yvonne: 7:00 a.m. here in hong kong, live from bloomberg's asian headquarters. i'm yvonne man. david: our top stories, off-again, on-again. president trump says the kim summit should go ahead next month. yvonne: his comments following a second meeting between kim and president moon jae-in. all sides say they are preparing for singapore. david: the white house plans for a dte. facebook pushback from congress. marco rubio says there is widespread opposition. yvonne: jay powell make the declaration of central bank independence. he says policymakers are under growing government pressure.

david: a very good morning to all our viewers if you are watching out of the u.s. yvonne, lots of positive news on the weekend. hopefully gets us out of this rut. ourre going to get where starting point is for equity markets in asia pacific. it takes you back 12 months. we talked about it three weeks ago, a stake out and break out towards the upside, then we meandered back into the range. that is our starting point. if nothing goes to plan, we are going for a third straight week of losses across equity markets. 17349 is your level for the asia-pacific benchmark. yvonne: that is how we ended on friday, but over the weekend, we got positive surprises. the latest development out of trump saying the singapore summit could be happening, maybe june 12. hopefully they can get the stars aligned.

also data from china, industrial profits roaring back. we could be seeing upside this morning. david: 22% positive following the ppi. have a look at u.s. markets on friday, not exactly a tailwind going into this week. shortened trading session, volumes light, futures pushing a little higher. s&p futures up the moment. , jobs,a week in the u.s. manufacturing, gdp coming up toward the back half of this week. dollar slightly on the back foot, but we are headed for a seventh straight weekly gain. the year is reversing up a little bit. the other big story is the big drop in oil prices. it does seem like there might be a possibility that opec and friends might be considering scaling back those curves. we will see what happens. yvonne: that spread between brand and wti, the widest in

three years at about 8.75 at the moment. we could see further widening. take a look at how we are faring for new zealand, down to .2% there it the aussie just opening -- down about .5% right now. focus on the oil price. nikkei futures pointing a little positive. we have seen these risk-on moves in yen. could be breaking above 110 possibly. seoul futures could be a key focus given the developments out of president trump when it comes to how seoul is going to trade. 109.61 for dollar-yen. aussie, we did see a retrenchment on friday given the fact that the oil price, we do see that continue dislodge -- continue to plunge. kiwi at 69.23. offshore juan seeing strength this morning. so the bond market as well, a

lot of moves there with the oil price heading south and yields heading that way as well. take a look at the german company, the rally giving leadership concerns when it comes to italy as well as spain. we are seeing more political risk spread through europe as well, all the tenure yields not , 2.75 for thet aussie. u.s. 10 year yield down about five basis points, well below 3%. also take a look at what is going on in the first word news with haslinda amin from singapore. haslinda: italy remains without a government after the would be prime minister giuseppe conti failed with his choice of a eurosceptic finance minister. he withdrew saying he has done his best to form an administration. the prime minister rejected his choice of a veteran economist who has repeatedly called for

italy to leave the eu and has criticized germany's dominance of europe. isna's island province taking steps to combat speculation in real estate. the campaign may go nationwide. they are banning the flipping of property and demanding down payments of as much as 70%. the restrictions were announced by president xi in april. china plans to boost the islands economy. international airlines have been given more time to adjust references to taiwan which china insists is part of the mainland. air lines that have made changes, while others have received extensions. china says that all 44 carriers have to modify their references to taiwan. opec and its independent allies aren't said to have -- are said

to have concluded that the oil market achieved its rebalancing target last month as restrictions hit their goal of eliminating the global glut. inventory plunged in april 2 less than the five year average for stock tiles in developed nations. the cartel and other producers meet in vienna next month. is betting products from four companies and has imposed a diplomatic blockade just days before the first anniversary of the -- restricted the import of goods from saudi arabia, the uae, egypt, and bahrain ahead of june 5. 's economy expanded last year. 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'm haslinda amin. this is bloomberg. david: thank you. back to our top story this morning, the north korea summit might just be back on. president trump appears to have

confirmed that the meeting will happen, saying the u.s. advance team is making arrangements. yvonne: let's get to stephen engle, following developments of this back and forth. hard to track what is going on. is there more clarity or more confusion? stephen: a little bit of both. this is what i predicted on friday, that the chance for a summit was the same as thursday, even though between those days, trump had canceled it. this is maybe modus operandi for trump, throw confusion to get clarity and to get a consensus on what they are going to deliver from the summit. if you don't have deliverables, why have a summit? right now in advance team is in north korea for talks to find those deliverables. the white house said on saturday another team is going -- perhaps the same team -- going to singapore as well in case it does happen. let's parse the words of the tweet from donald trump over this weekend. you talked about clarity.

it is not clear what he actually means. he talks about the advance team, but he also talks about north korea has a brilliant potential and will be a great economic and financial nation one-day. kim agrees with me on this. it will happen. a lot of us are reading this as meaning the summit will happen. maybe this means north korea will become a brilliant potential economic and financial nation one-day. what is it? yvonne: this comes after the emergency meeting moon jae-in had with kim jong-un. what was discussed was to get kim jong-un farther to the negotiating table for the u.s. to say, let's do this again. that might undermine the relationship trump has with -- not that they have a relationship now, but certainly -- stephen: there is a growing sense of camaraderie, if i do say, between moon jae-in and kim jong-un. the second time the two leaders have met, only the fourth time north and south korean leaders

have met since the korean war ended in 1953, so this is significant. kind of a side note, by the way, they met again. on the north side of the dmz. kim requested this meeting and moon jae-in, who was left on the sidelines and sideswiped by donald trump. moon jae-in was just in washington and the day after that donald trump canceled the summit. even moon jae-in said he was perplexed by that. moon jae-in has exerted a lot of political capital to make this happen. it is what he campaigned on. yvonne: a neutral middleman? stephen: he wants peace on the peninsula. moon jae-in said kim once again pledged to completely denuclearize the korean peninsula. this is the bugaboo between united states and korea, what is complete denuclearization? united states does not have nuclear weapons on the peninsula, but kim jong-un wants a smaller u.s. military presence on the peninsula. kim was more concerned about

three things -- can he trust united states, one. will the u.s. end hostilities? and will the u.s. and south korea dan down there boardgames that they will regularly and will the u.s. guarantee the security of his regime. that seems paramount. david: is it still singapore? stephen: on friday he said it was. today is monday. that is three days. david: that's a long time. stephen: ask me again tomorrow. this is what donald trump had to say about that exact question. pres. trump: a lot of people are working on it. it is moving along very nicely, so we are looking at june 12 in singapore. that hasn't changed. happens.l see what stephen: again, we don't know. that was three days ago. it could happen. singapore surely hopes it will happen.

we might be getting some a fatigue. moon jae-in and kim have met twice now trump and kim might meet. moon and trump did meet in washington. now moon is suggesting again that he wants a trilateral summit with him, moon, and kim to officially end the korean war. yvonne: if south korea and china are both meeting kim jong-un twice, i am wondering who is running the game? is it china and south korea? raising questions leading up to the summit. stephen: china definitely has exerted influence, now meeting kim jong-un twice over the last month or so. kim jong-un seeking the advice and counsel of xi jinping or xi jinping offering his advice and counsel as well. the tone from pyongyang changed after the second meeting. yvonne: we are probably going to come back to you tomorrow and see if we have an update. stephen: four in an hour. yvonne: stephen engle thank you, our chief asian correspondent.

