♪ >> u.s. of stocks a slide to the lowest of since may end in a new concern of china. race that gains as a hawkish larry kudlow chimes in. >> a trade and a trade war, $74 billion -- >> how electric carmakers are giving new lease on life.

>> hello, it is just past 8:00 a.m. here in sydney. this is bloomberg daybreak australia. >> good morning, 6:00 p.m. in new york. ber the next hour, we will looking at the action in wall street and what a day. it looks like wall street stocks ready to climb. trump indicated he would not take actions to block companies with at least 25% chinese ownership from investing in sensitive u.s. tech companies. anded like a good signal then larry kudlow, his chief economic advisor at the white house said president trump not retreating on trade, and that is why stocks retreated. the dow down about 7/10 of a percent. 500 down about 9/10 of a percent. >> bond markets --

tell us about the bond market because we've been asking this question of whether we have hit a peak of where it comes where yields are, right? >> absolutely. larry kudlow's signaled that a trade war is not over yet, that is one treasuries started to rally. the rally included in the two-year, the short and the benchmark 10 year, the third-year now well below 3%. maybe there is more doubt about the fed rate hike. >> yeah. -- therscores everything fragility of a need sort of positive sentiments we get in the markets. investors are scratching their head a bit of what the development and the trade war story will be. we are setting up for a pretty mixed open in asia.

that record low of one and three quarters of 1%. the language changing slightly saying the position of managing change in either direction up or down is necessary. the business sentiment could be fading to a pushing back of the star of a tightening cycle. not much change at the kiwi dollar. we had a bit of a jump up on the bloomberg dollar index to its highest and a week. sydney positive futures signaling weakness. let's head over to emerging markets because these are not looking good. , we haveanley warning seen the lack of shanghai and ila with currencies out by half a percent. you are also seeing the emerging market index off by one and a half percent again in the session. we will be watching onshore and un, so well before the

devaluation, i am watching as chinese markets remain in the bear market. it does not look like much respect is on the way. is on the way. tradeget a look at the tensions by bringing in bloomberg washington reporter greg sullivan. , president has decided on a less confrontational approach. 'what exactly is the administration's approach and is there consensus? greg: the white house announced what is seen as a less confrontational approach to china. aey are going to utilize committee that scrutinizes investment into u.s. companies that could be a potential u.s. national security threat. was a less confrontational move them what was originally reported which was the use of an

emergency law. course, the trade watchers seem to be a little more in a itotiating stance here, but is unclear whether trump himself is softening his approach as he is said to still be focused on china. the white house has before accused china of ip theft and technology theft, but they did not single out china in this statement. there are two bills going through committee and those would expand the committee's role so that seems to be the approach. win for more free trade dove members of the administration? greg: it does seem to be there position winning out here. earlier, we heard reports that secretary of treasury steve quiet, not been

making public statements as he disagreed with the very confrontational tariff approach. is one of the ones advocating for the emergency advisors in the white house that are more concerned about reprisals on u.s. companies or the effects on the market, winning out here. those comments from larry kudlow saying china has not been satisfactory so still attention on this trade relationship or it > -- relationship or it -- relationship. >> a surprise announcement from the supreme court. supreme court justice anthony kennedy announcing key is retiring. just how significant is this? greg: this is significant. ote and wasing v there a public in supreme court

justice. but you can expect that whoever does replace him will shift to the right on key issues. justice kennedy wrote the opinion and the landmark gay many believe, and whoever president trump will lean to the right on significant issues. >> greg sullivan, thank you. share some to headlines, mike pence on the heane to ecuador saying that and the prime minister of true trudeaue minister discussed that nafta. of immigranton families being separated, the administration does not want them separated, certainly the administration has said that over and over, and they will address the border immigration crisis in their meeting.

the u.s. will provide an additional $10 million to venezuelan migrants. pence says trump wants list for the supreme court. let's get the latest on first word news with our own jenna. apple and samsung coverage reached a settlement in their u.s. patent battle over smartphone design. the string of lawsuits started in 2011 when apple sue the samsung for copying the design of the iphone. it followed a retrial in may in which the jury awarded apple $539 million in damages. bank of england governor mark carney said that time is running out to remove a brexit threat to as much as $127 trillion of derivative contracts. contract continuity issue could cause havoc and financial

markets when britain leaves the mark in march. so far, the eu has not reciprocated. government's temporary regime would provide a temporary solution. provided their , andion to these issues the unlikely event of a disorderly brexit. jenna: they will stick with the financial -- they told bloomberg there will be no return to the spending habits that triggered one of the biggest financial meltdowns and the continent's history. what happened in greece in previous years and let us the bankruptcy was a huge waste of money, corruption, and

