yvonne: it is 7:00 a.m. here in the hong kong. i am yvonne man. welcome to "daybreak asia." the top stories this tuesday, asian-pacific stocks set to extend gains after wall street hit its highest in a month. the dollar rose while treasuries fell back. earnings season will divert attention from tariffs. bloomberg's global headquarters, i am ramy inocencio in new york, where it is past 7:00 p.m. on a monday. theresa may fights for her political life. that is while eurosceptic tories quit her government. the pound the client on fears of a confidence vote. t talks trade in

berlin. all right. a very good morning to you, yvonne, as well as around the world. almost as if people are wondering as if there is a trade war going on between the u.s. and china and the u.s.'s allies. of a difference in terms of focus. looking ahead to what is happening to our upcoming earnings season. investors looking ahead to financials and there is an expectation of the s&p to have 20% returns year on year. a lot of optimism moving ahead. donald trump also in europe. while he is on one side of the world, he is not looking to the asia-pacific. yvonne: the big question is, can you continue to ignore the politics.

really fighting to contain this crisis after three key ministers. we are counting down to president trump's supreme court nominee take as well. it going to be pretty prime time. ramy: did we expect anything otherwise i suppose? let's take a look at where the u.s. markets close and bring us that closing board. you can see the about is up by 1.3%. they are all seeing their biggest jump in more than a month. for the dow, it punched through a couple technical's to make it rise higher. they are both beaten. the s&p up 3-3. positive across the board for equities. it is definitely a different, mixed picture. the dollar spot is flat, just a

hair, rebounding higher after being lower most of monday here. the euro also flat, but the ecb's mario draghi said the economic fundamentals are still pretty solid lookout for protectionism around the margins. british pound, we know what is happening because of theresa may. lossesnd did pare some because there are not enough signatures for a no-confidence vote. in turkey, the lira is headed higher, up 3.5% in the u.s. session. also increasing in the asia session. nepotism,erns of president erdogan has appointed his son-in-law. concerns abound. signalspretty positive when it comes to equities. 1% or 2% gains across the board. we will see if that continues today. the index 50 pretty much flat in washington.

nikkei futures also up by 25 points. kospi futures seeing a bump of half of 1%. we did see a bit of this in the dollar. $.74 for the rnc. key be holding pretty strong, and the offshore renminbi, 6.62. starts towar concern ease. a lot less worried and paris, it seems. we will have to take a look at our markets as well. we see yields higher across the exception of the u.k.. you see the u.s. tenure up three basis points right now. u.k. 10 year yield, down two basis points at 125. gilts in theport short-term. let's get you caught up with the first word news. jessica summers joins us from new york. gansica: are to one -- erdog

has been sworn in with more powers. sincera plunged the most the failed 2016 coup. the appointed his son-in-law as finance minister. almost 25% is down against the dollar this year. chinese premier called for free trade as he much chancellor merkel in berlin. contrast to the attention both countries are experiencing with the u.s.. they are seen as prominent the borders of globalization amid the escalating trade war. navy divers brought for more boys out of the flooded cave system. that leaves just for boys and their coach trapped underground. eight have been rescued and are

recuperating in a hospital. authorities are trying to bring the last group out as soon as possible because eminent monsoon rains threatened to push underwater levels even higher. rescue teams in southwestern japan have found more bodies after record rains. at least 100 people are known to have died. 80 or more are unaccounted for, and thousands have sought shelter. shinzo abe canceled a trip to europe to oversee the cleanup. hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. very much.s taking a closer look at the u.s. market close, and investors appear to be shifting attention. analysts thinking 20% gains. let's bring in su keenan for more.

investors looking past those trade concerns. su: because they have something to look to. this is what analysts have been saying all along. it is clear that these earnings could be 20%, 30% above average. let's go to the snapshot and take a look at how the market has moved away from trade concerns for the moment. we have the dollar slightly higher, bonds lower. the dow posts a 1.3 gain. the measure posting again. if we go into the stock moves in particular, you get significant .ize moves very interesting move higher given the fact that chinese court ruled against the patent case, temporary ruling, which credit suisse says it shows itself restraint. they could be restrained from your of escalation to us to -- issue a final ruling. the latestws in session pushes that higher. twitter under great pressure.

they canceled all these fake accounts. botis trying to reign in accounts. a lot of investors shocked at the number of them. analysts cautioning they are up 90% year to date. this is a blip in the road for twitter. groupon is looking for a buyer. let's go to the bloomberg earnings growth. that is the title of our chart of the day, which can be found under gtv's library of charts. that is on average after writing 14% in the first quarter. look at this. pretty strong in december. we are looking to go higher than that. it will be the second highest since december and the biggest gain since 2011, and that is where the optimism is coming from. yvonne: it is interesting, too, su. we watched some of these tech

companies must exposed to a trade war who rely on chinese plans to manufacture. su: you have got a lot of analysts saying there could be 33% gains because they have done so well, and that alone is enough shift away from the trade concerns. let's take a look at some of the headlines that have come across from these analysts. they say the tech sector will earnings growth in the second quarter. we have got energy firms likely to show profits rise by 132%. 33% growth rate in the same time period. let's take a look at some of the stocks that they are talking about. nvidia speaks for the chip stocks. shell is one of the energy companies. we have materials companies in all moving higher and expected to do well during earnings, and that, for now, shifting the focus away from trade concerns, likely providing

an offset. yvonne: thank you, su keenan, with what to expect out of earnings around the corner. toh theresa may battling stave off a full-blown crisis, after three managers quit within 24 hours to protest for brexit plans. here with theis latest, and kathleen, tell us more about may's plan. why has it stoked such a result? kathleen: she had her cabinet ministers managed to hammer out an agreement on the soft brexit plan, a divided cabinet which has people on both sides in terms of the hard or soft brexit. and then before she knows it, by , heay night, david davis cannot support may's plan. boris johnson does not waste any

time. he announced he is stepping down as well. theresa may went before parliament to take a victory lap, present her brexit plan. it turned into a very strong defense of her soft brexit plan. here is what she said among others things. >> it is a proposal that will take back control of our borders, our money, and our laws, but do so in a way that protects jobs, allows us to strike trade deals, and keeps our people safe and our union together. kathleen: there was a lot of jeering, cheering going on. key elements the of her plan so we know what people are trying to support or opposing. britain will they in the you -- e.u.'s customs union. they will avoid the hard border issue with ireland. this is key. this is what has been standing in the way of any kind of deal. british producers following e.u.

