>> i am brad stone in san francisco in four emily chang. this is "bloomberg technology." in the next hour, apple shares that ofpresident trump tariffs are made good including the iphone. plus, where is mark zuckerberg? u.k. lawmakers are angry that the facebook ceo did not turn up to answer questions tweeting out a photograph of his empty chair. the chinese backed silicon

valley designed car's makers will hope to speak past tesla in china. about theto the ceo race to the chinese ev market. story.top apple shares were hit hard after trump implied he might include iphone in the tariffs. tim cook is spending the day with ivanka trump touring schools. this provides an extended conversation with the president's daughter and senior advisor before trump holds a key meeting with xi jinping in but with our rights -- in but ares.ities -- buenos our next guest has a bayreuth redone apple on $220 and with us from -- let's start with you.

you are watching china very carefully saying it is the biggest single threat to shares of apple. how seriously are you taking this threat for president trump? today, you have to assume everything out of china will be tariffs. i think on the assumption, you have to think about two has pricing power. if you look at apple and take the least expensive new iphone, xr, is more- expensive than the apple a. the ability toas better withstand tariffs than their competitors. brad: let's put the potential impact aside. do you think the president really means this? >> absolutely. to date, you have had multiple rounds of tariffs. you had one tariff in place today that escalates from a 10% tariff 25% tariff on january 1.

at this point in time, you have to make the assumption tariffs are real and there is more to come. as far as what more could be , you have-- tariffed to consider may be subject to a tariff. tim cook is spending quality time with the ivanka trump. will that make a difference? have the currency with the administration to make an impact here? >> i think they do. if you solid happened in september, apple put out a statement saying two of their most valuable products would be impacted by the tariffs. of days later, not long after that, the trump administration said we are not going to allow tariffs on apple watches or air pods anymore. now trump has the day to spend

with the president's daughter shirley to discuss this will be this- surely discussing will be one of the topics on the table. at the end of the day, despite exporting a lot of goods from china, apple is a u.s. based company. brad: let's say tim is not making histoday and case to the president's daughter and we see a 10% tariff on iphones and ipads that have not been previously affected by this. he talked a little bit about how apple could potentially mitigate the impact with the xr. what about the xs. some analysts say it is not doing as well as apple hoped. investorsly speaking, are underestimating the ability of companies like apple to mitigate the risk of tariffs.

for example, the chinese government is actively devaluing its currency. that will take some of the sting out of tariffs. in some instances, the chinese government is subsidizing manufacturers who might be affected. suppliersly, apple are moving the supply chain out of china. and a short-term basis, the big winner from the prolonged trade war is vietnam as you see manufacturers make products in vietnam rather than china. i do think apple and other countries -- companies relied on china for the supply chain have a lot of opportunity to mitigate risk from tariffs. as it pertains specifically to , with a higher average selling prices, they don't have to sell as many units to bear the fruits of a financial standpoint -- from a financial standpoint. brad: do you agree with that? this is not been a great season

for apple. shares are down, suppliers are renting back production. , perhaps apple can mitigated somewhat but it cannot be good news for apple in the holiday season. >> absolutely not. i do not think this is good news for pretty much anyone. the consumer, apple, or the suppliers. the suppliers are already losing money on apple because they squeeze them so much. apple puts multiple suppliers against each other to get the best prices. from that standpoint, they will mitigate the 10% tariffs if those come into effect so, but i do not think it matters. iphone is not selling as well as expected. we saw four apple suppliers making components for the company lower the revenue estimates for the current quarter all during the same week, all citing a major consumer electronics company. that is pretty alarming.

this is a bad new story for apple and i do not see it getting better in the short term. brad: tom, is the market misinterpreting the news from the suppliers? things, going into apple reporting the september quarter, they indicated weakness in emerging markets but not china. in brazil, russia, india and turkey. i think they were trying to adjust expectations to begin with when they reported that quarter. the other thing we are overlooking is one of the reasons for the tariffs is to not only improve our trade imbalance with china but to protect the intellectual property of u.s. manufacturers such as apple. while tim cook has done an amazing job of balancing the tightrope between managing the china suppliers, selling a large portion of products to chinese salesers, and managing

and things like that, apple stands to benefit from some of the things the tariffs are aimed to protect. the intellectual property rights of companies including apple. brad: what kind of argument you think tim cook is making with the president's daughter? >> i think it comes down to this is going to hurt the consumer more than anything. that has been their argument from the apple watch and air pod standpoint. that worked and the trump administration reversed course. why not try the same trick again? if apple has to increase the price of iphones, people will buy less of them and they might want to look to phones manufacturers by the chinese like xiaomi. smartphones are too expensive, where our consumers going to go? that would defeat the entire purpose of the tariffs in the first place. brad: we have to leave it there. tom and mark gurman, thank you

both for joining. elon musk says he can change the world, but not if you only works a 40 hour week. the man behind tesla, spacex, and other companies wrote a tweet that you need to work between 80 to 100 hours per week to make an impact. someone he musk told was working up to 120 hours per week at times as tesla ramped up model three production. coming up, u.k. lawmakers are not happy with mark zuckerberg as the facebook ceo pulls a no-show. why the government is cracking down on the social network, next. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪

brad: where is mark zuckerberg? today the question asked by the international grant committee on disinformation and fake news. a select committee of the u.k. parliament that invited lawmakers from nine other countries to participate. one department we did this image of an empty chair after facebook's founder failed to show up. in washington to discuss is the ceo of digital contact -- content next. they represent premium online publishers. although -- also with us is jeremy who joins us from london. set the scene. this was an extraordinary hearing with nine countries.