our top story on today's edition of daybreak for bloomberg subscribers, go to dayb on your terminals. also available on your mobile in the bloomberg anywhere app. make sure to check that out. president trump's compromise to allow china's cte to stay in business is under threat in congress. marco rubio has been critical of such a deal, saying a potential bill to block zte and other chinese telcos from operating in the u.s. would have widespread support. sen. rubio: i believe they don't have a supermajority. most members of congress have come to understand the threat china poses and there is a growing consensus to do something about what china is trying to do to the united states. this is a good place to start. yvonne: roz krasny joining us here. is there anything specific pending in congress were is what we are hearing from rubio just hot air at the moment? roz: i don't think anything is

really pending in congress yet. a lot expectation that maybe this is the issue that republican senators will go to the mat on in terms of dealing with president trump and the administration and trade policy. i think there is also a sense in the white house and one that they have tried to convey to congress that if the u.s. let re-spark thecould trade war that was brewing up until about a week ago and which was tamped down during the talks between chinese officials and the u.s. trade team. i think the trump administration , don't mess with this on this. there was a briefing on thursday with steve mnuchin and wilbur ross, the treasury secretary and commerce secretary. the message to congress was, turn down the volume, give us room, and trust us to make the

radio. is marco rubio right that a measure could go through congress with the level of support high enough to override a veto by trump? i think we are still a long way from that. coming up in the next few days, wilbur ross, going to china. he is going to have more talk on trade. the -- for the trump administration, zte is a really important element and they want to follow through with the promises they have made. david: is that trip by wilbur ross the trip to watch? what are we watching beyond any tweet from president trump? roz: probably some more tweets from president trump. i think in terms of action on the trade front this week, wilbur ross's trip will be the key one. there have been some reports in washington that he is a little bit on the outs in terms of president trump lineup of trade negotiators.

the fact he is going for three days reportedly may talk about some long-term agricultural deals and possibly some other elements. i think a week from now we may know a lot more about how the u.s.-china trade talks are really shaping up and whether there is a commitment to follow tradeh on the tenor of and end of the trade war before it really began. it will take a few days for that to come to light, i think. yvonne: we have heard from trump's lawyers. giuliani has been talking about the russian investigation again. what is he saying now? roz: rudy giuliani, on television today, two more appearances. he talked about the rigged pro robert mueller. he kept up president trump's talking points, a lot of the same rhetoric.

gateng about so-called spy , talking about 13 angry democrats. he even said some of the lawyers who were working for special counselor mueller had gone to hillary clinton's funeral. he meant hillary clinton's victory party -- or non-victory party in 2016. giuliani and trump are really pushing the rhetoric. they are, as my colleagues reported earlier this week, kind of talking into a vacuum in that we hear nothing from the special counsel. giuliani and trump get to set the agenda. president trump was tweeting again today and there is a sense that the more they can talk and kind of undermine the efforts of the department of justice and people's faith in law enforcement, that it may give them cover if they ever try to really strike out at special

counsel mueller. it remains to be seen what the endgame is, but polls have showed that americans believe the investigation is politicized and i think that is exactly what the administration wants us to think. outd: thank you, ros krasny of washington. coming up, details on what could be the world's biggest stock market listing. plus, another ipo that caught the eye of china's internet giant. yvonne: up next, we speak about trump's change of heart in the kim summit means for fx. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man. david: and i'm david ingles. the dollar closed out next week, the longest winning streak when you look at the weekly basis going back more than three years.

italy and spain over the weekend continuing to play the euro. emerging markets, fairly stabilized as we headed into last weekend. let's bring in sean callow and dive into this. pleasure to have you. very good monday morning to you. what do you think the bigger story is these first few days, the euro or e.m.? is probablyhe euro the one that is most interesting, given we have been hitting six-month lows. now spanish politics is also in the headlines, concerns there, so a big bump in yields recently particularly in italy. fresh news over the weekend. i think the market is deciding, how far do we push this? actually extend qe beyond this year, so that is a debate that could come back into

discussion, whereas a few months ago when it was at 1.25, it was all about when will they hike. there is a fair bit to digest, so that is the one i am watching most closely. a little bit of a pop at the opening on the prospect of new elections, seen mostly as a positive because the markets hated that coalition that was forming. some interesting levels on the euro. david: broadly, what is the call this week on the dollar? do we see more short covering or do we end this rally at 7, 8 weeks? >> look, it is probably a little bit -- across the board, i suppose it can continue to gain against the euro. we are not that keen on sterling either. the upside there. overall, we are little less optimistic on the dollar then we were even a couple weeks ago, certainly before those fomc minutes, which do change the dynamic of it. if we look at the yield on what

is priced in in terms of fed hikes over the next 12 months, you have got three hikes by about june next year priced in. it was only a couple weeks ago that that was about half a rate hike higher, so it was pushing 85 basis points or more. there has been a fallback in yields that probably continues, but only gently. we will watch the core dce deflate this week, and of course payrolls. yvonne: does that give relief when it comes to e.m.? iner we saw the routs argentina and turkey as well, is there is still the risk of the pain spreading? or is that subsiding now? >> i think it is going to be ongoing. the june rate hike from the fed is fully priced in, so it is more a case of how far will they go. we did get a little relief from

the fomc minutes, talking about changing their communication as far as where neutral is. they are getting closer to neutral and might have to consider a pause for maybe it's next year that you have extended. there is potentially a little pressure, but the ones under the greatest pressure in terms of having an economic situation, there is not much relief for them particularly. turkey, and in terms of contagion, indonesia and india have been suffering quite a bit from those regional jitters. in india's case, particularly on oil prices, so that is another one to watch closely. yvonne: what has been missing in this conversation is what is going on with china. we are seeing the yen pretty resilient the last couple of weeks despite what we have been seeing in e.m. data seems to be good, momentum and growth as well. is china still going to be the anchor of market stability for fx? caseah, that is our best

that they are still prioritizing currency stability. there has been no sign that they are looking to use their currency in terms of using it for trade advantage with the ongoing negotiations with the u.s., which have been hot and cold. the basic outline seems to be taking place, that china potentially had win over the reduce theiring to trade surplus with the u.s.. they are focused on increasing their imports from the u.s. in areas that suit them, the products they actually want and probably would have done anyway. as far as using the currency, i think china has shown itself particularly in the global crisis that they like having a stable currency at a time there is pressure on other currencies. it makes it more attractive. yvonne: we are going to leave it there, sean callow, senior strategist at what past -- at

westpac banking. plenty more to come on daybreak asia. this is bloomberg. ♪

yvonne: the latest business flash headlines, qualcomm is reported to be meeting regulators in clearance for its pursuit of an xp. reuters says they will talk to beijing before wilbur ross arise for trade negotiations next weekend. qualcomm says it is cautiously optimistic the merger will gain approval. david: some of china's biggest tech names are buying into what promises to be the mainland biggest ipo of the year so far. we are hearing from affiliates alibaba and tencent investing in the company. it says they are spending the equivalent of $2.15 u.s. a share on 20 million shares ahead of the upcoming shanghai listing.

still ahead, central bankers around the world are calling for independence from politics with fed chair jay powell leading the charge. more on what was said, coming up. this is bloomberg. retail.

