>> it is 7:00 a.m. in hong kong. i am yvonne man. this is daybreak asia and welcome to our asia headquarters. markets are set to track gains on wall street. investors see trade war tensions beginning to ease. the s&p 500 closed the highest since february. both sides say they are open to talks. bloomberg's global headquarters, i am ramy inocencio in new york. president trump ups the ante on brexit. told told -- he has theresa may a soft divorce would kill a u.s. trade deal. plus we go behind the deal on tesla.

we have in the inside track on problems surrounding the model three. good morning and happy friday. today, what goes up must come down and vice versa because the -- because of the retaliation from china did not materialize and we're seeing markets rise to their highest since earlier this year. at least for the nasdaq, we saw a record. so slightat ever shift in tone from beijing, not replying to the big list of tariffs from president trump, they were just sandwiched between these trade taglines --

headlines. it looks like in these rallies, there is a bit of a trade coming back which is what we saw back in 2017. ramy: let's take a look at where he ended the day here in the u.s. on this thursday. , no bigwas up nearly 1% superlative there but the s&p sinces the highest february 1 and the nasdaq up 1.4%. a record high, also the biggest jump since june 1. show you what is happening in commodities and currency. the bloomberg dollar rising a tad in asia trade, it was earlier rising. commodity index of by .7 percent, rebounding from yesterday thanks to both types of crude oil. gold futures had been higher but they have paired the gains.

setup looks to be positive when it comes to equities in asia. we are kicking things off in wellington, new zealand with the index up about one third of a percent. andbound in crude overnight nikkei futures set for a 1% gain. we mentioned the dollar-yen which we will talk about that futures are up moderately. today, the yener --ding on to seventh month seven month lows. these commodity currencies rebounding overnight as well, a high.lar at we are watching em currencies weakening for the lira but we are watching for the offshore emb rebounding.

taking a look at bond markets, here is where we are faring. pretty quiet despite the risk on. we did see the 10 year yield at 285, the aussie also quiet and german yields down about one basis point. in the meantime, let's get you caught up with the first word news. jenna is joining us from new york. jenna: thank you, yvonne. a jury has ordered johnson and johnson to pay $14 billion in damages to a woman who claimed damages toillion in a woman who claimed their talk talc powder caused her ovarian cancer. president trump told the london sun that a brexit plan will kill

any trade deal with the u.s.. he suggested boris johnson would leader, saying may ignored his plan on dealing with the eu. some are calling the brexit plan the worst option possible. president trump has treated a letter from kim jong-un praising his efforts. it is dated july 6, that is when mike pompeo was in pyongyang. that meeting concluded with north korean state media calling the u.s. approach "cancerous and gangsterlike." despite the apparent setback, trump street hails great progress. due to the escalation of what might be a protected trade war, there is particular worry that there are no signs of negotiation. recent movements suggest china will allow market forces to drive the exchange rate until

there is reason to change. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. jenna, this is bloomberg. thank you. to our top story, china accuses the u.s. of inkster logic in the worsening trade dispute and says it is not afraid of escalation. stephen mnuchin denied that we are in a trade war despite the white house proposing to ramp up tariffs on chinese goods. >> don't think we are in a trade war. we are in a situation of trade disputes. these are not trade wars. as i said onocused the nafta issue which is renegotiating an old agreement. we are focused on the china issue which is very complicated. let's bring in

washington correspondent greg o'sullivan. it seems like both sides are pushing back able to now. could this be a step towards avoiding more tariffs? greg: we heard signals today from both sides that seem to indicate there is some willingness to talk. we have been watching for a sign that they were willing to reapproach the negotiating table after the latest round of tariffs. talks had petered out that as we saw today, the secretary of the treasury said u.s. administration officials were available to talk and this echo ed a white house spokeswoman yesterday. both of those spokespeople said that talks were dependent on china, addressing long standing u.s. concerned. mnuchin even said they would have to make structural changes. no formal talks are underway and still being prepared but there does seem to be some

signaling that was not there before. yvonne: moore signals from the ministry of commerce in china as well. let's take a listen. logic and a gangsters it is the thief crying stop thief. states whonited violates wto rules and imposes tariffs unilaterally. that is typical behavior of unilateralism and trade protectionism which is not based on international law or any justified grounds. yvonne: is beijing tying down their rhetoric? >> the chinese have been consistently warning that they would retaliate in kind a u.s. efforts. they are putting the blame squarely on washington, saying the responsibility for tamping down the escalation lies with the washington and saying they have been earnest in their attempts to settle trade disputes. they are signaling willingness to talk. they have let the u.s. go

forward on escalation of tariffs so we will have to wait and see if any talks come out of this. lawmakers in congress are now working on legislation to limit donald trump's authority to impose tariffs. where do those stand now? >> lawmakers in both chambers are working on legislation but before it did not seem like they had the energy to accomplish much but suddenly there seems to be movement. however, i would caution that legislation to limit president hasp's tariff authority only had a symbolic vote, no substantial vote yet. in the house, we heard paul ryan tamped down any expectations, saying it is up to trump to sit down with his chinese counterparts, rather than the houses job to legislate on the issue. unclear whether this will go anywhere. moore on trade still ahead

when we look at the surprising effect of the tariff tensions on u.s. companies investing in china. next, markets could face a bumpy ride. we look at what stocks offer a good defense. this is bloomberg.

ramy: what an back. this is daybreak asia. i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. senior fed officials weigh in on the economy and monetary policy. let's get to our global economics and policy editor, kathleen hays. she is here with more. tell us the message. is it back by the latest inflation data? kathleen: this is all very important as the week closes out. growth, inflation, trade, the

federal reserve told npr on its marketplace program he sees the economy and a good place. low unemployment, growth is good. he is more concerned on trade policy. it is difficult to predict how it turns out. he could see a detrimental impact on the economy or maybe good. switch gears and get to patrick harker. our own michael mckee sat down with him. he says in regards to inflation, he is comfortable. even at as high as 2.5%. that would be well above the 2% target. let's hear what he said earlier. >> i had put in three for this year and next year. i have not moved off of that although i am open to an increase this year if we start to see inflation accelerated. kathleen: he is not rushing to raise rates even more this year the consumer price index

report is closed to watch today. bloomberg into the now, because what is important to most people is the year-over-year rate. what you can see here is the headline, up to 2.9%. we had a higher brent, which is an imputed number. gas prices falling. -- since fastest cinch 2012. highest rate, you see upward pressure on consumer prices. a put 2% there but i have point to make and that is the 2% target does not refer to cbi, it refers to the pce deflator, this .ore line -- this blue line the main number just under that 2%. and thata sweet spot

