haidi: a very good morning. i am haidi stroud-watts in sydney, where asia's major market have just opened for trade. shery: good evening. i am shery ahn. sophie: and i am sophie kamaruddin. welcome to "daybreak asia." haidi: out of story this wednesday, asia-pacific stocks look set to extend the global set off as sliding oil and week tech ed -- weak tech add to the gloom. demand continues to drag. the stock is at a six-month low. shery: he remains chairman and

ceo as the investigation proceeds. we are in tokyo. headlines out of nissan dampening sentiment across asia with stocks falling the most in two weeks in the last session. let's see how markets are looking right now. japan and korea coming online, sophie. sophie: we are seeing red across the board, matching this great and gloomy weather we see outside the window in hong kong, looking like a midweek hump for asian stocks. losing 1.2%, so we are seeing losses of over 1% in set fors the asx 200 is a fourth day of losses, trading at a low. the global selloff is continuing apace while the yen is not too far off from a three-week high. the korean won off by .4%, so this resurgent dollar strength is not helping the risk-off

narrative as well. we have the tech turmoil continuing. oil below $54 a barrel. just getting a little bit of ground after falling more than 5% on tuesday. s&p has placed the carmakers credit rating on negative watch. news reporting that tokyo prosecutors are considering building a case against nissan over financial misconduct. keeping an eye on takeda. a company with an acquisition. u.s. retailer earnings disappointed. we are keeping an eye on the

clothing maker. haidi, i want to highlight one stock in sydney that is taking a very deep hit. that is cyb falling the most falling the most. prior content charges for the payment protection insurance scandal. isfice to say, cybg forecasting a grim outlook and has warned that brexit uncertainty is hitting the economy in the u.k.. haidi: sophie kamaruddin among the markets for us. let's take a look at one of the .ther big decliners stocks are weighing on energy. growing doubts to opec's commitment to output curves. tuesday's decline was wti second-worst plunge in years. let's bring in stephen. we are bracing for what the ninth straight increase in u.s. inventories this week.

it is a pretty toxic mix for crude. >> that is exactly right. it is a perfect storm, as it were. the selloff in u.s. equities as we talked about before added to a pulled out on the same time, there is a worry that we are in situation.ly u.s. stockpiles increasing. there is a little bit of uneasiness about opec's commitment and its partners commitment to either cutting production or capping production. we heard from the russian oil minister that they need to wait the next you weeks to decide whether or not to cut production. that is in stark contrast to the need to cut say we now, as soon as next month, .5 million barrels per day. where we are going to be going forward. as exact the how opec decides to

move and whether this stockpile gain in the u.s. tapers out at any point going forward. shery: this chart on the bloomberg showing this huge plunge in oil prices in the last month and the 14 day rsi now in oversold territory. not just a result, but we have not seen this level in years.so how bad there?nd out how bad is the demand outlook that is can happen in the short periods time? -- period of time? stephen: the u.s. is producing the most ever because of shale. .pec is boosting the production russia is producing the most. what you are right. it is also a demand story. spoke with many analysts, and it's looking like we could get a slowdown in oil demand from the united states and china, which would be an enormous hit to the

demand portfolio. emerging markets, you know, their economy's are slowing little more than we expected, so because of that, emerging economies might not be consuming as much oil. that's going to suck the wind out of oil sales as prices continue to taper out, so there is definitely a little bit of downtrodden news and outlook on oil demand. it ise to remember that also supply as well. we are pumping so much oil. it is not able to keep up with the slowdown. much. thank you so stephen stapczynski. let's get you first word news with jessica summers. says he remains chairman and ceo despite his arrest in japan. the board asked nissan for all necessary information but declined to comment forward. that is as renault debates whether to push ahead with his

plan to merge renault and nissan. the government says nothing has been found against him in france. team has trump's legal submitted written answers to questions from special counsel robert mueller. his attorney says the responses covered questions regarding the questions of the inquiry. white house lawyers said they would only answer questions about whether trump colluded with russia and not whether he obstructed justice by firing james comey. president trump admits the crown prince of saudi arabia may have known about the plot to murder jahmal kershaw ski but the u.s. will stick by his longtime ally. he says the kingdom is an important block on iran. he says that outweighs the horrible crime perpetrated in a stumble. the administration says it is -- in a stumble. the administration say -- in i

stanbul. the administration says it is still investigating. reflects warmer ties between manila and beijing. it began when dutere took office and moved the philippines away from the long-standing american alliance. the deal includes joined oil and exploration in the china sea. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. >> thank you. the u.s. trade representative is accusing china is continuing ip and tech theft. he says nothing fundamentally changed. it comes ahead of an anticipated meeting between president trump and xi jinping in the g20 and when a sybase -- when a cyrus -- buenos aires. this does not bode well for the

talks. >> the expectations for the talks have been fairly limited theate anyways, given comments that vice president mike pence, the tough comments and criticisms he made in china about the aipac conference this past week, so we have been seeing lowered expectations for a deal coming out of that, but this is obviously yet another -- showing another rip. a very detailed report released by a robert lighthizer. it basically says china has been conducting a state backed campaign of intellectual and -- intellectual property and technology theft on a widespread basis. this is intensified that hacking has intensified. this is quite critical. it comes 10 days before that

