haidi: welcome to daybreak asia. stocks are set to slide. the dollar reeling as president trump attacks the fed. the u.n. remains at a 12 month low as investors weigh china's monetary policy in the face of a slowing growth. and i am in new york where it is just past seven p.m. on thursday. the auto industry fights back. jobs atld put american risk. forecastonductor trims

for revenue and spending but sees little impact yet i'm tariffs. -- yet from tariffs. ♪ ramy: good morning heidi and to our viewers across the asia-pacific. taking a look at where we ended here on thursday. the party had to end at some point for u.s. equities after three days of rises, they finally caught a breather here. keepdid little to actually the markets afloat. we ended in the red. an extension of moment for the fed. president trump calling in to question the rate hikes. the chinese currency

falling like a rock. he is treading on dangerous ground in terms of respecting the independence of the said. we could see gains in this equity room for two and a half years. ramy: a lot of people are hoping that. let's go ahead and see how the u.s. market closed on thursday. it definitely was not gains of any sort. the s&p 500 index down for tenths of a percent. 4/10 of 1% tech stocks feeling some weight. the nasdaq down for tenths of 1%. index is just slightly lower right now. it had been higher on u.s. trading. it was going through gains and losses after donald trump did criticize the fed on rate hikes.

the british pound was down for tenths of a percent after retail sales missed of their peerage investors pushed into that down three bits on the yield. we will continue watching this part of the world. it sparked another bout of volatility. we are seeing reaction from the pboc or job earning from chinese authorities. it's looking like a downside start to the friday session in asia. new zealand that at the moment. a bit of a lower start after two days of gains. for japan, looking more positive. a decline in the yen. and 25on numbers out minutes or so. they are expected to see a marginal pickup when it comes to crisis.

also looking a little weaker going into the friday open there. we spoke about the yen, it will provide to be something of a boost. it will play into some of the strength and inflation. at is where we are sitting and the aussie dollar giving up the gains from the jobs report yesterday. falling under 74 u.s. cents. ramy: but get back into the u.s. market close. most importantly, microsoft. -- butwe get to markets before we get to microsoft, what has happened after the comments with the fed? >> he says he is not thrilled about the interest rates. in the white house cannot clarify that the president respects the fed's independence. let's go to the board, what we have in the snapshot is that the in back soment did

of their equilibrium. check out the financials. the s&p 500 index worst performer in the s&p. industries in the second quarter three times the growth. stay tuned for that. financials at the setting the tone for a negative open. they followed through impacting stocks like travelers. lackluster earnings. analysts, investors slammed the stocks. let's go to the next board because there were some tech stocks that also got hit. mainly applied materials. taiwan semiconductor cutting its forecast. dover, by the way at the top is an equipment maker. investors seem to love it or

deep a on the other hand came out with a mixed report, not the greatest outlook and a lot of analysts raising concerns on whether this is another sign of amazon victimization. a lot of investors running from the stocks. ramy: we are also taking a look at the dollar. as that has risen, the commodities index have been falling. many in correction territory. i saw 9.5% down from the hybrid no. what is happening? su: copper now in eight there market from the high. having to do with a stronger dollar. let's look at the chart of metals and we can see that we are bounding in extending trading. all were in the red during regular session. the bloomberg charts, gtb is where you can find the charts. these are hedge funds taking net short positions on copper as of last week and what we saw is it

played out in the latest session. copper crashing through 6000 for the first time in a year, biggest monthly drop since 2015. let's go to gold. it crashed below the 1220 mark and is now heading for 1200. what you have is the dollar embolden in the bears in the metals market. look that chart, it tells the story. will goll say gold lower. let's go back to the bloomberg. worse. called dad to a base metal meltdown. tensionsed by trade with china. it has a lot to do with the fact of china being a big consumer of copper. yellow, aluminum, blue, zinc. one more chart, oil. oil also under pressure dipping below 68 and coming back up. you can see in a month how we have dipped and come back to it a lot having to do with saudi arabia think the excessive

supply talk is without acis -- without basis. we have been coming on contracts. we have to boost higher by the close. haidi: taking a look at microsoft, the gains we saw, even the highest estimates were smashed their out of its report. it was largely on account of cloud? su: big move on the cloud. let's go right to the chart after hours. you got a bump from microsoft in after hours trading. 89% increase in clouds. 38% off of jump was 365. another cloud platform getting a lift from the improving pc market and revenue was above 30 billion. what is important is that for the first time, it's all annual sales rise above 100 billion for the first time in history. quickly, another after our story were talking about, shoemaker

down. translate into a negative open on friday. for retailers, particularly apparel and shoemakers. they had week sales. they will impact others. haidi: thank you so much for that. overnight action on wall street. let's look at the other market moving story, moving treasuries and action in the dollars which was president trump's comments about the fed. joining us is greg sullivan. the white house was clicked -- was quick to issue their statement. some treading on boundaries going on. greg: there certainly is. the white house was quick to try to go into damage control, saying he does respect the fed's independence and that he is letting them do what they feel is best. the white house spokeswoman saying that trumps of views on

race and -- rate and rate hikes are known and long-standing. it's hard not to see this as in line with his willingness to break presidents -- break president. he does think that are taboo. still, it is hard -- opens the question of whether future bed action will be questioned for a hint of politicization after the trump comments. pushing boundaries, white house quick on the come back to try to tamp down worries that trump doesn't respect the fed's independence. todi: it will be interesting see if jay powell response. in the vein of the unorthodox approach, the white house has announced he has invited president putin to washington later this year. as the controversy of helsinki continues, to be quite fiery. greg: the most surprising thing of course is that it came on the

same day that the u.s. senate took a protest vote against president trump's appearance that he was considering a potent proposal to let russia question u.s. officials. letin had posed to trump to u.s. citizens the question by russians. lawmakers unanimously voted to go on record opposing that idea. so, here we are, many lawmakers rattled by what they see as a potentially too cozy relationship with vladimir putin thehe heart of trump, yet white house moves forward saying they have invited president putin to come to washington later this fall. ramy: that will be very interesting if that happens there. greg, we have learned about a proposal from esther putin on ukraine that came out of the helsinki summit. do you think donald trump would accept that or could he? interesting proposal

