heidi: a very good morning. i am in sydney where markets have just opened for trade. >> good evening from new york. >> and hong kong. welcome to "daybreak asia." our top story this thursday, the a reprievec set for after a modest rebound in tech, energy, and oil.

foxconn says next year will be difficult and increasingly competitive. carlos is awaiting his fate as the board prepares to meet today. get started with a quick check of the markets, closed here in the u.s., the last session before the thanksgiving holiday. lighter trading ahead of the day off. we saw the s&p 500 regained .3%. from earlierlied in the session, sort of faded and fizzled out, finishing now unchanged. the nasdaq had a gain of 1%. saw it pullback about half of the losses we saw in the previous russian. we also saw energy gaining ground from one year ago -- previous session. we also saw energy gaining ground from one year ago.

investors in asia have a lot to digest from wall street and the board meeting in your,. -- and the board meeting. attention will be on the nissan board meeting. what is the fate of the chairman of the company? quite a calendar to digest here .n asia investors will take what they can and run with it. stocks snap a four day to klein in sydney and in wellington, they are rising. in chicago, gains as well for .apanese stocks adding to potential headwinds for asian shares, white house trade consultant may not be making an appearance at the

meeting. that has to be confirmed. had afterdation maybe foxconn warns it is facing a difficult and competitive 2019 and is planning to cut costs by nearly $3 billion. see how machine makers are faring as we get reports this afternoon. orders have been slowing in 2018 due in part to declining chinese demand. manufacturers on the mainland are playing it safe when it comes to spending. an hourore data in half that may lend credence to the they may need to change targets. the malaysian market is expected

to decline further. checking the markets in hong kong. let's get your first word news with jenna. the ceo of nissan made learn his fate on thursday when the board meets to discuss financial misconduct. our sources say directors are split over what to do. he is accused of underreporting compensation and misusing funds. we are told from the director they do not have enough information to vote. brags it negotiations through the night in brussels -- brags it negotiators working through the night in brussels. that votingwarned against her draft would mean

out right.hwarted >> the point that has been made by a number of my colleagues is very simple. if you look at the alternatives to having that deal with the european union, it will either be more uncertainty, more noision, or we could risk brexit at all. >> the european union is stepping up discussions with italy. government -- he told bloomberg the populist governments spending plan would add to debt and reduce growth. >> it's way too high. we have asked questions and

raised doubts. we have received no answers. that is why we are persisting. issee that undoubtedly there very serious deviation to our rules. it has to be corrected one way or another. wouldna's orwellian plan to judge each of its people based on social behavior is inching closer to reality. in 2021m set to launch would design personalized ratings. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 in morests and analysts than 120 countries. this is bloomberg. shery ahn: thank you. a closer look at the u.s. close calling aany are

relief rally. energy was the strongest group on the s&p 500. oil rebounded. su keenan is here with more. what a difference a day makes. we saw the selloff in tech. now tell off leading the way up. the faang stocks were up between 2%-3%, particularly apple, and then gave away those close, apple barely ending flat. let's go to the bloomberg snapshot. slightly disappointing durable goods numbers. how is the fed going to continue to raise rates? that impacted treasuries which were able to call back earlier losses. the nasdaq finishing in the green. gains there, a big comeback from the tuesday decline.

let's take a look at the where we find our library of charts. 10% correction from the high. i put this on here mainly to show the size of the decline, how rapid it has been. both the s&p and nasdaq -- the dow, rather, still negative for the year. are of the big movers that noteworthy. foot locker reporting positive earnings in a big way. even though it had negative same-store sales, investors seemed to like it on a second day view. cbs up on speculation about the python deal. but --le up come again apple up, but gave back most of those gains by the close. we saw that weird

bounce back in oil. pretty bearish inventory numbers which, to be fair, was what we were expecting. su: output was offset by a decline in gas. there were big losses. bigger picture, you can see the big change. it was the biggest gain we have seen since october, which has been a steady slide. quickly into the money managers that into the bloomberg, money managers had apparently been actual before we saw the decline. they may have gotten this one right. su keenan in new york. president trump is happy with oil prices, at least, thanking saudi arabia on twitter for lower prices just a day after saying he would not let the