meeting that was supposed to be on the sidelines at the g20, showing that perhaps what we are calling trade hawks in the administration, including mr. lighthizer, the trader presented , want to camino, it seems like they are -- want to, it seems like they are on the us is nancy -- the ascendancy. they would like negotiations with china and may not be getting the president's ear quite as much. haidi: and it's interesting, targeting china 2025 again, releasing a threat to curve high-tech exports. that suggests that washington is not backing down on this issue. that's right, and there is a discussion about these attempts to curb these exports and this will be a conversation going forward which has backing in the u.s. congress, so it looks like right now it's talk. these things can change very

quickly. we heard from larry kudlow, the president's economic advisor, saying the president would like to make a deal. president trump still wants a deal. he thinks china wants a deal. he thinks these tough measures are coming out and we still have an economic advisor saying we could still have some movement. just 10 days away, those talks will be very critical. haidi: jodi schneider, our senior international editor in hong kong. do not call it a foregone conclusion. we will be asking what the renault's ceo arrest means with this increasingly shaky alliance means between the french and japanese automakers. shery: its outlook and strategy for asian stocks. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. our next guest says trade tensions may ease up. any signs of compromise will be positive for the market. i want to bring in toby lawson, head of global markets in societe generale. great to see you. the market seems to want to go even when weoment, are talking about the retailer earnings overnight, which was not a bad news story. momentum goes up, everyone talks about, you know, the market cannot go down, and the momentum continues to drive prices. are in a momentum downswing, where we get a sort of felt killing loop -- self-fulfilling loop. that feeds into a circular selloff that we are now starting to see quite a bit more momentum in its own right, and the

fundamentals, the reality of the situation, sort of gets ignored to what's going on in the market momentum wise, and that is something that will continue for a little while yet. >> this is kind of a lot of opportunities. library, almost nothing in 2018 has worked if you are a broad-based investor. we saw that pretty good example last night where everything from crypto to oil two -- to energy to equities really plummeted. we have a bit of a caution hedge. toby: fundamentally, you want to look at value versus momentum. previously, you could have an effectively broad index moving towards a broader view of overall stock strength. you're seeing it throughout this year while value becomes important. earnings were pretty good,

but what you want to start looking at is the debt position integrity in the quality of the balance sheets. the quality index investments, defensive stocks in this volatile environment. the market is going to still look week, at least in the short-term. for investors looking for quality, good stocks and earnings are still, you know, definitely the same. shery: in the fourth quarter, we have seen stocks gain a little bit of ground. on the bloomberg showing that for the past six years or so, we have seen better returns in the fourth quarter, 2017, at 2016, and so forth. could we expect seasonality to help here? toby: you have a couple of exhaustion us factors that -- exogenous factors that need to be factored in. trump and xiot

meeting in the next 10 days. it's critical to get some certainty for the investment community about whether there will be any compromise or development of a positive note on the trade conflict, so the seasonality should be supported notwithstanding what is going on on the exogenous side. this thing, if it continues to get worse, it will start to impact on the real economy, and that is reflected in terms of the momentum stocks, especially the tech sector, being solved, because of the tech concerns for iphone demand. we'll -- supply chain impact strip -- real supply chain -- real supply chain impacts. >> it seems that the relationship between bonds and equities has become more complicated. we have seen it flipped briefly negative in early october and then recovered only marginally. what is going on here? toby: again, i think that has

been due to the fed primarily staying strong on the curve in terms of interest rate hikes. they have not changed that. sellquity market first to off of it. there has been no effective shift in relation to interest rates over the short-term and medium to long-term. that is probably why you're seeing a bit of a recovery in bonds but not so much, because they see the fed raising rates. at least they have not changed the dot plot in the near term. without some change to the fed speak, without some expectation of change in the interest rate cycle, you would expect the bond market would find some of this at around the 3% mark. >> the fed has a little bit more cooing from the doves. right? toby: yeah. >> it may be starting to weigh a bit? toby: looking at indicators that

might point to quicker -- the market is looking at it closely. flipside of that is the economy is in pretty good shape. employment is at record levels. you know, the earnings results are solid. forward estimates may be softer, but the economic fundamentals are pretty good. the doves, the fed -- are a little bit more vocal, but they are still fairly clear and have not changed their view.. energy, that is a big -- >> energy, that is a new story. no one seemed terribly convinced by what opec says it is going to do. it is clearly a demand supply story for oil and very difficult unless you are an expert to look at those specifically. suffice to say that -- >> energy is gone to continue.

