yvonne: it is 7:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. dave: i'm david man. form, making an attempt to a government. mr. scissors is put forward, but populist parties say they will bring him down. yvonne: trump is to meet shinzo abe ahead of talks with north korea. reignseopolitics supreme. yvonne: the world of social value investing. we discussed the role of business in society with warren buffett's grandson. ♪

dave: here we go. if very good morning to our viewers just joining us. we are talking about italy, of course. were closed, but not exactly a lack of a lead. updates.ta weekly we get an update that they are we see anether to se extension across the year. straight week into last week that we have seen positioning in the common currency turned negative. it might add a little bit more of an appetite for the euro, but the underlying context on top of politics is the fundamentals have been really soft.

dave: that little rally in the euro yesterday seems to be pretty short-lived. it seems like he won't even get that vote of confidence. perhaps we are leading closer to these early elections in early autumn, close to 2019. it's a complication for the ecb. at the same time, if it does come in the fall, at the same stopthe ecb was seem to their acid purchase program -- we will see how that goes. the broader index, lower. have a look at the market, 2%. it's a widening spread between where you are and italy. the german bund, now down 34 basis points. 34 basis points. ceilingd asia, we are

new zealand stocks down about 1/5 of 1%. the aussie setting up for a nasty open, given what we have wen with the oil price, as continue to see crude edge lower. japan futures, we are seeing an upside of about 80 points. perhaps we could see a bit of a silver lining, but korea futures, also headed the opposite direction. dave: have a look at currencies. 1.1628.rading at about have a look at the lira. we talked about a little more confidence coming in, off about 2.3%, dollar-brazil. the equity index, they are also getting pole-axed overnight. you talked about oil, yvonne. yvonne: let's take a look at how doing.ties are wti, falling for a fifth straight day. we are seeing brent falling to

75.30. we continue to see these concerns about whether the russians and saudis are urgent about easing. gold futures, we are slightly above 1300, but seeing a bit of weakness given the dollar strength we have seen. index, downodities a broadly speaking to .1%. -- down 2.1%. dave: let's hope nothing happens, of course. otherwise, it is going to be hard to get a reaction. here's haslinda amin with your first word news. tolinda: the u.s. is said be willing to discuss a deal with europe. l could open the way to the eu avoiding billions

of dollars in sanctions. however, where told washington is ready to impose penalties if the two sides fail to reach a solution. the bank of england is denying a rift with the u.k. treasury after "the financial times" said the two are at loggerheads. the "ft" cited unknown bank officials in a report that claimed the banks of deputy governor had fallen out with the treasury on giving away regulatory control. however, a boe spokesman says there is no truth in the idea of a policy split. indonesia's central bank set the stage for a second rate hike in two weeks. a day after being sworn in, w arjiyo called for emergency talks to fix the currency. warjiyo has promised to be ahead of the curve on monetary policy.

forces in singapore and india have abandoned talks at a cross-border trading link. we're told the sga failed to reach consensus on the regulatory guidelines for the project. it would've seen traders in singapore buy and sell derivatives listed as indian. i am haslinda amin. this is bloomberg. yvonne: will geopolitics dominate the market once again? that put a call risk and contagion, -- political risk and contagion, spreading across europe. the president has been tasked to form this new government, now looking a little less likely. here's what he had to say overnight. >> the italian economy is still

growing, and public finances remain under control, and i can absolutely assure you that a myselfent guided by would guarantee caution in the handling of public finances. dave: of course, it is all very confusing when you try to follow . what might be bad for italy wasn't as bad for the euro over the short term. as we move into elections, i like this headline. italy is seen on course for new elections. hostage end up being over the next few months. the bottom panel is the nd spread, which a lot of people are saying could indication.

that takes you all the way back to 2014. you are speaking with oppenheimer funds. is this the start of this repricing? they are basically saying this might get worse. let's listen in. developments are concerning, and this is coming from somebody who until last week was not particularly concerned about the italian situation. token --the market has taken a completely different town. the market has seen what the true motivations were. dave: very complicated. let's look at the symptoms across markets right now.

impact has been to bring it right back down. it's going to remain under pressure as long as there is the potential for riding in the streets and also early elections. one thing that seems reasonably clear, even if they manage to get the caretaker government installed, it's going to have a fairly short leash. they are going to need to have elections. perhaps one of the things that has been missed a little bit and all of this, and if we look at what has happened to the euro overnight, that is the immediate italian turmoil impact, but looking further out, you have the situation with the ecb -- remember, it was thinking it could stop buying bonds. italy has an enormous amount of debt coming due the next year, the year after, and up to hundreds of billions of euros, getting close to half $1

trillion. if italy has to refinance their debt in the coming year and there is this turmoil that has driven up italian bond yields, and they want to refinance, how is the ecb going to stop buying bonds? it is going to have to be delayed. it is going to have to be more gradual, and that is going to remain a weight on the euro long whor everyone has forgotten would be the finance minister. to go over some of these risk processes, there's the possibility of a fresh european debt crisis. turkey --donesia, how should we be preparing for the aussie dollar? how should we look at that now? >> the aussie-dollar is clinging to support of around $.75. it has had a few gos at breaking

through but hasn't been able to. it is looking more and more like the aussie dollar is going to head south from where it is now. we've got a chart to show you about how hedge funds have turned decisively against the australian dollar, which was long a favorite for them, even when it wasn't doing particularly well. now we've got the biggest short that we've seen since 2013. maybe it's 2015 for the aussie dollar, but close to 2013 levels. looking at that and looking at the wider picture, which is pretty dire, you would have to say the aussie dollar, which has the disadvantage of trading every 24 hours, is likely to remain under extreme pressure going forward. yvonne: garfield, we are going to leave it there and come back to check on the updates when it

