paul: good morning, i am paul allen in sydney where australian markets have just opened. ramy: good evening from new york, i am ramy inocencio. julie: sophie: i am sophie sophie: kamaruddin -- sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ our top stories this monday, asian-pacific markets await the latest gdp data from china and expected slowdown has already been priced in. theresa may will offer her brexit plan b.

she says there is little chance of cross party support. and the shutdown drags on in washington. the latest offer is rejected as a top immigrant says let's talk. how: a reminder have -- of u.s. stocks ended friday. it was green across the board. s&p futures now in positive territory. the dow and nasdaq are up. what happened in china, they said they could theoretically take down u.s. deficit to the zero by the down to year 2024. economists say it is not likely. there is a possible executive order from the u.s. white house about chinese telecoms in the u.s., and we have yuko data coming out. -- ecodata coming out. we are watching for gdp from china.

sophie: we are awaiting that data dump, and asian futures are pointing to a positive start. aussie shares up .2%. in japan we could see a pop of .ver 1% for japanese stocks the boj is holding a policy meeting and investors are watching for potential cuts to the bank's buying to attract the nikkei 225. we are seeing oz drill rise on the updated has secured $151 million australian worth of contracts in new work. looking at the china data dealers, the offshore yuan is holding recent losses after the biggest drop in two months. the aussie looking weaker after holding a three-week winning streak based on speculation from the rba. the kiwi a six day of losses and the yen is 109, after this three-week low.

commerzbank said the monetary policy outlook suggests appreciation trend for the you had -- for the yen isn't over. paul: sophie kamaruddin with an update. let's get to first word news. su: british prime minister theresa may is said to have dropped the idea of cross party support for her brexit deal. she told the cabinet the issue will have to pass on u.p. votes atand d. all. the european union is split on how long it should be delayed, some pushing for a year-long extension. it is up to the u.k. to request, and may has no intention. president trump's lawyer says negotiations about a real estate deal in russia continued up to the 2016 election, later than reported. rudy giuliani said conversations between trump and his fixer

michael cohen happened as the as november that year. cohen admitted the two sides were talking in june 2016 last year, suggesting talks ended earlier. a populist government is facing renewed criticism in italy as it battles a slowdown that could require greater fiscal spending. the business lobby told the stamp a -- told the news that they could increase the deficit, not boost the economy. the do says italy will have the slowest -- the e.u. says italy inl have the slowest growth the european union. carlos ghosn is making another bid for bail, saying he will guarantee to stay in japan until his trial and will be happy to where an electronic tracker. the french government is playing down a full merger between renault and nissan, saying there are no plans to redesign the decade old alliance.

nissan has a nonvoting 15% stake in no which holds 43% of its partner. which holds 43% of its partner. 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 su keenan. this is bloomberg. thank you. china releases gdp figures later. an economist is predicting 6.4% growth. that would match the slowest pace in 25 years. china correspondent tom mackenzie joins us now. he is at the forbidden city. what can we expect? we are focusing on the health of the chinese consumer. we have retail sales that come time.:00 beijing in terms of retail sales the number is expected to stay in line with the previous quarter but there has been mounting concern in beijing about the

lack of optimism amongst china's all-important consumer. there was a tax cut pushed through at the end of last year, so we'll see if anything it can revive the hopes and optimism of china's consumers. we will look at the industrial production number expected to soften slightly. in terms of manufacturing and exports, we have seen this frontloading effect that drove out exports in 2018. we will see how much of an impact that will have on the industrial production number as well. we have fixed asset investment that will pick up marginally we could get ramped up infrastructure investment. int year policy makers put place policies to revive infrastructure spending that had fallen to record lows in the earlier part of the year. that is upping us we are focused on. we will get employment numbers and property investment. it will build out the picture,

we had a drop off in exports and that weaker factory gauge as well. fleshing out the picture for china's economy, continuing concerns not just about the trade war but external and domestic demand pictures as well. to closena has offered the trade deficit with the u.s. by the year 2024. six years. let's talk reality check. tom: you have been talking about skepticism among economists including our own about how achievable this is. these trade talks, the most recent in beijing, there was a proposal from the chinese side to reduce the trade deficit to trillion024, buying $1 worth of u.s. goods over six years. was in 2018 the deficit $323 billion u.s.

question is how achievable that is. this is difficult. you have to counter in of course the demand on the u.s. side for chinese rocks. that will fall off a cliff. and then producers of agricultural, farmers or lng suppliers or the makings of boeing aircraft could ramp up production and exports to match that demand if china does go ahead with this proposal. many say it will be about china shifting its surplus to other nations. there is a lot of skepticism. u.s. officials said we could look at this, but can you do it in two years? it was a note of optimism by the markets, and it does build on some of the markets china has been putting in place to push deal, and get a whether that is reinforcing the framework or discussing changes to industrial policy and pledges to buy more from the u.s., the chinese are looking at this

deadline to see if they can square up with the u.s. and get something achievable to offset the pressure in the chinese economy. ramy: tom mackenzie in beijing for us. china could be taking steps to ease tensions. the u.s. could be ramping up. the trump administration is preparing an executive order that could restrict chinese state-owned telecoms from operating in the u.s. trump really goes after huawei like the te. -- like zte. it muddies the waters and shows the trump administration sidesen speaks from both of its mouth. it is national security, it is trade. one step forward, two steps back. you would think if they were to go ahead with these measures against the zte fy way -- and

huawei, china would take issue with this and it would damage the momentum of the trade talks. it is hard to know. and as tom said there is really an overall upward trend line to the economic relations, so this seems like an extraordinary thing. at the same time there is fractions in the u.s. very concerned about economic security and national security and the mixture of those, the future of 5g and where the u.s. will come down on that. this is up to the commerce department to administer the executive order. it hasn't reached trump, so we could see something in the next few weeks. a slightly different national security seen, planning for another summit between trump and kim jong-un that might think -- might take place in vietnam. what will each side hope to get out of this after the last meeting didn't produce much?

