profit warning helps reignite trade trauma. the dollar weakens. behind the scenes some white house and chinese officials are working to revive talks and head off a full-blown trade war. opec and partners are said to act a plan to boost all output by 600,000 barrels a day. >> the aussie media company

dubbed after a world cup coverage mailed. score. >> hello from sydney. this is daybreak australia. happy friday. >> no flops here. thank you so much for being with me. it is about six clock p.m. here in new york. we will be looking at how the action on wall street will play into your agent's epic -- asia-pacific trading. it is definitely a day where for your prompt hope. because of the ongoing spat between the u.s. and china. we had headwinds across u.s. equities specifically in the online space. ended look at where we this thursday. the dow down 8/10 of a percent. that is now down eight days in a

row. the s&p at its lowest in more than two weeks. the nasdaq down 9/10 of a percent. let's take a look at the flight to safety. depending on where you are at. the u.s. 10 year year -- yield. that was its biggest fall in two weeks. similar for the two-year. investors pulling out, pushing because to euro skeptics were appointed to parliament there in italy. >> the euros are concerned, reignited overnight. we are looking like a friday session at least getting started. on the weak side of things. new zealand is flat.

at kiwi dollar trading 68.71. the aussie trading at 7377. under $.74. goldman sachs one of their key strategies going into the second half of the short u.s. dollar against the aussie and the the loonie. commodities, at gold is largely unchanged in the session. we are watching oil of course. of $66 per just shy barrel. opec has agreed to increase supply. watching developments over the next couple of days. the yen is holding at 110. more declines across the

cosmetic -- commodities. let's get the first break news now. >> the bank of england held policy but not all members of the monetary policy committee agreed. three out of nine members dissented voting for an immediate hike. the door is open for tightening at the august meeting. , policymakersse voted to change the guidance on when they will consider reducing quantitative easing. u.s. banks clear the first hurdle of this year's stress withstand aey could severe economic downturn. this year, goldman sachs and morgan stanley came the closest to the edge. it is the third straight year that every bank exceeded the minimum capital demand. first lady melania trump made an

unannounced visit to child immigration detention centers in texas. president trump signed in order to and family separation the mexican border. according to her step, she planned the trip on her own. called for federal agencies to reunite families divided under his previous policy. the house will that -- vote on an immigration bill for a permanent solution to the separation problem. >> we have to house the miners and we have to house them and we should be taking good care of them. we should return them back home. that's what we have to do. retains a slim chance of making into to the knockout stages of the world cup. match with denmark. they failed to score. for france to beat the danes.

argentina also faces a must win match against nigeria after their three nothing lost against croatia. this is bloomberg. >> thank you. returning to the u.s. market close. daimler adding to pressure on stocks the dow is mentioned eight straight drop. online purchases are now subject to state tax. that sent you merchants tumbling. we have more on this. it's a lot of headwinds today. >> the tax on the internet sales is a huge issue because it has merchants advantage over the brick and mortar. rose,ou will see is bonds the dollar weakened, and the dow was down for the eighth straight day.

that is the broadest measure of the market. let's take a look at the online retailers. you see the size of the moves lower. overstock.com, they sell a lot of products that other companies cannot sell. even took a big hit. -- ebay took a big hit. let's look at some of the other big movers. the mix of moves here. starbucks gave a disappointing television interview that knocked the stock lower. they will be shutting down some more stores. the outlook was not viewed as that strong. advanced micro devices is also showing pressure. therapeutics shows you the

moves we are seeing in these biotech firms when they get approval that has to do with a second stage path of one of the drugs. spotlight as its ceo is forced out because of an improper relationship with a staffer. let's take a look at the chart. chartsou can find these in our library of charts. you can see the growth under his five-year reign has been significant. this has been a blow to the major chip maker. he leaves his job where he will be able to retain some of that is a big legal question. it is seen as the largest me too example in corporate america because a lot of companies are taking a zero-tolerance policy. intel's policy was executives cannot date hello employees.

>> switching to the u.s. china trades. daimler is coming out and being seen as the first downgrade for its profit outlook related to what is happening between global trade tensions. >> the first company to come out and tie a warning that it's profit could take a hit to the trade wars. with look at how this affected not just daimler but the other auto stocks. down in a very big way. analyst was criticizing daimler, making a little joke saying daimler, man down. look at their stock how it has performed. there may be other issues going on. this is being pointed to the trade wars as a reason. convinced for the reason.

the next big event is that opec meeting hours away. they are gathering in b&r. we don't quite have a deal but how is it looking when it comes to this scenario that has been emerging over the past few months? >> it seems to look pretty dim for a compromise in terms of the output. >> let's look at how oil has performed your today. we had a big drop and it seemed on an upward trend. now it looks like the ministers are going into the friday meeting supporting an output boost. , take a look at the week so far in west texas. it has been a rocky ride. they are not sure what we will see at this meeting. whether an agreement will come out. it is being told that a ron will have a voice at the meeting.