what was it like and how did he go for facebook? said, the u.k. parliament invited lawmakers from other countries like singapore, argentina, brazil as well as small european countries to this hearing. with the idea that maybe they could draw mark zuckerberg out. the committee has asked zuckerberg to come several times. he did not show up again which may lawmakers angry. instead, facebook sent richard allen reaches their chief lobbyist in europe and is head of policy for them in this region. he try to into their questions but a lot of lawmakers were not happy. at times, the exchanges got heated. brad: i thought you started a tweet with the word woah. i think you were referring to revelations that facebook knew about interference back in 2014 from russia. why did the committee think that and why is that important? >> that served as documents that

were famously seized over the weekend and we will find out more about the documents in the next few weeks. i made the comment about the timeline in which facebook possibly found out about emergent politica -- cambridge analytica. senior managers at facebook, and there is a list of who the employees were, were aware of cambridge analytica. time we haveirst heard evidence facebook possibly knew about cambridge analytica. before we read about it in 2015 in the press. brad: clearly, we will be hearing more about the documents. they are seized as part of a filed againste facebook. the u.k. parliament has the documents. what you suspect is in those and why have they come so central to the u.k. government's inquiry into facebook? this committee is owed a lot of credit by pretty much

everyone along the growth -- i'll round the globe. they -- around the globe. everyone should be thrilled about how these lawmakers are try to hold facebook accountable. that set of documents may be further evidence to what was actually happening at facebook back in these critical years of 2012 to 2014. there were a lot of questions around facebook's decision-making and to have ppsess to data, which a were restricted from getting the data and kindred analytica is a part of that -- cambridge analytica is a part of that discussion. brad: jeremy, in your story today on bloomberg.com, you got a comment from facebook about and potential revelation that maybe the company knew about russian interference as

early as 2014. what did facebook say about the revolution -- revelation of the documents? jeremy: this is about a document reference but not released by the committee. damien collins, the head of the committee, said there was a document from an engineer citing russia using these features that app developersty to harvest the state to back in 2014. facebook told us this was taken this claimext and had been investigated at the time and found to be groundless. that is what they told us. richard allen who was testifying, he refused to discuss the documents in front of the committee because they are under seal in california. others say they are only representing a partial view and selected by hostile litigants to make facebook look bad. i think we will find out quite more and the committee has promised to release the documents over the next week.

brad: should mark zuckerberg have been there today? jason: absolutely. they have been after -- asking very specific questions and answer has always been the buck start -- stops of mark zuckerberg. the people that testified previously did not have the answers to their questions. mark is in an empty chair and i think that looks poor on facebook. have refused to answer the question regarding when mark zuckerberg personally knew about kim rigell at the goal -- about cambridge analytica. sign of poor faith in facebook to nine different countries not to show up for this hearing. that is concerning. brad: jason, following this, have the prospects changed from regulatory action or actions like splitting up the country?

the ftc is the most important regulatory group at this point. they are investigating facebook and they told us that. we don't know when facebook knew about the issues and the timeline. there is a lot of questions that they need to be asking. there is a significant find behind that and they could possibly push to break up the company. unlikely, butis it is worth pointing out also that there was a surprise appearance at the end of the hearing today by a former cto of the ftc. he just happened to be in london and they asked him to come over about something he tweeted. he got in front of the committee on short notice and said what richard allen had told him hours earlier was either misleading, false, or a lie. there are a lot of questions the ftc should be asking now. brad: how does facebook feel at the end of this committee hearing?

jeremy: i'm sure they don't feel great. they took quite a battering. on the other hand, in a way by --ying the committee zuckerberg, by not having them be there, in a way they kept it is contained. you would haved, every network on the planet broadcasting it alive. attentionat kind of around his senate testimony earlier in the year. by sending richard allen which is this anonymous figure to testify, although they angered the lawmakers by not having zuckerberg there, they probably thatd some of the options they might have gotten had he had appeared -- had he appeared. brad: thank you both for joining us. amazon just passed its biggest shopping day on history topping

its very own prime day on cyber monday. that's next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪

brad: cyber monday sales hit a high this year and amazon was no exception to the record-breaking. the retail giant said it had its biggest shopping day in history on cyber monday. a recorday weekend set for amazon as customers purchased millions of more products this think giving through cyber monday compared to the same period last year. bought morerldwide

than 18 million toys and 13 million fashion items on black friday and cyber monday combined. joining us from new york is shira ovide. from reading your twitter feed this morning, i gather you were not impressed by the press release. is that true? >> i think you can comfortably ignore everything amazon says about holiday shopping trends this year and every year. the word record amazon used it about holiday sales over the thanksgiving weekend. of course, as is their habit, there was no specificity around the numbers. 's 80 million toys a lot or a little? toys a -- is 18 million lot for little? -- or a little? brad: there was some stuff in

here, 20% more sales for small and medium-size business. shira: it is directionally useful to see what people are buying. that often reflects what amazon is promoting or discounting. know they sold a lot of echoes and instant pots but it is not as revelatory as they suggest. brad: i moisten interested in how amazon uses these to promote the things it cares about. ,ou have the four stars store the ring devices for your home, the echo devices, these are the things amazon wants to highlight and was people to pay attention to for the holiday season. shira: and i was struck looking on amazon over the holiday on how much amazon was promoting its own products. you saw a lot of deep discounts on it could devices and the ring which is the home security company that amazon now owns. as you said, there were

promotions for things like prime video releases and amazon's digital music service in the four-star stores and bookstores. it is interesting to see how much amazon uses the holidays to support -- promote itself. brad: i will serve you up a softball. amazon appears to have coined the phrase in this press release. "the turkey five." what is it and what you make of it? shira: i had not heard of it before either. to the fiverefers days between thanksgiving and cyber monday. i guess a frenzy of thanksgiving related deals. i've seen it somewhat catch on in the analyst community, much to my chagrin. if you can see my eyes rolling this morning when i read turkey five, it would have been quite a sight. agreei think maybe we can

never to utter it again on bloomberg technology. shira: it is a vow. [laughter] brad: thank you for joining usbrad:. -- brad: thank you for joining us. how columbus ohio is leading the transformation of tech, next. plus, the rates for china's ev markets. can a chinese backed silicon valley designed car beat tesla? this is bloomberg. ♪

this is bloomberg technology. i am brad stone. columbus, ohio is getting smarter. in 2016, they beat 77 other cities for the department of transportation's smart city challenge, winning $15 million in grant funding and designation as a smart city. it is committed to redefining public transportation and what it calls the new midwest. columbus has eclipsed the rest of the midwest in ev sales with a goal of introducing 300 fleetsc cars to public