or it is interesting because we don't know a lot about what was said in that helsinki summit in the one-on-one between trump and putin. most of what we are learning is coming from the russian side. we learned that putin proposed holding a referendum in the eastern ukraine, where there is conflict and tension there. what was also interesting is that putin was said to have a great to not topically disclose this so that president trump could consider it. it would likely face an uphill battle among -- ukraine would oppose it, their supporters in europe, and lawmakers. see that gaining much support, again trump is looking to better relations with russia. unclear what he thinks of that. ramy: bloomberg washington reporter greg sullivan, the latest out of there. what is happening between mr. trump mr. putin. we want to alert you to something crossing the bloomberg terminal right now. korea, south north

jae-in monday and --moon mate meet north korea's leader in august again. again, the president of south korea mate meet the north's kim next month. this would be a follow-on to what happened in singapore. just recently in the past month developments and in the meantime let's get first word news. >> the european union is drawing up a list of american goods to base tariffs if upcoming talks for dropping duties on imported cars. debating whether auto imports damage national security. washington already hit the eu with duties in steel and aluminum which led to

tit-for-tat. >> important truth of trade is that companies do not trade, companies and people do. stablees create a environment for trade or they don't. either way, it is the general public who will see the impact and pain. haidi: britain's new brexit chief has helped the first talks. one where britain crashes out of the block without a deal. they are proceeding at a snails pace. malaysia is said to have issued arrest warrants for two former executives. we are told they relate to the executor kasey kahne. -- casey ting.

may be gone forever. >> we will probably only get about 10%. lucky 30%. you are at the very least, 10%. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. still ahead, industry groups mine up to oppose president trump's tariffs. you will hear from the alliance of automobile any fractures later. ramy: we will access -- we will assess the impact of trade tensions and look at the rising concern in japan. this is bloomberg. ♪

haidi: this is daybreak asia. ramy: more now on president trump taking aim at the fed chair that he himself them appointed. the white house has backtracked the remarks. let's bring in doug gordon, senior portfolio manager in the adult. $298 billion in assets. looking to where we are right now, it is the summer doldrums in the united states and trade tensions on one side. earnings lifting on the other side. how do you find titans and the stability of moving ahead through the end of august? >> great question. that -- is itet being complacent or it resilient.

progression with president trump moving forward identifying of 200 billion in goods that would be morefs, it moves things and the concerning direction. that said, we are moving things in an earnings season. a modest amount of companies having reported. to be so good, just it seen when the market will put those concerns from the trade restriction higher in its priority list. earnings season could be an accelerant to that. for provides a bully pulpit a number of firms. remember, when we look at it in economic terms, not that big. if it starts to erode ceo confidence, that could be and erode.o identify

week,of course this next microsoft reporting just today in your state. what we might -- with technology being the central focus. that little microcosm there in the tech sector that has been driving the growth part of the rally we have had represents and concentrated risk. it gets your attention. guidance there it could give us concerns. , s&psaid, earning season 500 1.3% on revenue. on eps. 7%

close to 5% on eps. quick chat, i want a and get your views on emerging markets. this is an lgbt library, but trading at the biggest stocks in 16 years. the shanghai versus the s&p, what is your risk versus opportunity strategy look like when it comes to emerging markets at the moment? doug: that is a great point to make. we look at it and opportunity space. portfolio we have to fund from somewhere else. the strength we have seen in the dollar, tied with risks concentrated most specifically on china. there is a ripple effect outside of that.

pause on give me getting too aggressive. strategies totion limit or make an asymmetric outcome. it lends itself to being diversified and the full toolkit including activex out. are you adjusting allocation when it comes to energy and commodities related sectors? particular, does the down affect from metals -- a strong dollar story and a trade were story. does that inform your view on the market segments? we have in something the portfolio that i have manage. commodities aren't part of that. that is not something i turn a blind eye to.

it's a dollars story to a certain degree. tot is a place we would want stay at or near hovering around your policy wait. not something we would want to spend the risk budget we have to take an outsized position there. ramy: very quickly, you're talking about dollar rising. the trade tensions at periphery, how have you adjusted your rate hike forecast? really think that is essential. we have the stuff hard to goicipate and political actions is impossible, but we are trying to do that. on the fed aside, we have the pce number coming in at 2.3%, so mission accomplished for the fed. they feel comfortable around what they are forecasting in terms of two additional rate hikes this year and three in nextdots going forward

year. the fed is in a tough situation. if you have a meaningful impact from trade restrictions and tariffs, they will have to be reactionary. ramy: great analysis. senior portfolio management in seattle. you can get a roundup of the stories in today's edition of bloomberg subscribers. this is also available on mobile. this is bloomberg. ♪

haidi: a quick check of business flash headlines. comcast abandoning its struggle with disney. we are told it has concluded that raising its offer above too much andd be instead it will focus on u.k. satellite channel sky.

news,ors welcomed the comcast closing 12.5% higher. ramy: iphone supplier taiwan semi conductor has trimmed its outlook. they now save sales will rise this year i a high of single digit percentage in u.s. dollar terms, that is down from an already reduced forecast of 10%. may be vulnerable to the trade were, but they have yet to see any major threats. only the first wave has been executed today. in that, we see minimal impact for our business. on u.s.he bolt run equities may have further to run . u.s. equities could continue to gain for 2.5 years. there is a caveat.

they won't be as impressive as they have been. jpmorgan advising clients. just ahead, we will talk oil prices and currency on japanese inflation. ♪

haidi: we are looking up this morning in tokyo. we have just gotten the core consumer prices coming through for the month of june. rising a chance -- rising 8/10 of 1%. consumer inflation rising 7/10 of 1%. fresh fruit and energy coming in at 2/10 of 1%. particularly key as we were expecting a bit of a boost for that inflation number to come through from the weaker currency adding to export -- import prices and the impact of heil oil prices.

