>> is 7:00 a.m. here in singapore. i'm yvonne man, welcome to daybreak asia. asia pacific markets face a mute start after a listless session in new york. investors switch from the summit to central-bank decisions. ten-year yields rose and the euro well. gold and the yen are edging lower. ramy: i am ramy inocencio. at&t is to take over time warner. this will create a powerhouse to

challenge amazon and netflix. president trump repeatedly that he can do a deal with kim jong-un. north korea says the pair exchanged rank opinions. opinions. yvonne: this is the day after that historic handshake. this is the summit in singapore. both sides learn? were spinning this as a win for the u.s. and north korea. we had the joint communique. we saw a commitment to denuclearization but they stand on details. first, let's hear from the epicdent during his hour-long press briefing. he will talk about how he will take this bet to trust kim. >> i think that he will do these

things. i could be wrong. i may stand before you in six months. i could say that i am wr i don't know that i would ever admit that but i will find some excuse. yvonne: they were hard questions asked. he was bringing some fun into this press conference. what came out of that was this country development out of the summit -- the u.s. saying that they are willing to suspend military exercises with south korea. this could disrupt diplomacy in this part of the world. ramy: they could shake up strategic alliances. analysts are saying that this is a win. they have long-sought the u.s. leaving the korean peninsula. they don't want those 30,000 u.s. troops so close to the border there. shifting from the

summit to the central bank. especially here in the united states, there was much reaction because we're looking ahead to the today policy meetings. look at the board here. mixed trading at the u.s. closed. the dow had been lower for most of the day. you can see it close a fraction of a hair down. the s&p 500 was up by 2/10 of a percent there. that was the highest by february 1. not much of a positive there. the nasdaq is having for a new record high. let's lookurrencies as well. the bluebottle -- bloomberg dollar spot a rise. euro is flat right now as we head toward the ecb meeting where mario draghi is expected to talk about that. look at the mexican peso, crossing the 20 mark. this always ppens, it always weakens when there is more trade tension.

the turkish lira, this is the biggest fall since the start of the month, 4.5 to the dollar there. finally, as we look new zealand and sydney futures are a little less listless. at the u.s. market closes. confirf that new that e. we also saw pink slips at tesla, blues for bitcoin and a green light for two companies in a super megamerger. su keenan has more. walk us through this. we have the fed the wednesday. we have the ecb behind it. maybe we should wait and see. it looks like that is what the market did. there wasn't a lot of volume in

this market. it was well below normal. gold was declining. as we go to the big stories of the day, tesla is clearly up there. let's go to bloomberg tv where you can find our great charts. you can see a rise in the number of tesla employees to about 37,000 earlier this year. i'm looking at 9%. look at the big movers. the answer is yes, the stock is up in a big way. the company is really showing a pedal to the metal such as big. you also saw twitter hitting a three-year high as the advertising is valued. time warner and at&t are movi ahead of the big decision. let's go to after hours. you saw at&t lower, time warner was up as much as 6%. quickly, into the bloomberg one more time. if you look at ceo confident

verse merger activity, it was very interesting in this white line. this time warner merger has taken about two years to come to fruition. they now have the ability to go to had -- go ahead. the digital currency is now the lowest since february. it is down roughly 50%. we are well past the euphoria days. >> it got a little bit ugly. it has to do with the fact that you're getting a lot of scrutiny on the trading venues. let's go to the bloomberg to see how the decline has affected. just bitcoin but all of the -- you can see a dramatic decline there. billy have epic when not gone away. bitcoin is rat poison squared.

-- the critics were proven wrong. you can see the huge rise in bitcoin. this has just come down if you look at what happened in the last two days, it was a thousand dollar drop. it hasn't really been one thing. it is more the difficulty of trading and the concern about valuation all adding up to a digital currency that as well that 19,000. it has come down considerably to the 6000 handle. there are some predicting that it goes lower from here. yvonne: this is our top story. president peated his belief that he can do a deal with north korea. he said he is certain that kim jong-un is on board.

wes is throughout the week, heard the headline through on the press briefing. what did you make of it? >> that is an interesting concession. it is a significant concession. when you look at what north korea and kim jong-un came to the table to offer an verse what united states could potentially offer, it seems that the united states gave up quite a bit unhistorical perspectives. this has repeatedly pledged to make the desk negotiation. this was not verifiable or irreversible. the united states, their major ,oncession in the 75 minutes donald trump said that we are going to stop the military exercise with south korea. they're going to say

that they are going to spend much of the 11 nine dollars to build up the expansion of camp hreys to house the u.s. military and 32,000 troops. it could be expanded to 45,000 troops. this is a major military deterrent. we are going to stop the war games. i think there was a lot of head scratching. not only in so but also in tokyo, there are many more u.s. soldiers, japan has been much more hawkish. they did not give any of the concessions from north korea as far as ballistic missile restrictions that they wanted. if you think the success of this a strong anti-new for statement, if you are hoping for that, we do not get that. it was just a five-hour meeting. i want to come back to the latest. devin tina donald trump hasn't

-- accepted the invitation to visit pyongyang. this is a statement coming from north korea. --y said president trump they said the summit is of great significance. they're looking to make a radical switchover in the most hostile u.s. and north korea relations. also, north korea said that if the united states makes goodwill gestures, we too can make our own goodwill gestures. at least they are talking. the one good take away from the united states is that they didn't match up to -- ratchet up tensions. yvonne: we have eliminated that short-term threat of these. >> you could say that. the one person smiling is xi jinping. ramy: that is a good point. they have been trying to get

u.s. troops off the korean peninsula ever since the korean war ended. when it comes to stopping the wargames and donald trump saying that he. military personnel off, the ramifications are huge when wek at the strategic alliances and partnerships as well as competition. >> absolutely. it was very interesting to hear the u.s. talk about the cost of having the true president -- troop prescence in japan. the democracy usually talks about the cost being -- not allowing these dictators or those who are threatening democracy to have their way. the cost that donald talked about was the economic cost. i understand it, it is expensive. he talked about the cost of farmers out from guam just to go to the wargames in south korea. what cost there is to america

position and the security umbrella that it provides its allies statistically, japan and south korea. ramy: the political as well as the geopolitical cost there. that was stephen engle in singapore, thank you very much. let's get the first word news with jessica summers. you, chancellor merkel is turning the tables on president trump. she says that the trade one -- runs a trade surplus with europe. she also says the topic was discussed at last week's g7 summit where the president threatened new tariffs on auto import. that seems to be hitting german automakers the hardest. >> trade surpluses are still calculated in pretty old-fashioned ways. it is based only on goods. if you look at services, including those in the trade balance, the u.s. has a big

surplus with europe. rulesle has changed the in the app store. it is limiting how developers harvest, use and share information about iphone contacts. this asks users were access to phone contacts and then they market share or sell the information without permission for those listed on digital address books, sharing data is what's kept up a spoke earlier this year. facebook earlier this year. president trump drew sharp criticism on capitol hill. the senate is voting on a defense bill. the company agreed to pay a record fine and shake up its management to be allowed back in business. invented bricks as the g7 is useless because it doesn't include china and india.

