haidi: 9:00 a.m. in sydney where we are live from bloomberg's headquarters. i am haidi stroud-watts. gains after the open -- rate hikes will be gradual for now. a recovery in tech listed the nasdaq to a new high. they are shrugging off this morning headlines. ramy: from bloomberg's global headquarters, i am ramy inocencio in new york. president trump backtracks from his controversial comments on russia. " inays he, "misspoke

helsinki. goldman sachs conference he will succeed lloyd blankfein in only his second powershift as a listed company. all right. a very good morning again to you, haidi, and our viewers across the asia-pacific. it was interesting to see what the drivers were today, namely earnings as well as fed talk from jay powell, talking to congress in a semiannual report. bring markets higher, instilling confidence, especially at a time when there is negativity regarding the u.s. in china. haidi: analysts saying you cannot really blame markets. they have been schizophrenic given the conflicting factors we are seeing. you strip away any new headlines on trade for geopolitics, and

this is what you have, roughly speaking, a pretty positive tone of sentiment we are seeing. in the numbers. let's get to those with the u.s. close. looking at those, green across the board. a pretty broad-based rally when you look at the s&p 500. several sectors in the green, up .4 percent. materials, information technology, consumer staples, all being some of the biggest leaders. taking a look at the nasdaq, up .6%. record high, and that is despite the negativity we saw from netflix after it reported earnings and a failure to meet those estimates for additional subscribers. a lot of folks thought that was a buying opportunity and it did not end up as badly as people thought come the end of the day. let's take a look at the bloomberg dollar index. and that is rising just a little bit higher today. again, during the u.s. session, that was up .4%.

the pound seeing some weakness. gold futures, let's see, up just a tad. they had been down by 1% in u.s. trade, haidi. how welooking ahead to are setting up in the asian session, you are seeing trading in new zealand pretty lackluster, flat without a great deal of action that we are seeing. looking at indicators at .6%. just taking a look at how futures are setting up when it comes to the korean open as well as the nikkei, looking mildly positive as we did have that overnight. this is really going to be a story of that prevalent strength we saw in the u.s. dollar. does this indicate we will see sustained gains when it comes to the u.s. dollar? that will play out when it comes to asian currencies. we are looking at the dollar strength playing out for the korean won, which came off the

nine-month low, but looking at weakness today. the kiwi, 67.72, the only gainer in that g10 space against the dollar overnight, ramy. the dollarstocks and rally after jay powell's testimony to congress touted stronger growth. the nasdaq closed at that record. su keenan is here with more to walk us through the details. the market got two things it wanted to hear. first from fed chair powell that they will stay with the right increases. netflix got slammed after hours yesterday. let's go to the scoreboard, because what you can see is the is the techwhich heavy index, that is in the green, and that goes along with the nasdaq closing at a record. rising,ell 2000 also

bonds,in, the dollar and not really as prevalent year. let's go into the netflix chart because, again, this was a big story after hours. big story earlier in the day. sharp drop at a the open but managed to erase most of its losses by the close. check out the board of big movers. it makes the big mover list but it was down by 5%. it really cut its losses by two thirds. some negativity earlier in the session but managed to close off its low. analysts say that tech both, were lookinglls for resilience in these stocks. goldman, we are going to get you in a bit even though they beat on the numbers. let's go back into the bloomberg. we are going to the bloomberg at gtv, where you can find these stocks. this is called faang flu. the question was analysts asking

was the netflix story a bubble specific to a stock? is negative earnings report not necessarily a trend. you can look out why there is concern to the upside. getting very small. netflix and amazon were off their lows at the close and it's a positive note. not any flu yet. ramy: goldman sachs down .2%, but it had fallen as much as 2%. it did manage to recoup. su: let's talk about that. they did come in beating on earnings. positive outlook. but analysts had some questions. let's go to the board and look at the five day and really see the stock had dropped. what we saw was it came back by the end of the session almost even, but the questions had to do with the expenses and some of the trading revenue, and analysts were bickering among themselves. when did earnings not become the big issue?

they said there were some irregularities. there were on out -- were other analysts. the question was on ease about the handing over of the baton. handing it over to solomon. let's go quickly into the bloomberg because what you see is an outperformance of goldman sachs in the 12 years that lloyd blankfein was there. there is concern that the change in the ceo may be the end of that long reign. haidi: thank you so much for that. political developments overnight. president trump has backtracked now on his controversial comments about russia and election meddling, speaking after a barrage of criticism including from senior republicans. he says he has full faith in america's intelligence agencies. pres. trump: i have felt very strongly that while russia's

actions had no impact at all on the outcome of the election, let me be totally clear in saying that -- and i have said this many times -- i accept our intelligence community's that russia's meddling in the 2016 election took place. haidi: his performance alongside president clinton provoked -- provoked uproar. let's take a look at the fallout from helsinki. oe sobczyk, it's pretty rare for trump to retreat like that. what does that tell us? >> it indicates the political peril it put him in and a bit of a box with congress. so he -- the fact that he himself did it instead of toding out his spokeswoman

say that the president meant this, that is a mission of the seriousness of which they took this. this backlash that has been emanating out of congress. rare, is as you say very so you know, the president gave only sort of a partial walked back. there was struggle of the with him in congress and possibly for his fellow republicans. should they interfere with the 2018 congressional elections. but what is interesting about that piece of legislation is it would require certification from the director of national intelligence, not from the

president. they want to go to the intelligence agencies directly, bypassing the white house, for any certification or indication that there was additional interference. it would impose additional sanctions on banking and other areas that are still sort of extensiveched by the sanctions as already applied to russia. ramy: will trump's about turn silence his critics? even though he said he believed u.s. intel, he also hedge to a degree. he said "or other parties" or something like that, right? joe: this will give some cover to his most ardent supporters. there have been some members of republican house who have said that, you know, that they blame the reporters for asking the questions that prompted the answer, and suggested that this was just his unorthodox style. but i think that, at this point,