headline number, national cpi coming through at 7/10 of 1% just shy of the 8/10 of 1% of their expectation. we will get more on the inflation numbers. in the meantime, let's get to the first word mood -- first word news. >> president trump has attacked the fed's rate policy. it's a break with tradition respecting the independence of the central bank. the dollar weakened as trump told cnbc that he is not happy about the rate. they have raised interest rates of five times since the president took office in january of last year. commodities, oil pushed higher in new york as saudi arabia pledged not to flood the market here it. production totain

suit customer needs. brent crude has fallen this month with the escalating trade for an expanding supplies. indian stocks they'll a second day ahead of a no-confidence vote. smooth first couple of years but the the government faces challenges. they won with a wafer thin majority and failed to perform in front of talk a in may. you don't hear about treasure every day. warship hassian triggered a warning to investors. it could be carrying $130 billion worth of gold. the group released a video showing the ship that sank in 1905. reports,d on the opting regulators to warn about rumors.

global news, 24 hours a day, on air and at tictoc on twitter powered by more than 100 journalists and analysts in more than 120 countries. ramy: we are counting down to some of the market opens. here is sophie. markets look like they are headed south on thursday. investors caught off guard by the pboc seeming indifference to the slide. there is no summer law this friday for you guys? sophie: no summer slimmer here. it is waking up volatility and we got lines out from the pboc officials writing the financial news from the statistics. control leverage what ratio. keep an eye on what is going on offshore. hovering at 680 handle. with this picture, we are

anticipating more losses. we do have asian futures pointing lower. copper crashing below. here, -- china is a --rting with monetary policy pboc will keep easing right. more weakness and volatility ahead. work strategist on you one is more possible. haidi: also watching the yen.

is -- pressing ahead with self tapering. what else should be watching for? sophie: we did see a muted reaction cutting purchases. it has downgraded the view. few plays when it comes to japanese yen traders. when it comes to chip related , coming in below estimates. also worth watching, and the

upper house of parliament, legalizing gaining resorts. that would the a piece of the market that could be worth as much as $25 billion. 0.8% year on year growth. if you strip out the impact of the currency as well as impacts of higher oil prices. >> i think the latest at june cpi numbers will be another heartbreaker for the bank of

japan. the number including energy was 0.8% but what is worrying is that excluding energy measures, drop to 0.2% and we have had some very weak numbers april that's anotherd disappointing for the central bank. this haidi: we would not want to move the needle when it comes to the boj starting to think about exit strategy. i think in terms of actual changes to the weiss cc target or the negative interest rates, i don't think the bank of japan is anywhere close to signaling a policy move. gdperms of the pace of net purchases. they have been reducing the size since the introduction of why cc 2016 becoming larger and

larger. they don't need to buy as much to keep yields pinned down. the tapering will continue. relatively --ng >> along with trade war tensions and oil. not sure where that is going with opec plus going along with a run. >> it is a resilience of the dollar-yen is a popular question that we get these days. part of the support is coming from japanese flows. there have been a lot of m&a deals announced recently.

there is not a lot of strong incentive for japanese domestics to buy yen right now. i mean the trade war is a concern, and i think we are bracing for the potential announcement of auto tariffs. so far, it has not been so damaging as to show to meaningfully dampen a global growth at this stage. isy: with inflation where it right now in this latest print, i am curious what your thoughts unemployment at a quarter century low. hop on the bloomberg terminal because i want to show you and gtb chart. this i'm curious what you think in terms of where inflation -- how far does this need to go for inflation to start revving beyond a point where we are having the same monthly conversation? i mean, there are some

inential data distortions the unemployment numbers. it has been volatile this year. you're absolutely right. the labor martin continue -- labor markets continue to tighten. i think it could fall further. but, the main problem here is increases inthese wage costs, inflation expectations are still week. corporate's are not extremely aggressive about passing on price pressures to the consumers. i think it will take a lot more time before that changes. you mentioned auto tariffs earlier, we want to address the issue of the trade war if it goes into effect. had a pretty robust trade report yesterday with this 19th straight month gain in expert.

that drop insurance to the u.s., is it a precursor that you are starting to see if not the tariffs themselves but a lack of willingness or confidence in a global investment sentiment starting to come through? izumi: i don't necessarily think so. the trade this point, war hasn't shown up in the data yet. that is true for other regions as well except for summer frontloading and u.s. and china. what we worry about and continue to watch is the investment appetite. capex isune hong kong doing well. the are seeing signs it is getting bigger in the minds of corporate. haidi: in terms of punitive action being taken by tariffs in the auto sector come at the tech

sector as well, what impact do you see on having japanese industry in both of those spaces as you consider how intertwined the global supply chain is this day? izumi: on paper, if you look at trade, if impact on it remains confined between the united states and china, with tit-for-tat tariffs, the impact is still very small. but the auto will be a game changer. it's a huge slice of japan's exports. we -- our estimates show that if tariffs,s get hit with we will have to revise down by something like 50 basis points. haidi: always a pressure. head of japan's economics there with us reacting and going through those tepid inflation

numbers. also taking a look at the auto industry. the industry is pushing back against these tariffs are they have been warning they will put american jobs in jeopardy. will speak to the alliance of automobile manufacturers next. this is bloomberg. ♪

haidi: this is daybreak asia. new york.in the u.s. commerce department has begun open hearings on whether car imports actually pose a threat to national security or it, industry groups, and industry parties are lining up in opposition. one who testified with the eu ambassador to the united states. with three and billion dollars worth in trade and if there is retaliation, it is a serious escalation of existing trade conflict. it would be to nobody's benefit. ramy: our next guest was the

first person to speak at those public hearings. jennifer thomas is the vice president of the federal government affairs for the alliance of automobile manufacturers. so, it has been a long day. i know you have been speaking a lot. let's get to the heart of this. in the implication with donald trump and the white house is that imports of foreign automobiles are actually a threat to national security. your reaction? jennifer: obviously, we disagree with that. we have a hard time linking cars to national security. they are not a threat. they are a powerful engine driving our economy. we contribute 3.5% to america's tdp and support more than 7 million american workers. we are struggling to find the link between imported cars and a threat to national security. ramy: in terms of the pain that

