good morning, i am paul allen in sydney where markets have opened for trade. shery: i am shery ahn in new york. sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. paul: our top stories, pressure on huawei. canada has arrested the cfo at washington's request for alleged sanctions busting and iran. president trump said china is sending a strong signals about a trade deal but it is not clear

what was actually agreed last week. oil slips after opec offers only vague plans to output curbs. the level of any cuts was a discussed in vienna. -- wasn't discussed in vienna. shery: markets in the u.s. are closed for the passing of george h.w. bush. looking at futures, a second session of gains, up .4%. tomorrow will be the big day to see what happens after we saw more easing of tensions between the u.s. and china. we are seeing wti bouncing back factaining .3% despite the they dipped in the new york session p we have comments from opec plus, no details on what sort of production cuts we could get from the group. we are looking at the pound, now holding steady. right now the key question is what happens to brexit has prime

minister may is struggling to get that deal through parliament . let's see what the asian markets are doing now, sophie. sophie: struggle is the right term because we are looking at a muted start. we are looking at a mixed start. we have the asx 200 on the back foot, under pressure, off by .1%. wellington is gaining grounds after a two day drop. we can look at a mixed a session for asian stocks as investors come to terms with prospects for the u.s.-china trade deal and the cloudy outlook of global someh which is having people think there is wishful thinking about a turnaround for markets in 2013 -- 2019. this man finds it hard to read accelerate the global economy. intootion is sinking australia. the aussie dollar is at the lowest in more than seven months

. we will get more from australia to flesh out the picture at 8:30 hong kong time. trade surplus expected to have narrowed and retail sales likely to have picked up a touch in october but going to remain lackluster. we have consumer confidence data from thailand and indonesia and waiting on the opec plus meeting to kick off in the n up. oil prices have been fluctuating as traders hold out for concrete details. rent below $62 a barrel. we did get commentary from iran's oil ministers saying the country will not join any output deal during u.s. sanctions. paul: thank you. let's get to first word news. here is jenna dagenhart. reporter: the u.k. prime minister theresa may is what -- waiting a range of decisions to win over conservative rebels. after losing on the split, she has held talks with eurosceptics to elicit support. northern ireland's democratic

unionist party is ready to drop support for her government over the so-called irish backstop. the reserve bank of india is dialing back its hawkish tone signaling it is open to a more flexible monetary approach to months after stating interest rate cuts were off the table. the governor noted the possibility of commensurate policy actions if inflation continues to overshoot. he spoke after an rba kept rates unchanged for a second straight meeting. china's former central bank governor said he is optimistic about the trade truce agreed to at the g20. he said the agreement shows both sides are key to deescalate tensions but he warns wider reform of the trade organization is needed as well. he expects the u.s. and china to have some kind of accord in the next few weeks. optimistic. on the one hand, it shows both

sides have a desire to deescalate the trade differences. this person continues to profess innocence despite new charges money laundering and embezzlement linked to the 1mdb investment fund. his whereabouts are unclear but his lawyer says he will not submit to any jurisdiction where it has been predetermined by politics. he is accused in the loss of billions of dollars from 1mdb. 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. shery: thank you. huawei's chief financial officer has been arrested in canada and faces extradition to the u.s. on suspicions she violated trade sanctions on iran. let's get more from joe sobczyk

in washington. what are the allegations? reporter: the company has been under scrutiny since 2016 for violating sanctions against iran and other countries. in april it was revealed there was an fbi investigation of huawei that was tied to the company the zte, -- the company ate. -- zte. it has been quiet since the revelation earlier this year about the investigation, but this is something that has been developing over that time and comes at an interesting time. whether or not it will throw sand in the gears, trade deals they have been working on -- the for relatedned zte sanctions violations that was eventually partially lifted by

president trump after appeal from china warning it would but the company out of business. the arrest of the huawei executive seems to step this whole thing up. couple of notches. there will be a trial in the u.s. and more scrutiny of the company as it has dealt with other companies -- countries under sanction. one of the issues the u.s. is concerned about is the possibility of the company putting a backdoor channel into equipment that could be used to monitor u.s. users. they have denied that. this is a real friction point between the u.s. and china. shery: especially when we are seeing positive trade headlines from washington and beijing. have we heard anything from government officials or company officials? we have not. this has sprung late in the day.

the u.s. and before china gets in for business. this is going to continue to develop. we are waiting to see a response from the chinese government if any later in the day. this is coming as you mentioned at a time when there seems to be a saw in the u.s.-china trade yes,ict with china saying, they were pleased with the meeting they have with trump and they are willing to take steps, but what those are is still unknown. we didurther to that, see encouraging words from china's ministry of commerce on wednesday. an enthusiastic tweet from president trump saying everything was discussed. what will happen? no details. is there an extension to the

90-day truce or roadmap? what is the outcome? joe: it shows the two sides are talking. there is commitment by china to the negotiations area they have suggested there will be more lng,ases of u.s. soybeans, other things they say are mutually agreed on from the meeting, but no specifics. there is not as the president tweeted out on sunday an so there is aars, lot of ground to cover. aw inseems to be a th the trade war. it will give both sides room to maneuver a bit, so we could see an extension of a truce. but a lot will depend on how far and well talks go from here on out. paul: congress editor joe sobczyk, thank you for that

update. oil is the big story as well, saudi arabia, russia and other members of opec class group are defining president trump and recommending a cut in oil production. details need to be ironed out. our reporter is in vienna. she joins us on the line. we got an agreement for output curbs but no decision on how big area of wine all the circumstances? -- how big. why all of this? theyter: they agreed, but could eventually remove maybe one million barrels a day. someone else was saying some members need smaller reductions are adequate. when it comes down to it, it is how much they will cut, who will bear the burden and what level they will cut. different levels from the month

of producing this year and the deal in 2016, you will end up with a friend numbers of actual oil hitting the market. it is coming down to the wire. what could end up happening is what happened in 2016 with president putin and the crown prince having to make a phone call and make a decision how they want to proceed. we will at least have solid words out of iran today. -- they say iran is looking for any exemptions in the cuts opec as. it likes oil in $60 range. old iranian oil minister should be arriving any moment in vienna. he is under sanctions from the united states. they were giving waivers with some countries so they can given these

circumstances, they shouldn't have to cut because they are not able to produce right now at their macs. i'm sure there are other countries who have security issues like libya, and venezuela , also likely will be throwing cards on the table saying we don't want to be able to make some cuts. what makes this difficult and complicated is for the last month, saudi arabia and russia have been pumping at record levels. but nigeria made it clear saudi arabia will not bear the burden alone like in 2016. shery: the iranian oil minister saying opec is not part of the u.s. secretary of energy. our delegates talking about president trump? reporter: that is a good question. the minister feels like the u.s.

