near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. yvonne: it's 7:00 a.m. in hong welcome to "daybreak: asia."t the fed signals a pickup in hikes as jay powell says the economy is doing well. u.s. equities, treasuries, and the dollar retreated. bloberg's global headquarters, it is just past 7:00 p.m. in new york on wednesday. president trump says he is about to confront china "very strongly." comcast outbids disney with an all cash offer for the showdown

for rupert murdoch's entertainment empire. as expected, we did get that 25 basis point hike ahead of the june fed meeting. it was a mildly hawkish tilt t of the fact, at least that is what a lot of analysts are saying on bloomberg television. that came out five hours ago or so . the markets , maybe the most in two weeks or so, the dow as well as the s&p. when all things are said and done, the reason for this is the economy can actually handle it. yvonne: he was bullish when it came to the economy. jay powell's confidence very

high. still not able to call victory on inflation. butift in 2018 this year, could be difficult moving on to 2019 and 2020. ramy: our own kathleen hays will talk about that shortly. let's get a look at the market closed. we saw the dow and s&p fall 4/10th or so. nasdaq coming off just a tad. dow and s&p 500 falling most since may 31. let's hop into the bloomberg terminal. i can show you investors, the market, already anticipating the next fed hike, for both the third and fourth quarter. after the end of may, you can find this on your own gtv library using gtv on your

bloomberg terminal. yvonne: looking at the set up for asia, not too happy given this hawkish statement. down 4/10th ofex 1%. futures flat when it comes to nikkei futures. we have seen a whipsaw in the dollar. shut, down 4% after being down for local elections. they will be the first to react to this summit and the joint communique. looking how we are faring when it comes to currency land. 118.ollen yen at the policy and kiwi pretty flat. -- aussie and kiwi et flat. taking a look at the bond

markets as well after the fed. the u.s. 10 year yield breaking slightly. during the press conference, we saw yieldcome down to 297. aussie yields and the german ten-year bond in the opposite direction ahead of mr. draghi. we will see if there is any indication when the central bank will stop, or at least halt its asset purchase program. let's bring in our global policy itor kathleen hays for more. tell us about whats iving the fed. leen: jay powell says confidence is rising, hans economy is doing well. they raised the key rate. that was not a surprise. four more hikes are likely, because one person changed their mind -- i would love to know who

that is. what markets are responding is to is that the fed is moving in that direction. here is how jay powell put it at the beginning of the p conference. >> the name takeaway is that the economy is doing very well. most people who want to find jobs are finding them, and unemployment and inflation are low. interest rates have been will for some years while the economy is recovering from the financial crisis. kathleen: let's look at the numbers in terms of how the forecast changed. a little bit stronger, but unemployment down to 3.5% by the end of 2018. already one of the lowest rates we have seen in 40 years. core pce rising to 2.1% in 2019. some confidence that, yes, it is gradually rising.

jay powell says inflation has gotten to target faster than they thought. looking at the dots, so we can look at this on your picture. that is the seven members of the fmoc. with six and six, it is now seven and five. roberto does not think this is particularly hawkish. i would like to remind everybody something the fed officials say, on how theyts based think the economy is going to reform. it is a snapshot of the moment. baby hawkish a ep. ramy: [laughter] what is a baby hawk called, a hawkling? yvonne: or maybe it was when a

hawk takes a baby step. ramy: mr. pow is making his mark on this as well at every single even. yvonne: people said, gee, were you surprised when he sat at the d atum as opposed -- he stoo the podium as opposed to sitting like janet yellen? he said, i want to talk about the economy in plain english in ttg away from the academic speak of bernanke and yellen. i think this gives the fed flexibility. now, we'll rates have to wait for a conference meeting. -- we don't have to wait for a confer changes in how they will manage the fed fundsate. if you're not sitting on aadjus. ramy: the big news, up 25 basis point, as expected, and possibly

fourmore -- not four more total. [lour global and policy editor kathleen hayes. let's get more at the market reaction to the second fed hike rate - fed rate hike this year. >> baby step or not, it moved the market. treasury yields go to 3%. slide with&p 500 the reth no move, but again a negative. gtvs go to the bloomberg chart. here is the message the fed seems to be giving us. the economy can han3% yield. has been an area of concern. this white mark is gdp. the blue is the fed starter rate.

in yelw is where the 10 year yield is. some on wall street believe the yield could go much higher, even 6%. let's go into the big movers of the day. what you saw was a followthrough on the at&t merger with time warner. they got the green light. it opened the floodgates on other deals. , th century fox is up big coming in with a $65 billion bid. to valuation from goldman sachs. sacf, itoldman is up, on what appears the likelihood of four rate hikes, which is great for the financials. yvonne: let's take a look at volatility overall for the market. reelingis really -- is

from a 20 day decline. a: you can see we have lost 20% decline. concerns has to doecord. with increasing scrutiny on e atforms. there was a cyber hack in the korean platform. take a look at the big picture. you can see where we are down, heading toward the $6,000 handle after being close to 20,000. talk about volatility in general for the markets. there is aolatility trader known as 50 cent on the market. they are not su w puts this a hedge but there is that vicks volatility will double. vix volatility will double.

it is getting a lot of notice. yvonne: let's get to the first word news with courtney collins. courtney: president trump says he will confront china very strongly over trade in the co weeks, as his administration follows through on its tariff threat. he told foxnews china could be "a little bit upset with the clampdown." the demonstration hopes to release a list of tariff targets on friday. president trump claimed in a tweet "there is no longer a nuclear threat from north korea." he has been facing criticism for the vague statement. as secretary of state mike pompeo would only say h expectse north korea to take major steps toward disarmament by 2020. pompeo meets leaders in seoul thursday before heading to beijing.