rules. u.k. said it will have different arrangements for services which will lead to them, their banks losing their passporting rights. banks are willing to see how that plays out. johnsonicism for boris says this is the result of too much self-doubt. does seems saying may safer now because too many people do not want a hard brexit in the u.k. and the conservatives have not found anybody to up and put in place to run in office if she steps down. boris johnson's star has fallen. a quick look at the british pound. if you look at, you have this wonderful chart here. it shows you that the pound had recovered from the big lunch since the brexit vote in june of 2016.

worry about it. a very small loss today. traders agreed, theresa may may not be in danger just yet. ,amy: speaking with some folks at least in terms of the signatures they need, they just do not have that yet. switching to the bank of england, is there any knock on effect we can pull from what is happening with this lyrical turmoil? -- political turmoil? kathleen: they are fade -- afraid to pull that trigger. who knows? all,uestion is -- first of our bloomberg economics team has estimated a very large hit to the u.k. economy back to the bloomberg library. payingour #btv charts -- the price for brexit. the white line across the chart is the line that the u.k. would achieve if they had no brexit at all. the blue line is you leave but

you still have relations with e.u. you -- let's go to another chart which firms areously u.k. getting worried about this. we have the white line, the index of economic positions. look how it has fallen recently. hiring investment decisions. that is coming down as well. but you might think, after looking at this, that the bank of england is saying we better slowdown. so far, people are saying they will hike their key rate in august. there can learn about inflation, which has risen so above target, peoplepeople are -- so are so used to this brexit cloud hanging over the economy which has opened growing, maybe not as strongly as it would otherwise, but for now, it looks like the bank of england will be on track. the next time mark carney speaks, we will be waiting to see what he says. ramy: and of course what happens

in the next few days with theresa may and any brexit talks there. kathleen hays. we have got an exclusive interview on bloomberg later today. we will talk trade and tariffs 1:00 sydneyw at time. that's 11:00 a.m. if you are watching from hong kong. make sure not to miss that. yvonne: moore on brexit -- more on brexit. markets welcome the political turmoil in the u.k. ramy: later this hour, michael hirson will join us. he thinks china's reaction to u.s. tariffs will be relatively restrained for now. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. ramy: i am remy innocence you in new york.

back to our top story, and prices for theresa may brexit plans along with herself. joining us to dig in is fixed income senior vice president and senior portfolio manager, bryce. good to speak with you here. we are trying to make heads or tails of how this might impact growth as well as possibly any hike path for the bank of england here. makethrough your own lens, heads or tails of this into your interpretation. .ryce: it's interesting the market seems to react counterintuitively when you see this kind of turmoil. you see u.s. stocks up on bad lyrical news. -- political news. it is not necessarily related to the downside of what might happen. it's actually because the market fears change. there is a lot of growth. we think that that can help europe and the u.k.. but the market hates uncertainty. problems, any bump in the

road that seems to delay brexit is viewed positively, as ironic as that seems. ramy: that is quite strange. bringing in what is happening with the fed, we are looking at that yield curve and whether it gets closer and closer to inversion. hop into the gtv library, and i can show you what is happening here. this is the u.s. treasury yield spread. the spread is that 29.535 right here. to what degree does this concern you as it gets tighter and tighter? bryce: a couple of things. first of all, the corporate and credit yield curve does not invert, so the spreads widen on corporate bonds. they underperform treasuries, essentially. what else concerns me? i believe it's going to invert eventually. you look at this huge

bonds,demand with the along with the fed raising rates. most of what issues do not necessarily make us worry about a recession. they make us worry about managing bonds in that environment. you own a five-year bond that loses money that roles of the yield curve in terms of time. those are weird, bizarre things normally don't have to worry about in the bond market, but that is definitely the reality. ramy: in terms of the rate hike path -- at the end of last week, we saw wages, which a lot of people say are more important than the jobless number. 2.7%. impact to the fed rate hike path, a little bit of anything -- an easing. bryce: i think it keeps them right on track. i believe that the tenure and 30 10 year and 30

year yields are happy that it was not -- the fed will keep hiking rates. they changed the language as to what their target is. they will go at least 3%. they say they need to get to the neutral rate. that can invert the curve. we have inflation data coming out that contains this and cause the tenure and 30 year yield to shoot up, especially if there is any positive news on tariffs and trade wars. that would boost yields as well. thene: we mentioned about 2-10 spread. could you buy on these curve flatters then? bryce: i believe so. i believe the curve flattening trade is alive and well. if you look at seven to 10 year spread, it is down at three basis points. but i still think that there is more flattening to occur. we are barbells. are usingrt end, we

an etf rise of hours that shorts two-year and five-year treasuries while simultaneously being long 30 year futures. that tells us how much of a barbell we are trying to take it has worked out quite well. i think it will keep working out through the end of the year. yvonne: what could actually change? you are saying things could right?y steepen, whether it is trade related. the fed seems to be talking about uncertainty, but nothing they would act upon. when it comes to yield curve inversion, do you see the fed acting upon that and limiting the amount of heights we could see this year? bryce: i think what might happen first is that the treasury might decide that may be we are nineng too many t-bills, hundred billion plus, flooding the short end of the yield curve. maybe we need to stretch that out, issue more of a five-year, 10 year. that might be what stops the inversion of the yield curve.