is unduly influencing this. there is a few things where trump comes into play. one analyst says he is here in spirit. we did have the iranian, u.s. special envoy to iran meeting in the end with people this morning ahead of the opec plus meeting, bring to people close to the matter. he was here to discuss obviously oil matters with the saudi oil minister appeared we had trump tweeting at a critical moment of the meeting. they had walked into the meeting, and the president said he hopes they continue to keep it open and at production. overwhelmingly traders are areing me the saudis walking a fine line. they say they need to cut at least one million barrels a day, but there has been such strong

support for the kingdom given the killing of jamal khashoggi, many analysts wonder if they could decide on the call for lower prices. shery: thank you so much. our reporter in vienna, austria. we are live in tokyo for the bloomberg year ahead event. the former japanese ambassador to the u.s. joins us to discuss data relations with washington and the risks he sees in 2019. paul: we have an exclusive interview. talking strategy and output for casinos across asia. this is bloomberg. ♪ this is bloomberg. ♪

this is daybreak asia. i am shery ahn in new york. paul: i am paul allen in sydney. the year ahead conference is

underway in tokyo, bringing global ceo's. security will be a top discussion in the coming year. what is the mood by? upbeat evenis though it started to rain this morning. theill have an all day session. lawrence, thank you for joining us. >> thank you for having me. stephen: you said japan is a core interest and priority for melco. we know there will be three licenses issued. where are we in the process now as you are shaping up will be -- what will be a bid for one of those? important.l be very i think the national government plans on establishing the gaming control board in july, then i think after that, all of the

cities in the prefectures will line up with operators and consortiums. 2019 will be a year where operators like us will be trying .o join consortiums by the end of 2019 there is a possibility the bidding will have started. stephen: what kind of partnerships do you need to fill out your bid? >> partnerships is everything. it is part of our dna, fundamental to every project we have ever done. malcolm started out as a partnership between us and crown resorts of australia. we have a great partnership with sm in cyprus, the big conglomerate there. we have always entertained partnerships at all levels at the equity level all the way to entertainment food and beverage i.t. content.

for japan it is even more important to have great partners and can educate us on how to be culturally harmonious and have the best possible bid. we have been involved in the ir project in japan for almost 10 years. in that time we have met inerous potential partners various industries from real estate developers, construction companies to transportation companies to financial services. we are still -- there is a lot of dialogue and consensus building that is ongoing. there is a lot of game theory going on because at the end of the day the voice of the will -- be be in the involved involved in the element of politics. we have met great partners and are still working on -- stephen: japanese partners. >> who can contribute. >>stephen: some players will not

get licenses that would like to be in this, like cooleemee, maybe even game makers. are these the kind of partners you would like to tie up with? what would be the timeframe to come together to a consortium for the bidding? to -- thereneeds are three licenses. there is a lot of speculation about what those are, because even within japan the prefectures in the cities are duking it out right now. one clear favorite is going to be a soccer because given the governor was the first to raise beir hand, -- going to osaka, because given them first to raise their hand and the expo 2025, there is urgency to get the ir done. it is a tight timetable, but it is everything -- if everything goes according to plan for the

next year and a half, and the usuallytakes place, something the size takes four or five years to build. we are in 2019. if they get everything right, it could fit in that window. stephen: the favorites are las vegas, sam's, caesar's and melco. the odds on places would be a , tokyo.tokyo -- osaka >> in kansai it would be a soccer. -- it would be osaka. another rumored low duration -- location is yokohama near the airport. original one is hokkaido and nagasaki. there are some key elections of the local government levels that will happen in april and july. there are key dates ongoing.

but our main focus is really the major metropolitan cities. whether it is in kanto or kansai. i love japan. so i want to build the world's greatest resort here. kansai region, whether yokohama or osaka, has the best infrastructure. of tokyo is mayor here. do you need an introduction? >> the more face time the better. negativehow about the implications of? there has been resistance. a recent survey by the local media shows 53% was in opposition because of addiction elements. how do you address those? >> the problem is japanese citizens associate integrated resorts ir with pachinko

parlors. it is far from the truth. stephen: which is not categorized as gambling. >> technically. there are forms of gambling like ,orse racing, speedboat racing even though it is not technically classified, pachinko. invested 10,000 dollars in the cap. our facilities of investment, 5% in macau are part of gaming. gaming focus. we are proud of the fact of all the entertainment attraction, any market we operate in, most michelin star restaurants, so there is more to ir than just casino. stephen: analysts are saying gross giving revenue could be in the single digits.

gaming revenue could be in single digits. 2018 overshot everybody's expectations. after a years in 2016, 2018 has been good. i think 19 is going to be a decent year. stephen: what does it mean? >> high single digits potentially. at the end of the day it is dependent on geopolitics and macroeconomic factors. is the trade war really going to happen? stephen: it is happening. >> the end of the trade war. stephen: it is the trade war ping ofo impact the reup the licenses? they need to reapply. sands.thers, las vegas could this be delayed, or could the characteristics of licenses be changed such as more gaming revenue is part of the

requirement? >> the government hasn't told us. what they have been saying, and this is consistent for the last 15 years since licenses were granted, they want diversification, non-gaming. for melco, we have listened to them from day one, so we have doinghe market leader on more non-gaming. we call it it beyond damming -- gaming. we have dancing water. we fully embrace the concept. beyond gaming is part of our dna, and we are happy. as part of leading up to this license renewal process, they had a midterm review to take stock of how operators have been performing. melco finished first in virtually every single category. we are very happy. much.n: think is a how optimistic are you to get one of those licenses in japan? the opportunity is priceless,

and we will do whatever we need to do to win. stephen: thank you for your time. that is just the beginning of our coverage here of the look ahead from the japan market for 2019. back to you guys. shery: thank you. we have more news on huawei. we have heard canada arrested the hallway cfo. we are hearing the response from huawei, saying they are confirming she was provisionally detained by canadian authorities. they are not aware of any wrongdoing, that they have provided -- been provided little information on charges, so the first confirmation from the company itself after the cfo was detained in canada. paul: that is right. huawei saying it complies with all applicable laws where it

runs. the story is continuing to unfold, and we will keep you updated as we get news. it break down the latest r.b.i. decision to stand fast central banks across asia, hitting pause on tightening. this is bloomberg. ♪ ♪