irresponsibility in the manage a public finance. we should not go back to that and as far as i'm concerned, i will do whatever i can to not go back to that tragic period. theermany crashed out of diesel world cup. -- out of the fifa world cup. thatny finished bottom of group after sweden beat mexico. five-time champions brazil into their final game in danger but nil to set up a knockout match against the mexicans. global news, 24 hours a day powered by more than 2,700 journalists and analysts in more than 120 countries. i am jenna dag and heart. this is bloomberg. >> jenna, thanks. on's get you more details the u.s. close, stocks fell, bonds rallied, and trade tensions linger do with the

rebound story in tech stocks. about aoncerns crackdown in chinese investment in the tech sector. new hardshipngs a for this market. >> yeah, and this trade talk has been a negative for stocks. snapshot, a look of a we are going to go really quickly through this. are seeing bonds higher, yields lower which is impacting banks. we will get a gold by the way at the six month low. down a mostly percent for the month, the biggest drop since september. oil will get you off to the races with a number of factors. let's go to some of the charts because what you really see will follow through some of the energy stocks higher on the strong rally in crude, and we saw a lot of tech go lower. -- a very strong

stock at the top has been splunk . panel, the the next bond yields lower, for 13 days and this is a record. it has a lot to do with the 10 year yield being lower. there is concern about the impact on interest rates and the bank profits. lastly, let's take a look at media because a big not -- nod to disney. they get antitrust approval to buy the assets from fox. it puts a lot of pressure on comcast. are they going to be able to best a $71 billion offer that the disney has for fox? many say no. stay tuned. let's go into the bloomberg one more time. gtv is where you can find our library of charts. we are in a tangle over here of volatility gone wild. stay tuned. >> speaking about volatility,

how about the big jump in oil? we have the white house putting pressure on allies to not to buy exports of iranian oil, but then the latest numbers, wow. >> that is really what the grabbed the market. we had a $10 million drop, you never see that. let's go to the charts and see. we are at the four-year high and you have not seen oil this high since late 2014. let's go to a two-month charts, you get a better idea of how yes, itat increase is. has a lot to do with the fact that also the white house is putting pressure on iran oil, see already had that rally, and then this comes on. it is a very bullish number. thise also seeing intermediate, 1-3 months spread which is starting to widen, so you are seeing a real difference

in the fact that opec is heating. the fleeting reassurance from the saudi's, what that does is the intermediate spreads extent of the strongest and almost four years and that is following a supply outage in canada. quickly, let's take a look at the energy stocks. you will notice of the bottom of the chart, the biggest jumbo wasn't -- jump was in diamond offshore. it is very good news. >> i would like to be diamond offshore today. thank you. still ahead, we will have chief strategist who says risk are on the rise. on, joining us live to showed the impact of these trade tensions. this is bloomberg. ♪

♪ i am in sydney. >> i am kathleen hays in york. you're watching daybreak: australia. investors grapple with the mixed signals about the trump's team approach the china. joining us now is the chief market strategist at -- >> think you for having me. it has been -- thank you for having me. a tumultuous week that ended with volatility and markets are reflecting that. outhey are. stocks were set for a better day, a little sigh of relief because the president he is fine with foreign investment in the u.s. but there were so much weight put on what larry kudlow said. he is chief economic advisor at

the white house, that seemed like a bit of an overreaction. >> perhaps. i am seeing a different trend. i am seeing markets understanding that it is more than just rhetoric. it is not just confusion and inconsistency. there are real-world implications. companies are pushing back as a result of some of this confusion. theou are thinking about building a factory and you do not know what your tax rate is going to be, what you're -- your tariffs are going to be, you are going to hold off. that is a natural reaction. perspective, we are looking at this and saying the longer the confusion goes on, the more of a real economic impact it is going to have. even if they get settled just fine. cringing far are and going down when there is something negative said, and then when it is taken back, they lift up.