upbeat rhetoric from president trump and continuing relations without concrete outcomes. we think the meeting will take other99% in hanoi versus cities in vietnam, and it will be a good description -- distraction from domestic trouble. there has been little progress on the u.s. side in seeing denuclearization from kim jong-un and we think among the demands kim will bring to the meeting will be to continue being a nuclear power. i don't know how that squares with president trump. kim has had some harsh rhetoric recently, very pointed new year's address where he talked ifut taking a new path outreach to the u.s. didn't work. i think for sure north korea wants to see significance -- significant sanctions relief and

want to weaken the alliance between the u.s. and south korea. what is trump willing to give up it remains to be seen. ramy: donald trump keeping the doors opened by keeping the lights off for many divisions of government. where do we stand in terms of that? he is trying to give a three-year extension for daca but democrats are having nothing with it. democrats want to see a permanent solution to the so-called dreamers in the u.s. they don't want the three-year extension. that is a huge point and president trump is getting it from both sides. democrats want a permanent solution. some of the more anti-immigrant forces in the republican party people it is amnesty for undeserving of such measures. so president trump's stock is

making his speech by laying out given, he is forced to thought to this, sewer each party stands. it is kind of a big week for federal workers who are on any.ugh, not getting some are working and not getting paid. ,hey will miss another paycheck and the publicity surrounding that puts a lot of pressure on both sides i think. where the buck stops, i am not sure. i don't think anything that happens this weekend is going to get the government open this week. that is my best sense. plenty tokrasny, watch in washington, dc. still ahead, much more on china ahead of the latest gdp and other data. we will get an update on the property market in china. ramy: and why goldman sachs is

boosting its u.n. call and recommends shorting the dollar. the cohead of fx and em strategy. this is bloomberg. ♪ this is bloomberg. ♪

asia.this is daybreak i am ramy inocencio in new york. paul: i am paul allen. goldman sachs is boosting outlook for the yuan is on the basis of possible pickup in progress on the trade front. they are recommending clients short the dollar. let's bring in the cohead of fx and em strategy. goldman boosting its forecast for the yuan, a number of factors in favor. a few drag sectors as well. we have concerns about the efficacy of stimulus measures, the transitioning economy but you are still bullish the yuan.

for having me. we will see from this morning's data that china faces a number of challenges in its domestic am a cyclical outlook. there have been positives and import late markets are always looking forward. those positives would be the trade talks with the united states which seem to be on the margin getting better. that is what motivated our change in forecast. theop of that, signs chinese government is taking further stimulus measures. while backward looking, chinese theth is soft, softer than official numbers on our metrics, but we think looking ahead the rest of this year i'm a trends will be improving, helping the yuan -- year, trends will be improving, helping the yuan. paul: china has offered to wipe out its trade surplus with the u.s. by 2024. this would have knock on

effects. say china start buying soybeans from america instead of brazil. what kind of impacts will that have for em? larges could have implications depending on what china decides to purchase. it is very early days, we will take a detailed look at the proposal, but one important fact to keep in mind if many of the products china imports, even those not from the u.s. are already priced in dollars. the currency market implications are ambiguous. on top of that, you will need to see whether that proposal eases concerns about growth in the chinese economy, downside risk to the global economy, so paradoxically that would have the effect of tending to weigh on the dollar. so we will really need a lot more to sort out which currency

pair will benefit. on the margin it is a source of upside risk to the dollar if it turns out china were to go through a full force export of u.s. products. ramy: when it comes to the interaction between the u.s. dollar and emerging markets, what impact will that have, positive? viewers -- you our for the russian ruble, the thai baht, doing better than last year. zach: one big thing happening interesting markets is the u.s. economy is slowing down and the u.s. federal reserve is backing at a fairly steady clip this year. growth was above trend, and we

think decelerating to something continueclose to trend to surprise on the downside. you are seeing a sharp re-rating of u.s. monetary policy expectations. these things tend to be a tailwind for em currencies. the higher-yielding emerging-market exchange rates, south african rand or that rupiah tend to benefit in those types of the -- environments. the key change we have seen, something we would expect to go forward. ramy: how close do you think we are to a pause? zach: we are already. i think they are unlikely to hike at the january meeting, unlikely at the march fomc meeting. the fed is on the sidelines for now. no action we think is likely

until at the earliest the june fomc meeting. we need to see u.s. data, u.s. market conditions put in a very solid sequence of months. our own u.s. economists expect one rate hike. it could be later this year. something sooner is possible but that would have to come on the back of strong data. the fed is on the sidelines for now. that opens up for em, fx outperformance. paul: you also recommend shorting the dollar versus the pound and the euro as well. is that about the fed or more optimism that brexit can be europe can be sorted out? i see the bank of italy signaling recession. zach: versus the euro it is about dollar weakness. -- euro areaight

economy is not in great shape. the ecb will not take action for quite some time. decelerating faster. different.s they have a lot of risk premium built in around the brexit various scenarios. we would read the development over the last week as pointing toward a leader,'s -- later, softer brexit or none at all. the this tradition of risks around the pound -- distribution of risks around the pound is better. there is a lot of upside risk. we think it will be the highest performing g10 exchange rate this year. paul: wondering if the dollar weakness is the reason you like the aussie dollar at the moment because there are other factors at play. this is the australian dollar .ersus the shanghai composite there is a powerful compilation.