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paul: 10:30 in sydney, markets trading for 30 minutes. the main benchmark in defiance of expectations from futures is off a quarter of 1%. we have heavyweight sectors of financials and materials weighing on the index in australia. york. 6:30 in new futures unchanged. they were hire earlier, but they are taking a hit. we are getting more news out of huawei saying their cfo has been detained in canada. was suspected she violated trade sanctions against iran.

i am shery ahn in new york. in sydney.paul allen you are watching daybreak asia. let's get to first word news with jenna dagenhart. and its: saudi arabia allies are recommending a curb on oil production. they are defining a twitter tweets from president trump. they met in vienna and secured russia's backing for six months to reduce output in january but specific cuts were not defined. a final agreement could see one --lion barrels a day for removed from the market. china is sending strong signals about a trade deal, says trump, but there is confusion about what was actually agreed to. president trump thinks president xi agreed everywhere he said. china has begun it reordering american soybeans and lng but it

is not official what was nailed down in argentina. the trade war means bad news for china's auto industry. inventory levels are at a record, and there is unsold cars at the highest level reading based on details from the dealers association. china's car sales have fallen five straight months and are on course for the first annual decline in two decades. the trade war hurts demand spending power. washington said goodbye to president george h w bush in an us -- emotional ceremony. the elder son george w called a leader of steadfast character, saying he taught him what integrity means. president bush was the last u.s. leader to fight in war time. he will be buried after a funeral service in texas on thursday. 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. messages coming from some central banks indicate policymakers are becoming less confident in the strength of their economy. the global economics and policy editor kathleen hays is here with a case by case look and the reserve bank of india's decision to hold no surprise. kathleen: the signal they gave was a bit surprising but they kept the key rate at 6.5%. they are dialing back their hawkish tone. a couple months ago the head of the r.b.i. said in a tub of rate cuts was off the table. we will jump into the bloomberg. you can see this chart from our library. the key rate is 6.5%. look at inflation. in the spring, going into summer, look how that has eased. following oil prices -- nevertheless the r.b.i. didn't

really signal a cuts exactly because they are staying in atl liberated -- in a calibrated tightening stance. year 2018the fiscal gdp forecast at 7.4%, well below 8% that has been seen. he did open the door. he said there will be commensurate policy actions if inflation undershoot spear they cut the inflation forecast to a range of 3.2%. there were no headlines made as it turned out on the question of central bank independence. bonds had a nice rally out of the meeting because among other things, the r.b.i. it has to by more. more debt needs to be purchased. good for bond traders. from: not a big headline the bank of canada. no change and yet the dovish turn is really catching the eye. kathleen: it was a surprise

because the bank of canada governor had been determined to get rates back to normal. they were at 1.7%. he wants to see like 3%. before the great financial crisis that is what they used to have. people are less optimistic about the economy. oil is their biggest export. this is not good. take a look at this other chart. we are seeing shots of the canadian oil operations. inflation, which is rising rapidly, remember the big run-up in oil prices, a boosted the economy. now it is coming down. this is another reason why they peoplenal this pause think could last beyond january into next year. in fact they are now focusing -- forecasting the reason for this deceleration, it is interesting. their optimism in the economy,

the stage beat -- moderate growth amid declining optimism because of tariffs and other uncertainties. thank you for keeping an eye on that for us. let's get a check on the markets , getting it to sophie kamaruddin in hong kong. u.s. futures hinting at losses when trading resumes on wall street as investors weighed outlook for trade talks and growth and consider catalysts like the rest of us -- of the huawei ceo and more for a dovish tone. extending declines for a third session with inks and miners among the biggest drags on the asx 200. the aussie dollar, we are seeing it under pressure, down .1% after sliding the most in two rate on the gdp miss as natural puts it. they are going up the stairs and

down the elevator. the aussie bond taking a breather, topping around 2.5%, .he lowest level in 2018 we are seeing steepening ahead of october retail sales and trade balance data which could garner attention as economic risks are rising for australia. this is building the case for the next rba move to be a rate hike. shery: thank you. .ut get a check of the markets we begin with su keenan now, joining us. we have seen trade tensions easing between the u.s. and china and at the same time you get these headlines from huawei, and the cfo detained in canada because the u.s. wanted her after allegations she violated sanctions on iran. u.s. futures not looking good. traders and the wall street investors and main

street investors get an important timeout to reassess a lot of the news and sentiment driving the market. while there may be concerns lingering about yield, yields, there could be concerns about trade and this, it all is related to the underlying growth story. let's go to the snapshot of the way we left things on tuesday. you look at the stoxx story, financials were lower, chip stocks, not only a tech playbook momentum play. -- play, but momentum play. did weconcerned not only end on the lows in terms of the stock market but if you look at the breadth of the market, it is better than the bounceback, it has matched the fact the majority of the stocks are still below the 200 daily moving average. likely to be in

the spotlight on thursday, take a look at names. lam research announced wednesday it had fired its ceo over el centro misconduct incident. this company, one of the stocks that has been a big run-up because of the marijuana interest, down in a big way tuesday because of concerns and interest by a short seller, that also faces heavy selling thursday. nvidia is an example, a chip stock. pfizer is an example of what many say is seen as the new strength in the market. that is health care as we close out the year. we are showing to see some of the billionaire hedge funds reveal the losses they suffered in november. some of the big funds, whether in england or -- bank of england or steve cohen, they have managed to get through the october selloffs, but they are

indicating there were significant losses to the funds because of november selloffs. paul: facebook is facing investor scrutiny over a prominent downgrade. analysts saying the network has too many anniversaries. buythe down rate is from a to a cold. they are concerned whether politicians, tech executives -- look at the pressure the stock has been under. there are more headwinds ahead for the stock that perhaps it will be a long time before the company can get back to where it was. this analyst did not change his price target. looking at short-term trading, a lot of pressure has been recently. ofo the u.k. published a lot internal in emails of facebook executives, and it indicates there was some kind of wielding of data almost as a bargaining

