haidi: good morning. australian markets have just open for trade. shery: good du evening from new york. i'm shery ahn. sophie: welcome to daybreak asia. ♪ the top stories this wednesday -- apple first quarter reserves largely unfounded. revenue met expectations but sales slumped. investors weigh stability which could be the new watchword. sterling falling as the brexit

-- no delay. theresa may have to go back to brussels. let's get you a check on how the markets closed in the u.s. major averages mixed. dow up 2/10 of 1%. solid earnings out of 3m. striking a more positive tone. industrials materials leading the gains on the s&p 500 but tech shares weighing on the market. nasdaq down. tech giants, chipmakers leading the decline. after hours, apple and amd are up after reporting earnings. s&p futures higher. if we can switch the board, oil has gained ground in the past session. we had a mixture of not only been as well as sanctions, but also -- venezuela sanctions, but signs production could be cut in the radio -- cut in saudi arabia. the focus was on sterling, right

now gaining a little bit of ground against the u.s. dollar. the u.k. parliament sending prime minister may back to brussels to renegotiate her deal. the message was clear, they do not want a no deal brexit. let's see how we are setting up for the asian markets. sophie: after tuesday's volatile session in asia, we could be looking at a mixed start for the region. gaining 2/10 of 1%, resuming gains. among the leaders so far this morning. we do have the likes of a tech stock gaining ground. the share price up nearly 3% this morning. more on the eco-agenda. japanese retail trade and australian ppi, along with malaysian trade figures for december. let's check in on the aussie dollar ahead of australia's fourth quarter inflation report. we have the aussie looking steady ahead of that data, holding on to the bulk of the

losses made this week. today, we will gauge reaction to apples earnings and we do have several apple suppliers in asia that are to report this wednesday. lg display has already provided its update for the profit coming yuan.92.9 billion we will also have reports from japan. haidi: sophie checking in on the markets for us. apple shares higher after hours. investors breathing a sigh of relief that 2018 did not end quite as disastrous as originally feared. a difficult couple of years. emily chang is in san francisco with the latest. overall, the numbers were stable, beat estimates. as much as they can try to push services and other areas, you look at smartphone sales, sales

in china, still pretty worrisome. emily: absolutely. let's be clear, they beat estimates by the estimates were already lower because apple cut its forecasts, unprecedented, in the middle of the quarter leading all analysts to lower their expectations. on revenue over and all, they had the revenue at 83.3 billion dollars but it is the china number. china sales fell off a cliff. this quarter last year, apple brought in about $18 billion in china. this year, it was closer to $13 billion so that is $5 billion worth of sales, most of them we presume iphone sales lost in the middle of macro economic issues, economic issues, particularly to china a slowing market overall. haidi: tim cook spoke on that call. it is telling when he talks about customer habits. emily: yes.

so what is interesting is that tim cook sort of played the role of captain obvious when he talked about how people are adjusting to smartphone longevity. take a listen to what he had to say. toa customers are holding on their older iphones a bit longer than in the past. when you pair this with the macro economic factor, particularly in emerging markets, it resulted in iphone revenue that was down 15% from last year. our iphone results accounted for as significantly more than our entire year-over-year revenue decline. emily: so, we all know that people are holding onto their phones longer because the phones are better, lasting longer but here is tim cook for what i believe my be the first time admitting that people are holding on to iphones longer is kind of remarkable. basically, he is saying that if people keep their phones longer,

it is actually bad for apple's business. that is something over the longer term, apple will have to overcome and that is why they are pushing the services business with you have to buy those services and use them on apple products, use them on iphones and they are emphasizing the installed base. he is saying the company has 1.4 billion devices around the world and about 900 million of those are iphones. saying,im cook is also trying to talk up the services business. what did we learn about divisions outside the iphone? emily: this is the first quarter that apple did not report unit sales. we don't know exactly how many hardware they sold but they gave us revenue numbers from each of those products categories. $6.7 billion revenue for the ipad. wearables was interesting. $7.3 billion, including the apple watch, air pod, home pod.

the services number we will continue to watch. services at about $10 billion. that is the division that tim cook for the last couple of years now has said will continue to grow, will be apple's future. this is apple music, apple pa y, the app store. detox a little bit on the call about original content, but says apple is still dipping its toes on the water. does not want to say more, but they have hired a lot of people to work on that. could it lead to a subscription service down the line? we don't know. but apple will have to show we can deliver on these other bets at the smart phone market slows. shery: thank you so much for that. our bloomberg technology anchor in san francisco. let's turn to brexit because theresa may faces more trips to brussels after the house of commons ripped up her brexit deal and said she must try to strike a new agreement with the eu. our global economics and policy editor kathleen hays is here

with what happened in parliament and where brexit stands right now. it was a win and a loss for the prime minister today. kathleen: she is still standing. she is going to do something that she said would not work. she have to go back to the european union and say what needs to be changed in order to get a deal but she did get members of parliament to endorse what she is doing. in fact, whether or not she can change the withdrawal agreement remains to be seen. the eu repeated today they will not renegotiate the deal. they will consider a brexit delay. i don't think that is a surprise. they also voted to reject a hard brexit. they must have a deal to the there isdeal, but not really anybody stepping up with a way to get it done. let's look at this long list of amendments that was considered. two passed in the vote in parliament today, but she suffered when she first presented this brexit deal, the worst defeat in modern history

for a standing, sitting prime minister. 230 votes against her. you can see this list, the opposition party. jeremy corbyn in the labour party, a custom unit. no. delayed brexit from the scottish wealth nationalists, no. give parliament control of the process. no. debate the bill on extending article 50, no. avoid no deal, other words avoid a hard brexit, that did pass. the amendment to ditch the irish backstop for alternatives is something that got through. i think today's vote is seen as a victory for the progress forces in parliament. may was helped by more than 10 labour mp's to show their support for brexit. even so, she is a with a task she said would not work.

she is battling back and forth with members of her own party. here she sits with a very hard road to tread in the days and weeks ahead. haidi: of the whole exit package is the irish backstop plan. we are talking about these largely unspecified alternative arrangements. what are we expecting? kathleen: let's remember this has been the problem since the very beginning because everyone wants to avoid a hard border between northern ireland and the republic of ireland. this has been set up so after the brexit transition period, differ some reason they have not worked out the whole question of what foreign trade will take -- customs union, no customs union -- they will have a fallback. most of parliament has not been satisfied. they are concerned they will not have the kind of brexit they were bargaining for. in fact, bloomberg news reports that jean-claude juncker told theresa may on the phone that the heads, the 27 eu nations and

the european commission itself has already a draft statement. they rejected the brady agreement to terra the irish -- tear up the irish alternative. may will return to brussels this week. we will see how far she gets. it seems to me her leverage now -- i think she tried to tell parliament i don't know if i can get this deal through. the people she was negotiating with drew a hard-line. they have softened that line now that they see how firmly the withdrawal agreement has been rejected by british lawmakers. i want to finish with something from the bloomberg library. brexit optimism chart. looking at where the british pound is now what happened today, and the forecast for the end of the year. you can see the pound slipped pretty sharply. we got to this conclusion that may have to go back to the eu and go back to brussels to renegotiate. however, you can see in the bloomberg survey, the pound is