is that a dollar weakness story for you, or is that more a vote of confidence in the chinese economy? zach: it is half dollar weakness, half improvement in emerging markets more broadly. another church you can plot -- chart you could plot would be aussie dollar versus msci e.m. index. you have had a tight correlation between the australian dollar and general measures of australian -- emerging-market performance. the economy is slowing down, but growth in emerging markets, attly ask china -- ex-china this point. we ultimately think chinese growth will pick up as well. combined u.s. slowing growth, better emerging markets will domestic concerns in australia itself. paul: the goldman sachs cohead of em and fx, thank you for

joining us. you can get a roundup of the stories you need to go to get your day going on today's edition of daybreak. bloomberg subscribers can go to dayb on their terminals. it is also available on mobile in the anywhere app. you can customize your settings so you are only getting news on industries and assets you care about. this is bloomberg. ♪ ♪

paul: this is daybreak asia. i am paul allen in sydney. ramy: i'm ramy inocencio. let's look at business flash headlines. reports from canada say a leading telco is standing by its partnership with huawei despite growing scrutiny. the vancouver-based telus corporation said while it remains viable and reliable in canadian dollar -- canadian

telecommunications. it also represent -- also talked about transparency between the two. paul: fosun international, the project will include the is a cook brand. they are targeting the $660 billion to resume industry in china and have their sites set for 15% and 20% of sales. toy: tesla has a green light sell the model three across europe and deliveries will start next month. europe is a priority for elon musk with the mid side -- midsized market larger than in the u.s. they may even fly following the of tax credits in the u.s. this year. paul: the trudeau government will continue to work with china even amid newly strained

relations. we will hear from jim carr coming up next. this is bloomberg. ♪ erg. ♪

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su: you are watching daybreak asia. british prime minister theresa may is set to have dropped -- said to have dropped the idea of getting outside party support for her brexit deal. she said it will have to pass on conservative and d.u.p. support a loan. the european union is split on whether brexit should be delayed, but some are passing for a year-long. may said she has no intention of doing so. president trump's lawyer said real estate discussions about a trump tower in moscow continued later than has been reported.

he said -- rudy giuliani said conversations between michael trump -- michael cohen and mr. trump continued until june of 2016. they previously said the talks ended earlier. the top democrat in the senate said president trump' latest shutdown proposals will not pass. chuck schumer said the offer to extend professions for -- protections for dreamers in return for the funding of the border wall will be blocked by democrats on capitol hill. the fallout is widening with increasing numbers of federal workers saying they can't afford to commute to their jobs. >> let's go back and forth and see where we can find common ground. we are all for negotiating. we would love to have a fixanent six -- permanent for daca and tps like he wants a

permanent wall. su: 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 su keenan. this is bloomberg. ramy: let's check in on australian markets. what do you see? sophie: the asx 200 is adding .5%, set for a fifth day of gains led by discretionary's and energy stocks. and energyonaries stocks. it is rising on a december rate cut from the rba, the aussie dollar. stock movers in sydney, looking rose 7%t drill which after securing $171 million australian worth of new business. fallen -- this stockpiling the most in 17 months.

the challenging conditions for global recycling continues will go into the near future. ramy: thank you. ever we have been reporting, vietnam looks set to host a second summit between donald trump and kim jong-un. it comes with fee at nonsterling to feel the effects of president trump's trade war but the prime minister told us in an exclusive interview the government will ong.devalue the d ,> we have had strong growth but it was a small scale, so we need to continue. per capita income has risen and the economy is growing. it will go -- grow further. >> what challenges might you face in getting your target? >> we have issues such as trade friction in the region and in the world. climate change and the lack of

infrastructure in countries like vietnam, we are doing our best to overcome these with integrity, creativity, breakthrough and effectiveness. that is the message i want to give to the world economic forum in davos. we have strong foundations and fundamentals. haslinda: you talked about the u.s.-china trade war, but you also said there are opportunities that will arise. to what extent have you seen a change in supply chain or seen companies move from china to vietnam? they will see them when arise, but we haven't seen much change so far. most of our trade is carried out with partners like china and the u.s. and e.u., so if any of these come to any trouble, it will also come to us. haslinda: the u.s. has pulled out of the tpp. what is stopping vietnam from establishing bilateral trade

talks and come up with a bilateral trade agreement? vietnam and japan have been leading efforts to maintain progress on the tpp, and we have achieved the agreement with 11 members in the absence of the u.s.. trade between vietnam and the usa has seen growth. exports are beneficial for the u.s. people, and we will work towards a more honest trade between our countries. bought 150eady boeing jets from the u.s. and agreements have been signed. they will be delivered soon. we have seen the presence of large corporations like ge and big oil and gas companies from the u.s. in vietnam, so that is also helping. haslinda: would you consider devaluing the dong to help exports? >> that is not our policy.