comcast made a long-awaited offer to acquire much of 21st century fox, topping a previous bid from disney for rupert murdoch's media empire. atllion. value from comcast 19% premiumesents a over the disney offer. volkswagen will pay a one point billion -- $1.2 billion find for cheating -- fine for cheing emsions regulations. it closes the chapter in the crisis, even as new developments arise. the automakers htlement of thease will have a positive impact on other proceedings in europe. it still faces legal action in 55 other countries. global news 24 hours a day on air and on tictoc on twitter, powered by 2700 journalists and

analysts in 120 countries. ramy: courtney, thank you very much. - -more, for on the guest,rate hike with our who said we should expect a rush toward safe havens. yvonne: the latest on the u.s.-china trade saga, as trump 's tariffs loom large. this is bloomberg. ♪

yvonne: this is "daybreak: asia." ramy: we've got a little bit of breaking news right now to share with you. hong kong monetary authority has raised its basis rate to 2.25%. the hkma raising its basis rate to 2.25%. sticking with interest rates, more on the fed raising

rates for the seco te th year, and signaling two more hikes may be on the way. let's bring in our guest along with our global and politic editor kathleen hays. can't have a conversation without you here. al, thank you for being with us. i want to get your reaction not so much to the 25 basis point hike, because that was expected, but the hawkish tilt from the fmoc that there may be four hikes total during th al: when you read the language, especially in the first paragraph where they describe the economic outlook for the next three years or so, lots more hawkish wordage in that language. what was striking to make this when you go to the numbers, the projtis various fmoc participants provided, not much timee in all from the last

back in march. just not much changed. dots for 2018f suggest four rather than three, but that was just the movement of one dot. when you look at projections, their production for gdp growth peaks in 2018. there is a deceleration in 2019, and a further deceleration in 2020. the unemployment rate comes down a little more, so that is a little more robust. the inflation rate is flat throughout this period. not much changed in the numbers themselves. a somewhat more hawkish tone overall. especially when you look at the numbers, it is not a hugely more hawkish position in my view.

ramy: the top line you went through, just an uptick here and there. jay powell on wage growth -- why haven't those been rising? that is an indicator possibly of rising higher. pceis talking about core rising over 2.1%. there is a disconnect over both. al: that is true. lots of technical factors could affect that. the way i look at that, the corum, if you want to use that term, is part of the broader picture of the phillips curve relationship between unemployment and the tightness of labor markets on the one hand, and the broader inflation rate of prices generally -- did

not work the way it did 20 years ago. it appears markets don't have the same kind of impact on inflation expectations as was the case when i was working at the f. it is a bit of a curiosity. i would suggest the following as an explanation. when we were using the phillips curve a lot in conducting monetary policy decisions, the fed's credibility for keeping inflion down was much lower than it is now. as we move through the 1980's and 1990's through the way the fed the hate, i think we have -- behaved, i thk we have built up credibility toward keeping inflation in control. that is the main reason why they

are not expecting a big uptick in inflation. it could change. now it is part of a generally good overall outlook for the u.s. economy, and forolicy. yvonne: do you think what the fmoc said in its policy statement, its general thrust, has been consistent with comments about an inflation overshoot, it's fine -- i will library.a chart from our you have the headline number just at 2%. for the month you have the core at 1.8%. where does this sense of, we are not worried about it? as the inflation is think of ai can

million things that drives their productions for -- their predictions for inflation. how the inflation process was understood was not as dependent on expectations, but now that has changed. it leads to inflation projections. we don't see much movement in long-term expectations, either ones that are survey-based or based on market data. i think that is part of it. what that means as for us policy is concerned, that will tend to restraint policy tightening, all other things equal. you mentioned chairman powell's press conference -- i watched that -- he did emphasize the fed may bewhile the

to go over allowing its inflation target, he did not insist. f you begin toee significantly higher inflation, two, three basis points above 2%, that would get their attentio ce an impact on policy. if you have inflation bouncing ck up, the 2% rate, bakc back down, then i think the policy profile will stay the same. yvonne: i want to ask you a very quick question. if you were on the fed right now, would you be on the for rate hike orcamp? al: i would be concerned about the projections for two or three years out in the future.

if you look at the projected median funds rate dot at the end of 2020, it doesn't change from the last meeting. it is a little below 3.5%. that would be the number -- i would mainly be concerned about signaling. i would be comfortable with that . i would go forward just to build a little bit of insuranc it wouldn't be a matter of great importance to me. yvonne: we see the fund rate at 2.5%. there is talk whether the fed can raise the funds rate higher than that point. how much tolerance is there before we see a disruption in the economy? al: the projections that you see on the dot charts through 2020 is slightly under 3.5%. i think the day's estimate of

the neutral rate is something like 3%. leaves the story not completed. to be consistent, that would imply that you get some backing down in the funds rate in the out years after 2020. as the chairman ezed and always does in his press conferences and others do as well -- this is data-driven. de remember how the fmoc behave years ago. it is very much data-driven. if you begin to see economic numbers that suggest higher rates, i don't think there would be much hesitation in moving somewhat higher. if things moved back in the other direction, there is a lot

trade,y about possible problems with the economy in italy. that profile would move the funds rate down somewhat. a lot will depend on what we see as the remainderf 2018 unfolds. yvonne: al, we will leave it there. fedroaddus, former richmond presidt. plenty more to come on daybreak asia. this is bloomberg. ♪

ramy: quick check of the latest business flash headlines. rolls-royce is said to be cutting 4000 jobs as the jet engine maker tries to simplify its business andoost profit margins. the retrenchments would bring the number of jobs to nearly 10,000 since 2015. the softbank executive says we

were seeking to raise funds at a $35 billion valuation price tag, placing it above airbnb and spex it said at some point the start of would become a $1 billion company. a $1artup would become billion company. this is bloomberg . ♪