toby: clearly and the pressure. but that is potentially good for emerging markets and potentially good for inflation, so overall, at some point, cheaper oil prices are a major input to production and not necessarily all negative. right now, it's -- haidi: bank of japan. toby: depending on where you are. haidi: toby lawson, managing director at socgen securities in australia. morgan stanley's ceo, james gorman, weighing in on the downturn in u.s. equities. we will get you the highlights, just ahead. this is bloomberg. ♪ omberg. ♪

haidi: "daybreak asia this is." i am haidi strut -- this is "daybreak asia." i am haidi stroud-watts. shery: i am shery on. -- shery ahn. we are told there was no explanation of the delay in the

call is expected to be rescheduled soon. boeing is under fire over an airspeed sensor that can order the 737 into an emergency dive. the stock has slumped 11% since last month' lion air tragedy. shaidi: singapore has confirmed to bloomberg that the police -- it what color crime unit is involved in a new investigation into accounting practices and noble group. they are said to have offered false and misleading statements. the inquiry comes four years after the first concerns were raised about the commodity trader and the move towards its rescue plan. its largestened ever story in the -- in manila. asia.tlet will be in the base equivalent of one hundred 50 basketball courts and almost twice the size of a typical ikea shop.

$135 million earmarked to build, stocks, and staff the store, which will cater to 5 million households. haidi: a lot of furniture. james gorman says he is not concerned about the recent selloff. or his bank's ability to handle volatility. he discussed the feedback he has had from morgan stanley clients. the bubble burst of 2000. it is not when i first came out of the u.s.. listen, this is a market correction that we're going through right now. no, this is well within our wheelhouse of what we can handle. >> is it a healthy shakeout, correction, construction of multiples in the bottom market and what we have seen happen to tech stocks in the last few days? james: if you step back, we are

in a tightening process around the world, led by the u.s. three and probably four rate increases this year. that has consequences. the ability of the monetary authority has limitations to what they can do. we have got a lot of political turmoil. it is not surprising that the markets have been anxious. it is not surprising you are seeing some correction. the backdrop within certain sectors -- the faang stocks, incredible run-up in valuations. hundreds of billions of dollars have been created. it's not surprising that's been taken off the table. >> there is a lot of debate. the debate is reflected in the volatility that we see over a number of the things you just itemized. the sustainability of u.s. growth, for example, the pace of rate increases, and the magnitude of rate increases. the implications of this standoff that the administration is undertaking with china, for example. arounde any consistency

that debate as far as what you hear from clients? >> i think that the most important thing to take away is that there is just, going on. you think about it. every morning you get up right now, and there is a strong news flow from overnight. risk,, tariffs, political protectionism, anti-immigration. you know, -- >> there is much longer list. james: before you get to china and was going on in the middle east, sanctions in russia, ,orried the area, north korea it is a lot for investors to absorb. the backdrop is very strong economic fundamentals. on the other hand, tightening, and clearly, corporate credit -- let's just say -- where the corporate credit is full. issues around credit.

it is not surprising the markets are acting. this is what markets do when a deal with uncertainty. they get anxious. in the short-term, sometimes they get it very wrong. in the long-term, the market is always right. >> james gorman speaking exclusively to bloomberg. let's get a check on how markets are trading in the asia-pacific. nikkei falling to the lowest level this month. nissan rebounding slightly after plunging the most on news of arrest.hosn's the asx 200 is trading at the lowest level since december of 2016, falling for the fourth consecutive session. the latest report from the ustr saying china has not changed its unfair trading practices. haidi: really throwing more cold water on expectations we are going to get any deal.

we are seeing energy dragging the likes of aussie stocks seeing a pickup in new york ruled after the worst one-day fall in about three years. also some weakness across the rest of the commodities as well. this is bloomberg. ♪

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haidi: it is acorn 30 a.m. in hong kong. miserable session of trading. a very weak report. even moderately good news , oiles from big retailers is seeing a little more of a the worstut still decline we have seen in about three years. you are watching "daybreak: asia." let's get to first word news. tensions ratchet

up with washington accusing beijing of doing little. investigation of policies related to intellectual property and tech transfer. the trump administration is threatening to ramp up the pressure on china by tightening restrictions on tech exports. debating on whether they should be subject to more stringent controls. it would have a profound and long-lasting impact to washington and beijing. there is no end in sight to the turmoil for of may -- every major coin around. selloff among rival

tokens. quite market says $7 million has been wiped out january. bitcoin is now back at the level from last year when they famously called it a fraud. the two deadly wildfires in california could cost insurers up to $13 billion. those estimates include damage to property and cars. most of accounted for the damage. it has killed at least 79 people and destroyed thousands of homes. many people are still listed as missing. says he ist chairman not confident google would be better bringing his search engine to china. google pulled out of mainland china in 2010 when the founder decided censorship was

unacceptable. -- ing bloomberg >> anybody who does business in china risks their value. the question that i think comes to my mind, that i struggle with is, are we better off giving chinese citizens a decent search restrictedn if it is and censored in some cases, then a search engine that is not. that is the struggle that we have to work our way through. >> global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: we are seeing asian stocks at the lowest level.

