an afternoon rally sputters for a second day. >> the white house has seen a positive start as the u.s. details its demands. trump changes his story on stormy daniels, admitting he did repay #any. >> and not cool. tesla tumbling after you unmask had brushed off questions about

cash flow during the conference call. >> hello from sydney where it is just past 8:00 a.m. --s is day back australia daybreak australia. >> i am betty liu. we are going to look at how all of the action on wall street plays into the trading session. paul, let's take a look at how the u.s. markets closed. we saw the markets trying to ounce back from the lows of the session, digesting the fed statement, tech shares leading this rebound in the markets. the dow ending marginally higher. the s&p and nasdaq closing lower. keenane on the close, su is here and of course we've got the jobs report. what was interesting, we came 1% off the low and it looked like we were trying to rally to positive. we did see a gain in the dow.

we do have a little bit of trade talks along with earnings. what does the fed meet with inflation creeping up? let's go into a snapshot at some of the losers. -- movers. tesla was a focus. overshadowede ceo other aspects of the conference call. our colleague was on the call. he called the question boneheaded. that got more focused than anything else. take a look at the other stories of the day. yum! brands has been struggling. came in with an upgrade. apron, the meal kit company that had been struggling. definitely managed to add customers. the wall street loved it. and spotify, we talked about the

disappointment after hours. let's go into the bloomberg and take a look at the tesla story. therein is. dropping, the key takeaway from the conference call is one analyst, none of them believing about what the ceo saying not needing to borrow coming forward. over yet.is not here is a fascinating story. take a look at activision intraday, what happened is the earnings were accidentally released. you can see the normal session. there was a drop in the stock and it activision had to release the call report and there was a spike. all of the gaming stocks, the actual reports beating the second quarter estimates. wild ride, like a videogame. let's take a look at after hours because we are seeing a wild ride there. the internetlly,

radio service, subscription business grew. after hours.ing it weight watchers, can you believe this stock? 7%.after hours, it is up the latest report shows that clients are flocking to the company. aake shack also reporting very strong after-hours report. all of them beating estimates. thingsu, one of the key we are watching today, those big job numbers. we've got the weekly appointment first. what was the reaction? su: really positive. investors say you do have signs of a stronger economy. there is a market spooked by this wording from the fed. jobless data below estimates.

tracks this. what we can take a look is, i'm going to have you take a look at some of the video and tell you some of the other data. #btv 7494. story of thet is a trade deficit with china. that also came in narrower. jobless data lower than expected. productivity was lukewarm. the focus is on the labor data for the month and we are expecting to see wage growth. paul: all right, su keenan, thanks. let's get a check on markets in asia after the u.s. up a few points right now. very marginally. shaping up to be another positive day in australia. we've got futures pointing

kiwi dollarhe looking like this. $.75 after some pretty good trade numbers on thursday. on commodities, some strength returns to gold and oil again showing strength as well after a run once again reiterating that the nuclear deal not up for renegotiation. let's give the first word news with courtney collins. >> president trump has changed his account of a $130,000 payment may 2 point star stormy daniels. he admits to reimbursing his attorney. in a twitter post, trump said the money has nothing to do with the campaign, pushing back against allegations it may have violated election finance law.

the u.s. has charged martin winterkorn with conspiracy over -- d soel the michelin emissions scandal. they admitted they outfitted cars worldwide with a device to test.laboratory emissions he is the highest-ranking employee to face charges. inflation could give the ecb another reason to put off a decision on ending its bond buying program. consumer growth weakened to 1.2% last month and the rate was the lowest in more than a year. a statistical blip would usually be ignored but combined with risks like as trade protectionism could damage confidence. argentine has tumbled to