is why jay powell said he is not ready to declare victory on inflation. people are wondering if tariffs will cause inflation to rise. it is also true that bloomberg made a point on that consumer price index rise. the three month and six-month rates have peaked and are decelerating. another reason why they think they will only do three hikes this year. ramy: thank you very much. our globalys, economics and policy editor. our next guest says trade remains the key risk for markets because there's tensions will not be resolved soon. is ang us from singapore investment strategist daniel morris. triage the markets as we had that is whent 30, potentially to into $30 billion of tariffs could hit china. where do we go from here and how bumpy will it be? i think used exactly the

right word because the other date we have to keep in mind is november and to evaluate what trump is doing with tariffs, also in view of the midterm elections. and mentioning that he wants to maximize the economic benefit from the negotiations with china and nafta but also the political benefit. we think he will keep up the pressure for a couple more months, given that that plays well with his base but ultimately what it a reservation because he would like to have a chalk mark if is coming up to the election. ramy: a love folks say maybe even he would agree that that is considered a barometer of his popularity. cpi,flation, we have u.s. trade tensions being inflationary. do you agree because there is also the other side of the coin that it could be deflationary. daniel: i think you are right. it is both.

as far as the fed is concerned, they will focus more on the deflationary factors. if you get tariffs, it is a one-off increase in prices but it is the same as you increase taxes. you would have a one-off increase but it is not the therlying inflation where fed will think the economy is overheating. it is more of an idiosyncratic risk. from a business person's point of view, it is not inflation rising because growth is so good, it is because you have a tariff. fundamentally, italy negative for growth which is why we think trump will not pursue these measures because we believe he appreciates that as well. yvonne: it is interesting. we are seeing buying and selling when it comes to equities. take a look at the treasury market, it looks fast asleep even on a risk on day. aboutve the chair talking

how the economy seems to be on a tear and inflation is the highest we have seen in years. why do you think the bond market a so-called right now? -- so calm right now? you have to remember we were at 3.1% on the treasury yield it while ago and now we are below that. the government bond market does seem to be more worried about the risk from trade but you would expect that anyway because trade will be focused on the risk as opposed to the opportunity, whereas equity is clearly bumpy but trying to go upward unless you get some upsetting trade tweet. we have some concern in fixed income, more than are has been in equity but we think it will continue through the summer. that keeps treasury yields on the low end of the range. yvonne: so we like beheading a bit lower here.

let's talk more about china in particular. i have a chart here that shows -- this is the bloomberg fear and greed indicator. buying strength versus selling strength. the composite fell to four month lows. we're above extremes that we saw in 2016 so it does not seem like there is a lot of panic right now. can you at least take comfort in that? daniel: as you say, if it is wait a few days and it will be even cheaper. we want to keep in mind that there are two factors driving chinese equity market. trade is a big part of it you also have domestic slowdown in china because of the deleveraging process as china tries to reduce the size of its shadow banking system and access lending. the has weighed on growth and the markets and it is likely to

persist regardless of what happens with trade. i don't know if you want to declare victory yet. there will be continued pressure in china with the deleveraging process and that will have an impact on equities as well. yvonne: could earnings really turn everything around? market wants to see that, certainly in the u.s. we know will get good year on year. because of the tax cuts, taxes haveen before been taken into account, in the earnings revisions for that versus europe, they are not that robust. the u.s. is in line with europe so things are solid. aree are proving -- they improving but not necessarily accelerating. i think we would get some surprises and companies finding some extra earnings but it is hard to see any extra

acceleration. it will be enough to keep the market supported but we will still be looking over our shoulder at the trade front. ramy: bloomberg economics is theng this could be on order of 20% returns for this coming season and 10% for the third quarter. hopping on a terminal with me and the reviewers, i want to talk about what is happening with the yield curve. earlier, we were talking to be .sbc chief u.s. economist he said he did not feel concerned about this heading toward zero. what do2-10 spread, feel about that? >> i would have to agree because i think what is different this time -- of course you always get worried when you hear that phrase but we would agree the fixed income market is different this time. in the u.s.e of qe and globally that the yield curve is as flat as it is.

would havet qe, we some flattening. we may be 100 basis points or so higher. we have the phenomenon of a flattening yield curve but we are not thinking yet about a signal for recession. it is therefore technical reasons and we think it will continue to decline in terms of the spread before us, recession or risk is a ways off. ramy: if you can bear with me for another bloomberg terminal chart, there is an interesting thing we have here. a possible end to rate tightening. the spread between eurodollar futures fell between is zero for the first time. what does this mean for the u.s.'s nine-year expansion? that is one of the key issues in the market right now.

there is a disconnect between the fed into the expectations for rates in the next couple of years. we heard harker talking about that before. fed funded futures are not pricing that in. fourink we're going to get hikes next year. i think it is the repricing we need to be waiting for from the futures market as expectations go back up to what the fed has laid out and think about the implications of that. ramy: looking ahead, is there anything else, any kind of risk we have not touched at of earnings here? daniel: we don't want to forget inflation. we are not particularly concerned about it but back in february, the first trigger for

the cell up that we had earlier this year was the surprise on withge hourly earnings payroll coming in at 2.9% versus 2.7% expectation. it is not so much that inflation accelerated, but there is still nervousness and tension. you get one data point that suggests inflation is coming back and you get adjustment from the market. we don't want to lose sight of the core inflation numbers being higher than they were at this time last year. if you saw the reaction coming to that, the market will take it while. market cansaid the tolerate a bit of an overshoot but especially with the trade war, we are not sure where we will be headed. thank you very much. you can get a round of of the

stories you need to know to get your day going on today's edition of daybreak. bloomberg subscribers go to dayb on the terminal. this is bloomberg. ♪

yvonne: they could check of the business flash headlines. a mining giant welcomes a deal gold andnesia for copper mines while it the agreement is not perfect. the two sides say freeport will see majority control of grass bird. -- of grasberg. ramy: will cash out its interest. of profit sitting $3.69 million in the three months before may. uniqlo has invested heavily

abroad. of aowledge is the threat trade war with us as only limited damage. we will fight all the way to the supreme court on the mega time warner merger. this is bloomberg. ♪

yvonne: 7:30 friday and a cloudy hong kong. we are expecting some rain in the forecast and we are 30 minutes from the major market open. ramy: 7:30 p.m. in new york. you can see the setting sun across manhattan. markets close rosy. a high not hit since february 1 of this year. i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. first word news with jenna. china is accusing the u.s. of displaying gangster logic and how it handles the trade dispute.