could happen, that what happened to the u.s. auto industry, go through that. as we go to that let's hop into the bloomberg terminal to show viewers what has been happening in terms of sales in the blue line here. , just aeen plateauing bit since the early part of 2016. how would this hurt u.s. auto industry if these tariffs were enacted? shows,r: as your chart we are entering a fragile time for this industry. we are a cyclical injury -- cyclical industry. automakers have experienced a leveling off or decline in sales, so this is coming at a bad time. ultimately, this will increase prices for consumers. this will result in a drop in demand, and ultimately we will see job losses in the auto sector, which is the last thing we would like to see. that has ramifications very deep

on our economy as a whole. ramy: i see an often quoted number, the price of imported hardwood rise by $6,000 and a u.s. built car would price by $2000. peopleould avoid that, are saying tariffs are the wrong approach. what is the right approach? we should bethink expanding market access opportunities for auto exports here it we only have access to 20% of the market tariff free. in order to strengthen the economy, we encourage the administration to seek opportunities to reduce tariff and nontariff terriers globally. tariffs thatsing would ultimately have the opposite of the intended approach. haidi: jennifer, i want to throw

up eight pick chart that broadly takes a look at how much of the market would be impacted which is about a quarter of the u.s. market in terms of foreign vehicle makers. i'm curious come out of all of the automakers come up foreign and domestic that you represent, have you heard voices that would be in support of the some form of tariffs as being advantageous to them? jennifer: that's a great question. i have to say, i have never seen the industry as united as we are today, opposing these tariffs. throughout the value supply chain, there is simply no support for this. automakers,ll domestic and international, auto dealers, are all opposed to cut we understand the consequences that could come from this decision. we are all trying to do what we can to prevent this from happening. we believe it will be bad for our industry and economy. haidi: we've spoken to a number

of voices and the general consensus is, tariffs aren't the way to go. let's get back to the negotiating table. let's come up with a coherent and comprehensive strategy on how to deal with america's trading partners. tariffs are playing easily and nicely before the midterms. are you optimistic that the in thes of this will get way of any sort of resolution that would be business beneficial? jennifer: i would say, we certainly appreciate the administration goals of trying to level the playing field, strengthen trade agreements to grow u.s. manufacturing jobs, but tariffs are not the right approach. i think the more that americans can understand the implications this action could cause, the more you will see the opposition growth. ramy: jennifer, there has been discussion in converse -- in

congress to tie the president's hands in terms of tariffs. what is the latest you have heard, being in washington, d.c. in terms of hopes and realistic dictations? jennifer: we certainly appreciate the attention and focus that this issue is generating within congress. again, the folks on the hill understand the depth of the industry and this economy and the amount of jobs that we provide. they are very concerned about the impact that this will have on american families. we are very happy to see what they are doing and the attention this is shutting, but ultimately this is in the administration's hands and we are focusing on trying to discourage them from moving down this path. ramy: one discussion of course happening is trying to figure out what is happening with nafta. modernizing it or seeing if they

can save it. in terms of the biggest trading earners, axa co and canada, those are some of the biggest inputs. mexico accounts for $116 billion in autos and parts. are you fearful that nafta will dissolve? jennifer: we certainly hope it doesn't. for ours been good industry and our economy. it has created a regional supply chain that has allowed automakers to thrive in this environment. we remain competitive globally because of nafta. the industry overall is winning the cause of nafta. going back to your original question, this raises a good point, the majority of the imported cars that come into this country are from our trading partners and allies like canada, mexico, eu, japan, korea. hardly a threat. ramy: we will leave it there. jennifer thomas, price resident

of federal government affairs. remember, bloomberg users can interact with the charts showing go.r using dtv you can save those charts for future reference. this is bloomberg. ♪

ramy: a quick check of the latest business flash headlines. boeing fell in new york despite beating airbus. a booklanded orders for value of $79 billion, while airbus finished $17 billion behind. airbus failed to land an expected order from air asia. the carrier said the 100 plane deal needs more work. footwear company skechers got extended trading

after missing on same-store sales expectations. they were almost 4% below estimates. concerns over international growth strategy weighed on sentiment. the past year has been a wild ride for skechers investors. they surged 41% in october off the back of good results before plunging in april. softbank boss has dismissed japan as stupid for not allowing ride sharing. he's teaming up to launch a taxi hailing platform. they cannot handle the expected wave of taurus for -- of tourists. he has invested in ride hailer's around the world and says japanese regulations stifle innovation. >> in japan, ride-hailing is prohibited high law. i can't believe a country as stupid as that still exists.

it's incredible our national government is denying the future that is inevitable. we are in a precarious position. haidi: we are counting down to the market opens friday morning in japan, south korea, and in sydney. we are looking like a messy session to finish off the week. declines in wall street providing a pretty weak lead. the se flat going into oul open. in lighthing the yeb of weaker inflation data. coming up, we speak to the managing director of kapstream thewith his outlook on stock. watching for the pboc and how it is playing out for volatility. bill,head, japan's casino talking about the gaining industries prospects in a market

that could be worth $25 billion. coming up on daybreak asia, the market open.