the delay and negativity is very real and that is one of the reasons you are seeing bond yields come down across the board. >> is that also the possibility that what bonds are coming down, it is affecting markets already. stock volatility has slowing down and we have had at least a two guests on this week that does not think of the fed doing that for some rate hike of this year. an outside possibility that jerome powell does it in july as opposed to september. starts getting nervous that the volatility and the insecurity continues, they absolutely want to raise at least one more time. that is something that is important for them. they might preemptive and do it sooner rather than later. it is a small probability but it

would not be unheard of. mentioned volatility. i want to bring up this chart. volatility has been kind of low. it is starting to pick up at nowhere near the levels of what we saw around january and february. you look at this chart and that is vix in white. does this show you complacency, markets mispricing, or does it show you that investors, sort of like the boy who called woof, they are tired? become located answer is it is a little bit of all of them. there is complacency that the economy is growing a robust pace. investors are leaning back on that and saying corporate earnings are stronger, economies o our growin -- economy is mispricing ishe

making the assumption that everything is going to continue and this is just chatter and rhetoric and ultimately, it all gets resolved. there is the very economic reality which is where you are vixng things like the spike today and it spiked last friday so i think it is a little of all of them. best guess is there is a miss pricing and the volatility could put us in for a rough summer. other u.s. and investors are paying attention to what is going on in asia, particularly emerging markets. stocks are retreating, worst quarter since 2015, and we are setting up with 10 days of losses and that was the worst losing streak since 2014. how much of what is going on in that space? >> we are paying attention to it. at the end of the day, emerging market economies are very

significant to the global economy as a whole. you are seeing it in asia and latin america as well. one of the real issues, a stronger dollar and weaker local currency can have some profound impacts on a long-term basis. you have got two very different types of companies. orex corp., are they hurt helped by the trade tensions? >> i do not think it or in terms of fedex. the reason we like fedex as it goes back to a trump issue. his war on amazon and the u.s. postal service, that can drive additional business to fedex if that continues. they are better positioned than ups which is potentially facing some union issues. >> positive on fedex, it is a buy, so to speak. apple is vulnerable to the trade

battle with china. >> we look at apple as a behemoth company. we think there is going to be significant share buybacks, significant dividend hikes over the next few years, and that company over the next three years on auto continue growing, and we think it is another innovation cycle behind the iphone and ipad and the things they have been doing. if you look at their pc sales, the curveay behind and there is an opportunity for them to ramp up. us one more recommendation whether it is an individual stock or a little bit more cash right now and put your head down. are overweight in cash, 7.5% cash across the board. if you are this -- owning a lot of the stocks i that have done very, very well over the last year -- think

about the tech sector -- start feeling back. back. >> put the money in your pocket. oliver, think you for joining us. remember, bloomberg users can interact with the chart you think gtv go. browse recent charts and you can catch up on key analysis. this is bloomberg. ♪

♪ a quick check of the latest business flash headlines. toyota says its best-selling camry will cost american buyer a -- $1800 more. the earning example of an

american manufacturing might and the plant tariff is a tax on consumers. they have also condemned the trump administration outside of the u.s. they say that the projection of their products present national absrity risks is urd. they called the tariff the greatest current threat to the u.s. auto industry. >> and that says that it may cut ratingley davidson a+ because of the trade war. president trump again attacked morey's plan to shift outside of the u.s.. he tweeted that he is only making his competitors happy. -- they the blind want to get an advantage on

trade. this is bloomberg. ♪

>> sydney stocks are on track for a day of decline. it is 6:30 and you are watching daybreak. we are going to get to our first alert news now. >> trump says that he has a list of prospects for the retiring supreme court judge, anthony kennedy. willll step down and trump create the most conservative court in generations. votes ands a swinging

he backed conservatives to throw out campaign-finance restrictions. >> he will be missed and he will be retiring. we will begin at our search for a new justice on the supreme court and that will begin immediately. >> the white house is moving ahead with plans to limit chinese investments. there are plans to invoke a rarely-used law for economic emergency. trump embraced scrutiny on intellectual property rights. the less-confrontational fears ofhelps to ease an escalation of trade tensions with china. >> they will be allowed to invest in the question is how and what is the threat by the technology transfer or the theft of intellectual property.

these are things that this new permit will have to decide. tankleaked report, think from the chinese government warns of financial panic in the economy of china. there is concern about market turbulence and trade tensions. the institute for finance and development sees dangers from liquidity shortages and a recent plunge in stocks. ate say they are looking plans to hold purchases. considering ending imports. the national oil is seeking altered his. under the nuclear sanctions, all purchasesnd by november 5. global news on twitter is powered by 2700 journalists and

analysts. this is bloomberg. >> thank you. let's get the update on the markets. this is what we are looking at. this leaving rates and there is a slightly more dovish turn and a readiness to move with the economy. kiwi dollar is there and we had the u.s. dollar hitting there. every emerging market currency is there. let's take a look at the rest of the markets. a big move and a decline.