general o'neill coined the term in 2001 referring to the fastest emerging growing economy. he says that the seven is irrelevant as it excludes emerging powers but includes basket cases like italy. he concludes the g7 can no longer aimed the legitimate -- which it is missing -- legitamcy required. carbon more than 2700 journalists and analysts in 120 countries, i am jessica summers, as is bloomberg. yvonne: coming up, more from singapore. why china may have gained the most from this stage-managed summit. ramy: investors are certain the fed will pull the trigger tomorrow. we will look at where the devil may be hiding in the details. this is bloomberg. ♪

♪ ramy: this is daybreak asia. i am ramy inocencio in new york. yvonne: i am yvonne man in singapore. we will break down the same for summit with our chief north asian correspondent stephen it will also open with our next guest. this is the former u.s. ambassador and secretary of commerce for international trade. peggy for joining us, frank. call this at trump victory? the people into kim jong-un's trap? frank: this is the first moment of a long story. we don't know the ultimate outcome.

on the? side is will kim onto the agreement. that is a loss for the u.s. and u.s. allies in south korea and japan. yvonne: how big of a concession is that? what can the u.s. get in return? frank: i would hold that to the very end. those trips guarantee the security of south korea. they have kept peace for 67 years. i would say we're going to strip those out. think when you to see performance from the north and then we can talk about making

adjustments. yvonne: the one thing we did here was that these sanctions would remain in place. that is the biggest that he has. is that giving him enough leverage to see this through -- through? frank: sanctions can leave. especially when there is a positive moment when other countries and individuals say why am i complying when the whole relationship is going positive? there may be more border leaking into china. you may see more deterioration in a regime. the u.s. is doing what they can to keep them intact. the china get a good victory here tonight? frank: china would say anything that reduces u.s. military presence is good news for china. any steps that reduce confidence among u.s. allies and u.s. if there wasn't a

consensus on that, we gave a good friend, a shock. that is good news for china as well. you have to manage the relationship. ramy: to give trump credit, he said that the troops are not part of the equation for now. it could be down the road. there are 50,000 in japan. that is a big bargaining chip for the united states. white if you are the house right now, you would put timetables together for north korea. say this is what i want to see over the next 90 days. this will demonstrate to the u.s. that they are serious. we are saying north korea warm-up in relation to the u.s.. what does everyone else still? -- feel? reallyare they

interested in economic relationships with the u.s. or are they saying that i will pretend to be really in response because i want you to lay off? i want you out of my neighborhood. we don't know what the honesty of kim is on this. ramy: in the past, you can look at all of the different agreements that the north koreans had. you can see that the commitments they made were even tougher. what they made yesterday is about complete denuclearization. that is a reaffirmation of what he plans with moon jae-in. did north korea walk away from this? there is nothing new in the agreements. there are some circumstances. kim is in a much weaker economic situation. his back is against the wall.

china toe has engaged enforce those sanctions. the other thing that trump has done differently is he has put out that hand of friendship. debate why he would meet with kim but at least kim knows that if he will ever go from where he is, he will get the best deal he can from donald trump. stephen: what about the economic sanction we were talking about dictators looking at the world very differently. frank: you can show that video to any other human being. a dictator never goes down that path. dictators say this whole country is about me and staying in control. >> you don't think that he saw singapore and changed framework based on needed to shift -- needing to shift? frank: no communist dictatorship

has ever gone down that path -- saying why am i oppressing my people? he saw the worst of my was an disaster,d this is a we have to move toward market economics. nobody in the soviet bloc ever did this. cuba and north korea have not done this. some of the non-communistic dictatorships said that we will move away from communism. gorbachev saw that he had a problem but he did not understand economics. he made the mistake of trying to reform the political side without reforming the economic side. he said we're going to keep running things politically. yvonne: when it comes to the trade relationship, do we think that we are going to see don from making friends out of

-- donald trump making friends with enemies?ional g7, those arehe mostly from the trading relationships. if you want to pick something, you say, that is 90% ok and 2% a problem. but they problems are with countries like china. he will back off of the g7 issues. the reason it is unclear is because he has a propensity for theatrics. he has never gone to a meeting, he went to the nato summit and breaks his colleagues. he has never gone into a meeting and said you are wrong and i am right and you need to stop cheating me. there is something about his dna where he gets into that. he faded on that issue.

i suspect he will do the same thing with g7. now, he is offom and on to something else. we are talking about the viral photoperiod it didn't look as bad as some people think. thank you to stephen engle, our sheep north asian correspondent in singapore. we will have plenty of more to come here in daybreak asia, this is bloomberg. ♪

♪ yvonne: -- ramy: a quick check of the latest business flash headlines. seek -- thish to would be the biggest in australia. to deal would be subject review by australia's foreign investment and competition watchdogs. is kind 9% of its

workforce, underlying the mounting pressure. the cuts are the biggest widespread layoffs in teslas 15 they struggled to production targets for the critical model three. this is bloomberg.