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david: 7:30 in the evening, sunday in new york. we are approaching summer quite quickly. it is dry, the holiday weekend, markets closed monday for memorial day. futures pointing slightly higher across the board, dow jones, s&p and nasdaq off. yvonne: and it sure feels like summer in hong kong. 7:30 a.m. monday, looking at the first major market open. i am yvonne man. david: i am david ingles. you are watching daybreak asia. let's get you an update. first word news with haslinda. trump seemsesident

to have confirmed the historic summit with kim jong-un is back on, tweeting the u.s. team is in north korea to make arrangements. his comments came after jim met -- kim moon jae-in for the second time in a month. they agreed to push ahead with commitments made at the first meeting. mr. trump: a lot of people are working on it. it is moving nicely. we are looking at june 12 in singapore. movingsn't changed, and along pretty well. so we will see what happens. one-time presidential candidate marco rubio says a potential bill to ban zte and other telecom companies from the wide support in congress. most lawmakers understand the threats posed by china and the growing commitment to do something about it. rubio was responding to

president trump's proposal to remain in business after paying a $1 billion fine. growth, snapping a slowing streak that went back to october in china. profits jumped 22% from a year earlier, falling -- following a 3% gain in march. the national bureau of thisstics said topic -- was as improvement came in the steel and chemical sectors. president putin says japan must be patient with a territorial dispute dating back to world war ii. speaking at a meeting with prime minister shinzo abe, said the solution to the islands of the north would go on. soviet troops seized the island , and this of the war has kept russia and japan from signing a formal peace treaty. >> be patient and looking for a solution that would meet the strategic needs of both russia

and japan. it must be expected by the people of our countries. haslinda: 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 haslinda amin. this is bloomberg. yvonne: thanks. we are counting down to some of the major market opens in the asia-pacific. let's get to sophie kamaruddin with more. finally some news to hone in. sophie: let's not count our chickens before they hatch because we are looking at a .iserable may a third week of decline, and looking at the futures board, we are set to see softer footing for asian stocks, given the trading we are anticipating. the energy sector will be a drag given oil's tumble. we have china's solid factory output, and geopolitical profits to give a more optimistic view. e.m. futures are higher,

indicative of that. yen on the in on the terminal, 109.61, recovering some ground when it fell the most since february. the dollar-yen will be capped by the 20 day moving average around 109.85. the players that want to take big positions before the key am. data, jobs and i david: there are lots of risks, and lots of reasons to be hopeful. talking about spain and italy. yvonne: how much political risk is being factored into the euro, some say look at e.m. currency. sophie: when you look at how it tracks over the course of the year, look at its performance just this morning. traders, they are tallying situations as a plus, given the rejection of the eurosceptic as finance minister in italy. there have been fresh elections, and the five-star movement may want to impeach the president,

adding more to the scene, then you have movies on friday saying they put italy on a ratings potential review for a downgrade. i get a better sense of who will hold positions in italy's government. the euro could be under pressure. year to date, it is looking at levels from the right now, given the dollar's performance this year, that is something to consider. david: we are going down for an eighth straight week. the uncertainty is a change from what we didn't want, but that is a good thing. yvonne: no government is good news, apparently. ,avid: thank you so much sophie. let's look at china. we talked about this earlier, massive deals coming online, largest ipo since 2015, it has won the backing of some of the top tech companies. tom mackenzie is here. who is buying into this? the b.a.t. group,

baidu, alibaba, tencent. they are buying 1.20 8 million shares of these. it underlines the role of is particularly tencent and alibaba with the clouds they have. they have. there is interest in fax gone -- in foxconn industrial, which will be listing. it is a unit of on high industrial position. it is the number one assembler for apple, but what foxconn wants to do, they plan to raise $4.3 billion u.s., that they will turn into things like 5g wireless and smart manufacturing, so it is an area that ends up interest in the likes of alibaba. also of interest to a unit from the railway corporation, as our china life insurance. this is one of the ipo's that will be gaining much attention this year, planning to list in

shanghai. yvonne: we are getting close to what could be the largest ipo since 2014. what is the latest on the xiaomi filing and listing? tom: we are being told xiaomi are going to ask for permission to file on june 7 with the hong kong exchange. they then hope to start planning the pricing of this toward the end of june. they are looking at a valuation of about $60 billion to $70 billion. they are hoping to raise $10 million. xiaomi could be the blockbuster ipo this year, the largest since 2014. a lot of interest. there is a warning. the terminal shows similar listings, and you talked about this on the show in hong kong, the tech companies and how some of them have not fared too well. downng down, the group

48%, one of the standout is china literature which has done pretty well. they are up 27%, so we will see if xiaomi can meet the high and book the trend in terms of tech ipo's. it is likely to be a blockbuster . when they come to its pricing at the end of june. david: looking forward to that. elsewhere not much because of the environment. tom mackenzie, looking live from beijing. now australia, talking ios shares. bottom ofews, the your screen, getting some news from blackstone, 5.25 a pop. give the math, that is about -- yvonne: 15% premium. david: the offers from atckstone, all caps proposal 5.25, so that is the breaking news for you. that is the pricing on the screen. we will see, get more details on

this one. maybe directors might support this one. it seems to be a good one. some of the world's leading central bankers are making concerted called for their independence to be safeguarded. they agree that political interference is growing. speaking of stockholm, jerome powell said the pressure is one -- is rising. challenginglearly a moment for central banking. trust in government and public institutions is at historic lows . in this environment central banks cannot take our measure of independence for granted. yvonne: our chief asia economics correspondent joining us on set. what is the biggest concern? enda: when it comes to central banking independence, it has been upset the last few decades and has helped with the policymaking process. it is not universal of course,

not in every big economy. china is not independent. but what has happened the last few years is the shift towards populism has given concerns about corporations interfering in central banks and public trust in central banks is low for various reasons because of the crisis and the follow. there are those who think central banks could have acted better. so the end result is there are some countries in the world, turkey being one, giving an example that want to talk with central banks. when the rateunny environment is on the down, no one start -- sort of want to metal with things but when rates are going up, government want to exert influence. christine lagarde chimed in. what did she say? tom: -- enda: with the concerns especially in turkey, it has been accepted process this

practice to agree with this policy of central banks. they should let policymakers set interest rate on their own and steer the economy. they are muddying the water with political interference, causing publications that end up with populist policy measures that ultimately cause pain down the road. that is not just -- there is concern of many people. i would say the counter argument is there are no central bank that are not independent. china is an example. many voices are calling for it there. yvonne: and the fed, are they also at risk of losing the independence given what we have heard from president trump recently, the weaker dollar policy? enda: that was part of the campaign. people feared the trump campaign might impact the fed. he reappointed the chairman and several on the board. what he has done, he has

