here int is 7:00 a.m. hong kong, we are live from bloomberg's asian headquarters. i am david ingles. welcome to "daybreak asia." stocks in asian-pacific set to rise. treasuries pushing higher, yet again. the s&p 500 popping its average price for the last 100 days. the russell 1000 at an all-time high. in newi am betty liu york. asia's top economic advisor holding talks. urging to stop beijing's unfair trading practices. no business have

flagging strategy in the months ahead, james bullard talks exclusively to bloomberg. david, it was another day of rallies in the u.s. markets, but i thought the bar chart was interesting. puts into perspective these gains in the market. might be worrisome for some of the bulls. shows you just how much these faang stocks, how much they contribute to the return of the s&p. on a total return basis, these s&p,s which are 1% of the amount for 64% of the total returns, for instance, we have seen this week.

when we talk, are we bullish or bearish? maybe we are only talking, are you a bull or bear on five stocks. david: maybe it should only be called five stocks. a few years we look back on the, we believed tech is place to be, how can you outperform the index if everything was driven by five stocks? it is an interesting conversation to have. betty: speaking of markets, let's show our viewers how we closed today's trade. points, the s&p higher. the nasdaq going along. the faang up 0.6%. perhaps a higher open in asia. david: futures are pointing up. new zealand already up and running. we get the rest 60 minutes from

now. machine orders from japan, exports out of malaysia. hang seng futures, 250 points up, based on the last pricing. i imagine the tencent affect already factored in. you're looking at weakness across the basket cases at this point in time. brazil is worth noting. a few hours ago the central bank surprised us why setting rates at 6.5%. i guess it is a blessing for other em's, easing the cycle. a central bank, sing to take necessary steps. broadly speaking, when you look at yields, yields are up, curve is steeper. on the 10 year.

acute political gyration story pushing yields higher. 16 basis points. 2.9%,lia closing in a highest level in 2.5 months. that is the story of markets so far. let's get you caught up with first word news. >> congressional leaders pressed china's top economic adviser to halt unfair trading practices at the start of a four day trip to washington. met ahead of discussions with secretary mnuchin. his visit followed talks in beijing that ended without agreement. leaders are in bulgaria for a summit that includes rising trade tensions, the latest exit issues and the iranian deal.

trump's tariffs are due to hit on june 1. the leaders also want to salvage the iran accord, despite america pulling out. european shares hit near 15 week highs at the possibility of a populist italian government wade -- weighed. they are yet to say who will be prime minister. one italian newspaper reported they may rotate the post. tencent will be in the spotlight recordfter delivering quarterly profit that reassured investors worried about margins. the stock had lost more than $90 billion value in hong kong this year on fears tencent was overspending on new projects. the march quarter sub profit

jumped 51% to 3.7 billion u.s. dollars, topping estimates by almost 1/3. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. betty: let's take a closer look at the u.s. market closed, after positive economic data pushed higher, tencent recording record profit, easing concerns about its spending. su keenan with the latest on the rally today. production coming in strong. all of it helping boost the market. back into the market snapshot, that but the focus off the mixed messages from the north -- north korea, the u.s., back to the yield and bond. we're above 3%.

the question is, if these higher treasury yields will force the fed to hike rates faster than initially thought. oil fluctuated around $71. at one point, up to the highest we have seen in four years, on a decline in u.s. domestic oil supply. the iea did moderate that. we look at the big moves. macy's was at the top in terms results,g blowout there turnaround, based on discounts, really paying off. international shopping sales strong. square, the ceo comes on strong on bitcoin or some kind of

digital currency. the strongr riding sales data. helping a lot of apparel makers. macron coming off a spate of bullish news. is where yougtv can find these charts. the 10 year rate is 1% higher over global yields. you are looking at a series of years. 2018, you are above the mark where you have strategists and economists saying, this is the point that could sap demand for stocks. david: you got to imagine treasuries at these points could be cheap. yields are higher, as you mentioned, boosting the outlook for the overall economy. talk to us more about equity reaction. su: we have seen the housing sharks go into a bear market on concerns of higher interest rates.

they are most sensitive to higher interest rates. the strong trend in this data has been confirmed. homeowner confidence is at the highest in years. we saw housing permits for multifamily homes in the southern part of the u.s. at the highest in almost 13 years. counterintuitive as it may be, sales have been strong and robust, even as the borrowing rates have risen. what does it all mean? the housing stocks have been in a four month slump going into today. they were down 21% year to date. the housingoncern cycle could be in its latest stages, that perhaps this rebound is coming late. a lot of concerns about rising interest rates have been hitting the housing stocks, but on the strength of these rising numbers and the rising tide of the market as a whole, all of these caught a pretty good bid. david: thank you, su keenan with all the good news.

let's get to some not so good news. next month's planned summit between north korea and the u.s., pyongyang threatening to torpedo these talks because of washington. president trump says the north has not raised concerns directly. as far as the event is concerned, he says, we have to wait and see. joe sobczyk joins us now. any indication if the summit is on or off? joe: maybe. right now the white house says they do not for sure -- they do not know for sure, but they are planning on proceeding ahead. sarah sanders said today, we are ready to go, and if it happens, it happens. if it does not, the u.s. will maintain the maximum pressure on the north korean regime through economic sanctions and automatic isolation.