also, enough inflation. pce is right at the 2% limit. their target for the fed. for the whole year are over 2%. if that continues to rise, that will generally steepen the curve as well. we are at a time where it is not -- you cannot really predict with a lot of confidence which way it will go. you know, we are betting and continues to flatten, but it is a 60-40 proposition at this point. yvonne: before we let you go, are you seeing any opportunities outside of the u.s. or even the u.k., given we see the yen fixed income seeing a bit of a bid now? bryce: just broadly speaking and just to be brief, anytime there is news, the bark is worse than the right. dips, those that -- to take advantage of them. that is the only concept. [laughter] yvonne: bryce doty, senior vice

president and senior portfolio manager joining us from minneapolis. you can get a run-up of the stories you need to go in today's edition of daybreak. go to daybubscribers . it is available on your mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪ ♪

ramy: welcome back. this is "daybreak asia." i'm ramy inocencio in new york. yvonne: i am yvonne man in hong kong. twitter plunged in new york on fightn that it's widening against fake accounts will hurt user growth. twitter's rate of suspensions has more than doubled in september. they have suspended more than 70 million accounts in may and june. the stock saw a biggest intraday decline before pairing the

loss later in the session. ramy: you instances of falsified data. the company says the fake reports cover 19 models at five plans across japan and they were discovered during an internal check on employees conducting final vehicle inspections. nissan says the revelations will not lead to widespread recalls as the cars meet general specification three economy and emissions. in the internal review found that all models have complied with official standards. the exception is the gtr, which has a comprehensive review. yvonne: samsung has opened the world largest mobilephone factory in india. moon jae-in joined prime minister modi to launch the facility on the outskirts of new delhi. it will produce 120 million units are year, ranging from low-end phones to the flagship model. the india smart phone market

overtook the u.s. to become the second-largest after china. trump up next, president gears up to announce his latest pic to the supreme court. a look at the contenders, next. this is bloomberg. ♪ ♪

yvonne: we are 30 minutes away from asia's first market open. ramy: it is 7:30 p.m. monday in new york, markets closed nearly .9 of 1% up. investors look ahead to earnings. earnings season upon us this week. "onne: you're watching daybreak asia." jessica: theresa may is fighting for her political life after the resignation of her foreign secretary and increasing attacks from conservative lawmakers.

could face a leadership challenge from boris johnson and other hardline tories who need 48 signatures before -- to a vote of confidence. >> it is a proposal that will take back control of our borders, or money, and our laws. to do so in a way that protects jobs, allows us to sign new trade deals through an independent trade policy, and keeps our people safe and our union together. president saypec the cartel and allies are doing what they can to offset a shortage of supply in response to criticism from president trump. he said they are trying to balance the market without [indiscernible] the president has called on opec to cut prices urgently. elon musk is said to be in shanghai for what is to be talks

, continuing negotiations that have dragged on for a year. his desire to build a plant in china has taken on more urgency in the escalating trade wars. model x prices jumped as much as $30,000 after it raising imposed tariffs on american-built cars. disgraced movie producer harvey weinstein has been released on bail after denying new accusations of sexual harassment. he performedlleges 2006.ible sex act in including two counts of predatory sexual assault which carry a maximum sentence of life in prison. more than 75 women have accused weinstein of sexual wrongdoing. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg.

we are counting down to some of the major market opens. jody,were talking to rice it is a bit counter intuitive. you see risk access outperform. >> traders are taking a backseat .ere take a look at the futures board. we're looking at contact nudging higher. a trade war is a classic case of sale on the rumor and buy on the fact. the tariffs have been talked about since march and the hope is that things will get [indiscernible] even on monday the first full trading day since the tariffs kicked in, asia stocks by the most in over a month. you can see that asian shares crossed into oversold territory.

caution remains, credit suisse expects further declines over the coming weeks for chinese stocks which rallied the most in two years and monday. like rock has downgraded the country's equities giving volatility to trade ray asterisk. ramy: we know with emerging-market stocks of they have gone on a dip, is it now something that we might be seeing a buying session or rebound? bei write , it could premature but there could be several technical indicators, that could the near bottom after the worst losses in three years. as you can see on the chart on the terminal, they are resisting the onset of a bear

market. after the biggest to date gains in five weeks and after the loss from the january peek at under 16%. arkets may be considering trace back that is negative for the dollar and good for em assets and that has made july a good month so far for em traders after another signal that selloff may be overdone. some voices are chiming in. goldman sachs said the bearishness for emerging markets is overdone as growth prospects stabilize. ramy: thank you. president trump is said to have decided which judge he will nominate to the supreme court with the announcement scheduled 9:00 a.m. hong kong time, 9:00 p.m. on these coast. about trump'sw

potential choices? joe: it seems to be down to four picks, they are appellate court judges in their late 40's, early 50's. pretty much cut from the same bit of legal cloth. they have tended to favor business over government in terms of regulatory cases and bolstering gun rights. have a director ruling on the issue of abortion which is one of the flash point in this confirmation process. sides.ne for both who trump hasut decided. it is down to about two now at this point. and he is waiting to have the big reveal. ramy: in a typical game show fashion an hour and a half from

now. after justice kennedy steps down, how quickly could a new justice be in place? thisey are aiming to have done by the start of the new courts term which is the first monday in october. there is no impediment to making that timeline. democrats will drop as many roadblocks as they can but they have no leverage to block or seriously delay a nominee. that would be pending some explosive revelation that no one has so far seen. judgesomething in the record or other potential problems. there is no indication they have anything like that on any of the four. we talked about the political divide we see, is the vote assured? joe: it probably is, if i were betting i would bet for it. it is a delicate matter, the narrow split of the senate,

republicans have ft one and 49 for democrats. it comes down to five senators, to republicans and three democrats. maine and lisaf murkowski of alaska, the two republicans and the three democrats are the three who voted for trump's first supreme court nominee, neil gorsuch. running foro reelection in states that trump won in 2016. joe manchin, heidi heitkamp, north dakota, and joe donnelly in indiana will be in the spotlight and have a lot of pressure from at home and from a lot of outside groups that are already lobbying them and running ads in their states. we have to talk about north korea. the president saying that he is confident kim well denuclearize, he is believing that, the promise they had in singapore. also putting the blame game on china as well. dismissing the harsh