by 2020. they also developed a system of self driving shuttles which will begin accepting passengers in december, and last month it was the number one city for unicorn , and here to discuss is the mayor, andrew ginther, and the ceo of a development organization, columbus 2020. , i need to start by congratulating you on the buckeyes win over the wolverines. i was very excited to see that. >> always a good day when we are living wolverine -- whooping wolverines in columbus. me about columbus as a hope to unicorn startups. home to ohio university, the fast food chain wendy's, but how did you foster the entrepreneurial environment? mayor ginther: it is rooted in

the columbus way. we do public pregnant -- public-private partnerships better than anywhere else in america. we are very proud of the success of insurance and coverage by meds, and we believe there is a bright future for entrepreneurs in the city. we are focused on affordability, mobility and talent, all things that are key ingredients to making sure that startups and entrepreneurs are successful. i am sure a lot of developmental organization heads are looking at the success of columbus, trying to figure out what you did to stimulate an environment that was good for startups. what are the lessons from other cities -- for the other cities? a comprehensive strategy. we take care of markets that already operate. we try to attract the best from around the globe, and we believe

actually those two things lead to a great entrepreneurial environment. commercialization, institutions, other platforms we have from the private sector, it is increasing every day and it is a comprehensive long-term strategy to make it the best lace in the country to do business and scale. brad: i mentioned the fact about columbus defeating other cities in ev sales. talk about the visions for the public transportation network. how do you incorporate these vehicles and what would be the impact on congestion? mayor ginther: smart columbus has been critical to our success and progress we are making before -- we lag behind midwestern cities. since the award, which is really communitywide, not just a city project, but with the award from dot and the paul allen

philanthropies, we have been able to build a movement in central ohio that has put us ahead of other midwestern cities and ahead of the nation with respect to electric vehicle adoption. it does take all of us raising awareness, working with dealers to make it easier to purchase and access and building chargingcture with stations and other amenities. corporate leadership has stepped up in big ways of ultrafine their fleets as well as investing in a smart grid of the future. columbus was one of the finalists for a student to -- .or amazon's hq two are you happy with how amazon conducted it? mayor ginther: amazon already knows the great place central ohio is to do business with thousands of employees already working in the region. they know that columbus has a bright future.

we believe through this process we have a great roadmap for economic development for our region over the next 20 years. it focuses on making sure we continue to leverage and use affordability, enhanced mobility options but also really be a -- b aggressive about recruiting and retaining talent in central ohio. we believe those three things will drive economic development in the future. we have to be aggressive and thoughtful and strategic about putting those in place. let me ask you, the mayor is being politically astute with the answer these of the amazon vis amazon. it didn't work out that well. our member apple -- alphabet helpannounced a process to facilitate nonemergency

transportation in the city. how do you feel after these two relationships, working with big tech companies when they do show interest in columbus? consider amazon and existing industry that we work with on a daily basis and didn't take the process would help us immediately to refine our value proposition to all kinds of companies, forced us to actually think about scale in ways we hadn't because of the size of the project, and we are in touch every week with the world's best technology companies, including some that are already operating within our region like aws, facebook, chase has a large operation in our city, nationwide insurance doing technology out of the columbus market. how do we become a great employer in a great city for

those companies and continue to scale? check is clearly the future impacting every business model. -- tech is clearly impacting every future business model. brad: are you happy with the time amazon devoted to ohio after the announcement? mayor ginther: absolutely. we are excited for the start up with -- the future of startups, existingeur ships, technology. they have been great partners to us, and as we look out on the future, we inc. columbus and central ohio's future is very bright. brad: ok, mayor of columbus, ohio mayor ginther and kenny mcdonald's, thank you for joining. up using back to start the know-how of silicon valley to make the next generation of ev vehicles. we will talk about the potential of the chinese market with their

ceo next. and google workers have another problem with management strategy. the latest revolt from employees coming up. this is bloomberg. ♪

this is the chinese backed and based electric carmaker, hot on the wheels of tesla in china. the company is looking to target the growing market for ev in china. they raise half $1 billion in june and are considering future funding and the option of going public. joining us the floor of the l.a.

auto show is the ceo and cofounder -- cofounder. thank you for joining us. i'm imagining a lot of our viewers have not heard of your company. they have heard of tesla and other electric cars. tell me what you are introducing this week and when we can expect to see it on the market. hi, everyone. thank you for talking to me and being interested in our company. it is very exciting to be at the l.a. autoshow because normally [indiscernible] they are not cars in the traditional sense. the product will be very different and the business model will be different. cars --ling electric different business model. you look at different companies now and can find [indiscernible] this is not a sustainable business model. we see the car as a parking lot

on wheels. this means our business will be selling from the business that beginning. it is based on what the smartphone and consumer electronics industries have done. [indiscernible] eventually become a provider of mobility and of shared mobility. this is what we are built around. brad: we cannot buy one of your cars today and most of your viewers are not at the l.a. autoshow. how us what the car is, much you will sell it for and how it differs from other ev on the markets. carsten: what we introduced at the beginning of this year, this is a very safe suv, on the affordable side or it will be

around $145,000 u.s. it will go on the market next year in china and come to the u.s. in 2020. the basic approach is it is affordable, it is multiuse. we are focusing on the user experience. what we are going to unveil in l.a. is our second product, built on the same [indiscernible] excitingone is very new interpretation of the sedan. with china still a very big market. a new interpretation, very exciting [indiscernible] car, weures of this will unveil here and show in our press conference. mentioned you will

start selling these vehicles in the chinese market. you have a lot of your engineering and manufacturing in china. why the bit on china as opposed to other countries? carsten: we were seen as a globally company from the beginning. -- global company from the beginning. if you want to be global, you have to be present globally. if you look from where the product you want to do, premium product, the debate is premium car. this means you have to be in china and germany where the premium cars are. witht is a smart car connectivity, autonomous driving, very fancy style of using. [indiscernible] state-of-the-art technology you find in silicon valley.