still expected to be considerably higher by the end of the year, suggesting that many traders, investors don't think there is a solution. second referendum not being discussed now but we have to wait and see what happens in brussels before we see what the next bets are on where brexit is heading. haidi: lots more action to come. kathleen hays with the latest on brexit. letter to cut up-to-date with the first word news with jessica summers. jessica: provinces across china are slashing growth targets for the year, indicating a lower national figure to be announced in march. 30 provinces have released targets and 23 of them have cut back. 6.5%iming for six poin expansion, down from 7% last year. china's overall economy slowing in january for the eighth straight month. has appeared in court

in vancouver to contest u.s. accusations of fraud and id theft. the judge push back the date of her next appearance to march 6. a 30 day window for canada considering to center across the border. the expedition request has raised tensions ahead of crucial trade talks on wednesday. china has asked for meng's release. >> we are focused on fulfilling our national obligations, treaty obligations. making sure the rule of law is integrally applied. we are going to make sure that the law is respected. jessica: five people arrested over the dam disaster in brazil that killed at least 55 and left 300 missing. police detained three employees, the dam owner and two contractors from a firm that carried out safety studies on the dam. the government has ordered

checks on the other dams across the country. beleaguered venezuelan president nicolas maduro is trying to silence opposition using gagging orders and shutting down the internet. journalists across the country say they haven't mourned not to mention -- have been warned not to mention the interim president by name. access to twitter's live streaming app is blocked for the 12 minute duration of his speech. global news 20 for hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. ahead, apple's results giving chipmakers a lift after hours. we will tell you what investors no longer think it is all doom and gloom for semiconductors. haidi: up next, a busy start to the biggest events of the week. they could still be ahead of us. we will be asking the chief market strategist about how he

dealing with the fat and trade negotiations. this is bloomberg. ♪

haidi: this is daybreak asia. shery: u.s. equities edged lower on tuesdays as investors wait for corporate earnings, the chances of a trade breakthrough and the impacts of the government shutdown. our next guest says it will be shut down -- some time until the shutdown's impact is known. joining us now is oliver. great to have you with us. really diverse earnings. well,ple doing a bit beating expectations but the concern over china growing, whether it is them or ia, are you or nvid seeing any common themes and what should we be watching? oliver: it is a little early.

only 1/5 of s&p constituents have reported so far. what we are focusing on more than anything else as opposed to just looking at earnings, we are looking at the sales numbers. an earnings miss can happen because of revenue numbers missed or other events. we are much more concerned about revenue sales. you look at caterpillar, there was a sales miss. it was not horrible. apple, albeit revised expectations, did pretty well on the sales side. that to us speaks to the health of the business, but it is very much a line by line, company by company analysis as opposed to a macro view. shery: we did see really not much reaction from the government shutdown, not yet. having said that, 35 days of partial government shutdown is longer than the 21 day record under the clinton administration . when can we start to see some impact come through? oliver: i think we are seeing the impact trickle in slowly.

we probably will not know the full impact for another month or so. if you listen to president trump, he has already threatened another shutdown at that point if he does not get funding for his wall. we will see where we are. the white house and congressional budget office has said it will be an $11 billion cost. i suspect it will be much higher. we will see if that is sustainable. the bottom line is the world is a little bit of a mess right now. the slowdown in china, we've got brexit, venezuela plunging into a civil war. the middle east continuously in a mess. there are a lot of things at play. the question for strategists and investors is simple. which one is the straw that breaks the camel's back? because it would not take much when you have that much going on. haidi: oliver, as you say, there was a great deal of uncertainty, particularly this week as we have some topline earnings hitting the headlines as well, but also the trade talks as well

as the fed decision on brexit. is the question also -- you look at the range of outcomes -- investors have to make a decision of how bad the most likely outcome is going to be. is it a kicking of the can down the road when it comes to china trade and brexit, or should they be pricing for a worst-case scenario? oliver: while we are not going to be a trade deal with china by march 1, we will probably make enough progress that the trade exemptions and relief are going to get extended beyond that, so that is a positive. with regards to brexit, that is a big question. the greater question from an intermediate perspective for investors is will europe plunge into a recession? it is darn close. you have to watch some of economic data out of there with regards. to china, we know it is slowing down. the question is how will that impact the world? by some measures, the chinese

economy is larger than the u.s. economy at this point. decemberis that on 24, stocks were way oversold. they are probably fairly valued right now. if things improve and these headline risks go away, they are probably still cheap and that is what we think is most likely going to happen. if they deteriorate, they are overpriced and you will see another correction. haidi: of what to get your views on brexit and what happens to europe given that we have it in the works. theresa may having to go back to brussels and renegotiate everything she has been negotiating for the past 18 months. this is a chart on the bloomberg. looking at a bit of optimism if you look at the forecast for cable. we are looking at expectations by the end of the fourth quarter 2019 this year that sterling will be trading at 1.39. is that overly optimistic to you? would you be looking at u.k.

assets at this point and go given the uncertainty, it is pretty uninvestable at the moment? oliver: yeah, we would not take that level of risk at this stage. i think with brexit, the most likely scenario is the kicking the can down the road. they will come up with some sort of a face saving language that allows europe to say let's extend this, let's not make this a hard brexit. everybody said they don't want a no deal brexit. that means the only real solution given how far apart both sides are currently is to figure out a way to just extend it and make it last longer. in many ways, that is a good thing. in others, it prolongs the inevitable. shery: when you look at what is happening in the u.k., whether it is home prices flattening, investments really down -- not surprising -- how much of it is cyclical because it was supposed to happen around this time? how much of it is brexit

related? oliver: i think there is a component that is cyclical. i think the whole brexit situation is coming at the worst time for the u.k.. the global economy is slowing down. that is part of the natural cycle. whenself, that is ok but you have something like brexit that is potentially going to be costing hundreds of thousands of jobs to move -- entire industries moving out of britain and the u.k., that is very problematic. i'm not saying that will definitely happen, but it is certainly impacting by companies. it is keeping people out of england and the u.k. i think you need to take a look from an investor's perspective and say, look, if everything works out, it is very attractively priced right now but we don't know it will so there are other areas that are almost as attractive that we can seek some good investment opportunities. shery: how attractive is the u.s. when you see valuations not really being too expensive or

cheap either? oliver: on a scale of one to 10, i put equity prices at a five. they are not cheap because we do have these global headwinds and the potential for more political impasse is in the u.s. on the same token, if they improve, they are cheap. again, if somehow republicans and democrats start acting the way they are supposed to act as elected officials, which i know sounds somewhat ridiculous these days, then all of a sudden the bract are up of the economy, we still have a strong economy. we don't have much in terms of inflation. the fed will pause interest rate hikes and corporate earnings are strong. even if they slow to 7% growth rate compared to last year, 7% to 8% is not bad. that is enough for a 10% lift in stock prices. shery: oliver, thank you so much for that, joining us here in new york. you can get a roundup of the stories you need to know.