♪ is 7:30morning, it a.m., wednesday in singapore. we saw the president and kim jong-un made yesterday. we'll see what is next. i am ynne man in hongg. ramy: it is 7:30 p.m. here in tuesday -- on tuesday in new york. the s&p hit a high not seen since february. wents listed as markets

from the summit to central banks. of course, the fed with its decision out tomorrow here. most investors are thinking it is a done deal for another fed rate hike. i am ramy inocencio in new york. i am yvonne man in singapore. you are watching daybreak asia. let's get to the first word news with jessica summers. president trump has repeated his belief that he can do a deal with north korea. he said he is certain that kim jong-un is on board. the decision is to suspend more games -- wargames with south sent a shock through the seven decade military relationship with soul. developed a pretty good relationship in terms of getting something done. it got done. it is a started but it is

terrific. there are things that we negotiated after that document that are also very important. we are going to get rid of certain ballistic missile sites and other things. berussia is said to proposing that opec and the alliese to return oil production to october 2016 levels. rolling back most of their cuts within three months. russia and saudi arabia have suggested boosting output. s lowests tumble to it's in february. below $6,500, bringing the slide to more than 50%. bitcoin hit 19 point $5,000 back in december. cryptocurrencies are struggling

with hacks, theft, market manipulation and money laundering. haveesa may seems to averted a revolt by pro-eu conservatives. she dodged what critics turned into a major political rises. rebels have been pushing for an amendmenould have given parliament unprecedented per over the government strategy. they stood down after the prime minister offered a compromise. however, it is not yet clear what the deal includes. global news, 24 hours a day, on air and on tictoc on twitter. powered by 2700 journalists and analysts are more than 120 countries, this is bloomberg. we are counting down to major market opens. let's go to dividend was in hong kong. -- david in hong kong.

david: we are shifting to what matters with markets. a quick note, australia and .apan are climbing down as with indonesia, the futures are right here. we are looking at slight losses that at the open in japan. pricing in aalso little bit of declines. lead,s not really a meandering for more than a session. the closing is a little bit higher. i am not exactly the most accurate of leads coming out of the u.s.. shifting our attention to three central banks. long story short, jessica was just talking about the gyrations we saw in sterling. it is a stronger dollar story. from midnight, hong kong time, that is the rally you see on the

dollar index. that is the decline you see on the aussie, the euro and sterling. what they do after that, it is just three or four looking at that funds. we are right in between where we are for three and for four. we are stuck between christmas and new year. have a look at that. it shows you a potential for market blues. what we talk about is contingent on what happens this year. when you look at the pricing right now, the spread between the euro-dollar contracts, 2018 and 2019 at about 36, that means markets don't even think the fed will be able to hike three times next year. barely 1.5 times at this point in time. looking ahead to that fed rate decision.

thank you so much. let's go to at&t and technology here. at&t shares are slipping in late trade. that is after a judge cleared its $85 billion takeover of time warner. that is without conditions. they will feels evolution into a media powerhouse. they can go head-to-head with the likes of netflix as well as amazon. dave mclaughlin was at the trial what does this really mean? dave: this means that at&t can go ahead with a merger that it reached in october of 2016. almost two years ago it has been waiting for this deal. there was a long trial in u.s. district court in washington and today. the judge released the decision to the public and now, barring any appeal, the companies can go ahead and close. yvonne: a lot of analysts were expecting this to happen.

but with reactions from both sides? dave: right after the decision, the company lawyers were backslapping one another. it was all smiles as they went outside the courthouse. they criticized the government as they had in the past. meanwhile, the head of the justice department antitrust division that sue the companies, that was looking pretty dour. he escaped into a room and declined to talk to much reporters afterwards. >> how will this decision affect dealmaking in the future? i imagine comcast will be excited about this. dave: this was a really novel case. government was challenging a vertical deal meaning to companies that don't compete with one another.

most of those deals in the past have been approved without court challenges. this is the rst time in decades that one have gone to court. a lot of people were looking for guidance about how antitrust enforcers would handle vertical deals going forward. talk shares rose because this is the thinking. the thinking is that comcast will be able to have an easier time buying fox. there are another couple of deals in the health care sector. they could have an easier time getting approval. case, itterms of this seems that it was riddled with holes. i don't know if that is the appropriate thing to say. it is something that was easy to poke through the defense here in terms of trying to make sure that this didn't happen.

>> this was a pretty sweeping victory for the company. the judge basically rejected every single theory that the government brought against the case. the star witness who was an economist. the justice department did not score any point in this decision whatsoever. the judge even went so far as to tell them that they should not bother seeking a temporary hold on the deal if they decide to appeal. he said they will not get it. thank you for that wrapup. yvonne: joining us on this latest court case. now,ng more about apple they recently made changes to

the app store, limiting how developers harvest, and share user info. this cracks down on a practice that has been employed for years. it comes in the wake of a facebook data scandal. sarah is joining us. she and mark were the first to report the story. why is apple doing this now? apple has made a big point of saying that it cares about your privacy. it is not like facebook and google, creating databes of your private information to build an ad network. it does not care about that information. the problem is that it has built this ecosystem of developers who do make money off that data and do use the data for growth. the way to get this information is through permissions for contacts. when you give your contacts permission to a developer, they are not just getting information on you, it is everyone in your

address book. oft is similar to the kind problem you're concerned with around facebook and cambridge analytical. once the developer has that information, they can share his or salad with a third party. that hasn't come against the rules until last week. rulesome against the until last week. yvonne: how will they enforce all of this? you see the troubles with facebook, they struggle policing this activity. sara: it will be hard. apple doesn't track information once it enters a developer survey. it could be on a database somewhere. the company is going to have a hard time not just enforcing this but also making sure that all that data that is already shared with developers over the years is not used for any sort of harmful purpose. ramy: you can't help but try to

connect the dots with what has been happening at facebook. is this indirect response? saying.ple has not been apple still hasn't had any large scandalous relationships. it is pretty commonplace for veo sell it to data brokers or salad to any sort of marketing material. this company has a stellar reputation for privacy, even since breaking our story, they have done some great positive feedback from people. they say that apple looks like it is doing a good thing right now. what people have a hard time understanding is how difficult this will be for the company to enforce these roles -- rules. ramy: that was the latest on apple. thank you very much. up next, from the unemployment rate to emerging market concerns. a rundown of the things that the

fed will have to address in its policy meeting. this is bloomberg.