rhetoric from north korea after secretary of state pompeo left and is counting on whatever personal chemistry he feels he has with kim jong-un. he said that he believes the contract they signed which is a 1.5 page statement of principles that has no specifics, the president says this is going to keep them going onto the next round of talks and he feels that china has been pressuring north korea because of his actions on trade and slapping the tariffs on chinese goods coming into the u.s. his argument is that this could the china trying to hit that. -- hit back. yvonne: thank you. we're counting down to the presidents pick for supreme court nominee. both countries face u.s. tariffs, the latest on the visit

to berlin next. this is bloomberg. ♪

ramy: welcome back. this is bloomberg asia. yvonne: angela merkel has praised china for opening its doors to foreign investment, drawing a contrast with the u.s. stance on trade. her comments followed a meeting with the chinese premier in berlin. tom mackenzie joins us from beijing for more. as the signal further united front against washington between europe and china? to be moreeems alignment between aging and berlin. on the issues of trade. china has been pushing this idea that it is placed to work and coordinate with the eu's push back against this trade rampage

from trump as they see it. there are big differences still between germany and the eu and china when it comes to trade and economic policy. these words from angela merkel would a pleasing to china. she pointed to the deal they signed between the chinese side and her german counterparts and partners, this massive chemical company, bsaf will invest in china which will be fully owned .y basf she pointed to this as an example of china not just talking the talk but walking the walk. tl, had the chinese firm ca the largest maker of electric battle it -- batteries for vehicles. some concrete actions and some rhetoric from both sides saying that they are going to work more closely to push back against what they see as protectionism

from the trump administration. there are big fights still between germany and china when it comes to things like investment. germany is increasing its scrutiny of chinese investment, and of course, merkel pointed out she wants to see a level playing field in china, something of a complaint she shares with u.s. counterparts. there could be an issue in buta, described as anywhere america. what are the details? comments talking about the plans they put in place ahead of the tariffs imposed on friday and the fact he told chinese companies to ramp up their imports of everything from soybeans and seafood to cars. from any country other than the u.s. and they also said they would be using the duties of their levying, the retaliatory

tariffs to help support some of the companies that have been impacted in china by these trade tensions and they made it clear come a china, they are prepared to support the industries impacted by these trade tensions and we have a few more details by the commerce ministry. we are looking at the $16 china isf tariffs and likely to match that. china looking for how response should the u.s. ramp up the tariff measures. the concern is that u.s. companies will be impacted on the ground and that is something we are watching closely. thank you. let's get more on trade as well as china. let's bring in michael hers and -- herson. the back-and-forth we are seeing in terms of the anywhere but initiative, markets are

taking a breather. get us up to speed on where we stand and where do we go from here. michael: the tariff tit-for-tat israel. china reciprocated on friday. these are actual measures and now the question is whether we escalate beyond this first round of $50 billion that people -- both sides are in the process of implementing or if they find a way to deescalate. ramy: you think of richard's is likely before the -- you think a truce is likely. would waitect they until after the election to rally the troops to get votes out but why do you think this? michael: there is a risk of escalation. president trump if he has had one consistent view over the years, it has been that the u.s. is being cheated on

trade with china and needs to punch back. of a truce,omething a cease-fire before midterms. we are still at both sides, tariffs on 50 billion of goods, that is not going to happen without significant economic impact for both countries. as president trump has threatened tariffs on 200 billion of chinese goods, it starts to add up. we are heading into midterm season. president trump knows that he needs president xi's cooperation. it stands to reason that the political pressure on president trump is likely to build and as we had closer to midterms, as escalation continues, we will see him want to pull back. i will say the risk of escalation is significant. some are they looking for this them wins or

president and white house care about the structural ounces we see, eventually that is going to start to become more of a headwind perhaps even after the midterms. michael: it is a great question. president trump is not just looking for a short-term win. where he would like to be heading into midterms is showing that he is pushing back on china but not being so aggressive that the economic costs for u.s. farmers and u.s. firms is so hurts the gop's midterm chances. his advisers and the president as well are looking to reset the economic relationship with china. absolutely. u.s. trade representative robert lighthizer, president trump's treated visor they are looking to take some tough measures against china. it is important to note this is what the new normal for the u.s.-china relationship with slight at least for the remainder of president trump's term. we might see a truce but by no

means are we looking at a settlement that will result trade and investment disputes. well china likely retaliate? we are talking about 50 or not $500 billion worth of imports that targets every single chinese good that enters into the u.s. more onikely to see investment restrictions from beijing or what we have seen with the currency as well? michael: we will see a mix of formal and informal retaliation from china. the informal retaliation will be making life difficult for u.s. firms that are selling and china's market. what i do not think we will see is china using the currency intentionally to threaten the u.s. or punish the u.s. and the reason is that creates for risks than benefits china. you have the markets expecting further depreciation of the renminbi and you have a read of what china experience beginning

in late 2015, which was two years of heavy capital outflows and serious financial risks. as your correspondent said, another interesting art of this is china awarding market opening to european firms, to u.k. firms. it is not just text against the u.s., it is the absence of carrots that are going to competitors. ramy: in terms of what has been happening with the prime minister who is in berlin with toutingerkel, they were they have 100% control of the new investment in china, the first of maybe many that others are thinking if not america, hyundai do i get into china? there are restrictions but there are opportunities. talk to me about other opportunities from the europe -- from europe and the u.k. michael: china is in the process of opening its markets and looking to encourage imports. that helps president xi's

domestic agenda. making moreing goods available. looking --rump is president xi is looking to hive off europe, japan, and china from the u.s. he hopes to undermine u.s. criticism of china. the words of measured and calibrated come to mind here. they have been taking a patient track for the past two to four weeks out. always meeting donald trump but never going over. michael: that is right. think about china being willing to climb the escalation ladder with the u.s. but not looking to push any further. the reason is china benefits from showing that it is the responsible actor. that is the image that china is trying to project.