comes to the european markets, garfield reynolds, our markets live strategist. in the meantime, the u.s. is said to be willing to discuss a deal with europe over claimed illegal state subsidies given to airbus. let's bring invention and aim and with the very latest out of d.c. give us a little bit more context of how it got to this point in the first place. it seems like the relationship between the u.s. and europe was pretty fraught. is an old dispute with airbus and boeing, and it's worth noting that basically earlier this month, there was the final decision out of the wto, and the wto was expected to start considering what a sanction might look like against airbus monday. -- fact that the u.s. is now we understand and our colleagues out of europe reported -- considering possible talks is a

pretty significant shift. the u.s. trade representative threatened to impose retaliatory tariffs against eu products, so this is pretty significant. they reached some kind of agreement. dave: significant, you say. what are the possible implications for the trade block, and what is the latest on the trade spat between the americans and europeans? ben: this is all happening a while there are separate issues in the larger context of this eu-u.s. trade issue. basically, we are seeing europe try to race to some kind of deal before the end of the month when president trump is expected to impose tariffs on steel and aluminum imports. that could have big repercussions for the eu, and they likely might retaliate themselves. this is all in this context of a very tense time in trade relations between the eu bloc

and the u.s. you have commerce secretary wilbur ross headed out to europe this week. it's all pressing up against a deadline here. course, we'd like to focus more on north korea, this on-again, off-again summit that could still be happening. what is the latest out of d.c., and what can we do to ensure this will really be happening on june 12? ben: it is complicated. i don't know how much we can be sure of anything. it seems like at this point signs are a go. if you take it back to late last week and president trump kind of with a letteryone indicating the summit was off, and over the weekend, he indicated that it might be back on. you had the white house saying

that the trump administration and japan would be working together ahead of "unexpected "an expected meeting" between north korea and the u.s. we should check back. dave: benjamin been live for us , the u.s. now demanding north korea ship out its nuclear warheads and missiles. more on that in the broader context of president trump's a meeting with the japanese prime minister. theirs infected the cover , that shinzo abe is backed -- that is in fact the cover there, that shinzo abe is back. coming up, the turkish lira. we take a look at the currency's movements later in the show. riverfrontst,

investment group says geopolitics will continue holding stocks back. we will have a chat with their chief market strategist next. this is bloomberg. ♪ . this is bloomberg. ♪

dave: there we go. inleasant morning over there tokyo. futures, not exactly painting the same picture. just over 40 minutes from the open, cash markets over in tokyo and seoul and sydney. dollar-yen. you're watching "daybreak asia." i'm david ingles. yvonne: i'm if on. -- yvonne man. nicholson, in kevin riverfront investment chief market strategist. he joins us from richmond, virginia. taking a look at the development we've seen overnight with italy, our last guest saying, this feels a little bit different.

perhaps the things could be a turn for the worse. does this have a whiff of what we saw in 2011 and 2012 of a sovereign debt crisis in europe? >> i don't think that it is going to be a sovereign debt crisis, per se. 2011, you saw greece and you were worried about the peripherals, for right now, it is concentrated in italy. most of italy's debt is held domestically. i think it can be something that can be contained to just italy itself. --e: what should i make these might just be short-term when i seeuld i make bond yields in portugal and spain? i see portugal, greece, yields up overnight. is that simply a transit factor of repricing, or do you see this spreading? right now, i think i see it

as being range-bound at the moment. markets tend to overreact a lot of times when you have these moments, and as of right now, i don't see a huge issue with italy starting to keep it up. italy had gone on a pretty good rally for a while, and it's starting to look kind of cheap to us. the time,ow if now is but it is making us look at it a lot more than we would have two or three months ago. yvonne: i guess taking some of the steam out of this euro rally we have seen much of this year, is that a plus side when it comes to european stocks? pluss, it is definitely a because you had the euro trading around 120 earlier in the year, and now that it is closer to 1.16, if this continues, you could probably touch 1.15.

that makes it a lot more advantageous for the exporters out there who have been really struggling. the you have seen over first four or five months of this year is that you have seen the european economy start to soften, and a large part of that has been because of the strong euro. with the euro backing down, i think it will be to the benefit of those exporting companies that you have in europe. dave: just to pivot to the u.s., and that might be one of the reasons why you point out the s&p 500 has remained range-bound -- you are saying the ceiling is 2800. we are going to get a chart to visualize that. what brings us out of that range to the upside? earnings have come through decently, but we have been stuck still.

>> earnings have been pretty good, and earnings is what is getting us to the top of that range. the thing that will get us through the 2800 level is you need all of these geopolitical issues to go away. you need the threat of trade wars to go away, and for earnings to continue to be strong, in order to break to that upside. get to the trade wars, then we potentially see 2600 iffalling below you get a trade war with china, for instance. yvonne: we also have to watch this rebalancing we are seeing .etween stocks and bonds are people more comfortable in the market buying on the dips we are seeing in treasuries in? >> i think that we are kind of hitting our floor. it's probably around 290, where i think we will have some resistance as far as treasury

yields going lower. once 305 has been the upside week, ore level, last we had gotten as high as 313, and now we rallied back to 293. geopolitics has been in the headlines. however, i don't believe that will continue, especially if we get a good nonfarm payroll number this week and we show inflation is still around. the fed will raise rates, and that will ease some of the risk off mood and the treasury market and get us above the 3% level. dave: kevin, thank you so much for coming on the program. we've talked about the u.s. and the jobs numbers coming out friday. mind, a keep in

reminder from her clients that you can interact with one of the show. ctv is the command. check that out, g tv . this is bloomberg. ♪

asia." this is "daybreak i am yvonne man. dave: i'm david ingles. china is had to be prepared to approve qualcomm's $43 billion pursuit. is if it meets assurances that the u.s. will lift its ban zte. a regulator has cleared the inquiry and is satisfied with qualcomm's effort, and only

procedural issues remain. the deal has been pending for 18 months of but has been overshadowed by washington's ban zt electric car startup neo ise said to have filed a ipo. --nne: in the u.s.yvonne: ban on zte. yvonne: electric car start up neo is said to have filed an ipo in the u.s. at grab.'s have a look the company wants to move behind -- beyond ride-hailing to becoming an everyday app for consumers. the company is exploring new services, like food delivery, insurance for freelance workers. grab agreed back in march to buy uber southeast asian operations and also uber eats.