murder of journalist jamal khashoggi jeopardize relationships -- relations between saudi arabia and washington. these stories are starting to trend, trump's campaign to drive thisl prices lawyer and about jamal khashoggi's fate. >> we heard president trump thanking saudi arabia on twitter for low oil prices. this comes just a day after he pledged to continue a steadfast partnership with the kingdom. that statement definitely showed that president trump is viewing that relationship with saudi arabia in a very transactional light. he sees saudi arabia's benefits things suchs with as pushing back on iran, keeping oil prices low, and purchasing weapons -- as outweighing any kind of negatives incurred, especially in the wake of the

killing of the saudi journalist. onsident trump doubling down his transactional approach and vowing to keep saudi arabia at the center of his foreign-policy. haidi: what has been the reaction in congress? >> sharply negative. there has been a lot of pushback from congress on this one. senators in particular, including those from the president's own party, have threatened sanctions. the top senators on the senate foreign relations committee have triggered a formal review of into whether the crown prince is behind this killing, which could also end up triggering sanctions. senator lindsey -- lindsey graham, often a trump defender, has the crown prince is beyond toxic and there is strong bipartisan support in the senate first wrong sanctions against the kingdom. clearly at odds with the president over that. the president, again, doubling down, almost daring congress to go ahead with sanctions. mexico and canada are

expected to sign a new nafta. we are hearing that gop senators want to pass it through congress this year during the lame-duck congress. how's that going? >> for months and months, we would not meetrs a deadline this year. negotiators did reach an agreement at the g 20. some congressional republicans time.ook, there is still they are expressing concern that in a new congress, democrats will control the house and could look for concessions on the deal . leading republicans say no way, there is no time left on the legislative agenda and it would really risk running afoul of the process.

it looks like it is not going to happen this year. look for congress to take it up next fall. still ahead, foxconn said to be planning deep cost cuts. they are planning on a difficult year ahead. but first, here -- a cio joins us next. this is bloomberg. ♪

shery ahn: this is daybreak asia. i am shery ahn in new york. perspective on the state of u.s. markets headed into the weekend, let's welcome a chief investment officer and investment manager with 12.6 billion dollars in assets. thank you for joining us in the

studio. let me bring up this card on the gte library. homebuilders have really taken a thanith stocks losing more one third of their value this year. on a pe basis, we are seeing pessimism among homebuilders. given the importance of the housing sector for the u.s. economy, what does this tell us? >> for many in the u.s., it is the canary in the coal mine. a prizecomes as knows because rates have been going up and mortgages are -- no surprise because rates have been going up and mortgages are higher. the one thing we would point out that is different this time than a decade ago is that the percentage of adjustable rate mortgages that people own is a far smaller percentage. as rates go up, the impact on their ability to make those mortgage payments, that impact

is a lot less than it was going into the global financial crisis. variablea big surge in rate mortgages. that is not so much the case right now. nothing terribly good about this. just trying to make the point this may not be as bad as what triggered the global financial crisis. shery ahn: so it might not be a hard landing as some people had been concerned. >> not just a hard landing, but an outright recession. to suchs have crashed an extent that given the low interest rates, these prices are discounting virtually 0% in thes growth next year year after. that means we have peaked in earnings this year. that means recession may not be too far out. an economic recession won't be that far out

as well. that's a pretty dire outlook and something the market is trying to grapple with and come to grips with. we think the fears might be overblown, but i think that's going to decide the direction of the market going forward. we are hearing the doves on the fed starting to cool a little bit. the dollar and treasuries went lower overnight as well suggesting we could see a rate hike. we know december's pre-much a done deal, but by the time we get to march or the middle of next year, is there a question of how aggressive the fed is going to be? wake these are really confusing times for the fed. on what -- >> these are really confusing times for the fed. on one hand, look at the u.s. economy right now. earnings growth has been nothing short of spectacular. unemployment is low. incomes are rising. spending is rising and consumer

confidence is high. on the one hand, they are from 0%to move away interest rates to something close to a neutral policy level. by the way, those who threaten the fed as -- you think the fed is to aggressive already, they are not being overly restrictive. a real fed funds rate of zero is not restrictive. one might argue that it is. is a gradual trajectory of rate hikes seems fine for now with one big caveat. last projection showed five ate hikes until they got to neutral level. they would be better served being flexible and stopping at if financial conditions continue to worsen.