a.m. thursday7:30 in hong kong, pretty cloudy in the city. the major market open, likely to the pretty upsetting one -- to be a pretty ung this hawkish rate tilt from the fed. ramy: markets closed in new york nearly 0.5%, the biggest fall since may 31. as you intimated, yvonne, as expected the fed raised basis r ates to 2.5%. , when that happens we usually see a little bit of weight on

u.s. equities. yvonne: you are watching "daybreak: asia." let's get to the first word news with courtney collins. fed's dot plot projected the number of rate hikes toou overshoot faster than expected. the fomc raised rates for the second time this year, with chairman jay powell saying the main takeaway is that the company is doing well. he promised a news conference after every meeting starting in january. >> as chairman, i hope to foster a public conversation about what to eate a doing resilient economy. one way to do so is to have a press conference after every scheduled fomc meetings. we will do that beginning in january. that will give us more opportunities to explain our actions and answer your questions. yvonne: the hong kong monetary authority has followed the fe

d, hiking its rate to 2.25%. the ci' has shrugged off monetary tightening. a bloomberg survey has found most economis expect the pboc to reverse its repo rate by five basis points after the fed's tightening. british lawmakers rejected politicians pro-eu allowing the uk into the customs union. the house of commons about his april -- comments vote is a victory for theresa may. still, a leader of london's financial district told bloomberg there is a mood of frustration in the city. >> we can expect a lot more turmoil over the ne few months. the fact that this week has

passed without more turmoil is a good thing. ramy: yvonne: the biggest single sporting event on the planet kicks off thursday, with soccer's world cuin russian. the host will face saudi arabia in the first of 61 matches, culminating in the final on 19.ow ion june while companies are at loggerheads over nafta, the u.s., canada, and mexico have come together in thepoing arena, winning the rights to jointly host the 2026 world cup. global news 24 hours a day on air and on tictoc on twitter, powered by 2700 journalists and analysts in 120 countries. i'm courtneylins. this is bloomberg. yvonne: court, thank you. we are coming down to the major ti digting this said rate

hike. what is the story so far? >> we're lking at declines at the open. the other thing interesting apart from this story, where between the fed and the ecb. if you took the ecb out of the equation, you can say we have a hawkish fed. but we have yields pulling back in asia. the dollar is actually down leading into today. we will talk about the reaction later on. 2:30 a.m. hong kong time, which is when the fed decision came out, you had a spike in the dollar. yvonne: what jay powell seemed to have said, dialing back the rhetoric. puzzling, all those words. >> relatively soon is how he described howhe fed funds rate is closer to neutral.

the fed set four rate hikes based on the dot plots. the market is actually yawning. if the market expects four rate hikes this year based on the january contract, that line should actually be closer to the red line on top. september is a most priced -- is priced in. over the nt 12 months, you look at e pricing year dollar spread, 3.5 hikes. 1.th year, plus another 1.5 next year. that is the current pricing as things stand. what are we expecting across emerging markets today, especially after what we saw what happened with the fed? the differential there is just

getting bigger. david: the yield spread is for another conversation. i actually wrote about it this morning in the morning notes. i likened central banking to silent clubbing. everyone has to sort of dance along. you have those wireless earphones on. if you are on the outside watching everyone dance, you don't want to stand out, you have to keep dancing to the same tune. again, you don't want to stand out. everyone is dancing to the tune of the fed. there might be a reason, you might be tired. taking at you might be cha, butd doing the cha- at some point you have to get back to popping and locking. at 2:30 a.m. hong kong, that is when we had the fed decision out. let me pilot that for you.

every e.m. currency has been up since that time. short-term, we may not see that intuitive reaction across e.m., bui am sayg it is not as bad as people make it toe at the momen yvonne: you don't want baby in the corner. [laughter] david: no, you never want that'm the pboc as well. dahank you. we haven'talkingbout rising bitcoin going the other way, plunging 20% lower. certainly no shortage of bad news. we have been talking about origins of manipulation after the surge last year, the south korean hack. losing almost 70%. take a look at this gtv chart,

70% since we reached that record high in bitcoin in december. it is bringing everyone else in the crypto space lower. take a look at number two, number three purple has dropped 20% this week already. it is really tough to see any kind of let-up in sight. it seems the euphoria is not there. something has fundamentally changed in the crypto world. during these periods of consolidation, there is no one willing to buy. it is hard to see a reversal anytime soon. ramy: one analyst said they are waiting for consolidation just to sell, so they don't lose as much as if they sold right now. this is a conversation i have been having a lot of crypto folks. they say bitcoin is the first generation of this cryptocurrency.

moving ahead, like in the olden days when people used shells or stone, and now we are using paper money. some are saying light coin might be the next thing. in the future, maybe in a year, maybe in two, we might be talking about another currency instead of bitcoin. while you compared those cry to each other, i want to compare crypto to gold. the queen isaying, better than gold -- bitcoin is better than gold, but look at this. down 55% year-to-date. gold has been flat, a little up d down, but it still keepslue, . ramy: let's continue, because we have another megamerger to talk about.

comcast has made a $65 billion to acquire much of 21st century fox, topping a proposal by disney and setting up a bidding war for the empire. we are talking about disney. what do they do next? bob eiger really wants these assets. we say this is the last asset of scale in the media sector. everyone is rushing to scale up to compete with the netflixs and googles of this world. fox board has looked at this deal, and if they think it is superior to disney's offer, then they have to give disney five days to match or better it, or say i'm walking away. no one thinks he's walking away. we are setting up a big bidding

war here, and that is what investors are excited about. yvonne: we just had that surprise ruling from this at&t-time warner merger, which was credit surprised, rejecting the government's case. buy that make this more easier? >> one of the key oections fox had was the regulatory passage. they said withist&t-time warnereang te balance, it was hard to see how comcast could have a better they feel like this paves the way, that decision yesterday paves the way for them to make this deal. that is not to say it will not get an scrutiny. yvonne: what will the scrutiny be when it comes to regulators? >> their broader brand