to get your day going on this edition of daybreak. it is also available on the mobile app. that is the bloomberg anywhere app. this is bloomberg. ♪

shery: a quick check of the latest business headlines. fined $40 million by new york after admitting it rigged affect trade between 2007 and 2013. accused of participating in a regulators previously levied fund totaling $3 billion on barclays, deutsche bank and goldman sachs. shery: the clock is ticking for tesla to dodge a bill worth $920 billion. the amount of debt due march 1 from convertible bonds issued in 2014. tesla can avoid the payout by changing the note for cash and stocks, but only if shares jump about 21% from the current

level. the debt payment would be the biggest in tesla's history as they endure another challenging year. plenty more coming up. this is bloomberg. ♪

jessica: you are watching daybreak asia. apple shares jumped as holiday quarter results suggest that the company's performance has begun to stabilize after a punishing end to 2018. second-quarter revenue up to $59 billion, in line with previously lowered estimates. iphone sales fell last quarter, revenue from services and wearable devices grew from a year earlier. sales in china were down 26% from a year earlier. >> our customers are holding on to their older iphones a bit longer than in the past. when you pair this with the macroeconomic factor, particularly in emerging markets, it resulted in iphone revenue that was down 15% from

last year. our iphone results accounted for significantly more than our entire year-over-year revenue decline. jessica: sterling fell at the house of commons rejected a proposal to stop the u.k. from leaving the european union without a deal. the vote approved changes to the so-called irish backstop and sends theresa may back to brussels. the eu has repeatedly said it is not prepared to renegotiate a deal that took 2.5 years to complete. their are just eight weeks to go until brexit. >> there is limited appetite for change in the eu and negotiating will not be easy. but, in contrast to a fortnight ago, this house has made it clear what it needs to approve the withdrawal agreement. jessica: home prices in 20 u.s. cities rose in november, the slowest pace since early 2015.

valuesex on property increased 4.7% from a year earlier, down from 5% the previous month. the result underscore a slowdown in the housing market through 2018 as mortgage rates rose and supply remained tight. there are signs that china's taste for fine wine is cutting back. southern visas repairing a hong kong sale in march, valued at a record $26 million. it will feature more than 16,000 bottles, including 250 of the most coveted burgundy in the last five decades. hong kong is back in level with new york as the world's's wine auction seller after falling to second-place. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers.

let's take a look at how australian markets are faring. sophie? sophie: aussie shares have resumed gains before gaining 6/10 of 1%, led by resources companies. off the fourth quarter. holding onto the ball the losses made this week despite the rally in iron ore futures. iron ore miners in sydney are continuing to advance. checking in on the players. rising to a september 2017 high. bhp and rio jumping the most in more than two years, as iron ore compounds. may be a greater effect on iron ore producers than buyers as it will raise the cost of operations. checking in on gold and copper miners which are climbing. sapphire rising after reporting

better-than-expected second-quarter production. moving to the downside, we do have graphite mino under pressur. this comes in line with guidance. the 2019 target is 250,000 tons. holdings slipping 7% after the first half result. underlying profit was up 40%. losing ground in new zealand, lower profits on weaker tourism. down 6.2%, the stock has been downgraded by several brokers this morning, including morningstar even after it boosted morning guidance. shery: thank you so much. we have the latest numbers from lg this play. we have breakout of the fourth quarter operating profit, 279.2 5 billion yuan, higher than the estimates of 253 billion yuan.

we are seeing the fourth-quarter net higher than the estimate of 53 billion yuan. 24.3 billion yuan. fourth-quarter sales -- the estimate was up around that level. 92.8year operating profit, 9 billion yuan. they are looking at the breakdown. we are seeing lg display reporting operating profits for the fourth quarter that beat the highest analyst estimate. it is worth mentioning that 30% or more of the revenue actually comes from apple. we are seeing them beat estimates. lg display will be looking at how they trade when korea open street right now, we are seeing fourth-quarter net display area shift 11.1 million for the fourth quarter. haidi: yeah, the outlook for a lot of tech and ship suppliers

hinging on the outcome of these trade talks this week. shery, the trump administration is dangling the prospect of lifting all tariffs on china if it offers enough trade concessions. the treasury secretary steven mnuchin made comments on fox at of the high level trade talks in washington. tom mackenzie joins us now from beijing. what do his comments tell us about the u.s. strategy going into the talks in washington? tom: the u.s. is obviously clear and understands the priority for china is getting these tariffs removed. the threat of additional tariffs taken off the table. that is pretty clear from these comments. what he is saying to the chinese is we can do that if you come up with concessions around structural changes. that is the big question we have been discussing for the last few weeks, have are china's prepared to go. they have showed little signs of any significant structural changes around things like market access and subsidies. that remains a key question.

there is another lever that could be put to play by the u.s. even if they deny this which is the case against huawei. mnuchin and wilbur ross came out and said the investigation into the chinese telecom company is separate from the trade talks, but the chinese will remember what happens when president trump softened the punishment of zte after a phone call from president xi as a favor. something else the chinese may be looking at is the political weakness of trump given the shutdown and the fact he stepped away from the shutdown, back down in the face of pressure from democrats. that may a lesson the chinese take on board. when push comes to shove, president trump has and can backed down. shery: the strategy seems to outlast china when it comes to economic concerns. we are now seeing further signs of a slowdown in the world's

second-largest economy. tom: yes, you are absolutely right. of ans. is very cognizant ingrained slowdown we are seeing in china. that was articulated by some of the provinces. 30 provinces have announced gdp targets for 2019, 23 provinces have lowered those, including the two largest economies. there is a next vacation that china -- expectation that china will produce its national gdp margin in march to a range of 6% to 6.5% gdp for 2019 versus 2018 which was a target of about 7.5%. many experts think it incentivizes the wrong thing. the fact you have 23 out of 30 provinces reducing target for gdp shows it is a pretty broad-based slowdown that is expected at the provincial level

from chinese officials. that is taken into context as well. we also have economics crunching some early data that we will see an a straight months of slowing growth. again suggesting that it is yet to really invigorate growth in china. although, exit occasions from some economists that it will happen in the second part of the year. shery: thank you so much. the two.s., amd and 3m, most recent companies to weigh in on slowing growth in china has sliding global growth as well. ramy walks us through the numbers. the numbers looking pretty good. ramy: surprisingly, especially for the tech stocks, in particular semiconductors and chipmakers. we have seen those downgraded for intel. not so for amd. profit is in line with estimates and the outlook does look pretty rosy. the estimates, 0.08%.

we are seeing after hours -- look at the share price, up by 8.5%. not only that, looking ahead to the outlook, this is the line that is important -- they expect high single-digit percentage revenue growth in 2019. with that said,. another line that caused a little bit of confusion amd actually said they saw first quarter revenue at $1.2 billion. the expectation was $1.4 billion. positivity, taking a look at what is happening in 3m, the maker of everything from post-its to electronics. this is -- the estimate beat by three cents. shares rising over the course of the day, up by about 2%. the outlook is different from amd. they walked back from november. 3m says the year estimate is