a new record low after interest rates failed. a recent downward drift is accelerating to a selloff as concern grows disjointed policies allowing for excess government spending. investors thought the president election would be a turning point. global news 24 hours a day powered by more than 2700 in 120 countries. i am courtney collins. this is bloomberg. all right, thanks. as the world waits to see what comes out of trade talks between the u.s. and china, the word from washington is they have been positive. our editor kathleen hays is here with the latest. what is the white house saying? >> well, as you said, so far the

word is positive. day one of the talks on thursday, they will be getting noty for day two, perhaps surprising the chief economist to vice president mike pence was speaking at thursday. he was asked how things were going and here's what he said -- what i heard from the first day, and they have been there for a day of negotiations, it has been positive. the difficulty will be we will hear pretty positive things from china and the question will be, do they actually do them? that is the tough part. indeed. if you are at the negotiating table, how do you make sure that whatever is agreed to includes steps and guarantees to make it actually happened? ,e know that steve mnuchin

after dinner in beijing, along with the commerce secretary, the trump'sp, and donald chief economic advisor had no comment. that is understandable. he wants to wait until something happens. states. is focused on the driven economy. donald trump has been saying, is this sufficient? the state allocating capital. is that going to build a strong economy? and of course technology transfers, they will also be on the table and the fact the u.s. trade gap gets bigger and bigger. china said we don't want to preconditions for negotiations. we want a clean slate. they don't want to promise to cut the trade gap. that is one of the things donald trump is pushing for. we will see. maybe small progress will be

taken as a big step. so we got the latest trade report from the u.s. what is happening with the trade deficit? >> for the month of march, the gap actually shrunk. the question is, is is something donald trump will consider a drop in the bucket or a down payment? especially if the chinese agreed to some of the things he is asking for. the gap shrunk 11.6%. exports rose 26 point 3%. for the quarter, the u.s. china trade gap jumped 16% to $91 billion. on an annual perspective, you can see why president trump is focused on this and why a small change won't make a difference. you have u.s. exports to china. year.illion the last the blue is imports from china.

the yellow is the trade gap of about $350 billion. donald trump says would it be hard to cut? the u.s. trade team has threatened to leave the talks if they are not fruitful. our economics correspondent is not optimistic. he feels the trade team knows what they want and other exports , excuse me, experts are negative as well. was optimistic. the question is, you can get commitments, but can the u.s. get an agreement to make sure the chinese followthrough? a case in point would be intellectual property. that has been an issue for so long. what will come out of these talks? i am a glass half-full person. the fact they are sitting down is progress in itself. we shall see. a rough roadnly ahead. kathleen hays, thank you.

more on those trade talks later in the program when we speak to a form official who says it is not clear what president trump once out of the discussion. that coming up later. next we are going to get the outlook from the markets and the rate path. this is bloomberg. ♪

we are counting down to the sydney open for the final day of the trading week. futures pointing a little bit higher. lead frome a tepid wall street. i am paul allen in sydney. betty: you are watching daybreak australia. stocks rally back and still ended down for the second day ahead of the payroll report.

economists think jobs were added with a downward in the unemployment rate to 4%. bryce joins us now. he is a senior vice president and portfolio manager. it seems like the market, investors are still digesting the fed report from yesterday. inflationou think, is the game changer in the market? >> i think it is. we have accepted the labor market is doing well. the game changer yesterday was the fed said we have inflation at 2%. you are right. it has taken the market time to digest. we have been spoiled. there toad the fed prop everything up and now it feels like you are leaving your parents' home for the first time. now the relationship is going to be different.