a lot of the more senior members in the senate and the house are taking rather seriously -- taking a serious look at trump's view and how he deals with this. some ofave tamped down the worst of it, but it has not eliminated the criticism or the wariness from members of congress. ramy: the contention and concern seems to be there. joe sobczyk in washington for us. thank you very much. now, let's get the first word news with jessica summers. goldman sachs has confirmed that david solomon will succeed lloyd blankfein as ceo. october 1 washer in the new era, only the second hand over -- new era.r in the solomon will be the bank's oldest new leader in almost half a century. blankfein has been at goldman for 30 years. he takes $85 million when he finally walks away. >> i will be stepping down as

ceo at the end of september. and us chairman. and i will -- as chairman. i will retire at the end of the year. ramy: japan and the european union signed a trade agreement that lowers barriers on goods and services. it also provides a counterweight to u.s. protectionism. the deal removes a wide range of duties and regulatory officers. it will help japanese sell. the deal has been under negotiation since 2013. reports from london say you e.u.ns are being told -- nations are being told to prepare for a new deal brexit. appears on the days that the secretary visits brussels for the first time in his new role. they will discuss a wide ranging internal document that urges member nations to step up

contingency plans for the u.k. to crash out of the block. amazon moves past it's difficult start to the annual time-based sales promotion. spending soared an estimated 89% in the first 12 hours of the event. amazon extended time data 36 hours from 30 hours last year and added for countries, including australia. the start of the promotion was plagued by technical glitches, which shoppers vented about on social media. globally, 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 have jessica summers. this is bloomberg. haidi: thank you for that. coming up on "daybreak asia," the fed chief indicates rate hikes will continue to be gradual. we will take a closer look at jay powell's testimony on capitol hill. ramy: we will assess china's ability to withstand a trade war with i just -- isaac stone fish.

this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi chad what in sydney -- haidi stroud-watts in sydney. ramy: they signaled more rate hikes. sent a messages that the policy decisions that go with it are definitely not preordained. kathleen hays is here with the recap. for now, the two words so much importance here. kathleen: it was not expected. let's get right to what jay powell said in his prepared testimony, which underscores that this is something he meant to say and these two words apparently were there for a reason. let's listen. >> it may well be -- we do not see it in the numbers yet -- but we have heard a rising chorus of

concern which speaks of actual plans being put on ice. kathleen: that was a very interesting exchange he had. how he was talking about the economy looks, jobs are strong, inflation near target, and he said the appropriate path of policy, for now, is more gradual rate hikes. this is not something he said in the past. why would people put important on that? because some people thought he was on autopilot. why? look at this gtv chart. dots . it shows you the consensus for for rate hikes this year. rate hikes. you'll curve is flat, but they are shrugging it off. they must be deciding they will go ahead no matter what, so that now" was-- the "for very important. jobs are strong. you have inflation near target. when it comes to trade, he did say it difficult to predict the

timing an impact not only of trade tensions but tax cuts as well. it is a lot of uncertainty. the fed is seeing hiking again in september, but less certain in the markets. that yield curve question is a big one hanging over investors have now. ramy: he did talk about it a little bit, but only pushed around at the edges. people tried to get him. kathleen: i do not think they tried hard enough. [laughter] ramy: he should come on bloomberg. kathleen: anytime. ramy: let's bring in eric when a grad -- winnegrad. thoughts here. we have heard jay powell speak over the course of the day. most of it was pretty optimistic and we knew that that was going to happen based on the documents that came out last week, but looking to trade tensions, we are trying to figure out when these clouds will creep up on us. eric: he was asked a lot of questions about trade, but his

answer was generally along the lines of wait and see. i think we have a sense of the directionality of it, but i don't think anyone will argue that trade tensions are good for the economy, but we don't know whatig it will be and over time horizon. ramy: everyone seems to be saying this has been something that happened historically, but the more we talk about it, the more everyone says to forget it. where do you stand on this? eric: i'm not inclined to say forget it. we have never had a recession that was not preceded by an inverted yield curve. but i do think it is reasonable to think that the time lag theeen the inversion of yield curve and recession might be particularly long. an inverted don't curve follows the policy rate is too high and there is a correlation between yield curve and

the real policy rate. i think it's very difficult to make that case. i am pretty very -- convinced that the yield curve will invert before the next recession but it could be a long time in between. >> he did say that when short-term rates were above, that could be a sign that your policy is too tight or we can characterize it as tight. the classic concern is right here in this chart that shows when you get a curve that starts inverting, you are followed by a big red bar. that is called a recession. that could how happen, do you see any avenue now where the inverted yield curve itself could -- he said it's all about the neutral rate but i don't think he answered the question. how will this affect fed policies? eric: there are some members of the committee, particularly those who tend to be dovish, who don't want to raise rates for when the yield curve inverts. a cynic might observe that they

would not raise rates regardless and are using that as an explanation. i don't think the inversion of the yield curve itself or the flattening of the yield curve itself will unduly influence the way that chair powell is thinking about this. it reflects the variables that trigger one. if we do not see the variables, i think it is appropriate for the fed to be skeptical of the power of that signal. they talked about it in the minutes. they talked about it in testimony. they are clearly aware of it. you have to go beyond that in terms of analysis and look at the economy itself. do we see signs from the data and the economy that a recession is imminent? that is what you want to be responding to. this: eric, in terms of sanguine reaction when it comes to equity investors, when you're not seeing complacency, that seems to be a reasonable reaction to the slowdown to senior manufacturing in china.