the with vendors, where allegation is a rewarded vendors by giving them data, punished others by depriving. usl: thank you for joining with that update. reports from tokyo say japan is planning to invite president mayp for a visit or -- in or june. we will discuss his relationship with shinzo abe. this is bloomberg. ♪ bloomberg. ♪

paul: this is daybreak asia. i am paul allen. shery: i'm shery ahn. japanese media say prime minister shinzo abe may invite president trump for a state visit before the next g20 summit to be held in osaka at the end of june. the year ahead conference now, stephen engle is standing by with the expert on u.s.-japan

relations. stephen: that is right. our guest is the former japanese ambassador to the united states. he is the head of the peace institute as well as they president of the america-japan society. thank you for joining us. >> thank you. stephen: we have the trade war brewing with the united states and china. there is some peace overtures and a little bit of a reprieve on the negative rhetoric out of the g20. there were newspaper articles in japan at the beginning of this week including a front-page article in the japan times inging if there is a thaw between china and the united states and a new nafta signed uncompleted, perhaps donald trump will turn his trade ire on japan. do you see it that way? >> they say that because they have to catch japanese viewers

and readers. .1. stephen: a media story. in -- are u.s. people limited in the number and that they have been limit -- now they can do some other work as well. japan and u.s.at has already been discussing trade issues and has agreed to stop negotiations -- start negotiations next month. the president and prime minister has agreed on the framework of trade negotiations. stephen: are you optimistic or pessimistic? , guess it will be called tag but the united states wants a movement on services as well. >> it says it is a trade agreement on goods, but including services as well. in agreement was issued september 25. stephen: do you think donald

trump can get a better deal doing this than what is already under the tpp where japan has agreed to take for example, i will use u.s. beef as one tariffs japan's at 38% will be lowered to 9% over several years. can trump get a better deal bilaterally? >> i don't know. we have to look at the prime minister and president agreement on september 26. japanese site has been saying a maximum market access in thecultural what already existing framework, e.u. agreements is tpp or what you said about over tpp is

not a japanese position. said about market access as well, u.s. would like to have more cars manufactured in the u.s. in that agreement on september as well. stephen: we are hearing the u.s. might push for a provision in any new agreement on currency devaluation. there are allegations japan has been at times a currency manipulator. is that possible? >> i don't think so because i had not heard japan has been a currency manipulator. we have been relaxing interest rates, but that is following the steps of qe. up to qe4. the interest rate is going up

now. japan has not followed yet, but i have never heard japan called them currency manipulator. stephen: there is an allegation. >> even china has not been -- stephen: they haven't been labeled, so maybe -- i will give you that much. let's talk geopolitics. i came back from the apec summit , and there was sensitivity about the chinese delegation what they perceived to be ganging up on what is called the quad, the united states, japan, australia and india. do you see in efforts diplomatic way to isolate china? >> may be chinese would take it chinese wouldbe take it that way. australia andtes, japan and india, it is not an alliance but a friendly discussion because all the

countries are democracies. it is not a one-party rule. we change parties and discuss issues on equal basis. stephen: what will japan-china be like? >> in short political relations will be good. attitude changed their in the last year. relations have been tense, and they are looking for better with japan. second because they need the economic boost. gdp is 6.5%. they need a little boost. u.s. is cautious going into china, so they are looking at japan. bri, belt position on

and road initiative, they think have changed. he said with conditions, he brid be more supportive of -- pri. it doesn't mean exactly that business world will start investing or whatever in china. they have to think about the profits. i think japanese companies have to take it into account. also the wages increasing in china. you can find good labor in vietnam and myanmar as well. stephen: are you optimistic in the united states and japan will strike a trade deal in a quick manner, or is it long and drawn out? >> it could be a fight, but it would not take too long because

we know it is a big issue for united states. we don't think it should be taken as a delaying tactic from japan. it will be careful. if it is economic, always we have to work [indiscernible] stop the clock or whatever. that happens all the time. it is a domestic argument. stephen: thank you so much. send it back to you from tokyo. thank you very much. the former japanese ambassador to the u.s., and conversation with stephen engle. we are counting down to the market open in japan and korea eerie there is evidence selling may not be done. what are you seeing? sophie: there is a much in the way of direction but not looking like the risk negative stance will be easing. we see a rebound for the yen

while stock futures are declining. we have futures looking like a mixed start for the kospi as well as the nikkei. the current account balance on a yearly basis, nine point $9 billion, helped along by the higher surplus in goods treated. we are seeing some -- stocks declining for a third straight session. we watched jgb were trading kicks off after the 10 year fell to the lowest level since july but analysts say it reflects the moves in treasuries and indicates no move for the boj to react. we are keeping an eye on apple iphone suppliers like japan display after a lens maker forecasted continued weakness in the weakness on waning demand. this comes after the iphone casing supplier announced a drop in sales. onwill look for more hints

the outlook of apple. when it comes to other stocks, keep the look on lg display. chipmaker isrts a to promote its coo to its new ceo. creditre could be a downgrade for cicada. $62 are likely to -- billion. shery: thank you. you can get a roundup of the stories you need to know in daybreak. go to dayb on your terminals. it is available on mobile in the bloomberg anywhere app you can customize your settings so you only get news on industries and assets you care about. this is bloomberg. ♪ rg. ♪

shery: a quick check of business flash headlines, lion air feels betrayed by boeing over the fatal crash and is threatening to cancel upcoming orders. regulators didn't specify the cause of the disaster but said lion air needed to improve its safety culture. boeing issued a lengthy statement that included questions about the carrier's maintenance. paul: marriott slumped after saying it is too early to put a price on the massive data breach announced last week. the company revealed the personal data of have a billion , starwood compromised hotels bought in 2016. the total could top $1 billion. isry: an iphone lens maker flagging lower revenue, saying demand from several customers remains weak. the company declined to name those customers but clients

include apple and huawei. million, a fall of 20% year on year. several companies have indicated weakening demand for the new iphone range. let's -- paul: let's get you an update on the breaking news story, the arrest of the huawei chief financial officer. this arrest will be taking place on the request of u.s. law enforcement. we don't have anybody -- any details on what the arrest is about. this has to do with potential violations of the trade embargo and could a potential spoke in the wheels of the u.s.-china trade deals. shery: futures taking a hit, falling as much as .8%. we are getting the chief operating officer from the

australian unit saying if this is related to tech theft, etc., it doesn't bode well for china-u.s. relations. let's get a check of asian markets before we go, plenty more coming up. oming up.