to this year's low. trade tensions continuing to escalate. let's see how all of this is affecting markets in asia. sophie: the headwinds are mounting for stock investors. falling over 1%. in sydney, it could be a fourth day of decline. we are seeing it off. ae benchmark is trading near 2016 low. picking up a little bit of momentum. we have potentially going to see more downside risk for the australian dollar. today.ean won is off we did see both import and export growth slowing in that

time. you had indications that trade is having an impact. rising as compared to the double-digit growth that we saw last month for that period. movers inn on stock tokyo. the most since 2011. the department store operator selling outside of japan. reports thate news it delivered products that were not properly in acted errant with bitcoin swap, sending the ,igital currency below $5,000 it is sending them under pressure. at 1249, valuing the company. it is trading as a standalone

company. on the other hand, we are seeing them take a hit. we have this alert on the bloomberg. sayingmodity trader now that the proposed restructuring deal is in the best interest of stakeholders. they are aware of the joint investigation, not to mention the accounting and regulatory authority. they are saying that they will cooperate fully with authorities. the restructuring has been taking place. sources now telling bloomberg that the announcement of the probe came as a surprise to creditors and advisers, saying

they will cooperate fully with authorities and are aware of the joint investigation. the proposed restructuring is in the best interest of stakeholders. the blows keep on coming. restructuring negotiations. now there is a multiagency .nvestigation we will continue watching that story for you. let's get more on the markets. where do we hide on a day like today? >> it is a difficult thing to say. i took a look at some of the potential havens, and some of them also had a bad year. correlations have gone away. they have been underperforming this month as well. the only thing that rose

overnight was the u.s. dollar, which is the last thing that we wanted to see. weaks been associated with emerging markets. it is supposed to be the start of the holiday season. shery: we saw the shanghai composite and the hang seng index falling more than 2%. the worst global performance in the last session. withy, they are not happy china's practices. there has not been any improvement there. really dampening the mood. is adding, again and again. big picture causes like the trade, tensions and smaller causes like what is going on .ith apple and ge

european stocks are not been doing well because of lingering concerns there. much knew thatat news in what came out overnight on the trade front. if you are a diehard optimist about the idea that donald trump is maneuvering towards some kind of a deal that will make him look good and it might lead to progress down the track, that is still in play. these kind of comments and assessment fits in with the whole playbook for the u.s.. the accused china of not doing the right thing on trade and wants to see it change. china indicated it is putting things on the table. there is still going to be something that will add to the confusion, adding to the

unwillingness of investors to make a strong play as we wait to see if there is some sort of hail mary pass coming from the g20 meeting. shery: thank you so much. , we will be back in tokyo to get the latest. we are hearing from the financial times that the nissan board was opposed. falling the most since 2016 in the last session. plenty more to come. this is bloomberg. ♪

haidi: this is "daybreak: asia." now as investors digest the market implications from the arrest. stephen engle is in tokyo.

the headline on nissan and all these allegations keeps on coming. >> that is right. we are learning from various reports from the investigation that led to the arrest of carlos , it was stemming from the board'sceo and the position grab to a merger that they were pushing between the key alliance partners. for more on this developing story, let's bring in the research head. thank you so much for your time. was this the best way out for nissan, if indeed they did not want a merger? >> that is an interesting question. it is true that they had expressed reservations about a

merger. not sure this would be the best way to do it, must there was an underlying problem. >> there seems to be an underlying problem, the height --s at that hastily arranged press conference. too much control was placed at the top. i think he still had a big impact on the senior level, but at the same time, he has been distant himself. one of the incident they were concerned about was the whole inspection crisis. that probably tied into some of the frustrations that they were having with him at the top. is nissan in good hands? you mentioned the inspectors scandal.

they did come out and address it quite quickly. is there disarray? >> there has certainly been more instances. issue did not relate to the cars themselves. >> uncertified inspectors finding off on the cars. correct. there has been a lack of attention to the process and perhaps too much focus on pushing volume and other aspects of the organization. inhas been trying to reel some of the focus on volume and focus more on quality. what is the future of the alliance? does it stay together if the top , the orchestrator of that alliance is gone? it would be hard for nissan

to back out of the alliance at this point. there is too much going on for .uture technology in a lot of ways, they need each other to get back to tell. what will be the difference between the alliance and the merger? >> the french want to keep control. they definitely do not want the french controlling. have votinges not rights. the french government has control. nissan profits for half of the other profit. forward, it is not out of the question that nissan could break from the alliance. could they survive on their own

in this disruptive world? off, nissan were to back they would have defined an alternate partner because we are already seeing this alignment taking place. announcing more and more projects with gm for external companies. it would be very tricky for tosan and renault to try find a path forward. thehat does this mean for third partner, mitsubishi? the alliance is important, but at the same time, the same reason we like mitsubishi, it has potential. it has been doing extremely well in indonesia and thailand. it has been doing well in china.