i want to bring up this quick our gtv, bloomberg commodities index dropping to the lowest since august. that continued decline in oil prices as well as iron or and other key metals as well. does this seep through to what a potential risk of protectionism, will tariffs, actually do to what is already a tenuous date when it comes to global growth? eric: for the global economy, i think that is certainly true. it has more to do with what's going on globally particularly in china. i think it is reasonable to think that the ongoing -- our own estimate is that the impact of the tariffs we have seen so far is something like .1% or a rounding error. it may be a case where the u.s. sneezes, the rest of the world

catches a cold or catches the flu. about global demand and seeing that reflected in commodities prices makes sense all the more so because we see the dollar appreciating. kathleen: but what about confidence? what about jay powell saying it is starting to slow down business investment decisions? we have seen stock market volatility. is that the risk for the fed? is that the risk for the economy that they may have to respond to? do think that confidence is the channel we need to look at the most closely. even the financial market channel -- we have seen equity volatility. over 2800.back it is hard to believe that volatility is something that would derail the economy. more i do worry about it as business investment plans. if you run a business in the u.s. that requires imported goods, the uncertainty around

trade policy around your input cost is something that could have an impact. ,f we see start to roll over then that is something the fed would need to respond to. i would be quite surprised before the end of this year, but in 2019, it's possible we will see that in a more significant way. ramy: very quickly on earnings, what is your take on what is happening now? the surprise has been to the upside. hop into the bloomberg very quickly to see the earnings analysis dashboard. for example, financials here -- earnings surprise, nearly 4%. the last season, it was actually better. where are we going here in terms of the pillar of support regardless of the clouds that surround us on global trade war? eric: it should not be a surprise. the economy is performing extremely well. and 5%.ocking below 4% it is a good environment particularly when you take into

account the tax cuts enacted late last year. when the economy is doing well, businesses are doing well in earnings are doing well. i find the dichotomy striking. earnings growth this year yet people are worried about a recession. on the one of those two things is likely to be correct. given the weight of the economic evidence, i tend to err more on the site of the earnings and corporate america sending us a signal that is not as strong as it has been in the past. ramy: we will even there. thank you so much, eric winograd kathleen hays. bloomberg users can interrupt with the charts shown using gtv . you can save those charts for future reference. this is bloomberg. ♪

likely to becies

the prevalent theme as we have the jump in the u.s. dollar. watching dollar-yen as city is saying the dollar-yen picture is likely to rise in the near future as their trade of the week. this is bloomberg. ♪

>> it is 9:30 a.m. here on wednesday morning. we are 30 minutes out from the open of asia's first major market trade. a pretty strong jobs report coming through. the nasdaq hit a fresh record high. jerome powell is not sounding overly hawkish at all. they are saying these rate hikes will continue to come. p.m. here in new york. markets are closing up for tens of a percent. stormya very rainy and day. ramy: markets were positive.

the s&p is at its highest. i am ramy inocencio, in new york. haidi stroud-watts, here in sydney. >> president trump has reversed his words on russian election meddling. he now claims he misspoke one word during his news conference with president putin in helsinki. he attempted a clarification that comes more than 24 hours after those comments. i realize that there is a need for some clarification. it should have been obvious, i thought it would be obvious. i would like to clarify in case it was not. in a key sentence in my remarks, i said the word would rather

than wouldn't. the sentence should be i don't see any reason why it wouldn't be russia. >> bloomberg is told that they will discuss global trade tensions. response is unlikely to be included in the final statements. the document will input -- mention the importance and multilateralism but will not focus on the imposition of tariffs. this is international trade and investment and it was important engines of growth and development. the bank of england is a step closer to a rate hike. that is after they rose to a record in the three months in may. mark is strengthening the labor market and limited capacity as a reason to raise rates. he has not said when. sterling strengthened on the news. my markets pricing in an 80% chance of tightening at the banks next meeting. a little more

crowded around jupiter. astronomers found 12 new moons around the giant planet. that takes the total number 279. telescopes identified the new moons that orbit jupiter in opposite directions. they were not spotted before because they are relatively tiny, one or three kilometers in diameter. global news, 24 hours a day on air and on tictoc on twitter. -- powered by more than 2700 journalists and analysts in over 120 countries. >> let's see what we should be watching. we saw that jump in u.s. stocks. how does that play out for the rest of the world? >> it looks pretty clear that we will get some relief rallies at the open. cost toustralia and the come on life. the big question going forward

is if those can be sustained. there are plenty of reasons for concern. worryis also the nagging that emerging asian currencies have been under the gun. if those keep trending down, i think those will cap whatever risk might be out there this morning. haidi: bitcoin jumped 12%. any rhyme or reason? >> there was chatter, some technicals if you could find them, it indicated it might go up. once it started going up, the momentum got behind it and off it went. it is upe now saying about 7000, it might keep going. to get somes likely bad his. -- news. follow garfield on our markets live blog.

to wall street now. ramy: it is a new era at one of the company's largest banks. named davids solomon it's next ceo. second quarter earnings were slightly missed. the cfo says that david solomon has been a key driver of the bank'srowth -- think -- growth. >> you have seen this in the results. there is emphasis on the growth plan, on driving revenue and earnings growth, all of these are parts of the strategy. david has been instrumental in that strategy. michaelt's bring in dan -- reichel. looking ahead to a solomon ere=a

-- era, what does this mean? dan: it is a shift in power and goldman sachs. it is one of the most closely watched financial establishments in the world. increasing the revenue. if you look at the evolution of goldman since the crisis in the past 10 years, the trading operation has been less emphasized. at the same time, the investment area isvid solomon's growing in importance. this is an important shift. ramy: looking back at the legacy, how can solomon capitalize that and continue forward on that if he needs to? legacy foris a great him to emulate.