it is to maintain a stable vietnamese dong. in the to have trust vietnamese economy and stability of the currency. paul: that is the vietnamese prime minister speaking exclusively to bloomberg's haslinda amin. the global trade war focus is on the u.s. and china but other nations are working towards free and fair and -- free and fair relations. kathleen hays spoke to the canadian trade minister. what was on his mind? kathleen: i think a lot of his -- the same of what is on our mind. that is the impasse between china and canada over the two canadian citizens who have been arrested in china. a canadian citizen with drug charges on his plate charged with death. -- sentenced to death. also the fight with huawei, both

sides speaking out. premise or trudeau has been calling other -- prime minister trudeau has been getting other leaders to step up to china while they fight back saying don't engage in microphone diplomacy. this should be bilateral. here is what jim carr said. jim: we are going through a , but this didn't begin yesterday. it goes back decade in -- decades and is multilayered. we are very concerned about the two canadians being detained. we believe it is arbitrary. we believe in the rule of law as expressed by the independence of our judiciary, and we also think the imposition of death on a canadian citizen is unacceptable and we are reaching out to our allies to make sure this is in the interest not only of canada but others. kathleen: your conversations

with washington, conversations with colleagues around the world , of if that might happen, and if it would, how important would p? t be to the cptp jim: if the american community believe it is in the american national interest to come onto this field, we are happy to have that conversation, but there are standards and they are high. any nation including the united states that wants to hear to those standards are welcome to apply. kathleen: what did you think about brexit? jim: they are an important trading partner. we are culturally similar. same thing with the you. we want to have -- the e.u. we want to have a healthy relationship with the e.u. and the u.k. we will have continuing discussions both at the official level and political level with

the u.k. to make sure everybody understands where everyone else is coming from. e ahleen: for the u.k. ba cptpp candidate? jim: of course. kathleen: as you get ready to s, what is at the top of the list? is there one thing you could hope to accomplish concretely in the talks he will have? -- you will have? jim: the most urgent is the appellate court. without any new judges, the gears will come to a halt or they will slow down and not be good news. we have to make the arguments to all of our partners that there is a better way than theft, and to propose some, make sure the conversation continues with a certain spring in our step. kathleen: so we covered a lot of

ground. this idea of wto reform, it is something canada spearheaded, got started last fall. he had a wonderful metaphor for what it is like. he said the u.s. and china have got to be involved. but he said what if you had a barbecue with 164 neighbors over talking about where to put the new cell phone tower, imagine how hard it is to get anywhere. that is interesting. merely that is on his plate. on hisearly that is plate. -- they are the seventh nation of 11 to ratify. they are in. canada has high hopes for this, wanting to export to japan in particular. i will speak in the next couple of hours with new zealand's trade minister as well to see what he thinks of these issues because certainly not just cptpp

and wto, but the u.s.-china trade war and what it means for the world is something everyone has something to say about. on jim carr's mind, you have to have a rules-based system. that is ultimately what he and others are hoping for. hays, looking forward to your next interview with the new zealand minister. we will get more on china's latest data due out in just about two hours time or so. that is as economic indicators show signs of strain. this is bloomberg. ♪

ramy: welcome back. this is daybreak asia. i'm ramy inocencio in new york. paul: i am paul allen in sydney. fourth-quarter gdp

rating due in a couple of hours. there are questions about the sustainability of the country's economic miracle. take a look. andonsumption, investment net exports, the three tenets of gdp are under strain in china. economists are watching infrastructure as any pickup in government spending shows up first here. we have seen an effective halt on projects including transport, that looks to be changing. beijing is casting a but is it -- forecasting a budget deficit from 4.6% guidance with -- $120 billion in rail projects and more. they point to urgency among policymakers also facing cooling global growth. add to that the trade war which hit exports in december with an unexpected contraction.

on the domestic front, the malays are showing up week. the microeconomic forecasting -- policy is on the way, including further tax cuts and measures to boost purchases of cars and household appliances. the key is getting the stimulus dosage right in the midst of a rocky u.s.-china relationship. ramy: all those economic concerns that our tom mackenzie just wait out really -- just weighed out. home price growth grinding to a halt. let's discuss all of that with alan lee. looking out the -- at the commercial space, you are forecasting a moderate decline looking at 2019.

>> actually it is quite a soft decline in demand, given the transformation of the economy in the last 12 months. it has given conflict on the trade and also give pressures and also industries. especially like the trading companies. it is upsetting by the strong domestic new demand especially generating from the new technology industry. other industries generating from the strong technology innovation process in domestic economy. ramy: looking at how the u.s.-china trade war is playing out or maybe at a standstill, how can investors factor that in to whether or not they should invest in the real estate market?

what we have seen last year after differing investors -- very active in the chinese real estate market, a whole year basis, it is actually a record high of 78 [indiscernible] domestic markets. that is taking advantage of the softening monetary policy of china and also a process of deleveraging process. and which provides a good timing for foreign investors to come commercial consumer market and most of the investors are looking china market for more [indiscernible] marketng-term investment

instead of speculating. china has a gdp still grow very stable and very strong and is faster compared to the average standard of the global most of the economies. paul: so what is your outlook for the china commercial property market in 2019? do you expect foreign investors to continue propping it up? alan: we see the trend will continue after last year's strong for an activity from investors coming to china as a market. region, inia-pacific those five years we understand [indiscernible] there will be around $35

billion u.s. with china as a market destination. paul: can we talk about the residential market for a moment? we have seen that easing back. how much concern do you have about that? market,sidential authorities very clearly their actions on the whole market. the residential is more for leaving in instead of speculation. evan the market -- given the market has already become very stable in the last couple of years or 12 months, and we think that government is saying to be policies, policies in most of the cities recently. encouraging different cities and authorities to try to apply the

differentiated policies, so facing different situations in different cities. ramy: before we let you go, one question. we were talking about foreign investors piling into china from last year into this year. how about domestic investors of folks who are mainland chinese? when will they get back in? see some change. it is actually over liquidity acently in the market, and sign of the softening market is coming. change the market will the second half of the year. most of the authority and institutions are foreseeing a strong liquidity compared to last year, coming to the market from the middle of this year.