beijing says there is no current contact with washington and though it does not want to fight, it is not afraid of escalation. the minister of congress -- of commerce bound to take a firm hand. >> that is a gangster's logic and is the thief crying stop thief. it is the united states who violates wto rules in the first place and imposes terrorist unilaterally. that is typical behavior of unilateralism and trade protectionism which is not based on international law or any justified grounds. presidents --u k, protesters greeted president trump during his first official visit. hundreds lined the road outside the palace for the trumps dined may.prime minister theresa it is unlikely the even solly protesters, flying in by helicopter from london. they will spend the weekend at trumps golf resort in scotland.

crown and home of the now king of the emmys for the first time. it's a new high for digital streaming and overtook reigning champion hbo in award nominations. candidates for the 70th enemies were announced in los angeles and netflix scored 112 nominations, more than any other network. two decades after launching as a dvd by mail organization, it has become a hollywood powerhouse. there's ceo jack dorsey says he is lost to enter thousand followers in a purge of specific suspicious- accounts. lost accounts are those with suspicious, sudden changes in activity. twitter said recently it is identifying almost 10 million dubious accounts each week. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am jenna, this is bloomberg. back to you, yvonne. yvonne: thank you. we are counting down to major market openings in the asia-pacific. for more, let's go to sophie. it seems like we do not get news on trade, markets going ahead here. one day we are up and one day we are down. today it looks positive. looking positive but traders remain cautious. we have several measures saying he should stick to this earnings story. look at the long-term economic outlook. of risk appetite, we see asian assets taking a backseat. the yen suffered its biggest weekly loss since september. as you can see from this chart which you can find in the library, the breakaway is starting back in april and entities rising trade tensions, they have stopped some analysts. , selloff that may have further

turning to this chart, the yen slump moving a below the 200 day line for the first time since late last year. this may not always lead to a loss. a 9% rise over the next five months. boardng in on the futures this friday, we could be hinting at a higher open for tokyo and sydney but it could be a subdued start. some fund managers in korea have been a leading stocks given the trade war risks. 7.5% down in the past month. do have several fund managers cutting back exposure to korea given the trade risk. allianz global investors among them. chinese -- korean suppliers of chinese products.

they are sending nearly a quarter of exports. they could see a hit to gdp from tariffs. korean chemical and steel players will be among the hardest hit sectors. terminal,see on the the korea index, since the end of february, materials said index comprised of steel and chemicals is down over 16% to be the worst performer but the tech sector is down less than 1%, showing some resilience. some a connectors may see a small impact than taiwanese peers. ramy: a lot of analysts have said they keep technology in their portfolios. thank you very much, sophie. now to one of the biggest after the bell stories in the u.s.

likely to impact trading. the u.s. justice department onealing a judge's decision the at&t time warner takeover. this reopens the government battle to halt the $85 billion megamerger. vulnerable merger is as the review this with the lower court. the lowerto see if court made any mistakes in giving the green light to at&t. extended down 1.25% in hours. friday's trade will be an indication of what this could mean. basically, the justice department filedbasically, the e department filed a one sentence decision saying they would appeal in a federal court and this is with the battle lines are drawn. if they would win at the appellate level, they would undo what happened in a stinging rebuke, a major loss for the

trump administration and it would indicate a decision by the head of trumps antitrust division where they thought they needed to challenge the time warner takeover and the case is being closely watched because while many anti-trump cases work their way to the core, this is the first one that was a giant merger of companies that operate in different parts of a supply chain so concerns about antitrust were presented in a different manner. you can see that the stock has been under pressure since the battle began. it is now down 17% year to date, down after hours. it will be interesting to see the headlines that continue to affect this friday. has at&t's response been and what our analyst saying now that they are losing the appeal? unlikely considered because the lower court did make a decision that it would be overturned. bloomberg was able to reach the ceo at the sun valley meeting of

many media moguls and he said they will fight it if necessary. they believe that will not be necessary. fact based,t a thoughtful, thorough order about executing it now. in other words, they are going forward with the merger and beginning to integrate different assets. there are not expected to lose, however if they do, they said they will fight by going to the next higher court. stockslook at the three in the middle of the next media battle. that is the major bidding war and this again will probably impact us. ramy: thank you very much. let's look ahead to what we can expect tomorrow. earnings season does kick off with financials, several key u.s. banks reporting on friday

including j.p. morgan, wells fargo as well as city. let's bring in our banking reporter laura keller. talk to me about the key things we need to watch. second quarter tends to be something we do not see a key theme so it is not like we will have charges, taxes, known litigations. it is more forward-looking than about a different banks. investors will want to have a loan growth. they want to see if the tax overhaul will help these banks or whether there has been a better lending environment. some banks have been telegraphing that that the revenue increase we're expecting is not that great. the same with revenue, we want to see how that is doing. a lot of issues basically. looking for catalysts. i understand you have been writing about investors wanting to hear about new directions and strategies. exactly. that is something that investors look at any second quarter. we are going into the second

half of 2018 and want to see what that will look like. especially on the trade front, you want to hear what the executives will say in terms of how that will impact the individual and to businesses that have globally. obviously, there are certain certain executive us -- kinds of executives who we look to as colorful characters. i want to reference back to what from jp morgan about the political landscape just after the supreme court in the u.s. allowed parts of president donald trump's tablet ban to continue. recession,e great which is now eight years old, we 1.5%-2%n growing at despite stupidity and political gridlock. we have become one of the most bureaucratic, confusing societies on the planet. it is a must in embarrassment being an american citizen going

around the world and listening to the stupid -- we deal with in the country. ramy: was that a beep there? laura: it was. it's got a little heated. he is talking about how he feels embarrassed to be an american at some so we can expect colorful commentary from him on friday. yvonne: it could get a bit theatrical. take a look at this in terms of trade war impact. are we seeing any of that at this point? laura: we're not her specifically how this might impact us. citigroup is linked internationally, have a lot of cash overseas so when you think about the mexican peso falling against the u.s. dollar, there could be some impact to the book value and that does not really impact earnings. those are things that investors will want to hear about. whether executives think that is something sustained or something they do not have to deal with in the long run. think about the trading prettyment, it is

banal from previous periods but there could be impact going forward on a rate trading for example. you could see the executives really wanting to get guidance going forward in the quarter. investment banking has been interesting this quarter. of dealsot seen a lot but we have seen tight lines in that could be affected as the trade line goes forward as you could see trade companies that wanting to borrow. companies notee wanting to borrow. you, bloomberg news banking reporter in new york. the latest issue of bloomberg businessweek, let's take a look at tesla's production of the model three. in all it's great and glory. danaf those reporters is hull who joins us from san francisco. great story on the cover for

this bloomberg businessweek. it really looks at the challenges with the model three. saying this is a version of hell. dana: there were four reporters who brought a lot of reporting firepower to this story. we looked at the model three from its inception to manufacturing which is still has challenge from watery module -- fromt working battery module lines not working to issues with worker safety in this fast-paced culture. they had to build a third assembly-line because the two lines could not get to 5000 without a third line and it is still an open question as to whether tesla will be able to make this car in high volume. they have reached 5000 but eventually they have to reach