reappointed stock standard middle-of-the-road central economists. jay powell is pretty much -- yvonne: and the others. enda: so in case the fed is going to go one way or the other all of a sudden because of mr. trump's outlook on the economy, it is proceeding that -- it is for seeing a steady past. once politicians take on central banks, you don't know where it will go. david: no luck are based on economic sometimes. thank you so much, and the . rrent, our -- enda curran we have an interview with the alaska governor who said his take is key to cutting the trade surplus china has with america. that chat is coming up next. this is bloomberg. ♪ is bloomberg. ♪

yvonne: we are counting down to asia's first major market open this morning. the markets memorial day weekend in the u.s., but we see firmer shares in japan, the nikkei futures up, reducing the fall from the dollar-yen, weakness coming through for the yen. david: a lot of that comes down to where the dollar goes from here. we are getting a lot of data from the u.s. this week. we are getting revised first-quarter gdp numbers out wednesday about the u.s., then you have i asked them manufacturing and jobs from -- you have ism manufacturing. expansion youeld see, this is on your gtv library. it takes you all the way back to 1950. it is just to takeaways here.

it is the second longest in between recessions. it makes you think we are nearing the end of the cycle, but it is the slowest pace of growth as you can see at 2.3%. here is your clinton years very that is where we are currently. the only difference and people talk about the business cycle being closer to the end of that, what is not happening is it is rolling over from inflation. the new normal people talk about, it is clearly what has been happening since the global financial crisis. have a look at gdp coming out towards the latter end of this week. yvonne: and bloomberg economics laid it out rightly so. you have these two economies showing so much strength, china and the u.s., and signals that em might not be seeing that they get crisis has some were saying. we will watch the china pmi data out later this week, closely focused here, the official

figures due out wednesday. 51.4, sonsus number at this could be a steady kind of growth picture we are seeing in china, perhaps growth momentum could continue. we saw that kind of indication in the weekend. it would be industrial profit numbers. you see the profit rebound once again after this bottoming out of the ppi prices, and we are seeing these two very much linked, and certainly this will bode well for the chinese corporate sales, help alleviate the debt burdens they do have. we see positive signals when it comes to south korea export growth, the first 20 days in may, that jumped 15% with property investment recovery in china, that is supportive for ppi prices. david: and the marriage of being first quarter, soft data, moving right now. have a look at charts here. gtv is the function. there is one that i brought up.

browse through that, you get a sense of what we are talking about today. it is in the charts for your future use. gtv on your terminal. yvonne: plenty more to come on the trade front. we will be speaking to bill walker. he has wrapped up a trade mission to china, promoting a range of businesses from food to energy. he talked to tom mackenzie how deals can help ease trade tensions. >> it has been about the relationships i have established over the last four times i have been here. now we have businesses over here. we have a microbrewery bringing their beer over. we had that last night. we had someone makes baby food very healthy, seafood. that is part of it. we had a lot of tourism, fisheries. we have people to fly over the life king crab from alaska to china. they are on the strip. timber mining, educators, sports

folks looking at the opportunity to have chinese athletes train for the winter olympics in alaska for the 2022, so we have a real mix of players as well as lng, which is sort of the significant piece. tom: are you able to give a rough dollar amount as to how much all of this trait with alaska, between alaska and china , could help to reduce the surplus for the u.s.? be the single most significant by far because most are not in the realm of $10 billion ranges, so we are talking $10 billion just on lng before you get into seafood, which is probably $11 billion. we could triple that. hundreds of millions of dollars in the mining, no question about that. key toly think we are resolving this trait to visit. we will not do it all ourselves. it will be a big left over.

tom: tell me about your conversation with the vice premier. what do they want to see from the u.s.? alaska andthem from the u.s., going to make that happen. some things you cannot do by phone or letter. you have to sit across the table and make it happen. what he saw, we need to keep doing what we are doing. we are putting together this $43 billion transaction to bring $8 billion to $10 billion of lng over to china every year, and we believe it is a 100 year supply. talking almost $1 trillion of product on the u.s., from alaska to china. that is the kind of deal that will get us off this roller coaster of tariff challenges back and forth. tom: you have been talking to the commerce secretary wilbur ross as well. what have you been hearing from the commerce secretary, and how do you think his job will be

when he is over here? talked we talked, and we last week, we talked about the lng project, he did not stop. he said what else can you do? i say seafood, talk about that, ining, i would throw my alaska a week ago. the goal for the mine, 100% of that goes to china. mine, 100% from the of that goes to china. areurces on the ground, we 7.5 hours by direct flight. we are working on those hard, and also seven to nine days by direct shipping, so we are the closest u.s. port state by far to china. david: that was bill walker, the governor of alaska, talking with tom mackenzie. deadliest catch comes to mind. yvonne: getting hungry with all the crab. david: sunday evening in the u.s., food is an idea of what

you might be craving. don't forget about the tv function. you can see that interview, catch up on past interviews and dive into any of the charts, the functions we talk about on the show. yvonne: become part of the conversation, send us instant messages during our shoes -- our shows. we have luke ellis coming here at 8:00, talking about the hedge fund industry. and for bloomberg subscribers only. this is bloomberg. ♪ . this is bloomberg. ♪

you are watching daybreak asia. yvonne: let's do a quick check of the business flash headlines. xiaomi is that you want a june 7 approval to list in hong kong. they could raise $10 billion u.s.. the smartphone maker hopes to price the sale next month if the application is given the green light. but the timing could slip depending on the volume of information demanded by the hong

kong exchange. they could value $60 million -- billion. david: the australian bank wanted to make sure no one suffered damages after the nationwide outage. this affected the retail and banking. they say it was an incredibly rare event and no personal data or -- were compromised. they are asking customers to compact -- contact them about the business. bardier is meeting growing demand for luxury business jets. they will have optimized wing and all new rolls-royce engines. they will have a range of 660 nautical miles, enough to fly hong kong to london nonstop. their biggest is this just is to launch this year. david: the box office force was weak for disney's latest offering. territories,nd 55

ringing in $148 million in total. forecasts.rt of the worst opening weekend in fact are the four rebooted star wars so far. they hope to see it go through the holiday weekend. yvonne: counting down to open in japan and south korea. futures and trading, futures were actually firmer here, given we have seen retrenchment with the dollar-yen. the wind is coming through from the japanese currency. that could provide support for equities here today. at thed see a 45% pop open, but a lot to focus on not just with geopolitical tensions that are using today but also oil prices. david: oil prices obviously, the narrative there is we are coming back. in april, it was a time when the

market did rebalance, backing up in oil prices. coming up, opec, doesn't mean they will take their foot off the gas when it comes to the cuts? a lot more coming up. the next hour coming up, a big guest coming. we talked about star wars. man group, the ceo of joins us live exclusively. a lot to talk about. china, with a plan to do with the license, where they are on strategies, all these other things. the macro environment, how things improve globally in the first quarter, because we are sort of meandering as far as equities are concerned into the second quarter. yvonne: they are seeing rising rates and volatility. at volatility could help hedge funds. also the strategy will be key after late last year they got the approval to start their onshore hedge fund in china. the first foreign company to do so.

david: the market, if there is any playground in the market that traders will want to frolic in, it is the a share market. more coming up in daybreak asia, the open as well coming up. this is bloomberg. ♪ this is bloomberg. ♪ our phones are more than just phones.