if they can get the cost savings at the bottom line, there profit will be very good. is nissan a buying opportunity at this level? the turnaround will take a few years. >> thank you for your time today. we will be here in tokyo all day long. there onephen engle this developing story. let's get a quick check of the latest business flash headlines. $2 billion in funding. south korea's against online retailer. they sell product from electronics and food. on commerce.ig bet

making a fortune backing alibaba. steps to prepare the business for a london ipo. considering selling minority interest in some of his assets to a new company listed on the london stock exchange. it could tip them -- give them more power. haidi: japanese shipping line introducing its own currency for crew members. we are told the goal is to make it easier for workers. -- the digital point would try to avoid wild swings. why someake a look at

have fallen overnight despite getting robust earnings. this is bloomberg. ♪

haidi: this is "daybreak: asia." u.s. retail stocks took another beating after target reported earnings. it is down for an eighth

consecutive session in a row. ramy inocencio has been following the trail of losses. it was not just target that saw the pain. this is a trade-off between what is happening with the margins for merchandise and the cost we are seeing in terms of the battle for online space, from freight and delivery. let's take a quick look at how we ended the day. .arget being the biggest it had been down as much as 14%. you can see tjx down 4%. ross also down by more than 9%. the biggest one is with target. take a look at the next graph. 28.7% -- coming in at

29.7% in the third quarter of 2017. marginsot just gross that was one of the bigger drives. another was same-store sales. right here, 5.1%. you are probably saying that is only 0.1% here. looking back, this has been growth. finally seeing some pullback here. inventories, they are also rising. bump in theseasonal third quarter as they prep for the december period. this is pretty major. we have never seen this before. analysts are wondering if this is in regards to stockpiling

with the trade war between the u.s. and china that continues to rise. this comes as we are meant to be going into the holiday shopping in. getting close with all these discounts going. the economy is doing well. ready to shop. ramy: already shopping. , do not forget black friday, which is coming up right after thanksgiving. the expectations are high. wants to get out there and shop. maybe 5% in terms of the sale bump we are asked acting, but it is those costs that come from the digital space. people are saying we are talking

about peak earnings, but what about peak christmas? what if all those retailers out there, those specifically brick and mortar retailers are putting too much in terms of discounts? the delivery cost to get all those out there. ross blamed rising wages. santa will need to be packing a lot of gifts. going to a lot of stores in order to make it happen for a turnaround in the sector come january. let's take a look at how some of these asian-based retailers are doing at the moment. a lot of pressure monsanto to deliver. retail suppliers are

crossing their fingers. a little bit of a cause for worry. so far, we are seeing some losses. olympiche official jacket maker. worth watching, some players in china. when it comes to it, the company has had a rough 2018. it has come up short when it comes to revenue and profit targets. shery: let's bring in david ingles for a check of what is to come.

david: goldman sachs joins us today during this period of market stress. leaning defensive. stay away from equity markets. get into defensive utilities. one of our other guests coming up, talking about the implications. you know what i learned? there is such a thing as a presale. lots of strategies to get your shopping. for "daybreak: asia." ♪

rishaad: welcome to bloomberg markets china open. the globalmming selloff. adding to the trade war. debra: and -- continuing to steal technology and intellectual property. rishaad: carlos backing for now. we are live in tokyo.

what was over here is over there. the u.s. is trying to catch up with what is going on with emerging-market. yvonne: welcome to the party. david: the jungle. rishaad: it is a terrible party. commodities in china, we want to watch what happens there. take a look at what we are seeing. malaysia joining us from that holiday. really joining in on this party. you have oil now, the latest in this perfect storm. matt 6% plunge here today. the tech stocks still very much in focus today.

that catch-up fall of 1% at the open. we are down more than 234 points at the moment. basically, nowhere to hide. wasactually do see that it semi conductors that was rallying. every sector in the region in the red. no shelter here when it comes to oil, when it comes to currencies. the dollar shooting up overnight. oil volatility, take a look. the highest in almost two years now. a lot of comments on what is causing this. spilling over into energy right now. increasing doubt that opec might not be as serious about cutting output later on next year.

on.re expecting data later let's show you what is the set up today. china probably one of the worst markets out there on tuesday. you have the hang seng futures down 191 point at the moment. we saw the hang seng rebounded in november, pretty short-lived. futures down 9/10 of 1%. we are seeing some further weakness into the currency. david: bad news continues. other big story we are because of that, u.s. trade representative is accusing china of continuing tech fest. course, a comes ahead of this

highly anticipated meeting at the g20. jodi schneider is with us. does this change anything for the talks? do these talks take place? >> these are talks on the sideline of the g20. they are not formally scheduled talks. this complicates the talks and complicates expectations for what could occur. vicehad been lowered by president pence's tough talk, among other things at aipac last week. detailed 53 page, very report. it really shows that the u.s. is

continuing. intellectual property and innovation and it has taken further unreasonable actions in recent months. nothing has changed, is what they are saying. >> right. but also, they are accusing china of stepping up cyberattacks in the u.s., that this is actually a growing threat. also, that it is increasingly focused on these technology companies that the u.s. is in terms of the theft of intellectual property. david: we will be watching one of the. onl us about this ban

high-tech exports in china. they are in the process of reviewing it. reduce thesecally high-tech exports, not just in china, but in other countries as well. the u.s. congress is saying this is something we need to deal with. the u.s. congress has been back and forth on whether it is a good idea. interesting amid all of this. we still have larry kudlow saying the president has hope for that meeting with his chinese counterpart. that he knows that china wants to make a deal. this tough talk, president trump is trying to say that we are willing to talk.