that way,seems certainly the paradigm is shifting quickly. in terms of the job report tomorrow, i am assuming wages, there's going to be focused on wages. if we see another uptick in wages as we signed january, d think the -- do you think the markets are going to tumble? a very strong jobs report is going to make people nervous. even though it should be positive for the economy. the market is going to be scrutinizing the wage number to see what kind of growth there is. i don't think wage growth tells the story. you are seeing people quit for better jobs at a rate we have not seen since the tech boom. there's a lot of other things propelling incomes and

savings rates, tax cuts. the wage growth is only part of the story. it is focused on this, there is an uptick. propelling incomes and savings rates, tax cuts. wanting to return to the fed statement where they were talking about the objective to suggest they might let inflation run hot for longer. i want to hear what you think, how hot will they let it run in for how long? >> when you see terms like that, i get nervous as an investor. it seems like sometimes they are trying to cloud things a little bit because what does that mean, symmetric? is 2.5%.to date it has really turned the corner. they can't immediately get to a neutral fed funds rate. so they know if they need to stay on this gradual path, which it looks like they're going to do, raising rates when they have a press conference, it will take

time to get to where they wish they were at today. think the wage growth and all of that has them saying, how do we communicate we are ok knowing it is going to go above 2%? we need to buy time until we get rates to where we need to be. paul: we have seen the yield on the 10 year dip below 3%. is that a pause before it goes higher? are relieved the fed did not do anything. if there had been a press conference yesterday, they would have raised rates. they basically declared victory after 10 years they have been achieved full employment. inflation at 2%. there is no reason to not raise rates except we have been conditioned to believe they will never raise rates unless there is a meeting accompanied with a

press conference. the 10 year yield is reflecting a little bit of the relief rally, saying, wow, we don't have to worry. they are not going to accelerate the pace of raising rates. we know they are probably going to raise them a quarter of percent every other meeting. that gives the 10 year yield breathing room. i think that if inflation continues to accelerate, investors will not wait for the fed. so that is why now that we have three, it is temporary. it is going to go north of three once again. senior viceght, president and portfolio manager bryce doty. we are going to have to leave it there. thank you for your time. you can get a roundup of the stories you need to know in today's edition of daybreak. subscribers can go to their available it is also

on mobile. you can customize your settings you only get the news you care about. this is bloomberg. ♪

betty: good morning. i am betty liu in new york. paul: i am paul allen. you are watching "daybreak: australia." chinese president she jim payne announced big plans. beijing wants to turn it into a tourism hub and has designated it a special economic zone to encourage a wave of construction. we asked a ceo about opportunities and the initiative. >> it is one of the opportunities we are not looking at at this time. from an mtr perspective, if you look at our footprint, we are in

beijing. about a year ago, we signed an mou. those are the places we have been focused on. theeople find excitement in belt and road initiative. what plans do you have? >> you are right. the initiative is a fabulous opportunity. , i think it is like 30% of gdp. our strategy focuses more on the software side. academy.ses on our the academy is a training school that we established in hong kong

18 months ago. we had discussions with a number of companies. discussionsaving with indonesia, jakarta, the philippines. discussions in vietnam, thailand. we want to work with, share ideas with, the fabulous infrastructure. >> what are the challenges faced by the industry? is that a result of the infrastructure need? >> what we are seeing in some of the countries we are operating in is the requirement for more people to join the industry, on the construction side, the engineering side. the industry overall is driven by urbanization.

thes really driven by urbanization we are seeing across the world. that drives demand for urban infrastructure, including metros. that drive really drives the need for a lot of talent as a -- as we gofuture into the future. lincol leongas speaking in beverly hills. tesla shares tumbling more than 5% one day after elon musk told investors not to buy them. that dropped his dismissal of conference call questions about cash flow. said potential leave the ceo does not care about financial metrics or they do not tell a good story. seeking to capitalize on

the tax trump reforms and etf s. to pay a dividend of $.50 per common share and immediately increase the share buyback program to half $1 billion. betty: bp is weighing an acquisition of energy assets as it seeks u.s. shale. it is working with morgan stanley to advise on the plan. bp is selling up to seven packages, including three in the permian basin. they are worth at least $10 billion. next, we will find out why investors are getting spooked by freespending ways under jack ma. this is bloomberg.