>> thank you so much. let's take a closer look at the latest in trade tensions. bloomberg is being told that officials are restarting talks with china to avoid a trade war. wilbur ross thinks washington has a distinct advantage over beijing. >> once they put the tariffs through if it went that far, they have nothing more that they can do. we could go theoretically all the way up to the 500. that is not a very easy game for them to play. similar ratios with the other countries. that's what president trump means if he says it gets to be a big war, we have more bullets in the other countries. rostov like he is doubling down.

much like we saw with the bte issue. >> absolutely. there is a strong divide in the white house and that is what you are seeing here. there is one faction in the u.s. white house that is starting to reach out. how to restart the trade talks with china and avoid a trade war. at the same time, you have another faction within the government that is pressing to use this moment to really get a big restructuring of trade relations with china. secretary ross is articulating go to the that if you mat it can hurt china more than the u.s. and that ultimately china will fold. chances of ahe trade war they can be avoided? >> they are pretty good. you are seeing a division within the white house. there is one strong action --

faction that is trying to figure out ways to negotiate a settlement. there had been a. in may when the action seemed -- havingt and they were negotiations with senior chinese officials in beijing and in washington. the protectionist faction gained the other -- upperhand in late may and the president at the moment is trying to rile his immigration and over trade going into the november election. other faction within the white house is more concerned about economic growth area and how the stock market is doing. ande you see a counterpoint they also are trying to win the day. each side is constantly trying to get the best of the other side. >> immigration is another hot button that is coming to a head right now. republicans have rejected the broad proposal favored by

conservatives on thursday. they are supposed to vote on another proposal on friday. what are the chances that these bills get past? >> one has already failed. doubt will it will pass. and there is a pretty united democratic opposition. it will be a tough road to get in the the house even house once they delayed it they didn't have the votes right away. even if it were to pass the house, it would still have to pass the senate. -- the chances there are really low. still ahead, a committee of backs raisingers output despite iran's objections. a preview of friday's opec we will beer area >>

talking investment strategy with with your trust. this is bloomberg. ♪ we are counting down to the

sydney open. negative.e looking -- ng said that, sittinghares still pretty close to that decade high. it's a beautiful friday morning here in sydney. daybreakatching all-star you. -- australia. a potential trade war between u.s. and china. joining us is with your trust chief.

you are still constructive on the economy and on growth. this is despite the headlines we are seeing in terms of trade war risk and as -- equity is falling. tell me your thoughts. let's begin with where we are in the economic cycle. economic growth is showing momentum. crop -- corporate profits are soaring. we could be at the end of the cycle. the simple answer is we don't think so. indicators arec still rising. the fed is still halfway through its cycle. the yield curve is still positive. consumer confidence is high and rising. unemployment is low and falling. disposable income is high. retail sales are strong.

and aion is contained rise in interest rates is orderly and gradual. these reasons we just don't see a recession in the next couple of years. >> a lot of people still do. still gettingve closer and closer to inversion there. bringing in what is happening with trade tensions. will start think we to feel the bite here? officials are trying to reengage with paging -- beijing. there in lies one of the larger policy rates -- risk. that the white house gets it wrong on trade and tariffs. we believe that the current position is about posturing.

you need enough luster so that your threats look credible. but not so much that it slowly draws you into a trade war. announced the tariffs against our allies. , this procession where does it end? what have you done enough posturing to try to establish the credibility and when is it too late? i will throw out another question. how do you convince your counterparts that your threats are real without convincing the financial market also that your threats are real? we are not quite there yet this will become an increasingly precarious tightrope walk to get the balance right. at the end of the day, we believe we will avoid the global trade war but it is not getting any ear easier.