we will see what happens, also the threat of further terraces on the table. , it has now joining us not changed. risk in the all the background. that's right. geopolitics used to be predictable in the past. now the problem is politicians do not say what they mean or mean what they say. i have been talking -- other talking to china or the russians? you hear that they want to make a deal, that they want to talk. i think markets are finding it very hard right now to come up

with a forecast for next year because the situation is a binary. either we have a soft brexit or a hard brexit. a new u.k. government or the old one. all these things are really getting investors jittery about how to forecast and what will happen next year. rishaad: are they really binary about a hard brexit and a soft brexit? >> that's right. if you look at one of the things, it is key correlations, telling us how people are leaning. whenever you had bad news on brexit, the pound went down and markets saw that as a good thing for the british economy. you had a negative correlation between the currency and equity

market. every time you had bad brexit news. people realized that maybe they are not going to have a last-minute deal. stoxxhe currency and the went down last week. people are changing their mind on this one. i am wondering if it will get bad enough, does this give reason for the federal reserve to slow down the rate hikes? if they do that, all the bad things go away. not necessarily because they are already at a level where cash is actually attractive again. you have until the middle of this year. back and put some money into cash.

you are in the black already if you do that. that is what is happening today. we cannot predict the future with any kind of confidence. the risk-free rate is looking attractive again. it to: are we seeing oossimistically -- t pessimistically? say this is due to frontloading, but it hardly suggest that things are falling off a cliff. copper prices are also pretty resilience. yes, there is definitely some frontloading going on. meddling through this economic data. good andll coming in the consensus was until last month that the economy will look

descent until the middle of next year because the numbers will still look good. this consensus seems to be changing now. just like you said, how much of it is frontloading? it seems from this week on, they are guessing that a lot of it is frontloading. markets are telling us one thing about the federal reserve. the federal reserve is telling us something entirely different. who do you believe? 2019 is going to be another year where we will be assessing about the cost of borrowing. >> we definitely are. the debt bubble is huge. seeing high-yield spreads and low-quality spreads

increasing. asian economies going out for the last six months. we are seeing signs of pressure in the credit market. grade spread has not risen that much yet, but they are starting to. you are seeing individual spreads go up. things shoot up suddenly because of one event, but there are also big names in the credit market and they lead the way and make people nervous. david: the ultimate question moving into 2019, do you think it will get worse next year? is there anything you see that we are undergoing now, anything different towards the end of the

cycle? >> we are towards the end of the year and the cycle. correlations are very different. , weof the things we look at always use the current correlation regime. the one that preceded the global financial crisis and to run -- in 2008. -- when we use that regime, it is worse. funny 5% bigger than the court -- the current correlation. as of last week, they are the same now. a lot of the divers indication now weu have is on and see that the loss could be as big if you are on the wrong side of it. david: that is encouraging.

let's leave it there. from singapore, let's take it to sydney. president xi jinping's visit has already led to a string of deals. shrugging off morning. -- moving thects philippines away from a long-standing american alliance. u.k. prime minister theresa may heads for brussels to talk more on brexit and the draft deal she has made with the eu. back home are demanding she secure a better agreement. the uncertainty about the split has divided politicians and the business community, leaving the

sterling under increasing pressure. much higher than it is for other major currencies. there will be an event that moves rolling up and down. that will likely continue to happen for a while. president trump admits crown prince may have known about the plot but says the u.s. will stick by its long-term ally. he says the kingdom is an important block on iran. it outweighs what he called the horrible crime perpetrated in istanbul. the administration says it is still gathering evidence. president trump: it is america first for me. we will not give up billions of dollars in orders. it is very simple.

it is america first. no end in sight for the turmoil for cryptocurrencies. tumbled more than 30% in a week, fueling a selloff. says some hundred billion dollars has been wiped off crypto since january. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. david: 649 there. it has been a tough year for you there. seesgan actually optimistic long-term. the portfolio manager with the

most profits. what happened to the world's largest car alliance? the glue that keeps them together. we will be examining that and more. this is bloomberg. ♪

rishaad: standing by for now saying it cannot comment on the evidence seemingly gathered against the chairman and ceo. remaining in custody after being arrested for alleged financial impropriety. david: stephen engle has been following this developing drama. what are you watching, specifically today? it is a fascinating drama

unfolding. is this a story of personality becoming too powerful and reading a lavish life while? more of a palace coup ? a way to block what carlos .anted to do in the coming weeks, he was going to push for a formal merger between renault and nissan. merger toa firm cement the cooperation. beyond what he was planning to step down on the alliance in 2022.

that is all in question right now. there is probably some of both of those elements. carlos hadions that too much power. that led to two little oversight theissan, combined with fact that he was in opposition to an outright merger. these are the latest headlines we have been getting. they have been reporting that in the coming months, he had made that merger between renault and nissan your versatile. because not sit well the french government, they had a stake in renault. nissan has a stake in the know, but no voting rights. nissan was contributing the bulk

of providence. we are getting other headlines. the ceo of mitsubishi motors is talking to reporters at this hour. he says it is important to continue this alliance come even without carlos ghosn. the tension in japan, waiting his stake in the legal system in japan, where he could face a sentence of up to 10 years in prison. a fine of $88,000, or both. prosecutors can also go after nissan, not just carlos ghosn and his fellow director, greg carey -- greg kelly. we are awaiting his fate as the chairman of nissan with the board planning to meet in yokohama tomorrow.