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got the markets opening in 90 minutes. futures pointing higher by a fifth of 1%. i am paul allen in sydney. betty: you are watching "daybreak: australia." let's get to the first word news with courtney collins. >> a white house economist has described the birthday of trade talks as positive. bek says the test will china's ability to deliver on its promises of economic change. it is the first public update on discussions between president economic team and

officials that are scheduled to run through friday. a powerful rainstorm has killed 100 people through parts of northern india. the severe weather brought down trees and houses. it injured around 300 people. the storm caught people by surprise because monsoon season is more than six weeks away. more thunderstorms are forecast through the weekend. u.k. brexit secretary david davis says he is convinced britain will leave the eu. he told parliament that new ideas submitted on the issue are untested and have merit and drawbacks, which is why the u.k. is taking his time with ongoing discussions. >> almost 60% of our future exports are going to the rest of the world.

this is not surprising because the imf and european commission has said the majority of growth will come from outside the european union. it is our aim to make the most of that and that means -- >> and the u.s. federal appeals court has once again reversed the conviction of a former trader who is serving time for lying to customers about braun prices. he is serving a two-year term. the ruling cast doubt on the pursueent's decision to charges against those who deceive clients. global news 24 hours a day on at and at to attack -- and tick tack on twitter. i am courtney collins. this is bloomberg. thanks very much. let's get an update on the markets.

it has just turned negative after a positive start. the kiwi dollar above $.70 u.s. again. the greenback losing ground. futures in australia looking like this. a fifth of 1% at the moment. the dollar also back $.75 u.s. some good trade numbers helped that. we've got the japanese yen continuing, gaining a little bit of ground against the greenback akens slightly. yield low 3%.eld low let's see how long that lasts. let's get more on what we should be watching with adam. one thing we are hearing from goldman sachs is investor should relax. why are they telling us to worry less? >> there is a lot going on that

is dominating the debate, whether what is going on with as theensions in china, talks continued on friday. it is diverting people away from the fundamentals that remain pretty good. you had an equity market that is flat the last 3-4 weeks. now things are settling down. the folks at goldman are saying, it is not a time to be taking on risk. we should not be worried. the strongne is global growth they see. they see concerns around monetary policy are overdone. they alluded to what the fed said the other day. tolation is not a problem the downside. don't worry much about monetary policy in tightened. and the technical headwinds are perhaps overdone.

indexes.ooked at the ultimately the setup is positive for the folks at goldman. betty: hang on one second. we are getting earnings coming out. full-year net income coming in 3.2% above the estimates. 2.48stimate was for billion dollars. coming in at the higher end of the range. also noting a net operating income of 10.9 2 billion australian dollars. we will continue to watch those rie reportss macqua their results. all the bobby -- alibaba reporting. fall ford see profits the first time in a year and a half. that is right.

the equation is basic. sales growth is falling. and if you pair that with rising , thatand acquisitions basically equals a hit in terms of profits. let's dive into the bloomberg. this is the revenue growth you are seeing with the purple bars. the blue dotted line is the estimate we are expecting. 53%. that sounds great. as you can see, that would be the lowest pace of growth in eight quarters. not only that, if we see that, my chart has the profit margins. anyone not going the way wants it to see. 62% growth. that is expected to fall. we spoke to someone at ubs and he said margin decline could go

into 20. he also points out with the cost involved, this is some investment right now and it could even out humming into the future. there are some things i want to walk you through in terms of all of those businesses. for example, a financial service service, isod valued at about $9.5 billion. the video business, of course, up by $1.1 billion in terms of the cost for programming. $1.1 billion compared with about $2hich is million. there is competition between tencent and alibaba. ant spending, lazada, financial, they took a stake in the internet finance giant. .hat said, analysts are bullish

dive into the bloomberg one more time. the analystow you recommendation function. green on the screen. hold,are 48 buys, one zero sells. the return potential is near the against the 12 month price target. and we were looking at the pde ratio. this is about 50, compared to amazon, which is about 250. regardless of the revenue, analysts are bullish. all right. thank you so much. next, we will preview the second day of china-u.s. trade talks with a former clinton treasury official. this is bloomberg. ♪