♪ yvonne:s is daybreak asia. i am yvonne man in singapore. ramy: the fed has launched the first of three important central-bank policy meetings this week with the ecb and the bank of japan. our global economic policy editor kathleen hays is here with the rundown. wages,on, unemployment, that is what they always focus on. >> the question is whether the fed can hike their race tomorrow oreveryone expect and signal if this is enough of a tilt with a stronger consumer with the labor markets getting even more tired. saying we need to signal to more.

this is their second most important inflation. if inflation is going up and your paycheck is a rising, you are not getting ahead. gb can call up this gb to -- tv if you want. this is something that is not quite there. average yearly earnings are up to 2.7%. look at how this is a steady uptrend. this is a lot being powered by l prices. another point to make about this is to of the big things that push these cpi's higher.

rising rent, higher gasoline prices. is that something that is going to cause inflation to rise? though that hurt consumers? i think that is another reason why the fed is expected to be very cautious. right now, it is a split between three hikes and four. we will see tomorrow which side prevails, the cautious ones or the ones worried about the economy overheating. ramy: thank you very much for setting that stage. with that fed hike tomorrow page right in, attention will be on this. the latest data shows u.s. inflation accelerated to the six year high. this is reinforcing t fed's gradual approach. thank you for joining us here. i want to get your thoughts on where we are headed. we had taking a look at inflation. earlier on we were talking about inflelated -- rate of

ation. definitely, tomorrow's rate hike is a done deal. in terms of the conversation about the three or four, that is where the fed is going to make up its mind. his inflation at that level? does it have to tell everyone right now that it is going for three or four? it dsn't have to. we read into the fed statement. we pay very close attention to the press conference afterwards. we will look at every single, or;. it doesn't need to tell us everything tomw. it can still keep its options open. i would be more careful in trying to find out whether september is ago or december is a go. we know september is coming between now.

i can still indicate a december rate hike. >> that is what is going to be so important about the press conference after the meeting. this is the first thing that everything -- everyone is going to want to know. the national federation of he bigndent business, group and small businesses, the second-highest optimism on record, it seems like optimism and a stronger economy, tax cuts taking hold is evident. what does that mean for the hawks? will they push for overheating? >> that is was part of the debate comes in. businesses are constantly indicating that they are very optimistic. the job market is still adding jobs at a very fast pace. urgency ine that

which growth. to presshe hawks want therewith that concern, is still some wiggle room for becauseto live in open we still can withstand some inflationary pressure. it is not that high. they have repeatedly indicated that they have a metric inflation target. there is still a lot of space, they can raise rates and they e to guide financial market expectations toward faster rate hikes. that would not be a problem.

>> looki at the geopolitical risk, we are seeing trade risks happen with the g7. we are seeing something, and singapore. the geopolitical risk is higher in 2018. this is the gcb library. 2018 and on avage than 2017. to what degree is geopolitical risk calculated? >> that is the other fine line the fed has to walk. definitely what came. what happened at the g7 meeting is primarily trade related and unexpected news. we were not expecting much distraction after the meeting. it is also geopolitical. these are allies of the u.s.. we are trying to see how the stand of the u.s. changes. what it implies for them working together in the near future and what that implies. all the central banks are looking at geopolitical risks. they do pay careful attention to that. i don't think it will feature as

one of the prominent comments in the statement. they will try to downplay it. --rall, we are helpful hopeful that the allies will try to not have an outcry trade war. even something like this will eventually go through. it will take a little longer to get to the conclusion but that is still our base case option. yvonne: we heard those lines from ben bernanke just last week. talking about how the u.s. is facing this wily coyote market. thus he have a point? does the fed have a temper position in two years? that youonomy dictates need the stimulus when the economy is already running hot. having a fiscal stimulus at that

point, it is less effective. it is not an effective, just less effective. when you're already at or above capacity, that as to a little bit in the near term. this is the sentiment continuing. these activities are all continuing. also, it adds to inflation if you're already at capacity and running the economy even hotter. in the near that is fine. the inflation is rising a little bit. that helps the fed's case to raise and stick to his non-libation plan. the other thing that it helps the fed do, it helps them get to a place where it is more comfortable when that downturn comes. you need to build that monetary policy space. the higher the terminal rate

you're able to set, that gives you more of a cushion in terms of how much you're able to cut back when that downturn hits. whether it is 2019 or 2020 or later, we are not there yet. we are not in a position where we can say we're having a recession coming in may 23 of 2020. we can't say something like that yet. it gived a little bit of ammunition. it basically gives themselves the tools to fight any future fires. the forget, our interactive tv function is tv . you can watch us live and catch up on pass interviews as well. you can dive into any securities that we talk about during the show. this is for bloomberg described as -- subscribers only. check it out at tv .

♪ ramy: we are counting down to the market open in japan and australia. let's look at w they're headed right now in terms of futures. a 10thfutures are up by percent. we're looking ahead, soul is closed for today for election day. you're looking at somethinom 24 hours ago. sydney futures are up a fraction of a percent of their as we head incoming up, we'll get more reaction from the kim suit with park strategies -- taking apart a little bit more about what happened from the trump and kim summit in singapore. k thenining us is peterson. these. talk to us about

they're expecting the fed as well as the ecb tv. market movers with the bank of japan, we are expecting them. the market open is next, this is bloo ♪

♪ yvonne: 8 a.m. here in singapore, i am yvonne man. welcome to daybreak asia. this wednesday, we are talking their recap of the singapore summit. asia-pacific markets facing a muted start. investors not turning to the strength us -- strand of central banks decisions. a fed hike is a much priced in an the spotlight turns on the ecb and a potential base for unwinding qe. ramy: and i am ramy inocencio you in new york where it is just past 8 p.m. on tuesday. to trading inrn

hong kong after a two-month suspension. but it faces new penalties in washington. and come a president trump repeats his belief that he can do a deal with kim. north korea says the pair exchanged some frank opinions. ♪ yvonne: after that historic handshake, it seems like business as usual here in the lion city in singapore. of crse, a lot of questions ahead of what came through in the last couple of days as joiét between the two nations for denuclearization was pretty scant when it came to details. ramy: and donald trump said he thought this was a comprehensive agreement, but a lot of analysts that we have had over the past few hours thought otherwise. saying that it might be a bit meaningless because it is just howfirst step in who knows

many steps over the course of the next few months, maybe years. to be honest, we just really don't know. yvonne: yeah, markets elbaradei quickly.pretty . taking a look at the market open, korea closed for the local elections it is interesting to seek south korea takes on this. let us get to the market open with dave in glass us from hong kong. david: speaking of moving on, think of you and your ex, it -- itt mean that you are is called a normalization in relations, if you will. markets are meandering, the nikkei 225 and the asx 200 art meandering ahead of the fed decision. inflation in india is right at about the 5% level. the r.b.i. a bit above, and the u.s. two-year yields, that is