this is when it came to the und and that ispo where the 10 year is. just a reminder that the s&p 500 closed lower. there was initial optimism about the trump administration and it quashed by larry kudlow. let's go to the asian open and we are going to continue with what happens in chinese markets and is this the same as 2015? important that it is and there are comparisons to what has happened in the past that is useful and i think it is good to point out some significant differences with where we are without the markets are performing. andave obviously lost this

it is significant and it is not the kind of move that we have seen. similarly, we have seen a pronounced weakness and it is as quite on the same level 2015 and those things are important. movements outof tf's and somee e suggests that this is a level of contrary an indication and there could be a swing with the other direction. this one here shows that well and this is the atmosphere we are in with these chinese assets ad are we reaching

recapitulation level? when will the authorities make a pronounced move? question andficult there are chinese assets that oftinue to be in the front people possible. host: it strikes me that china cannot win. whenever they show strength, it is like they have a weapon in the trade war. are there legitimate forces for why the yuan is weakening and will does raise a question of "currency manipulator" for the trump administration? guest: you would think, with this kind of a move in a managed currency, that it would get to a . usesion where the u.s

that, in some way, to start talking about retaliation with the currency here, but the si lide could go further before we get to that level. we have seen a significant move built on what is happening over but thereew months, are a lot of of fundamentals on the chinese domestic front especially with a tightening of credit and a economic data and industrial production. so, there are legitimate fundamental reasons for why this you start tobefore consider why this is being allowed to happen and if the authorities are allowing this to might have.han they which chinese assets, whether we get to the tipping point by the

end of the week it is a tough call. >> a lot of stores are playing out. if you so much for joining us. out do not forget to check our library for some of the charts that you just saw on the terminal. debi -- next, state debt is on track for the next 4 years. this is bloomberg.

heidi. you are watching daybreak, australia. the monetary policy is tightening and it is one of the biggest worries for the money managers. from syson joins us dney. how are they positioning for the trade war? we saw this really hit u.s.

bonds today. bets byare hedging piling into treasuries and also buying yen. interestingly, they are shorting the australian dollar and the new zealand dollar. we also have to remember that these currencies are proxies for china. the aussiecouldth dollar fall? how vulnerable is it? >> it is definitely vulnerable. aussie-dollar .70 by nextbelow $ year. there have been credit default

swaps sold in turkey and they ce could that the pri for nextow as $.65 year. >> there is a lot of positioning going on. >> absolutely. you have goldman sachs preparing risk in fidelity international has come back exposure to equities and that is a risky part of the market. yes. i think we will see more to come. the stateth us is premier and the minister for the aboriginal partnership. it is good to have you here. we were talking about one of the and theficult things trade war with australia being uniquely vulnerable. how closely are you watching

these developments? what's we are monitoring this situation and i think it would look where this is going to end, but the queensland economy has weathered other economic storms and crises. the we know is that queensland a and the australian economy is a strong and resilient one and we are diversified. moree industry makes up than 10% of the economy and that is a good thing. we have a demand for the commodities and we have forward with key trading partners and we know placed toe uniquely weather the storm. with the tourism?

>> we are seeing in increase in exports and a spike in tourism throughout australia. we're seeing a similar increase in tourism numbers. inut this is very uniquely tourism numbers, but this is very uniquely placed -- in tourism numbers, but this is uniquely placed. there is a strong surplus in the budget. times larger than predicted at midyear because of the high level of commodity prices currently. and, we're seeing an increase in the energy exports. there is a that long-term demand for the commodities in our government going forward. >> tourism does good things for

the queensland economy and you see a great deal of flows from chinese tourists. is there an infrastructure issue with australia? asia andly, you go to it is not the same level that you get in australia. >> we are very aware of this and there is an infrastructure boom with $25 billion for this project and there is construction or what is planning to be constructed, including the queens wharf in brisbane or getting delivered, including a new casino, so there is a range of tourism infrastructure and it has been delivered and it is an exciting time for tourists. that brings me to how you are funding this.