-- diplomatic isolation. indication it has been scuttled from north korea. there were indications about the libya model. ,hough he did not draw the line the north koreans seem to do that on their own. we suggested that was a code for regime change. betty: we also just learned president trump's top adviser will be taking part in a trade talk after all, so why the reversal? joe: there was a something of a power struggle in the white house. peter navarro, the top trade advisor to the president, is the hardest of the hard line advisors to the president on china. he was part of the delegation with treasury secretary stephen mnuchin that went to beijing a couple weeks ago.

those talks were fruitless. disagreements and disputes about how to handle those talks. therro was not listed among u.s. officials who would be meeting with the vice premier liu when he was in the u.s. we were told initially he would not be meeting with the vice premier, but now he is back on after the story broke wide bloomberg earlier today. says,ite house official he will be in those meetings as well. betty: has there been any progress on the trade talks? what is the reaction of liu he's visit to congress? joe: it does not seem to be much. the president says he does not know what china is asking for. the vice premier made the rounds on the hill today. and orrin hatch came away from that meaning -- meeting pessimistic.

he said the vice premier listened, heard their concerns, that did not offer much in return. he said he was fairly convinced probably the white house would have to go through with the tariffs they plan to impose because there was not much sign of progress, but that may be a matter of the vice premier keeping his cards close to the vest while meeting with lawmakers. we will see what happens with the talks this week. betty: thank you, joe sobczyk in washington, our congress editor. trump-kim summit issues on the bloomberg. subscribers go to dayb on your terminal. still ahead, 10/10. tencent, fears they are losing margins. david: investors gaining

confidence. the good data, there is a look at the market outlook and how this changes equities. this is bloomberg. ♪ ♪

david: this is "daybreak asia. i am david ingles in washington. betty: back to the market where advanced, retail results and solid economic data boosted confidence in the american economy. for more, we are joined by a chief investment strategist at riverfront investment group. what did you make of the rally today, in the face of 3.1% gains on the yield, we saw gains in

equity market. andhen you take a step back look at the treasury yields, everyone is concerned about how they have risen, broken above the psychological 3% level. if you take a step back, 3% yields on the u.s. tenure is not necessarily detrimental. s&p ises where we are in historically well supported for yields between 3% and 5%. maybe it is the market taking more rationality toward this view of rising interest rates in the early stages usually means good things are happening in the economy, not necessarily a bad thing for stocks. so long ago weot saw the jump in yields in the equity market. some of us were wondering what took treasury yields so long to start rising, because the economy has been on solid footing for some time. you look at earnings and

employment, wage growth, all things moving in the direction you would expect to see. market sentiment is fragile. ever since february, a pretty good dent in the market sentiment. -- market has been with sign the market has been whipsawing around. if you look at the market, you are stuck in this 2800 range. markets -- stocks and probably go higher. david: hold that thought, we have breaking earnings out of singapore, fourth quarter net singh dollars. operating, -- that

would be about 3.2 billion u.s. dollars. more reaction when that stock opens up 90 minutes from now. you,, simple question for do you think stocks will end the year higher? msci growth, for instance. do we end the year higher? chris: yes, we do. the states, it is difficult for us to see the market make headway until you get past the midterm elections. world is a more attractive u.s. specific. we like international stocks, we think the risk to reward is better. we expect to see decent gains in msci world from here. david: there is a debate where

to put your money across assets. turn oneived to equities might be the same as putting your money into a money market or waiting for a dividend yield and not expecting a return. that government -- that argument has almost become subjective. chris: we are still prone risk. k. we are still pro-ris let me explain. we are overweight, relative to our benchmarks. if you look at the dividend yields across the eurozone, the aggregate, subtract that from bond yields across the eurozone, you still get a positive spread, 200 plus basis points a positive spread. that suggests to me -- it is abnormal, if you look back through history. usually bond yields are higher than dividend yields.

that suggests to me those markets are undervalued. i still think there are pockets of decent valuations across the world, if you are willing to get more granular. japan is in a similar boat. japan, relative to the rest of the world, cheaper, and a good value. david: how does that valuation method work in europe, where you have softening data? we had core european yields push higher. of universall stock still look attractive from that method? chris: yes it does, let me explain why. data has been softening in europe, but i think that has changed the reaction function of the ecb. earlier investors were concerned about the ecb getting hawkish. if you look at data now, the ecb is backed into a corner of having to remain accommodative. that is good for risk assets.

you mentioned core yields rising the eurozone. if you look at the correlation between the 10 year german bunds and a eurozone stocks relative to the u.s., there has been a positive correlation over the last eight years. we like the idea you are seeing longer-term rates rising in europe, because we think that can help the european financial system and banks. betty: i want to follow up on comments from james bullard, where he was talking about ahead,ting rates too far forecasting getting rid of the dot plot. maybe we should not rely on forward guidance as much. how would that affect the market? chris: we would have to look at how much of the dot plot has changed the reaction function. my personal view, while it was

an admirable attempt at the fed to be more transparent, in some ways it made things less transparent, because we assessed over the dot plot and who had which dot, where. to bek they are trying more transparent, but i do not know if that is possible. betty: how much do you rely on the dot plot? chris: less than you might imagine. betty: [laughter] not surprising. thank you for joining us. do not forget our interactive tv .on tv dive into securities and functions, plus, become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ this is bloomberg. ♪

betty: this is "daybreak asia."

i am betty liu in new york. david: i am giving less in hong kong. look at these new global shipping regulations, will support the price of oil for two years? $90 in 2020. lower sulfur levels, fuel, of january of that year. triggering the need for more crude. prices are at the highest level since 2014 as global supply continues to tighten. told mitsuiberg well take part in a wind farm. bloomberg says the project is still in the planning stages and u.s. --uire $1.8

billion u.s. dollars. david: an event for online merchants. they aim to connect retailers with hundreds of chinese manufacturers, to sell directly to american and european customers. it is part of the efforts to evolve from an e-commerce platform to a global logistics operation. taking charge of the remaining business after selling most of its assets to disney. the 46-year-old will assume the roles as a ceo and chairman, in the company referred to as new fox. 's younger brother james was not mentioned in the company statement. david: james bullard the relevance of forward guidance. the dot plot, putting that concept on the fence.