10,000 a week. yvonne: you and the rest of the authors of the story had more access to elon musk. can you talk more about the challenges of the model three? for: what tesla was going -- they take a clean slate approach from a design perspective and they wanted to make a cool looking car that had exceptional range and to get a lot of range of a battery, you need to think thoughtfully about how you design the car in terms of aerodynamics. my colleague went to the design studio and got a lot of information about how they were thinking about the car from the get-go. ramy: of course there is a security or safety issue regarding production. can you tell us about the worker who lost a leg? dana: this incident occurred in the fall of 2016. it is the first time we have been able to report it fully and with tesla, there is always crazy rumors floating around but

we were able to confirm that this incident did take place. incident thatift happened around 130 in the morning. the workers leg was injured and eventually amputated. i have seen pictures of this worker with his prosthetic. this is an incident that -- it is not new but it is the first time we have been able to confirm the extent of the injury. it was very serious. bloomberg technology reporter dana hull, the latest in bloomberg businessweek on tesla. up next, u.s. companies in china plan to increase investments despite trade tensions. the american chamber of commerce president shows is why straight ahead. this is bloomberg. ♪

yvonne: this is "bloomberg daybreak: asia." i am yvonne man in hong kong. ramy: u.s. companies operating in china plan to increase investment there. that is rising consumer spending and profit upset -- offset trade tensions. companies effect to boost investment led by tech as well as services companies. conducted before trade tensions started heating up this month. let's get more behind this with kenneth gerrit. good to see you here. we know this was taken about three months ago or so, but the investingre still despite what we're seeing here. that is because companies take a long view. from the beginning of the trump administration, there have been worries about potential bilateral trade tensions which have now become even more of a reality.

companies have been focused on the long-term opportunities in china. in the survey, there were two trends that companies not give them positive tailwinds and those were rising consumption, the result of the growth of the middle class in china as well as process of urbanization. for most companies, these are very important trends that are , ifslowing down at all anything increasing. that motivates desire to continue to invest in this market because for u.s. companies operating here, china is a market of great strategic importance. elsewhere in the survey, you will see profits in china are returning back to headquarters in the u.s. and making important contributions to bottom lines. there is still this feeling that there is significant opportunity in china. ramy: it is interesting that the increases in the investment i led by technology, hardware, software, as well as services companies which strike to the

heart of the trade tensions between the u.s. and china. china has a 2025 initiative. if this survey were taken now, with these things change? we were tothink if take the survey now, some of the sentiment would be less enthusiastic. focus reflects the fact that china is moving sharply into a greater emphasis on technology in the digital area. we see this in the fast growth thatcommerce in china and brings opportunities but it is true that the technology area is a flashpoint between the united states and china. in terms of chinese investment , that isited states something that will get caught up in the tensions between the two governments. yvonne: i think we see some subtle changes in town, perhaps coming down on the trade

rhetoric we have seen. some are saying they were forced to retaliate it stopped short of saying how. what sense do you get on the ground in shanghai about a possible opening that comes to negotiations? here -- the sentiment there are two ways to characterize it, one is a growing sense of uncertainty because no one is sure where this is headed. we are in the second act of trade frictions with the first wave of trade tariffs being implement it. whether this leads to a second or a potential third act, there is uncertainty. there is worry about potential retaliation on the chinese side that would be qualitative. import as much as the u.s. does so they can to respond

in quantitative terms to the extent the u.s. can buy companies are worried about retaliation and whether approvals will be hung up. you could see a slowdown in imports of hollywood movies or china could actually use its strength in terms of exports of rare earth to do things to her the united states. or companies here, whether not the operating environment will become more complicated for them as china tries to show its displeasure and create political pressure on the administration. take a look at what we have seen with harley davidson saying it is time to open plants has ae the u.s., tesla plant in china. are we likely to see companies start think about how to adjust their supply chain and expansion plans or do think most businesses are carrying a wait and see approach? itneth: i would characterize as wait and see but at the same

time, these companies have already begun looking at options. an harley davidson, this is eu site. but it is an example of a kind of business decision a company will have to make when faced with the choice. for companies here it is not easy to pick up the supply chain that exists year and move it elsewhere. that would take years to accomplish but on an individual basis, companies are looking to see what alternatives might exist if they have to find a new supplier or export something to the u.s. from elsewhere. mostt to underscore that of the manufacturing that takes place here is to sell to the china market so in china for china is how we describe this. the vast majority of the activity is aimed at this market. thank you for joining us from shanghai on the latest report.

now for a look at stories trending across the bloomberg universe. blasting theresa may's stop brexit blueprint. bloomberg.com, if you ever question the price of your smart phone, that $1000 price tag may turn out to be a bargain. how trump may to thank for the uptick in book sales. you can check out those stories trending on bloomberg online or on the terminal. this is bloomberg. ♪

yvonne: counting down to the market open in japan and australia. we will a low rally right now. trade tensions and of course earnings season around the corner. we just mentioned banks in the u.s. kicking things off friday.

we are looking pretty positive when it comes to japan in particular. .8%.es up we mentioned the dollar yen spiking higher, the highest since january. certainly that will be news. .offee futures are up we're expecting a bounce back .rom crude overnight certainly one to watch on commodity currencies. coming up on daybreak asia, fx looks at the trade war impact on asian currency. his forecast and we also ask him about dollar-yen. is the dollar going to the haven currency amidst a trade war now? also ahead, asset management joins us for a discussion on chinese stocks and investment strategies. he thinks markets can rally from 20% in the chinese market despite the trade tensions.