[indiscernible] recognized -- then you have to be in china, produce in china and do your price change. this was a global company from the beginning. we have one global product, global brand and business model. brad: it sounds like you spend a lot of time on airplanes. you mentioned raising 500,000 dollars in june but one thing we learned from tesla is the capital requirements not only to bring a car to market but to scale manufacturing and get profitability are high. what do you plan to do to keep byten fully funded as you move towards releasing your first vehicle? we are going to production the end of 2019.

our plan is under construction with the phase done now. we are installing machinery, we have built prototypes. we will bring products out of the production process come bringing it to the [indiscernible] the end of the year. different funding rounds already, a round, b rounds, now we are preparing the c round funding which will be finished in the first month of next year. this will bring out -- ok, thank you for joining us. sign aup, google workers public letter against the company's plan to return to china. we will discuss that next. this is bloomberg. ♪ this is bloomberg. ♪

--d: alibaba sherman chairman jack ma has been announced as of communist party member. he was among the most recognized business leaders. he is one of 100 that the party will honor as a celebration, marking 40 years of the economic reform and opening up. google's plan to bend to the chinese governments desire to this government's desire for search results -- abandon the initiatives known as product -- project dragonfly. is oppressing the vulnerable wherever they may be. dragonfly in china would establish a dangerous precedent,

one that would make it harder for google to deny other countries similar concessions area to discuss the issues around this, we are joined by isaac stone fish, the senior fellow at the asia society and mark bergen who returned from a reporting trip in china. but start with you. start with you. how many employees signed it, and how will google read this? i think it is close to 140. what is rare, there have been public letters before. there was one earlier this year around the contract with the pentagon, and there was one about dragonfly. this is the first time employees have put their names out publicly. it will draw more attention and google management will put more attention on this because of how they go out on a limb. brad: what you make of the argument?

they refuse to censor the vulnerable. isaac: i don't know if that is exactly what is happening here. i would not call the chinese people who get to use google in this case the vulnerable. i think they are helping the powerful, helping beijing, the party. that is striking. it was also strange to read the letter and see the employees say this was not targeted against china, but any country that china isthat whereas the case they are dealing with now and is by far and away the most important market where any issue can come up. brad: what do you think of the argument that google would have to be bending to the will of other governments isaac:? they are setting a bad precedent for alphabet and other businesses and other american tech companies. we see no other market that has

comparable levels of repression and anywhere near the size of china. russia is a smaller market for google and every other american tech company. to real problem for google enter this way would be the message that it sends to facebook, microsoft and the way it in bold and stationing about, u.s. tech companies are not going to yield. tod: i had the opportunity interview john hennessy recently on studio 1.0, and i asked about project dragonfly, and he sounded ambivalent himself. does give a listen to what he said. does give a listen to what he said. >> anyone who does business in china compromises some of their core values, every company because the loss in china are different. the question i think comes to my mind and i struggle with is are giving chinese

citizens a decent search engine, capable, even if it is restricted and censored in some cases than a search engine that is not very good? does that improve the polity of their lives? that is the struggle we have to work our way through. brad: what do you make of that dark -- argument? happening.is what is one of the employees that resigned over this project told me he was talking to a colleague and said a dirty window is better than no window. there was a strong belief and the management certainly would express this internally that google could do more good being what with isaac was saying earlier, we have this balkanization of the internet. 10 years ago when google was in china, it looked different. askingia, the country is

google to ban certain apps and in europe they have the right to be forgotten. there is no consistent internet, so they look at other companies in china and say why can't we do the same? brad: where does google go from here? they are waiting for some license to introduce public -- operation dragonfly. a permissionto get to operate in china, considering the blowback and the pr punishment, do they want to do that? isaac: i would guess somewhere there is a spreadsheet about projected revenues not only for china but a host of other projects they have versus the pr damage, employ url, the people who publicly quit to protest this. i would guess the potential

games financial are much higher than losses. i think google is going to say unfortunately we will take a hit of our reputation. we will feel with the trump administration criticizing this. if we can go in, we will do it. do you think they are still going forward? mark: there was a letter to senators saying we feel like we will be behind. china is marketing ahead, and part of this project, even if we never launched it is a way to keep up with the insertion. google looks at tencent and alibaba, the companies in china, and how they are using ai, and i think they want to be a part of that, and even if they don't launch a search engine, they are looking at a cloud business

which is less controversial in congress and with their employees and other parts of alphabet. i think right now we are less likely to see a search engine then we would six months ago -- than we would six months ago. brad: thanks so much. that does it for this edition of bloomberg technology. bloomberg technology is live streaming on twitter. check us out @technology and follow tictoc on twitter. this is bloomberg. ♪ ♪

i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. haidi: very good morning. i am haidi stroud-watts in sydney where australian markets are open for trade. ramy: i am ramy inocencio. sophie: i am sophie kamaruddin. welcome to daybreak asia. haidi: asia pacific market set to follow wall street as they raise chances of a trade that taught this weekend. president trump open to a deal with the g20 but the white house says china will have to step up. bmw is committed to the u.s.

market and will continue to invest. we will hear from the ceo. let's get a reminder of how u.s. stocks ended the session. you can see the we ended in the green, it was a very flip-flop kind of day. the s&p 500, i counted five flip-flops across the flat line. it was a battle between trade fears and trade hopes, and trade -- won witht with donald trump thing he is open to a deal. there are tariffs at the start of next year and new tariffs on $600 billion of goods that have not yet been made. the dow and nasdaq are up by the most in a little more than a week. we can see futures up .10%, indicating possibly we might see a third day of gains, but it is early days, early hours.

let's flip up the board and going to the bloomberg terminal. i want to show you a deeper dive into the 11 sectors. for the most part very green, health care and consumer staples the leaders. energy materials down the most, there has been a lot of wti volatility. oil did rise above the threshold levels, information technology also key, up a quarter percent, but it is also flip-flopping back and forth, especially with apple, falling .2%. that have fears that donald trump been saying anything made in china, even if it is with an american company could get tariffs. , most of it in the green. you have larry kudlow putting the onus on the trump-xi meeting. we have a meeting scheduled.