so we are foreseeing the domestic institutions, especially on the [indiscernible] companies of that will become more active this year, especially targeting market assets and infrastructure assets like logistics, data center and ton multifamily incoming six 12 months. paul: we will have to leave it there. that is cbre's china president alan li. now for a look at the stories trending across the bloomberg universe, a top house democrat is offering a path to end the shutdown as the impasse drags on. the white house finds borrowing more costly as it shoots through its crisis era debt record. also to the limits on bridget -- trump-kimand a second

summit. london hosts the third annual women's march with protesters calling for an end to austerity. you can check those out online or on the terminal. ♪

ramy: welcome back. this is daybreak asia. i am ramy inocencio. paul: i am paul allen. let's get a quick check on the blitz -- the business flash headlines. the indian government has removed two executive directors from the board of punjab state bank. they were hit by a $2 billion fraud last year. the finance industry dismissed the pair without giving any reason. last year the bank said a rogue employee provided guarantees to jewelers who used to obtain massive foreign loans. francine: nintendo investors -- nintendo investors are

feeling powered up despite slowing demands on the switch and a steep shares slump last year. price cuts, better software pipeline and the imminent launch --a new game are rising raising confidence. this helped with 20% since december, after a slump of 44% in all of 2018. paul: in thailand, the surging baht is adding to the challenges facing thailand's trade dependent economy. it rose 5% against the dollar. bloomberg data shows exports may have fallen in december, oh that would be for a second straight month -- and that would be for a second straight month. the commerce ministry will release the first monday. ramy: let's do a preview of the markets open in japan and south korea. sophie kamaruddin, we are already seeing positivity in

australia. could we expect more? sophie: it looks set to continue when we see trading open in korea and japan. the kospi could extend for a fifth straight day gains. the nikkei has been out -- underperforming the topix. the boj could cut back buying. panasonic,toyota and the companies are planning a joint venture on ev batteries -- ev batteries. indicate news is reporting suzuki has developed a new plan to boost capacity by double digits. and look at sunday motor, which is -- hyundai motor, which is upping investments in various places. we are watching companies like oci on china's review of

antidumping measures of poly silicon imported from the u.s. and korea. ramy: we are counting down to those opening a few minutes away. and for daybreak asia have state street global market strategist been luck. we will talk about what he is taking u.s. and asia equities over japan and europe. we will look at the china markets and what his outlook is for the u.s. and any spillover for u.s.-china trade. paul: let's get a quick check in on asian markets. australian markets have been trading for an hour. the asx is higher by .4% one laggard is falling the most in 17 months after reporting the first-half earnings drop down, 12% down on the year. the broader index higher p we have the anz in new zealand , the futures looking

positive, kospi futures pointing higher. we will have the nikkei open at the top of the hour. this is bloomberg. ♪ bloomberg. ♪

good evening. to "daybreak:e asia." paul: our top stories this monday. markets are counting down to the latest data from china. slowdown has already been priced in. theresa may prepares to offer her plan b.

ramy: the ship -- shutdown continues in washington dc. let's get into the markets right now because korea and pan markets have just opened. it looks like it is good news. sophie: we have not seen much conviction coming through across the region. adding .8%. aussie shares are headed for the a 10winning streak, now at week high. we are waiting anxiously for the chinese data out. for gaining traction. holding recent losses after the

latest weekly drop. we will a close eye on the aussie dollar. a three week winning streak. some moves through the pound. this comes after a five-week advance. the canadian loonie making moves early in the session. paul: thank you very much for that latest check of the markets. to trump administration is working with kim jong-un. the white house announcing they would meet late this month. president met the senior aide for talks on friday but neither side elaborated on what was discussed on what might be

on the agenda. president trump's lawyers that discussions about a real estate deal continued. with conversations happened as late as november that year. the two sets were talking in june 2016 but previously told congress that the talks ended much earlier. latestnt trump's proposal will not pass. the offer to extend protection for dreamers in return for funding for the border wall will be blocked. the fallout from the shutdown is widening with increasing numbers. saying that they cannot afford to commute to their jobs. >> let's go back and forth on

this and see where we can find common ground. we would love to have a , just as he wants a permanent wall. 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. this is bloomberg. paul: let's take a look at what markets we will be watching this week. how sustainable is the global equities valley? the concern is that it is only as sustainable as the allegedly positive flow that comes out. a couple reports came out, one of which was denied soon after. signaling a back and forth.

thing is it underscores how desperate investors are. what will investors be looking for? hoping for not really bad news. -- they are all on a downtrend. unlikely to undo that downtrend, but if it could lessate it, we could get a worse economic backdrop to go with this hope for a sustained traded piece. thatorry at the moment is is what is already priced in. of those get both falling into place, we could have some concerns. ramy: we will get those numbers

to you in about two hours time. thank you very much. you can follow more on our might -- markets live blog. you can get a market rundown in one click. there is commentary with analysis. you can see what is affecting your investments right now. economists are predicting 6.4% growth, matching the slowest pace in at least 25 years. china correspondent tom mackenzie joins us from beijing let's get a little more detail into what we can expect here. tom: it is expected to come in at 6.4%. the survey is an expectation. of course, that would be

dependent on a number of key factors. as well as the continuing crackdown on some of the shadow banking in china. they are expected to come in line. concern thateasing china is starting to wobble. of course, you have fixed asset investment. the increase in bond issuance will help support infrastructure spending. we might see something of an uptick. the trade and export numbers that came in strong in 2018.