10:00 here in sydney welcome to "bloomberg daybreak: asia." the dollar real to as president trump attacks the feds. investors are on alert. the president says it has been dropping like a rock and that is putting the u.s. at a disadvantage. from bloomberg's global headquarters i am ramy inocencio in new york. the auto industry fights back against duties warning the administration they will put american jobs at risk. malaysia issues more arrest warrants linked 1mdb.

most say that money is gone for good. haidi: president trump continuing his unorthodox approach to dealing between the government and the fed with this comment on rick -- rate hikes as well. we are seeing asian markets starting the session on the back foot. whipsaw notou say equities is what i'm thinking i -- is what i am thinking about, i am thinking commodities and currencies, the dollar, as well as surgeries -- treasuries. donald trump did not think the fed should be raising more rates for now there is talk that may be the fed could double down and continue on as turkish. -- as harkish. we saw the market -- the market

fall after breaking three days of rises. we are also seeing on the trade tensions, these auto terrorists in particular getting a lot of paperwork and quite a unified front there from the industry in the u.s.. also taking a look at japan inflation, no major surprise, a price action coming through on account of the week again due to higher oil prices fitting through their. let's took -- take a look at friday. it is a happy friday, markets maybe not so convinced at this point. haidi: not a cheerful friday. --re matching this droopy whether we see out here. ,e are looking at the weekend very gloomy indeed for asian stocks. they are at the out -- back foot of the yen.

not much of a surprise. over in japan we are seeing stocks being led lower by financials, utilities, out of stocks, as this auto tariff debate rages on. kps insult the cops be -- -- kospi. we are keeping an eye on the stage sticking below 679 and set for a six weekly deadline. as we brace for monument weakness chinese authorities have been but everything under control messages out there. there are saying they have stabilized as the right -- rise in debt has slowed. ramy: checking the markets in

cameroon on your asia friday, let's do a deeper dive into the markets with our live strategist, mark cranfield in singapore. as you heard from sophie, it looks to be the start of the asia session today. they has weakened almost 26.8 here, 6.77. .7% is a weakness of a since its strongest point this year so far. particularly since the middle of june, it has been quite an acceleration and the rise of the dollar for the yuan. obviously since people thought that the trade war was becoming a serious factor for them to take into account. we have seen gradual weakening of the yuan there. no serious pushback from the pboc. there was one day in early july when they did a bit of a stealth and intervention but nothing major to stop that. we have reached this quite andificant milestone of 6.8

that may be an area which starts to slow things down a bit. overnight, the comments from president donald trump, he was talking about the markets, as people are probably trying to downplay it a bit. confusion intoof the market when we have had such a strong move already. we might see things calmed down a little bit today. particularly if people are now looking for treasure secretary mnuchin to follow up with those remarks. let's see if he has anything to say about it. there is enough being thrown in to confusion. hopefully something settle things down. ramy: may why we are also seeing negativity in the market trickling down into asia-pacific. onwards to japan, just about 35 minutes ago we got the latest print, take aim and 0.7%, the survey was were 0.8%, let's say that for the most part, the boj

is probably going to stick to its guns. >> yes, there is nothing in there for the -- them to change tactics. it has risen very slightly from 0.7, the previous month, at least they can say that it is on an outward trajectory but it is still a long way from the 2% they are trying to achieve. there is no sign they will do that in the short-term. the bank of japan has been repeating the same message that there is nothing to stop them continuing with their super aggressive easing and the numbers will not change that. the fact that they cut bond purchases vary slightly this a technical issue, it does not really tell you that they are changing monetary policy. they're happy continuing on the path they have been for some time. in terms of the big impacts on the market, not too much but at least cpi is gradually creeping toward the target. but there is a long way to go.

had largely when it comes to equity, the battlefield for these trade tensions are commodities, the commodities index, looking pretty oversold and nearing a correction. are we seeing a bottom be informed at the moment? >> that at the moment. no. as you say it has been battered credibility. one of the key things to watch here is copper. copper is having an extremely bad run. a lot of people look at that is one of the major commodities to tell you about the health of the global economy. copper is under some of pressure. it is a forward-looking indicator that people suggest that we are going to see lower growth in the months ahead. it is definitely something to watch. people are very concerned about that. we are seeing to other things as well. oil prices have gone up as well but copper has been definitely one of the key indicators. is aat stays down in there

warning sign that the world economy is starting to peak. the strait issues to come into the equation as well. yes, commodities are still a way from bottoming up. haidi: thank you so much for that. mark cranfield there in singapore. you can follow more on this story and marks commentary and all the days trading actions on our markets live block on bloomberg. presidentmore on how trump broke over two days the feds interest rate hikes. we saw that knee-jerk reaction in the dollar, treasuries, and then the reaction, the damage control element from the white house as we saw earlier as well. how significant is this, particularlyee -- after someone he himself chose? >> by convention, a u.s.

president is not common on -- aary policy periods president does not comment on military policy. it is unusual. that is why mr. trump's comment have raised the eyebrows of so many observers. he did also qualify his remarks by saying that he would let them do what he thinks is best. but nonetheless, it has raise questions. on the one hand, he is stoking a very strong u.s. economy through his fiscal and tax reform policy, which observers would say would lead to a need for higher interest rate to keep a lid on things. what not what sure direction mr. trump wants for the economy in terms with signal he is sending to the fed. from here the question will become how does the fed respond going forward? hear: is it likely we will from powell? >> our colleague in washington

was saying that it puts him in a bit of a spot because he was appointed by trump but nonetheless he is still very independent and he may now be forced to prove his independence . cycle perhaps accelerate to prove that it is his fed and will not be dictated to by politicians. that is the view of some, of course. plenty others say this is -- mr. powell will set rates as the economy dictates and per nothing else. given the comments from this administration on the dollar, given the administration's policy on trade, now given these rates, it does add to a sense that economic policy in the u.s. is in somewhat of an uncertain time. certainly heading into a quite unclear outlook. ramy: data dependent is a phrase that comes to mind.

end might donald trump actually want to get involved in fed speak here and fed policy? i can only think of the midterms and what happens with stocks and equities with regards to rate hike. >> that is the other complication. we are in an election cycle in the u.s. and this matters not just for the u.s. before the entire world. monetary policy flows along the whole global economy. mr. trump will be watching the market levels above all else and if you see that the interest rate hikes are causing pain to the stock market that might trigger a response from him. then it goes back to mr. powell and sticking his ground and staking out independence from the fed and making it clear that he will not be dictated to by politicians. regardless of what mr. trump said going forward, he will be -- we will see how mr. powell responds and handles that pressure.