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david: at :00 a.m. in hong kong. i'm david and gless. yvonne: i'm yvonne man. energy and focus after oil's biggest fault in 11 months. david: they say the colette has been drained but plans to raise output faces opposition from other producers. president trump says the senate should go ahead and a u.s. team is talking to north korea. david: he spoke after a second meeting of the two sides and they are still preparing for singapore. ♪

mixture ofve got a good and bad news from what we've got out of the weekend, and good china data, summit data, summit still happening june 12. taking a look at the euro stories, that's act tracking as well as oil prices. good news, bad news. david: is like an even counter raid. we are closed to open moderately better. on the balance of risks, italy was a big story and then you have thanks ticking off in spain with the socialist part of their. there. there's trade out of hong kong later today. it gets heavy toward the latter part of the week. i is a manufacturing.

lots to consider of course. we will get you the open of markets and just a moment but first word news with paul allen in sydney. italy remains without a government after the would be prime minister failed with his choice of a eurosceptic as finance minister. done headw, saying he is best. sergio romanelli rejected his choice and a communist who called for italy to leave the euro and has criticized germany's dominance of europe. china's island province has taken steps to combat speculation on real estate and the campaign might go nationwide. the lengthy residency is banning flipping of property and demanding down payments of 70%. restrictions were announced by president xi as a plan to boost the economy. international airlines are given

more time to adjust preferences to taiwan, which taiwan insists is part of the mainland. they have received and applied for extension. china says all 44 carriers are asked to modify references to taiwan will do so. opec and its allies are concluding the oil market achieved its rebalancing tied for month as output restrictions hit their goal eliminating global glut. five-year plunged to average for stockpiles. cartels, russia, and others meet in vienna next month. qatar is banning products from four countries demanding a medic blockades. the ministry is restricting the input or sale of goods and saudi arabia, uae, and bahrain.

resort tomanaged to it faster than its neighbors. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. yvonne: thank you. look at your original benchmarks. spending lower, but admits -- a mixed pick and equities. developments coming through. let's get the latest with sophie kamaruddin. sophie: a decent day for southeast asian markets a look at the asx 600, off by .2%. energy stocks are weighing the most on a benchmark, down 1.4% as oil continues to slip. brent sliding for a third session. retreating from the 79 handle. even with this, goldman sachs sticking to its bullish. $82 a barrel for crude this quarter.

venezuela, as well as iran. let's take a look at korean stocks that tended to move around the geopolitical developments. whenfell 90% on friday trump scrapped the summit with ken. here's how it fared with it looking like stocks are charging. >> in the elevator, there we go. one direction. story thiss our top hour. president trump appears to have confirmed a meeting will happen, saying his u.s. advance team is making arrangements. yvonne: stephen engle's has been following developments right now. elevators echo up also -- that go up also go down. it's hard to pinpoint which one is the actual true sentiment

other than there is clarity and confusion with all this. donald trump canceled it abruptly, then moan and kim met again, only the fourth time they have met since the korean war trumpin 1953, now donald is alluding to the fact is back on again. look at the tweet. you have to parse the words. does he mean it will happen, meaning does that mean the senate will happen or does that mean, alluding to the sentence before, he believes north korea has brilliant potential? it will happen. kim jong-un agrees on that. many are reading this as the fact maybe june 12 in singapore might indeed happen. what happened over the weekend was significant but has become a sideshow. kim and moon met again at the dmz, this time on the southern side. they requested this meeting and

moon, a lot of political capital invested in this, obviously obliged the invitation and can once again pledged to completely denuclearize the korean peninsula. yvonne: any more clarity on that? stephen: does it mean a gradual denuclearization? or what the united states calls, complete, verifiable?, and irreversible denuclearization? that's what they want to nail down the deliverable. the singapore summit will be about the optics, the deliverables. those have to be arranged before hand. david: they can't just me and hug. it is good optics. they met twice already. stephen: there's a lot of different summits going on. china has met him twice now. mood has gone to washington. , or atre is a pledge

least a proposal for moon jae-in to have a trilateral summit after that kim trump summit. david: i'm getting it mixed up. tophen: a trilateral summit officially end the war and have a peace treaty if the singapore, or maybe kim trump summit is successful. david: is it singapore, though? stephen: let's hear from donald trump. this is what he had to say, three days ago. here's what he said. taylor: a lot of people -- president trump: a lot of people are looking at it. we are looking at june 12 in singapore. that hasn't changed. it's moving along pretty well. we will see what happens. stephen: again, elevators go in both directions, ok? as long as it doesn't go sideways remain state he. david: stephen engle, thank you.

that's at the top of this edition of daybreak. very quick look at that. db go on your terminal is the function for that. it's also available on the mobile and bloomberg anywhere app. yvonne: certainly the key focus as we count down to june 12. in the meantime, look at the markets. under pressure after oil posted a big drop. withlitics looming large the kim summit back on for now. let's bring these questions to our special guest host, luke ellis. he manages $112 billion in assets. welcome to hong kong. listen to the back-and-forth you hear when it comes to president trump and kim jong-un, what are you telling your clients when it comes to risk free markets? luke: i think you are constantly

looking for the signal as opposed to the noise. there's a lot of noise and you have to look at the things that actually happen rather than the talk. the reality is that the on/off is noise and it creates short-term volatility but not enough to trade around. you are looking for, when does he do something? and try to ignore all the pronouncements and the tweets area that -- tweets. they don't move markets. yvonne: we have a rising rate environment, volatility in the picture. witnessing the second highest one a comes to net flows. is this a turning point for the heads -- hedge fund industry? luke: it's been in pretty good shape so it's an all-time high of assets. it closed a year before. 2016 was marginal in its outflows but given we have retained performance in the hedge fund, assets increased

with a bit of flows. with bond yields where they are and basically creeping higher everywhere, slowly but creeping higher, with equity markets at high valuations, investors know they need something else to make their expected return. int's where hedge funds come in terms of helping them are it achieve their goals -- helping them achieve their goals. david: what do you make of the environment now? a lot of people were calling for a correction and then people were surprised. things have meandered since then. nothing happened. do think conditions have worsened? are they stable? where do you see them going? luke: i think we have a couple of big things going on that hasn't changed. rates are jerking higher in the u.s. and equities are gradually drifting higher based on decent growth.