rishaad: what do we know about them reaffirming their commitments? they have appointed a temporary ceo, haven't they? >> that is right. it looks like right now, for no was alot more -- renault lot more answers. they are sticking by him for now but he isn and ceo, not able to run the company right now because he is in detention. the current chief operating officer also pledged full andort for carlos ghosn promised to protect the partnership with nissan. we heard from the french finance ministry. the french government is one of

the most influential stakeholders. the french finance minister says we will not demand carlos ghosn's immediate departure as we do not have the proof yet. thank you for that. this is bloomberg. ♪

yvonne: we are counting down to the open. plenty of superlatives out there. more towards the negative side. shares could be down more than 8%. still seeing a bit of weakness.

we saw that 2% move lower. really proving that this come back is pretty short-lived right now. ♪

wehaad: 9:29 in hong kong as care you down into the trading day. wall street having a cup time. dropped toaking its 24% since its peak in october. accusing china again of theft. on top of that, looking at more volatility. time to give up maybe.

we are headed into the open. 17 seconds until that opening bell. more than 1% on the major benchmark. 695 other dollar. lots of things to watch. we have been talking about tech. you have trade concern. oil in the mix as well. we are set up how in the china market open. .he hang seng down once again, we saw that move lower yesterday. shares are down 1.5%. all seeing red across the board. oil has in a big mover today. . little bit of a rebound today

that 6% plunge. dow close to 5%. it has been interesting. chart.look at this we are seeing the deepest bear market in tech stocks since the financial crisis. it certainly feels that way. this is versus what we saw during the boom and bust of the 2000. also shows more pain. it does seem like speculation for now. again, take a look at this. a look at the earning estimate when it comes to tech. that has lower. trailing earning

estimates as well. we are seeing a little bit of limited upside. david: what a downer. it is hard to be fun in this environment. how are your friends doing this year? >> doing relatively well. has underperformed. down for the year. rishaad: how do you look at it? what is the deal? in general, we are long-term optimistic on chinese equities. we do think it looks interesting now. for a couple reasons.

it has taken the chinese government offguard. it ultimately pushed them to reach a consensus within the government and self for coordinated policy moves. more proactive fiscal responses centered around tech companies, etc.. we think they are positive. this all happens in a backdrop where valuation has become more attractive, particularly for the offshore market. a five-year expected return for china stocks that we covered. combined makes us feel pretty constructive on chinese equities. rishaad: does it mean going back to basics? the thing is you think about

buying on the dip. you are actually buying on the peak, if you will. tough todefinitely call in the market. our advantage is that it is taking a longer time horizon. , it's are like us long-term prospect, it is the time to be brave. david: you must be making adjustments. monday,he market from a tuesday, to next monday, it is not really a big issue for you. there are some moves that we are seeing, whether hardware tech,

software or luxury. are there any adjustments that you are making or looking to make in the next few weeks? we have seen, recently, adding a couple names that we like, longer-term. consumer, health care and some of the tech names. rishaad: these are very crowded places. look atke a technologies. amazingly good valuation. it is the one underneath. >> it is pretty broad.

we have to look from a bottom-up perspective. in the tech space, what we have been adding is internet and some of the software name. place where we have given up a lot of the gains. a lot of policy nor his around. find new, we do opportunities in the sector. subsectorsertain that can outgrow the overall market. david: what is your cash allocation? are you looking to increase? rishaad: and how do you see resumption -- predictions? >> we are fully invested. it has been pretty stable this year for offshore funds. david: all right.

thank you. let's move it along. we will get that story and the rest of the first word news with paul allen. trump's legalt team written answers to questions for robert mueller. responses answer questions related to topics on the inquiry. they will only answer questions around whether trump colluded with russia. wildfires could cost insurers up to $13 billion. those estimates include damage to property and cars, as well as disruption to business. it has killed at least 79 people and destroyed thousands of homes.

the chairman says he is not confident they will be better off. the goal of the ceo. the founder and larry page decided is a ship was unacceptable. >> anybody who does business in china compromises their core value because the laws in china are quite a bit different. the question that comes to my mind, that i struggle with is, are we better off giving chinese citizens a decent search engine, a capable search engine, even if it is restricted and censored in some cases, then a search engines that is not very good? does that improve the quality of their lives?

paul: there is no end in sight to the turmoil. bitcoin has tumbled more than 30% in a week. point market cap.com says more than $7 billion has been wiped off of crypto since january. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. david: coming up in the program, 's arrest.rlos theaad: we will tackle unholy drama. and also, michigan as well. this is bloomberg.