presence --ir broadband presence, regulators worry they rty use that power to thwa competition from the netflixes of the world. onnne: 2plenty ahead bloomberg television. our next interview not cot a.m. hong kong time -- next, president donald trump is warning he could upset china over trade in the coming weeks because he isring t release a finalist of tariff targets. analysis coming up. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." yvonne: president trump has put china on notice, saying he will

confronteijing very strongly in the coming weeks on trade. the white house is expected to release a finalist of tariff targets on friday. for more we are joined from our bloomberg respondent. -- correspondent. what can we expect from the next round of tariffs? >> we will have to see if the u.s. will proceed with a list of tariffs on goods, and which they will target. that is critical for the companies at stake, and for the importers. we will have to see how china responsds to that. they mentioned any progress made can quickly be undoneith tariffs. ramy: where did the u.s. and china stand with trade issues? >> one step forward, two steps back in some cases. mr. trumploed a deal on

zte as part of the overall bargaining mix. china has made clear if the u.s. pushes ahead with these tariffs, they will retaliate. they too will target u.s. goods they import, and they will take concessions off the table. it could be another trigger for the deterioration between the two economies if mr. trump goes ahead with his promised actions. ramy: stay there, because we will dig deeper with you and a f elw at the nonprofit think tank, council on foreign relations. she has released a new book "xi xinping in the new chinese state." i want to get your thoughts on pulling the trigger on these new chinese tariffs. you may say it is about time? >> it is about time, although this is six months in.

we started in january with tariffs on solar panels and washing machines. i would say it is time to do it, except i'm not sure what the end game is. when steve mnuchin was asked, what does success look like in this trade effort? he said, he will know it when you see it. i am not sure this administration will know it when they see it. ramy: i want point in the north korean aspect. needed to put pressure on pyongyang. now he is saying, you guys are great. here go the tariffs. what is going on in his head? elizabeth: as far as he's concerned, the summit in singapore was a s, the first american president to et with the head of north korea -- already has achieved something else -- he has won.

frankly, kim jong-un as proved himself ot b -- has proved himself to be an independent actor. he offered a unilateral freeze of his testing without asking the u.s. to stop joint military exercises. kim jong-un has separated himself from the chinese. it is not clear president trump thinks he needs that much from china anymore. global it seems like the economic outlook is going darker by the day. she has been consistent on this message all year. it is a stark reminder of what is at stake. most economists will say the tariffs on the table don't have much of an impact on gdp growth. the bigger fear is what these tensions do for trade and

sentiment, not just in the us and china, but other trading partners around the world. that is a big fear. yvonne: we have been talking about how the president is lashing out on g7, but mak friends with north korea. certainly the international order has shifted quite drastically. what do you make of that? is there any kind of strategic type of policy here? elizabeth: i think president trump has upended our understanding of the u.s. role in the world. he doesn't understand what alliances means. alliances are premised are shared values and norms, built on give and take, you have institutions that constrain your actions. you understand each side gets to get and each side gets to take. -- give and each side gets to take. he has withdrawn from the tpp,

the iran deal. he does not value our institutions. instead, he values dictators. the most laudatory remarks he makes seems to be about putin and duterte. i think it is mistake. when you look back to 91, who stood by the united states, it wasn't north korea and china and russia, it was our allies. i think it is a very shortsighted approach he takingis to the -- he is taking to the g7 and with our traditional allies and values. cans it possible mr. trump leverage the -- can rebridge the gap with his allies? what can you do to rebuild the trust?

elizabeth: i think he would need to show he values the relationships. rhetoric.need to temper his he would have to show some alliance to the international structure and international agreements -- not withdraw the united states from the world trade organization, for example. i am not quite certain he is prepared to do them. unfortunately the cap numbers like secretary -- the cabinet members like secretary pompeo, ances, value our alli don't have the same degree of power and prestige the president holds. maiden want to bringhe china 2025 program. this gets to the heart of these tariffs. how muchup the g7,

does trump need foem to back him to push back against what protectionist? elizabeth: this is china's efforts to protect its domestic interest these in -- domestic industries in 10 areas, like a.i . and robotics. it would be great if we could use our allies to put pressure on china to protect intellectual property, and to not basically have chinese companies command 40% of the market by 2045. i think trump is rapidly losing the support, or any ability to call on allies at this point. in addition to launching tariffs on china, he is doing the same

onur allies. i don't think they look at him as somebody o n be trued. yvonne: we have been focusing so much on goods, but the u.s. has trade surpluses when it comes to its allies. licensingbout the m deals. why do you think the u.s. overlooks this faction of the trade dispute? elizabeth: i think it is the steel and aluminum and automobiles that speak to president trump's base. he is less interested in the services area. when he looks at the promises he madery aut ba ta, it sn't really about the service sector, it was about manufacturing and bring back the old traditional industries that used to be the basis of the american economy. yvonne: appreciate your time,

cocil of foreign relations. the sure to check out her new book. don't forget our interactive tv function as well. you can dive into any of the securities or functions we talk about. be a part of the conversation. send us instant messages during the show. this is for bloomberg subscribers only. check us out on tv. this is bloomberg. ♪

ramy: a quick check of the latest business headlines. carson block says muwars capital is betting against a chinese education group. the company has a market capital of about $23 billion. we will hear more from carson block in the next hour. bloomberg has been told carlsberg is planning a local

ipo as it seeks to tap into a thirst for local beer. india,rg ranks third in with just 14% share of the market that a monitor says will grow to $11 billion by 2020. yvonne: we might need a cold one today counting down to the market open in japan, south korea set to go. we are reacting to declines and the federal reserve rate hike. we could see four in total for 2018. we are seeing the nikkei futures down. kospi coming back on after local elections as well. talking about the local fed hike and how markets are reaction. we will also tk about seoul. joining us is head of research

to talkbout the opportunities from this joint jime k. -- the market open coming up ne xt. this is bloomberg. ♪

yvonne::0 kong. imboman. -- i am yvonne man. stocks wants to more hikes this year. piles tst rate rise pressure on emerging markets. i am ramy inocencio in new york where it is just past 8:00 p.m. on a wednesday. attention turns to the ecb with a thursdayeeting set to discuss the end of bond buying.