thank you so much. we will await of course a response from the fed or from powell but getting some breaking news coming from -- from the japanese economy minister, he said the tpp 11 and japan epa will advance free trade. the tpp 11 is expected to be eight enacted by early next year. the -- it must be ratified before it will be put into process. singapore ratified it we expect three of -- three more to do so by the end of this year. they wanted to be a win-win scenario. that japanese companies in the u.s. are a plus for u.s. trade. another country flying the flag of free trade there. >> the european union is

expecting american goods to face tariffs. the u.s. is debating whether auto imports image national security, that could turn of the 20 -- the tariff trump has threatened. oil pushed higher in new york as saudi arabia pledged not to flood the market to bring prices down. upims that it would step supply are without basis and opec will maintain production to fit customers need. crude has fallen this month as the trade war and the specter of expanding supply trigger concerns about renewed oversupply. malaysia is set to have issued a -- arrest warrants for two former executives of the trouble 1mdb investment fund. they relate to the funds council jazmine lou and the former

director. the domestic investigation is nearly complete at least four and a half billion dollars are said to have disappeared. much of it is gone forever, malaysia says. we might get back around 10%. maybe if you're lucky, 30%. at the very least 10%. >> global news, 24 hours a day, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna diane hart. this is bloomberg. ahead, would be casino are facing their final hurdle in japan, we will catch up on the latest a little later this hour. ramy: will the fed hike to the extent markets are actually expecting? our next guest is preparing to be surprised.

we will find out why in just a moment. this is bloomberg. ♪

ramy: this is "bloomberg daybreak: asia," i am ramy innocencio in new york. haidi: and i am haidi in sydney. is aussieuest bondsman -- steve goldman who is kapstream capital pty ltd, manager director and portfolio manager. what is your approach? steve: it is that or dependent, when i look at the data it is data, but it's not inflationary. i am talking about wage growth and average hourly earnings

being well below 3%. in my mind it means you will not see rises in court inflation at least not yet. haidi: is that the new normal? is that the time we are in? because of it is automation or globalization. we are just not going to see that pass through. stee: certainly the bargaining power is lower than it was years ago because of those technological changes because of globalization that is part of the reason why we are not seeing -- thath growth that wage growth. haidi: this is research from the query, looking at the liquidity crunch or the reaction i guess you can say that the fed is going gently but that retreat in emerging markets, the retreating credits, it tells you that the markets are telling the fed not to hike anymore or take it

really slowly. is that the reaction or is that the reaction you would expect? after so many years of really extraordinary monetary policy? steve: it is not only through credit spreads it is through shape of the yield curve. it has flattened dramatically. signalings are worries of a recession of the fed hikes too quickly. another part of that story is, with short-term rates rising so dramatically and credit spreads widening, costs are already increasing. here in australia we are seeing that beginning to get past through to target borrowers. you can argue -- mortgage borrowers. you can argue this is an environment at least in australia that the rba is in hiking rates. ramy: i want to go back to your point of inflation staying

higher. the strait tensions swirl, that in many ways is inflationary support of inflation here. what are your thoughts on the -- on that? steve: inflation will pick up. that is a temporary one-off item in the end. that though step up tariffs are probably more of a cost to the consumer and actually drive consumer spending lower, so i think that is a long run negative outgrowth. depending on how far we go with the rhetoric you might end up on doing all of that -- undoing all of the good you did in the tax cuts earlier in the year. ramy: it is balancing out one positive for a negative so to speak. in terms of your predictions for the rate hike paths for the fed, any changes? what you have -- what do you have? steve: i think the rba is on

hold for the very long run. hikese case is the fed one more time this year, and they will struggle in the first part of next year. one this year one in the first part of 2019. which i think is still far below market consensus. one interesting thing that came across today out of the white house is the record low, the president's economic inisor, -- larry kudlow, terms of american consumer and american citizens a lot of people might like that but do you think this is a wise thing for the economy? steve: no. the original tax cuts were probably not a wise thing for the economy either. it is a good thing for a popularity rating and that will be probably the big story on why we are talking about that rather than any economic reason behind. haidi: your expecting the trade

rhetoric to say this is a long game. what investors do, do you have a hedge, how do you position yourself given how much we do not know including how much this last four? steve: you have to be aware of volatility this year more than other years. those political risks are increasing. but with that said, trade wars, that means central banks are on hold. they want to keep rates low. they want to encourage market participants and investors to take more risks. rest of 2018 and 2000 19 may actually look a lot like 2017 and 16. it is a low rate environment. haidi: where does australia fit in all of this? ist of conflicting with it, it more opportunistic for

australia? steve: that is exactly right. economy hasstralian benefited from the 7% growth levels from china. is still expect that to continue but here in australia, we probably have the same problems the rest of the world has. in the end that means the rba is also on hold. provide investors an opportunity to take risks. i would force the equity markets continuing to do well in that type of environment. haidi: steve goldman, portfolio manager at kapstream capital pty ltd. you can watch us live, catch up on interviews, and dive into any of the bloomberg pensions we talk about. become part of the conversation as well. any questions that you have for our guests. check it out at tv go.

this is bloomberg. ♪

haidi: units are forcing -- we are told shanghai from a group has been talking to advisors that he could raise have a billion dollars. bought a 74% stake of over $1 billion last year. 's is unlikely to six was before 2019. ramy: comcast is a vending machine -- abandoning its struggle with century fox. disney wouldbove be too much and will focus instead on u.k. satellite channel sky. another hurdle was the requirement to invest some fox

access -- assets. they closed 2% higher in new york. . , tsmc nowo and supply singleles will rise by a digit percentage down from an already reduced forecast of 10%. the chips may be vulnerable to president trump's trade war but they have yet to see any major threat. >> only the first wave has been executed today. in that, we see very minimal impact for our business and our customers. ramy: boeing fell in new york despite beating rival airbus and farnborough airshow. have a book value upside bene $9 billion -- have a book value of $79 billion.

airbus failed to land an expected order for a 321 the carrier said the 100 plane deal needs more work. up next, driven up the wall, the other industry fights back against terrorists saying they put american jobs at risk. this is bloomberg. ♪ this isn't just any moving day.