we could be looking at a higher open across the board. we have fluctuations for sydney stocks at the start of cash trade. energy and materials potential a weak spot, seeing the likes of bhp and bluescope steel under pressure with agl energy. we have little on the data talk to distract. constructiong on work data. overall looks like asian stocks looking to round out november with the first monthly rise in four. base metals continue to be a point of consent should -- concession. industrial levels at the lowest level since june. you can see on this chart. in commodities is putting further pressure on market expectations, inflation measured by u.s. breakeven. jump into the terminal for a

chart to illustrate the outlook. you can see here the two, five and 10 year to the lowest levels this year be euro -- below the 2% target. the five-year rate has fallen .elow 1.8% you want to keep this in your back pocket as we go through the chair said chair -- fed speech. sophie kamaruddin there are let's get you to first word news. reporter: president trump will the xi jinping for dinner on saturday. that is what the of ministrations has with further talks are not make progress. larry kudlow says the president is open to a deal but only if china steps up and produces new ideas. the u.s. has threatened to hit all chinese imports with tariffs if there is no agreement. >> certain conditions have to be met with respect to fairness and

reciprocity as we have said many times. for example issues of intellectual property theft must , forced technology transfers must be solved. andificant tariffs nontariff barriers must be solved. reporter: early indicators from china suggest the economy slowed for a six month as the trade where -- trade war grows. signs ofest available a government moves to support households and private companies haven't been enough to let the fears about growth. weakness in the major changing says trading partners to help either. a group of google employees signed a public letter opposing plans for a product in china that sensors results. would further enable chinese state surveillance over ordinary

people. the letter was signed by 10 employees, mainly software engineers and researchers. google said the project is exploratory. indonesian investigators are to resume the search for the lion as peopleporter demand information about the disaster. initial dedicate -- data indicated it was ordered into a steep dive after takeoff but families have been given no further details. bloomberg has been told the delay is due to the need for specialized search vessels. global news 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in 120 countries. i am jessica summers. this is bloomberg. ramy: let's look at the u.s. trading session, stocks searching for direction. had a session -- retailers

was a bright spot as final numbers confirmed holiday spending off to a roaring start. su keenan joins me and has all of the details. su: it was hard to tell whether it was a risk on or risk off. a lot of it had to do with radical reports coming out on the trade front. would there be more? you said it looks like a note of hope area you saw the dollar advance, the bonds edge higher, the retailing index, we sought strong performances, individual tocks only up .5%, oil able hold on to gains from yesterday's rebound. let's go into the big movers. the story is the size of the moves. papa john's down on disappointment from investors who thought there could be strong investor interest, possible rescue for the company. followthrough on yesterday's news it was separating into

three different companies. advanced micro showing stec dust strength in tech. and the faang stocks, the fact that close close to unchanged for alphabet and amazon, which we saw also a slightly negative. even though they had gains, they were not able to hold on to them. apple's decline is a big story that continues going into the bloomberg with what we have, the latest downgrade. fewer analysts have a buy rating on apple. the buyers are down, getting an update, 56% of all analysts have a buy. that is certificate decline from a year ago. talking to retail stocks, we had a bit of a boost in the second, but maybe not as much. momentum has been expected given confirmingumbers u.s. shopping online or in person, a lot of retail spending

going on over the four days. what were the numbers? is happy andtry they got off to a strong start. the crowds were out, people seemed to mix online and in-store buying. the national retail federation approximately shopped online only from the five-day thanksgiving here that was 6.5 million more from those who shopped exclusively in stores. it was a mix, and it came in line with adobe analytics optimistic production -- projection. they confirmed sales of $6.2 billion, increasing from a year ago. for at the big green retailers. in the bloomberg we will take it back to reality. what you are looking at in this chart is cyclicals. the home boulders and automotive, down in the red, a

bear market area down 20%, starting to go up, near two-month highs but these are rate sensitive groups, homes and autos, how are those sales going to go in 2019 as interest rates pick up? that is one of the key concerns weighing on the market. haidi: a day after the president's former campaign manager was accused of violating a plea agreement in the russia investigation, the white house is accusing robert miller -- robert mueller of ruining lives. president's are the grievances? reporter: he is forming a pre-rebuttal for what his allies expect to be a damaging report from the conclusion of the investigation. these are many of the same issues he has been bringing up before, accusing the prosecutors

that are working with robert mueller of being democrats, robert himself is a republican, initially appointed to the fbi by a republican president. is hee of his grievances didn't talk to everybody in his campaign including people who didn't have any dealings with russia or agents of russia. and that those people, a number of people's lives have been ruined. he is setting this up -- it is a matter of keeping his supporters behind him any possible erosion of support once the report comes he can continue to criticize and try to undermine the credibility of the investigation this way. for the battle that will be coming ahead of not

only with the robert mueller conclusions but also when the democrats take over the house at the start of the new year where they will start a new round of investigations. the president has quite a bit going on and continues to complain about the clinton foundation not being investigated and things like that. you can -- ramy: you can see from those tweets he launched into a tirade in the probe. he has also threatened to take away subsidies from gm after they said they would close 14,000 -- cut 14,000 people from their factories. what does he mean? it is also uncertain what he can do. house, his advisers and spokespeople say there is no timeline, nothing specific, they are just discussing options. is one thing that is out

there is a consumer was getting a tax credit for buying electric vehicles, like the chevy volt, and gm continues to build electric cars in china. beyond that it is not clear what else, what other action he could take to retaliate. would require action by congress that is part of the tax law. there is not a lot of sentiment for missing with the tax credit, although gm and others lobbied to extend because gm is running up against the limits of its -- as we speak and it will probably be not eligible for those in the near future. still -- his chief economic advisor larry kudlow say he expressed to bear the chief executive that trump was , and he iswith her

apparently not the only one and the white house. ramy: a lot of people more than cross. still ahead we will go into the rate debate. the fed vice chairman backs more gradual hikes while james bullard strikes a more cautious tone. haidi: we will take a look for any black spots in the market with rising volatility, growing economic uncertainty. this is bloomberg. ♪ s is bloomberg. ♪

haidi: this is daybreak asia. i am haidi stroud-watts. ramy: i'm ramy inocencio. we ask investors and traders what they are doing in this market and where they are putting their money and why. right now we will turn things around and look at what the market is telling us. 20 merck & co. -- tony burke

caddo talks about how the market is behaving. good to have you on the show, your first time on daybreak asia. looking at the market, i have to say i was confounded because it kept flipping and flopping over the course of today. what are they telling us now? >> you saw mixed results, apple and google, facebook down, -- iix was up, a lot of had a strong balance, so it looked like we were holding the lows from october on the s&p, but we are only less than 10.6 -- 10% off the high, correction territory. i will tell you what i feel. it feels bearish over the last six to eight weeks, not just the price. the price action.