why he thinks it should not be the case anymore. plus, the top market and business stories. stay with us. this is bloomberg. ♪

david: 7:30 in the morning here in hong kong, thursday. 30 minutes away from the open of major markets in the asia-pacific. two hours away from the markets in hong kong. tencent seems like a 10 out of 10, as we have been mentioning. new york city, rainy outside our headquarters, 3rd avenue. i am betty liu in new york. david: i am david ingles in sunny hong kong. this is "daybreak asia." a delegation from north korea

has met chinese president xi jinping as speculation swirled the trump-kim summit could be canceled. beijing urged their allied to go ahead, despite recent hawkish comments from washington. may meet inm singapore on june 12. washington is going ahead with the preparation as normal. malaysian police have raided the of -- as they reinvestigate millions of dollars missing from the 1mdb fund. prime minister mahathir mohamed says the fraud is bigger than thought. singapore,eaking to the u.s., sweden, and others. 1mdb.s money was from it was laundered in america.

since there was so -- no mention the money was from malaysia, there is no claim on it. we expected to be returned to malaysia. isthe trump administration turning up the heat on the middle east. they are acting in concert with accusing nasrallah of destabilizing the region. hezbollah has frequently clashed with israel and in syria cited with bashar al-assad. al-assad.ith bashar trump's 2017 financial disclosure, he asmbursed cohen as much $250,000 for unspecified expenses.

he could be in violation of federal ethics laws. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. david: just under half an hour away from the markets in seoul and tokyo. sophie kamaruddin with asian stocks making like rambo. what does that mean? >> putting on their red bandanna. getting set to advance. the u.s.-china talks this week in d.c. orders inore machine half an hour, aussie jobless numbers. the new zealand budget due. even with this question mark over the trump-kim summit, investors may be sanguine.

link -- weound and could see a little optimism at the open. david: big day for southeast asia as well. ofre is a rate decision out indonesia that seems to be close to call. risk see a fresh bout of diversion. several strategies see little to help the rupiah overcome its weakening trend. i will pull up a chart. the rupiah is at a 31 month low, the lowest since monday for 2 -- the lowest since 2015. reversing course after cuts in august and september. those moves were followed by rupiah weakness. it has been a wild ride for stocks in indonesia. they have lost $65 billion since hitting a peak.

plus, lingering worries over thee, growth, geopolitics, latest series of bomb attacks. it is not helping investor sentiment. they are seeking to stem the selloff, making malaysian stocks -- indonesian stocks the worst in asia. tencent's big spending ways -- the social network and gaming company defied worries. our chief correspondent stephen engle, here to break down these numbers. how far were the numbers off? >> they were off by 1/3. they beat the estimate by almost 1/3. tencent had been telegraphing they would except pressure on

the margins in favor of longer-term growth in new areas like cloud computing as well as entertainment, video and the like, and physical retail to keep pace with the efforts made by alibaba. the quarter did blowout analyst expectations. we are seeing a 61% rise in net income to 23.3 yuan. that beat estimates by almost 1/3. investors had been selling off on this stock since a record high was hit january 23. they sold more than $90 billion of u.s. stocks. they were bracing for that pressure on the margins coming in this march quarter. it did not get that. gain froma one-time its return on investment in the area, like news and video. even with that, the results were

strong. let me highlight a few points. growth, profit margin, was more than 50%. we are expecting pressure on the margin. most analysts expected to come in a 47. they are better monetizing that and getting more monthly users, topping one billion for the first time. revenue rising 48%, higher-than-expected. the lion share for this business has been its online gaming business and honor of games. games revenue up the first quarter. david: i am glad you brought margins up. we are going to pull a chart up to show you how the margins changed since it went public. 70%, have comeom down to 47%, which is what the expectation was. this smallean,

rebound, that they are out of the woods? stephen: they have kept costs under a bit, but costs did surge 51%. pony ma put out a statement, the said, we will continue to invest in improving our products and rolling out new products. they are working on cloud computing and artificial intelligence and entertainment and video. those are costly endeavors. the press show the margins. we might not be out of the woods. one thing we will be keeping an eye on are the shares. the shares have been down 16% since january. they were flat yesterday ahead of their earnings. with what a telegraph happened in south africa and overnight in new york, atop shareholder in tencent.

the stock was up in johannesburg. a proxy for tencent. they did sell a big chunk last time around. it has worked out for them. thank you so much. tencent, one to watch. coming up, real estate credit in india. senior housing in china. where there is opportunity. this is bloomberg. ♪ . ♪

david: welcome back, you are watching "daybreak asia." i am david ingles in hong kong. betty: i am betty liu in new york. investing opportunities in emerging markets.