whether or not that starts to b.d -- eb we saw the export numbers for december. there is a lot that will come through. it will build on the numbers in to theve that went prices. we had to flesh out. there is weakening domestic and external demand china. of course, questions as to what will have.additional we have been reporting on one potential bright spot. it is very nice, but is it realistic? i think it is worth

approaching with caution. one thing is clear. we had a similar offer in may of last year. and nixedmp came out it. this is something that they have numberfore these are the -- before. these are the numbers that were put on the table. deficitposed ending the buying a trillion dollars worth. there is skepticism among the economy that it is even achievable. people had to save a lot less. you might need the producers to ramp up supplies.

a lot of questions around this proposal. saying we are a little bit skeptical. clearly, the chinese are trying to put this in favor in terms of going ahead with this trade deal. we will get further talks. that is where the attention shifts. paul: tom mackenzie joining us from beijing. thank you very much. we will get the thoughts of the former japanese trade negotiator on how the pact is progressing. ramy: up next, there is plenty on the agenda for markets to way over. it is coming up. this is bloomberg. ♪

paul: this is "daybreak: asia." prefersr next guest asian equities. joining us now to tell us why is the global macro strategist. always good to have you on the show. you like asian equity. equities,ook at u.s. it is still the area where we see the strongest earnings potential. ,iven what we saw last quarter this is an easy beat. overall, valuations have come to be at attractive levels.

where the averages well over the 20. it remains a good earnings story. , when like asian equities we actually look back at where it has come from, emerging markets had a good rally the last couple of weeks, but it has been with positions very low right now. the stimulus packages are coming through in china. the trade war is going in the right direction. it is a very attractive story. possibly to outperform in 2019. ramy: there are a couple reasons to go one way or the other. said valuations are reasonable.

technically, bloomberg news failed to hold that. one is saying up and one i it. >> when we look at the equity market and why we like it the drivent is a sentiment market. story, most a big of the analysts that i have been macrog to, chinese momentum is weakening. i do not see it improving. especially with an earlier chinese new year you will see spending holding off. slip --e still in a

relatively slow place. the chinese government is really focusing on targeting private enterprises. think in 2019, what we are going to see, it is not about liquidity. it is about focusing on the transmission channels of focusing those to the private enterprises. that remains key. would he be a little nervous getting into this stage? there are a lot of risks. there are questions over whether the stimulus will be enough. it keeps gettingr. the valuation reflects this risk that you are talking about.

when we actually look back to where shares are, it is at a level where we are back into the 2015 era. now, it ishink right too late to get in. weak bounce. i think that is something that we need to wait for a little bit. stimulusl be a china story helping the economy. whether or not it focuses through, that is a second half story. let's talk about u.s. equities. the earnings have been reasonable so far. >> earnings have been more positive. levels back at valuation

comparing now -- comparing it to last year. i would not say u.s. equities are cheap. i do not think anybody can disagree with that point. where is the growth in terms of earning potential? where are we getting a higher return on equity? that is an area that we like compared to other markets. one of the most important things . it relies on a weakening of their currency. is, they are going to have a lot more headwinds going into 2019. the euro and the yen are thately to depreciate much. if you look at emerging markets, they benefit from a weakening dollar. that is where i think the

currency play comes in. on the eurouched just now. i want to expand that to brexit. as we are watching the chaos unfold, what do you expect over that? i said it before. it is very hard. uncertainso many scenarios that will unfold. think the situation will linger on. it is something that we do not believe in. believe inople, you the more optimistic side. , some extension of article 50, but when we look at where the pound has been trading against the dollar, it is really just 5% below fair value.

where thee looking at pound is right now, do you re brexit, it 16% undervalued. a big job. i would refrain for now. paul: we will have to leave it there. do not forget interactive tv function. you can watch us live and catch up on past interviews and diving into any of the bloomberg functions. become part of the conversation as well. is for bloomberg subscribers only. check it out at tv .

this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." paul: i'm paul allen in sydney. the global trade war focuses on the u.s. and china. canadian trade spoke exclusively in tokyo. >> we are going through a tough patch. this is not a relationship that began yesterday. it is sophisticated and multilayered. this is a tough moment because we are very concerned about two canadians being detained. we believe that the rule of law is expressed an industry and we also think it is unacceptable.

we are reaching out to our allies to make the case that this is in the interest of not only canada but other nations. conversations with your colleagues around the world of if that might happen. if it would, how important would that be? american community believes that it is in the , and we haverest very happy to have that conversation. there are standards to this deal and they are very high. adhereion that wants to to those standards is welcome to apply. of what isyour sense going to happen with brexit? the eu.ame is true with we want to ensure that canada continues to have a healthy trading relationship.