$10.45 to $10.90. rbc is saying the walk back is not as bad as they feared. they say that 3m, high quality defensive name that should outperform during economic downturn. even though we are seeing a lot of negativity in terms of chinese growth slowdown and global growth slowdown, with these two companies we are seeing positivity. haidi: and luxury also retaining. doing pretty well in u.s. trading despite the ongoing trade tensions between the u.s. and china. the domestic growth slowdown we are seeing in china. what are they doing to withstand all of these headwinds? ramy: this is surprising. this is really surprising because while we are talking about the chinese growth slowdown, when it comes to the engines for the revenues coming h, it comes from

china. the ceo said basically that everything is firing at all cylinders. the ceo saying that the demand for fashion, leather and alcohol are all up. >> last quarter was growing faster in china. theink the main reason is ability of our products. ramy: who does not desire things cognac?nessee when we split this things up in terms of what is positive -- lvmh, by the numbers, revenue beat 9%. as i mentioned, fashion and leather clearly -- 17% versus the estimate at 10.5%. fiscal year profit almost in line, 10 billion euros versus the 9.9 9 billion estimate. this is a good start for 2019 for the company. ceo saying trying to put a little bit of a reality check,

saying could these good times continue? he says no but the year is going in a very good direction. haidi: ramy there with the latest earnings. next, we are talking tech on the back of the apple earnings. the prospects of semiconductors advisors president is with us. this is bloomberg. ♪

shery: this is daybreak asia. hours,apple rose after adding to the more benign the downside. the semiconductor index is up more than 7% this year, despite a number of looming headwinds. let's talk with robert. the last time we had you on a few weeks ago, we talked about the down part of the downfall

for the chip industry. could today's result out of apple, which were not although but a bit of a head stretcher as to why the stock move as much as it did, does it change your view at all? robert: i really don't think it changes the view. a bit anti-climactic given that they already preannounced results. however, think the stocks are moving in somewhat of a relief rally where the results are not as bad as they could have otherwise been. i think we are seeing that out of the other chip stocks as well. haidi: we are looking ahead to samsung. they are expected to report their first drop in quarterly profit in about two years. for companies like samsung, saying they will have to cut capital expenditure. is cutting cost a way to get through the next are of the cycle? robert: it is not so much cutting cost, as it is reducing supply. samsung is a significant supplier.

the largest memory chip supplier in the world. what the you're doing is cutting back on the supply of chips that have flooded the markets been reduced pricing. it is both a cost-cutting exercise as well as reducing flood of chips. shery: we got those numbers from psmc, really showing stockpiles continuing to grow. what are we expecting for the global chip industry as far as growth or contraction this year? robert: i think we could potentially see a 10% to 20% contraction this year. it is difficult to protect -- predict the year in the first quarter. you have chinese new year and a postpartum depression after the very strong first-quarter holiday season sales in the u.s. it is difficult to predict right now, but we expect the entire year to be down. the three major chip segments are doing weaker. the memory segment which is obviously down because of reduced memory prices. you have the data center market,

which we heard from intel and nvidia, which is downgraded obviously apple, samsung is down. all three markets in a downward trend in the semiconductor industry. the entire industry will be down on the order of 10% to 20%. shery: how much of it is because of the trade tensions and concerns of further threats on chinese goods? we have seen some of those apple suppliers talk about shifting some of their production out of china and into india and southeast asia. robert: right now in terms of the semiconductor industry, there really is not any substantial capacity coming out of india. there is some capacity in other places in southeast asia, but it is difficult to shift capacity. most of the components that are used in apple iphones come from tsmc, which is out of taiwan. haidi: in terms of china's great

ambitions of making semiconductor innovation and production kind of a national champion type industry, is that largely rhetoric at this point or do you see that becoming a real competitor, just adding to the supply problem that the industry is already facing? robert: i think they probably will become a real competitor. 2025 atalled china in already spent on the order of $100 million. there are 23 semiconductor labs being built in china. it is where all the activity is. we have seen this before when japan entered the semiconductor market and korea entered the semiconductor market, taiwan. with china entering the market, they will likely disrupt the market both in terms of memory semiconductors, as well as other communications that are currently made by tsmc. i think china is entering to the market is very real and will definitely impact the market. shery: amd numbers as well.

they have been doing really well. pretty interesting they did not mention any problems in china. what was the difference from amd which followed less optimistic projections from intel or nvidia? robert: amd has less business in china. they were a little light on the revenues but earnings were ok. i think they are looking for better growth throughout the year that most of the hyper scale data center customers that they have are outside of china currently. shery: we are looking at semiconductors stocks in the u.s. this chart on the bloomberg showing they have underperformed the broader s&p 500. the p/e ratio falling below the s&p 500 come a similar to the level we have not seen since 2011. given all of the negative headlines on this industry, could we expect some upside given it could provide some good value for investors? robert: as i mentioned before, we are having a bit of a relief

rally where the news is turning out to be not as bad. shery: is that sustainable? robert: i think the stocks may come back down a little bit, some of the stocks that had a bit of a pop here maybe anticipating more from the year. if we have a 20% down here, it will be hard for the stocks to move upward in light of that. haidi: robert, i am keen to get your views on the latest developments related to huawei, china's largest company, largest tech company. they have a pretty big chip business as well, not just for phones but also things like cameras, cctv cameras. what do you make of the china's -- challenges for the company? is that something they can overcome, this reputational hit that has been elevated this week by the u.s. charges? robert: i think in some ways, this is a backstory to the trade

issues. huawei and other companies in china are complicating the story. we have a semiconductor manufacturing company in china which was essentially shut down by the u.s. government because of intellectual property theft from micron. that a long what we previously saw from zte complicates the trade issues. if anything, they make a trade issues that much more difficult to resolve over time. i think huawei certainly has aspirations to be a much larger company, but these issues that have come up of late will likely stand in the way. haidi: always appreciate your time and views. robert maire with us. do not forget to interact with the tv function. you can watch us live and catch up on past interviews, take a dive on any of the securities with the bloomberg functions we talk about. you can join us in the

conversation by sending us instant messaging. this is bloomberg. ♪

shery: this is daybreak asia. i'm shery ahn. haidi: a quick check of the latest business flash headlines. boeing and airbus splitting in order for 48 single planes in a deal valued at $5 billion. plus 18n on 10 more, a-320 aircraft with the planes to be delivered by early 2026. air travel demand in asia is a fed it to double in the next to get dates and carriers are racing to alter their fleets. shery: one support from the country's richest man as it searches for a suitor. shares fell the most on record

as the carrier said it is raising about $350 million in a rights issue underwritten by investors, including a shipping magnate. norwegian came under pressure when british airways owner ing and in an eight-month pursuit. haidi: harley davidson plunged of the most in a year after admitting president trump's tariffs wiped out profits last quarter. zero earnings through december. including restructuring and tariffs, missing estimates by $.29. the president attacked hardly last year after it announced plans to move some u.s. production overseas to avoid tariffs. shery: accenture is to begin selling automation software that is already eliminated 40,000 jobs. the platform has been in development for five years and suggests ways to streamline and automate processes, including finance and accounting, marketing and procurement. accenture says all staff affected by the program have

been retained in other roles. haidi: let's get a look at the market open in japan and south korea, almost upon us. sophie is in hong kong. sophie: stocks to watch -- asian suppliers on the radar after the tech giants results. adventists, gdk. lg display with fourth-quarter operating profits beating the highest estimates. other companies to report -- numbers from japan keeping its full-year forecast. also posting results. keep an eye on airlines in the region. also watching japanese retailers after retail sales rose 1.3% on yearly basis. on the radar after the company said it would discontinue selling products at convenience stores. retailers have been in focus in japan given some of the concerns around japanese consumers

looking to spend their earnings. that is a look at the breakdown from the open head of korea and japan. this is bloomberg. ♪ this isn't just any moving day.