profits are up, revenue is up. the firm is much more diverse. it has more areas of business, it has more profit streams. the consumer efforts they are making now are examples of that. stigma ofcarries the the crisis. he became famous outside of wall street. this is in the popular imagination as the face of wall street during the crisis. he was the one on tv a lot. he will carry that as well. haidi: did we get any surprises out of most recent results. >> you mentioned the declines, it was not worth it. even after the trading day ended, it was flat.

goldman set aside less revenue for compensation. the compensation pushback. are looking at that and saying they can't do that too often. that is not something that can repeat. stigma,ou mentioned the the bad reputation and the number of -- a number of the big banks had that. in particular, goldman sachs. what has changed when it comes to too big to fail? you see, just before president trump over, you see trading being pressured by dodd-frank and some of the other regulation we are clamping down on on wall street. effect that having a big

everywhere, particularly at goldman sachs. president trump promises less regulation and that may loosen up a little bit. goldman has shifted directions. they are focused on various other streams. >> he is joining them there in san francisco, under chapter had in goldman sachs. haidi: amazon has overcome technical glitches to report soaring on his prime day promotion. amazon spending is up 89%, this is bring up the bloomberg technology reported. what is new this year? 89% is hardly a prime sale.

ime day sail. -- sale. >> amazon has not released any data. that is from a third party. that is an outside estimate. they claimed that the sales are going well. it big change this year is has extended the time again, it started at 24. this is several hours left. all of those things, the additional hours, the additional go to the sales. haidi: these are getting traction on social media. a lot of shoppers are venting about this. do we see any damage coming from

that? >> no, it is short-lived. it really only had at about the first hour. they recovered afterwards. this is 109 in sales. that calculated the overall estimated spending on the day. it's lasted into hourly increments. that presumes that people went somewhere else or did not come back. it is tough to ascertain what the damage would be. ramy: any idea what caused this crash? spencer: amazon is not saying anything. i heard a couple of things from a couple of experts. they did a software update, there was some kind of bug. they had to get all hands on deck to figure out the bug. it could be bots is another theory. that lastction is

year, this happened several weeks in advance. can snatch up a good deals and sell them in mass. you can overwhelm the system and book of inventory. tory.ck up inven ramy: that was the latest on amazon. up next, is china's economy strong enough to withstand a trade were. -- war. this is bloomberg. ♪

ramy: we are counting down to first major market open. you can look at japanese futures. they are up by half a percent, getting a little bit of some support out of the u.s.,

especially after we saw some shares rising to a record on the nasdaq. we will how that goes as we move into the trading day. this is daybreak asia, i am ramy inocencio. haidi: i am haidi. they have signed a deal that scraps a wide range of duties and regulatory obstacles between the two economies. they want to send a powerful message against protectionism. they join us now from tokyo. name trump or the u.s. specifically but this is a point of emphasis on uniting against u.s. trade policy. it is true that they did not name trump or specific nations. given what is happening globally, it is pretty clear what they're sending a message about.

they could continue to find protections. the longer term or shorter-term applications when it comes to markets -- implications when it comes to markets? >> in the short-term, i think it is clear that the risk is for the market. manycould be affected by concerning things about a possible trade were between china and the u.s.. for a long time, it could be a little bit more nuanced. we have to think about how it will be implemented and how long it will take to fully implemented. given because of that, the outcome will be affected by the process. you have to be patient to see the full outcome of this. next givenwe expect

these global trading developments? >> i would say two things, one is that i think it will be interesting to see how the nations will be meeting with each other one-on-one. at the same time, what is going to happen when they gather at the same place. gathering.the in that context, you'll be able to see power dynamics of which nation is taking the lead and to talk.hey want to meet and which country is getting isolated and getting out of the loop. ramy: we will leave it there. ki -- yoshiaki nohara.

our next guest is not dying this. this.ing this is isaac stone fish. isaac: i think a lot of times, countries or representatives will say that we could expect beijing to act this way or expect china to have this positive change. it is a combination of wishful thinking and recognizing that. if they present it that way, it will be more effective in criticizing china. ramy: why would they want to? it is stacked in their favor. they used the system over the past several decades or so to try to get to where they are. successfula has been in maintaining a protectionist economy. even though a lot of european trump,is distracted at

there is a lot of questions in the eu and major economies in the eu that china is not providing a level playing. -- playing the old. -- playing field. really place heavy emphasis on opening up in china. beijing as theng new world later for open trade and global liberalism, is that largely rhetoric? is there any incentive or desire to make good on that statement? not -- i think china is a liberal nation, politically it is still a leninist system. economically, it is still state capitalism. there are some in the countries in the world that can take up this mantle of the top nation. doing,what japan is germany and canada is much smaller. canada has been quite open in

its economic moves as of late. i think this is an important year for xi jinping to keep paying lip service to opening up. this is the 40th anniversary of when done shopping -- talkedmer chinese later about opening up. i think we would be surprised to see a lot of concrete steps to make china a more open nation. haidi: is there a danger that it becomes more inward looking, economically because of the pressures that come from the closure of trade volumes in the united states? is a risk.ink that one of the most important thing is that the china -- u.s. can do english into china is open up. trade is a good way to do that. believethink economists trump's obsession with this

trade imbalance. the more we trade with china, the better it is not only for american consumers but also for china as a nation. the more exposed it is to the rest of the world, the better it is for china. that goes to the idea of development for this free trade agreement. what you think the bare-bones of it might look like? isaac: i think china could have a few high ticket items. they are investing in oil refinery or a plant in germany and to be able to do that while not actually having to open up protected chinese markets to european goods. side, if theyn can find a larger chinese market for nonsensitive goods, that could be a close enough thing that both sides could claim success. in issues like media and high

technology and certain areas that touch on national defense, china is not willing to open up its markets. haidi: the fixation on ?echnology, is this ideological is this similar to the u.s. being uncomfortable with the rise of japan. is athink china 2025 convenient whipping boy. it is a much larger issue. the united states does not know a constructive global relationship with a company that -- country that jeopardizes this. nation thatly is a presents to the world a different way of being on trade and on a political level worried maybe china 2025 is part of that. if wes. needs to decide

are ok with china being an equal power and if not, what are we doing about it? ramy: you can see this lull happening between the u.s. and china. it can turn on a dime or on a tweet. fish.was isaac stone now to some stores across the bloomberg universe area a disruption hits google's cloud computing service. this takes spot by and snapchat down with it. the current baby blue paint job of air force one dates back to the kennedy administration. joining40 companies are the city's campaign in tokyo offering things like work from home to breakfast at the office. you can check out the stories trending online or on the terminal, this is bloomberg.