equities can perform with decent growth. the concern is, when do we get a change in the environment? when do they get high enough to cause a collapse in growth? most investors spend too much time investing -- expecting tomorrow to be different than yesterday. most of the time it's the same thing. in february, clearly december, january we got ahead of ourselves. we gave some back in february which was a weird technical thing, but people with too long the same. you can argue friday and the bond market, you got a recently sharp selloff. because somebody people were short. the trend is still heading higher and gradually higher in equities until we get significant inflation. david: do you think we are towards the back end of the repricing process? when you look at the feds and the tightening cycle, are we

actually closer to the end because of no inflation? then they actually think? luke: we are closer than we were at the beginning, but whether we are at the end, i expect it's more likely this goes on for another 12 months then we are going to get something different. the fed will keep raising rates until they see a change in environment. u.s. growth is pretty good. the second quarter is weaker in europe. there has been a few disappointments. people got caught up in the idea european growth would be very strong. u.s. growth is pretty good. asian and chinese growth is pretty good. that provides a decent backdrop for equity markets. david: italy and spain, as well in the mix. and china. luke ellis will be staying with us. we talk more about investing. let the appetite for mainland

shares. what does it look like ahead of inclusion in a few days? yvonne: we get the latest on opec as well as oil has the biggest loss in months. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man. david: i'm david and gless. a senior australian official says a rumbling u.s. china trade dispute is casting a shadow when you look at markets in asia. and the efforts to go -- open up global commerce. the officials were speaking on an asian economic forum over the weekend. tom mackenzie has the latest on what happened area just outlined for us with a key concerns are for opec. this is mark colton, the

assistant trade minister for australia highlighting some of the ripple effects of this trade dispute between beijing and washington. 21 nations gathering and pop on new guinea and the big focus of this forum was to work through some of the systems to improve free and fair trade. mark colton saying overshadowing these discussions as he describes the elephant in the tradehere these discussions between the u.s. and china, particularly the path these negotiations are going to take. this reinforces the view that the concern from investors and policymakers is you are seeing a disconnected and a lack of coordination out of washington when it comes to this trade relationship with china. the china position seems clearer. they are going to open up their markets and speed up some reforms as a result of chinese pressure. but the u.s. stands is harder to read and that is causing some confusion and anxiety.

if there is a trade war and exports from china fell 10%, that would result in a loss to gdp and some of these asian nations of about 1.1% according to bloomberg economics compared to a drop of 0.3% in china. the asian nations would lose out more than china and that was a concern that was talked about at this forum. yvonne: despite your concerns, we sought decent data when it comes to industrial profit. tom: that's right. interesting these numbers coming out over the weekend. industrial profits in april ticking up 21.9%. we've got a terminal chart that shows these profits. from 2016 until now and the correlation, or lack of, with the australian dollar. the commodities trade a big part of this. all of that fed into the industrial sector. the aussie dollar ticking up a little as profits were down in

the second half of 2017, but grinding higher in 2018. that's a positive of support for the aussie dollar. they were higher margins. you see more inflation, as well. the chemical sector and steel sector and auto sector strongly performing slightly more strongly. overall we have seen industrial profits in china take up 50%. -- tick up 15%. pretty reasonable in china. we should not discount that slow down as economists will incur in the second half. yvonne: tom mackenzie joining us from beijing. still with us is luke ellis. you are the first foreign investment company to start off and onshore hedge fund in china wholly-owned by man group but we have seen a lot of changes and

deleveraging. has that affected fundraising? luke: not really. that's a product sold to onshore chinese clients. there's lots of money in china looking for investment products. if you deliver something slightly different, there is interest domestically. it's interesting listening to that last piece, having just been in beijing. i would say the sense of growth in china is positive. they feel like, there's a lot of evidence that the fluff in terms of numbers has been squeezed out. even if we print another 6.8, which looks like the same growth number we see before, it looks like this is real. some of the ones in the past, i do remember being at a conference a couple of years ago where the central bank told me what growth would be at the end of the year. i said that's exactly what we will print. this time it looks pretty clear

they are allowing real data to come through, which is why we see variants in different parts of the country. david: this might be a simplistic question, but what the chinese investors like? what are they craving for? the honest answer is investors everywhere like performance. as it managers get over complicated by talking to about strategies in enormous details. clients are looking for performance. they are looking for returns. that's what they are after. if you have all of your money in the chinese stock market, the only source of return is growth in china. lot ofve got bonds -- a the attended of -- alternative to bonds in china have been proxy guarantees from banks and for the government. there's a lot of pressure to take those products out of the government, and that's why

people are looking for diversifying investments. yvonne: after the bear market and bonds in china, many banks had to cash out money parked in external funds to mediate what is going on with pboc as they raise money market rates higher. that's a key source of funding. is that a long-term trend? luke: i think the chinese government, as part of that process of mixture of liberalizing and normalizing markets, is clearly trying to get the bond markets in china to be a more normal market. in the corporate side, we have seen a few defaults, two last year, four this year. it's a stepwise process to get to a place where there is sensible default risk in bonds. that becomes interesting he goes you can start to make judgments between things in the same way and different products that are being sold to the banks there. there's a clear process to drive

them to be market-driven products rather than based around guaranteed things. that's all healthy. i spent a bunch of time with regulators last week. they are trying to move things forward in sensible steps. they've come a long way. there's further to go. it takes a lot of steps to make sure nothing breaks along the way. they are trying to get to normalize by markets. david: and open access to the markets. there is a pent-up demand outside. speaking of products, you guys received a mandate. what have you done with that mandate and what you plan to take that? back in september was the first time you were allowed a wholly owned entity in china as a fund manager. we took advantage of that. we've been present in china in some time under a different

structure of regime. we run a bunch of cta for about four years and china is one of those markets where, i think of asset management as an import and export to ms. six -- business and domestic business. in the u.s. and europe, we do both. import, where we bring international products to clients, exports orbited local products to international clients and businesses. china is another country to do that. i don't think we will have a domestic tied business. in china, there is a big opportunity to offer investment products on chinese instruments to chinese clients. yvonne: mentioning the opening up, you have all these stock indexes. hong kong and china used to do their own thing but now you can see capital moving from one market to another market. how does that change how you view the market? do you have to watch closely

where the mainland money goes? gradual opening up of shares and the inclusion of msci, another small stuff going on coming up. the potential flow of foreign money is significant for the chinese shares but the reality is, domestic money will drive the outcome. matter, but flows at the moment chinese flows out of china are restrictive of the things driving domestic shares. david: still the same powers within the markets. you thinkf msci, do there is enough information out there in terms of research and what have you, corporate governance? as they open it up, for investors will be looking at the pool of data and quality research to make informed decisions. do you think we are at par already? are we moving close to that? to decide what

you are comparing it against. there is enough information to build a well constructed portfolio. david: are you satisfied? luke: we find we can generate significant output in china in both asia and here in hong kong. the bit of it is, it's not perfect information. but when there is perfect information is sometimes harder to generate output. we don't mind things where you have to do work to understand the numbers in order to do research. that's an opportunity for active fund management. china seems a perfect market for active fund management for a long time to come. yvonne: are long short strategies still the approach? shorting opportunities have been getting more expensive. luke: shorting is a challenge. the reality is, talking to the cso last week about increasing the amount of hedging

instruments. the trouble is what happened a couple of years ago was people to the hedging instruments and used to take some leverage that's that cause -- leveraged bets that cost volatility in the market. it's a bad thing in a market. hedging is a good thing. but at the moment, hedging is a challenge. activeity, it's about not only in the equity market, and then in the futures market, which you can't export out of china hasy, but liquid futures on interesting things that are diversified to the rest of the world. in those markets you can trade long and short. david: it's a process. as you mentioned, three years back. let's see what happens. luke will be back to talk more about china and goal boss, as well. which one does better, depending