yvonne: coming up next, indonesia's newest central bank governors sets the stage for a rate hike. we will have the details next. this is bloomberg ♪ -- bloomberg. ♪

dave: 30 minutes to the open in japan. looking at the peak there. beautiful that hitfaily -- fairly hot and humid. 34 degrees is the forecast for this morning. if you're making way to work, hopefully you get yourself into a cool ac.c. building. yvonne: a little bit cooler it seems when it comes to the sun in tokyo. breaking data from japan. holdingbless rate steady at 2.5 percent, still holding onto these multi-decade lows. ratio holding steady as

well at .151.59. slightly softer than what economists were expecting. a type, type, labor market. have seen ines we japan, this will bring up wage prices. dave: in fact, when we hit 3%, we have a chart which shows this context.er-term you were talking about the jobless rate. we have seen wages start to go up we have a bloomberg chart. meet me halfway. those two lines are meeting towards the middle. jobless rate on top. the wage indicator at the bottom. the two red lines, 0%. closer to 2% is better for the boj. we are at 1.%. we have seen sign that the tightness in the labor comet has caused wages to

up. yvonne: with the boj -- watching the numbers closely but i will not know how much they are going to dictate. the open in japan and other major markets in asia. >> retailers, because given what we have in a tighter labor market, what we see and that space, how they are grappling with this prospect. been turning to solutions like automated checkouts and not keeping stores open 24/7. iand other news lines of note ot midrange economic plan in june, we learn the sales tax is to be raised to 10% in october, 2019 as planned, but his advisers recommending pushing back the fiscal targets. this as abunomics losing its mojo. now, japanese stocks say they may be losing their mojo as

well. check out the chart. the nikkei and the topix are down for they year. here's the yen. remember how we were talking about the decoupling of the yen. a disappointing earnings season that is not helping the mood. pulling up the futures board. let's check in on how the market may kick off this tuesday. we are seeing pressure across the markets in tokyo. with talks under pressure and wanted. -- in wellington. keeping an eye on construction and rail transferred. nissan reportedly cutting its north america output by 10% to 20% through summertime. dave: speaking of losing your mojo, shih-tzu abbé, not the most popular guy in tokyo, because of the scandal. he needs north korea. it saved in the last time he or

in on this meeting with kim jong-un. >> he wants to help his credibility. abe is saying he and trump had agreed to meet before the sum mit next weekend, ahead of this roller coaster summit. the u.s. has decided to hold off on major sanctions on the north. in the leader, moves in korean stocks-- check out this chart on the terminal. i want to show you how we have seen some of the things play out given the prevailing modd. tourism shares are outperforming tech stocks. line inrspace, the purple, is down 8%. yvonne: maybe those chinese tourists aren't coming in now to seoul. checking the markets for us. haslinda amin is joining us from singapore. hey, has. haslinda: hey, the white house

says president trump will be -- will meet japan's prime minister ahead of the summit un.h i -- with kim jong the u.s. has sent a delegation to singapore to prepare for the summit and, another team is talking to kim's people. brazil's state-run oil company is suffering its worst rout in 20 years as a truck strikes wreaks havoc in latin america's largest economy. it's lost $34 million since the strike began last week. shortages of food and fuel have sehut businesses. the real led losses. and the stock market fell 4%. high sp is dropping a eed rail line.

mohammed is canceling the project signed under his predecessor. he says that militia will have to pay penalties for axing the deal. the european commission is proposing a ban on some symbols used plastic products to cut the consumption. if approved by the e.u. government, the ban would apply to cutlery, plates and plastic food containers, and bottles. europe was to take the lead in a sustainable goods business worth $3 billion a year. ivanka trump's brand is one of -- one of a new brand in china. raising questions of conflict of interest. the government has granted provisional approval for another 8 trademarks. trump has stepped back from

managing her brand but continues to profit from it. global news 24 hours a day on by and on twitter powered 2700 journalists and analysts in more than 120 countries. this is bloomberg. dave: thank you. let's pivot back to e.m. the strengthening, the turkish currency. policymakers will be using this one week repo rate as tool. policy and markets hoping that the move might be able to reverse the current sudden and sharp depreciation. yvonne: let's break out our chief asia economist. just yesterday were talking about the concern of the central bank independence. is this a win for turkey? >> it is a big vote of confidence in the central bank. last week, we had erdogan stepping in.

rather striking language. this move meets a key demand from investors. they had wanted clarity. they wanted to know which rate -- now we have this one repo rate, which the central bank is saying will be the benchmark. the lira shot up and things have been positive for turkey central-bank. thathat i would say is both new york and london were out yesterday for holidays. the real responsible come over the coming days. dave: we will learn that later today. aside for thekey next few hours. indonesia tomorrow, there is a special meeting taking place. what can we expect? edna: it's live. governor perry has been -- he said, they're calling this meeting to be proactive to get ahead of the fed. we're to an a half weeks away from the fed meeting. by all accounts they are going to tighten interest rates.

and certain economy say the individual move and raise interest rates. it looks like the new governor is trying to get ahead of the curve and away perhaps the outgoing governor was not. thhe's been corrected. yvonne: markets have rewarded it for that proactive stance coming through because most have said, a 300 basis point hike is greater. is the rout in .em. over? edna: it is early days. that the move and treasury bill have peaked. you see oil coming off the boil. and, underneath it all, the they're still in reasonable shape. most of asia's current accounts is in good order, inflation is low. but there is still a sense that

jittery.re the markets remain nervous. that is the biggest driver of folio -- of portfolio flows. depending the speed to, there may be a near-term reprieve. yvonne: thank you. enda curran. he may mention what we have seen in the oil price, futures extending their slide, racking up the longest run of losses in three months over concerns of saudi arabia and russia. dave: we are down for a fifth straight session. we're talking of wti. let's get more with our energy reporter. steven, do we know anything about the timing of the plan of opec to raise output, or i'm guessing it has not been decided, but what is it right now? >> well, unfortunately right now there really is no decision. now, if you look back at what