>> i want to throw out this chart. talking more about what he was referring to. whennot a matter of if but we see an inversion. if you look at some of these indicators. likecularly if you look there's intense. invert, withesn't this actually tell you that recessionary conditions are on the way? >> i will make to observations. first of all it is still flat. there will be a few months before we see the inversion. keep in mind there is a further life from the inversion and the yield curve to the onset of the recession. that is a trivial observation. here is the real difficulty. isknow what the policy rate

by looking at the short end of the curve. we never know what the unobservable neutral rate is. we typically look at the long end of the yield curve to assess that were approximated. are u.s.xtent today interest rates being distorted by two specific effects. policy.ersion monetary two, i'm even global growth. growth outside the u.s. is getting weaker. other central banks are still neutral or even easing while we are tightening. is this holding u.s. interest rates lower from its true equilibrium neutral rate. that is the question to answer. it is a tough question. we believe that the unusually low term premium that you see entirely at

reflection of the u.s. growth prospects. it is influenced by foreign rates to some extent. chance that we could see a policy missteps amidst all this. >> we talked about one on the trade front, where do you get this balance right? other one would have to come from the fed. they project that the long-term funds rate will and at about 3%. there, withwe get no corresponding change in the 10 year bond yield. curve andt the yield that is a bad outcome. we believe this will not happen for two reasons. but the more likely one is that at some point the ecb will eventually begin to raise their rates and that should push up u.s. interest rates as well.

we expect that the 10 year bond yield in the u.s. should trade around three and three quarters and a couple of years at that happens we restore the positive slope of the yield curve. if for some reason the 10 year bond yields is stubbornly stuck fed willess what, the off for, stop, and back the last few rate hikes because presumably this be in the midst of a week growth act drop. >> always a pleasure. our deal has been reached between greece and its creditors. a 10 year extension on its european financial stability fund loan. place inks are taking luxembourg. going to to the wire there.

looks to be the fourth and final review of the long running greek bailout story. take a look at daybreak on your bloomberg. all the stories you need to know to get your trading day going. here this is bloomberg. ♪ quick check of latest business.

wall street is waiting for comcast counter bid in the battle with disney for 21st century fox entertainment. expectations for offer of 41 or $42 per share. shares had already fallen. about $65 billion. the kingdom's energy minister saying that it would be nice if it happens in 2019. his economy is not critical for

the saudi government. it was originally slated for 2018. he said much more is at stake. he is merely taking a box.

>> 8:30 a.m. here in sydney. placeof profit taking in as we have had the aussie sharemarket up to these decade highs outperforming the rest of the region. elsewhere we are looking like it for the sluggish start to friday. in new york it is 6:30 p.m.. you are watching daybreak australia. >> thank you. white house officials are trying to restart talks with china to avoid a trade war for u.s.

tariffs take effect on july 6. that is according to bloomberg sources who say the national economic council are engaging high-level talks in the next two weeks. it is not looking likely anytime soon. a committee of ministers overseeing the opec plus agreement have backed raising oil production. the joint ministerial monitoring committee met before of the opec meeting. it is recommended a 6000 per day barrel increase. majorityelming [indiscernible] that is a nominal figure. what actually is distributed to the market will be a smaller number. >> hong kong office space

remains the most expensive in the world. higher than the nearest competitor. that is london west and area it is the third year in a row that hong kong tops the survey. midtown manhattan and midtown south in the city of london did not make the top five. new zealand is celebrating the arrival of the prime minister's baby daughter. waited 3.3 kilograms. both mother and baby are in good health. the 37-year-old leader issued a statement thanking people for their kindness and best wishes. powered by more than 2700 journalists and analysts in more than a hundred 20 countries. this is bloomberg. >> thank you. let's give you an update on your

friday market action. new zealand is just getting started. we are seeing a little bit of a downside. the kiwi dollar trading at 6871. weaker against all of its g10 peers. have to percent lower into the start of the session. aussie is holding at 7876. to short the u.s. dollar against the loonie and the aussie as well. japanese inflation data on top this morning. expected to remain largely unchanged therefore sluggish in may. sterling at 13243. despite the boe keeping rates on hold where the unexpected vote from the chief economist of the bank of england reporting a rate hike. yield fallingar below 2.9% at one point as we

had some concerns again being revived about the potential trade war in the s&p 500 closing low. the dow posting and eight straight session of decline. not a great session as we get started's morning. pretty negative set up to friday trading. is momentum also against the time when it comes to how asia's going to trade. >> i think it is. as we are seeing this week. we have seen you big swings in both directions. the sentiment is very negative at the moment. you will see in parental buyers wanting to come in. since theworst week end of march when stocks were down a couple of percent. we areemind ourselves starting to test those lows that we saw a earlier this year. no shortage of people on the cell phone this week that have