however, there is a warning flag. a professor says, the overall shape they are in has a lot more crack's than it did five years ago, at the time of the -- and at the time of the global financial crisis. life investings in emerging markets. great to see you again. is talking about rising yields, inflationary concerns. we might be underestimating the concerns of those voices on and they areets, in fact, more fragile than they were 5, 10 years ago. are you seeing this? would you agree? generalizericky to about all emerging markets. we see opportunity in the growth markets of latin america. two markets in particular are

mexico, brazil. both have presidential elections this year. brazil is coming out of a deep recession. it is not fragile, it is in recovery phase. corruption scandal lingering, uncertainty, interest rates have been cut in half. that is one bright spot. mexico as well, different reasons, similar uncertainty. in asia, where i just visited -- betty: you were in hong kong and singapore. gary: yes, as part of the conference. china, in ways, is fragile. the organization trend, consumer class absolutely rising. india, we talked about before. betty: just staying on china,

they are growing their economy. it is becoming more domestically -- domestic-demand focused. have you noticed a perceptible change where the chinese economy may be more protected from external forces, like u.s.-china trade tensions? gary: yes, i think there is an inflection point you are referencing. wherethe organization 15, 15 to 20,to maybe now 25 million people a year in china urbanizing, which creates residential play opportunity and all the things that radiate from that. yes, i think the consumer is in a move and shift to more growth. also, a tech savvy can -- consumer. betty: are you interested in the

chinese market? gary: we have been off the chinese market for so long, it is interesting to come back. n wee was more there tha expected. through the lens of home renting, senior housing, which is really coming alive. is creatingd rule opportunity because china is older as a country. beyond china, vietnam, philippines, indonesia. those places are really percolating. we are seeing interesting opportunities for housing, student housing, logistic real estate, etc. these are early days for these markets. lens, it isough our 25 years ahead. but it will not be consistent and there will be moments, like

a there always are. always are.e it is not for the weak. [laughter] david: it is early days. a lot of these demographic trends are happening. now that you are back in china and looking at that, how do avoid getting into something crowded? i would imagine everyone else is looking at the same thing, the same opportunities. thereit is interesting, has been a steady march of capital back into china. china has scale. it also has multiple cities that opposed to many emerging markets where there are only one or two. most people tend to focus on core at the property level. think high-rise office, luxury

hotels, big malls. our focus has never been on that. a lot of people are doing the same thing, but it tends to be trophy/core. not luxury, not iconic. affordable, entry-level housing has been a wonderful business for us, always 20 years. it is certainly not sexy. it is much more challenging, than focusing on anyone iconic property. david: real estate credits in india, what is that about? india appears to be so vast. we have been traveling and establishing relationships with india for quite some time. it took us 15 years to find the right partner in india. we have great enthusiasm for that country.

the real estate industry is in the very early days, getting established. view, the most intelligent way to participate is in and around high-yield real estatesed on sector, for sale housing and compelling income property sectors. betty: has there been any emerging market you have looked at in the last 12 months you have bet on and it disappointed you? any you have been surprised by? [laughter] not over the last 12 months, to answer your question. for us, latin america has been choppy. i would not say anything has been at a peak and dropped. things have been down in a low zone. we are just seeing the percolation up from there.

we are just getting serious about asia again. betty: gary, thank you. gary garrabrant, jaguar growth partners managing partner. fed,s a big day for the st. louis fed president james bullard giving kathleen hays his views on the u.s. flattening yield curve. we are in anyink danger right now, sitting here today, the yield curve has a nice upward slope, it is not too over the last 30 years. but i would be concerned we not lurch into an inversion without our eyes being wide opened. betty: joining us now is steve matthews. what did you learn from this bullard interview where he suggested to throw out the dot plot? an interesting

interview. he is setting the stage for the debate for the second half of the year. inryone on the fed believes -- and investors believe the fed will raise rates in june, but there is debate over whether to additional three rate hikes this year. he is basically saying, what is the rush? maybe policy is closer to neutral, not accommodative, and you have concerns over an inverted yield curve. suggest perhaps you are going to have a recession or slowing economy. this was a big day for the fed. you have the head of the atlanta fed and the head of the new york fed both talking about this inverted yield curve. madeta in particular

strong statements and said, not on my watch. we do not want to have this happen. this will be a debate that will continue. i have got to bring up the issue of emerging markets, not that it is part of the fed's mandates, they will not be faulted if they do not care about em's. i look around the world. what is the fed's policy right now on emerging markets? steve: that was interesting, your section on carmen reinhart was fascinating. position is in some way similar to donald trump's -- america first. they are worried about the u.s. they say, our mandate is to do what is best for the u.s. economy. if the rest of the world is hurt by that, well, that is life. you saw jay powell, the fed

chairman, give a speech last week saying, that is not part of our mandate. he also said, we do not think it will be a big problem. the comments by carmen reinhart suggested this is something to watch, and it would be a big warning sign for the fed. what is impact is, happening for global growth and synchronized global growth around the world? that has been a real tailwind of for the head -- the fed. that could change the outlook a bit. david: that is life, a page out of sinatra. thank you. machine orders, forward-looking indicator, not good indication, falling 3.9%. steeper than the 3% decline we were expecting.

year on year, 2.4% drop. the estimate was barely flat. dollar-yen, 110.36. .utures pointing higher lots more to talk about. stay with us. this is bloomberg. ♪ this is bloomberg. ♪

david: this is "daybreak asia." betty: a quick check of the latest business flash headlines. companies under an umbrella of alliance group, after a tribunal group replaced them. .t slumped more than 50% the tribunal accepted from

to collectrying unpaid dues from rcom. david: ramping up earnings in sydney. the creation of 50 new positions ranging from tech, to a concerted effort to push into their retirement market. the ceo is expected to be named shortly. early foris a little alcohol issia, but in the spotlight. a couple of rare macallan fetch $570,000. each bottle carries an estimate of about half a million u.s. dollars, excluding a 22.5%

buyers premium. david, are you a whiskey drinker? david: no, i have to say i am not. ien if i have the money, would not pay that much for whiskey. but, whatever floats your boat. 1926. that was during the great depression. they would have a good reason to drown their sorrows. whatever floats your boat. almost 600,000 u.s. dollars. betty: i am sure there are plenty of people, not uri -- not you or i, ready to pay more money for that title. blanc or are sauvignon warm milk kind of people. we are approaching the opens in

asia. futures pointing slightly higher. lots more coming up here on "daybreak asia." we unpacked detailed out of the tencent results. this is bloomberg. ♪ oomberg. ♪

david: welcome to daybreak asia. yields pushing higher yet again. economic advisors holding talks with congressional leaders. betty: amazon takes its fight with alibaba to its rival backyard. pimco and its parents are hiring in sydney.