in the morning futures are up, then it is down at the end of the day. in a more bullish tape, you want to see reversal. atures open down, rallies strong we haven't seen a lot of those recently. ramy: i feel that you might be the least bearish of the bears at least right now on bloomberg tv. would you characterize yourself as that and what is the optimism around anything? >> we focus on measuring market risk. we look at market data. one of the things we noticed is the market itself has become juicier at the top. you look at the top stocks in the market, amazon, google, the top 10, the weighted average data, sensitivity in the market is 1.2. that means the top 10 is 20% more volatile than the s&p itself. you look over five years ago, the top stocks were johnson and

johnson, coca-cola, and there were microsoft and other tech stocks, but it was not as heavy. the market is self has become top-heavy, and you see that in the price action. it led the way down from the end of q3 into now and is more effective by more volatile technology stocks. of -- you said because you characterize it being overt love to come of the growth stocks, is it being skewed? does it make the market feel worse than the fundamentals are? >> absolutely. you look at the other asset classes, commodity, oil down. it is a very unusual year. the first time since the early 70's -- 1970's you haven't seen a single asset above 5%. they say it is a bull market somewhere, but we haven't seen it. it felt worse than it is, and it is exacerbated by the fact

possible strategies haven't worked out. off years, a lot of hedge funds with a lot of trouble. the climate has worse than the numbers would indicate. worse than the numbers would indicate. the end ofything at last year we started having this conversation. is it actually happening and where you see the rotations of leadership coming from? >> we see that with value over the last six to eight weeks being strong. one of the strongest positive factors has been momentum. that has really taken on the chin over the last six to eight weeks. we are really looking at factors and different strategies and how they will change over the next quarter into 20. how those strategies rebalance, particularly the momentum strategy that five stocks that have been better.

we are looking for the higher that we rebalance quarterly. there will be differences and how those strategies go into the end of the year and set up for q1 and beyond. the technology question is will that lead, or will he get leadership -- we get leadership from another group. health care is the only one with double-digit gains. health care, buying in financials, so we could see another leg up your we have seen these corrections before, one in 2016, 2015, 2011. it will be challenging to continue this technology led growth very we might need to find another sector. ramy: folks are wondering if the pain will end. another question is what is happening with the fed and rate hike pass. use are for -- you are forecasting three in 2019 including the one possibly in december. any chance for a cause? --

pause? is nothink so, and it just the market. you could increase the probability. the vicecomments from chair of the fed it we have been taken both ways. meeting, youlive know, every march and june. there is a probability that will happen and we are hanging on every number and seeing which way it will lead. has your observation been with regard to the other major theme of the market of 2019 when it comes to trade rhetoric? how does that inform the way the markets behave? >> >> you saw it >> in the summer with industrials whipping around. now it is in technology. apple for example is in the crosshairs with threats to the iphone with tariffs, so it has been market wide, and the market doesn't know what to make of the rhetoric are you see some of the

administration saying one thing, the president saying another, and it has been tough to not get a handle on. haidi: thank you so much for joining us. you can get a roundup of the stories you need to get your day going in today's edition of daybreak. you can go to dayb on your terminal and it is also in the anywhere app. to passfed speak through this week. you can customize the settings so you just get news on the industries and assets you care about. this is bloomberg. ♪ berg. ♪

this is daybreak asia. i am haidi stroud-watts in sydney. ramy: i am ramy inocencio. taking a look at where you are, it is still raining cats and dogs. the superlative that we have here, but i can't quite get over

that you are getting a months worth of rainfall in just a day. look at the camera we are showing. and the day if it was raining we would say, let's not use this camera but this is how bad it is looking at how the -- looking at the sydney opera house. haidi: it is very atmospheric. quite apocalyptic of this morning according to a number of people, trying to get to work, the tunnel was close, one of the other major bridges, parts of the airport have been closed down with flights being canceled and schools and businesses have closed for the day, advising people to stay home and work from home if they can. this is not really the start of the sydney summer. the drought has been really devastating for australian farmers. as much rain as we can get despite inconveniences is good.

let's get you a check of business flash headlines. sales surged after hours on the high revenue forecast. they announced fourth-quarter sales up to $3.6 billion, surpassing analyst estimates. 26% in the third quarter. the maker of cloud-based apps has been fighting rapidly to keep the good times rolling. slumped asal motors president trump warned he could terminate subsidies for the ford electric car program in retaliation for gm's decision to close factories and cut thousands of jobs. he tweeted his anger at this company and the ceo, saying it is being repaid with job losses and closures. rejected claims of collapsing sales in china.

the china passenger car association said 211 cars were delivered in october, a slump of 70%. tesla said the figures are not true and lots more to come on daybreak asia. this is bloomberg. ♪ this is bloomberg. ♪

haidi: it is 10:30 a.m. in sydney where markets have been trading for 30 minutes now. ofre not taking a view sydney because it is raining and gloomy. we got a months worth of rain this morning. a beautiful picture there. 6:30 p.m. in new york. up by ap futures are 10th of a percent. i'm wondering if we can make it three for three, still the early hours yet. all markets in the green. it's been a surprise. before coming on, it was in the negative. we managed to do that.