essentially what would happen if you get a rate hike priced in. brent will be interesting of the next few weeks. russia is now said to be planning to ask opec and friends to start ramping up production back to october 2016 levels. there is also the other part of their oil story where if you look internally within oh, there seems to be some level of disagreement on where demand really goes from here and how much yually need to pump into the sector in the second half of this year. one stock we are watching out for that is not. trading yet is over in australia you see the headline right there, li ka-shing with a big deal. $11 a pop is the offer. eight dollarss at seven,. about a 30% premium back to

central banks, two things you want to note, there is room for market moves. just because we get a rate hike priced income a it is not about that, it is about what they say, their projection economy. we are looking at bets on three rate hikes in the red line, and in case you're wondering, that is the january contract. futures are right in between, we will see where that goes depending on what the narrative. and the commentary wil be this obviously plays into what happens next year. stocks right now, three rate hikes are priced in into the markets. one rate hike next year and that to. just in case you are curious that is a thread between the euro-dollar-2018 and 2019 contracts. this chart here in between, it shows that there is room to dance as we had into the key rate and guidance coming out later on. ramy: thank you very much, david ingles on the markets.

let as bring in garfield reynolds, over in sydney. asian markets are opening lower right now. is it really that the headline in u.s. inflation has got ?nvestors spooked garfield: ram don't think the headline ilation numbe came in prh in line with -- the headline inflation numbers caetty much in line with expectations. dated ease concerns when it comes to the fed? the fed will raise rates. now that we have had the little turkish, argentinian tantrums calming down, there's nothing to stop them saying that they will raise rates, that the data is showing that inflation is going back up. so three is for 2018 four will be on the table. the table?lose to over here, or right in front of them?

i think that is a big part of why asian markets today look very frozen to me. nobody really wants to go anywhere up or down at moment. the has combeen forgottehe markets. so to, meandering speak, especially what we saw here in the united states, slating to asia. in the meantime, bond markets are looking for the interest on excess reserves. what are we watching for? garfield: we are watching to see whether it will be a 20 or 25 basis point increase in the rate. that is again all part of the balance sheet adjustment, and what goes on with that, also affects how everything else prices throughout. a have had a little bit of drop off in rate slowing down the curve, but it is because it was only 20 as opposed to 25.

so this time around if they were to go to 25 instead of 20, you might get a tick up and, which would behing of a false positive for rates. is both fromion that and from the rates perspective otherwise, will the curve keep on flattening? yvonne: we surely have seen that flatten even more, after what we saw in mid-may. it is interesting, i was talking with one of the analysts on the singapore summit. this, lete are past us now focus on the fundamentals. what kind of data points are you watching today? today, it is a little bit sparse on the data points. we did have some very interesting and perhaps concerning data on china's credit growth which came in much weaker than expected. president xi jinping will

probably be happy that deleveraging continues apace. i am not so sure the chinese stocks and bonds will be happy. we alooking out for australian consumer confidence, and a little bit more of the china foreign direct investment data which is also do. those are all small pieces of the picture, but the biggest data point was the china credit statistic that i mention and that has come and gone. they have to be a bit concerning since we have china's market, which has an recovered since that post february collapse unlike the the rest of asia. so when the stockket is not doing so well, that has to act as an anchor for the rest of the markets in asia. yvonne: garfield, thank you. our bloombg strategist joining us from sydney. you can follow more on this story and all the days trading on our markets live blog where

garfield writes a lot of his insights. you can get a market run down in one click plus commentary and analysis from bloomberg's experts editors and find out how it is affecting your investments right now. let us get to the first word news. jessica joins us from new york. jessica: hey, yvonne. while president trump has torpedoed his be that he can korea, he says he is certain kim jong-un is on board. his decision to suspend wargames with south korea is the most concrete developme from the summit. it sent shockwaves through america's seven decade military relationship with seoul, korea. >>e have developed a pretty good relationship in terms of getting something done. it got done, i think it is a terrific document. it is a starter, but it is a terrific document. there are things renegotiated after the document that are also very important.

we are going to get rid of certain ballistic missile sites and various other things. >> cellor merkel is turning the table on president trump. she says if the u.s. runs a trade surplus with europe when services are included. a rebuff of are trump criticism on u.s. exports. threatens new tariffs on auto imports which could hit german makers the hardest. >> trade surpluses today are a prettyculated on old-fashioned way based only on goods. but if you look at services, if you include them and the trade balance, the u.s. has a big surplus with europe. >> apple has changed the rules at the app store, limiting how developers harvesting, use and share information from iphone contacts. it and the practice which has seen developers ask users for access to phone contacts,

marketing the information without that permission of those listedn the phone book. chinese phone maker zte may face new punishment. that is after president trump's criticism on capitol hill for helping the company continue its business. they begin defense on -- there's a debate on defense bill which could be discussing the issue. last week, the company agreed to shake up its business, the us to shake up its management so that i could be allowed to continue business. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists in over 120 coun i am jessica summers. this is bloomberg. ♪ yvonne: still ahead, we will talk more about the singapore summit as wee central banks holdcy meetings this week. our next guest will give us his

take. but first, more analysis of the singapore summit with our next guests. this is bloomberg. ♪

♪ ramy: this is "daybreak asia ," i am really inocencio in new york. yvonne: and i am yvonne man in singapore. president trump repeated his belief that he can do a deal with north korea, saying that he a certain kim jong-un is on board. >> i think honestly he is going things.ese i may be wrong i may stand before you in six months and say hey, i was wrong. at another i will ever admit that, but i will find some kind of excuse. yvonne: despite that, the president decisions to suspend

theames with south korea is most concrete development from either side of the summit. stephen engle is in singapore with me. this will potentially shake up thry alliance number lovehat the u.s. has had here .n this part of the world stephen: he definitely dropped this long. when we read through the joint statement, it was dirty water down. the first two points were about establishing long-lasting peace and reflecting the wishes of people in both countries. and the third one was just a reaffirmation of the declaration from late april with moon jae-in , for north korea to embarq or pursue complete denuclearization. nothing about verifiable or irreversible. down.as really water the fourth part come up very symbolic, about the pows and mias, but again, nothing about