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haidi: a very good morning. i'm haidi stroud-watts in sydney. shery: good evening from bloomberg global headquarters in new york. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, asia-pacific stocks facing a mix to start. are raising higher with the dollar. revenue met lowered expectations although china remained weak.

shery: sterling reacts as the brexit deal -- there will be no delay. theresa may will head back to brussels. investors have a lot on their plate this week. we have the trade negotiations between the u.s. and china kicking off as well as the fed coming up with their decision on wednesday not to mention the brexit drama unfolding in the u.k. a have seen the u.s. markets little bit next so we will see what asia does as we lack clear direction from wall street. sophie: it is a wait and see game being played. a quick check on what is in the lineup today in asia in the last half-hour. inflation due later this morning. japanese consumer confidence for january may see moderation. december trade figures are expected to see a slowdown in exports worth. we have the nikkei 225 gaining

ground this morning, up .2%, extending games. the kospi lower by .1%. we have samsung electronics and another company under pressure. weing a look at lg display, have the stock getting ground, up as much as 2.2% at the start of cash trade. it beat the highest analysts estimate. sales came in line with estimates. the screen maker says that first quarter panel area shipments are to fall by high single digits. average selling prices will decline by mid to high single digits. haidi: sophie kamaruddin in hong kong. first word news with jessica summers in new york. sterling fell as the house of commons rejected a proposal to stop the u.k. leaving the european without -- european union without a deal.

it sends theresa may back to brussels to appeal for new talks. dut you said it is -- that e.u.said itthe eu -- the says it is not prepared to renegotiated deal. >> but in contrast to a fortnight ago, this house has meanst clear what it to approval withdrawal agreement. jessica: provinces across china are slashin growth targets. g30 provinces have released their target and 23 of them have cut that. 6.5% expansion, down from 7% last year. showed china's overall economy slowing for eight straight months. in huawei cfo has appeared

court in vancouver to attest to accusations of fraud and ip theft. in the face of a 30 day window for canada to consider sending her across the border. arrests have raised tensions ahead of crucial trade talks starting wednesday. china has asked for her release. >> we are focused on fulfilling our international treaty obligations, making sure the consistentlys applied. we are a country with the role of law. we are going to make sure the law is always respected. jessica: five people have been arrested over the disaster in brazil that killed 65 and left 300 missing. police detained three employees from a contractors german consultancy firm that carried out safety studies on the dam. the government has ordered checks on other dams across the

country. 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 jessica summers. this is bloomberg. thank you. apple shares jumped in late trade as last quarter results upcoming performance has begun to stabilize after a punishing and to 2018. let's get over to mark gurman. analysis for us. what is the main takeaway? they really tried to put positivity when it comes to services. at the end of the day, we saw a slowing there and a slowing in china. are presenting life beyond the iphone. if you look at all of apple's major segments, the apple watch and services, all those categories grew a notable and

year-over-year for the holiday quarter. $10 billion revenue wise, which is a lot of money, and it's worrisome for the company. way toed to find a reverse that, rebound the sales, replace that product, but meanwhile, they are showing other levers they are pulling. the other takeaway for the second quarter is not great. 55 billion to 59 billion. midpoint comes significantly below that. this will represent a consecutive decline in sales for q1 and q2. we looked back at the terminal. apple hase first time had a fiscal first year consecutive decline since 2001 so we are a little bit in uncharted territory right now. shery: in terms of the weakness in china, did we get more details about what is driving

that? were there any bright spots? what is to come? like there wasd optimism that the trade tensions might have a possibility of being resolved. mark: new details, no. we did not get any new details. cook reiterated his points about china that he did previously on january 2, but he is mostly blaming economic headwinds and a contracting overall smartphone market in china. depending on who asks, some stats say that is true. factors ranging around that. this is not something that will be reversed or rebounded from a time soon, but cook did sound optimistic about the tide turning in greater china. shery: he also sounded determined to make up all sound like a services company but we do know that services only accounts for 13% of their revenue or so. where is the growth segment for apple now? talk about this

services thing. they are getting so many subscriptions. they are saying they are going to have 500 million subscriptions in use by 2020. quite frankly, i feel like it is confusing to me because apple is not behind many of those services. areany of those services coming from app store developers. this entire platform, all this money is based off of the programs and subscription services that other developers are creating. apple needs to issue their own services. we released apple pay and apple music and so on within the last three years, but that is actually not true. in 2015.ic launched apple pay launched in 2014. we are already talking about the five-year range. i believe this is the year they are going to do it, but it is in question how these are going to move the needle.

it will be fascinating to see if apple can really make a dent in the market that has been so dominated by a amazon prime, netflix, and others, and if a new subscription service is something people will subscribe to enlarge numbers. shery: mark gurman, bloomberg tech reporter, joining us from san francisco. says asia-pacific earnings are likely to trend lower and downward revisions may be seen for at least another couple of quarters. a portfolios manager. does this mean that you like asia less than you did before, given the earnings outlook that you have for these companies? >> absolutely not. what i am trying to say here is what we like is the growth profile in asia. yes, there's some headwinds earnings. the growth profile has slowed somewhat, but we still think

there is great opportunity in asia. we like to look at markets that are unloved and underappreciated. owns, and it was a tough year in asia last year in the equity market. on the growth side, there's plenty of opportunity for asian markets to surprise us on the upside. shery: how much will it help if we see a weaker dollar given we are headed towards the decision? a lot of people are expecting the fed to come out with some announcement of a pause this year. sarah: i think that is a huge driver in fact, with the weaker u.s. dollar, that is again for emerging markets and asia. that is something we have been watching very carefully for the direction of the dollar and was the fed ponds, that should be very welcome news for markets in this part of the world. haidi: sarah, i want to throw up showing one of the

biggest concern, biggest unknowns. even if we get some resolution, the stalling of export growth in this part of the world -- part of this you can say is due to the uncertainty. we had quite a bit of frontloading in new export tariffshead of the kicking in. we are expecting china gdp to continue to show manufacturing contraction. data, taiwanese exports, it all pans one picture, right? even if -- paints one picture, right? do things continue? what sectors would you be looking at to shelter from anything that is to exposed to the same -- too exposed to this theme? been: everyone has expecting a slower growth environment, and that is exactly what we are facing, whether it is in china or korea were really .lobally across the world