happened last week, saudi arabia and russia both said they where considering or open to increasing output. unfortunately, for them, the other opec members disapproved and think it is too early. opec will be meeting with russia in june in vienna. that is when they will come to a final decision. now it is too early. the market is reacting to saudi arabia and russia's decision to consider potentially increasing output. they are giant players. and their decisions and interests play lot of weight inside of opec. getting other members online will take some time. there is an interest by russia and saudi arabia to make up for some of the lost output by venezuela and iran after the u .s. puts more sanctions on the country. there is an interested fill that gap. how much they will do it and went is s -- and when is still

up in the are. yvonne: is $80 the feeling? is there the expectation the price of oil will continue to fall? stephen: um, well, it depends on who you talk to. the market players who are trading right now think it will continue to fall as they're see lling. but goldman put out a report over the weekend saying, we are not changing our bullish outlook. all saudi arabia and russia are filling in the gap left by iran and venezuela. goldman still thinks that by the third quarter, we can get to $82 for brent. that is quite a jump from right now. there are a lot of bullish forces. is going tore what happen with opec. there is a lot still in place. it's not down and out -- we're not going to go back down to $50 oil again.i think there is still a lot of bullish players here. we have to see how this plays out. dave: thank you. live for us out of tokyo, our

energy report. coming up, big picture. solving some of the world's biggest problems through what our next guest calls social value investing. we'll be joined by the grandson of warren buffett along with the co-author of their new book. they join us next. this is bloomberg. ♪

cash market in tokyo just about to get underway. we just had a job list data at 2.5% unemployment. everyone is employed in the economy. having a look at futures down 1/3 of 1% ahead of the open. this is daybreak asia. let's turn now to what is called social value investing. that concept in business and

society here. sectorading private philander visser coming together to tackle some of society's challenges. uffett.clude howard bar a management framework. both authors join us right now live from new york. good morning from hong kong. howard, let me start with you. what is social value investing? >> thank you so much for having us onto it we are excited to talk about the book. social value investing is a new book. in it we tell the stories of ceo's and nonprofit and community leaders who are coming together and working on really remarkable projects together to both serve their individual goals organizational goals and also to serve society's goals of the same time. by going to and talking about these really wonderful examples of success, people can see there

is an opportunity to make a big difference in the world while also doing good out there. bill can talk more about this, we provide a framework, almost like a hammock to -- a handbook to guide people. case studies from india and what is going on with telemedicine to central park in new york city. we give a good breakdown of how those partnerships have succeeded in how you can replicate that success for the social value investing framework. dave: bill, chime in here, because i see a lot of these examples and howard talked about how diverse these examples can be. what would you say is the common denominator? denominator isn that the big challenges we face in the 21st century have risen requireevel that they more expertise than government alone can apply. and by engaging the private sector, private sector entities can make money and be part of a major change in the way people

live their lives. example, the examples from brazil and the examples from here in new york city, where things that are good for business are also good for people, and by combining the scale of government with the expertise in operations of the private sector, you get much better outcomes. yvonne: talk about the case study in india, in particular. hink digital india, telemedicine is so significant? bill: i hope people will read the book because it is a most like science fiction. in india, you have a biometric i.d. system that has been set up here it was conceived of by the government, but over the number of years, the government was unable to infinite it. they brought in one of the leaders from the tech sector which is big in india and together, they have registered in the system now almost 1.3 billion people who can access

not only government records and government benefits, but increasely banking services, even the most remote parts of india and diagnoses from one of the world's best hospital providers. rural areasnciics in of india. it is amazing. and it is truly a partnership between the government, the private sector, and by the way, eneurs running the centers where people come in and become diagnosed by major doctors in mumbai. just a great story and something that can be replicated. yvonne: quite fascinating. howard, from a market perspective, people have watched and look into these policies before, and they were viewing them as concessionary, that you can create social value but you have to sacrifice cost and returns. what do you think has changed now?

whitey think investors are increasingly embracing these types of policies? howard: it is a wonderful quest. i do not think sacrificing returns ever has to be a required part of the dialogue. we're seeing significant shifts in society at large. first of all, when you consider consumer demand, millenniumals will choose to buy a product that is associated with a social mission. prefer tollennials have a social impact on their local community than they do to receive recognition to professional work. in 2013, he saw a big shift happen when millennials started defining the primary purpose of business not just is making profit but serving society and creating social value. those are big indicators. seat in terms of capital markets. in 2016, one out of every $4.00 invested in professional management had some sort of social orientation to it. more recent, you saw with larry

fink, the letter he wrote coming out of blackrock, a big call to companies and ceo's around the world saying, if you do not have a social purpose with what you were doing, you might lose your license to operate from society. he argued, essentially when you look at the long-term time horizon, your financial and social rewards converge. if you've not seen the letter, i recommend reading it. dave: the other point to be made withoutthat stron -- strong infrastructure, the private sector cannot make money. by helping on these infrastructure projects, like we see a new yorker, what we see in brazil and india, maybe the returns might not be as great on those projects but they create a society with a digital highway throughout india where private firms can make lots of money. the example you are showing no, city, notin new york only benefit everybody with his but itul public spaces,

had a demand is impact on the real estate market and on local businesses. bill: there is a symbiotic relationship that benefits everybody. yvonne: how dave: how do we marry the concept of a strong man? you have erdogan in turkey. in the philippines and you have trump in the united states. principles of cooperations coexist with that style of leadership, where collaboration is not the first thing that comes to mind? bill: well, the namesake of the station might bloomberg is known as a pretty tough character as known- mike bloomberg is as a tough character but he was democratically elected and operated in a very contentious political system in new york, but was able to apply the same principles through that political system and get it done. i would also argue modi operates in a democratic system. he, too, is a tough guy. but he has been able to work