even though they have the impact from the trade war has been pretty indiscernible, i suppose, it's pre-hard for them to be able to say going into next year that if the trade war worsens we will do see an impact, particularly on inflation. >> the third-quarter earnings report will give us a sense of what impact to the tariffs are having. 10%-12% of the companies. there was formal guidance that was lower than many expected. that's the consequence of terrors -- of tariffs. avoid athat we will full-blown trade war, but from the fed's perspective, until there is growing evidence that this is becoming a bigger issue, they don't want to prematurely act and then let inflation become a problem because they

were too slow. be datak is to dependent, be flexible, be noble, and adjust to changing conditions. >> more tariffs on chinese goods next year alongside tumbling food prices. what are your expectations for inflation? >> the key metric is core and it's based on food and energy. a kind of takes oil out of the mix. cheaper gas is being offset by a taxs, which is like hike. it raises the price of imported raws, goods that import materials. it's a bit of a wash. on january 1, we are projecting tariffs on chinese

imports. -- we aremes to pass hopeful and optimistic that we avoid this. that there is some successful resolution. sophie: let's see what happens at the g20, right? thank you so much. plenty more to come on daybreak asia. this is bloomberg. ♪

haidi: this is "daybreak asia or go -- daybreak asia." biggest assembler of apple iphones is aiming to cut nearly $3 billion of cost in 2019. in an internal memo obtained by bloomberg, foxconn warns of a difficult and competitive year.

to watch when taiwan opens. >> are we surprised, really, after all of the negative headlines surrounding apple in the last few weeks or so with the supply chain? foxconn is the latest in a apple of news for the supply chain. we wait for the share price to start reacting to this news. you can see on the screen, over the past five years, if you had gotten in in 2013, you would have gained a lot and then lost pretty much everything and then some. is down 53% since its record high, now its lowest since august of 2013. lamy give you the details from the cost cuts at foxconn. -- let me give you the details from the cost cuts at foxconn. they are going to cut iphone 6nks businesses by about

billion yen. they are going to -- by about 6 billion. they are going to cut 10% of the non-technical staff. is a lot of earning power there. and 3 billion r&b in terms of at the foxconn industrial internet corporation. and was a bloomberg scoop foxconn did want to reply to our reporting. they said a review will be carried out and it will be no different from exercises carried out in past years to ensure that they enter each new year with a budget that meets the current and anticipated needs of their customers. basically, the messages keep calm and carry on. as sherry mentioned, we

are also watching the reverberation of the reaction across the whole asian supply chain. >> and in terms of the supply chain for apple, there are about 140 suppliers out there. let's take a look at the stocks that are exposed to the apple supply chain. date.re down 25% year to it's interesting, taking a look at what has happened with the apple iphone. we know demand has been falling. trends, it is down from its peak in 2013. it is at half the peak it hit in september of 2012. you can see analyst recommendations. looking at the yellow line, this 176 dollars in change.

you can see the holds are rising ever higher. next, theing up latest inflation rate out of japan. ♪

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haidi: you're looking at a live shot of tokyo. the city makes up with trading expected to look with a little bit of upside as we get to the start of trading in asia. a bit of a positive lead from wall street. we are getting the numbers crossing the bloomberg now. gauge for japan coming in at 1.4%, bang on expectations and an acceleration from the previous month's 1.2%. we are expecting 1% and still waiting for that engage to come in, excluding fresh food and energy. you are seeing an uptick of .4% again as expected.

we did see that slight acceleration in the headline inflation number driven by that rise in fresh food prices. the court gauge likely to hold pretty steady as we see -- we are also looking at higher base effects into reading to that flight tick up. looking at the import of higher energy costs as a bit of a driver for that as well. that, theout all of seasonal and base effects, the fluctuation when it comes to food and energy costs, and it does look like we see a pretty steady core inflation rating of 1% going into the end of the those lower oil prices as we have seen in the last few weeks will really contribute to a bit of a dampening in inflationary numbers for japan. we are going to get you more but thaton this, headline number for cpi, 1.4% as expected, excluding fresh food and energy. the court inflation coming in at .4%, also as expected.