trade hopes tromping trade fears right now. with regards to what happening with u.s. and china in the countdown to the g20 summit. you are watching daybreak asia. let's get your first word news. early indicators from china suggest the economy slows for a sixth straight month. a bloomberg economic gauge says the government moves to support household and private -- private is iny in -- we can china's major trading partners also doesn't help. investigators are to a reportersearch for as relatives demand more information about the disaster. data indicates a faulty airspeed sensor may have ordered the 747 into a steep dive short after

takeoff. families have been given no further details. to asay the delay is due need for a specialized search russia. sterling weekend as theresa may lost her back brexit tour on signs it will be increasingly difficult for the house of commons. the prime minister candidate pressure from parliament. lawmakers now being allowed to change the terms of the brussel accord and demand a second referendum. may wanted a straightforward taken orally the debate. new zealand central bank will relax mortgage lending restrictions as the housing market cools. banks will be allowed to make more low deposit home loans. the required down payment on mortgages will be lowered. financial stability report says it expects further loosening of lending restrictions and coming years. facebook is under fire again in the u.k. after declining to send

mark zuckerberg to testify before lawmakers. he answered questions on capitol hill in april but has repeatedly refused to appear in the u.k.. facebook sent its vice president of policy solutions. day,l news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. let's get the latest on the markets. sydney mustpour in be raining on stocks. financials and real estate stocks among the laggards. minors are the biggest drag. gaining theirare

footing with wti hovering above 52 bucks to get -- bucks. it has been a choppy ride for crude prices. wti volatility surged to the lies level since early 2016. they are wondering if oil can keep up above that $50 level. we are shifting to that g20 meeting for clues on what opec might do. goldman sachs reckons that the meeting could be a potential turning point for oil markets. little turnaround is seen for copper. appetite is waiting for copper miners. , fallen to the lowest level since the summer of 2016. the storm clouds are gathering. there is considerable uncertainty over trade when it comes to copper and other base metals. ramy: thank you there. here's a look ahead to the trading day in the asia-pacific. president trump has resumed his

bashing of the federal reserve. saying they are standing in the way of a stronger u.s. economy. our global economics and policy editor is here with the presidents latest said iran. >> years ago, whenever a president would say something about the fed, we would call it fed bashing. donald trump taken it to a new level. he had an interview earlier today with the washington post. he's not even a little bit happy with jay powell, the man he chose to be head of the federal reserve with such fanfare. he's blaming the stock market drop in the fact that the head of gm laid off workers on the federal reserve interest rate hikes. he said he's doing deals and not being a caught a mated -- accommodated by the fed. some people would say, you are pushing a trade war getting in the way. maybe he's setting up a bit.

you can blame when the economy slows down. mary kudlow said, donald trump is giving his opinion. he's not trying to tear down the independent wall between the white house and the fed. the vice chair of the fed was asked about this when he spoke in new york this morning. noted, monetary policy is more art than science. there can be differences of opinion about the pace of rate hikes, the destination. the fed has its mandate. it safe. if you want to complain, go ahead. anybody can do that. they are imported is gradual rate hikes. less certain when it comes to where the fed should stop. >> this is important. to a certain extent, what they see for 2019 rate hikes is so important to the bond market. saying, maybe one or

two. not three. one of the things rich said in his prepared a parks -- remarks. the neutral rate were you don't make the economy faster or slower. risks have become more symmetric. he talked also about using the data to do two things. be data dependent in the sense of, what will it tell you about where we are now in terms of our pellet -- policy? also, where is that neutral rate? where is that theoretical endpoint where the fed could stop raising rates? yes about his preset course and said, there is no preset court. -- course. a couple of weeks ago, he said

it would be good to get the neutral rate above the funds rate. maybe he's putting a little bit more flexibility in his remarks. , whenl see if jay powell he speaks to the new york economic club tomorrow at noon, if he is also expressing this view of yes, we are heading -- we are watching things closely. i would love to hear him talk about stock market volatility. to see if he has any sense that may be some things would change enough for the fed to take another look at where they are heading into a 19. december rate hike is a done deal. look at what to expect as we look forward to passing that speech from jay powell. it could be a pivotal moment in the trade war. when president trump and president xi me. this is what some experts have

told us. be, goeal concern would all in on every chinese import at 25% rate. that's a $25 billion tax increase. ramps up to 50. that would be noticeable and would hurt the president's economic agenda. >> if there was a trade deal with china, which would definitely be better than what we currently have, the markets would be very excited. along,d the view while if the trade war did not blow up, the economy would be in a better place today. >> it's possible. the probability is low. trump wants to appear tough on china. we are not counting on a major breakthrough. the fact is, this is starting to impact sentiment. >> the whole trade issue has now become mixed up with strategic tissues. the u.s. is worried about the growth of chinese military, the

data that the chinese have been getting from the u.s. and many other issues. unfortunately, it has become more complicated. bloomberg's china correspondent joins us now from beijing. with what we have been hearing from the trump administration, the swing between positive and negative headlines between now and saturday. >> absolutely. we got a balanced view from larry kudlow, the head of the white house economic council. he thinks, trump thinks there's a good possibility of a deal at this meeting. she's a pain has to come up with new -- the president of china has to come up with new ideas. would satisfy the trump administration at this stage, given their list of concerns vis-a-vis china and trade? whether that's intellectual property, market access. the chinese have said that they

are prepared to meet the u.s. halfway. we haven't got any sense on the that thee in china chinese officials are going to make any radical steps or concessions at this meeting. we may be wrong but that is not the sense we get at the moment. trump has already said that he is looking and prepared for additional tariffs on chinese goods. kudlow reiterated that again in his comments to the media. he thinks that the u.s. is in a better position than china vis-a-vis the economy, we have heard that before. kudlow reiterating that. the u.s. is coming to this from a position of strength. china is feeling the pain and some of the equity markets and in terms of investment year. many officials think that china has the upper hand in the long-term. sidesofficials on both saying a little bit more.