that makes the u.s. look like an aggressor, makes president trump look like he is destabilizing the global trading system, all of these are efforts for china to win allies to push back against the u.s. thene who thinks that europeans are going to blindly follow china in the fight against the u.s. is mistaken because europe, japan, other trading partners have many of the same concerns that the u.s. is pointing out when it comes to china's innovation policies, investment restrictions. there are limits to how well this is going to work. you mentioned how the u.s. might need a helping hand when it comes to north korea. president trump saying he feels confident about the contract he and kim jong-un signed and suggesting that china tried to undermine the agreement. that beijing is

stirring the pot? asia is showing it will play a central role. it is a not-so-subtle reminder to president trump that any pastor what he would consider success in north korea has to go through beijing. i do not know that president xi notelling kim jong on to given but the message is clear enough. it is an apparent message to the u.s. if you push too hard you're going to risk undermining soccer goals including the perspective on north korea. ramy: thank you. e, we want to draw your attention to an exclusive interview coming up later. we will be talking about trade and tariffs with former treasury -- the former treasury secretary at 1:00 p.m. if you are watching from sydney. yvonne: now for a look at some of the stories trending across

the bloomberg universe. he has revealed the billionaire real estate developer did not take them over time and raised his salary only twice in 15 years. one of the feature stories this theing covers bitcoin, technical indicators suggesting the world's largest cryptocurrency may be gearing up for a price increase. and on the bloomberg subscribers are reading about a staffing trend. a bid to attract young talent. youan check them out on -- can check them out online or on the bloomberg terminal. ♪

ramy: a quick check of the latest business flash headlines. the m w is boosting capacity and china. amid the escalating trade war. and brilliance increased

production at two chinese facilities. from 450,000. spend on batteries from catl. he tweeted the company should be ashamed for exploiting the poor and said his administration would respond. pfizer raise prices on 100 drugs following a pattern of regular increases that it takes each year. pfizer said most of its prices have not changed and some have actually fallen. yvonne: less than three minutes to go until the market open. see political uncertainty surrounding the u.k. and yet risk assets are up. the gains to extend we saw yesterday. the best day for asian stocks and five weeks.

we have to nikkei futures popping up forever -- firmer. we are talking about the latest on the u.k. and how foreign funders

yvonne: welcome. aren specific stocks gaining after wall street hit its highest in a month. dollars rose as treasuries pulled back. >> and it is just past 8:00 p.m. on monday here in new york. pastsa may plowed on brexit. the premier talks trade in berlin.

he wants china's partners to stand up and reject protectionism. yvonne: brexit uncertainty, for chaos in theitical u.k.. it feels like we have to hit the back track on 2017 all over again. a lot of focus now diverted into earnings. no news on the trade front so we're seeing sentiment when it comes to e.m., a lot of traders now saying it went on to far, too fast. ramy: there is talk about getting in there after those falls. ,n terms of looking ahead earnings season is almost upon us by the end of this week. as we have talked about, we're expecting returns on the order

and as good as 30%. we are feeling optimism as we look ahead. the s&p 500 has climbed for three days straight. even chinese investors are looking at earnings in china and say it is positive. marketake a look at the so far. gains across the board. sophie has more. sophie: a positive move for stocks. the nikkei 225 rose for a third day. sydney also gaining ground. u.s. futures ticking higher with the 10 year yield trading at 2.85%. taking a look at some assets, i want to highlight the offshore yuan, continuing to strengthen. moving towards 661.

bonfires have snapped up the most shares in two years. optimism remains over china's overall health. it could be the best earnings growth in eight years. the pound has her parents some of its losses. repaired someas of its losses. yen, 111 aeye on the dollar. are trickling into the conversation, it's a bitsy -- mitsubishi saying they will raise prices for consumers in the u.s.. they gained on that news. also watching nissan as it grapples with data.

it stock up nearly 3% after falling on monday. we are keeping an eye on yahoo japan. planning to sell $2 billion of its shares to a stop -- softbank unit. you. thank let's get to first word news with jessica. aserdogan has been sworn in president of turkey with vastly expanded powers. for the country to move forward in every field. the lira plunged the most since the failed 2016 coup. almost 25%y is down against the dollar this year. president has told bloomberg the cartel and its

independent allies are doing what they can to offset a shortage of supplies in response to criticisms from trump. he said producers are trying to balance the market without rate -- raising supply to inaccessible level. the president has called on opec to cut prices urgently. >> opec is doing its part. the market needs time. we are monitoring the market. there are things outside our hands. geopolitics and how much production is coming from shale oil and this is information we do not have. we cannot know. we cannot predict. thai navy divers have brought for more boys out of the flooded cave. that leaves just for boys and the coach trapped underground. aret have been rescued and in the hospital.

authorities are trying to bring out the last group as soon as possible. monsoon rains threaten to push underground water levels higher. rescue teams in southwestern japan have found more bodies after record rains. at least 100 people are dead and 80 more are unaccounted for. rain warnings have been lifted but landslides are still a threat. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ramy: u.k. prime minister theresa may is now battling to stave off a full-blown crisis after three ministers quit within 24 hours to protest her soft brexit plan. kathleen hays's hair with the --est -- kathleen kate

kathleen hays is here with the latest. 24 hours ago, view was that theresa may was doomed. can chief survive the year -- can she survive the year? -- last week on friday she got the deal for a soft rights it plan. brexit plan. then we heard that david davis was stepping down. then the foreign minister of london stepped down. theoday was supposed to be big lap in parliament. presenting the plan and saying, i have done it. and it has turned into a defense of a plan with a lot of pushback

in parliament. let's listen. will take back a troll of our borders, our moneys, and our laws. -- take back control of our borders, money, and laws. the hard brexiteers don't like it. this has been one of the biggest preventing the, u.k. from even presenting something to the eu. ontish producers will follow rules. the u.k. will have different arrangements for services. that means banks will lose eu passporting rights, which is a big issue for british bankers.