they are chasing postretirement dollars. david: a very good morning. good evening to you in new york. you talked about u.s. equities pushing higher and also about emerging markets being under pressure with you rising yields we put -- with rising yields. we put a chart up. msci eme m. in recent history, the relative value, the concept kicked in. that stocks imagine went higher from here because we are now at the feelings.

in other words, if emerging markets improve, that bodes well for the u.s. if it does not, that is a bearish sign. betty: it might be indeed. where emerging markets trade needs to be accounted for risk. the risk right now, we heard reinhart.rom carmen these rising yields, rising rates might force central banks in emerging markets to raise rates faster. that could be a risk. that to the first word news with paul allen. st. louis fed president says policymakers have no business flagging strategy weeks or months in advance because they had -- they don't have a situation could change. he said the predicted three or four rate hikes this year could put downward pressure on inflation. although he sees no danger at the moment. he wants the fed to change course. >> the whole idea that you are

naming the number of rate hikes we out in the future when you don't know what the data will be is something we should get out of the business of doing. paul: a delegation from north korea has met xi jinping as speculation as well as that that may bemp-kim summit canceled. trump and kim may meet in singapore june 12. the trump administration is going ahead with preparations as normal. malaysian police have raided the home of the former prime investigate.hey the scale of the fraud is bigger thought.ially malaysia sucking to switzerland, singapore, the u.s. and others to recover the money from 1mdb. 1mdb andoney was from

it was laundered in america. first, there was no admission that the money was from malaysia. now we say the money is from 1mdb and we appeal for it to be malaysia.o hall: the trump administration is turning up the heat in middle east, imposing sweeping new sanctions on the letter -- the leader of hezbollah. three gulf nations are accusing him of destabilizing the nation. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. ♪ david: thanks for the update. .3% early on in the asia-pacific. let's break down the equity action. from wallking cues

street, gaining ground, keeping investors on their toes while u.s. 10-year yields are at the .1% level. aussie jobs, malaysian gdp, and a policy decision from indonesia and japan. drop in three,ly but second quarter orders, they are coming and started than the first three months. watch for reaction in machinery makers. korean assets are in forests best in focus whether or not trump and kim jong-un meet in singapore . tech and property shares raised -- leading the rise. this year, south korea is to resume building it's part of the railway connecting it to the north.

grounds gaining some after reaching a in 2014 high on shrinking your stockpiles. the oil backdrop is now more bullish and more robust. david: china is urgingdavid: -- betty: china is urging north korea to go on with his summit with the u.s. . president trump says the north has not raised any concerns directly. as for the events, we will have to see. jodie snyder joins us. this will happen? unclear. is president trump says he has not been notified, as you just noted. he will have to see whether he hears from the north, whether the summit land for june 12 in singapore will occur. president trump also said something interesting when he made those remarks at the white

house in the past day. he would require -- he will still require that north korea give up its nuclear weapons as part of these talks. that is the crux of the criticism from north korea's leader kim. up then't want to give nuclear weapons or agree to give up the nuclear weapons without getting assurances from the u.s. that they would remove sanctions. he calls it the libya model. his administration in north repugnancethey have for john bolton, the national, who is the architect of that policy. there is a lot of he coming from north korea. a lot of serious warnings about whether they will go ahead with the talks. that president says he doesn't know anything about that and he is still preparing. david: speaking of talksdavid: ,- david: speaking of talks they are in washington.

jody: looks like things are moving forward with trade talks. the trade talks in china did not go quite so well. some key trade officials are in washington. is talks of moving forward. at the same time -- there's talks of moving forward. at the same time, the head of the wto said the u.s. had delivered three hard blows to the wto over tariffs. orle we have some progress certainly attempts at progress, there is still criticism on the from stage of the u.s. china. david: they are still very far apart. jodie: peter navarro looked like he was being excluded from the talks after having not brought

the two sides closer together in beijing when he was there. he is a big china critic, a hardliner. that he has been included in the past. he is being excluded and word is he is taking part in the washington talks. but the two sides are far apart. the fact that it has come to these threats of the tariffs, the u.s. threatening to impose $150 billion in tariffs on chinese goods and then china saying that they would retaliate in kind means that there is a lot of tough issues between the two sides on issues like the u.s.'s allegations that china violated intellectual property rights, a whole host of other issues. it's tough to see them resolving this all in a couple of days in talks. the question is can they agree to talk more so that the two sides will not go forward with the tariffs? david: we are coming up that

very tight deadline. thank you so much. jodie snyder with the latest on washington. president jim bullard is an outlier. he has been tried to push back against the view that the u.s. economy is at risk of overheating and that requires a series of well telegraphed rate hikes. in an exclusive interview with kathleen hays, he basically says that fetches stop giving out forward governance. >> the whole idea that you are naming the number of rate hikes way out in the future when you don't know what the data will be is something we should get out of the business of doing. kathleen: you mean the dot plots? when you are at zero and you are giving forward guidance, that is one thing. that we are not at zero anymore. we never gave forward guidance of this nature in this kind of situation where you are well off ciro and it is not -- off zero