that is the broad picture. but i think the trade tensions are front and center. none is the most immediate thing markets in asia are watching and that's creating a lot of volatility. of positiveany sort news coming out of the trade , the markets will react very positively to that. somewhat of a re-rating on the back of that. so, yes, we think the trade .ould be a huge mover for asia we like asia. we like emerging markets. evaluation signal is strong. if you look from a bottom-up perspective, a lot of the companies are in pretty good shape. they are very stable businesses. and many of the investments that we have at the spring -- east spring are not exposed to trade at all. they are driven by the chinese consumer, and the trade

impacted very minimal. so we like china. we like asia. we are less keen on europe. there's a lot going on in europe. there's a lot of volatility. brexit is top of mind. and i think given the uncertainties in that part of be world, we prefer to invested in other areas like the u.s. and asia and emerging markets. >> it is also if the decision week. it is on the back burner a little bit. the least eventful out of all the event risks we have this week. in terms of what we do, we are expecting pretty much a pause until data tells us otherwise. does that give you a more image when it comes to emerging markets? there is potentially a resolution on the trade front. you're right. everyone is downplaying the fed decision and assuming that there is a pause.

our view is that they would probably be one to two hikes. they may not be sequential, but that is what we are expecting. we see the growth profile in the u.s. as being quite decent. so that would be a very good outcome for asian and emerging markets. if the dollar weakens again, scenario, theore markets should rally behind that, so we have already seen a pretty strong start in january. asian markets are up between 5% it percent this year, so you know, i think the market is expecting this pause and expecting the fed to not be able to raise rates as fast as we were thinking last year. and that's been working. shery: the problem with emerging markets and asia in particular is it always see big swings. we have to get used to the volatility by now, but given all of the price swings, how would you recommend your clients to invest their money?

yes, so we are highlighting a couple different things for our clients. we are seeing a lot of interest now in our low volatility strategy, so these are equity strategies that are designed to have lower volatility than the overall markets. the stocks we own tend to be more defensive in nature, and they don't go down as much on the down days, so we have seen a lot of interest in though volatility strategies. we are recommending clients to look at income oriented strategies. rates fed is not raising as fast as we had anticipated, you could roll back the year two years ago, and an income oriented strategy makes sense. we are seeing a lot of interest at the moment. good investor interest in those types of strategies because the property market is viewed as being a more stable place to invest and also have a very strong dividend upward of 5% to 6%.

haidi: i am reading your notes on brexit saying the best investment opportunities are often underappreciated by the market. if you take a look at u.k. assets for the moment, given that theresa may going back to brussels to renegotiate his the all, the one she has been working on for 18 months, is essentially ripped up. there is so much uncertainty. or not unloved enough really investable at the moment across the u.k.? sarah: that is a little bit too unloved. the problem with the u.k. and with europe, in our view, is just that there's so many unknowns, and there's a lot of binary outcomes that could arise, and it's just, from a risk return trade-off, there are too many risks. war isina, if the trade resolved or has at least discussions, this will progress in a more negotiated manner down the road.

could possibly be a very strong stimulus. with the u.s., it has still got a good growth profile. we are still behind the u.s. and tech. those areas of the market will respond better to positive news in the market whereas in the u.k., a lot of things can go wrong and we can take a leg down in fact before we see any sort of recovery. sarah, really appreciate your time and views. sarah lien, east spring investment client portfolio manager. the commitment to scrapping its nuclear weapons program. this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i am shery ahn in new york.

theresa may faces more trips to brussels after the house of commons ripped up her brexit deal and said she must try to strike a new agreement with the e.u. kathleen hays is here with what happened in parliament and where brexit and right now. kathleen, it seems we have gone back to square one, a few months ago, where she is going to try to negotiate something get there really has not been much progress within the u.k. certainly, there was opposition to the deal she did negotiate. it was finalized at the end of last year. parliament voted it down earlier this month. there has been this struggle in her own party is what you are going to do. we have to move forward. no progress? i don't know if we can say that. there's a couple of things that are pretty hard to agree to at this point, but everybody agreed we rip up the deal, in effect, you go back to the e.u. and negotiate, even after she has said they will not renegotiate.

she is on board with this. this road ahead is going to be tough. let's listen to what theresa may said earlier. appetite forimited such a change in the e.u., and negotiating it will not be -- contrast to a fortnight ago, this house has made it clear what it means to approve a withdrawal agreement. kathleen: that is one of the e.u. complaints. you say we have to do exactly what you want. now, they know a couple of things. they don't want a hard brexit. they want to tear up the irish backstop deal as well. immediately, the e.u. said they will not renegotiate the deal. they stand ready to consider a brexit delay. parliament did vote to reject a hard brexit, but they are really not doing much so far it seems to step up and take a little of the load off theresa may by the end and say -- give some

suggestions. it is up to theresa may to go back to brussels and get them to done orthing has to be there may be no brexit deal at all. that is the leverage now, if any. haidi: one of the most contentious parts of the whole exit package is the backup plan for the irish border. the backstop. these alternative arrangement being touted, do we know anymore about what to expect? kathleen: we know there has been opposition within the u.k. in the house ofn commons since theresa may brought this deal home. as far as she could tell, this backstop is if we cannot get through the transition and have a trade arrangement we have all agreed to that is starting to work, we might have to resort to one of these deals. the challenge is not having any kind of hard border over northern ireland and the

republic of ireland. a hard-fought history of bringing peace to that region and keeping the two sides an agreement. that is why it is so important. brady proposal, but jean-claude juncker from the e.u. said they already have a draft statement in hand to issue that they will reject the brady amendment. they won't reject tearing up this irish backstop, so when she returns to brussels this week, it will be interesting to see what kind of response she gets and if there are any cooler that and creative minds can come up with something that both the u.k. and the e.u. can agree . we shall see. second referendum mopping discussed too much today. for now, it is up to theresa may to see what she can get from the european union.