orting and education company whose profits he calls fraudulent. yvonne: asia is sandwiched between these central-bank theings -- bank meetings -- fed and the ecb. fedslightly baby hawkish hike we saw overnight. and whether or not the ecb will halt that qe program. fromd see a change in tone jay powell not just when it comes to rate hik but when mes to press conferences. they're going to be live. ramy: starting in january of

next year, every conferences going to be live. he wants to communicate transparency moving ahead to make sure people do not get confused or mixed signals. the bond markets, currencies up. a quick market check, talking about the open. we are seeing what we were expecting. ramy: we have a look at the nikkei 225, south korea is reopening. it was shut yesterday. as you can see, u.s. futures under pressure to give you an indication. the fed decisi was at about that point. you can have a better look at that when you look at the website. this is the bloomberg dollar ,ndex -- this is the em emerging-market currency index. if you ask anyone out there, it is anyone's yes why we're seeing -- guess wh're seeg em

today. you do not want to be long the u.s. dollar when the ecb might be hawkish especially given how heavily weighted th euro is 12 hours away from that ecb decision. looking at expectations, i showed this earlier. the fed might be tilting hawkish. when you look at the euro-dollar spread into next year, it does give you an indication we might not get there. in then the current bets market, that is one hike, two hikes next year, maybe one and a half this year. the market is not convinced. if you add those together, that is a moving target.

year, we are not even at three, maybe at three, certainly not at four. they arein jerome powell has described the fed funds rate as getting to neutral. , you addat one model four new, it is already at neutral. we are posing the question, is it near neutral or at neutral? it is a theoretical rate, of course. the last time the rate went above that estimated neutral rate, you had a recession. this also plays into that flattening yield curve. it is a complicated conversation. th is what we are seeing as far as this chart is concern. ramy: we have been having those conversations. everyone seems to be saying we are getting near. david, checking the markets.

u.s. dollar had an event full day, rising on the fed tone, up about .5%. in oure, let's bring strategist in singapore. what is next for the dollar? >> i think there is more downside. thisove set the end of session will continue for the next few days, probably into the next week. ere are couple of factors. the fed and how the market reacted. just as david was debating, where is the neutral rate? we are on the latter half of this hiking cycle. means rate hikes are less kely to be supportive of the dollar from here. i also think the trade situation is evolving in terms of impact on the dollar. they're either going to rip up global trade, that would see a

dollar rally. or if it perceived to give the last couple and the of months, trade negotiations ve trum is pushing people away from doing trade with the u.s. that is going to be a long-term dollar negative. this means the dollar will continue to fall in the days ahead. saw: earlier today, we also -- with the fed, those arguments make sense. you talked about trade. as we look to friday, when the white house ys it might pull the trigger on tho tariffs with china, how seriously should we take those? >> very seriously. this is a big negative for equity markets. not only do we have this looming trade threat. idee equities tbadly

yesterday, particularly in tech. trump has solved the north korea situation, he might turn his focus to tackling tech companies. his tweet lends support to that. tech stocks are looking nervous and this whole trade thing, this china tension, will way back into that in a vulnerable market. emphasizertant to that this whole trade argument is going to ebb and flow. we might get a negative headline but that does not mean it is going to be negative from there on. next week, we could have a positive tweet. yvonne: that is true. the ecb is around the corner as they meet today. it seems mario draghi pushed back into the corner. -- worst of all, he cannot deny they will have to discuss the end of qe. will there be a firm date?

i think it is likely. the program is meant to end in september. be erit if they said we are going to extend to a. extend qe. it is unlikely to be a hard stop. yvonne: thank you. marked joining us from singapore. more on our live blog. you can get a market run down. just one click and a commentary and analysis. you can find out what is affecting your investments. let's get you caught up with the first word news. >> president trump says he ll confront china strongly over trade in the coming weeks. his administration prepares to follow through on terror threat he has told foxnews that china

could be upset at the clampdown while prag his personal relationship with xi jinping. the administration plans to issue a list of terror of targets on friday. comcast has made a offer to acquire 21st century fox, can tapping a previous bid from disney and setting up a bidding war for rupert r's media empire. the largest cablder said it has offered $65 billion. cash, the bid in represents a 19% premium over the disney offer. volkswagen will pay a one poi $2 billion fine and could find german prosecutors for cheating es emission regulations. it closes one chapter as new developments arise. the biggest automaker said the settlement of the case will have a positive impact on other proceedings in your.

it faces legal action 5 countries. british lawmakers have rejected prs intended to lock the u.k. into the customs union after brexit. the vote is a victory for theresa may and reverses changes inserted by the upper house. the financialf district told bloomberg there is a mood of frustration in the city. the fact this has been passed is frustrating. >> global news 24 hours a day and at tic toon wered by more th0 journalists and analysts in over 120 countries. i'm courtney collins. this is bloomberg. ramy: thank you. will continue our

discussion on the fed and what we are likely to see from other central banks. later on, we are seeing a.response from the bank of is it expecting much reactio the fed? we will talk with paul choi. this is bloomberg. ♪

yvonne: i am yvonne man in hong kong. ramy: am ramyncw york. markets are under pressure after the fed signal in new york. are they overreacting? catherine -- kathleen hays is here. i think it is interesting because we got through a rate hike as expected. it was a small shift that hit the bond market, the asian markets as well. go on the terminal tells

you the story in pictures. dots saying we hikes this year. those represent votes on the fomc. we had division monetary affairs, an important position, here is what he said about the it is not a solid signal. i would be inclined to think about ierms of re noise than signal. what the fed will do is look at the da and take his clue from there. the dots are an exercise in forecasting. it is true the markets also saw a hawkish change. inflation stronger.