denuclearization. -- thed not necessarily north koreans did not necessarily give any concessions. so what did president trump do, he give a major concession during the press conference, and that they will stop the wargames outh korthat is a major deterref thosekorea, to have wargames. i am not advocating them, but to give that up as an amazing what is it, 32,000 or so u.s. soldiers on the korean -- toula, more in japan his credit, he says that that is not part of the equation right now. we heard from the secretary of state before saying, that is not on the table, we will not re troop numbers there. and then donald trump says, we will stop the wargames. -- even thehaking blue house in a seoul, korea

said they are reviewing the statement. yvonne: northorea, it is probably a win for them, and china off course is also .hrilled to hear this stephen: eat china definitely got what they wanted. summit, they-good got that the escalation of tensions, but they are not getting any indication that the united states will push for regime change, the two sides did not walk out, and donald trump in the press conference said he would like to have not only moon jae-in, but also xi jinping in china involved in the next summit, potentially, to end the korean. bring a china to end the process. ramy: it is really interesting because while north korea was trying to get a bilateral deal, it is almost likely are harking back to the six party talks a few years ago.

stephen, stay with us. newre going to bring in a guest who served as a senior adviser for asia on the commerce department, and we're also joined by john campbell, executive director of the nonpartisan advocacy group, the arms control organization. sean, the top line as you try to dissect what happened hhours no. >> yes, only 24 hours and we have been dealing with north korea for seven years. i am ok with trump having taken the meeting, i am willing to be convinced to see what he can do, but based on the statement, i am pretty underwhelmed. ramy: what makes you the most underwhelmed? kay: first of all, trump has been talking about how he would be like nobody else and not repeat the mistakes of obama and bush, but this is very bush-like language.

notably, we adopted north korea's language on unique verizon nation. of the denuclearization korean peninsula, which is north korean code for removing south korea from the u.s. nuclear umbrella. of scrimmage, during the press conference, not necessarily the halting of the wargames, those can easilbe continued, but the fact that our own president would call our wargames provocative. that is something that i would expect president xi jinping or kim jong-un to say. that is what unnerved me. ramy: darrell, i would like to bring you here. w to see the next steps, whether it is complete, verifiable or irreversible denuclearization. darrell: let me first say, that i think the meeting between the two heads of state is important to break this cycle of escalation that we were seeing in 2017. i agree that the joint

communiqué is very basic, but it does provide the basis for further detail negotiations with sey of state on pao. andnorth korean minister he, they will have to pursue this in the next coming weeks. at the real test is whether each side will follow through on concrete steps to realize these very lofty goals. about is not the statementt the exercises, but the lack of agreement about the pacing and the sequence of these steps. in other words, if we will have an action for action process, which we have been discussing, which step will the united states and which step will the along? take to move us another question that is not clear at this stage is whether they agree on the definition of denuclearization. the othere with guest, the north koreans have

has saying, and the u.s. been saying for years, denuclearization of the peninsula. that means from the north korean prospect of, the removal ofu.s.e pe meaning weaps that can carry nuclear weapons or that can strike the regime. that is what they are looking for their we had that is possible and if we can do that while still providing defense assurances to south korea and japan. have notefinitions necessarily been agreed to on these issues. clarity about the next steps. this is going to be the hard work that the qatari of state compare will have to pursue. so, mission yet to be accomplished. it is a years long process at best ahead of us to disa very sophisticated and substantial nuclear program, ofdreds of buildings, dozens facilities, probably 10 to 50 nuclear bombs.

it will be an operation that could take a lot of staying power on the side of both the government and our allies. darrell, i.e. encouraged by the fact that the president said that sanctions will --daryl are you encouraged by the statements the president gave, regarding progress? can they actually get china to play ball? guest: china and the united states have a, and will hear. they have different ideas about how to execute the strategy, which levers to emphasize at this point. for now, the existing u.s. sanctions will remain in place until such time as the north koreans take further demonstrable and verifiable steps, which it is not clear as to whether all the sanctions will remain in place. until denuclearization is

completed, or whether there may be a gradual lifting of certain sanctions, in order to help incentivize actions on the part of north korea. the trump administration has really clearbout their messaging on this point. there is a north korean press on account of the meeting that differ is with the idea of sanctions remaining in place until the end of the denuclearization process. so there is room for disagreement that i am concerned about. back on the military exercises, let us be clear about what the distinctions are here. president trump said come i believe, that the exercises will be sus ended. reversed.e those exercises could be resumed in the fall if the north koreans are not moving forward. that does not mean the removal of any u.s. military or so that all, that is not what he is talking about at this stage. what i am surprised by is that

he did not offer what the north koreans have been asking for going into the talks, which was taking out these strategic exercises. these that b-1 bombers, the b-2 bombers, that is actually what the north koreans were looking for. they may have gotten more from donald trump. he may have gotten something for suspending the exercises that we don't know about, but he also may have given up concessions that did not get him something in the denuclearization process. ask you a, let me similar question about the sanctions that we just asked the other guest. how important is it to keep the sanctions on the most in full force until we get verification that they are dismantling? the last time you and i talked, you called the dismantling of the testing site a bit of a show or a sham. sean: it definitely was, from

everything that i've heard from experts who were there and watched it. we haven't taken off any of the sanctions existing, but we have held back on hitting with korea with more sanctions. we never got serious on sanctioning the mainland chinese enablers of north korea. i saw within one hour of. president trump's press conference last night, beijing was already sending message that it is time for the to to list it sanctions -- lift its sanctions on north korea. it seems like the sanctions regime is being weakened as we speak. stephen: of course, people saying that it was actually china with all the concessions, which is what donald trump said he might do. thank you very much, shawn king of park strategies and daryl kimball of the arms control association. ♪