haidi: after brussels she goes again. kathleen hays with the latest on brexit. he can also get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on your terminal. mixed results. apple, nothing to write home about. mobileo get this on the in the bloomberg anywhere app. you can tweak the settings so you just get the news on industries and assets you care -- that are relevant here. this is bloomberg. ♪

haidi: this is "daybreak asia." i'm haidi stroud-watts in sydney. shery: standard chartered has been fined $40 million by new york after admitting it rigged x trades. trades.nks -- fx

regulators have previously levied fines totaling about $3 billion on barclays, bnp paribas, credit suisse, deutsche bank, and goldman sachs. haidi: thank new zealand held the -- fell the most. -- bank new england fell the most. impact ofdes an issues associated with the rolls-royce engines on some of its planes. the ceo says air new zealand remains committed to a dividend, however it is reviewing its network to ensure the business remains strong. shery: harley davidson plunged the most. president trump tariffs all but wiped out profits. restructuring,ng was $.17 a share, missing estimates for $.29. the president announced harley davidson after it announced

plans to move some u.s. production overseas. coming up next, the trump administration's big carrot for trade deal with china. could all tariffs be scrapped? this is bloomberg. ♪

haidi: we are awaiting australian inflation numbers, just trickling in at the moment. the koran quarters cpi coming in at .4%, as expected. there on year, 1.8% for consumer price inflation numbers, slightly higher than the 1.7% we were expecting. inflationary pressures lower from the 1.9% from the previous third-quarter number. quote unquote a, cpi coming in than%, a little bit higher expected and picking up pace from the previous quarter. the headline number, 1.8%, a fair way away from the rba's

target of between 2% to 3%, so unlikely to move the needle when it comes to that early february rba meeting. sophie kamaruddin in hong kong. after that inflation report from australia, we are seeing the aussie dollar pick up some momentum, adding .2%. not keeping track of the rally we are seeing an iron ore futures. singapore heading towards $83 a ton, given the impact of the disaster, hoping for iron ore minors in sydney. asx 200 gaining .2% this morning, set for the third gain in four sessions. elsewhere, we are seeing losses for stocks and wellington. in tokyo, the nikkei 225 down by .3%. littlepi is looking changed. we are keeping a close eye on apple suppliers. og display posting its numbers this morning. taking a look at some of the stock movers this wednesday,

check in on -- this is the philippines has asked for the u.s., japan, and south korea to look into investing in the shipbuilding north of manila. the government is to finalize its decision this quarter on what rolet will play to save hanjin. role it will play to save hanjin. steve movers in tokyo. we have the mothers index. in tokyo.overs we have the mothers index. they will review funding for the traumatic rain injury medicine. the drug has failed to meet its primary endpoints. shares off 19% this morning, so this company break

under pressure, falling 22%. the company to apply for an out-of-court turnaround. shery: let's get the first word news with jessica summers. home prices in 20 u.s. cities rose in november at the slowest pace since early 2015. decelerating for an eighth straight month. index property values increased from a year earlier, down from 5% the previous month. the result underscore a slowdown in the housing market throughout 2018 as mortgage rates rose. fedex is looking beyond amazon for growth by setting up a new late-night shipping option for retailers to send orders directly to online customers. the program allows sellers to deliver the next day when items are purchased as late as midnight. it says it does not expect that to rise.

nicolas maduro is trying to silence his opponent using gagging orders and shutting down the internet. journalists across the country have warned not to mention juan guido by name. there scope was lots for the 12 minute duration of his speech. there are signs that china's taste for fine wine is coming back. -- a single on a collections all your data 26 million u.s. dollars. it will feature more than 16,000 bottles, including 250 lots of the most coveted burgundy of the last five decades. hong kong is back as the next top wine auction center after falling to second place. 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 jessica summers. this is bloomberg. haidi: thank you. the trump administration is dangling the prospect of lifting all tariffs on china if beijing offers enough trade concessions. steven mnuchin made the comments on fox ahead of high-level trade talks in washington. tom mackenzie joins us now from beijing. what do the secretary's comments tell us about the u.s. strategy going into these talks? tom: the u.s. clearly knows that china is looking for the tariffs to be removed and the threat of theffs to be taken off table. they want to focus on the domestic challenges here in china. there is another element which is trying to persuade them of course to step up in terms of their concessions. we are seeing piecemeal movements from the chinese. this is something we talked about around intellectual property.

there's a lot more that the u.s. wants to see from the chinese in that respect and the u.s. have also said they want the chinese to sign up to a program of verification and enforcement, something the chinese have been unwilling to do. there is another factor of course, which is the huawei story. and whether or not that becomes a source of leverage for the u.s.. the u.s. have been very clear, saying this is not part of the trade talks. will remember the u-turn president trump made to reduce the punishments on that chinese telecom maker after having a saying hepresident xi was doing a favor for the chinese leader. president trump muddied the waters on huawei by talking at the end of last year about using him as a bargaining chip in these trade talks. it's complicated issues when it comes to huawei and whether or not that will be a source of leverage. the u.s. is saying if you can come to the table was something

consequential, there is a real possibility you get tariffs taken off and the threat of additional tariffs removed. that is what the chinese want to see. we will get more when the talks kick off in washington this week. haidi: china is facing pressure closer to home and closer to its belt and road initiative tom:. in many respects -- initiative. tom: in many respects, this initiative is starting to come on done. many countries are pushing back. according to some all caps, it's a trillion dollar infrastructure push. and it is pushback, not a big surprise, is malaysia saying they are ultimately looking at scrapping this $20 billion chinese finance -- mohammed has talked about his concerns about the project. there is another fly in the ointment. we have seen countries like myanmar and nepal and pakistan

pushing back. there is great concern about the indebtedness of some of these projects and what it leads to. there is a view that china is going to start re-looking at this whole initiative. they have a summit coming up in april of this year. if it can inject some transparency, maybe the belt and road initiative's could be revised and proved to be a better project than it currently is. certainly another challenge for china. >> challenge indeed. america's top chief has undercut president trump's view that kim jong-un is committed to a denuclearization. the nationalof intelligence tells congress he doubts north korea plans to its nuclear program. steve engle is following the developments. how much does this contrasts with the presidents assessment? it has been seen as overly optimistic or positive. >> there's always caret and

andk -- carrot stick. president trump wants to coax kim jong-un that to the table. it is up to the intelligence community to provide the intelligence needed to come into with theotiations accurate information. dan coats is the director of national intelligence, and he, among other intelligence chiefs, give their testimony in the annual worldwide threat assessment, to congress. dan coats, as the director of national intelligence, says there is a number of threats to the united states coming up. also, more intensely competitive china and russia. perhaps the biggest one is north korea. we continue to observe activity consistent with full -- inconsistent with folding applies asian -- flow --

full denuclearization. it will givey that up all of its weapons of mass stockpiles and production capabilities. keep in mind satellite analysis suggests north korea continues to churn out its weapons. it has turned out warheads as quickly as ever in the year since its last nuclear missile of 2017.the autumn shery: and yet it seems we are still on track for that second summit. we have heard that it could be, at the end of next month. do we have any more information about this meeting? don't have any information about the exact dates nor do we know exactly which country. it is highly likely to be in

vietnam. we don't know the exact location yet or the day that can be around severed 20th. it could be the week after that. i think there is still a lot of motions, a lot of work going on for that preparation, and it has ifn a bit of a stalemate, you want to call it that, in the eight or nine months or so since that june summit. koreans have north accused the americans of a bit diplomacy because they declared the united states has not necessarily promised anything in return for kim jong-un's promises to denuclearize, hence we are getting reports that he continues to weaponize th. the united states wants denuclearization. will that be on the table? we will have to see. engle, thank you so much. coming up next, the u.k. parliament tears up theresa may's brexit deal and sensor

back to brussels for more negotiations. we will discuss her chances of success. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. theresa may ready to renegotiate a brexit deal. heather connell a. connelly. is this can't amount to a no deal brexit or an extension of article 50, given that from all of the rhetoric and immediate response from europe, that there will not be a substantial renegotiation? , i fear,this is really just going to lose time, and at