first word news with jenna dagenhart. rising protectionism and a lot of international cooperation threatens the global economy. it faces rising threats from trade disputes and higher rates. the group is cutting its forecast for global growth next 3.5%, saying% to uncertainty is adding to the slowdown. >> today's economic outlook points to a global economy that is losing steam. the imposition of new tariffs, uncertainty about further restricted trade options, are contributing to a marked slowdown in trade growth. investment andl threatening jobs and living standards. jenna: the wto will set up a panel to rule on the trump administration's latest accusations about china.

a detailed report from the u.s. trade representative says tojing has done nothing improve its practices. it was released 10 days before president trump meets his chinese counterpart at the g20. the wto will determine whether china's trade policies violate international rules. the european union is stepping up its budget dispute with italy. rome'snomy chief says rider behavior threatens them. he says the plan will only increase debt. the e.u. is taking the first step towards disciplining italy for breaking the budget rules. >> one that is capable of reducing debt is way too high. we received no answer. that is why we are persisting. undoubtedly there is a very serious deviation to our

rules, which is bad for italy. it has to be corrected one way or another. jenna: saudi arabian oil production surged to a record 11 million barrels per day this month as demand climbed and supplies from huron were bishop -- iran were disrupted. opec is bracing for a bigger challenge from the u.s. next expected tooducers raise output even further. newle is to roll out policies in europe to offer more transparency around political ads. the announcement follows a year of scrutiny over how internet platforms were used to spread misinformation during elections. about whodisclosure pays for political ad has been a particular sore point. require advertisers to be verified before they can pay for political messages. global news, 24 hours a day, on

air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna dagenhart. this is bloomberg. thank you.> we have key eco-data. we have cpi coming in in line with estimates, awaiting singapore's final third-quarter gdp data. them to you as soon as we have those numbers. let's turn to australian markets. sophie kamaruddin in hong kong is watching lithia miners rallying this morning. -- lithium miners rallying this morning. sophie: they are soaring this morning. check out mineral resources, jumping over 19%. 32%.tock climbed more than that would be the biggest jump on record. this as it sold a stake. we have the biggest producer of lithium making a play to capture

more of the car battery market so it agreed to pay $1.15 billion to human resources for a 50% stake in that mine. be thee said to potential partner to own and operate them i -- the mine. shift inexperiencing a demand for hydroxide, which fetches a higher price than lithium carbonate. she lay -- chile would have produced lithium carbonate. a quick check on futures in singapore. you see a potential gain. a quick check on futures in singapore. you see a potential gain of .5% at the start of cash trade. in light of the recent selloff, franklin templeton saying japanese stocks are looking like an interesting opportunity with strong fundamentals, but socgen is seeing more challenges, setting the 2019 target for the nikkei 225 at 400 points. far off. they would be to balance the

risk of a prolonged cycle against opportunities and undervalued and oversold. you have softer and upgrading consumer staples to neutral but cutting discretionary and tech from overweight while remaining care,ight on health energy, financials, and from interior. haidi: let's get you a recap of the inflation number we got through from japan. national cpi year on year, the headline number, 1.4%, as expected. everything was paying on. core inflation picking up by 1% and excluding energy. matching the consensus expectation. let's get some analysis from tokyo. martin schulz joining us there. great to have you. energyip out food, the prices which we know are going to come down come november,

there is still just not that much inflation in japan. >> yes. we are seeing it hitting the ceiling in terms of inflation. what we are seeing is a runoff in terms of oil prices going up on energy. we already know that after october, in the november numbers coming out for tokyo already next week, this will be significantly lower. 1% is quitebelow likely. we do not have inflation. japan, we do not see inflation coming in for next year. companies are focusing on more productivity, so price trends are down in tokyo from here. japan, thebank of takeaway, is going to stay the course. are you concerned about the structural and undesirable effects of the extraordinary monetary policy? year, it was

basically the story that the bank of japan is doing -- getting regularly out of the market. quantitative easing is more or less done. they will keep the interest rates pretty low and keep the much lower than overseas. in particular, in the u.s.. that means the yen will probably anreasonably weak from industry perspective. this is a pretty good situation because energy prices are overseas. the yen remains comparatively weak. shery: of course, we have seen these disasters in japan take a poll on the broader economy. how strong of a rebound can we expect from that? the shock was, exactly. natural disasters and all these special events. we had two runs into these difficulties.