come out and trimmed their equities positions. goldman sachs, ubs, and morgan stanley cutting their target. earnings fundamentals are coming under pressure. this is in the context of waning signs around some economies. this idea that six months ago synchronized economic growth. it's getting very testing with evaluations having run away in the early part of the year. >> it is not just asia at large. i'm curious why is goldman sachs advocating buying some local currency bonds in particular which places? this hastely a lot of

to do with what we have seen over the past weeks weeks or so which is an almost 180 degree swing in terms of the argument are emerging markets shepherding the tightening cycle. the sense of being in the bullish standpoint from people willing to be positive on emerging markets was that they can look through the fed tightening circle that has now swung and people are starting to question with an incrementally , can assets fed stand up to the pace of this tightening? we are seeing a lot of pressure in emerging-market accept. some ofdman favoring these bonds, a lot of it has to do with a short u.s. dollar narrative in relation to emerging-market assets. perhaps not places like argentina or turkey just yet

certainly some of the other countries the chilean peso for in placesrough soul like africa where the rain has the job site from here. largely their argument is that when a global economy does well, you still see underperformance from the u.s. dollar. >> thank you. another painful friday session. don't forget to check out our gtb library. here australia, the commissioner is investigating conduct. a fourth round of hearings next week. ranging from bribery and document forgery to getting misleading financial advice. what are they going to focus on?

allegations are not actually going to be looked at in the hearings this coming week. they will be looking at regional and rural communities. basically farmers. farmers are a flashpoint in the us trillion psyche. their farming the land, they're working hard. allegations over many years now that the banks of been guilty of actively seeking to force people off the land. they have the potential to be very explosive. bepolitically, this could explosive as a powder cake. walk as to the reasons here. notice is that the part of the governing coalition of australia has a stronghold in rural areas. it was their dissatisfaction with the way the banks work theh may be -- made

pressure to be called in the first place. it was pretty unresisting will. studiesf these case prove examples of unconscionable behavior by the banks, then that could be a real political issue. i think it is worth noting that in the rounds with had so far, they have ranged from the quite shocking to much more nuance. the most recent round was about small business holders and that was harder to find out right villains and heroes. that did come over in the banks favor in many ways. >> we are looking at the estrella ensure market. that has been a recovery in the banks. early to breed a sigh of relief? >> you have to be brave to breed

a sigh of relief. there is a federal election next year in which how to get tough on the banking sector is going to be one of those things. the banks have recovered. >> good to have you back. looking forward to the next round of hearings in the royal commission. coming up next, we are going to look at oil and opec. we will look at the extra production and what it could do to the markets. ♪ >> you are watching daybreak

australia. a committee of ministers

overseeing the opec plus agreement is back to raising oil production and that is despite objections from iran. it is recommended 600,000 barrel a day increase in output. that is ahead of friday's full opec meeting. the bottom line here, regardless of what happens, investors are all expecting that prices will head south. market had priced in a consensus of production output increase of around 800,000 to a million euros a day. underlyingat the agreement, it was successful. 1.8 called for removal of million barrels from the market. at the same time, it was also successful in not only bringing down, bringing prices up by $.50 but it took down global

inventories around the world area we think about the range of options that are possible from the outcome of the meeting, any because whenullish demand peaks for the summit we are going to need all of those barrels. >> the crux of this is a ron. what is the reason for them not wanting to because if they raise production but in this case no. >> this is the interesting thing. oil pricest where have stabilized, opec is less effective at balancing the price isea when the cratering to the downside, everyone wants to get prices back up. and venezuela do not have the capacity to increase production. we are seeing underlying fishers it has venezuela benefit from an uptick in production because they can sell more barrels. , means theyexchange

can benefit from selling. they want to appease the trump administration at the same time not appear to be appeasing the trump administration area they also need to keep russia on board with the deal. they know that opec has lost a lot of clout in managing the market. they have a lot going on at the same time they need a higher price and sells for their upcoming ipo and because they have increased spending domestically. there are a lot of fissures within opec right now and not a lot of cohesion. hop into the bloomberg guide. i want to show you the library. at least russia wants to get back to the 34 million barrel a day mark. 300 could be a bump of