i think people should pay stron attention to what he said at the press conference. he sees uncertainty about the natural rate of unemploy he said the fed policy will be guided by incoming data. we will keep our minds open. we are seeingorhawkishns andne: up next is the ecb boj at course. what is expected out of mario draghi? mario draghi, in jt a few hours, and the bank of chinas expected to raise its rate by five points. there is mario draghi. they are seen discussing the qe exit. he is cautious. he wants to see inflion staying near thet. he wants to see the economy getting stronger.

he is going to say yes, we discussed it. save the details for the july meetings. that is what he is talking about. aney are ahead of the central bank, in the corruption char later half of the year, they're supposed to raise their reserve requirements. your lsening and tightening at the same time. it is tough when you're trying to avoid a slowdown. we have seen that in the philippines as well. thank you, kathleen. joining usngs michael every. what do you makeis hike from the fed? was it dovish or hawkish? >> i think it was covered nicely just now.

they're looking at the data. and they'reeak ms. getting toward the end of the cognizanty must be of the fact there getting toward the end of the cycle. we do not know who the members are. it is anonymous. some get to vote, some do not. much -- it is a little much to get excited about. yvonne: is that what the bond market is getting excited about now? they say, where coming to the end of the cycle or this is a function of a fed focusing on expectations? >> when i started out, the message drilled into you is never fight the fed. the bond market has been fighting the fed four years, showing it does not think the fed has much further to go.

as is still saying the same. yvonne: what happens when the ecb comes into play? if we do see an announcement about the end of bond purchases, european sovereigns do not have that kind of global demand. what happens to supply? -- demand i should say. >> demand is strong for the court economies. economies. particularly after italy. it is a question about what they will do when it starts to evaporate and people start pricing in for that. it could get uncomfortable. we will see how the ecb crosses that bridge. yvonne: is there adi between of announcing it in june and six weeks later? >> there is a holiday in july. ramy: i want to chime in.

with what has happened with the fed and what is expected with the ecb, i want to explore the knock on effects with. hop into the bloomberg.. i cannot claim credit for this. we can see the s&p 500 has been beating the emerging markets index. of this to come? >> when you have got a backdrop of the fed hiking and people worrying about the fed hiking too much and 've gothe ecb tapering, it is unfavorable for emerging markets. the fact that they have got the chinese ranking five points, you cannot mirror that with a five-point move. you are doing nowhere near enough. it indicates the pressure emerging markets are going to be under. to be forced to

raise even though their economies cannot handle it and it is going to be uncomfortable. isy: the trade war fears starting to solidify, with what the white house has been saying in the past few hours regarding those tariffs, $50 billion worth on imports. to what degree are you trying to factor this in when it comes to asia-pacific investors? >> it is a negative. we have been expecting the war is going to be atandoff n trade between the u.s. and china. when that wassed dragged back onto the playing field again. it depends how you model it. you can make a case it will not be damaging if it stops here. what if it does not? what if thiss the first step in a much larger fracture over trade? at that point, it is impossible to model but it gets messy.

central banks will be paying attention if that starts to happen. if you're not dancing to the tune of the fed, you seem to be punished by investors. what do you think is the next central bank to raise rates? >> it depends what the fed keeps doing. if the fed starts to slow down, they can hold up. if they do do two hikes this year, you're going to see almost every major em have to keep tightening and many are not well-placed to do that. ramy: i want to go back to that trade issue. was on in the if thend they said trade war fears got to a head, she was forecasting a recession in the u.s. by 2019.

what do you think about the credibility of that rationale? >> it depends how big the war gets. $50 billion in tariffs, i do not see that .8 -- that putting a huge dent in growth. you have to presume a downward spiral in a global trade war. i would not rule it out. i do have that as my base case. we have to factor in trade is going to be more under predictable -- unprede. politically, we have to accept the dynamic is moving in that direction. yvonne: what is going to change the market sentiment? >> when it hapns. maybe they will wake up and say, this is happening. yvonne: when it comes to risky assets, where should i be looking for in terms of opportunities? is there anything in the em space? >> it depends how brave you are.

you look at argentina. yvonne: asia seems to look sturdy. >> it is holding up for now. let's see how it does if we do get a trade war. at the moment, it is too early to dive into those waters. yvonne: talk about the dollar. is it like catching a falling knife right now? >> i am positive on the dollar. we heard voices saying if we get this trade war backdrop, you should be selling the dollar. i think you buy it. hit,if the u.s. takes a export focused asian economies take a larger one. the underlying implication of the trade war is you cannot earn dollars from trade anymore. if you cannot, where do you get your dollars from? there is going to be a squeeze on dollars globally. everyone is going to be scrambling for them.

the dollar is going to go through the roof. yvonne: you had another question? ramy: i will take that. i want to throw a head to china. hop into the bloomberg one more time. weki into china retail as well as investment. we are waiting for factory numbers to come out. that is here in the blue. fixed asset investment supposed to stay stagnant. as we look ahead, what are your thoughts as we move ahead into the china spear -- sphere? -- itind it is not looked is not worth looking at any of the data. there is not any one number i pay attention to anymore. ramy: we will leave it there. thank you for that clarity,

rabobank.ery of plenty more to come on daybreak asia. this is bloomberg. ♪

yvonne: a quick check of the latest business flash headlines. itgas turbthe company is lookinl possibilities, including a possibility with a rival. it had previously said it is not part of its core. rolls-royce is: cutting 4000 jobs at his -- as jobs,cutting a limit a nearly 10,000 jobs since 2015. rolle says t cuts will deliver annual cost savings of $400 million dollars