meanwhile, when you look at the reaction, boris johnson put out his resignation issue early, ahead of two resume saying anything about it. -- ahead of theresa may saying anything about it. mays plan hands much of our economy to europe. she seems safe for now. pro-brexit lawmakers do not have enough votes to call for the no-confidence vote. they also know this is not the hard brexit plan. so meanwhile, she is attempting to woo support from the opposition, the labour party. has challenges ahead. she has to present the brexit white paper this week and meet

with the eu. many people say they do not want to be too soft with the u.k. because they don't want other countries to think they could easily call a brexit again. she has a tough road ahead. it is tough to find anyone to fill those shoes. thank you, kathleen. joining us now is michael every in hong kong. is brexit really wrecks it right brexit rightreally now? >> after hearing that excellent summary of the confusing comedyon is that british is an acquired taste and right now we have monty python's flying brexit.

we will have a choice of different soft brexit's but there are clearly a run for the conservative party who prefer a hard centered brexit. they're going to do everything they can to crash towards no deal. you can see why bearish that's on sterling are increasing. on one hand, a soft brexit makes it more likely, but now hard brexit is rearing its head. yvonne: markets are soaring despite the mayhem. it seems we're back to what we saw last year, globally. of newave a surreal set headlines. daily, we have news flow coming through in country after country that makes you think, really?

seriously? it is still monty python. yvonne: do you think this is something that is actionable? if theresa may brinks the white -- brings the white paper and comes with the softer stance, she will get hit by the brexiteers. are there any options on the table? >> not really. someone is going to lose. we are looking for a happy medium where everyone is a winner, and there is not one. we are going to end up with a the hardit which brexiteers don't want, or vice versa. and someone is going to have to accept the loss. the eu on the other side of the fence will remain on moving, or will they move to try to support may or topple her?

ramy: michael, talking about how soft the brexit could be, do you think, what are your thoughts were this could find some sort of it'll ground -- middle ground? >> i do not think there is one. look at the details we just saw. deal on does not get a services, the one thing they are good at. they do get a deal on goods, which we are terrible at. so how does that if it the u.k.? it is far better to do a norway style deal, which is brexit in name only. it is the same thing by a different name.

that is very soft and not with the hard brexiteers want. ramy: in terms of volatility and the pound, dive into the bloomberg. this is in the terminal library. we can see the volatility has been trading in a range. how long do you think we might ?till be in this middle ground >> quite a few months. deadline is october for the u.k. to actually have a position to present to europe. at the moment, we will need every minute. back -- isming talking about coming back to rally his troops. things would get really messy. lucky in ones regard. thank god we have in england game coming up. that will keep everyone

preoccupied. yvonne: everyone is hoping for a win. taking a look at the chart that shows where the pound has been, expectations have decoupled in the last couple of months. do you think they could still hike in august? >> we see some banks hiking, we majors fed, we see other doing it. if you are going to have the softest of all possible outcomes nine months from now, all you are going to have is the breakup of the soviet union being replayed between the u.k. and europe. yvonne: what about inflation? what central anywhere really

cares about inflation? how much further does sterling have to fall? it doesn't seem we saw a big reaction. a weakink we will see reaction. if we have a hard brexit, it would be a huge letdown. if it isn't, we could bounce from here. we do not know yet. with us.hael, stay we will have more with you coming up. we have an exclusive interview on bloomberg later today. we will talk about trade and tariffs with jack lew at 1:00 sydney time and 11:00 a.m. in hong kong. ahead, chinese

data releases today. we will talk about the latest inflation forecast. ramy: we're counting down to president trump's supreme court nominee announcement. more on the front runners my next. -- more on the front runners, next. this is bloomberg. ♪

ramy: welcome back. this is "bloomberg daybreak: asia." yvonne: chinese equities are so of valuationshare are becoming attractive. let's look at the chart. ratios.-earnings we can seen -- we can see they are the check -- cheapest since 2016. investors feel optimistic about the earnings season.

still with us is michael every from rebel bank. seeing the best chinese stocks yesterday in two years. how meaningful is this right now? when you look at that line, it looks attractive. you can see those arguments kicking in for a day or two. i do not buy the numbers i saw before i came in that analysts in general are looking at a 60% profit increase across the board. you have a slowing chinese economy i worrying local backdrop and landmines geopolitically. that chart has a lot further down to go. yvonne: are you seeing that in trade frictions?

we just haven't gotten to that point yet? >> trade fiction is a very real threat. -- friction is a real threat. you have to factor in the probability that it come back to bite a lot of companies. globally, we have north korea, oil prices, they are all a worry. we should be factoring in those possibilities. in china, the economy is slowing. about stimulus, but mainly for smaller companies. not the big ones being traded. when you have the domestic economy slowing and the fed hiking, and all these geopolitical risks and possible currency volatility kicking in, i do not think you be -- i do not think you should be saying it is a done deal. that is really bullish. there is talk -- what do

see could keep them from sinking a little faster? >> there is a lot of of talking we will see. we will see further cuts. they will be increasingly targeted and they will not work. we will see more rrr cuts. is a threat floating in the background, the nuclear red button allowing currency to get weaker. ramy: we are seeing it strengthen a little in the past few days him ever since the trade war officially started. is there a threshold number for the u.n. against the dollar where you would start to raise your eyebrows if it weakened?

i thought we would get to 680. we got to 670 recently. 684 was pretty much the threshold. we saw that in the renminbi last time it sold off. draw a line in the sand and then raise one eyebrow and look at donald trump say, where do we go from here? i think they are around the 670 mark. i think moore it is the political edge to the market. ramy: quickly, one question regarding emerging targets. time to see a rebound. any countries or markets out there you're thinking now is the time better than others in terms

of what they are doing with the balance sheet or economic growth? >> i disagree with the previous analysis completely. ramy: ok. yvonne: always a bear. >> that's what i do. every, thank you for your candid analysis. tv't forget our interactive function, tv function, tv . catch us live and catch up on past interviews and dive into the bloomberg functions we talk about. is is for bloomberg subscribers only. you can check it out on tv . this is bloomberg. ♪

ramy: a quick check of the business headlines. ultima is going to sell some shares and consolidates banks ownership of japan's most popular web quarter. they intend to acquire 11% of