i am paul allen in sydney. betty: you are watching "daybreak: australia." officials are set for a second day of talks friday in beijing after a positive start to negotiations. chinaget to our correspondent for more. how have the talks been progressing? m: the u.s. delegation arrived yesterday at the u.s. embassy behind me where they met with the ambassador and then went on to the talks, led by the vice premier to president xi. u.s.d not hear from the officials when they returned to their hotel not far from the embassy where i am now. yesterday they were asked questions by the reporters. what we've got our details from

vice president, mr. pence. said he is positive about the talks that have been taking place over the last day in beijing. he said the u.s. delivered a list of asks. he said one question the delegation will be put into their counterparts was whether or not the chinese would be willing to lower tariffs to an equal level to encourage imports into the u.s. market. we know that the u.s. delegation have concerns about what they see is a forced tech transfer and access to markets. there have been complaints by economists about the vagueness of some of the u.s. demands on china. that makes it difficult to get a gauge on how exactly china is able to deliver. those talks will continue later

this morning and are expected to wrap up at the end of today, friday evening. we are hoping for a press conference for specifics around that. that is not certain. tradetom, the u.s. china gap widened again in the first quarter. is that a potential pressure point? tom: it could be. around 91 billion u.s. dollars in the first quarter and for context, the u.s. trade deficit billionna was about 340 dollars. president trump is not always consistent. he is consistent in his concern about the trade surplus the u.s. , china has with the u.s.. he has demanded china reduce it. the chinese specifically said they would not give in to demands to reduce the surplus. they think it is a ludicrous

demand and a structural problem and is a question of savings in the u.s. there is that question. essentially a point of friction and hanging over the debate that is going on in beijing is the threat of these dollars of tariffs trump could make a decision on by june. the question is, will the delegation be able to come back from beijing with some concessions from the chinese that will appease president trump? there is a question about whether the delegation is unified because you have those on one side who take a harder view on china versus others to see it as a proponent of free trade and globalization. whether they are speaking with one voice is another question. paul: all right, tom mackenzie in beijing. here, high-level talks

between the u.s. and china continuing in beijing, trying to avert a trade war. it is a thorny issue. to get to analysis on it, we have brought along from the university of california. he is a former assistant deputy secretary of the u.s. treasury. thank you for joining us today. i want to start without observation tom made. is the u.s. delegation singing from one song sheet? you have one toward free trade and one on the other more protectionist. >> i would not say a little. i would say it is totally incoherent. this is not normal. you need to focus on the fact this is not normal. donald trump says he wants a smaller u.s. trade deficit. yet the numbers that kevin and

others have been putting out about the effects of last december's tax cut for the rich have that growing the trade billion as the effects they claim will roll in. the others are certainly no better but they have forgotten who they are working for, who they are supposed to be working for. that behind them, navarro, does not know better and kudlow, it has been a long time since she did economic analysis and his , he ists on free trade not able to form a negotiating position. and of course, they have backed into, trump says, when he is coherent, his concerns are about

intellectual property in market access. that was why obama negotiated the transpacific partnership. it will be better if the u.s. were one of 12 countries negotiating with china on these issues as a group than one country that sent its people to beijing where they are spinning around and hoping to come out with some face-saving things they can sell is concessions back to washington, d.c. where they do not understand the issues. paul: one week ago we were hearing from the australian trade minister about how the u.s. was on board with the tpp. in the absence of that, how do you bridge these? pitching at least. that is positive that the

decision to drop the tpp on day one was a mistake. the only trial balloon that has been floated recently is for voluntary export restraints. reagan administration did in the 1980's. and that may get china on board because voluntary export restraints are a way of telling chinese producers, let's form a monopoly and exploit u.s. consumers and users. if you want to reach an agreement, say you have an agreement. we are going to take the money and give it to you in the form of monopoly profits. that is something you can do and trump will probably think it is a victory for the united states. reagan thought it was a victory for the united states in the 1980's. it was not then.