we will wait to see how a sort it out. we have continuing discussions with the u.k. to make sure that it is where everybody else is coming from. sure. if they want to apply and are prepared to meet the standards, they would be considered. over you get ready to head , what is at the top of the list? is there one thing that you hope you might actually be able to accomplish concretely in these talks? problem is urgent the dispute. the gears are going to come to a halt where they are going to slowdown. argument toake the all of our partners that there is a better way than that and to

propose some. to make sure that the conversation continues, we have a certain spring in our step. paul: that is canada's minister speaking to our policy editor kathleen hays. get a the latest flash headlines. reports from canada say they are standing by as the partnership -- with the partnership despite growing scrutiny around the world. they have written to the staff awei remains a participation in communications. -- a participant in communications. ramy: building two new hotels in china. the project will include the first asian branch. the operator is targeting $760 billion industry and has

set its sights for between 15 and 30% of sales. paul: tesla has won the green light. they are expected to start next month. they are seen as more than twice as large in the u.s. still to come on the bloomberg daybreak: asia. we will be counting down to the release of the fourth quarter figures. you expectg to see and easing there. oft, we will get the view the slowing economy. stated for tha issue will havo

pass on conservative and d.u.p.. some government pushing for a s said she has no intention of doing so. >> they will put in preparations

for no deal. itst uropn commission said italy will have the slowest growth in the euro area this year and next. bid for bail, saying he will guarantee just a in japan until his trial and would be happy to where an electronic monitor. the french government is playing down a full merger meanwhile between renault and nissan saying there are no plans to

resign the decade old alliance. nissan has a 15% nonvoting stake in renault which in turn holds 43% of its japanese burner. global news 24 hours a day, on air and at tictoc on twitter, -- japanese partner. 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 su keenan. this is bloomberg. thank you. time to see how the asian markets are shaping up. let's get over to sophie kama .2% , set for a fifth day higher but the korean won is under pressure as investorsonsider the drop of imports and exports in the first days of january.

let's check in on those movers. mahindra. they say the korean stock would be moving on a report that hyundai motor will ramp up in india's ev industry. is working on second summit with kim jong-un expected likel.

what does each sign up to get out of thi meeting was were after the mid-first meeting, what did we get after that? it is unclear what each side hopes to gain or what their agenda is we haven't heard that. president trump sent out that treats he was excited to meet leader kim and talk about what see these -- what cities they could be in. likeesedtarefovi

to weapons inspections and haven't made much progress in dismantling the growing arsenal theoryeads and icbm's that hasn't been much progress, but of course the white house is saying they hope there will be more. for the agenda and the specifics of what china -- what each side hopes again, we don't know. let's talk about the shutdown. house democrats are standing firmly against president trump's border wall plan, but is there result stoning to crack? their resolve starting to crack? jodi: the democrats are not giving in to the president's new proposal which would require them to fund that wall but also give a temporary reprieve, three years to the so-called dreamers, young people brought as children

illegally. -- the number three democrat in the house would like to see a permanent plan. they could provide some wall funding but basically s let's take a few brakes, reopen the government and take several weeks to discuss how to resolve this impasse over that border funding. the democrats and the house are in the house are not bring along with the plan. in the senate there will be a vote on the plan. it is unclear how much democratic support it has and if it could pass the senate. if it does, it will not be well received in the house where the democrats control the agenda. this coming friday will be the 800,000aycheck that

federal workers will miss. there is a lot of pressure to move forward, but they are still far apart. estatehis russian real deal, possible real estate deal between donald trump and some folks in the country, one lawyer, rudy giuliani is saying things about donald trump's former lawyer. help us understand what is happening. sayingudy giuliani is the discussions about a possible real estate deal in russia between president trump, who has longermpaigning last is than we had previously thought. michael cohen said they lasted until june of 2016. rudy giuliani saying they went until october and november of 2016. the white house is denying a

reported buzzfeed that donald trump told michael cohen to lie negotiations went on. and has been an unusual move from the molar team -- the robert mueller team. they said that buzzfeed story is not correct. it is an evolving kind of story but rudy giuliani said discussions did go on until october or november but denying that the president asked his former lawyer to lie. schneiderright, jodi with the latest intrigue from d.c. our next guest says the chinese economy will continue to slow for the first half and possibly stabilize. joining us from hong kong is the securities chief economist. we are not used to seeing gdp numbers quite this terrible from

china. what are you expecting? >> i think if the economic slowdown is largely expected by the market. it is almost a market consensus. i think people will realize. number one, many sectors in china have been seen -- seeing traditional growth. some traditional growth drivers have seen on a monthly basis, economic adjustment could last for a while, three to five years before new growth drivers are unfounded. it is a lengthy process. it will last for a while. guestse have had a few on bloomberg daybreak: asia still optimistic about the picture. this is kind of a fun chart.

5633. it shows us three different ways to measure chinese gdp. the official numbers, and ending more -- a more encouraging line. this measures railcar go, electricity consumption, so there are indicators that are positive. what do you make of that? the economy is going through cyclical and structural changes. we don't worry about this in the long-term. this is good for long-term changes great we don't worry about the slow down. but talking about the indicators, we look at the physical -- the fiscal revenue growth [indiscernible] profits, there was already growth in november. these are numbers -- the fact

that the market is much more than the headline gdp number. i think the economy will continue to weekend but the stabilization is -- to weaken, but stabilization is possible. china is a large country and consumption is only 10% while our population is 30% of g20 -- only 10% of g20 while population is 30% of g20. consumption being one of the other aspects coming out. but in terms of industrial production, this is of grave concern. hop into the terminal. i want to show you and our viewers that the rates of industrial production are near decade lows. 5.4% is where we are. the bloomberg survey is expecting 5.3% through the year