on which function? we will try to get the answer from luke in a moment. he rejoins us on my with think technology is best when building a portfolio. this is bloomberg. ♪

yvonne: 8:30 in singapore. cloudy picture at their half hour from the open. latest from the white house, this june 12 summit could still happen. some goodwill on both sides this morning. i'm yvonne man. david: i'm david ingles. you are watching daybreak asia. let's get you updated with paul allen from sydney. trump seems to have confirmed the historic summit with kim jong-un is back on, twitting the u.s. team is in north korea to make arrangements. this came after kim met moon jae-in for the second time in a month. they held talks on the north korean side of the jamar kaisha

and agreed to push -- of the demarcation line and agreed to push ahead. trump: it is moving along very nicely. we are looking at june 12 in singapore. that hasn't changed. and it's moving along pretty well. we'll see what happens. paul: one-time presidential candidate marco rubio says a potential bill to ban zte and other chinese telecoms companies from the u.s. would have widespread support in congress. he says most lawmakers understand the threat posed by china and there's a growing commitment to do something about it. rubio was responding to trumps proposal to let cte remain in business after paying a $1.3 billion fine. china's industrial profit growth accelerated, snapping a street that went back to october. profits jumped 22% in april

following a 3% gain in march. the national bureau of statistics says total profit value tops the equivalent of $90 billion and says improvements came in the steel, chemical, and auto sectors. president putin says japan must be patient over a territorial dispute dating back to world war ii. speaking after meeting shinzo abe, the president said a search for the solution to the islands would go on. soviet troops seized the island at the end of the war and they kept russia from signing a formal peace treaty. towe believe it's important be patient and looking for a solution that would meet the strategic interests of russia and japan, one that should be expected to the people of our two countries. paul: global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. yvonne: thank you.

asian markets are shaping up. let's get an update with sophie kamaruddin. sophie: asian stocks are mixed and the yen is under pressure. the nikkei to do five about to -- .2%. in sydney, off by .4%. energy stocks are dragging on the benchmark. brent extending its biggest loss in 11 months. the june 12 summit so on, the korean won is getting ground, hovering at 1073 handle here, weaker donald providing -- weaker dollar providing several leads. check out which stock is leading that charge. a company sensitive to relations with the north are jumping, including a carmaker surging 30% this morning, stands to benefit should the two koreas decide to reconnect the rail and

link network space. toid: lots of things consider. stronger one, lower oil. look at ellis is still with us. -- luke ellis is still with us. we were discussing robots versus humans. the constant point of stress is from people within the industry, they might sometime get replaced by a robot, which has happened in several functions. talk to us about which one works best in which part of the fund industry. luke: sure. there is nothing in the human world that isn't going to be affected by technology over the next 10-20 years. no reason fund management will be different. if you look at the three stages of running money, you think of equity market, you have picking stocks, building portfolios, and executing trades. there is no doubt today that technology is infinitely better

at executing trades given the way that markets operate today, given the amounts of liquidity that comes from high-frequency trading, the fact you have to do your execution in lots of very small -- execution has become a technology game. it's an interesting place to use machine learning to keep ahead in the technology race. portfolio construction, if you met a fund manager that says they kept their position on a post it note, you would think they were mad. everybody uses spreadsheets. portfolio construction is clearly helped by technology. it's really on the stock thinking side, where today, if you are running a concentrated portfolio, it's clear that humans still have an ability to have a real edge. not everybody does, but the ability to ask a ceo difficult questions, to understand what the ceo doesn't know about the

company, he was still have an edge on that. if you run on a diversified portfolio, i would argue computers are much better. yvonne: we've seen before that they don't perform well when there is a regime change. went to the happened, things went desert. how are they faring now in this environment where they are adjusting higher? luke: i'm not sure there is evidence that humans perform well in regime change. spot 10 most humans regime changes out of each one that happens and when you look at performances of discretionary macro compared to ctas, they didn't spot regime change it up and ctas at all. i think the reality is, where it matters is, there's a formula about running money, which is the value is the average edge on the trade multiplied by the square root of number of trades you do.

less costs. if you can have a big edge, you don't need that many positions and humans can do well. if it's something with a small edge, you need a lot of trades and that is where technology starts to win. yvonne: we mentioned how your influence has climbed a look at computer-driven funds. they posted losses in the first quarter. at what point do you think you can recover from those losses? luke: february was a very tough month for ctas, that's true. it's a particular type of strategy, but having had a very good run, it gave a bunch of profits back. that's how c.t.s. work. again, i'm not sure there was evidence of that somebody spotted that sharp reversal any better than ctas did, but it's part of the process of how it works. ctas make money over time but they make it in very sharp runs,

and they have occasional givebacks. that's part of the profile and i think that clients invested in ctas really understand that and as evidenced the fact that the first quarter we saw net inflows just by bumpy performance. clients understand what they are investing in within your portfolio. they have a real sense. they have a sense within a portfolio. david: are you confident some of these algorithms can learn and can be tweaked depending on the new normal of the environment? the example in january was, lots of people were selling and then everybody got caught out there did you could -- caught out. could tweak it for something that might happen in the future. are you confident we can get over those humps as they go along? luke: there was a lot of misunderstanding of where some of them lost money in february.

there was some people who had simple strategies being short vix and got hammered. theer quant wasn't using contract for anything because it was a false market. it was clearly being moved around by structured products and the levels didn't mean anything. do we use volatility for position sizing? absolutely. but we use it real volatility which is different than the fix. but the vix provides interesting contracts and we are able to make money out of those. yvonne: what does this mean for fees? we have seen in interest in quant strategies, interest in risk, as well. is this potential evolution and where hedge fund strategies are going from here? ke: i'm going to take a step back and do something simple.

if you take the average institutional investor, they are trying to make something that looks like 5% real returns. they might call it 7.5% in the u.s., but they made 5% real. that's a type of returns they are trying to make. if you look at where bond yields are today, on a 10 year basis they will earn you basically nothing in real terms. you look at where equities are valued today, if you convince yourself valuations are ok, you get 4-5% real. you are going to make 2.5-3 percent real, which means 200 basis point short. if you run a pension fund, that is $1 billion you are short of return every year. so they need something to hear their objectives. yvonne: what you see more pressure there? to feehen it comes pressure, it's a tax on the end client. the only person who takes risk is the end client and so whoever

takes fees out puts tax on the end client. taxes are ok when they are in the 25-35% range. it's very hard to build a y with a 10%nom tax rate. it's the same on fees. clients don't mind playing fees, which are proportional to the value you at. what they don't like doing is paying 100 basis points for something that tracks the index plus or minus a bit. and this shouldn't. that's really poor value. but if you take significant amounts of risk and you have a skill supply to that risk so there is an expected added value, clients really don't mind paying fees on them. david: we will talk more about where that gap is, anything in between that. luke, you are staying with us for final thoughts. coming up, talking oil.