flattenedeen already in spring, and we had a run-up after that. gdp was growing up 3%. now, we could expect, in the last quarter, growing at -1%. -1.2 percent. negative growth in the third quarter that the economy will more, by 2%, but not much i'm afraid. for next year, it will gradually taper out at around 1%. maybe a little bit below the 1% if difficulties in overseas markets remain, so not to high expectations from here. so,y: in the past hour or we heard from nikkei news that japan is eyeing ¥2 trillion in a policy package because of the sales tax hike that we are expecting next year. how much support will this provide the economy, and what does this mean for the boj as we see more fiscal stimulus coming through? this will be quite

important. the growth story was basically based on investment, on corporations being optimistic about the domestic market, being more concerned about the overseas market, but bringing back some investment into japan. this is a pretty good story for this year. next year, concerns are still there. investment is a little bit slowing, meaning if the government is coming in here and the or less guaranteeing tax hike next year will not have a negative impact on the economy, this should be helpful, and we should see a rather stable economy. at around 1% growth, this is not too bad for japan. isdi: martin, how vulnerable the supply chain story if we do see a doubling down or worsening of the trade tensions? martin: the concern is really about the asian markets right now. tensions between the u.s. and china has been building up significantly. i am rather optimistic however

that we are seeing maybe not the worst of comments but the worst in terms of confrontation. inwill be quite helpful ofting at least the stage chinese and u.s. demands getting gradually to be matched. i am rather optimistic that the overall situation for trade and for the outlook for asia will improve from here. haidi: lots more to talk about. senior economist came with us in tokyo. coming up next, we will get his views on nissan, and nissan's board meeting in the coming hours in japan to discuss the fate of carlos ghosn. we will be at the nissan headquarters, next. this is bloomberg. ♪ g. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i'm shery on in -- shery

ahn in new york. the board of nissan meets to discuss ghosn's arrest for financial misconduct. sources indicate a split on whether to dismiss ghosn, who has been in detention since monday. stephen engle is at nissan headquarters in yokohama. the latest lines crossing the bloomberg right now saying that a nissan official is now saying that ghosn has six houses provided including in tokyo and new york. that his sister had an advisory contract as well. we have been hearing all these different news coming from different sources. how transparent have these allegations against ghosn been so far? stephen: you know, the japanese media really coming out with a variety of different stories. we are getting new updates every minute. in the morning papers, we have that story. i believe it was from right here about perhaps some of that money that is alleged to have been

misappropriated. it went to carlos ghosn's sister. this isreport -- critical evidence for tokyo prosecutors, who will hold a press conference at 4:00 p.m. today. sahi is from the a people. info thatcollected indeed carlos ghosn ordered reporting of lower pay to regulators, and that is the key point of contention with the ceo of nissan, as they did a several months long investigation into financial misconduct -- alleged financial misconduct -- by carlos ghosn and a fellow board member. that was passed on to prosecutors and mercy males indicate that carlos ghosn recorded lesser

income. prosecutors just saying that of 44be to the tune million u.s. dollars over the previous five years, and according to that report, the report and the emails were provided by those executives plean nissan who struck bargains with prosecutors. the interesting new development in japan is that they are pleaing the gardens -- bargains, which could enable more whistleblowers. we had mtv yesterday reporting that nissan is eyeing a revised -- a revision to the alliance with renault and mitsubishi. we are getting another report this morning that nissan is mulling asking granola to review the capital structure, and apparently, the ceo and others, who are on the opposite camp from carlos ghosn, they want to see a more equitable relationship within this alliance, because right now, of course, we owns 43% of nissan with voting rights.

the french government has 15%. the alliance.with renault and nissan. nissan has 15% over no -- of renault and no voting rights. indeed, if the reports are true, nissan, once they handle this deal, our seeing him as a chairman, they will really push renault for a revision of the alliance. haidi: is that a sure bet that that is going to happen if the board votes, steve? sure bet,t is not a but you have to look at the factions and how they potentially will vote. they can kind of show the different factions. there are 90 board members. two of them are not voting today. they are in detention. that is to bank -- from cut -- two from carlos ghosn -- that is two from carlos ghosn's camp.