59 days and counting, time is not what the u.k. has. theresa may will go back to brussels, ask them to open the withdrawal treaty. they are not going to do that. and then we go back and they now what -- and say now what? we had hoped there would be a stronger majority for extending the letter so we can get past this deadline. there was not enough there. i think we have to get closer to the cliffs edge unfortunately until an extension is really the only possibility. need thehas got to extension for what purpose? when i saw through the seven votes of the amendments in the house of commons today, party loyalty is greater than getting a majority directed outcome, so we have to play this drama a little farther until we see whether it is an extension or possibly we hope not but

possibly going into a no deal scenario. shery: jean-claude juncker coming out immediately again and saying what do you want? there needs to be more clarity as to what the u.k. wants. the positions of strength changed in terms of how much has?age the u.k. we have seen the weakening of european economic data. the powerhouses like germany and france and italy are starting to show various indications of a slowdown. the e.u. doesn't need this at the moment on its plate. heather: no, this is the tragedy of this whole saga. you have the u.k. economy that has been weakening over these two years because of this uncertainty, and now, you really have challenges hitting the economy, germany. some of that is a softening of china's economy. the u.s. and the tariffs, we have a very uncertain moment. italy is extremely fragile. has his owncron

domestic challenges. unclear whether his reform agenda will be able to be pursued with vigor. and the both the e.u. u.k. struggling economically, yet we are going to go closer to edge, on, this cliffs brexit. this is not good news for the toted states, just adding the growing global economic uncertainty. we all thought that there would be some common sense prevailing here in these last few days before march 29. that is not happening. that will make markets much more nervous about where this is heading. yet, the prime minister, was she able to secure a message at least towards the e.u. that the house has a deal? there is a deal the house can itually approved, but involves -- actually approved. the negotiations happening with brussels. heather: what she achieved today

is tory party unity and that is to her. been so elusive that has been her main mission for the last two years is to ensure party unity. the problem is, this is just not based in reality. negotiation, and this is following theresa may's own redline to maintain a frictionless border but to go out and negotiate trade deals after withdrawal. this is what is so frustrating about this. there is no more give in the e.u. line. we are going to lose time and she is going to be back pretty much where she started from because there is no support within her party and her supply support her original deal. we are going to keep going around this may paul a couple of times. we get closer to some finality.

shery: we continue to see businesses voicing their concern that british chambers of commerce coming out and saying another day has been lost while the clock is ticking. see a more business decisions shifting towards the european union as we continue to see this drama unfold? heather: you're absolutely right. u.k. businesses took some comfort in the other amendment that did pass, they did not want the u.k. to leave the e.u. without a deal, so that was some words of encouragement, but you're absolutely right. businesses have to make some decisions. they are going to make some decisions about what this will look like. you see shifting of businesses. we saw what the pound did after the vote. there has to be some really economic cost to this lack of decision-making.

so again, this is not good news for the global economy. heather, are you anymore optimistic when it comes to an outcome on the u.s.-china trade talks? heather: we continue to watch this drama play out. you know, it is hard. we follow it day by day. we are looking at today's decision on huawei, and you saw secretary mnuchin trying very hard to divide. the trade talks are separate from the huawei case. it is difficult to separate those two. you know, again, the president suggesting that could be a very big deal at the end of this. again, just more uncertainty. where is this leading us? but here is the fact of the matter. we'll american businesses are hurting because of this continued stalemate and trade war. we need to stop worrying about the dom getting american

businesses growing again and not having to deal with tariffs or the threat of more tariffs. haidi: is this part of a longer-term strategicly -competitive relationship between the u.s. and china that will go on for many years? is it possible to strike balance but not derail global growth? heather: it is extremely difficult. what the trump administration has done has deeply shaken this relationship. some have argued that has been a long time in coming, but we are only now realizing the ramifications, the global economic ramifications, of profamily shaking this very vital trade relationship, but it is not just the trade relationship. what we are really seeing is a fundamental shift in the trade rules, and this gets back to reform of the wto. our allies in the e.u. and japan have also felt the sting of u.s. tariffs trying to navigate

through those difficult waters, so the u.s. is really challenging the fundamentals of global trade, and i think that cannot be underestimated, even as we focus on this enormous u.s.-china dynamic that is playing out. heather, great to have you on with us. senior vice president. check out our interactive tv function at tv on the bloomberg. you can catch up on past interviews as well as dive into any of the securities or bloomberg functions we talk about. you can become part of the conversation as well. send us instant messages during our show. do check it out. it's at tv . this is bloomberg. ♪

haidi: most apples the players in asia are moving higher after the iphone maker posted better than expected results. peter elstrom joins us now. better than expected also, not worse than perhaps what could have been, i guess. what are you seeing in terms of the asian reaction? peter: it was interesting. apple have certainly set expectations very low for this quarter. the came out and warned for first time in almost two decades that they were not going to meet their own revenue forecast, so expectations were very low. apple had solid results and gave

a pretty solid forecast for the next quarter, so that offered them reassurance to apple investors in particular. we saw apple shares after the market close rise quite a bit and you are seeing the rally the asianinto some of suppliers. some of these shares are showing a fair bit of rally. suppliersnge for the in asia is apple is really repositioning its business so it is no longer as dependent on the iphone. they are pushing into services. they talked about how many of the services they sell through itunes is now reaching record levels. base of iphone users who are able to take advantage of the services and apple benefits from that. the problem from suppliers in asia is they don't have the same kind of benefit. they are dependent on the number of iphones that gets old because they are selling parts for those iphones. that is the challenge going forward. shery: how dependent is time one semiconductors on apple --

taiwan semiconductors on apple? will they get a boost? peter: this certainly raises concerns for them about what kind of growth bc see an iphones. tsmc gets paid depending on the number of chips they are going to sell to apple and other suppliers. they are not just dependent on apple. they are one of the leading suppliers for chips in the world. the smartphone market right now, we are seeing, is not having the kind of growth we have seen in years past, so it's a challenge for them to your out where they are going to get the next round of growth. shery: peter elstrom joining us from tokyo. and for more on what to watch later in the markets, here is sophie in hong kong. sophie: when it comes to stocks to watch, we are going to be keeping an eye on display makers. morgan stanley and credit suisse cut price targets on the display

maker. also keeping an eye on area asia after city downgraded the stock lashed the price target by 11%. and before i go, a quick check on currency movers. after acan peso sliding double notch credit downgrade. take a look at g10 movers. we have the british pound holding overnight losses sparked by the no deal brexiteers. sterling -- brexit fears. fourth quarter cpi data beat estimates which is seen reinforcing the case for it -- that is it for "daybreak asia." ♪ i'm a veteran

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rishaad: it is 9:00 a.m. here in hong kong. welcome to bloomberg markets china open. hero the top stories. searching for direction. david: suppliers about bowl climbing. revenue met lowered expectations. rishaad: the pound on the way down. there will be no delay and theresa may said back to back to -- must head brussels.