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in singapore. at negativity coming through for the asian trading section after the work week. the wall street -- i am ramy inocencio in new york, you are watching "bloomberg daybreak: asia." let's get the first word news now with jenna taken heart. core consumers are trying to exclude fresh foods, rose 0.8% from a year earlier,

energy costs were a big -- a big part of the increase. the bank of japan may start tightening its ultra-loose monetary policy anytime soon. president trump has attacked the rate -- the fed rate policy avoiding comments on monetary policy to respect the independence of the central bank. the dollar weakened as trump told cnbc he is not happy that the fed is raising rates to potentially stalled the u.s. economy. brexit chief has held his first talk and brussels. theyt with michel barnier, urged member states to prepare for all possible scenarios. that includes one where britain clashes out of the block without a deal. the brexit negotiation are currently proceeding at a snail pace. indian stocks fell a second day ahead of a no-confidence vote on prime minister later friday. his ruling bjp has faced

challenges recently after the government saw -- the last -- he lost crucial elections in the state and failed -- a sunken russian warship has triggered a warning to investors. there are claims it could be carrying $130 billion worth of gold. showso was released that it sank off the coast of korea in 1905. they moved on the report prompting regulators to warn about both groundless rumors. global news, 24 hours a day, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: thank you.

we are seeing asian markets losing starting the day off on the back foot taking that week lead from wall street overnight. that's take a look at what is moving in which direction. sophie. reporter: losing steam but there are hints that we may be getting some risk by just -- but just marginally so. sydney stocks are gaining ground. the nikkei up about 1/10 of the percent. cost be greening down as well -- greening -- gaining ground as well. that are on that there is more pain ahead for the yuan. japan, the leaderboards there, we have japanese pharma company, mitsubishi, jumping the most since may, 2017 rising over 4.5% so far.

perhaps as the industry gets hit this week by poor results by omnicom and publicists. its revenueut target, that is slipping in korea after being cut at goldman. i want to highlight alumina, nearly falling 6%. base metals get pummeled by these trade barriers. metals fell off on the trade war's. ramy: thank you. sophie checking the markets on your asia friday. let's get back to the auto industry in the united states. they are pushing back against possible tariff warnings. the major bird is american jobs. the commerce department has begun open hearings over car imports posing a threat to national security. joining us is bloomberg's automotive reporter.

in terms of what we heard yesterday in the u.s., there was so much pushback and not so much support. reporter: exactly right. there has definitely -- there is definitely a call risk among industry groups and trading partners, all with the basically the same message. basically, the reasoning is that these tariffs will really hit consumers. the u.s. consumer. it will push price -- push up prices and lead to lob -- job layoff. it was several hours might started at a: 30 in the morning and ran into the evening, it really, this message was repeated over and over again. for example, one that i am area where of is toyota. toyota has said the camry, which has been the most made in --rica car, that will be go that will be going up in price.

even a car that is made in kentucky completely is going to go up just because of how intricate the supply change is globally. haidi: we are seeing so much unity rise in that opinion. it is very different when the put tariffs on steel and aluminum. reporter: that is exactly right. there and there was a united voice but in the opposite direction. supporting the tariffs, both among producers and the workers unions. so in this case, it will be an uphill climb. the eu and canada have been particularly strong in saying that we will retaliate with additional tariffs, we have already seen escalation in terra fours with the u.s. and some of its partners. there was one single voice in support of the investigation, i

will not say in support of the --iff per se, that was was that was from the united workers union. it is long due to investigate the deterioration or the reduction in u.s. manufacturing and what that could mean for u.s. session of security. but they are not in support per se of link it tariffs, they are really pushing for targeted measures. there is a warning that rash actions could have unintended consequences. one supportive voice we have heard so far is sounding warning to about what could happen if this goes the runway -- the wrong way. haidi: thank you so much, bloomberg's automotive reporter in tokyo. malaysia says most of the missing 1mdb money has probably gone -- is probably gone for good. they are hopeful up to 30% can be recovered. total amount lead

to corruption around the fund could now be more than $12 billion. to ourspeaking correspondent and he joins us now. it is a complex web of transactions around the world. it is almost impossible to see where the money has come from where it has gone, it is also in question of ownership. that is the reason why it what -- it has been called a ponzi scream. -- a ponzi scheme. the current feminist or he says he wants to -- that current prime minister says he wants to -- it is difficult to trace the money at with -- money at best.

take a listen to my conversation with him. i will take an estimate. we will probably get around 10%. , if we areybe looking we can get up to 30%. of it.very least, 10% we are paying $50 billion. you can get 30%, but, at the very least 10%. as i said, it is still not sufficient. rest?appened to the reporter: why only 10%? what are your indications?

what are you hearing? >> we could not trace where the money went and what they purchased. what did they buy? it is treason. ofre is also questions ownership, due process, different jurisdictions. that is also a question of cost. after deducting all the expenses, how much is left? reporter: might you want to claw back from other players like jpmorgan which was involved in the dollar transactions? >> i think we have to assess , duty. terms of it is something we need to look at. think there needs to be some disparity first. i do not want to make any

prejudgment. exploringyou're not other banks and their involvement on 1mdb? >> i want to identify not only the wrongdoings, you have to focus on the tactics. the you see where are accessories, so to speak. down --ou can lock reporter: to be sure, we have not heard the end of the 1mdb scandal, in fact, the finance minister did say that he expects to reveal more scandals linked to 1mdb over the course of the next month or so and they will involve at least $1 billion. the problems have not ended. ramy: clearly.

how about the economy here? was the minister confident about meeting malaysia's growth target? reporter: it is tough. it is challenging. he referred to the trade tensions within the u.s. and china, although malaysia is not likely to be directly impacted by that, indirectly through the supply chains, global supply chains malaysia will feel the heat. we know that the market is looking at 5.526% growth for best, malaysia will probably grow at a 5% rate. these are really challenging times. member that it suffers from a $215 billion deficit. much wider than initially thought. the embezzlement, the 1mdb scandal also remember, that it eradicated the gst, now implement of the sst, which would generate only have the amount of revenue that was generated by the gst.

in terms of revenue base, it is much smaller, and that is proving to be very problematic for the government. ramy: thank you. bloomberg's chief southwest asia correspondent in kuala lumpur. much debated japanese casino licenses and the jackpot is for a bill that gets past. we take a look at the players and possible winners. this is bloomberg. ♪