♪

yvonne: now for a look at stories trending across the bloomberg universe. .ind out what good news on thethose stories terminal, you might want to check this one out. $150 million worth. that 10 minute clip. and listing some of the corporate scandals. you can check out those stories trending online. the arrest of carlos ghosn, yet another blow to the reputation.

becoming the most recognizable executives here. there was a lot of jealousy. absolutely. michelle, give us your take. this bottom line without actually having the equivalent. or just personal dislike? there is a mix of all of this in the story. we know there has been a lot of francesm in japan and in around his compensation package. and jealousy around that. we know that the balance of the alliance has not been satisfactory to the different parties. that is in the mix. mix of personal

situation, jealousy and the realistic, where does this alliance go? michelle, as in investor, what i am probably wondering is nissan in trouble? >> the bigger question is what happens with the alliance? everyone is partnering up. everyone'so advantage to blow up the alliance. we are on the verge of massive industry. resources are being spent autonomous, collected.

nobody really wants to go it alone. be in theirbably best interest to make this alliance work. when you look at the current structure, it does seem ,hat the outside benefit whether we see a breakup in the be some ofhere will the former members who might be doing better than others. correct. so it needs to be renegotiated, reconfigured. i do not have personal knowledge of what they are going to do. there was a lot of talk about it being a merger. that was one of the stories that came out today.

others that wanted to put the brakes on that. i do not know how this will all come out. companies tohose go individually, it does not fit where we are in the industry right now. rishaad: it is not just about this alliance. they have a lot of similar parts they are using. it cannot just be taken apart. precisely. many years ton put together this alliance. they share vehicle architectures . incredible task

and expensive wine to untangle. the allianceings designs, they are developing electric vehicles, which are very same to develop. nobody is making any money. very little money, if any on electric vehicles. it does not seem to make a lot of sense either. how does this play out? >> very good question. there are a lot more questions than answers right now. unfold.re chapters to think nobody knows exactly, unless somebody inside the company has a game plan. this whole situation came as a shock.

it did not leak out. let's get to some of these movers. what do we have? yvonne: it seems relatively better than what we saw yesterday. estimate for apple and micron overnight. setting demand for products in china. take a look at how we are all seeing these surveillance stocks. it is one to watch. that half -- orts

asare living those, but not drastic. a lot of questions. we want to show you some of these retail suppliers as well. earningspointing reports coming out of target, got. we are seeing the likes of one of their retail suppliers down 1.8%. names, these other pretty mixed picture at the moment. plenty more, still to come. this is bloomberg. ♪

heid: ceo james forman says

is not concerned about the recent selloff or his ability to handle all this volatility. rishaad: discussing the market correction and the feedback he has had from morgan stanley. the bubble burst of 2000. i was coming out of graduate school in 1987. this is a market correction we are going through. this is within our wheelhouse of what we can handle. >> is it a healthy shakeout? what we have seen happen to tech stock in the last three days? >> firstly, we are in a tightening process. hike.and four rate it has consequences. they had limitations of what they can do.

we have a lot of political turmoil. it is not surprising you have seen some correction. incredible run-up in valuation. dollars of billions of in some of these companies. it is not surprising some of that has been taken off the table. >> the debate is reflected in the volatility that we be over a number of the things that you just itemized. growth andability of rate increases, the magnitude of rate increases. the implications of the standoff , undertaking with china. arounde any consistency that debate, as far as what you hear from clients? the most important thing to take away is there is a lot going on.

every morning, you get up and there is a strong news flow. brexit, terrorists, protectionism, anti-immigration. before we get to the markets, before you get to china and what is going on. for you get to the war in syria and north korea, it is a lot for investors to absorb. strongone hand, very fundamentals. tightening of corporate credit. clearly, issues around credit. it is not surprising. they get it very wrong in the long-term. the market is always right. david: the ceo of morgan stanley

speaking exclusively to us. let's have a look at your business flash headlines. shares jumping after reporting surging sales. company ofi-based 17. their biggest gain in two months. on the other hand, the quarterly loss increased fourfold. ikea is to open its biggest store ever in manila. it will be 65,000 square meters. it is the basically length of 150 basketball courts. almost twice the size of your typical ikea shop.

david: i can imagine the traffic. plus, speaking of, let's get on the roads and take a look at shipping. introducing its currency for crew members. the goal is to make it easier for seafaring workers to convert money into local currency. they are either filipino or chinese. trying to avoid massive swings. what do we have coming up on the program? we will be looking into what happens next. david: we will be looking at that scum of the different types and where the opportunities are.

asia-pacific head of research, coming up in the next 60 minutes. this is bloomberg. ♪

♪ just about 10:00 a.m. in hong kong and singapore. welcome to bloomberg markets. yvonne: asia pacific's fall, sliding oil and weak tech adding to the gloom. david: trade tensions, transpacific yet again. usa and china is trying to steal its tech and ip. does remainsn chairman and ceo as that investigation proceeds. we are live in tokyo. ♪

yvonne: another day, same issue, same headlines when it comes to trade, tech obviously. this part of the world not bad as the u.s. tech also not that bad. david: when you look at the granular analysis between the nasdaq and s&p 500, it is much worse on the nasdaq than the s&p 500. it is not as bad here. let's have a look at what is happening. this is general market moves giving us a flavor of what is happening. indonesia coming on board. down. were atot as bad as we