50% even the next coming year. if we ever a trade war. have a market open coming up next. this is bloomberg. ♪ . . .

yvonne: 8:00 a.m. here in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. daybreak: "bloomberg asia." a more conciliatory tone, and both sides are open to talks. bloomberg'som global headquarters, i am ramy inocencio in new york. of the follow-up from a possible trade war is preparing to take full control of his chinese joint venture. and netflix is home of the

crown, and now the king of the emmys as well. the one-time dvd renter is now a hollywood powerhouse. ♪ all right, we have got breaking news right now on singapore's gdp, for the second quarter, growing 1% quarter on quarter. the survey was actually for something higher, 1.3%. the prior quarter was 1.7%, so while it is growth, it is growth that is slowing down your on a year on year basis, the gdp has expanded at 3.8%. actually missed the survey estimate of 4.1%, and also a slowdown in growth from the prior quarter of 4.4%. singapore's gdp growing, but again, that growth slowing quarter on quarter. also year on year seeing the

slowest growth ever since 2016, yvonne. reaction toa huge the dollar right now, but we saw provisions lower for the previous quarter as well to 1.5% for the first quarter as well. it seems like the manufacturing sectors, the construction sector contracted, the manufacturer sector slowing growth here. services still expanding by 3% year on year. the tradef see how economy is still seeing a lot of risk here when it comes to these trade wars. certainly singapore is one of them. ramy: that is right. interesting to see it is still able to continue on, despite what is happening with the trade tensions that are rising here. it will be interesting to see what happens in the third quarter and fourth-quarter if these tariffs do take effect.

china's biggest trade partner/south korea, china, singapore in particular, if there is any weight that will take effect. yvonne: we will see how singapore trades in just about an hour or so. openll head to the market in tokyo, seoul, and sydney. >> rising for a second day, over 1% so far. discretionary leading the way. --korea, chipmakers caps on chipmakers samsung. samsung biologic on the back as the korean ssp says the company deliberately violated accounting rules. it is gaining .1%. we do have brent losing and oil set for a weekly drop, ready to boost output. after the singaporean gdp numbers are out, we have seen some move in the seeing dollar, 1.36 handle, and we

have the seeing dollar looking -- sing dollar looking weaker. the head of china's june trade report due this friday, we have 6.48ading just below the $ handle. keeping an eye on the yen, ahead of the japanese industrial average, due at midday. again, set for the worst day since september. checking in on companies that reported results on thursday in japan, keeping an eye on stocks, retailing after its third-quarter earnings beat forecasts, it obtained its earnings guidance. we have it delivering an earnings beat, gaining two point and -- 2% off the robotics the economy forecasting. ramy: let's bring in bloomberg and life strategist mark cudmore. down the most ever

since this january, but no news is good news for new york's equity bulls. mark: absolutely. overall, it has been a good week equity market, despite all the hullabaloo of trade. most equity markets are higher than they were a week ago. i think that it's really important to note. the commodity markets have really collapsed. a slight convergence in global markets. commodities reflecting a major disruption, possibly due to trade, possibly due to supply factors. markets taking a more mature approach to wait a second, the publication is just what trump requested from the ustr on the 19th of june. a new not necessarily move or an escalation, it was just someone not being openly defiant of trump. fore is still a long period

a chance for the public to respond, to get some feedback, and the finalist will not be done until the 30th. that is a lot of time for compromise in the months ahead. yvonne: mark, these bipolar markets, as i described it earlier, every time we see a trade hack headline, we see the markets -- trading headline, we see the market bounceback quite steeply. why should the markets believe these actually exist? mark: i think unfortunately markets are going to trade off of these headlines because short-term traders overreact. there is a tendency for market analysts to default to the description of when we see a rally, traded tensions easing, escalating. that is not really what is happening here. overall, trade is the dominant theme that is really important, but it is a really slow-moving thing. most of the exports preceded ffs coming in, and even

the ones that have been implemented, the slowdown, overall, what we are seeing on trade is very much irrelevant. however, despite the fact that i sound very positive and dismissive of it, it is thistant to emphasize is still an ongoing theme, and there is no sign of resolution yet. so trade warriors are very worried in a long-term basis. they are not affecting earnings yet, equities yet, or growth yet. background think story. that is why trade is dominating tension, even if it is not driving prices too much beyond the immediate headline. yvonne: as much as you want to put it on the back burner, it's things like we get every time something that hits, we get the reaction. mark, thank you, mark cudmore joining us from singapore to you can follow more on the story on our markets live blog. you can get a market run down in

one click as well as commentary and analysis from mark and his expert editors in bloomberg, so you can find out what is affecting your investments. let's get to first word news. jenna has more. trump president reaffirmed america's commitment to nato but only after dragging germany and other allies through today's of insults and accusations and demand for higher defense spending. he had a last-minute news conference to address reports he did not want to quit the alliance, saying he could do so at without the approval of congress, however, he said it would not be necessary. president trump is tweeting about north korea. thhe posted a letter praising kim jong-un's efforts. it was when secretary of state mike pompeo within pyongyang. that concluded with new york media, calling the u.s. approach "cancerous and gangster despite that sweet, trump

hailed great progress in relations. boosting the equity baers. gic reveals that has boosted its cash and bond investments. it also notes valuations in u.s. assets make it harder to find good opportunity. the remarks follow those of a rival who expressed the same concerns about market volatility. a u.s. a u.s. jury has ordered johnson & johnson to pay 4.1 billion dollars in damages to affected in the company's products cause ovarian cancer. they are reordered j and j to pay a $550 million compensation, nowh means the total is home was $4.7 billion. the company plans to appeal and remains confident its products do not cause ovarian cancer. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. am jenna dragon heart.