it is set for a fairly tense meeting, opec and saudi raising output. we'll check out oil is moving in a few minutes. this is bloomberg. ♪

yvonne: will continues to slide in asia after the plunging friday, the most in 11 months. opec and its allies now say the market rebalanced in april as output managed to eliminate global surplus. let's get the latest on that with our bloomberg asia energy reporter. what does this mean for opec as they meet? will it be a contentious meeting? >> it will be tough. the decisions that saudi arabia and russia have come to that they will change policy and add more barrels to the market is a shift from the cut. but the decision they've come to without consulting most of the elements within the group. the uae minister said it will be

a group decision. it looks like it will be a tense few weeks. a lot of diplomatic work on the saints. russia and -- behind the scenes. russia and saudi arabia have formed an alliance. if they wanted to increase output, they could do it. this group has worked as an alliance. they have managed to cut production together and do it together. i suspect they will work diplomatically behind the scenes and we will hear from producers leading up to the meeting. yvonne: what changed from the saudi's? we were talking about $80 oil, now since the president tweeted about oil prices are too high, is that what led to this change in tone? ben: there has been anxiety in the market, prices have gone up and up. further than what people have forecast. president trump has consistently's to appease. -- could stitch constituents to

appease. it's putting pressure on consumers at the moment. the surplus is essentially gone. that we were going to run for two years. it makes sense to add barrels to the market. yvonne: where does that leave us for prices? take a look at the analyst reports. which should we be watching? ben: that's the key question. where do prices go from here? they are extending the times to fill the most in 11 months. and that bearish sentiment, you feel the market. goldman came out and said the policy change doesn't change their bullish view. they are still looking at a two $82.50, and $.50 and -- but there will be pressure in politics. yvonne: defocus on geopolitics? ben: it plays a significant part. we have potential sanctions and

iran. the industry is in the doldrums. that is affecting the fundamentals and tightening the market. a little bit of oil back on the market could help. yvonne: venezuela and iran, too. ben sharples joining us in hong kong. for breaking news, we teamed up with twitter for tictoc on bloomberg, the first local network design for social media. also our top news reports verified by us. follow @tictoc. this is bloomberg. ♪

yvonne: if you see a chart on the show you want to see again, go to g tv and say those charts. you can browse through those charts on bloomberg television and catch up on key analysis and say for your future reference your morning meeting here. we want you to have that in your back pocket. this is daybreak asia. i'm if on. david: i'm david and glass. -- david ingles. look ellison is still here with us. manager and ceo for final thoughts. you were talking a little bit about what performance people are looking for right now so between now and the end of the year, what is the sense you get on the performance people are looking for?

your clients, at least, ballpark? : our clients are mostly big pension funds, so on. we figure we run money for something like 100 million pensioners around the world. so they are not sitting there thinking, what is my performance for the next six months? they are thinking much longer term and what they are looking for is a 5% real return over time. that's the goal and recognizing hedge funds are a good way of getting that. yvonne: what about being an active manager in a passive world? take a look at assets that some of these vanguards and what they have right now. it is what is dominating right now. had you stay active and go smaller than some of these? luke: i think what you are seeing is a separation from where the price is heading rapidly to zero, and there will

be a small number of providers that do it in real scale, and then true active. if you spendnough, your life running with 50 or 100 basis points of tracking error, is impossible to generate and of value to be worth your fee. if you run at a 10% tracking error, it's perfectly reasonable given the information ratio we have and you still get 5% outperformance overtime. and that's something clients will pay for. i think as chunks of the industry has gone to passive, and that saves clients money and that's good, it also creates a lot of interesting investment opportunities that, for a long time index rebalancing was something you couldn't make any money out of. now it's a tremendous opportunity to make money because there are so many people do have to follow the index inclusion rules exactly because

that's what passive is looking for, same with the way they execute. do we have to adapt our execution in order to understand the way passive executes? yes, but there are certain times in the day we trade more and certain times we tried less in order to avoid getting in their way. that all creates opportunity for us to make money. thed: when you talk about concept of manager, that has clearly evolved. are you hiring more quants now? what do people go to school? business school or phd? yvonne: [applause] engineering. -- [laughter] engineering. luke: we are growing both. 50-60% ofof between our firm depending on how you count it. i feel good about that, but there is value in the discretionary world and it's there are some

clients who still would much rather invest in discretionary. so we do both and are proud to do both. we try to make sure all the people in the discretionary world understand the value of technology and embrace it. so we have areas in the firmware we are hiring phd's in math. we have areas in the firm where we are hiring people with masters in phd's in finance and economics. and we have places where we are hiring people with all sorts of various things, but one of the things we do with all the people who join our analyst program, coming in with a graduate degree or sometimes a masters, they are all made to spend at least six months and one other quant engines learning how to respect data, even as a discretionary person. it's important you respect data you understand what a real correlation is. you understand how to manipulate information and extract the data from bloomberg but turn it into

something you can make money out of. yvonne: bloomberg reported that man group has lost for money managers and it seems like we are in a talent war, given what we are seeing with hedge funds these days. how difficult is it to retain talent? there's a funny window in the second half of april every year, which is the go around period. it's like the window in the football league, that when last year's conversations rolled off the four next year is when you get spun around. and so ourod 2017, people were very attracted to other people because we outperformed in 2017. the reality is most people come to work because it's a really interesting job and because the place they are working is someplace they feel good about working. we lost four fund managers out of 500 or something.

is that annoying? yes. but is it the end of the world? not at all. in thed another four same window and there are always other people. there is good talent out there if you run a firm where it respects people as humans and people and doesn't treat them as numbers. yvonne: great to have you here for the whole hour. luke ellis joining us in hong kong. funny more news to come. -- plenty more news to come. david: the company says no customers suffered financial loss after the nationwide system. retailh left a tmz terminals out of service for six hours. the bank says it was a very rare event. it's asking customers to contact the bank about the impact on their business. yvonne: barnier is planning to new models to make demand for

luxury is this jets. they will have redesigned cabins, optimized wings, and rolls-royce engines. the larger will have 600,000 nautical miles, enough to fly to hong kong to london nonstop. it's to launch this year. david: speaking of planes and pilots, solo rides the box office for disney's latest star wars offering. just under $50 million in total there. northllion take in america was short of forecast, the worst among the four rebooted star wars films so far. disney has slashed its estimates through the memorial day holiday from $150 million to $150 million. yvonne: i missed out on that. david: me too. yvonne: what are you watching this morning? >> not that.

but 100 offshoots for the number one franchise. i would say what's coming up. irrepressible cio of that company. there she is. she will be joining us and a half hour talking to us about what is going on with the trade route, how it's playing out with markets in china, and what the best next guess is. economiste ages chief to do all these things coming up through this week and last but arianast, isaac both of gives us a sense of where we are. but markets continues next. ♪

rishaad: little bit more positive about the north korea summit. now it could be back on. president trump saying his meeting with kim jong-un should go ahead and the two sides are talking directly. speaking of a second moving -- meeting, all involved saying they are preparing for singapore on the 12 of june. in hong kong, i'm rishaad salamat. haidi: i'm haidi lun. also coming up, cross lines in washington. the phone maker is facing growing opposition in congress. this is bloomberg markets asia. ♪