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ramy: a quick check of the latest business flash headlines. this is georgia -- 250 million tons. it is revealed that it expects of $440 million charge. the iron ore output jumps 3%, this is a full year, the 2018 production will be downgraded. clients isas biggest warning him to call it. he wrote an open letter to musk. he says his conduct has been concerning. he told elon musk that his behavior is fueling an unhelpful perception of his leadership, thin-skinned and short tempered.

tesla fell slightly in trade area -- trade. the owner of the mandalay bay hotel says a 2002 federal statute raises liability to the company. it adopted anti-terror technology. they say the company cannot be held liable for the deaths. are, counting down to the opening of markets in japan. withis looking like a day tech dominating, it is granting that all-time high. this is looking broad-based across the region there. this is a by a 10th of 1% in sydney and also tracking high.

we'll see how trade disputes are making global equity markets more volatile and also toward instability as well. this is bloomberg. ♪

>> it is 10:00 a.m. here in sydney. we are live from the australian headquarters. look into davis asia. these are the top stories. u.s. stocks were lifted, rate hikes will be gradual. this is driving markets again, trade tensions and deal policy may bring the rally to a halt. inocencio in new york. we are just past 8:00 p.m. on a tuesday. it is the end of an era at goldman sachs. andd blankfein is leaving he will be succeeded by david solomon.

president trump backtracks from his controversial comments on russia. he says that he misspoke in helsinki. haidi: asia investors may be ready to be in the mood to buy. jerome powell headed to capitol hill and did not say much to spook investors. rate hikes will come gradually. nothing much has changed with trade tensions, this is very much on the back order. -- back earner. --nothing much backburner. there is a lot of good support when it comes to the

second quarter earnings season went out. it is all surprising, it is all to the upside. this is because of strong and continued u.s. economic growth. haidi: good support for the u.s. dollar. we have that reef pause in dollar gains. -- brief pause in dollar gains. take a look at how that is playing out here in asia. we are watching the asian currencies. particularly the dollar-yen. we are going to see downward path -- pressure. we have seen gains of about 1% there. -- kospi is strong out of the gate. the bloomberg commodities index is at its weakest since august. the pressure when it comes to that trade tension rhetoric they

still playing out when commodities are not in the equity space today. as trading gets underway, we will see what we will be watching with bloomberg and the live strategist. testimony is in its stride, even as we spoke about this curve, it seems like nothing to see or what they wanted to project. i think it was a very successful performance for powell. there was very low takeaways for financial markets. it was ideal when you have this communication from fed officials. unless they are trying to guide the markets toward expectations. i think equities rallied overnight because he did not emphasize the trade war. he did not alarm the market. the dollar.ame for it did most of its rally before jerome powell's move. front and rates will actually continue and that is why the dollar continued to

go higher. >> we have seen these u.s. equity gains, everyone is focused on chinese equities. that is one of the most important backdrop stories. i think that will become a big focus. the other thing for asia to watch is the big story -- the collapse in oil prices. positive for most asian economies, most of them are massive oil or energy importers. all countries love the fact that oil prices are coming off. haidi: whatever combination of joke local headlines that seems to result in dollar strength, is that here to stay? >> i am not convinced. this top down in the bases a few weeks ago.

this was that only very strong performance yesterday. it has been making these bounces up and down. forink the next larger move the dollar is probably lower rather than higher. i think most of the front and hikes are likely to get this. unless they accelerate much more aggressively, i don't think they will get the fed support. on the trade angle, i think this was positive for the dollar. from here on out, it will be more negative to the dollar. i think that overall, the dollar will bank on this range. the next larger move is more like the to be lower than higher. one thing that struck me as interesting is the lack of u.s. treasury yield movement. it was basically flat. .0018. what is going on -- not going on? >> i need to double check this.

rangeeek was the tightest in 10 year yield since july of 1998. nothing isthat is -- affecting 10 year yields. they are not sure which one is going to be more dominant. if trade was processed, they will be negative for growth. they might eventually be inflationary as well. those two things are going against each other. we are seeing this commodity prices fall sharply. that is negative for inflation. we are seeing a strong economy. overall, the inflation story is very stagnant at the moment. i think the treasurers give the best measure of what powell said. that is nothing for markets. that is why treasuries never react. ramy: that was mark in singapore. powellcted, jay

delivered an upbeat review of the u.s. economy and he signaled more rate hikes i had. -- ahead. kathleen hays is here with the recap. the two words for now coming out of jay powell. these are carefully is -- written. what jay powell said when he was laying out his plan for the economy. >> with a strong job market and the risk to the outlook balanced, we believe that the best way forward is to keep gradually raising the federal funds rates. on thetakeaway, this is bloomberg by our that eco-. he says that we were getting worried because the dot plot is on autopilot.