seven are going to be voting. for people have to vote in -- four people have to vote in favor of that. there is three other key nissan employees, and i do not mean to ,reak this down on race lines but you can see the divisions from french factions and japanese factions. vice president, he took a board position after last year, late last year's big inspectors scandal in japan. he assumedly would side on the side of -- that's two voting in favor of ghosn's departure. you also have toyota. perhaps there is the four votes. jean-baptiste -- also. so perhaps that is to votes for keeping ghosn.

four votes for kicking him out. thethe wildcard will be vice chairman. he is a former nissan ceo. we heard from media reports yesterday that he is being investigated, or i should say, questioned by tokyo prosecutors. we do not know which side his allegiance is on. haidi: counting down to that board vote, our chief north engine correspondent, stephen engle, was in your, today. -- yokohama today. getin schulz, i want to your top takeaways from what we know so far. is this a coup? is this more political than the headlines were leading on? is this another example of the problematic corporate governance environment in japan? coup is not, a

really like the has mr. ghosn is not involved. it seems to be much more a struggle about direction and what we know already is that the top management, at least involved in the scandal, we very much hope we will hear something smart from the board meeting today in which direction to go, and we know from 2015, there is a very open struggle about the power balance between renault in europe and nissan in japan. this has been at a very topline issue at the company from early this year, and now, it comes down to -- where is direction going? shery: what does this say about well?se culture as we are now even hearing regulators, out and say that whistleblowers need to be protected. will this really be the cause of more change in corporate governance in a country?

side ofon the scandal the issue, it is really messy, because a lot of cultural issues clash here. on the one hand side, it is executive pay, which from mr. is ratherrspective balanced because his income overall was about the level of volkswagen or general motors. it is about 10 times higher than you would expect as a president or major manager in japan. it is also, in terms of lifestyle, all this is in one package, one difficulty. i would not cut the entire story along these lines. it is about the direction in the automobile industry. where to go. nissan's major market is in the u.s. everybody is looking -- where are we going in terms of the mobility -- e-mobility? it will be a big question of direction, and who is the next ceo.

haidi: it comes at a time of seismic, fundamental change for the auto sector, right. does it in danger the japanese auto sector? butin: not in danger, clearly under pressure. the automobile sector is doing very well. this is true for japan and europe, but profits are still very high, which is very useful, but sales and profits are under pressure. the bigger question is where to go. we have seen these huge alliances that are focusing on major automation plans around on the way out. these major executives are on the way out, and now we are seeing much more numeral alliances focusing on digitalization, focusing on smaller plans for you mobility -- e-mobility. nissan has to work about these issues very carefully here. haidi: martin, appreciate your time with us. martin schulz, senior economist,

joining us. shery: let's take a look at some of the stories trending across the bloomberg universe. why jamierg.com, dimon and warren buffett may have the last laugh on bitcoin as that crypto's economic delusions unravel. on the terminal, users are reading about how defense secretary james mattis has advised president trump avoid evenin foreign locations, as he is criticized for not visiting u.s. troops in the holiday season. on tictoc, speaking of the holidays, that is into santa's workshop. the trade war. check out those stories, trending on bloomberg, online, or on the terminal. this is bloomberg. ♪

>> a quick check of the latest business flash headlines for you. goldman sachs malaysia -- intensifying with two abu dhabi investment funds claiming they suffered losses in the case. international petroleum filedment and another since saying goldman bribed officials to "manipulate and mislead the claimants" and to misuse information to further the criminal scheme. unidentified third parties. the holiday shopping season gets into top gear. it is written to a number of customers to say their emails and names have been inadvertently shared thanks to a technical glitch. amazon says there is new need -- no need to change passwords. china eastman buying a stake in a deal with 400 50 million u.s. dollars. money raised will be used to buy three new plants from boeing and

repay bank loans. it is part of the plan to expand at home and abroad, and in response to the government's called to boost the private sector. lots more to come on "daybreak asia." this is bloomberg. ♪

haidi: good morning. i am in sydney where major market opens have just happened. shery: good evening from new york, i am shery ahn. >> welcome to daybreak asia. >> our top stories, asia pacific stocks set for a reprieve after a modest rebound in new york. brexit negotiators worked through the night in brussels as there is talk of