paul: good morning, i'm paul allen in sydney where asia's major markets have just opened for trade. shery: and in new york, i'm shery ahn. selfie: and i'm sophie kamaruddin. welcome to daybreak asia. all: our top stories this 30, canada arrested cfo and may extradite her to the u.s.. asia-pacific markets face a mixed open at best with more

pressure on equities. after opec as allies cuts were noty -- discussed in vienna. we are getting some more positive headlines over trade from the minister followed -- foreign affairs in beijing saying the u.s. and china have established hugely beneficial goals. we will see how all of this translates into the trading session in asia. sophie: we are seeing red for stocks as we kick off trading console as well as tokyo. a 3rdenchmarks headed for avenue losses. the nikkei down my .5% while .3% lower for the kospi this morning. await thevestors outlook for trade talks with the bank of canada's dovish tone. were seeing weakness for the asx 200 as well.

let's check in on u.s. futures which are falling morning. the yen rebounding, given the switch and risk appetite. it's difficult to see in easing in the risk negative stance. treasuries essene the 10-year gilts fall below 3%. the jobs report is due on friday. sophie kamaruddin, thanks that update on the markets. let's get the first word news with jenna dagenhart. jenna: president trump says china is sending strong signals about a trade deal but uncertainty remains over what was agreed in talks in point of cyrus. trump tweeted he thinks president xi meant every word of what he said then that all items

were discussed. it is not clear what was officially nailed down in argentina. saudi arabia is allies are recommending a curb on oil production. they are defying a twitter plea from president trump to keep cap's open and the price falling. meeting indiana to secure russia's backing for six months of reduced output from january although specific cuts were discussed. finally agreement could see a million barrels a day removed from the market. u.k. prime minister theresa may is said to be playing a range of concessions to win over conservative rebels. after losing three, and votes, she held talks with prominent eurosceptics to solicit their support. ireland's democratic unionist party is said to be ready to drop their support over may's over the so-called irish backstop. governmentng kong official has been convicted in you are paying millions of on behalf of aes

major chinese energy company. he ran the nonprofit arm. a federal jury found him guilty of conspiracy and money laundering overbreadth -- over bribes paid. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. paul: thanks, jenna. the u.s. is seeking extradition tounspecified charges canada's justice department says it is in connection with potential violations of sanctions on iran. from joe.test on this this arrest apparently happening on the request of u.s. law

enforcement agencies. has there been anything out of the u.s. so far? >> so far the justice department has declined to comment on the situation and the arrest. the company has been under scrutiny since at least 2016. one, over whether the security issues with their equipment that could be back door attempts to survey alarm either u.s. people who use the company's products, and the other more seriously which is probably what this violatingrelated to, sanctions on iran by selling equipment to iraq. this is an issue that has been under investigation since at least april when it first came to light. the u.s. has been slowly, quietly building its case on that and apparently resulting in these charges against her. joe, not long after we got

ae news on huawei, we had statement out of china saying the u.s. and china have established a mutually beneficial goal from the ministry of foreign affairs, talking about trade there. i can only presume that statement was drafted before administrative foreign affairs got news of this rift. what effect is this likely to have on trade talks? >>'s could become a real point of friction. earlier when u.s. took steps to sanction zte, the chinese made a specific appeal to president trump saying those penalties put the company out of business. trump relented and lifted some of them but they have kept some of the sanctions or some of the penalties in place, for instance, huawei equipment cannot be used for government purchases and the u.s. has been pressuring its allies and the e.u. and australia to take similar steps.

so this is going to be quite a point of friction right as it seems like the u.s. and china have made something of a fall in the trade conflict between the two countries, with at least some preliminary agreement to agree -- continue talking and perhaps ease some of the back and forth on tariffs. yet we still haven't seen any more details coming from beijing, despite the fact that we got this statement from the ministry of foreign affairs. what was agreed between the u.s. and china? joe: we still have not seeing specifics. president trump's tweet on sunday about an agreement on auto tariffs was quickly backpedaled by members of his administration. trump also tweeted some pessimistic thoughts on whether or not a deal could be reached. we have seen china come back and say the talks were constructed.

there is some indication that they will increase purchases of lng, but wes and still don't have any specifics on what was agreed to during the g20 summit in argentina and whether or not the timeline of 90 days, we don't know exactly what steps will be viewed as progress between both sides, except that talks are going on and that is something of a break through. as we are speaking to you, we are getting the latest headlines. the embassy of china now saying that have asked canada to free , saying thatawei china is back has complained to both the u.s. and canada about meng's arrest. we had seen president trump giving zte a lifeline, if that was the case with huawei's

editor, could this be the case for huawei as well, depending on how those trade negotiations go? joe: it will be a little more difficult with this if it involves the justice department and possibly an indictment of the u.s.. those that should be technically independent of the white house, and the procedures on that, they will have to go along with the legal process of both countries. the justice department does have some latitude to negotiate how these issues are carried out, but we will have to see whether or not that has some impact on these talks and whether or not the white house will do anything. much, joenk you so sobczyk in washington. let's discuss how all of this will affect trading in markets. let's bring in west goodman in singapore. we saw the s&p futures falling almost as much as 2% at one point.

is this all because of concerns that this arrest of the cfo of huawei could complicate trade release -- trade relations between the u.s. and china? wes: yes, the huawei headlines hit just at that time. people were struggling, there were some gyrations, people struggling to price the market after the u.s. holiday yesterday, so we are still down but recruit -- recouping much of the losses. the decline today i think fits in with the broader picture of concern over the u.s. economy. the beige book came out and expressed ebbing optimism and there's always talk about the flattening yield curve and talk about the expansion is going to die of old age. i think today's stock decline fits in with all that.