with the vast majority of people. howard in his example about afghanistan shows that you have to engage the local community if you want to be successful. and i think, whether it is a tough guy regime, even look at the politics of china, they've been giving more and more freedom at the local level, because, without the support of the local community, you can be as tough and strong as you want, you probably won't succeed. yvonne: cross sector partnerships are key. howard, last question to. -- to you. much of your framework has been based on your grandfather's work at berkshire hathaway. can you go into more detail about that? how big of an influence has warren buffett been on your philosophy? howard: thank you for asking that. my grandfather was remarkably supportive in working on this bok. i started three years ago, we thought this would be a series of articles we did

not know it would be a book. input, itaking bill's share them with my grandfather as we were writing, because we knew his feedback would be important. he was supported. really remarkably so. a,nd one thing that is great is if you want to know how he feels about the book, there is a short piece that opens up we talk about, really frames a lot of our messaging around optimism and what his hope in our hope is for making the world better place. but, you know, kind of zooming back a little bit, i think part of what is so inspiring for ours was to see -- for us to see through our students at columbia, the definition of success for society is starting to shift. there is a role definitions of wealth and power and fame, which are still relevant, but a lot of folks we are talking to our students. they really care about making an impact on the world. my grandfather has been one of the biggest as rations i have had for that. biggest of the inspirations i've had for that. he gives me the opportunity to share lessons through social

value investing's with others so that he can see the opportunity they have to make othe world better place. yvonne: we have to leave it there. howard w. buffett and william eimicke, a fascinating conversation. they are the co-authors of lue investing and professors at columbia university. more ahead on daybreak asia. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man. dave: coming up, the next hour, of course, we continue the conversation on markets, oil specifically. he's not sold on saudi arabia, hinting at raising production. yvonne: interesting call on brent crude. we'll ask him about that here

before that currency news, the impact of political uncertainty in europe. strategyave the fx manager coming up in the next few minutes. this is bloomberg. ♪

dave: it is 8 a.m. in hong kong. yvonne: the top stories this tuesday. aia pacific markets of face lower open as risk appetite drains away. oil has the longest run of losses in three months. the latestirssors is to form a government italy. popular say that will bring him down. yvonne: qualcomm -- approval hinges on z.t.e.'s fortunes in america. dave: another day, another summit. trump to meet abe ahead of historic talks with north korea. for the time being, they are still on.

the geopolitics and korea looking more favorable. europe is, too. the contagion coming through. the euro faltering once again. basically erasing your the earlier gains yesterday after we learned what is not going to be a populist government now with the italian president asking to form artelli government. more doubt that that could happen. elections in the early fall of the earliest. but a lot of questions. people are saying, is this going to be another sovereign debt crisis happening in europe? dave: i think, when you look at this france, italy, germany, spain to a lesser extent, a slight bump up across periphery portugal. i mean, the indication was you might be headed in that direction.

it does not mean we are going to get there. the spreads compared to 2011 are nowhere near that wide. it does complicate the matters for the ecb. at that point when people are talking about elections in the fall, that was actually one of ecb was thought to have, wanted to stop therir program. concerned,he euro what might not be euro good for italy may be good for the euro. -- for the euro. yvonne: ecb can be key, too. can they still wind down asset purchases? dave: a lot of it will have to do with inflation, those numbers coming out this week. lots to consider. we will get to the open in a moment but your first word news. with paul allen. paul: thanks. the u.s. is said to be willing to discuss a deal with europe over claimed illegal -- he's given to airbus. the talks indicate a shift in position for the trump

administration and could open the way to the e.u. avoiding billions of dollars in sanctions. we're told washington is ready to impose penalties for the - -if the two sides fail to reach a solution. the bank of trump's brand has won new trademarks in china, theing questions about -- government has granted provisional approval for another 8 trademarks that will be finalized if no objections are raised in the next three months. trump continues to profit from the business. bank of england is denying a rift with the u.k. treasury after the financial times said that two are loggerheads over prospects for the city. a report claims the banks cap the governor had fallen out with the treasury for giving way regulatory control.

indonesia's new central bank governor has set the stage for a set and rate hike -- a second rate hike in two weeks. a day after being sworn in, perry warjiyo call for talks to support the currency as a move backft the rupia, pairring its decline to 3%. forces in singapore and india have abandoned talks on a cross-border trading link. ee are told the sgx and the ns failed to reach consensus on the timing of regulatory guidelines required for the project. it would've seen traders in singapore buy and sell derivatives based on their stocks. all the news 24 hours a day and on tictoc on twitter powered by 2700 journalists in 100 countries. i'm paul allen. this is the. yvonne: take a look at your

market open. we are seeing it edging lower. volumes also pretty low as well. several countries are closed for the holiday. >> looks like shaping up to be a bit of a trouble tuesday. dollar-yente, the hovering at the 1.35 level. with precaution in the air. off.i 225 the kospi, that is resuming losses that are the biggest drag so far the benchmark which is down by 1/10 of 1%. in sydney, little changed by energy players under pressure, down 2.5%. taking a look at some of these assets today. the korean won a touch softer after a four-day event. the euro trading near the

weakest level in seven months with italy headed for fresh elections and keeping an eye on brnent, sticking below that $76a barrel mark. korean talking about can consumer stocks outperforming defense. that segment may find more of of the consumer confidence reading. the reasons include expectations for economic operation with the north as well as easing concerns over u.s.-china trade tensions. the darlings of the cost the building stocks, they will remain so as highlighted by our colleague as progress is made on details for the june 12 meeting. so, construction players will probably also like kim's admission in that the north's critical infrastructure is in need of improvement. so, giving such players prospects beyond the self for construction, utility and steel. seoul. 12% in dave: building bridges.