and it is not clear where rates will go the future. i think piling up these rate hikes over the next two years or three years or something like oft is some -- as some kind inevitability, we should not be doing that. rateould say we have the about ready to be today and we will monitor developments and we will react to what happens in the future. that is how we would like to frame this, i think. kathleen: john williams, incoming president of the new york fed spoke to bloomberg today. one thing he said interesting was that forward guidance, maybe it's time to put down to bed, to end the market handling. do you agree that? >> one thing in the statement is that monetary policy remains accommodated. we use that same line when we were at zero. now we are way off zero and we're still using the same language. it has become dated. i would like to say we are at

neutral. whether i can convince my colleagues to say that, i don't know. i think we should reform that and then think about the dot plots as well. betty: again, that was jim bullard speaking exclusively to jim -- it's lucidly -- exclusively to kathleen hays. david: coming up next, the take on high-level talks ongoing in washington, whether or not we should be hopeful. that's next. this is bloomberg. ♪

betty: this is daybreak asia in new york. david ingles: and i'm david a

list in hong kong. he is in washington. joining us understand what we can expect from pham realistically -- from him realistically, we have our guest. generally, what expectation should i have for these next few days? >> i'm pretty optimistic. there's maybe some concrete result that can come out, at least to avert a trade were between china and the u.s.. it is quite clear that senior officials from china coming to america again just after two weeks of intense straight talks in beijing, there's something although they are probably concrete will come out.

david: that they are in washington means they are prepared to give concessions to the united states, enough for the u.s. to back away. what do you think those gifts are concessions are? >> concession is probably mutual. both benefit from trade. that's why, in the u.s., there's already0 companies about u.s.ir concern tariffs on chinese goods. of course, a lot of companies will be hurt with a trade war. on the chinese side, chinese exports are the biggest in the world. china is the number one exporter in the world. any agreement. negotiation outcome will be better than a trade war. china already expressed their willingness to compromise. the chinese leader, mr. xi,

already said that china will cut tariffs, especially in automobile trade, and increase imports. first import expedition in china will showcase how much china will be willing to import. so i think not only a the china, but strategy to boost import demand. this: when we talk about trade surplus issue that donald trump cease to be upset about, $350 billion last year -- seems to be upset about, $350 billion last year, you are saying that is a realistic objective to have. how does china go about delivering $200 billion in surplus cuts? >> to cut the trade deficit is a consensus. but whether it is possible to

in two years is unrealistic. that is impossible. of course, the reason for negotiations is we can probably find a way to reduce an amount that both could agree. betty: i just want to mention one headline coming across, not related to china, but sort of related in the sense that it is on trade and on japan. wton will be informing the retaliatory steps on the u.s.. japan was not exempt from the aluminum and steel tariffs. they will be looking for some recourse through the wto. anding on china though these trade tensions, what do

you think the chinese can continue to do to pressure the u.s.? what about these treasury holdings we keep watching? every time there are auctions that happen, we are looking for any reduction from the chinese. is that a good leverage or leverage to use? >> definitely not a good leverage to use. i don't think the chinese government ever thought of that. in the last six months, the chinese government is accumulating more american debt. is a safety concern here. here.is a safety concern i don't think the chinese are willing to use that as a weapon because that is a negative for both countries. and the u.s. bond market is the deepest. they have to put some [indiscernible] on the other hand, japan is complaining about the u.s. unilateral trade sanctions.

other countries are voicing that. and the chinese are voicing that. for china, they are trying to seek the moral high ground. multilateral -- a multilateral trade agreement is much better than trade sanctions. domesticre is a huge market and chinese huge demand can be another tool to use as bargaining power. betty: speaking about using tools, how effective do you think the wto will be in these tariffs disputes with trade tensions? course, the u.s. is the most powerful country in the world. i think the risk is that the u.s. may walk away from the wto. that is bad for everyone. i think the wto plays an important role in the enforcement of the fare rules for all countries. rules for all countries.

here.s the question will the u.s. ignore the wto? a lot of things being done are not acquainted wto rules. that is why japan is complaining about it and other countries are complaining about it as well. betty: thank you so much. don't forget you can always find, in-depth analysis and today's big newsmakers on bloomberg radio. number download the app, radio plus. this is bloomberg. ♪

betty: this is daybreak asia.

i am haidi liu in new york. david: and i am david english in singapore. when you look -- in hong kong. our next guest told us that some tightening of macro prudential regulations could be increasing the risk profile. >> it is hard to group emerging markets together. there are some big differences across emerging markets. there are some that are vulnerable on my watchlist. at the same time, the book of emerging markets are a much finer condition than they have been in the past. a number of emerging markets have adopted more prudential policies. a number have tried to cut down on their credit account deficit. when the u.s. started to discuss tapering, a number of emerging markets, which had told her abilities than, average -- haverabilities then,

reduced them. some of the risk that banks used to take by borrowing in dollars-ish shifting to the -- dollars is shifting to the private sector. more countries have put on macro -- companies can borrow in foreign currency and borrowing directly from corporate bond markets. so you see a shift of risk away from banks to individual companies in the corporate bond market. the sector is now exposed to more dollar debt. as u.s. raises interest rates, i worry there will be some risks in these sectors that we don't have good data on, that we don't have good data on, that we don't regulate as good as banks.

