heidi: a very good morning. australian markets had just opened for trade. >> good evening from bloomberg global headquarters in new york. asia." to "daybreak haidi: asia looks set to end a limited week in decline amid growing concerns about trade. president trump seeing no meeting with china. investors already worried about europe. theresa may failed to win a

breakthrough. the eurozone is slowing. and banking on change. australia's investigation into makes hismisconduct biggest catch so far. sherry: news president trump would not be meeting president xi jinping before the deadline really hitting the markets. the dow fell .9%. the only heat of sectors that were in the green on the s&p 500 -- defensive like utilities. nasdaq fell the most in more than two weeks. we have also seen downside for s&p futures, but global investors have little to go on when it comes to more momentum to carry on the 2019 brand. let's see how we are setting up for trading in asia with yes trillion markets open right now. australian markets open right now. nabi: by the time we get to , that is when we will be

.atching let's look at how we are tracking so far in this part of the world. we have seen an outperformance when it comes to aussie stocks over the past few days, largely led by financials. we are looking at a bit of a decline as sydney gets under way. indexoomberg dollar looking like a little bit of weakness when it comes to trading in new zealand as well. markets rejoining the fray, but remember, a number of markets remain closed for the lunar new year holiday. shery ahn: let's look at some of the egg moves behind the u.s. stocks selloff, which appears to put the future of the rally in question. a lot of news wait on stocks even before the market opened. su: reports europe was slowing playing into the global growth

concern and renewed concern about the shut down here in the u.s. perhaps happening all over again. let's go to the market snapshot because we did see the dollar advance. that put pressure on commodities. we did see at one point the dow is down well over 350 points, 389 at the lowest. major averages closed off of the lows, but clearly, it was a wake-up call that this post christmas rally is at best on pause. we will get more of the action in just a minute, but let's look at some of the very big movers, again mostly on earnings. moreer was almost down than 10% at its trough and that had to do with the fact that it had a weak sales forecast. it showed lackluster growth, and that has many concerned. chipotle, a rare exception. we reported how this fast food giant is proceeding with its

turnaround plan ahead of a positive earnings report yesterday. let's look at the banking news. a big marriage between the bnt and suntrust that has spurred the idea we could see more deals -- a big marriage between the bnt -- a big marriage between bb&t and suntrust. that provided a boost to the whole group. that, again, a bright spot for banks, which have been under pressure, given that as treasuries have rallied, we have seen yields come in just a bit. >> after hours, we saw toy chain mattel shaking off investor concerns about its cost-cutting exercise, which was what helped it beat expectations. away expectations. nobody saw this coming. let's look at how the stock is doing after hours and that can just show you the element of surprise. 18% gain for the stock.

again, this is a stock that really was only up about 23% year to date. done look at how it has year to date. you can see that the pressures aftereen on this company toys "r" us pretty much liquidated. you can see the drop. there has been a change from these hard toys, if you will, to sort of the video toys, but what they managed to do was come in at four cents a share. that beat a loss that was expected on wall street of $.14 a share, the first time they've beat on earnings per share pretty much in three years. they also reported that barbie sales were at the billion dollar mark. who knew that this very big ran for mattel, which had been on a resurgence had in sales yahoo! there cost-cutting managing to hit the line. investors encouraged and perhaps covering some short positions on the stock.

it looks like they are set to go in a good direction from here. shorts, we saw oil tumbled for a third day. a lot of this amid worry we will not see a resolution to the u.s.-china trade situation. at theare calling february fallout because we did see oil hit a high for the year. let's look at the five-day chart. right at the first of february and it has come off of that. it is also the third straight day lower and we have seen oil bigger picture again hitting highs we have not seen for a while on the opec cut to output, where you have china and the u.s. in a big dispute over trade that could really impact the demand picture that many strategists say is bearish until there is clarity on this front. >> jeff bezos, just some lines

crossing the bloomberg, saying "thestatement that national enquirer" owner tried to blackmail him over photos. detailsbe getting more on this story. it is still developing. president trump has concerned that he and the chinese president wilmot beat before their trade truce expires march 1. chief asia correspondent joins us now. markets reacted pretty negatively after a few days of uncertainty. is this kind of the sense that leaders would only meet when the deal needs to be inked, so does this tell us they are still pretty far apart on the details? >> we knew they were pretty far apart on the details anyway. if they want to slap a band-aid "we got ad just say deal," and therefore china buys

more u.s. products and they address one of the main issues and that is the trade deficit, then that is an easy one to accomplish. a fairly easy one to accomplish. and trump and xi could meet done deal and back to normal. no, because the big issues are intellectual property rights violations. what this tells me is they are not close to resolving those issues, and i'm not surprised by that. reformre big, long-term issues that have to be addressed over the longer-term and donald trump already said no trade deal is going to happen until he and xi jinping meet. they knew to have deliverables -- they need to have deliverables when these men meet , especially at a trade summit, to sign some sort of momentous deal. the fact they are buying more time is a good sign. it is three weeks today that the deadline expires. tariffs goadditional