figuratively and literally as well. thank you so much. let's pivot to italy because the cost-cutting economist, mr. scissors, is the latest to be asked to form a government. arterelli says his only aim is to form a budget. but populist leaders are now pushing for a vote, perhaps in the summer. yvonne: as early as august or september. jodi schneider is watching all of this. give us the latest on what is going on in italy and what has propelled the two groups to be divided? jodi: the populace forces do not want to help mr. scissors. they are very angry over there lost bid for power and want to have elections as soon as possible before september. of course, this is going to throw some chaos and uncertainty into italy's future. anti-f the issues are the

immigration versus pro- immigration forces, and also, euro skepticism. they're an anti- immigration versus anti- immigr, euro skeptic and the five-star movement is antiestablishment. together, these populous forces are saying, we do not want to see the status quo. we don't necessarily want to be part of the larger european union. element some anti-euro to this as well among them. that's really this widening divide is over those issues. and again, it looks like it will be somewhat chaotic in the short run as they try to form a new government. yvonne: italy already one of children of the european union,. how will that impact the economy and can we see that risk spread across europe? appears to bew it somewhat contain. this is italian for the moment and their markets will be seeing the effects.

the question is, if you have continued uncertainty and chaos, that really may speak to some larger and more broader market turbulence in the months ahead, especially if they continue to push for early elections. until the elections are held, it will be some turbulence. dave: on average, a government every year since the war. the question is really if it remains cute in italy because we are used to that. the other thing i want to talk about as north korea. we have to keep asking the question every morning. is it on or off again? jodi: who knows? president trump says it is o on again, ignoring a letter he sent three days ago. where he said it was off. president trump says there are direct talks between members of the u.s. government and north korea. of course, over the weekend, north and south korea met again. so, it looks like it is on for

the moment, but of course, both these leaders are somewhat mercurial. it could be on and off again several more times before it actually happens. it could be pushed back. it looks like both sides are really tamping down their rhetoric. they got angry again after it was called off in that letter. now the mood appears to be to try to push forward this is -- with this. there is a lot of preparations to be done if it will occur in singapore on june 12. yvonne: this is a battle of the unpredictable he right now. who can actually call whoever's bluff. thank you. jodi schneider joining us in hong kong with the latest. of course, we watch the oil moves, and headed for his longest run of losses over three months. both saudi arabia and russia plan to raise output. dave: we will get more from our bloomberg oil markets editor

joined in japan. good morning too. -- to you. i guess there are concerns about supply coming online. the question is, how real are those concerns at this point? things, we have some major things happening in the oil market at the moment. the venezuelan sanctions will market.ot of out of the people are concerned about how that will impact the supply. we also have the iran sanctions. that is going to take a lot of it off at -- as well. forecast,e biggest one million barrels a day taken out of the oil market. there is a lot of concern that the demand, supply is very tie. we h-- very tight. we reached the target that opec was targeting which was the five-year average. so, the signal is that supply is quite tight, and the prices so

high we might see demand go down as well. producero, anna, nations, they seem to have different views right now on where they actually want prices to be. what's the breakdown? is there any likelihood of reaching a consensus in the next opec meeting? pec havell, o always maintained that are not out to target prices but then we get stories coming in with their minister saying what our prices are. initially we had saudi arabia say a couple months ago that they think $80 a barrel is a good price, which at the time seemed kind of high. now we're seeing brent in the mid-80's. it's come up quickly. we also had russia and president putin saying recently that he theks $60 a barrel is right amount. any higher than that, it will affect demand again.

the also, getting back to supply and demand concerns, we had the international energy association say a couple of weeks ago that they are very concerned that the demand is going to go down. some other people is said to have seen demand affected quite a bit. goldman basically came out and said, wait a minute. we're getting retracement back. but that does not mean fundamentals might be counterproductive for the oil price. why are they still bullish? anna: that's right, they are very bullish. they reiterated their price barrel.$82.50 per they are saying the demand is still strong. and the fact that saudi arabia and russia signaled last week that they want to raise opec production again, they're saying that signals that supply is tight, and also, all these concerns we have about supply do demand, well, if opec

raise their opec again, it will raise the involuntary cuts, involuntary declines we are seeing from venezuela or iran. so, it's not going to oversupply the market again. they're also saying there other issues going on right now. in the u.s., we have seen restless production that is causing constrained in their pipeline. so, the oil from america is not getting out into local markets. they've also set whenever we have seen situations where demand is this strong and there has been suggestions of raising output, prices decline but they do come up again. historically, it has been 8% higher than before the announcement. dave: thank you so much. our bloomberg oil markets editor. our guest joins us more to talk about the oil star later in the show. -- oil story later in the show.

the session is low right now. we are pushing towards that level. if you take it back 24 hours, the high tatian back towards 1.0986. of course, we are pushing towards that level. looking across the bloomberg, there does not seem to be any specific catalyst for this. we'll continue to monitor this movement in dollar-yen. plain vanilla. 1.0921. coming up on the program, -- we talked about oil. prices are freefalling. the fed issk how far opec and russia get ready to raise output. yvonne: up next, an outlook for the euro and other major currencies including the yen. as the political turmoil in italy is set to drag on. this is bloomberg. ♪

yvonne: this is daybreak asia. dave: the euro, currently trading 1.1633, the lowest in six months. initial optimism on the possibilities of new elections in italy. reversing some of the earlier upsides. we're now trading lower sessions. joining us our tuesday morning -- this tuesday morning. head of fx strategy. ray, i'm worried about the euro. and wondering whether mario draghi is looking at everything that is happening in italy and rethinking what they have planned for the year. >> well, i don't think that mario draghi is going to be too governed by politics unless he think the politics is going to impact the economics. whether or not i noticed that i think bloomberg were running stories at the weekend suggesting that the ecb could actually issue guidance on the fate of its q.e. bond buying

program is nearly as the june meeting. early reports has adjusted it might not come till -- had suggested it might not come till july. even though we've seen some softer numbers in recent months. to be honest, the euro weakness is more of a welcome development in so far as it's the strength will be worsening early in the years. ing significant threats to the achievement of their inflation objectives. if the economy is fundamentally ok, the ecb could be more emboldened when they next address the world in terms of their confidence that we are moving in the direction of achieving inflation targets. if eurozone political risk rares start toagain, and we see pressure on peripheral bond markets as we have been seeing, intense is under downward pressure, that will give them pause for thought. yvonne: and, especially if you

are heading to a new election in the fall, we're not sure which way this could lean towards. >> well, i suppose at the extreme you can turn around and say, let's wind back to the beginning of 2017 where we were heading into the french elections where there seems to be in existential risk. had le peenn been victorious. we're not suggesting we are necessarily heading back. at you look at something like italian bond spreads over germany, they're already french wider than pre- election concerns about the ongoing existence of the euro. so, if you go back to the midst of the greek crisis, though spreads were at 600 basis points rather than 200 basis point here and euro-dollar, debdown at 1.0, 10% down from where we are now.