♪

♪ yvonne: good morning, it is a: 30 in singapore. we are half an hour away from the opg trading, the day after the historic singapo summit. i am yvonne man in singapore. ramy: and i am ramy innocencio in new york. u are watching "daybreak asia ." let us get the first word news with jessica numbers. rolling back most of the output cuts within three months, this plan would see

reducers share increased by 1.8 million barrels a day next month. russia and saudi arabia have already suggested boosting of puts, good hurt demand. bitcoin tumble to its lowest in february -- since february as a meltdown accelerates. it has renewed concern about the long-term viability as an alternative to traditional cash. the price fell below $6,500 wringing their drop to more than 50%. . cryptocurrencies are struggling from hacks and thefts, manipu and money laundering. the man who invented breaks says the g7 is useless as it does not include china and india. he coined the term in 2001, referring to the fastest-growing international economies. he says the group of seven is easingly irrelevant as it like.es basket cases

it or leave he concludes that the g7 can no longer claim to exercise economic leadership. united kingdom prime minister theresa may seems to have by.ted a revolt euro eu conservatives she dodged much good turned into a major political crisis. rebels had been pushing for an amendment that would have given parliament unprecedented power over the brexit strategy. .hey stood down after the prime minister offered a compromise however, it is unclear what the deal includes. day, onews, 24 hours a air and on tictoc on twitter powered by more than 2700 journalists in over 120 countries. i am jessica summers. this is bloomberg. just, thank you. let us see how the asian markets are shaping up this morning. looking pretty mixed right now ahead of the o we could also check this after

the world cup love. ramy: yes, it is on the weekend -- world cup lull. later on, i have a very good chart to show you. david: south korea is closed as well indonesia the, later on. there is a slight upside right now, slight being generous area in japan, 50 points short of 23,000. that might have to do with the yen pushing towards a three-week low against the u.s. doll i wobble of the start of australia, a bit below water. fed in aalk about the moment with kathleen hays, so i will leave it for you to look at. brent prices are also very much in focus leading up to the opec meeting. large uncertainty within opec itself on where demand actually goes in the second half of this year, plus there was also rusher

in the mix. now said to be planning to act to seek output curbs to get scaled back. in other words, output back to 2016, october levels. we will also look at india on the back of inflation numbers from that country. let us see what has been happening in japan by sector and australia, you have the banks, insurance and mining stocks weighing on the index. the counterbalance my property, but not enough. here, just fed before we move on to the conversation, green line is three rate hikes this year. we have thene, second one later on tonight and the third one, that is up in the air. we will see where this goes. coming out of afric out of the c

decision. ramy: we are kicking off a week when the world's three most important central banks meet and make decisions that could affect investors, hustlers and policymakers at home and also abroad. kathleen hays is here, how much do you think the hike will be. kathleen: are they going to to a four hikes in total this year, are the hawks going to say that we should be prudent and move ahead before inflation ises? are we going to be too restrictive to fast? we have a chart here looking at judy the growth versus coursey the -- gdp growth. you have the f o gdp at 2.8%, but we have core pce down 1.8. this is supposed to move higher, that is what the fed is considering.

also, the economy is strong, but wages are not rising. unemployment is down to 3.8%. wage growth, average stack at 2.6 to 2.7% range. bottom line, i think the tiebreaker is that that fed inflationake sure 3%, so that calls for another rate hike. ramy: could the ecb be heading for an exit? kathleen: we know that they will be talking about whether there will be a public announcement on this. the ecb might want to look at this chart, euro area inflation. .2rmany has inflation at 2 percent. finally breaking 2%. it might be time to say that they will start reducing and purchases in some number.

that is reason to do it, but mario draghi has been cautious in the past. the expectation going in is that they will discuss it, but no actual announcement from the ecb meeting in july. yvonne: kathleen, rounding up the ill, youave the bank of japan as well. changennot exactly policy, what can they do? kathleen: inflation may not go to target, and fact on the last reading, it got further away from target. interviewed byts our bloomberg team in tokyo said no, no change. one more chart that shows you how low japanese unemployment is, way below the none accelerating inflation rate, and other words of employment. if are below thevel, wages should be rising and that should show up in inflation. but look at core cpi, 0.7%.

at have got until 1.0% year-over-year. that is a problem for the bank of japan. they reported last week from the nikkei that they might do -- they mi here is where we are having sy low inflation. beyond that, they cannot even change the target date, because it don't have. that anymore, thst so we will see, yvonne. yvonne: kathleen comest they with us. we will be bringing in our next a capital markets company, joining m in singapore. much a dones pretty deal, do you think we will see a dovish hike or a hawkish hike from the fed. kay: i think the market is good or -- skewed for the fed to be hawkish. i does have plenty of time to raise expectations, so they

could have a september or december hike, but i think the risk is lopsided rates. yvonne: we have a press conference after every meeting. do you think that will change how markets have priced in august and september? absolutely. it was interesting to say how it went from fed rate expectations from to hikes being priced in, to barely one being priced in. that is how huge the variation has been. but if you look at the u.s. manufacturing and none manufacturing have been healthy at 2.1e cpi coming in overnight, headline coming in at 2.8. yvonne: yes, but can they reach a consensus? sean: from my perspective, i think global growth is robust. there are definitely dubs on the feds side of things, but at the

end of the day, that on the central bank that will continue to hike. kathleen: one of the questions about inflation is how much the headline has been pushed of by oil prices. lael brainard who is a very important fed official and ally of jay said is important for the fed to keep inflation at 2%. is it possible that is the reason why the fed will wait until september to tell us whether they will do two more hikes? to wait and see if inflation stays that 2%? not just cpi, but the all-important personal consumption expenditures price index and core pce? a perspectiverom from the central bank, you never want to paint yourself in a corner. they want to be prudent from that was active. but going back from the initial testimony of jay powell's public speech, he was very constructive when he really didn't have to be.

at the end of the day, we had come out he could easily air o of caution and wage to update the market later on. but for me, it is just a question of time to head that way. we could see potential in version in the market. ramy: actually, i wanted to ask you about that. in terms of looking ahead to a possible flattening of the yield curve. do you believe it is a harbinger of recession? that happen,ou see with come across wit dovish tilt? kay: i think on the second to last point, statistically speaking, it seems to be one of the best indicators out there about going into recession. but if you look at the leading china,ors and growth in that could be a non-issue in this case. if you look at the spread between the 10 year bonds and

the 30 year bonds in the u.s., it is only about 15 basis points. so ifed moreme reason, why would it investors the the 30 year bonds? could actually see a case where the 30 year bo drops below the 10 year bonds. yvonne: we have seen pretty strong bond options this week, especially with the 10 year. but we still can't keep the kay: correct, we got to 3.12,r? then we went to 1.80, i think we could pop back over 3%. the key level nor bonds, three e key level for that to break on a sustainable basis. talk to us about the ecb then. why do you think more hawkish for them, less so when it comes to the fed?