this is bloomberg. back to you. yvonne: thank you. investors are breathing a little bit easier. they grappleeran, with an economy at a falling stock market. correspondent tom mackenzie is following this. we see interesting language. it seems like they are also stepping back of it. tom: yes, it is really about what he did not say rather than what they did say at this press conference from the ministry of commerce. what they did not reiterate was this line around quantitative and qualitative measures. qualitative is being kind of code word for non-tariff barriers, a word that officials had used before, and they are

really being pushed out by the chief economist. we're seeing china moving away from a tit-for-tat response to a more selective retaliatory response. that was echoed by mary on the show from the peterson institute, saying it is not in china's larger or broader because theyo that want to be seen as open and a decent place to invest. nonetheless, we did get some colorful rhetoric from chinese officials. fung describing the rhetoric as being like gangsters. take a listen. >> that is a gangsters logic, and it is that these crying "stop, these." it is the united states who -- the thief crying "stop, thief." it is the united states. it is not based on any justified

grounds or international law. tom: those comments the be targeted at the domestic audience here in china. a spokesperson think they could be open to talks, steve mnuchin saying the same thing, and the commerce ministry in china saying the best way to resolve the tensions are to sit around the table and talk them through. the question is what exactly they discussed, because steve mnuchin again reiterated he wants structural changes in china's economy, and we see no evidence that beijing is prepared to walk in that direction at this stage, at least. of an impactw much of these trade tensions having on china's economy so far? we are still in the early part of what is happening. is there any proof right now? tom: it is early stages, isn't it? he expects to get trade data earlier that could flesh out the picture to some degree, but looking at the process prior to

the first round of $34 billion worth of tariffs, nevertheless, the investor sentiment is there. we are expecting to see the export numbers often to about 9.5% growth from about 11% the previous month. that is a bit of a slowdown, a marginal slowdown, but it is not something that is likely to be too concerning to officials at this stage. we have the second-quarter gdp numbers on monday as well. we will get a print of about 6.7% compared to six when 8% in the third quarter -- 6.8% in the third quarter. the target is 6.5%, so you are still well in line for that target. the question really is to what extent they start to erode that. according to barclays chief economist, you should start to see a slowdown in the gdp. tensionsing the trade escalate, you see the $200 billion worth of tariffs, you could potentially see .5%

knocked off of china's gdp. you see a slowdown in retail sales, a slowdown in factory output, investment, and it becomes a more complex picture for chinese policymakers. the question is, for president a, if he is presented with dilemma, does he pull back from the deleveraging campaign or less growth. they do have fiscal pools, -- fiscal tools, monetary tools that they could use yvonne: some of it come with risks. you, tom mackenzie joining us from beijing. in tokyo, we are seeing dumping some 5%. this is the highest we have seen for the stock since january. we had pretty solid earnings coming through for retailing. talking about the expansion overseas, that expansion has been playing off -- paying off for the retailer. the early summer fashion line,

the china e-commerce sales facing double-digit growth. concerns on trade wars here. the company also saying perhaps these tensions have a limited impact on supply chain that does not expect clothing demand in china to decline, either. overseas now really the headline, the face roger federer, a key theme for fast retailing. we will get more from "bloomberg intelligence" later in the show. still ahead, stocks climbing as much as 20% over the next three years, even as a trade war kicks off. we will find out what is keeping him so confident. ramy: plus, standard chartered says the standoff means things will probably get worse for asian fx before things get better. currency strategist divya devesh joins us. this is bloomberg. ♪ this is bloomberg. ♪

ramy: welcome back. this is "bloomberg daybreak: asia." i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. isning us now from singapore divya devesh, standard chartered is asia fx strategist. viewers here,ur what we have been seeing in dollar-yen, we are quite confused by the weakness we have seen given the fact that much until april of this year, the trading with u.s. yields and the interest rate differential, now we are seeing a decoupling here. what do you think is contributing to that? a couple ofnk factors which are driving the recent weakness in yen come up one is, i mean, it seems like we are in a little bit of a risk, especially here in asia and more but u.s.cross e.m.,

equities are still holding up quite well. i think the correlation with broader risk sentiment, equity performance, dollar strengthens seems to be quite strong. that is keeping the dollar-yen supported. yen weaker in recent weeks, both on the bonsai . it is very important, because they tend to be fx and hedge, and that is driving yen weakness. look at the number for the last couple of weeks. japanese investors have foreign trends and equities in the last two weeks, which is roughly half of the entire foreign equities buying that they did in the first half of the year. i think there has been a notable pickup, which is also keeping ye n quite weak right now.

yvonne: it is not just the yen. it is treasuries, gold. we are tapping a huge bid, even during the trade war tensions, than we have seen in the headlights of the rhetoric escalating. what is the safety haven? is it mostly dollars? divya: yes, certainly it is the dollar, but i would not really like the traditional safe havens like yen. i think the issue right now is even though they half been an escalation in trade tensions the mother is no doubt about it, but i think the market is relatively optimistic and how things play out from here. you had about 1.5 months of window. there is the possibility of a discussion happening. the market is still holding onto the view that things are maybe not going to get that bad eventually, and things are going to get sorted out. i think that is the reason for the optimism in the life of treasuries or yen.

if things do deteriorate from yene, i do see the likes of outperform in g10. ramy: on the rmb, we got an interesting development -- r& d, we got an interesting development. where do you think it is going to be going from here? theknow it across development. divya: i think it is up a 6.7 level, which is why the authorities have shown some signs of cautiousness approaching those. we do not think the dollar is going to be driven by what

happens on the trade front. the u.s. trade site is not talking. i think that is not a good sign. obviously, there were comments overnight that things can improve. if we do go down this path, and as we go closer to the august deadline, there is probably going to be more pressure on the research side. we do not think that it is the line to the sand. we do think it could be reached in the short-term and that we could be living in a period of more weakness over the next few months. ramy: how much weakness are you talking about, do you think? divya: it really depends on how bad things get on the trade front really. i think it is also important to realize that china's economy had already been showing signs of slowing down in the second order. june numbers are coming up on monday. markets are going to focus a lot on the. prospects for the

economy, and on top of that if external demand as well, authorities would be very happy to see some sort of weakness, 2%, 3% weakness even from the current. levels much more from what markets think we are. e.m. asia, what should i be avoiding? sophie: i think -- divya: i think north asia, obviously cny, korea has a strong dependency on both u.s. and china, but i think amongst the most export currencies in dollars to be the taiwan . it has a trade of almost 100% gdp. almost all of the trade surplus comes from china. is obviously very exposed to all of the trade tensions going on in the background. i think gwd would be one currency which should be

avoided. yvonne: what do you think, divya, we have seen rate hikes from the bank of indonesia. what is your outlook for the currency by year end? divya: i think unfortunately for indonesia, the sentiments are still relatively ok. the central bank is definitely ahead of the curve. 100 basis points in about six weeks' time. i do not think they are yet giving credit to indonesia for that. as long as the overall e.m. risk is weak, it could remain under pressure, but i think underlying fundamentals are probably much more sorr solid than what markets are indicating right now. yvonne: divya, we will leave it there. divya devesh joining us. thank you. this is "bloomberg asia."