speaking of this, jump into the bloomberg library with me to look at one of the gtd talk -- charts. you can see the consensus of dots, in other words, forecasts or how many rate hikes are signaling to mark, a total of four. -- two more, a total of four. in this testimony, could trade stop them? jay powell said that it is difficult to predict the impact on the economy. he said the same is true of tax cuts. they are supposed to be stimulative. when he was asked if he is seeing any impact from trade, or is one of the answers he gave: powell: it may well be. we heard a rising course of concern that begins to speak of actual plans being put on ice. bottom line, nothing really

changes after jay powell's testimony. heis running everyone that has not said anything consensus wise. markets seem to be betty moore on another hike in september and then that december hike he comes much if year. iffy -- more iffy. he did say that they are talking this, the short-term rates and the long-term rates, that is an inverted yield curve. here is what he said, this was an answer to one of the members of the senate banking. >> the shape of the curve is what we talk about a lot. i think about it as the question being what is that message from a longer rate --

lowerthe new full rate is than you think, maybe the market is sending you a signal that you are going to hike rates too much. at the same time, as i said earlier, i wish somebody would have pushed him on what the yield curve does. for monetaryeed policy? i think he was let off pretty easily. if anybody is listening, he is talking to you on wednesday. go ahead and push him on the yield curve. ramy: we believe that there. that was kathleen hays. that is the latest fed speak coming from jay powell in washington. we have an alert for you. this is crossing the bloomberg terminal. this is in regards to jared kushner. the dnc has asked a federal court for permission to serve him with a summons as well as a complaint by mail. this is in regards to a lawsuit that the dnc has filed against

russia. that is called the dnc versus the russian federation. this is in regards to the interference in the 2016 presidential election. apparently it has been difficult for the dnc to serve him. they are asking for the court permission to deliver it by mail. now, let's get the first word news with jessica. jessica: trump has reversed his denial of russian election meddling. that is after a widespread backlash including from senior members of his own party. don't trump claims that he misspoke one word. the attentive clarification comes within 24 hours after those comments from which he had not backed away in several subsequent media interviews. i realize there is some need for some clarification. >> it should have been obvious, i thought it would be obvious.

i would like to clarify in case it was not. key sentence in my remark, i said the word would instead of wouldn't. percentage should have been i don't see any reason why i would -- it wouldn't be russia. tradean has signed a agreement that lowers barriers on goods and services. it provides a counterweight to u.s. protectionism. removes a lot of regulatory obstacles. it will help japanese exporters sell into the market. the deal had been under negotiation since 2013. the bank of england is a step closer to a rate hike. that is after u.k. employment rose to a record. mark carney has said it strengthens the labor market -- he has not said when the rates will rise. sterling strengthened on the news. there is a big chance of

tightening at the next meeting. from london said eu nations are being told to prepare for a no deal exit. the daily telegraph story appears. this is brussels, for the first time in his new role. there officials meet in on wednesday. they'll discuss an internal document that makes them step up contingency plans. global news, 24 hours a day on air and on tictoc at twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. ahead, top grade iron ore could spike. first, here y tribeca investments -- hear why tribeca

investments say that asia looks like it has good trade value. this is bloomberg. ♪

ramy: welcome back, this is daybreak asia. i am remy innocence you in new york. , in sydney.haidi is our guest. investmentsa portfolio manager. there are more stocks related to the china and economic growth. showing good value at this point. haidi: how do you get more exposure to that the domestic growth story? point, there is

really great value. ei: the valuation of the stocks looks very reasonable. trade war is doing a whole thing. that will have some volatility. what is affecting the trade war will not have any effect on the economic activity. buy?e you ready to jun-bei: we do see volatility until we know the outcome of -- what trade impact. right now, they are still negotiating. the longer it gets dragged out, the more impact it will have. we expect that to finalize in the next 3-6 months. haidi: when it comes to the australian markets, it is such

an inward looking market. are there stocks that you look reasonablehat is a way to get exposure to the emerging markets story russian mark -- story? jun-bei: we had a big story face in the china consumer growth. you can go into the winemaker, the baby infant formulas. those sectors in australia are very expensive. beenalia's market has insulated from the rest of the emerging asian market. they are trading on very high multiples. looking at banks as well as oil companies, those are some of the biggest losers yesterday. to what degree do you see that as an opportunity? we saw a recently bullish oil prices. we see some sort of tail risk to

the global growth story. at this point we think it looks good. most of the oil names have had a good rally. we are heading to the results season. we expect them to hold their price is -- reasonably well. ramy: looking at what china and the pboc may do -- the equities are down 20% or more. is there any chance there might be some monetary easing coming forward in the next six months or so? jun-bei: this is all china's focus. in the last six months, they lowered their rr rates. this morning, we read about the tax cut that is targeting helping the low income people. this is focusing on forgetting

the global issues and income trades and all of that. what they want to do is transition that economy and this is where they will be focusing their attention. how much longer do we have of this long dollar trade? we had that jump overnight, it feels like however you lineup the risks, it always seems to come back to strengthen the dollar. how does that play out when it comes to your stock picks? i think the strong dollar is a big risk factor going away. as we head into the recording season in asia as well. they had a lot of debts. theythe last few years have actually been paying out very high dividends to support the share price. we expect this reporting season to pay that back. eventually they will send out a somewhat bearish commentary in terms of the balance sheet. which emerging markets would you

be opportunistic about. some of them have better fundament of buffers than others. jun-bei: in terms of the asian market, it is about the growth. that growth is coming from china. it is the chinese consumer growth. there is no better than asia. -- china techheck ? that is a tough base. our investors seem to have moved on from the tax -- tech story. if you look on the relative regional basis, australian tech companies are so much more expensive than those tech companies. these tech companies are very ofh exposed at the forefront the trade war issues at this point. think australia

will continue to see these equity havens lows? jun-bei: that is what we have seen in the last month or two. we have outperformed the rest of the asian markets. we see more defensive, the economic activity is very late to what will happen in the rest of asia. this seems to be good support and the aussie dollar seems to be finding space at this point. ramy: i am curious about the japanese yen. this trade is the trade of the week. what do you think about that? it is approaching 113 to the dollar right now. feel that a u.s. dollar has run very hot. given the volatility, you will probably see some support with the u.s. dollar strength. be emergentre will

by support. emergence by support. >> that was the deputy portfolio manager. don't forget, our interactive tv function, that is tv . you can catch up on past interviews and dive into any securities or the bloomberg functions we talk about here. become part of the conversation. you can send us instant messages during the show. this is for bloomberg subscribers only, check it out at tv , this is bloomberg. ♪

this is daybreak asia. ramy: i am remy innocencio in new york. let's do a quick check of the latest business flash headlines. this is the citi open. this is topping estimates at 241-250 million tons.