kay: we all know that september was supposed to be one of the bond purchases of stocks, but we also have the little italy issue in europe, far from over. yields haves like come back a lot lower for now than italian bonds, versus the , that tends are back up, and i think if he was to be hawkish and say, we are stopping bond purchases and moving towards qt, out of think that is the right signal to the peripherals. . spain is also far from a done deal we just saw mp switch their. withinhe next few months, didinr there. kathleen: i would like to come back to the question of the fed, the broader picture in asia. almost every fed official says, look, the fed is not responsible

for volatility overseas. that emerging markets in global markets do their own thing. g tvu look at one of our charts which you can find in our library, it shows that emerging markets fund to that he has really emerged from the jheaven. if you are in one of the emerging markets in the world, you know this. -- really emerged from the g7. d thing that could go into the policy deliberations? kay: i think that is a fantastic questions, and i love the point that howell made. i think central ers will go back to focusing on the medium to long-term. thatld love to see more of peers, buts the proof is in the pudding. if the s&p is down 30% in one or two months, that could will go back to being more

accommodative. but central bankers should definitely focusn the medium to long-term, rather than the short-term fluctuations of the market. yvonne: now that we are past th summit, we have eliminated one hurdle that has beting on markets. does it still look like a sideways market to you? what can we do to shift sentiment? kay: we are in the summer now, you can see it. and of course, it is the world cup, even less people watching the screens. to grind up on the equity side, tech leading are best technical is are still strong, but i am focused on the u.s. equity markets because that is user to call on a directional basis. but there will definitely be a lag until people get back from the summer. that is just how things go. ramy:. i would like to throw ahead to the bank of japan at the end of this week in terms of what we might expect there, what are your thoughts? again, from my

person active, the market sleeping on the bank of japan just an the bank of canada. as we have seen, inflation starting to tick slower and the last growth figures going into contraction after eight consecutive quarters of growth. you are basically moving towards less qe and more towards more qt. that could be best the dollar yen could be going lower which does not load well for the nikkei in general. ramy: thank you very much, caven .eterson up next, zte as set to resume trading today after reaching a deal with the u.s. governmbut 'e over, with the senate looking to restore penalties. this is bloomberg. ♪ --

♪ yvonne: this is "daybreak asia ," and i am yvonne man in singapore. ramy: and i am remy innocence you in new york. the ge set to resume trading in hong kong after sanctions were released in exchange for management shakeup in a record fine. but the story is not over. wantedate has overwhelmingly to advance legislation restoring restrictions. they bring up peter elstrom, our technology editor. peter: we are going to see inres begin trading again hong kong and in mainland china later this morning, about 45 minutes from now. so investors will be able to trade after about two ms. it is been a long suspension for

that company and predictions are that shares will go down pretty dramatically. that challenge that the company has gotten out from this that hereence, from the it was not able to buy components from american suppliers, including semi conductors and electrical components which were essential to their operations. however, it did miss out on several weeks of revenue and doing business. it still faces us looming challenge as you mentioned, that the u.s. senate is moving ahead with legislation which could reimpose the ban just after the commerce department agreed to this settlement. departmentmerce settlement is very severe. as you mentioned, they have to pay more than $1 billion in fines and replace top management in the entire board. quite serious. ramy: since members of the u.s. senate have voted overwhelmingly to advance this.

do they actually want more on top of this record fine? peter: they are suggesting that donald trump and his commerce department, sh have settlement to go forward. so, this is a fine, replacement of management and it also calls for monitoring by american regulators over the company's operations and its export practices. what they would like to do is go back to the previous penalty. which was not allowing zte to buy components from american suppliers. those are again really essential for the mobile phones they make and the telecommunications equipment it makes for other companies. that is why zte a few weeks ago, said that they were shutting down all of their major operations. because it weren't able to get the components they needed to be able to push ahead and sell to their customers. that is important because right now, telecommunications

companies around the world are 5g networks under willing to spend billions of dollars to build these networks, which is zte was hoping to on.talize they cannot do that if they are not able to get access to american components. yvonne: another hiccup here in the u.s.-china trade spat. what does it mean for other deals like foxconn and others? kay: that is exactly the question. this comes in the context of their broader trade tensions between the u.s. and china. they have been talkingut everything from telecom equipment to soybeans, to steal. so this is just one piece of the puzzle deskto -- steel. there are also m&a transactions including qualcomm's proposed nxp; doctors.an x

chinese regulators have been said to be ready to go ahead and deal.e the so i looked like this is a positive sign, that the commerce department has finalized a deal point.te at this it depends how serious a threat the senate will is perceived to be at this went, and whether it is likely to get imposed. the commerce secretary was asked about the senate proposal, but is still news to become law yvonne: peter, thank you so much. bloomberg's asia technology editor joining us from tokyo. don't forget our function, tv , you can catch up on our othernterviews and also topics that we talk about here

on bloomberg. the sure to check it out at tv . this is bloomberg. ♪

♪ ramy: this is "daybreak asia ," i am ramy inocencio in new york. yvonne: and i am yvonne man in singapore.

taking a look at what is coming up in the next few hours here on bloomberg television. rishaad, what are we watching today? rishaad: we were looking at what happened in the eu, and we will have our next guest, from the heritage foundation. a right wing think tank. we will look at what really happened on tuesday, welling ofo perhaps, didn't. we will also have more on that with chief global equities strategist. we will do a read through on equity markets to see if there was anything with regards to the summit. head of economics and strategy looking at the interest rate bigsions, as we await three announcements of this week from feds. there you have it, remy. ramy: before we handed over to "bloomberg markets: asia," let us look at how markets are looking right now.

japan's nikkei and a excess 200 are going in opposite directions. .25%,kei is up about the asx is down about .4%. some artists are in the negative as we head toward the old including kuala lumpur. yvonne: yes, a lot of holding patterns here at leading up to the key central-bank meetings throughout the week. of course, we are on standby for the markets opening. coming up next, we sign up. singapore.om 20 more coverage coming up from our team here at bloomberg. ♪ more coverage coming up from our team here at bloomberg. r team here at bloomberg. what's a gig of data?

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rishaad: asia-pacific markets flat, investors looking for movement and china as new credit their slums. fed pricedentral banks trading waters. maybe a date for the unwinding of qe. zte due to return after two months of suspension, but the u.s. security drama that cause that hiatus may have further to run. i am rishaad salamat in hong kong. haidi: also coming up, hong kong infrastructure readies its a guest deal, almost $10 billion