and $500 million. secretary of state mike pompeo believes dismantli nuclear weapons can happen in secretary trump's first term. this is bloomberg. ♪

yvonne: 8:30 in singapore. it looks like blue skies. i am yvonne man in hong kong. ramy: i am ramy inocencio in new york and you're watching daybreak asia. let's get the first word news with courtney collins. >> thanks so much. thefed has upgraded projected number of rate hikes this year to four as unemployment falls and inflation overshoots targets. the fomc raise rates for the second time this year with the chairman saying the main takeaway is the economy is doing well. he promised a news conference

after every meeting starting in january. tfoster a public conversation about what the fed is doing to support a strong economy. one step in doing sis to have a press ence aft everyone of our scheduled meings. we're going to do thabeginning in january. that will give us opportunities to explain our actions and answer questions. >> the hong kong monetary authority has followed the fed, hiking its rate-25 points. shrugged offas u.s. monetary tightening but reality may bite as banks lending rates tick higher. pboceconomists expect the to raise its rates by five basis points after the fed tightening. extended loss, bringing its slide to as much as 20%.

questions are mounting about whether the biggest cryptocurrency was manipulated during last year's price surge. said anotherr digital currency tether may have been used to boost the coin. the justice department has opened a criminal investigation into illegal trading practices. the biggest single sporting enon the pnet kicks off on thursday. ths world cup in russia. a common dates in the final in moscow on july 15. the corporate brewers are likely to be tv manufactures and betting companies. loggerheads,e at they have been able to come together in this arena, winning the rights to jointly host the 2026 world cup. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120

me courtney collins. s g. am courtney colli the asian markets reacting to that fed rate hike overnight. a bit of indigestion? >> a lot. have a look at the nikkei 225. -- we are down. south korea is down about 22 points. local elections yesterday. you are looking at the asx 200. one of the bright spots across the asia-pacific, coming up close. s&p futures a big drop following the fed announcement. this is where the action is, em fx, the fed decision down. we are at the middle.

there is your dollar index initial spike. that is also playing out as far as that 10 year yield is concerned. we are below that 297. rates.the pboc to hike it is not benchmark rates. it is the seven-day repo rates. it willdoes happen, take place over the next, we will get confirmation in about onur, 50 minutes. here is your fed funds rate. retail sales, slower growth, 9.7 percent is what we are expecting. it is a larger market as well. a great chart to revisit every now and then. ramy: thank you very much. mike pompeohead,

says he expects north korea to move toward complete nuclear disarmament within president trump's term. korea,n a trip to south japan, and china about that summit in singapore. asiantalk to our correspondent. he said more was agreed to them was spelled out in that document. what is he referring to? >> he is addressing critics who said the document is sin and -- is thin and does not contain a lot. is there areying different definitions of denuclearization, concepts of how that would work. within the document was a phrase called complete denuclearization and this was a phrase north korea has been using. they have agreed to this for years. it means they want the u.s. to

thatid of its umbrella protects south korea and japan. the u.s. wants complete verifiable irreversible denuclearization. that was not in the document. ld standard. ramy: it is a difference of definition. pompeo also says complete verifiable irreversible denuclearization is just semantics. how does he see this taking place? >> he said you should read complete denuclearization as cvid, as everything the u.s. wanted is in that one phrase, which would be a change from how these documents are red. he sees this unfolding over the next two years. the end of the trump administration, you would see

progress. he pushed back against critics -- saying if these negotiations do not proceed, thls be on. he was playing damage control. quickly, pompeo heads to beijing after that. what is the key message she is going to have to bring? >> he is going to have to reassure allies. japan's foreign is at that meeting in seoul. he is going to have to reassure allies the u.s. is committed to protecting them and explained the comments that north korea will longer poses a threat. there might be a different view in tokyo and seoul. in china, he is got to address the issue of tariffs which are comiis week. yvonne: thank you.

seoul, paul choi , head of career resh at csla. the president tweeting there is no longer a nuclear threat from north korea. these seeing some of stocks collapsg. i think there was an element of disappointment because there potentialtations on economic cooperation with north korea after this deal was done. have beene stocks rallying hard in the last two months. ou the orall .arket, the market was flat if you compare from march 9 when trump accepted kim jong-un's offer to meet, it has been flat. tre have ensay

expectations builtthe cost be -- kospi. yvonne: we have seen that when it comes to maetentiment. to show chart here earnings erosion that we have seen. kospi have hed their earnings estimate for the rest of the year. we are seeing resilience and some of these other markets. thinkt could lead you to be re risk on and how sustainable is that? i think it is long-term positive in that there is no geopolitical tension as in the past. rerateomething thatan the markets over a long time. on a cycle, we're getting worried about domesticconomy

because economic data like unemployment as well as consumption data is coming out ak. the export has been rising over the last 18 months and it seems like that might soften going forward. there is concern on cyclicality of the economy. you mentioned the earnings but on the earnings front, driv b the tech sector, the earnings have not been bad at all. it is depending on what kind of biu ok at. our coverage indicate earnings have been updated your today mpared to the start of the year. ramy: i want to loop and the fed with the bank of korea. the bank of korea chairman said that theed move is going to have limited impact on markets. bok is int rates, the this dilemma of whether to raise

or not, especially this differential, the rate gap 0.5 points, is that right? the be ok will differ rate hiking as long as possible. the domestic economy indicates the economy is not good. if you look at the unemployment ase, they will try to defer long as possible. as you mentioned, the gap career rate is getting larger. certain point, they will hao be concerned about capital outflow and that will force them to hike, maybe once. ramy: on investor outflows, i see in april, $1.7 billion versus $3.7 billion. today, analysts have said that current account surplus would keep that -- less outflow.