2000. that has never been hit. what downside or upside might there be to this you want market watchers to know? shen: this is one example that the gross -- growth revenue is already single digits and even low. we have seen in the past -- i think this will become [indiscernible] in the coming years. trade with the u.s., that had a slowdown on production but overcapacity inside china has also slowed down production a bit. -- the tradention tension continues, likely the new demand will come from consumption. consumption becomes a new growth driver in china. production was -- will at a low for a while. ramy: you say this is the new

normal. how long do you think this might last, or do you think this will fall even further, and how long will it go until something breaks? had, in thevernment 19th party congress, the government had the shifting from the highest growth rate to high-quality develop mid stage. that is partly expected, but the government hadn't expected the growth rate to slowdown during the transition to high-quality growth. put in becauseis some can't go through the whole process to be worked out. les inspected -- intensive sectors, you know, we will continue to grow. that protest will go on. as the consumption will become a new growth driver, that is

probably what will take three or five years. important fors many of our investors and survival through the process is actually critical. before we let you go, i want to get your thoughts on .otal debt, 2.5 times gdp should investors and chinese officials be concerned by this? does it depend who is borrowing? shen: yes, for the near term we are concerned about the dips. but that process is leverage because oferagable the past with exports. they are single-digit growth likely in 2019. we are seeing the growth rate will stay at a low for a while and monetary policy will be

supported for a while, but we need to seem new growth drivers to emerge. it will either be consumption and innovations. ramy: all right, the chief security economist, thank you. we are counting down to china's minutes.t in a few getting down to the business of implement in the landmark trade deal. we will discuss their meeting with the former japan trade negotiator next. this is bloomberg. ♪ ♪

revampedbers of the pacific trade deal are in tokyo to finalize the implementation of the accord and opened the door to additional nations. let's discuss that with a former trader negotiator at the japanese ministry of foreign affairs and public at keio university. university. at keio

these nations are getting together this past weekend, doing a kickoff meeting. how have things been going? >> so far it has been quite productive. i met one of those trade investors yesterday over lunch, and [indiscernible] this first commission meeting which was held on saturday offrnoon, and a good kick for this very important countries to 11 foster free trade and trading goods and services across asia-pacific. it is a good start. they are going to increase the membership of that very important trade framework across asia-pacific. chile, peru, have not ratified this. what is holding them back? malaysia, thesee,

prime minister just coming back to his post, and he has some political sort of issues with his predecessor. largely it depends on the domestic politics. i think this first commission certainly cptpp encouraged those who haven't ratified yet. it is a good stimulus that has been brought in through this meeting, i'm sure. , all at the end of this these meetings, what do you hope will happen reasonably? yorizumi: reasonably i would say a couple of countries within asean, they have already cptpp.ed to join the

for that matter they have to be engaged in the trade negotiation, particularly the market access. another thing which is important is they have to accept the rules part of the cptpp. i think these things are going to be fading away for the larger part of this membership. ramy: bloomberg business speak had -- bloomberg businessweek had a story about globalization thriving despite the rhetoric and actions out of the united states and other populist leaning nations. would you agree with that, or do you still think there is an attack that still needs to be figured out on globalization? yorizumi: the fight or struggle against protectionism, that has been taking place all the time,

you see. this time we have very colorful, ony extraordinary president the other side of the pacific, so we have some difficulties certainly. if you look at japan's trade cptpp 11, we have also a free-trade agreement with european union, which is [indiscernible] the first of next month, february, and our regional economic partnership which is comprising 16 countries including china. you know, for the wrapping up process for the end of this year. mega-fta's certainly have a very important step forward for further fight against or struggle against protectionism and hope that our

partners will certainly look at very important development in international trade. japan, taking and effect with carmakers. being a major distributor between the u.s. and japan, what do you think is the biggest risk? we ask you this when you come on, about autos, but we can't get away from it. roughly: japan exports 1.7 million units of cars made in japan to united states directly. those are direct export from japan to united states. manufacturers, car manufacturers, producing cars within united states, that amounts to 3.8 million units of cars. that is quite important, quite massive.

that produces a number of jobs, the 90,000jobs about jobs being created and altogether with supporting industries around sector in the united states, that is 1.5 million jobs being created. i think united states should look at that kind of investment part or local production within united states. not only focusing on the actual number of units of cars being exported from japan to united states directly. ramy: we haven't seen a lot of opening up i suppose on the u.s. side. final question, if you had the ear of president trump, what caution or warning what you tell expandcptpp continues to , as japan and the e.u. deal is set to kick off january --

february 1? yorizumi: mr. trump should be reminded japan and the united states have channeled massive resource to negotiate. the market access of your -- u.s. products entering japan within the framework of the original tpp, that has been successfully concluded by october 2015. that means we have already kind of de facto free trade agreement between our two countries. what is important for united agreement,ook at our almost four years ago, and reassess the importance of this agreement because you see, the agriculture for united states is very interested in beef, pork, dairy products, all these things.

we already agreed. like newpp countries zealand or canada are interested tppetting in by using this 11 devices. if united states steps back eternally, that is really damaging their interest here in this market. i think they have to look at that kind of negative side of u.s. retreat. ramy: will be watching that. -- we will be watching that. thank you very much for your time, former trade negotiator for the japan ministry of foreign affairs. this is bloomberg. ♪ this is bloomberg. ♪

ramy: coming up on bloomberg markets in one of the top-ranked forecasters for the chinese economy will be on the show with the latest data out of beijing. it will reflect a slowdown. and talking about home and mainland markets. that is ahead of the data dump. before we go to bloomberg markets asia, looking at how markets are trading. this is bloomberg. ♪ ♪

rishaad: welcome to bloomberg markets china open. yvonne: investors counting down the latest gdp reading from china. a further slowdown may have not been priced in already. widespread gains you lie increasing debts. we will hear exclusively from the new zealand trade minister. ♪