it must be disappointing for people who have been looking for a bottom in this week stockmarket selloff, because the u.s. economy is actually doing pretty well in china has been making comments about how it plans to implement its end of the latest trade agreements. fall, its continue to suggests or will make me think that the latest trade talks are a bit too little, too late. seeingis that why we are seeingquities asian equities falling, because we got more positive news coming out on trade tensions between the u.s. and china, and yet asian stocks took a hit in the last session. they are falling on top of those trade headlines were getting this news over huawei. what can we expect for trading across asia today? like i said, a lot of people are looking for a bottom

and it must be disappointing that stocks the following. months or weeks ago we were talking about synchronized global growth. now that talk is all gone. we are now talking about a slowing in the world's biggest economy and a couple of central banks are does something to canada and india, they are scaling back their views on their own economy. so it looks like sort of the slow growth cloud that is hanging over the markets will be what is tried in trading today. paul: the dollar has whether all of this reasonably well. what is the outlook there? think the dollar will be one of the beneficiaries of all this. latest central banks of scale back their views on their ,conomies, canada and india there is some discussion about the reserve bank of australia maybe turning a bit more dovish. mario draghi in europe has

expressed concern over the latest economic indicators. the fed, there is talk about it will call or stop texture, but nevertheless, there is a rate hike coming this month and at least one more coming next year. so u.s. yields are higher than their counterparts around the world. the fed is continuing to hike rates even if it does cause sometime next year. that i think will continue to benefit the greenback. west goodman, we will leave it there. thanks for joining us from singapore today. follow this and all of today's .rading on the bloomberg still ahead, opec less nations to five president trump and recommend a production cut. we will take a look at oil, later. shery: we will discuss how trade tensions are impacting emerging

markets. this is bloomberg. ♪

paul: this is "daybreak: asia." i'm paul allen in sydney. shery: emerging-market assets extended declines with investors still skeptical the trade war will end any time soon. our next guest shares at sentiment, saying a long-term sentiment -- solution is difficult. lin.joined by max it seems like one of those details could be huawei and how that could affect the relationship between the u.s. and china. for emerging markets, what is more important in the short-term, the trade lines or what is happening with the fed and monetary policy in the u.s.? max: i think they're both equally important.

i would say that now the consensus for the u.s.-china agreement is that it is a short-term positive, but i think the focus will turn back onto the fed. we expect the dollar to gain against asian currencies because it shifting to more data dependent approach. a lot of the good news for u.s. and china was already priced in after the g20 summit. now we think the dollar can actually gain against asian currencies. shery: what does it mean for asian equities been -- then? maximillian: asian equity have been following the -- the converse is that is some point if they start fessing in -- pricing in the fed thought, it should be a little more stable, which should be positive for em. em violations overall are much lower than the u.s.. at some point, maybe six months

down the line, they will start getting rotation out of u.s. equities and back into em equities. to wait forhave some of the geopolitical uncertainty to pass first. paul: you say markets have priced in a loss, but there's a bit of a catch 22, if there is a pause, that will eat to a pickup, which will lead to tightening. how do you play that? maximillian: it's this back and forth that will get you to equilibrium with the fed and the market. a trade are you strategist like is to play the uncertainty. every fed meeting in 2019 will be a live meeting with the press conference and the fed is going to be very data dependent. it's a trade that would like in the u.s.. in terms of central banks and emerging markets, can you see some tightening happening

there? thailand is an obvious candidate, isn't it? maximillian: thailand is similar to bank of korea. the data has softened slightly. they only need one more vote to push it toward a hike. i think the central bank of thailand will be that next one to hike. andave bank of indonesia central-bank of the philippines coming in the next two weeks. both of those central banks could tighten. they have been hawkish recently and it gives them more room to pause this time. paul: your thoughts on the offshore yuan, we stuck talking about it, what is driving it lower? i think this week it was the g20 outcome which is more positive than a lot of people had expected. on top of that, at the beginning of each month in hong kong and china and the onshore market, you tend to tea -- see dollar

weakness against the yuan because exporters have seasonal dollars selling. that beginning of the month effect is gone and people are getting more realistic about the outcome of u.s.-china talks going forward. both the offshore and onshore will weakened slightly against the dollar. $25 tears getting kicked in could push the yuan past seven sometime next year. the central bank will slow that weakness but it is a very real possibility for china. shery: despite all the uncertainty oh for trade, -- over trade, is it all because of the chinese government? part of it i think is because the central bank of china, the people's bank of aina, is starting to tax all

hawkish, deleveraging focus. now they're emphasizing target easing. once the central bank starts talking about looser policy, that should support stocks more. top of that, china stocks tension nowr level in u.s.-china trade risk. i think a deal is still unlikely. the fact that you had a handshake means a lot of the rhetoric will attempt down, and that should be good for china stocks. shery: thank you so much for that, max lin. catch us live but you can also watch are past interviews and you can find all the charts and assets that we show you throughout programming. tv . this is bloomberg. ♪

shery: this is "daybreak: asia."

i'm shery ahn in new york. allen in sydney. saudi arabia, russia, and others in the opec or defying a plea from president trump in recommending a cut in oil production, but the details still need to be ironed out. james thornhill joins us. it can we expect from this opec meeting? james: there seems to be broad agreement on the need for cuts. the big question now is what level the cuts are going to be. audi arabia is suggesting level around one million barrels a day. others it seems are not so keen to have so big a cut in the russians in particular will hold the key on this. what we have is a high-stakes horsetrading game between the big oil producers. obviously the amounts saudi arabia cuts will be key and they don't want to cut by too much because that means others can step in to fill the gap and earn more revenue themselves.

so there is a lot at stake in it remains to be seen but they can actually agree on. the other factor you have to consider is trump, he came out with twitter comments saying he wants to keep oil prices down. so they all have that in the back of their minds as well. so there is still a lot of uncertainty around this opec meeting coming up. shery: do we have a sense now that we are near the bottom? >> it's a good question. obviously they will agree to some sort of cut and that will be supportive to prices. you could argue that the market is ripe to bottom out around here. there is also a long history of not being able to stick to these cuts for very long. there has often been slippage and once it starts coming in, prices could be under pressure again. there are analysts who are prepared to stick their next out outlook tobullish

crude prices. wells fargo was one. they said they've seen the crude $70e rising back up to level in the new year. they are basing that on the sanctions the u.s. has imposed on iran will start to kick in in earnest next your. so far they have not had as much of an impact on the market. also you have the ever present risk of geopolitical tensions and the u.s. in china seem to be getting on a little better about trade at the moment, but will that continue? we always have the potential for a flareup in the middle east. russia and ukraine have had tensions there so we don't a what going to happen there. all these things are potentially supportive if the market perceives a threat to supply.