>> [indiscernible] when the bank goes out, you see where they are rocks are. [laughter] again, that was kristin forbes with kathleen hays. now a quick look at the business flash headlines. forecasting 1.6 u.s. dollars as mobile sales rise. fourth-quarter net income was $583 million u.s.d. says thergan stanley new global shipping rules will support oil prices for the next two years. it is taking brett perhaps -- brent to $90 in two years.

analysts see that boosting demand and triggering the need for more crude in general. prices are already at the highest level since 2014 as global supplies continue to tighten. betty: mitsuibetty: is close to taking a stake in a major offshore wind farm in taiwan. the japanese trading house is in it.nced talks to acquire is still in the planning stages -- it is still in the prestigious. david: 21st century fox says that block when murdoch plans on taking charge after selling assets to disney. achlin murdoch

plans on taking charge after selling assets to disney. ♪

david: 8:30 morning in singapore. why am i even bother looking at the weather. is always the same, hot and humid. , we'reeeks from now supposed to have a summit between president trump and kim jong-un. rethought.ng is my push through. it might do not. david english here in hong kong. betty: i'm betty liu in new york. you are watching daybreak asia. we just saw breaking economic numbers. month, a higher than expected 6.5%, quite a rebound from the prior month which was really -- which was revised

lower. perhaps we are seeing much healthier tech demand for these products out of singapore. electronic exports year near though did declined 6.9%. nonoil exports also surpassed expectations come 11.8%. expectations were 7.3%. remember, the prior periods are lowered. david: a good indicator of the global economy, forward-looking indicator, exports out of singapore. slightly higher on the s -- on the sgx. i have to take issue with your weather assessment of singapore. we've got muddy. we have month -- we have

muggy. we have monsoons. and we have sunny. [laughter] the ringgit holding a head of malaysia gdp. thely higher while dollar is extending declines. slumped, .4%,have led lower by industrials and financials. banks down under continue to have it rough. morgan stanley sees aussie bank margins narrowing in the next 18 months. one stock on the back foot in sydney is treasury winds, snapping a two-day rise, down nearly 9%, sliding as the company reported delays for some of its shipments being cleared

by chinese customs. callsow, we have four buy and three sells. you.: thank let's get to first word news with paul allen. paul: congressional leaders press china's top economic adviser to halt unfair trading practices at the start of a four-day trip to washington. met with the white house ways and means committee in .reparation for discussions

they have yet to say who will be prime minister. was italian newspaper reported they might rotate the post. and therade tensions future of the iran nuclear deal. president trump's tariffs on steel and aluminum are due to hit the lock on june 1 -- the block on june 1. the eu is negotiating for an exemption. the eu wants to salvage the iran accord despite the u.s. pulling out. cohenshington post says money fromsolicited qatar and others. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over

120 countries. david: if you are looking for a job, listen up. -- and allianzn are setting up a new venture in australia. they are looking to set up and higher 50 people in sydney. ofpass understand what kind people they are looking for. >> it is literally across the board. they are looking to hire and higher big -- an dhire big. big.d hire to serve the underserved postretirement market down under. betty: what are they hoping to achieve with this new venture?

why target the gray market down under? they are basically trying to get a slice of the poster -- postretirement market five. they reckon at december 5 billion dollars a year is -- up to $75 billion a year is shifting. there is not enough product out there to hit this market. they reckon they can make a dent into it. betty: the timing is interesting as well. is that why they are opening a new financial services now? >> absolutely. stewart reckons there's no better time than the present. they are coming with a clean slate. opportunityem the to hit that market. betty: thank you.

amazon is taking the e-commerce backyard,its hoping to become the middle man in the global flow of goods to the u.s. spencer joins us from seattle. is amazon looking to connect merchants with chinese factories? amazon is becoming more of a global or just ask company and this is part of that. they want to source it is directly from china, get as close to where the goods are manufactured as possible, and get it to the shoppers' doorstep where there are few layers and middlemen in between to win on cost and pricing convenience. it is basically just them taking that quick delivery model and supply chain and reaching deeper and deeper into it all the way to factories overseas. david: they are moving the supply-chain vertically, if you

will. larges a fairly cross-border e-commerce market a lot of companies are targeting it. >> right now, cross-border e-commerce, defined as a merchant in one country selling a product to a consumer in another country, that is growing at twice the pace of domestic e-commerce, meaning merchant and customer in the same country. so cross-border is growing at twice the pace of domestic e-commerce. it will be a $100 billion business by 2020. one in five dollars spent online will be a cross-border transaction. amazon is going after that. alibaba is going after that. wishes going after that. ebay is going after that. customers will go and be willing to transact with a merchant a broad. merchant onam a

amazon selling my goods, his is good or bad news? spencer: that is an interesting take. if you are a u.s. merchant the sources goods from china now and you oversee bringing them from china to the u.s. and then you send them to amazon facilities and sell them from there, you are probably a little regret now. you as anazon seeing unnecessary step in the supply-chain, unless you have some sort of differentiating thing, you're creating a branding your product. but if you are simply. picking up generic. it's in china and dumping them on amazon, you should be worried products in generic china and dumping them on amazon, you should be worried right now. david: ok, thank you. coming up, record profits, citigroup.bers with that conversation is coming up in a few minutes. stay with us. this is bloomberg.