it would not be now. just some of the reports coming out from the talks so far, the chinese delegation seems to have a connection or a respect for tove mnuchin and not as much dwight eisenhower and navarro. given the chemistry between them, what could come out by the end of friday? mm, as you say, it is not normal. it is difficult to have expectations. if this were semi-normal, you would say protectionism wins only when there are powerful interest that stand to gain that have some salient point of pressure. and republicans who had been elected in the early 1980's wanted voluntary

export restraints on imports of autos to the united states even though that was potentially devastating for u.s. people like me in the 1980's hoping to buy a cheap car. boon to the profits of japanese automakers. at this time there is no thatficant interest group once significant protection against imports from china. american manufacturing is embedded in chinese value chains and would find it difficult competing against german and japan producers if they were not able to draw on these links. trump and seems to be the people who want to make it their business to boost trump,

which is strange because he knows better. we are going to have to leave it there. delong as we are watching these talks between the u.s. and china. coming up, looking at xiaomi's filing. india willy he says be key to the company's strategy. this is bloomberg. ♪

paul: i am paul allen in sydney. betty: you are watching "daybreak: australia." be the largest initial public offering since 2014. let's get more from the managing director from the hive who has been talking about tech topics, including ai.

i want to get your thoughts on xiaomi. there's a lot of talks about how they are going to be launching a , even here in the u.s., india. what are your thoughts on their filing? >> it remains to be seen how the filing does and what comes out of it. there is no doubt in my mind that for the next foreseeable decade, markets like india are important for people trying to sell these smart devices. phones are one part of the equation. smart devices in various elements are going to be important and at the end of the day all of these companies want a relationship with the customer and use that data to sell them something on top of this phone, the gillettee strategy of selling you the

razor and then you have to keep buying the blades. betty: that's right. certainly a smart strategy, sumant. smart phones, it was interesting to hear that comment from tim cook when he was talking about how the smartphone market, apple does not saturated. there is a bigger market out there of mobile phone users who have not stepped onto the smartphone bandwagon and apple has an opportunity. what did you make of that comment? >> i think he was right. if i was apple, that is what i would be saying. whoe is a market of people are yet to be connected to the internet. engagest way they will with the information economy is through a smart phone. for a long time we had this heuristic it has to be under $100 to hit the mass market.

i would not even say the broad mass market. the middle class market. the chinese manufacturers have done a better job in india than the apple iphone has been able to do. they are trying different strategies. it has not happened yet. paul: sumant, you have a lot of investments in the internet of things and you talk about personalizing engagement as being the next frontier. how do you make sure consumers keep control in balancing that about the needs of the technology? >> that is the question of the day. there was one question around of big data,anel artificial intelligence was struggling to answer. i don't think anyone has the right answer. in europeome moves around data protection that is

in the right direction. china has their own. to some degree, the u.s. is lagging behind. controle, giving people on what they share, giving , theht into their data kind of images they are leaving behind them as they engage with the internet, it is an educational process so they know what to control. right now if you ask who was on facebook, what data do you want to control, i don't know if people now. at the same time there is value in giving that data to someone who can taylor and offering to you. it is a fine balance many not just facebook, the advertiser, the publisher, for many years google had played with that. sortedme, it needs to be out. it has not even started yet. ,aul: sumant mandal

unfortunately we are out of time. thank you for joining us. that is it from "daybreak: australia." asia." "daybreak: this is bloomberg. ♪

>> 7:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. welcome to "bloomberg daybreak: asia." stocks off to a mixed start after wall street sputters out. investors weighing u.s. job numbers. watching day two of trade talks in beijing. the white house sees a positive start to negotiations. from bloomberg's global headquarters, i am a betty liu. president trump changing his story on stormy daniels, admitting he did repay hush money but saying it was legal. why a spending spree