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ramy: all right, a quick check of the latest business flash headlines. welcoming a deal with indonesia gold and copper mine. while a knowledge in the agreement is not perfect, frequent look for the majority control -- freeport is looking for a majority control of gasberg, 51%. yvonne: apple is expanding its green credentials with a $300 million fund to promote clean energy and china. it is wanting to raise a percentage of green power in its supply chain. apple wants to fund projects producing one gigawatt of renewable energy in china and up to four gigabytes worldwide by 2020. ramy: shares in must company and jumped more than 5% on thursday, pushing the market value over the market reliance is the second indian giant to pass $100

billion. it also means it is regaining the title of asia's second richest man, behind only alibaba's jack ma. more to come here on bloomberg. ♪ come here on bloomberg. ♪ phones have made our lives effortless.

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singapore.0 in looking much brighter. markets also bouncing back in the asian and pacific areas. i am yvonne man in hong kong. ramy: i am ramy inocencio in new york, and you are watching: european close national i you are watching "daybreak: asia you are watching "daybreak: asia ." jenna: beijing says there is no current contact with washington, but it says it is not afraid of an escalation. the ministry is bound to take

what it calls "firm and forceful measures," claiming america broke rules. and what may be a protracted trade war particularly worried there is no sign of negotiation. standard chartered said it will allow market forces to drive exchange rate until there is a risk of overshooting. it is compared to a previous forecast of $6.18. president trump has dealt a double blow to u.k. prime minister theresa may. on the first day of his visit, he told britain's "sun" newspaper that her brexit plan will kill any future trade deal with the u.s. the also suggested boris johnson would make a better leader, saying they ignored his -- may ignore his advice on dealing with the eu. some are calling it the worst possible outcome. protesters greeted president trump and his wife, melania,

during their first official event. hundreds lined the road outside where the president and his wife with prime minister theresa may. however, it is unlikely they even saw the protests, flying in from helicopter on london, meeting with the queen on friday resortgoing to trump's in scotland. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. dagenhart. this is bloomberg. back to you. yvonne: jenna, thank you. looking at how the asian markets are shaping up, we have the latest with sophie kamaruddin. sophie: happy friday so far. despite the gloom we are having, it is edging toward $1.13. an.ck the offshore yu the pound, that is slipping on

the latest brexit woes, falling to a one-week low. kicking off with what is moving biologickorea, we have falling as much as six point 8% earlier after the korean financial services commission found the company deliberately violating accounting rules. a report of improper practices. -- electrico, posting a big quarter profits, but as "bloomberg intelligence" points out, it may see headwinds from a slowdown. also in tokyo, keeping an eye on a retailer rising since january, shares of 16% year's today. seven hold calls. jeffries is maintaining its hold cards yvonne:. calls.

yvonne: all right. we will talk more about fast retailing. last week, tom, we were talking about how this is not the expansion overseas anymore for fast retailing. tom: that is right. they perform extremely well across all geographies in japan. they did quite well in china, southeast asia, and north american europe. it was not just about the expansion. it was more about the everyday low pricing model. they had better inventory management that has allowed them margin crunching discounts in some of the prior years. if you look through nine months of share, they are on management targets for operating profits. yvonne: roger federer obviously the face now. does that push them into further expansion overseas?

thomas: absolutely. it gives them an opportunity to expand in the new markets in asia and in europe, but it ecb reynolds to the -- if we see the run-up to the 2020 olympics, it will be more aggressive, because we see the expansion in tokyo, europe, north america with federer. also, kei nishikori is doing well on a global stage, and that with brick-and-mortar stores and e-commerce as well. growth, whattain challenges what fast retailing need to keep in mind? thomas: a couple of things. one of the blemishes in the last guarter was the chie businesses. they are trying to grow so they are not a one engine vehicle. in order to do that, to try to bring in more customers, the risk that they run is the product mix overlaps too much with unit low, because gu --

gu isniqlo, because cheaper, people may go down for cheaper's shirts and skirts. it is going to be very difficult for them to continue to deliver same-store sales next fiscal year. are talking about the fall here, but we forget that, tom, we have to talk about the trade tensions with china here. how might that affect the strategy for fast retailing? thomas: i think it will have very little impact. they will continue to increase their focus on growing the overseas expansion profitably. i think longer-term, it does have an impact in terms of where they source and being more diverse geographically. five years ago, china has a distinct advantage to its regional peers, particularly in

areas like performance fabrics. that quality gap has really closed. sense, seeking customers' perception is that quality in india, vietnam, and indonesia has matched and in some cases surpass china. right, that is bloomberg intelligence retail ab, thankhomas jastrz you very much. the economy grew slower than forecast, and that is clouding the outlook amid rising trade tensions. this comes as sovereign wealth fund gic echoed warnings over global slowdown. let's bring in our bloomberg singapore bureau chief stephanie phang. what is dragging on growth here? stephanie: in the second quarter, ramy, both constructing and manufacturing sectors contracted. severalallen for

quarters continuously. weakness in the second quarter was due to weakness in private sector conception. 0.1% to aing fell contraction briefly growing in the previous quarter. so those were the two sectors. ramy: let's talk about risk here. obviously the trade war will have a big impact, but one of the risks are there? yeah, definitely the trade war is a big risk factor. singapore is one of the most export-dependent economies around, and with rising interest rising oil prices, those are the external risks that the economy will be keeping an eye out on. domestically, the government recently tightened the current on the privacy sector to cool prices, and that might be a

further dampener on the construction sector. interestingly enough, the external threat is growing for singapore. last week, the central bank governor announced central banks' annual report, and he said trade tensions are now evolved into a trade conflict, and that is going to basically hurt the engines of global growth, being trade, investment, and manufacturing. that is something we will be watching very closely. yvonne: we heard that, too, stephanie, they are a little more cautious. their investment center is also echoing that view. how does that change their strategy now? stephanie: so first of all, in the past year, the year ended march 31, they actually reduced their holdings in develop market -- developed market equities, they boosted holdings in nominal bonds and cash. that reflects much more cautious

funds. they did say that they are expecting lower returns in at least the next couple of years. they talked about how it is increasingly more difficult to find good investments, although a very much bottom up strategy, and they are looking for the opportunity in emerging markets and china. a very much bottom up in both, they saw opportunity in the construction that had happened to those markets, and also the fact that in china, foreign participation, for example, in the asian market is still very low, it has a lot of potential to grow in the coming years. yvonne: stephanie, thank you, stephanie phang, singapore euros chief. chief.au this company's stop could see 20% growth over the next three years even in a trade war