the risk is that if we get these elections called and, depending on particularly how the five star movements are faring in polls, it has the potential to bring about a genuine, accidental threat -- existential threat for enthusiasm to remain in the e.u. for the near-term you have to say political uncertainty imply some further perhaps significant downside risks for the euro. i would not be surprised to see those spreads in the coming days and weeks. dave: i'm glad you brought it up. we have a chart of those spreads. at 2.34, italy over german 10-year, how far can is actually go up? e extreme back in 2011, in

the midst of the greek crisis which i think was much more of an existential risk than exist today, we were 550 basis points. you wind the chart back to 2010, 2011, you will see that. in that sense, just the fact we have already gone back through 214 basis points was the widest week saw back in april, 2017. we already surpassed that. one of the things i'm looking at is what are the holdings of italian debt. in percentage terms, 37% does not seem high. in nominal terms, foreign snvestors own 700 billion euro worth of italian government debt. if they do perceive to be credit risks associate with those now and we see further liquidations of those italian debt, that would give an indication that the scope for further blowouts is quite certificate. whether that would pressure the euro, the banks in europe are selling italy and buying

germany, that does not provide a direct -- re intro to the euro in that sense come i think the words might be more expressed through their spreads than directly through the euro for the time being, at least. yvonne: it brings up the question about the dollar. 3%.s to be capped at do you think there is enough momentum and the dollar rallied to go beyond the differential? ofwell, there are lots moving parts to the dollar. it is not just about interest rate differentials. talking to our traders this morning, we were saying the dollar is not going to go down while the euro is going down. if you think about those indices, they've got such a high percentage of the euro, if the euro is going down by default, it will hold the dollar up, even in the face of declining yields, in the bigger scheme of things, whether or not the strong,

synchronize globe story that looks as though it was being fractured in the early part of the year, it develops into something we can actually say, the u.s. is outperforming the rest of the world, i think that would be a significant factor that will drive the dollar higher. if it turns out that actually the first part of the year was more of a blip and think nice global growth is still there, then that will bring the u.s. dollar to heel. we're still focused on the 20 up as it as a. thethe euro find its feet, u.s dollar is going sideways to higher. dave: lots of data coming out of europe and the united states. ray, we have got to leave it there. ray attrill, head of fx strategy. keep in mind, you can interact with a lot of the charts we bring up here. gtv takes you to the library. catch up on all the analysis. for your future use and

reference. this is bloomberg. ♪

nissan is to cut working hours and field goal output at its five u.s. and mexican factories. shift times and production will be reduced by 20% over the summer in response to falling auto sales last year not planning any playoffs but aims to reduce inventory to boost profits. dave: china now said to approve $43comm's $32 billion -- billion pursuit. if the u.s. lifts a ban on z.t.e.. only procedural issues remain on the table.

what a deal has been pending for 18 months now, but has recently been overshadowed by washington's ban on z.t.e. on national security grounds. coming up, the world's biggest mutual funds as it is optimistic about beijing's reform agenda. next on bloomberg. ♪

>> 9:30 in tokyo. vaccine,to the levels a one-month low. 2.5% on your and implement rate. we will talk about the markets in a minute to request your watching daybreak asia. economists nickname mr. a -- asksas to form to form a government in italy.

is opposed by the antiestablishment five-star movement demanding a new >> public andgust public finances remain under control. >> the white house says president trump will meet shinzo abe before his expected summit .ith kim jong-un delegation toa the summit and another team is talking to kim jong-un's team. they are suffering the worst the and at least 20 years

economy has lost $34 billion market value and shortages of lossesd businesses led while stock market fell 4%. the high-speed rail line is -- he says he is canceling the project under the administration of he said his decision is final and will have to pay contractual penalties. the european commission is proposing a total ban on domestic products and measures consumption of others.

europe wants to take the lead in a sustainable market with an estimated $3 trillion per year. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. >> bottom of your screen, let's break down what happened. cross asset as well. >> let's kick it off with what is happening in tokyo. happened for the yen. earlier, the dollar is holding ofr, now it is up by a 10th 10%.

also, what to highlight what is going on in the oil patch. crude is set for a fifth of losses. prince premium, now at the widest in over three years. let's check in with the stock movers over the region. in january 10 hi after jumping about 30%. gallison resources surging and over tokyo, japan is having a tough morning, sinking to a fresh all-time low after reports that apple has decided is a lid screens for all of its models.

japan display trying to catch up to rivals lg and samsung. junk here to talk about more -- talk more about these moves. what does this mean? it will create a different set of losers and winners. lot. is plunging a it is -- it has recovered a little bit. supplyinglay has been lcd screen sample and then working to produce a lid screens, but because of technological difficulties, they have struggled, so it is that news for japan display for the time being. the expectation is kind of

unclear at this point. reactions to this stock rising about 5%, so lg display has been working to supply a lead screens for iphones, but it hasn't been vessel so far. it will take more time or lg display to supply those bullet screens, so if it is true apple beswitching to oled, it will lg or samsung screens. we will have to see how things develop from here. >> it is clear when you look at japan display, and actually gets 54%.e war percent -- >> i think this is a surprise or

many -- for many. if it is true that apple is planning to go all oled next year, it will have to be all samsung or it did of a mix from lg display, but the expectation that samsung will be able to supply that much bullet screen has been high so far, so we will have to see if samsung is able to ramp up capacity to meet all of those demands or if lg display speeds up its development. will have to see how things develop and if suppliers are able to meet apple's demand because specifications will only get more complicated and it will

not be an easy demand to meet. >> i think we just brought up clients to -- for >> thank you, really parsing through the data. let's have a look at the world's largest mutual fund manager here it is a top of its list, so we are talking with vanguard international. james sourcector told us more about the tragedy for -- strategy. >> you already have 80 million investors in that environment, so lots of challenges. i think the challenges are becoming less so in the years ahead. for all of the top about what is

happening from a trade perspective, the market is opening up more and more by the end of the year and we can see a a fund actually being manager in mainland china. retailre going to serve investors, you need to be competing on the ground as a local writer. our guest is there are lots of ways you can do this. you will probably need to work with local partners. if you really think about all of the market outside the largest at said -- asset management, china has to be at the top of the list, especially if you are looking at mass affluence.