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'etty: are chief north asia correspondent david engel is here to break down those estimates. david: we were expecting a letdown. investors had been selling off tencent shares to the tune of $90 billion since the record high back in january, late january, when the stock it that record high. there was pressure on the margins. even tencent signaled it would accept more margin pressure a favor longer-term growth in new businesses. like cloud computing, which they are investing heavily in.

even physical retail to keep pace a little bit with alibaba and their new retail strategies. those investors were bracing for the hit on the margins. the first quarter results came out well ahead of most estimates -- all estimates, really. 3.7 u.s. net income, dollars -- 3.7 million u.s. dollars. even with that, the results were not bad. let's give you a few bullet points before we get to our guest to talk about it in detail. gross profit margin in the first quarter was more than 50%. the analysts expected 47%. active monthly users, passing one billion for the first time. revenue rising 48%. that was higher than expected. the lands share of its business

is still in gaming -- the lion's share of its business is still in gaming. not necessarily out of the was yet on the margin pressure. surge 51%,costs did they will continue to invest in these new businesses. david: spending, that seems to be a concern. this first question in a bad and condescending way, but what is it about this company that seems to catch everyone industry analysts -- i mean, you keep getting this one wrong? [laughter] everyone under shoots. why is it so hard to track? all, they never gave full guidance, official guidance. second of all.

the top, fordicate the pc games. that pcht, they guided will continue to show some top com. they are pending approval process, so there will be some temporary heat in the mobile games in the second quarter. there's a lot of business line items for this company. in that sense, they never give any guidance. david: so you are clear for now. let's talk about margins. we will pull up a chart that tracks everything from gross income to operating profit margins. we track this over the years. from 70% to 50%, same thing here and same thing there.

50% does not seem to be a problem. margins, the reason why analysts have been modeling done is because they did mention subsidies on the payment and the continued investment in the content costs, which will come at of the cost revenue side. all of these use of investment in the digital content with the music in the video actually started to show some leverage because the substitution growth continues to exceed company expectations. that actually help overall. on the profit, they encourage us to look at the non-gap spaces because they did have gains they have to report. but on the non-gap basis, we are

removing that gain. growth 29%.profit mention they are looking at monetization foreign business investment they did poor a lot of money into, like video content and entertainment. how important is it for them to keep that revenue steady on the gaming site? -- gaming site? -- gaming side? there are a lot of things they need to get stability. >> that's right. we always mentioned tencent is quite far ahead in their thinking. they have been investing in upstream studios to secure the top nine. games, the, epic ones that they own 48 percent, which launched fortnight earlier this year.

they will be watching pc fortnight sometime later, pending approval. they mentioned that they have started the preregistration for --eign ipc in china in april -- for fortnight pc in china in april. one area where they relaunched miniany video app, -- video app, this is a defensive move, trying to regain user engagement. they are seeing some potential app.ts from tictoc tencent is a management execution. this is early in the face of the cycle -- phase of the cycle

where they invest into the video app. they mentioned it last night. they will leverage a lot of their professional content on music, on videos, to allow leveraging distribution platform and really attract user attention. betty: we were talking about wechat, reaching a billion users, and how they are almost saturated in china. now they are looking to overseas from our growth. can they replicate that success another markets? >> it is hard to say because they did try a few years ago to penetrate into overseas market, like in india. they are ignoring that expansion

plan a little bit. it looks like they are using the payment as another potential in southeastusers asia to continue to use more and more wechat. philippines, it is also to get philippines and their families and philippines to start using wechat. david: you know you lived in china and you know this market very well. david: it's interesting. that is question is about the ecosystem that wecha has createdt. it is an ecosystem itself. that is a difficult want to replicate overseas. not linked to international banks, etc. and alibaba pay has a lead. >> yes. -- it is all be

consumer choices at the end. we will see how they do in the overseas. china itself has a lot of opportunity, not just the payments come over time, the e-commerce services as well. thank you. you can interact with a of the subjects that we bring up here. there are the recent charge. analysis forey future use in future reference. tv .out, this is bloomberg. ♪

♪ david: -- ale says it will not risk in investing in iran because of your sanctions unless it gets a waiver. has large operations in u.s. and depends on american banks for financing. total was a first western oil company to sign deals to develop .ran's oil

david: an indian tribunal agreed to put a telecom company in insolvency. bonds plummeted by a record amount. seeking to recover about $170 million in unpaid dues from our, rcom.om betty: amazon is looking to sell business services directly to american customers, turning into a global logistics operation. it is perhaps a little too early for alcohol here in

the asia-pacific. two models of a rare 60-year-old mcallen whiskey will fetch -- whiskey will fetch record prices. they are offered in separate lots. each bottle carries an estimate of half a million u.s. dollars. it is 52% buyers premium. betty: if i worry was a drinker, i would be more excited about this. for was he lovers, they would pay that much money for it. -- for whiskey lovers, they would pay that much for it. i am sure it is a fine drink. david: hopeful it is. you would notse, take it. you are just keep it. david: yeah, why would you? [laughter]

you are not a whiskey person. rishaad: i like whiskey. but whiskey does not like me. let me tell you what we have coming up. ,e will be looking at tencent what the better-than-expected numbers tell us. lift onwe can expand a advertising. we will look at the earnings and the prospects. we are off to beijing to talk about trade talks taking place in washington, d.c. we've got the vice premier there at the moment. he is the managing partner. about.is whole spat is looking at prospects of interest rate hikes in the u.s. and how they impact this part of the world.

there you have it. that is the next couple of hours. betty: and a lot more, indeed, .ish now a quick look at how the markets are trading after the bull run we saw the u.s. carrying on those gains, up almost 100 points. pi up almost .5%. david: that is it for us. and haidi take the reins next. this is bloomberg. ♪

♪ david: did you always know you that you wanted to run fidelity? abigail: i never felt any pressure to. david: did your father say if you work hard, in 20 or 30 years, you will be the ceo? abigail: he was not the guy to who made promises to anybody. david: what do you think investors mostly want? abigail: everything. david: was it complicated growing up with your father and family being so famous? abigail: we were not famous at all. i mean, this this was the equity market in the 1970's, david. david: as you look at what your future will be? abigail: i think this is the moment that i have been waiting for. >> would you fix your tie, please? david: well, people would not recognize me if my tie was fixed, but ok. just leave it this way. all right. ♪