it has revealed that they expect a $440 million charge in the current fiscal year over the disaster. ore outputter iron jumped 3%. that means that full-year 2018 production will be downgraded. one of tesla's biggest backers is wanting elon musk. has written an open letter to musk saying that conduct has been concerning. they say his behavior is fueling an unhelpful perception of his leadership as thin-skinned and ill tempered. >> it crossed the line with the untoward message and tweet earlier this week. at that point, if you got to it and where it jeopardized some of

the consequences. success,art of tesla's having investors. it is a very capital intensive business. ceo, brian crutcher resigned because of conduct. to departure is not related company strategy, operations or financial reporting. his predecessor, rich templeton will come back to the role. haidi: mgm is suing the victims this shooting. the federal statute races liability for a company that has adopted anti-terrorism technology which mgm says they want a judge to declare that the company can't be held liable.

up next, another chinese tech company is preparing to go public. thisll tell you more about company's plans to take on alibaba. this is bloomberg. ♪

haidi: it is a: 30 a.m. in singapore. 8:30 a.m. in singapore. we had a pretty optimistic view across broader asian equity markets. i am haidi in sydney,. . ramy: let's get to first word news with jessica summers. sachs hasoldman confirmed that david solomon will be the new ceo. this will assure in the new era

on october 1. oldest will be the banks new leader in almost half a century. he has been a goldman for 30 years. almostxpected to pocket $85 million when he finally walks away. i will be stepping down as ceo at the end of september. burst --airman, i will retire from the firm at the end of the year. told: bloomberg has been that they will discuss global trade tension. a response is unlikely to be included in the final statement. this document will mention the importance of multilateralism but will not focus on the individualism of tariffs. international trade and investment are important engines of growth and innovation and development. its prime dayast

sales. to 36 hoursded this from 30 hours last year. this is in poor countries in -- including australia. it was plagued with technical glitches. vented about this on social media using the #pr imedayfail. found 12rs say they new moons orbiting jupiter. that takes the total to 79. they identified the new moons that opposite -- orbit jupiter in opposite directions. they were not spotted before, this was because they are relatively tiny. news, 24 hours a day, powered by more than 2700 journalists and analysts. summers, this is

bloomberg. haidi: let's look at how are our -- our asian markets are shaping up. markets wee strange find ourselves in today, it looks pretty positive. >> it does look positive. it also feels a bit intuitive given what we are last night on the red chair. a look at equity markets here in the region, just in case you missed it. the s&p 500 is closing about 28 hundredths. this high that we are seeing on the asx 200. japan is nearing this level at about 23,000. we bumped our heads twice. we are still quite distant from that. let's have a look at yields right now. lots of things to talk about.

i know you guys have been talking about this. the fed chair gave an upbeat assessment of the economy. that led to a flattening of the curve. of 2008.n the july you have a slightly flatter curve. the 10 year has barely changed. what city calls the trade of the week. chinesea lot about the the japanese yen has also been weakening. we are back to level. we crossed at this level this morning. the 50 and 200 data. as a lot of these hedges, out reversed, thist

is a very short-term trade. you can look at some upside here. this, when you have these rate differentials start to spread, that is one more thing that might push us higher. thank you very much. now to the world of chinese e-commerce. this company is one of a growing number of tech startups turning to public art is to cash and to bring the fight to alibaba as well as other giants. let's learn more about caroline: with edwin. edwin: it is an interesting little company. for so long it has been a two horse race. andcame out of nowhere

started putting up a strong -- thise to his duopoly. they have spent a lot of money on traditional advertising as well as online marketing. i think it will continue to do that because in terms of users, i think they need to sustain that model isd mostly predicated on heavy discounting. i think that is pressure on the bottom line. i see that pdd is aiming to list in new york. why not in china? edwin: it could be symbolism. these are long-standing traded

stocks. i think analysts understand that chinese e-commerce a lot better than they used to. maybe counting on that invested interest. also, it depends on whenever started preparing for this ipo. only until recently, hong kong was against these companies. this is also a story of extreme wealth creation. the will make them one of -- richest people in china. very top end, the owner will be close to $10 billion.

it is fairly remarkable for a three-year-old company. he is in a school engineer. he was not destitute. to $10rom almost nowhere billion in the space of three years, that is china for you. what is interesting is he will than jd.com haidi: that is quite extraordinary. that was edwin chang. intoxt, we will be digging this record production in growth ambition. and daniel will join us, next. this is bloomberg. ♪

haidi: this is daybreak asia. i am haidi. ramy: i am ramy inocencio in new york. seek they contribute little top 250 million tons. our asian metals and mining reporter, david stringer joins us from melbourne. lift, bhp expects to production further. we are seeing production from its two biggest rivals. push higher from where the have gone? david: absolutely. forecasting is a fit particularly increased that. a record annual

production and after 12 months and ended at the end of june. there are options beyond that. on the middle of 2019, it will have the capacity to go there the. it is whipping through ray lahood support, all of that is boosting capacity. that is the thing. this is the biggest exporter. this is a similar position. a lot of iron ore is coming up, i guess you would see some reduction in prices. though,not seen that prices have held steady at over $60 a ton. benchmark prices have ticked up.