competitionthe coming from, local players or international players? >> if you are trying to start in and -- institution, you can do that offshore and that is a whole set of different competitors. i would say in any market, if you want to serve retail investors, people hitting the local markets, you have to have an approach and assume if you're time, you arever not going to win at the expense of others. you will have to compete against local companies that have local capabilities and much more market expertise when you have.

>> that was gains norse speaking exclusively to bloomberg. sold on thext, not change of strategy. is bloomberg. is number three

this is daybreak asia. >> back to oil markets now. concluding they succeeded -- joining us to discuss, associate director for mining and energy i will start with your real quick. first of all, open access the market rebalance in april, is it

really mission accomplished? >> technically, yes. they are saying they want to bring down the average. having said that, you have to understand the last five years or the highest ever. >> you have to look at longer-term? theou have to cut down on barrels. next let me bring into the conversation, what you think? completely. the risk to what we are seeing is they are changing the measures of success. the trailing five-year average, that is really what they stated, but there is a lot of talk about changing that measure, so in output, it could

definitely be the case where we could see cuts in the market. most countries won't be able to boost supplies. they potentially could face lower revenue. ,s the countdown to the meeting is there any sense we could get some of the consensus from the likes of iran or venezuela? >> in terms of what we are seeing is saudi arabia and russia have gone out of the group to make this call, so in terms of where the meeting ends up emma that is really going to be a call on whether we can get consensus and right now, it is still not wanted to percent guaranteed. reaches that,abia the consensus may not,.

everyone is now looking to their positions. it is a bit risky and that is really where the risk is, that all this talk and conversation is really going to drive -- iment, but this deal they certainly have incentives boost output as much as they have been saying. wills forget, 5% potentially be ipo. having that, this deal is something, even though commentary has changed from saudi arabia. >> it certainly has. i look at this pie chart we are seeing here.

where might we see the push back come from. there might be corners within the saudi team that might be leading some of the outlook curbs. >> if you look back the first two months, and a lot of countries were actually not complying and so they were actually stepping in with pressure from other places and right now, a lot of member nations have been saying it is sayingo they are now they are on the risks to increase supplies. i don't think there will be a lot of pushback from other states because for other members, the volume is much

lower and you look at other markets, they have their own fiscal deficits to meet, but we don't see much struggle in terms of getting a consensus. >> i wanted to bring a chart here that shows what we have seen when it comes to production when it has started to fall. andave seen brent crude futures. we are seeing this spread between wti and brent crude. furthere expect that given some of the geopolitical tensions now russian mark -- tensions now? >> a lot of the opec production adding to that. let's not forget they are running some infrastructure

constraints quickly. we think by august, there could be some risk. those spreads could remain so long as we have that problem and the incentives are there deathly for the u.s. to export that crude to asia and markets outside of the u.s., but you are also going to have capacity constraints. it could definitely stay there in the market for a while. >> the oil market -- does it remain that way or do you see a reversal in the next two years? now, it would indicate markets are seeing definite it conditions. so far, that view is held in the

markets, so in terms of when that changes, we need to see opec act and i think that would be the key trigger in which we see a given move from the .arket, but that is a risk curious, was in the u.s. supposed to be a swing producer? it seems like the saudi's are kind of in control on what is going on. what has changed do you think is oil what has happened prices are increasing about $80. downopec actually cut demand for global oil. that is something that they have to take into account. i'll ore prices might leave a

victim of demand. when oil prices or demand falls off, then the oil prices can correct much output than normal, so that is some risk i think russia and others are starting to knowledge and that is why there is a drive towards easy production. time.don't have a lot of andhat is your timetable before we get there, you actually see shell come out of the woodwork? we have $90 per barrel, so that is quite dated. that is a view we would not see opec at them a so there is downside risk. production,shale current pricing has incentivize

that production very strongly. it is outside that are responding to current pricing and that -- we will see meet them, but right now we think forecast for a bit overdone in that is something we think the market has impacted fully until later this year. >> appreciate your time. think the senior analyst agency. remember, you can interact with the charts featured on bloomberg tv. save the charts for your future references as well. is bloomberg. -- this is bloomberg.

asia.s is daybreak headlines,st singapore-based -- wants to go beyond ride-hailing. delivery will be rolled out in malaysia, vietnam and the philippines. >> let's give it to india, five $7 billion about

more than the lenders had. official audit ending march shows the discrepancies. process of having the worst there. volkswagen is opening for new factories in china with its local partner. monday andpened on others to follow. and will focus on suvs electric vehicles. >> speaking of china, the markets open 30 minutes from now. >> we see what we have equity wise for the companies. the risk from energy.

>> we will see the consolidation barrel.er and also the spread between brent and wti. that is likely to compress at some extent. likes it is nice to have diverted use. that is energy, but what are the options left. moving along, looking at what else. >> emerging markets here as well and where are we with the recent dollar strength. alex i believe will give us his views. of the ones i should say. >> last, but certainly not least

-- >> charlie jemison is a long. >> u.s. treasury yields and 2.9%. the languages building up. >> that is the name of it. up, market coverage continues.

aret doesn't seem if they willing to take much risk at the moment. increasingly wary of tensions in europe. way.oing the other they say they will blunt his edge. lun am a another day, abe ahead of the historic talks in singapore. this is bloomberg markets: asia.