scenario. more on that few after the break. this is bloomberg. ♪ break. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. a check of your markets here this morning. happy friday. we look to be finishing the week on a strong note as well across the region. 1.3%ese equities up about or you can see the dollar-yen dynamic really put into play dollar weakening to the lowest we have seen since january. inching closer to 113. the 200.at here for a lot of questions about this, the commodity as well, whether -- isbound is quite 2%

going to persist, ramy. lumpuret's look to kuala . it is up by about .5% -- .1%. you want to see how this reacts further, if it does at all. coming in just a little bit under the gun, 3.8%, the estimate there. but still, it is growth, right? taiwan ahead to ti futures, up 4.1%. -- .41%. what is happening across the u.s. indices, seeing that rebound from yesterday's negativity after the trump tariffs were actually enacted, yvonne. yvonne: yes, a shift in tones from both. our next guest says chinese

stocks may rise 20% over the next three years, even if conflict with the u.s. persist, and again could be as much as 50%. wong joins us from the lion city here this morning. k-hoi, thank you so much for joining us. we see all of these low expectations for china, of course. a very sensitive market with trade headlines. given how sour sentiment is, what is the goal here for china? kok-hoi: i think firstly, investors have been through it u.s. spent off, but i think a country policy economy is more than just trade. view, it is very strong fundamentals good for china. five years or even longer. one is the government.

we think china has probably the best or the strongest government since 1949. xi jinping and the cabinet and summit officials are capable, intelligent, very focused, forward-looking, and also have the iron wheels. must to doing what they modernize china. it is very strong for china. you -- how do kok-hoi: yes? yvonne: we were digging into and it ischology, showing us how allergic these markets are. how do you adapt so they can

filter out the noise, essentially? it is, firstly, as long-term investors, should not be too much influenced by the short-term noise. i am not saying that trade is not important -- it is important -- but it is not the only factor that drives a country's economy. so we are more focused on the long-term fundamentals, like, you know, the government, the workforce, capital, technology. which i think are the more important factors that would drive the success of the chinese economy. , for all right, kok-hoi investors who are investing right now, what would you suggest to buy, and what would you suggest to avoid? kok-hoi: i think for now, maybe

want to avoid exporters, because the trade would seem to me to be continued for many more months, therefore, they could continue to be vulnerable. each time the u.s. imports more therefore we focus more on the domestic sectors like the conception, but you know the chinese consumer -- consumption, but you know the chinese consumer has become more affluent, and they continue to consume. when you look at cybersecurity, it is immune to all of it. ironically, we like technology. although china is still behind the rest by maybe five years to 10 years, it is because they are behind that they feel strongly that china will focus on

it islogy, and therefore taking already five years, some of the strong technology i think will receive support from the government and do well. yvonne: kok-hoi, we have seen some of these tech plays, alibaba, tencent, now they seem to be bogged down by the investment restrictions to the u.s. can you stay long on some of these big names, do you think, still, or are there some other parts of the tech sector that are overlooked at the moment? think these companies continue to do well, but my issue as many of -- not all -- is valuation. i think among them, there are some good ones that continue to --well, but there are also many are not as strong as we think.

they are very high, and therefore we think that some of over will be vulnerable the next three years to five years. ramy: one interesting thing i am reading in your notes year, that made in china 2025, which of course is that the heart of what is happening between the u.s. and china, you say it is "unstoppable and this is nonnegotiable." really interesting you are seeing it is going to be weighed down. kok-hoi: yep. made in china 2025 is china's industrial policy for the next 10 years. thechina wants to move up note chain, but it does want to continue to be a labor-intensive economy for the world. industries,upgrade and therefore made in china 2025 is nonnegotiable. it is something that i think the

chinese government has decided that it must do in order to become an advanced economy. 1962, led byer, in the u.s., try to stop china from continuing the nuclear program. by then, the chinese government at that time said when it comes to the nuclear program, it will speak for itself. then two years later, china successfully tested its first nuclear bomb. 2025,china, made in china you know, i am pretty sure that china will move ahead. the more pressure washington applies on china, i think, the more the chinese feel that they must do it and do it faster. they might be

invigorated. real quick here, what you think the weakening has only markets? you have seen the correlation between the stoxx and yen -- stocks and yen positive these days. kok-hoi: a weak yen with investor sentiment. the chinese stock market has corrected quite severely the last few months. we think the market volume has overreacted, because, as i said moreer on, china today is than just three. i would concede that 20 years ago, it was very important for china's internal growth, but in the last few years, net exports have not been the major determinant of china's economic growth. , hene: all right, kok-hoi will leave it there, "what'd you

miss?" -- aps assetoi, management cio and founder. commerce secretary wilbur ross saying he will sell all of his equity holdings. this comes after his release of a statement from the commerce department, saying "i have made inadvertent errors in the investors required by my ethics agreement," and he looks forward to serving the american people again. u.s. secretary of commerce wilbur ross saying he is selling all of his holdings. this is bloomberg. ♪ this is bloomberg. ♪

ramy: welcome back. ."is is "daybreak: asia i am remy innocence you in new york. yvonne: i am -- i am remy inocencio in new york. yvonne: i am yvonne man in new york. taking majority control of the joint venture in china. richard engle is following the story right now. richard: in april, xi jinping announced they would be opening up and relaxing those requirements for the joint ventures with chinese partners or that has been the requirement for a decade now for foreign automakers. partnership.oint hong kong, but away, is down. -- it had ended

up in shenyang. most of the suv's are imported from the united states into china. we are hearing people in china theng they will be one of first wants to announce the ownership structure with a joint venture partnership, 60-40 thereabouts, and that could be coming down the pike soon. ramy: stephen, how much of the trade war is pushing this kind of opening? stephen: it is definitely accelerating the move, because like i said, the suv is a big profit generator for carmakers in china. they are made in the united states. the bmw suv's are made in the united states, i believe in one of the carolina plants here, and they are shipped to china. four out of the top 10 foreign branded models in china that are exported to the united states,

3, the x6, german-branded american-made. they have got to definitely move production of those, or that is the idea, to china. ramy: all right, great stuff, stephen engle, thank you so much. let's do a quick market check. you can see up 1.33%, not too far behind it, down by about .1%, yvonne. yvonne: futures looking pretty positive as well. singapore is the one to watch, a one-year low. this is bloomberg. ♪ this is bloomberg. ♪

>> asia-pacific market tracking street. wall china appearing little -- they are open for talks. beijing slams washington's logic.r president trump saying brexit would kill any u.s. trade deal. salamat in hong kong. markets.loomberg