♪ ramy: welcome back, this is "bloomberg daybreak: asia," i am ramy inocencio in new york. haidi: gaining results are expected to clear the final hurdle in japan today with --let's head to tokyo now. the spill has been subject to some heated debate. -- this bill has been subject to some heated debate.

reporter: this implementation built kind of lays out the broad parameters where casino reports and built. it is subject to a lot of, it is pretty controversial and has the debated, but some of questions the bill answers has some implications for the company. things like the tax rate, which will be about 30% of gross -- the casinoe, licenses which will be three licenses, the casino floor space, which will be 3% of the total every of the resort, and additionally, the issue of asset locals.s for japanese it will also have a ¥2000 entrance fee. ramy: what is next? will the bill is passed it

clear the last hurdle but they -- there are still a lot of small things that need to be addressed. they need to regular -- right create a regulatory body to write off all these smaller by logs that are the smaller details. of thehat happens, kind local municipalities and cities that want to host a casino resort, will be able to put out a request for proposals of the companies that want to participate in building one. reportera consumers lisa, thank you very much. let's bring in david bonnet, partner at delta state hk limited. he has great experience with the casino world. one interesting thing come i want some clarity on that, this could be the biggest ir but with the smallest casino. help me understand this. david: the way that the light

is actually written -- the law is actually written is that the 3% total of gross floor area really favors operators who build bigger. it is based on the proportions of the total casino area to the total building area. consequently, you have the japanese government also that is very much emphasizing responsible gaming and the japanese population has somewhat eight negative opinion currently of casinos. there is a lot of political tension surrounding this ir bill. consequently, non-gaining elements will be very much favored by the japanese government and really there will deemphasize the casino portion of the industry. in terms of conferences and hotel spaces, similar to what is happening in singapore with the ir there. cities, osaka, al qaeda, nagasaki, they are all at least some, if not the options

here, what gives them a leg up? david: that is the million-dollar question. if we knew that we would have a lot more to talk about. right now, the way that the law has been conceptualized, it is designed to provide growth in rural areas. also come up three licenses, they are thinking one will be the major metropolitan area, the other two in rural areas. right now as we think about it, with japan having domestic growth challenges, we related that -- reiterated that earlier this morning, this is an exciting thing to think about as a new industry. there will be a lot of new industries and new sectors that can benefit from it primarily, lending, construction, new jobs will be created. while we are thinking about it from a holistic perspective, it has -- it is really a good

situation. haidi: how much opportunity is there likely to be for foreign you talked about joint ventures and partnerships, how much would there be in terms of hurdle entry in this market? david: for three licenses actually create these regional monopolies. they are quite high. that is why you see people from all over the world going to japan and marketing themselves trying to offer up their products and talking about why they could be the best competitors. high barrier with entry you create regional monopolies and you get really -- a lot of value. if you create a monopoly for a casino anywhere in japan, it will create a lot of money. it will be highly competitive. the law has not passed yet but once it passes you will see a lot of domestic japanese companies, construction

companies, trading companies, they will definitely get involved. to build a great resort anywhere you need a license and a big plot of land. in japan, the land is already spoken for. that is where we think about these joint ventures, foreign casino operators will have to pick their the messick operating partners -- domestic operating partners. haidi: it is just beginning to turn around. at one point you think this has more overcapacity over the region? david: we have seen in asia that gaming is an underserved product. there is a lot of demand for consumer gaming, in singapore, australia, philippines, they really outperform. seven years down the road, at least this is the earliest we can think of, there should be a,

especially with a regional monopoly, the should be enough demand to make this quite sick -- these quite successful projects. haidi: david, great to have you on wes. david bonnett -- david, great to have you with us. this is the first global news network design with social media offering live video coverage and updated top news reports. joined twitter and make sure you are following tictoc. this is bloomberg. ♪

♪ haidi: this is daybreak asia. pledged to has long tackle pollution and one solution may be in the nation's own backyard. beijing embarks on its and vicious china 2020 five modernization program, bloomberg's jean-luc takes a look at how you technology will rival china towards a boom. reporter: china needs natural gas. propelled by presidents xi jinping press to -- the country now is now the largest world gas importer. have more gas than anywhere in the world's. the problem?

how to get it out of the ground. >> you have these low-lying mountains, youll are not in kansas anymore. bringively, you have to everything at the top of this mountain where you can start drilling. reporter: last year, china produced 9 billion cubic meters, of gas, -- >> the u.s. model is like a factory, a flat plane, you cannot do that in china. reporter: the chinese government has cut the resource test -- tax on shell by 30%. it creates a subsidy that encourages the major producers. there is a -- there is uncertainty if that policy will continue. >> it is pretty backseat.

the subsidy is important, but they do not seem to be doing a great deal. it is time for you guys. reporter: if she'll will take off in china it will be because of the lessons learned here. it is the largest shell gas plate out of -- outside of north america. in termsvery important of trade, the techniques of trying to learn, how they improve, it is crucial. reporter: energy giants are pouring their money, they will reach billions of dollars by 2020. >> we will try to expand output in a steady way. our goal is to achieve a billion cubic meters by 2020 and producing more clean energy for the company. >> they are showing signs of

process by investing in drilling technology, trolling costs have dropped 40% from 2010 levels. it is for to go before they can claim success. >> filling will not carry the aspirations the chinese -- that is a crucial next up. when he to see evidence, can china find a way? haidi: that is it for "bloomberg daybreak: asia." market covers -- market coverage continues. ramy: have a great morning, stand by for bloomberg markets. this is bloomberg. ♪ retail.

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and it can be included with your internet. which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. ♪ rishaad: a muted but positive fallinghe offshore yuan to its weakest and more than a year. president trump breaking with tradition, criticizing fed policy, attacking the man he nominated for the job. malaysia, arrest warrants, the government fears most of the money is gone for good. in hong kong, i am rishaad salamat, and this is "bloomberg markets: asia." ♪