what are you thinking now? the current account surplus has been large for a while and that is keeping the currency strong. exports andn the their exports have been concentrated on a number of sectors, especially semiconductors. the current account surplus will depend on how the growth will grow from here -- will go from here, especially in i know youne: mentioned you are shifting your portfolio given where we are. how are you changing it now? stoxx in stay on the the long-term? >> over the long-term, if there is peace on the peninsula, it will not only affect

infrastructure but it will affect all kindf stock consumption, industrial, all kinds. the risk return is better on korean large-cap which has been lacuster over the year to date. the risk return is better on the korean large-cap, something like he end a motors. -- hyundai motors. yvonne: thank you. paul choi joining us from seoul. carson block tells us about his new short target, education company tal. here why he says their profit numbers are fraudulent. this is bloomberg.

ramy: short seller carson block

says his muddy waters capital is beinait chinese tutoring education group, saying its profits are fraudulent. block says it is lying about investments. tal educationt group, which is a china-based education company. invests in the is probably familiar with them. this is not a small company. this is a $26 billion company. the stock is up 25% in the past five years. you say it is a fraud? it is a real business but its profits are fraudulent. the you look at appreciation of stock price, soe people might say, institutionalized, why would

they do this? i would point to the value of the chairman's holdings. three years ago, his holdings were worth about $9 millio day, theare close to a billion dollars. there is your answer. -- $8 n. there is your answer. it is a real business but it is not able to grow as profitably as it has been portraying. >> there is a distinction. there is a distinction to be drawn between this kind of a and some of the other frauds you have exposed which ,ou have described as zeros nothing there, empty offices, is that right? >> there are a few things that --tinguish this from say these guys are not making up 90%

of their revenue. revenue some making up and we are able to quantify a portion. one of the things that is unique about this is in the past, we have said the trees are not there. you would have to get over to china to verify it. fraud, we have inflated net income over the past three years by 43%. investors can look at our report and there is a roadmap. they can follow this. you do not have show up at a factory to see this is a broad. it is it -- this is a fraud. this is in the documents. >> i've had a look at your report. you say your thesis is supported by chinese government documents.

what kinds of documents and how did you get your hands on them? >> going back to the first time we exposed a chinese fraud, we used financial statements and other filings from what is known c, or the state administration of industry and commerce very -- commerce. companies file filings with this company regularly. past, we can look at financials and say, you only have 5% of the revenue you are claiming. that companies began adjusting and they would file fraudulent financials with faic because there was no penalty with that. tal is see with inconsistencies within the documents. sometimes financials have been

amended or changed. earlier financials are the ones that look genuine and now it looks like they have penciled in 85% of fake revenue. we're able to see the games they are playing with different revenue. most important, from these filings, is the shareholder registry. that is not something that can be questioned. when you look at the shareholder registries, you can see tal has been lying about the timing of investments and how it made these. that goes to the heart of what they are doi which turns out to be more enron. that was carson block there with erik schatzker. toyota is hiring more engineers for its automated driving team after announcing an investment in grab.

let's go to a bloomberg columnist toeen writing about this. pretty vague overall. what is your take? >> it was very vague, that statement that came out during the day. it was full of fluffy buzzwords. it wasngs i took out of talk of financing, of maintenance, those kinds of things. grab andto me that toyota want to be in the business of helping drivers buy cars, find financing and get into the area of insurance. they talk about user-based insurance. way through to predictive maintenance and that is the kind of thing toyota would want to be involved in. it does lead to a will be pushing toyota cars onto drivers , drivers who may have been

thinking of buying whatever else. heavy investment grab and holding a seat on the board. that is a good deal for toyota. grab is there a risk that could find itself becoming asset heavy? i am curious on that and how would that play out? >> that is a good question. that is a risk. stage, very vague, we may hear more from toyota today. will hear more from the toyota side of that. my concern is that grab may want to go down the path of owning vehies themselves and that takes them from being an asset company to being more of a car rental company. view changes 180 degrees

when you do that. even if you do not, even if you're in the business of encouraging drivers to buyew carso get on to their platform, those drivers have a debt they must pay and they must get enough business through the platform, through grab, to get enough car trips to pay off that debt. that grab willng morally, if not financially, have to deal with because t will have to make sure drivers have enough to pay off debts. that is a concern because that becomes a different ballgame. was to matchber excess supply with excess demand and not worry about inventory in between. when you encourage inventory of new cars, that changes the dynamics. ramy: it is a growth opportunity ies because an

lot of people are using these ride-hailing services and not buying those cars anymore. thank you very much. you can see more from bloomberg .pinion on the terminal for brking news, we have teamed up with twitter to launch tictoc, this is the first global news network design for social media, offering hourly updated news reports verified by us. if you are on twitter, make sure you follow at tictoc. this is bloomberg.

ramy: this is daybreak asia. i am remy and his sons in new york. -- i aremy innocence you in new york. yvonne: i'm yvonne man in hong kong. now for lookt at we're watching. asia, citibank ceo for intra-asianct on trade frhehreat of tariffs. tariffs in the pipeline they could come into force at any time. looking at that. going on into how the future of banking evolves. m&a as well.

that is a look at that and the bank itself. that is francisco are us to get to -- francisco comin ramy: b wndver, let's gea quick look at how markets dog. the nikk i they are at session highs after starting the day. the asx 200 is in the green. we still need to digest that that statement, that rate hike. rate signalsur when it comes to the rest of the year. it could be an ugly day. down 1% right now. this is bloomberg. all mar

♪ david: you get a call from steve jobs appeared tim: there was a sparkle in his eye that i had never seen before. david: did your friends tell you this was not a good idea? tim: they told me i was nuts. david: warren buffett still uses that flip phone. tim: i said i would come to omaha to do tech support. david: -- tim: i thought i was making the wrong call. david: why is it called the apple watch? tim: i like apple watch. david: well, you are the ceo, so. [laughter] >> would you fix your tie, please? david: well, people wouldn't