yahoo! japan shares. was created to hold yahoos shares and other companies after last year's verizon company. twitter plunged in new york on concern that the widening fight against fake it touts will hurt users growth. the rate of suspension has doubled since october and they have suspended 70 million accounts in may and june. basf is going to spend up to $10 billion on it new facility in china. withplant will be built of thening 100% operation. it is expected to open in 2025. in a moment, president

trump is preparing to name his choice for supreme court justice. is expected tont be delivered around 9:00 hong kong time. this is bloomberg. ♪

it is 8:30 in singapore. i am in hong kong. ramy: ima new york and you are watching daybreak asia. withs the first word news jessica. theresa may told the commons that her plans to stay close to eu rules following brexit is the only course to solution. it is a proposal that will

take back control of our borders, money, and law. but do so in a way that protects safeand keep our people and our union together. >> lisa chong has called for free trade. up praised china for opening to foreign investment, driving a contrast to tensions both countries are experiencing with the u.s.. ofy are prominent supporters globalization him months to the escalating trade war. -- amongstng escalating trade war's. harvey weinstein has been released on bail after new allegations of sexual harassment. an indictment say he performed a forcible sex act on a woman in 2006. he is being accused of predatory

assault. more than 75 women have accused harvey weinstein of wrongdoing. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to see how the asian markets are shaping up. we are extending gains we saw yesterday. some life in the turnaround. we are continuing to recover from the nine-month low we hit last week. seeing the offshore yuan now below 661. it looks like investors are not giving up on nissan yet. and the nikkei is up 1%. the kospi is set for the third day of gains with the biggest blue -- biggest boost coming

from samsung. yahoo! japan is abiding by the most since february 2017. softbank is set for an eighth day of gains. yahoo! japan was raised to outperform. -- capcom ising sinking from the most since september. next to see is sliding -- next d.c. is sliding in sydney. ramy: sophie, thank you. let's get to one of our top stories of the day. president trump saying he has decided which judge he will

nominate with the supreme court with an announcement scheduled for 9:00 p.m. here on the ease coast. greg stohr joins us from washington to see. -- washington dc. >> we have known all day that he was down to two, brett cavanagh and tom hardeman. we're focusing closely on cavanagh. of regulatoryot cases and has been skeptical of federal attempts to regulate is this is. ramy: which would be -- regulate businesses. ramy: what would be the easiest one to get through? >> probably judge hardeman is easier to get through. he does not have as much of a record. he does not have the number of cases on issues that judge

cavanagh has. on the 10nagh worked star report, the investigation of former president clinton -- , theth starr report investigation of former president clinton with monica lewinsky. these could come up in a hearing. there is more ammunition for democrats to draw upon. yvonne: what will the president be basing his decisions on? is it mostly based on their views on regulation? or hitting some controversial issues, like abortion? >> we do not know for sure, but there is not a huge amount of difference with any of the people he is considering with where they are likely to come out on the issues. gorsuch, -- neil gorsuch, it it was evident that

the present cared about chemistry. he wanted somebody he felt would be a strong justice. those factors might play and along with -- play in. ? yvonne: is this vote assured? could we see a potential repeat of when president obama chose his pick? because republicans controlled the senate and they were able to block the vote. here, republicans control the senate. they have a narrow advantage. as long as they stick together, they can get the nominee through. they are hopeful they could also take out some of the democrat justices. republicans hope they will get more than just the 51. ramy: let's look at it from the other side of the quaid.

that is what the republicans can do. there is been a lot of pushback from the democratic side. wante media, they say they to make sure what happens here in terms of conservative this --ht term back dax turn turned back toward a liberal side. what can they do now? >> they have lost the ability to block a vote. they do not have a lot of power. previously, a minority could block a vote but that filibuster is gone. the only thing they can do is try to shut down the whole setting. the kerry big political consequences with it. that would be the one thing they could do -- that carries big political consequences with it. they will have an op will -- uphill battle with that. a quick check on the

latest business headlines. trump has attacked a pharmaceutical giant pfizer over drug prices. pfizer raised prices on 100 drugs, following a pattern of regular increases it takes each year. most prices have not changed and some have fallen. fake nissan has admitted reports covered 19 models at five plants across japan and they were discovered during an internal check on employees conducting vehicle inspections. this will not lead to widespread recalls. an internal review of emissions and fuel economy tests found that all models have complied with official standards.

the exception is the gtr. bmw is boosting manufacturing capacity in china. brilliant six -- agreed to expand their venture to 520,000 cars next year. bmw plans to spend $4.7 billion on batteries from china's see atl. samsung has opened the world's largest mobilephone factory in india. the facility is on the outskirts of new delhi. producesays they will year.llion units a the smart phone market in india grew 14% last year. it is now the second largest after china. up next, details on the

chinese prime ministers visit to burling -- berlin. this is bloomberg. ♪

yvonne: this is "bloomberg daybreak: asia." merkel has praised china for opening its doors to foreign investment, trying a contrast with the u.s. stance on trade. she met with the chinese premier in berlin. tom mackenzie join us. does the signal a united front against washington now? seem to be closer, even if more differences remain between the eu and china on a

number of issues. but certainly, what the chinese heard from merkel at the meeting would have pleased them. in the last few months they have been pushing for this for a's closer alignment -- for a closer alignment with the eu. we heard merkel praising ideal moved by china to allow investors by one of germany's biggest companies, a chemicals maker. it would be owned by a german company. she pointed to that as an example of china matching words with actions. you also got a pledge by one of china's biggest companies, see atl.-c so you have concrete examples the both sides .2. even if key differences remain.

it seems symbolically they are more aligned on the issue. yvonne: besides the trade tensions, we have key trade data out of china. what can we expect? us flushta will help out how trade tensions impacts the economy and what the growth picture looks like. prices are expected to pick up in4.5% in june from 4.1% may. a couple of factors. coal, metal, oil have picked up. you could see this increase and

that is good for corporate profits and helps them paydown debt. in terms of cpi, the expectation increase.ll get 1.19% slightly stronger food prices. oil is a factor in this. it is still a ways away from the target of 3%. response,f the policy policycts you could see to match what is going on with the fed and to continue a deleveraging campaign. tom, thank you. joining us now is jillian edwards preacher.