600,000 barrels a day. what do you think is realistic if we get a compromise? priced in is a's hundred thousand to one million. prices are down 9%. that would be realistic because opec has been overly compliant with their own accord in the market needs that. at the same time what is important for determining the trajectory of prices will be bit messaging. not just the number but the communique. in termst open ended of leaving room to decide what to do with missing barrels from random and venezuela. did they start to oppose -- oppose a quota. can down thed the road to the next meeting in september? the messaging will determine how investors react over the next coming weeks. trade and theis

impact on the demand side way into this weekend discussions? is that something they should take into account much. >> it is certainly one of the biggest wildcards out there. woman look at the terrace -- tariffs they should not impact oil demand too much. even when we look at the most conservative estimates, they by 1.4 demand to grow million barrels a day this year as well as next even with the trade wars. when it comes to the big questions in the market, we can project a lot of things because we know baseline levels. when it comes to determining the personalities and how they will react to trade wars, there's obviously a bit of a wild card. in terms of where they are now, it should not be too big of an impact. >> bullish positions have been

holding steady but they are starting to fade. or interestingly is this gap between pricing and wti. how do you expect that to close? what does that tell you about the behavior of u.s. show going forward? andhe spread will stay wide permian crude oil will continue to trade at a significant discount. that reflects bottlenecks going on in that part of the country. we talk about shale is being fast cycle. the infrastructure is not fast cycle. it takes a long time to build type -- pipelines. i think that will impede the arel of shale because they answerable to shareholders.

where those oil prices are trading at a significant discount, that is going to impede their ability to grow. we imagine that those discounts will remain in place and when it comes to trade, if china imposes tariffs on u.s. crude oil, it will find other markets. it might have to take on itself little more of a discount. >> it's not a question of how much. thank you for joining us. previewing what is likely to be a contentious opec meeting. catch up on the key analysis that you want to save those charts for your future reference as well. ♪ this is bloomberg.

take a look at that croatia and france through australia and argentina just hanging on. peru is out. russia 2018. bloomberg subscribers can check out the latest results at w cu p go. you can see how our colleagues and anchors are faring in those predictions. >> there is some relief in store for the long-suffering world cup fans who have had trouble watching games broadcast. traditional media one. loseryou know the biggest for the world cup. >> this is the cautionary tale of the telecommunications

company that decided what to do with content. the world cup normally is broadcast by sbs. optus has been getting into broadcastings been the english premier league. decided, optus decided it wanted the world cup. optus would get 39 world cup matches but it all came unglued less friday because the early light egypt. you cannot underestimate the awesome excitement for the world cup generates. the system collapsed, they got there generic playback error. everybody got angry including the prime minister. ceo for an the optus

explanation. >> it looks like they will not have a chance. what has optus been doing to try to rebuild interpretation? >> is. apologies from the ceo. he regrets the service was not up to standard. everybody gets their $15 back. they are negotiating with advertisers to try to get around the problem there. everyone gets free access to optus sports until august. will benal media showing the rest of the group games. as for the knockout stages, optus could make a return which everybody is nervous about. hope the problems have been ironed out. >> they will find the most stable way they can to watch the games. the next business flash headlines now. president trump's trade spat

with china. china can get into european attempts to sell more airbus presidentsng french visit. he is trying to seal a deal for a 20 passenger jets. if the order is confirmed it will signal that china has retaliated against u.s. tariffs. >> more competition for boeing. securing a deal with delta airlines. purchase 20 of at close toircraft $1 billion based on list prices. it follows one that happened in may with american airlines. the program has helped with the commercial airplanes back on see

rj family. >> singapore airlines says while oil price volatility will impact costs,ley -- operating based on supply and demand. as long as demand remains viable, pricing will change dramatically. he also gave bloomberg his view on trade tensions between the u.s. as well as china. >> i want to say i am not qualified to talk about the impact of trade in whatever happened between the u.s. and china. wem a business perspective would like to see countries around the world work together to grow the economy rather than contribute into a slowdown. >> you can see more of my interview later in daybreak asia. that is it 9:40 sydney time. 7:40 if you are watching in new york. >> great conversation.

daybreak asia is up next. happy friday. >> happy friday. not just trade tensions but also tensions in opec in vienna. oil minister walking out of this meeting. it looks like the rest of the opec members say that they could have a preliminary agreement. we are honing in on what that number is going to be when it comes to how much they can raise output. the market currently is pricing in around an increase of 400,000 barrels. we will see if we see anything higher than that. in just a few minutes we are also going to be talking about where we are headed is in terms of equity. we will look at opportunities around the world that coming up

in just a few minutes. is it for daybreak australia. daybreak asia is next. this is bloomberg. ♪

yvonne: we are live from bloomberg's asian headquarters. welcome to "daybreak: asia." asian stocks set to extend their worst week in almost three months, as trade trauma returns. behind-the-scenes, some white house and chinese officials are restart talks. amy: just a 7:00 p.m. on thursday in new york. opec decided to boost output by 700 thousand barrels per day. ceo