nding this is giving a rise? >> there is a corporation that is doing a lot findingng and we are that the market is very interested in the infrastructure projects that we have put forward and we recently went out and we found that it was incredibly successful and we will go out to the market again future.ot-to-distant >> are you expecting appetites in the market? are, yes. >> there has been an exit is of people heading to queensland to get better property prices. are you expecting a property boom? >> we have experienced a

property boom in particular apartment wellings in the inner-city and we have had this in the city in the recent years with strong growth in the dwellings sector and we see this with housing and attached housing and that continues to grow quite strongly. there has been a bit of a decrease and we are seeing population growth really push the interest and the energy and it was predicted that property somes might outpace by 13%. complext to get to the environment of chinese-australian relations. the relationship with australia has deteriorated. what do you think will happen with investments when it comes to investors? >> there is

queensland, like australia, that has been built on the back of foreign investment and we welcome that as part of the economic growth story. --fact, queensland, has had in fact queensland has -- in fact, queensland has had growth linked to this. there are a number of commentators talking about this across the world. >> it would be home to protectionist tendencies, some would argue. isi am not sure that correct. i think the queensland has shown an appetite for foreign investment and we have a number of huge projects in the past, including the energy industry $4.2 billion and we

have an appetite for investment that we welcome. i think that the international climate around the china-u.s. relationship is one that needs to be sorted out. queensland has a very strong relationship with a number of key trading partners in asia and our exports go to asia and we have 30-year long-term contracts locked in for key commodities that we expect to continue. host: thank you so much. the queensland deputy premier. to bloome spoke , sayingair force 2 that trouble pick someone top in the mold of scalia.

this is a real chance for the president to make his mark on supreme court. >> this is a big deal. pence's remarks is that he will a swinghe pleas for vote. mike pence is that you will not appoint a kennedy. te says that he will suppor really like scalia, conservative. >> what does that mean for the complexion of the decisions that we have seen? a lot of people who are liberals have been very upset about just about any supreme court decision that has been made and they were tearing their hair out today. is a going to change that much? >> he was in a swing vote in this session, but he was a key vote to make gay marriage legal a couple of years ago. without kennedy on the court,

, gaya justice like scalia marriage would not be legal. so, in terms of trump and russia, this is another topic you are following closely. mp's putin meeting will cover a broad range of issues and pence says that, if russia -- pence is not say if russia w imea fore to cede cr a g-8 return. >> he would not say if they should have to give up crimea. the previous administration would not have said that. the previous administration would have said that giving back and thes the first step print is administration would have required several other things before they would have

considered letting vladimir putin back into the group of developed nations. joining us. for interesting,'s from mike pence after an interesting discussion of a day here in the united states on the supreme court. thank you for joining us in washington. you can watch us live and see past interviews on our interactive television function, tv go. you can also become part of the conversation i sending us instant messages during our shows and we love to hear from you. this is for bloomberg subscribers only. this is bloomberg.

>> you are watching daybreak. ae evening market will see generation of retirees. the wave of lithium batteries are not destined for the dumps.

they are repurchasing battery packs for everything. for more, david stringer joins us. this is a fascinating story. i guess we will benefit from it and that is why the carmakers are working so hard on this. ell, that is right. we think that, by 2040, half of the new car sales and about one third of the total global fleet is forecasted to be electric and it is a lot of batteries. 10 and ank about passenger car because they were carter, those batteries will need to be replaced and we have ofrowing mountain batteries. what they are thinking through is the fact that the batteries are kind of not done. they are useful. i cannot power a car, but still

10 years of useful life in less eye for demanding applications and the key is to recycle the raw materials. with the companies are finding, testing, putting into commercial applications, is a second revenue stream and, if they can make an extra set of profits in the same product, that is clearly something worth chasing. what it also seems to answer the question, people having questions about dangers of these batteries piling up in the environment. how are they going to get reused in which markets will they be in? >> so, we are looking at a real explosion of testing and a real diversity of applications. this is either a small-scale and it involves putting an energy storage pack in your house. these batteries are supposed be taken out of a car and they are

typically broken down into or differents modules to be used in bigger applications. this could mean a reuse battery module for a rooftop or solar or wind power and they may just store energy that is the cheapest. so, we're also seeing large applications in grids in germany. can tesla use all of this? what's interestingly, they are not pursuing this and their focus is on harvesting their own batteries to recover raw materials. at this stage, they are a key player that is on the sidelines. >> yes. it is quite interesting. essentially, the repurpose and thatts could be not profitable for the likes of tesla. david is there. very interesting. and other things

are retirement usage for ecv batteries. we will go to daybreak asia next. this is bloomberg.

yvonne: it is 7:00 in hong kong. we are live from bloomberg's asian headquarters. welcome to daybreak asia. trade angst hangs over global markets once again. u.s. stocks slide and treasuries rally on concern about the crackdown on chinese investment. equities jump on president trump's apparent softer line of the race gains as larry kudlow -- but erased gains as larry kudlow chimed in. .ever again the ministers says they will be no return to the spending habits that triggered a financial fordown -- further win