julian, it seems we are seeing a reemergence of reflation trade -- trend in china. say resilientould has been ppi prices. do you expect this to last? we do not think it will last that long. heart of the story is the global rebound in oil prices. -- parts of the story is the global rebound in oil prices. in china, there has been a recovery in industrial activity recently. that has a lot to do with the easing of pollution controls that caused her instructions during the -- caused disruptions during the winter. some of it seems like a

temporary boost. if you look at the fundamentals demandsrlying man's -- investment is slowing significantly. so although investment has picked up, i disagree with tom on the monetary policy side. i think the fact that inflation is rising is not going to be enough to encourage them to stay the course on the deleveraging campaign. they will be's concerned about the domestic activity. we expect monetary easing in the second half of the year. we had the triple archive take effect last week. does that also risk ringing bringingflation --

faster inflation? 2%.t is slightly below well below the 3% target. even a couple of years ago, when the economy was running really hot and you had a sharp rebound in industrial activity and rebound in ppi, almost 10%, you do not have cpi hitting that part -- target. inflation is not the main constraint and policy. the biggest concern is credit growth and financial risk. that is the main reason. priorities change. slows, the priority will be supporting growth and financial risk concerns will be pushed to another day. the: i want to ask about

you entered directory. about the u.n. trajectory. could the increase mean there is more room for the yuan to depreciate? >> i think the increase means there are no signs in the official data to puff up the currency. that suggests they were mostly on the sidelines and they at least allow the currency to weaken. there are plenty of rumors out there that they are leaning on state banks to do their jobs for them. that would make sense to some degree. one of the lessons they learned a couple of years ago when they try to spoil the renminbi is

that it is interpreted to the market as a negative sign. so even if they want to support the currency, it makes sense to do it in ways that do not show up in the fx reserves data later. are some evidence that they had been stepping in. they could have stepped in more forcefully. they could be willing to allow some depreciation to offset the impact of u.s. tariffs, but i think there is a limit. we have lowered the renminbi forecast to 6.48. i think one of the lessons they learned a few years ago is the bailout allows the depreciate to quickly. there are much safer ways to support the economy in responding to tariffs. weaponize in be remembered he is a last resort. weaponizize thing --

be is a lastand resort. we expect one more trouble cut this year. bench mark lending rate cuts towards the end of the year because we think the andomy will slow cuts policymakers will respond aggressively. we have already seen some easing of monetary policy if you look at bank rates. they have come down since the start of the year. so there has been a shift in the start. even though officially the rhetoric is all about deleveraging. behind the scenes, there has already been a softening. pritchard,n evans

thank you very much. we have exclusive interview on bloomberg later today. we will talk about trade and tariffs with jack leo at 1:00 sydney time and 11:00 in hong kong. don't miss it. yvonne: let's look at how markets are trading. look at japan. nikkei 225 up more than 1%. asian stocks had their best session in five weeks yesterday. best stocks were up, the day we have seen for chinese markets in two years. this rebound. michael every says this is just a dead cat bounce. investors are of -- investors are focusing on earnings season.

in malaysia, we are seeing green across the board. singapore, futures up. a relief rally. ramy: a countdown to president trump's announcement of the supreme court nomination. looking positive across the board. up 9/10 of 1%. that is it for us. coming up, we will have special coverage of president trump's supreme court announcement from the white house. yvonne: catch it live here on bloomberg tv. we will also have the market open in china. this is bloomberg. ♪

>> says the country was founded, only 113 people have served, appointed for life but averaging 16 years each. collectively, they changed the course of history. tonight, president trump will nominate his candidate to be the member of the supreme court, what he is calling one of the most important decisions a president can make. welcome to a special edition. i am reporting from washington.

we are in the east room of the white house. the president will appear shortly with his nominee. we're also joined with kerry director of the judicial crisis network. justice clarence thomas. .e also have david goodfriend he served in president clinton's white house. kevin, you are in the east wing. what is going on? >> top republican senators are trickling in to support president trump's announcement. pence, mitch mcconnell are heading to -- huddling together at the front of the room.

jerod titian or has also been spotted. kushner has also been spotted. three senators are up for reelection. wereof the democrats who invited here tonight declined. turned to how the nomination process will go through. the last appointee, neil gorsuch, it just took 66 days. to gete nominee be able through the nomination process ahead of the elections? carry, give us a sense. you are very involved in this process. what are you looking for in the next justice. is there any real difference among the four candidates? >> i am looking for someone who

has experience, is qualified in terms of being articulate, right, good judges. applying the law and constitution as they are written . some but he does not believe they should substitute their policy preferences for the law. and someone who has the courage of their convictions and can demonstrate in their career standing up for something they know is legally right, even though they know they will get pushed back. i think all of the candidates show it, but in different ways. it will be exciting to hear more. in the clinton white house. what are you looking for in the next nominee? i think we have to find somebody who respects precedent and would be inclined to not do violence to the law. a lot of times we find on the

left the claim of judicial activism leans towards conservative justices. we are going to have a right word shift in the court so democrats will be looking at whether this incoming justice will be respecting president and uphold certain rights will hold dear. i think confirmation process will be very thorough and probably contentious. where do you strike the balance? >> it is something every justice has to figure out. no justice thinks every president should stay forever. they look at quality and legal reasoning of the opinion, whether it has been undermined by other opinions.

there are a lot of factors that go into considering whether there is time to overrule a president. that is something that will be discussed going forward. while every justice will be different than the one they are up morece gorsuch mind with justice kennedy more than anyone else in the court. for all the people thinking gorsuch was a huge shift to the right, he was much more in mind with justice kennedy than we thought. if this person is with a similar philosophy, i do not think the shift will be that dramatic. inwe are seeing them rise the east room of the white house as the president will be walking in shortly to introduce his nominee to be the 114th justice of the supreme court of the united states. we are waiting for the president now to walk down the aisle. there are multiple reports right now that judge kavanagh will be