this get us closer to any kind of deal at this upcoming g20? >> essentially, not really. this is the vice premier and the chief economic advisor to the president of china. thatd again emphasize china is continuing to reform and open up its markets. he says that china will continue to put in place policies that would make it easier for foreign companies to operate here in china. chinanly the president of have talked about their willingness to open up sectors beyond finance and autos to things like education, medical services, and those areas. saying that those reforms are going to be stepped up. we heard these messages for -- before from china. in terms of the protectionism of , we also heard from

the chinese ambassador to the u.s., saying that they are not going to weaponize their treasury holdings. that would be like playing with fire. we do get a deal, even a hint of a deal would be positive for emerging-market assets. the bank of singapore says if we don't get a deal, you are looking likely that the yuan crashing through that seven level with the u.s. dollar. ramy: one more question. a few moments ago, we saw that china said that the president will be meeting emmanuel macron at the g20 as well. , as the u.s. continues to pressurize china, could there be avenues for further ties to be built, specifically in europe, specifically with france? >> that is something that china would like to see. they have been making overtures

to their european counterparts. in hamburg, in germany, having meetings there. the president of china will be meeting with emmanuel macron. when you speak to the europeans here, they say that they do agree with many of the issues being brought up by washington in terms of reciprocal markets and the lack of reciprocity for foreign businesses operating here in china. all issues that they largely agree with. what they don't agree with is the tariffs. the idea that china could form a strong alliance with the europeans seems far-fetched. to stress tong their european counterparts that they have in more -- more in common. they german companies -- big german companies, policymakers have allowed them to do. continue this outreach

to their european counterparts. ramy: it's interesting to see that china does have options. thank you very much. coming up, how china's slowdown could affect global demand for iron ore. we have commodities with citigroup, next. this is bloomberg. ♪

ramy: this is daybreak asia. this: our next guest says year may have been the best her robert commodities. joining us is the citigroup commodities specialist. we want to start off with our chart. we have the latest reading yesterday. it shows a continuation of a

downturn. industrial profits out of china falling every single month since may. we have seen the troubles when it comes to the steel mills coming through as well, tracking that decline. do you see this going through until next year regardless of whether we get any sort of detente or compromise on the trade front >> -- front? >> what we know for now, china is under these severe headwinds. inwere seeing a slowdown property contraction activities and household consumption. these trends are very difficult to take going into next year. what is uncertain is how much the chinese government is willing to put into stimulus, primarily through infrastructure expenditure and a broad base of text cost. it will be offset with positive signals out of the government.

the prospect for those stimulus are uncertain as the leadership of china and the u.s. step in to trade talks a g20. haidi: it's really interesting. at that part of the year when they start ramping up, energy use going into the winter. the bad weather or pollution levels in beijing at the moment, a couple of analysts telling us that when the pollution gets bad, you can tell that the government is having to get more desperate in terms of allowing some of that old smokestack fuel to come through. is that something you are seeing as well? >> yes. air pollution in beijing is pretty severe these two days. we are seeing the government reacting to this by gradually allowing and mandating more cats. we have seen a loosening of that production cut policy as compared to the past winter. when the production cut policy was enforced strictly.

this winter was different. local government, beijing wants gdp as well. the production cut is a bit disappointing. that's why the market is trading steel and iron ore down. more steel in the market than we are he thought. ramy: it seems like it's a pretty bleak picture moving ahead here. hop into the bloomberg terminal. i want to show you the falls and iron ore. 65% in white. degree do you think that this has further to fall until we potentially hit some kind of bottom? ofthe reality is, both types four are seeing falling prices. if you look at price support, we put out a report recently arguing that iron ore can't 54 dollarsels near

into the median term. prices falling down, it's hard to see a rebound based on fundamentals. for 65%, it's equally challenging. facedat steel mills are with lower profit margins, they are happy to use low-quality or. the 62% or 68% gets well bid. 65% is under more severe downside pressure. ramy: choice of quality leads me to my next question. scrap metal is also posing a threat here. you are not necessarily going for the stuff that hasn't been used for poor -- before. how competitive is secondhand steel relative to pierced off? --. stuff? >> whenever scrap is cheaper, the steel mills will be up for

one another. the trend for the medium-term is for scraps apply to grow pretty rapidly in china. china is entering this scrappage era for old cars and buildings. nowadays, it's 150 million tons. it's going to do hundred million tons in two years and even higher in five years. that will make scrap more price competitive than peak iron. what's your assumption as to what happened with the u.s. dollar? on wherea huge impact oil pricing and commodity pricing goes from here. if we get some kind of , does thatat the g20 come through more for the u.s. dollar? >> into the medium-term, we think that the u.s. deficit will pull the dollar lower. you lookort-term, if

at relative performance of the u.s. economy versus the rest of the world, the u.s. is in a strong position for the dollar to stay where it is or go higher. has ang dollar spread come a consensus. position is maximized. unless we see a near-term pullback, the dollar will stay where it is going into the g20. afterwards, we might see a pullback into the medium-term. ramy: one area of optimism is that peak steel hasn't yet arrived. when is that going to happen? who stands to benefit? >> if you look at china for example, a lot of people thought 2014 was peak steel until the last round of stimulus that brings steel demand another like higher. it's going to be the same pattern. we are shifting back and forth between stimulus and tightening. still demand goes one way or another.

under our best case, there's some start of stimulus going into the next few years. still demand could go another like higher before peaking. over the medium-term as the urban a nation -- urbanization slows down, it will be impossible to use as much steel as it has. ramy: all you need to know about iron ore and steel, are cities commodity strategist. more ahead on daybreak asia. this is bloomberg. ♪

haidi: this is daybreak asia. let's do a quick check of the latest business flash headlines. madrid is as post-brexit trading hub in the european union. after initially only playing through some investment banking positions in london. the banking his entering spain

as a legal base for the majority of its operations with germany playing a secondary role. sources say no final decision has been made in plants could still change. haidi: united technologies saying it's on the way to break up to take you years to complete . investors may have to wait until 2020 for the conglomerate to spin off its elevator and climate control divisions. its purchase of the aerospace supplier is complete. names australia's oldest in newspapers is trading later on wednesday. after anny was named english immigrant who brought the sydney morning herald in 1881. the stock is 83% below its all-time high of march 2000. ramy: coming up in the next

hour, we speak about the future for thin tech in the region. the market open is next. stay tuned. this is bloomberg. ♪ [ phone rings ] what?!

ready for christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. haidi: good morning.

asia's major markets have just opened for trade. ramy: good evening from bloomberg's global headquarters in new york. welcome to daybreak asia. ♪ haidi: asia pacific markets are set to follow wall street highs.