you can make an argument for a rally for crude in the year ahead. it's thosesaid, headwinds that cause the price to come down in the first place and they have not completely gone away. shery: james thornhill, thank you so much. latestet a check of the business flash headlines. lion air says it feels betrayed by boeing and is threatening to cancel upcoming orders. a preliminary report did not specify the cause of the disaster but said lion air needs to improve its safety culture. boeing issued a statement that included questions about the carrier's maintenance of doomed planes. the personal data of up to a half billion disc was compromised in a hack of starwood hotels which marriott

bought in 2016. bloomberg intelligence estimates the total bill could top of billion dollars. still to calm, i will have trade numbers for you at the bottom of the hour. ♪

paul: you are watching bloomberg "daybreak: asia." breaking news, retail sales in australia for the month of over coming in as expected, .3% higher but the trade balance for october a bit of a mess, $2.3 billion surplus. a $3 billionting surplus so a slight miss. october imports rising 3% from a month earlier while exports rising by just 1%. dollar weakening, taking a big hit on wednesdays much which are that's weaker than expected third-quarter gdp

numbers. october trade a bit of a miss as well, $2.3 billion. shery: the gdp numbers in the last session were a big hit for the aussie dollar as well as the asx 200 which right now is getting close to that level of 5600. let's get a check of the broader markets, under pressure again. here is sophie. seeing losses, set for a third day of declines across the benchmarks. banks and miners among the biggest drag. plenty of data for market watchers in australia to consider. retell cells coming in as expected and this comes on top of that disappointing gdp print which we got for the third quarter which didn't said the aussie lower but it fell the

most within two weeks overnight. futures,ck in on u.s. s&p futures falling as much as 1.9% this morning. we are not quite figured out what might be the catalyst but some traders are saying there could be of that finger in the trading was distorted ahead of the resumption of trading on wall street and given that selling pressure was so intense is morning, it forced the exchange to cause trading for some time. against this backdrop we're seeing the yen rebounding, we had it trading at 112.99. with stockss cap holding the key to the currency direction with both the dollar and yen firming up as investors includingng headwinds the ceo of huawei.

that news is driving gains in biggestor nokia's supplier that generates 19% its revenue from nokia. so we will keep an eye on huawei smartphone suppliers, given what is happening for huawei. it is interesting when it comes to timing, given that the u.s. is saying talks are going really well and then we see this take place. paul: sophie, thanks for that update of the markets. with get an update and some first word news. saying the agreement shows both sides are keen to deescalate tensions, although he warns why do reform of the wto is needed as well. joe says he expects the u.s. and china to find some kind of a

court in the next few weeks. >> on the one hand, it shows that both sides have a desire to operations.rade inventory levels are at a record and an index tracking the volume of unsold cars climbed to its highest reading last month. china's car sales have fallen for five straight months and they are on course for first annual decline in two decades as the trade war for its demand and spending power. the reserve bank of india is dialing back its hawkish tone, signaling is open to more flexible monetary approach, just two months after stating that interest rate cuts were off the table.

he spoke after the r.b.i. kept rates unchanged for a second straight meeting. financierve malaysian continues to protest his innocence. his whereabouts are unclear, but a statement from his longer says he will not submit to any jurisdiction where gilt has been predetermined by politics. he is accused in relation to the .oss of billions of dollars washington has said goodbye to president george h.w. bush, in an emotional ceremony at the national cathedral. george w. bush called his father a leader of unrelenting optimism and steadfast carrier, saying he taught him what integrity means. president bush was the last u.s. leader to fight in wartime. he will be buried after funeral service in texas on thursday. global news, 24 hours a day,

on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. paul: that's get more on the cfo inof the huawei connection with potential violations of u.s. ages on iran. join on the phone by david. what do we know about what happened, and why? so far the details are little bit scarce. we just know that she was arrested in vancouver. some say it is likely in relation to trade embargo where shellegations told very high-tech equipment to iran despite sanctions on that country. paul: the timing of all this is rather unfortunate. trucet had this 90 day

and now this. what impact might it have? >> the impact cannot be understated. of thethe daughter founder of the company and a potential success to him as well. almost all of them look up to her as a demigod in the internet seen. in other words, this is essentially like arresting the daughter of one of china's leading technologists. the impact can potentially spread beyond social. huawei is an important key as part of china's efforts to land -- expand globally through southeast asia. we could potentially see a lot

of anger from the chinese side during those trade negotiations. how is this going to affect the company's dealings? globally? it's already feeling some pressure and scrutiny in australia and in new zealand and the u.k. as well. fromat's right, it is and five g networks in australia and new zealand. there is pressure for other countries to not it out as well. the bigger implication really is in the same vein as zte. is badcally if huawei for purchasing equipment that comes from america or any country that wants to have dealings with america, that essentially kills it all. huawei is in the midst of developing its own technology such as chipsets that would somewhat protect themselves from the same situation that ge face, but it is still pretty reliant for its communications business. paul: do think we could expect

to see any pushback from china? the china global times today ofning is a linda backlash this. david: -- what we'll initially see is shot. this goes right to the guts of china's technology scene. he's incredibly powerful businessmen in china. i think the chinese government will digest this gradually and is launching toward the trade discussions. paul: david joining us on the phone from beijing with more details on that evolving story about huawei this morning. daimler's plan to take control of its china joint venture may go some way to showing it beijing is really serious about using the rules on foreign ownership. ours look at that with editor in beijing.