the net impact on the market is not as pronounced. we are seeing a lot of lower quality, higher cost production exit the market. the net impact is probably only about in addition of 2 million tons. that is kind of why we are uping that #rise really hold in that 60-70 dollars a ton range. ramy: why are there some doubts about whether that might continue to mark -- continue? aren't -- are diverging opinions. they're trying to reduce pollution from heavy industry. china's steel mills have been gravitating toward higher-quality iron ore. a bigas really driven

premium for the product. we are seeing that trading right now. not quite $30 above the benchmark. certainly those elevated levels. this fight to about $100 per ton. we are hearing caution. longis casting down on how steel mills in china can continue to pay out for higher quality raw material and if we will see a little bit of a normalization in that process area -- process. haidi: are they hearing anymore about the sale of their u.s. show units -- shell units? david: forecast production will fall potentially as much as 4% in the current fiscal year. that is being driven by lower production. that will be a negative. on the shell process, probably

good for the shareholders. that process is on track. that will reap about $10 million -- $10 billion. they can announce one or more transactions and that it expects the whole process to be wrapped up this year. stay with us. we will continue that conversation. hashong kong stock exchange come to an agreement to set up what is being called an initial trading. and it comes to hong kong and companies with these structures. this comes on the back of the stock exchange in china saying that he will be allowed mainland investors to buy shares in hong kong.

it does seem like this is a special working group thing set up. the trading stability. is looking to see a resolution. let's get back to the topic at hand. we are talking all things commodities. there are all of these trade tensions. senior commodities strategist. this is daniel. to --all, when it comes calm when it comes to commodities. as wehis only get worse try to work out what the implications are of trade tension and trade war? i think investor positioning had been quite long before these issues came to the floor. gainedly, that momentum

from that sector has weighed on the market. to add to all of that, we are seeing this out of china. certainly these are supply-side issues. it has been a perfect storm in a sense. this is the big issue for the shorter term. you particularly expect chinese softness to show a rise in oil prices. is there a reason we have seen this community? -- immunity? dan: i think their outlook is more positive than the global scene and the global investor. also, the data has been a lot

more positive than other sectors. the were up about 7% from first half. seeing small recovery and it is added to a more positive sentiment. >> i will ask your question. -- ask you a question. >> i was not ask about the copper market. this is another big market. what are you seeing there?

are you worried about the potential for labor disruption in chile and south america? will that impact on that particular market and provide another feature that we will have to factor in? >> the talks have ebbed and flowed. we saw that first formal offer from bhp rejected by union. i think the interest will certainly ratchet up. the market has been complacent around the risks. this is just the start of a wave labor andplies and contract negotiations coming from south america. signsk if we start to get that they are steadfast run the terms and conditions, the issues

around that will start to play on markets. at the moment, those concerns of tariffs and the trade war are overriding concerns at the moment. >> people are still expecting that shortfall in the copper markets. we heard on bloomberg tv last he loves more copper. are these top minds going to have to buy to get that more copper? >> when you look at incentive pricing for copper, the price required to get a decent return on a new project, it is still significantly higher.

for producers such as rio and bhp, it is going to be significantly cheaper to buy. as you said, it is becoming increasingly difficult to find on the markets because producers see the rosalie positive outlook over the longer term. certainly, this low -- lull we aere seeing in project of elemet will develop on the market. these are relatively conservative demand forecasts going forward. even in the shorter term, we are starting to see value emerge. i think the concerns around the trade war are overdone.

in terms of the risk to oil, there is fear of demand destruction. that is because of all of the trade tensions. where do you see the price is going? daniel: there are so many political influences in the market at the moment. they are overriding the fundamentals. there is this wave of new supplies. it will be a headwind. it will keep prices relatively subdued. what it does is create a platform for another decent rally. smalleroing to see spare capacities in the market. the risk to unplanned constructions are fairly high.

we have been hearing about customers pulling back from purchasing iranian oil in libya ann though we have seen increase recently. there was a strike in norway as well. the issues are still bubbling away in the background. this was particularly in the weond half of this year, will really expose it to a potential spike in prices. the risks to all of this, what is your assumption on the dollar. ? we think the dollar rally is overdone. it is going to be a little bit different. we won't see it across the entire currency spectrum. i think the headwind that we have seen will be for

commodities. that should be a brother positive impact for investors and commodity markets. haidi: we appreciate your time. you can see all of the stories that you need to know to get your day going. terminal onn your the mobile using the bloomberg anywhere app. this is bloomberg. ♪

welcome back, this is daybreak asia, i am ramy inocencio. haidi: just recapping some of these lines, this is the development through the hong kong stock exchanges. that theythe news won't be allowing mainland investors -- this is directly impacting them. it sounds like a special working .roup has been established this could allow them to trade through the stock connect. -- the inclusion would have made them eligible for that stock connect. tosaw them reacting terribly that initial news, it was down about 10%. we could see a little bump in heading into hong kong.

ramy: we see how that works out. let's look at how markets are trading right now. they are all in the green. 225,he nikkei 20 -- nikkei up. this is off of the weakness of is at these yen, it highest since january of 2018. haidi: this seems to be the prevalence in for trading today. optimism when you see how singapore is shaping up. they're looking at 2/10 of 1% higher. we also had that gain led by tech overnight. ♪ retail.

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♪ a positive start for asia-pacific stocks after an of the -- an upbeat message from the fed. earnings driving the markets, trade tensions, geopolitics, all could bring this rally to a halt. rules on theew trading of dual class shares. i am rishaad salamat. this is "bloomberg markets: asia." ♪