thanks for joining us today. us about this,ll let's just start there. daimler sources tell us it's looking to follow what bmw did a couple of months ago and try to take a majority stake in its chinese production are. it's one of the biggest producers of luxury cars here in china, which is the world's biggest and fastest growing order market, so very important for them. until recently they were restricted, that foreign companies could only hope is to percent or less of them. china has eased off and they will be ever to dominate or hold a majority control of them. bithis is seen as a little of a test of china's pledge to open up to foreign companies. it is probably only the tip of

the iceberg and how this goes down, how it plays out and whether they have success with whetheren as opening up china really is serious about this reform and letting in foreign companies, or whether it is still intent on protecting the interests of its state-run companies. paul: the tip of the iceberg, apart from market access, what else is there? >> it is seen as progress. there has been easing all of the rules about restricting or a control in financial services and banking as well. from presidentse xi about opening up. there are still a lot of restrictions to foreign companies doing business this year. thee are also concerns

trump administration has raised repeatedly with force technology transfer and concerns about intellectual property. the china under pressure to deal with those as well, as the progress we are seeing with this. m o'brien, thanks for joining us from beijing. coming up next, you'll curve concerns still fresh, despite the day off for u.s. treasury's. our next guest says a flat you'll curve is a course for opportunity. this is bloomberg. ♪

paul: the u.s. treasury market has been day off, but concerns about the yield curve are still fresh. our next guest says worried, it just means opportunity. bernstein -- lance alliance bernstein manager brad

gibson. you're not worried about inverting your curve. can you tell us why not? >> we have tortured the data to see what the shape of the yield curve means for economic activity going forward and the , we know economies will flow into the future. we also know that when you'll curse latin, the next thing it happens is they stephen. for active managers like ourselves, we can position for the next move, the next large moves in markets and that will be a tendency for the yield curve to steepen on the longer in. it also means there are other markets globally that have steeper yield curves. when we hedge those back to the u.s. market would generate a higher yield and what we can in the u.s. market alone. paul: so you're reasonably sanguine about yield curve inversion. how likely is it you think we

will see it happen, and if so, the day that it happens, do you think other people are not going to be as relaxed about it as you and could we see another sell down? brad: to be clear, in terms of active investing, the movement to the yield curve does give us another opportunity to go against it or go with it. we don't argue that a flat you'll curve historically has meant that economies will slow and therefore the outlook for growth assets is likely to be a bit more challenging. within our portfolio's we certainly have been taking a more cautious approach and looking for more idiosyncratic opportunities in those markets. paul: so in terms of the balance of your portfolio, how is that looking at the moment? are you overweight cash and looking for some opportunities? brad: do hold a little bit of cash, but not more than normal.

underweight in markets like core europe, japan and the u.k.. within the treasury market the yield curve is an active position between the tenure and the 30 year. we think the longer term is likely to be steeper. now that the market is only pricing in one-to rate hikes over the next 12 months, we think that is about as far as it can go. we would like to push back against any further rally in the u.s. yield curve. subject of the fed, i would just like to get your thoughts on that. 2019?s your outlook for we probably have a more aggressive approach for the fed. that is being challenged at the moment by the fed. we have three or four more hikes

penciled in for 2019. the data so far in the u.s. is supportive of further acts. where we have a nine consensus call is that inflationary pressures are likely to escalate more than what the market is expecting. inflation is likely to be higher than what the markets priced. paul: are you seeing some opportunities in emerging markets? yes, we are. we said opportunities in the local indonesian market. recently, even the philippines bond market has weakened quite significantly and yields got to above 8%. we see opportunities in those markets. so we do see opportunities for yields to outperform developed rockets, yes. paul: thank you very much for

your insights there, brad gibson. you can get a roundup of the stories you need to know to get your day going on today's edition of daybreak. mobilelso available on and you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪

paul: let's get a quick check of the latest business flash headlines. potential fines over the role as one of europe's biggest line -- money laundering investigations. cooperation with authorities may limit the size of any penalties. they've admitted about $230 million flowed through the estonian branch, much of which is deemed suspicious. the iphone lens maker is flagging lower revenue, saying demand from civil customers remains weak. include apple and huawei. several tech companies have indicated weakening demand for the new iphone range. finallyelf driving cars

ready to justify its decade-old drive. it will include a human behind the wheel in case of malfunction. the move is a milestone for the company that began in 2009. since then it's robot powers have logged more than 1600 million kilometers on public roads. the world's leading dairy cut its forecast for milk saying first-quarter sales climb, but it's for your projection remains on track. the forecast on supply outpatient demand. new zealand's largest company wants to divest assets and cut thes by posting a net loss last financial year and changing both its chief executive and chairman. pbo see governor says he's optimistic about a trade truce with the u.s. and china,

showing a mutual desire to tone down the tension. he warned against relying too much on a lateral approach and said reform of the wto is wired. >> i am optimistic, on the one hand it shows both sides have a re-escalate the trade operations, trying to find ways to up the production. an importanthand, element of the trade, i think, is the [indiscernible] on the other hand, like

protecting injured -- intellectual property rights, cyber intrusion, those are things i think in chinese , were going to use this kind of pressure to accelerate the legislation, the regulation but especially the law enforcement in this regard. personally i'm quite optimistic that both sides can reach a certain kind of agreement on that.

>> so coming from china, there is a trade war, the one you are already mentioned. is there anything china should do to divert the trade war, do you think? hope for this, the trade problem should be in the multilateral wto mechanism. we know that people are serious about wto reform. we think that at some level it is really necessary. is if we usesks compromise between each

other, it may cause a problem to today's multilateral mechanism. let's have a look at what's coming up in the next few hours here on bloomberg tv. let's get over to stephen engle in tokyo today. who are you going to be talking to? we have a busy next hour and a half or so. three big interviews here at the year ahead conference in tokyo at the palace hotel. first up in the next 40 minutes we will talk to the ceo and head of one of japan's largest old trading houses. i just met him in the hallway and he said he is excited to be here, but a little nervous of what i'm going to ask him. from my understanding about him, is pretty confident and pretty outspoken for the leader of a big japanese conglomerate. that is coming up in about 40

minutes time. also we will have the president ceo of japan post. we will get more on their outbound investment strategy come in wrapping up our coverage this morning, will have jim molen, get his insights into possibly bidding for a japan casino license. lots coming up, paul. paul: lenny to look forward to out of tokyo. that's get a quick check of how markets are trading. note prices, very much a risk off day. we've got japan down 1.25%, the cost speak off .5%. off .5%.spi that is it for "daybreak: asia."

rishaad: welcome to the china open. scarlet: walkway is in the spotlight. -- wawei is in the spotlight. david: stocks fall. u.s. futures decline. there is a pessimistic mood. oilaad: they plans for oils -- vague plans for curbs the levels discussed in vienna. ♪