in after that? probably not. it looks like an extension will probably be in the works. keep in mind, steve mnuchin and china lighthizer head to next week for the next round of continued trade talks. that is going to be moving forward in incremental steps rather than the big one fell swoop. >> it would have been an ambitious schedule trying to meet president xi jinping when you also have to meet with the dictator of north korea at the end of the month. >> absolutely. the north korean issue needs donald trump's full attention. back in june, the critics who were out in full force saying there was nothing concrete, hard and fast pledged by the north koreans at that summit, so there are a lot of issues, a lot of reports north korea has not abandoned its nuclear program. there needs to be full attention

from the u.s. side. when i heard that perhaps xi jinping would perhaps meet at that summit in vietnam or on the sidelines of that summit between kim and trump, i immediately thought that would detract from the north korean issues because, again, trade is at the forefront u.s.-chinaand of relationships and that would take center stage. we do not know the site yet of the summit, too. we know it is going to be february 27 and 28 either in hanoi or denying. we are hearing the north once hanoi because they have an industry there. however, the u.s. likely want danang because there were what i believe aipac meetings there more recently a they have already sussed out the security issues. >> shares have just resumed

trading. they were halted, remember, in the afternoon yesterday, just about an hour away on the close of the market for the announcement on the bank's leadership change. now to ceo andrew thornburg who was singled out alongside chairman ken henry, both quitting the bank. we do know in terms of the willg that his replacement be the subject of a global search at the end of the month while the chairman will stick around until that new ceo replacement is in place. largely the reaction seems to be that we are seeing this kind of discounting when it comes to how it is trading to the rest of its peers. mcquarrie the one saying this is the beginning of a big overhaul transformation for the banks. we will continue to mark that one is one to watch. let's get you the first word the meantime from san francisco. >> theresa may has failed to make any breakthrough in her

latest brexit talks in brussels. she and eu officials agreed on one negotiations by the end of the month to try to break the impasse that threatened a no deal divorce. may is demanding changes to the so-called irish backstop to help a deal pass in parliament. the eu will not budge in its warning of dangers to come. concerned.ery from economic and human crisis. this is the reality of a no deal brexit. >> the bank of england added to the gloom i saying the uncertainty is sweeping through businesses,nomy, and households. the bank offered renewed pessimism with governor mark carney saying the thought of brexit is racking up tengion even with a smooth split. the boe still sees the u.k. economy growing at its weakest

pace in a decade. >> the fog of brexit's cousin short-term volatility and more fundamentally, it is creating a series of tensions in the economy -- tensions for business. although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no deal, no transition exit. >> the r.b.i. delivered an .nexpected rate cut in a sharp reversal from october, the bank took rate cuts off the table, the governor opened the door to more easing and brought growth back into focus. that's in contrast to his predecessor whose sole aim was to meet the r.b.i. mandate. france has deployed its ambassador to italy as relations between two founding members of the total -- of the european union plunge to a new low. france was also angered by a

meeting between the italian deputy prime minister and a senior figure in the so-called yellow vests protest movement. onbal news 24 hours a day air and at tictoc on twitter, powered by more than 2700 journalists and analysts in with an 120 countries. >> thank you. chartered standard gives us its currency outlook and tells us why it sees more yuan weakness ahead. >> none of the major central banks are in a position to do so after promising to tide volatility this year. this is bloomberg.

di: this is "daybreak asia." shery ahn: investors can count

asian credit among the big far.rs of the year so our next guest sees more room for the rally to run. great to have you with us. what is driving this surge? >> i think the 3.5% return in the month of january is certainly fast and serious. we should be expecting this type of return for the rest of the year, but to really put it in context, what has been really driving it has been a change in sentiment in terms of expectations of some type of resolution of trade between the u.s. as well as china, and then on the u.s. side, i think a more has certainly put a pause on for the rate hikes, so with those in the rate -- with those two things in the pocket, january was a very strong month.

>> charts on the bloomberg show credit spreads in asia among high yields are really starting to tie in already. what would have been a good entry point for investors? >> i think it is important to keep in mind that today is still a good entry point, and let me explain why. even absent further rallies, you are talking about 7.5% yield. 7.5% yield -- is that actualize a bull? actualizable? will this be compensating sufficiently, and i think the answer is yes. when we look historically at asian high yields, if you can get it at today's levels, historically, you would not have lost money as long as you have at least 18 of-year holding period. the key take away here is that you don't need a further rally. i think it is still a very

attractive entry point, especially for those investors that have a of-year at least yeartment horizon -- a two at least investment horizon. >> if you like there has been a seismic shift. is it sustainable? >> i think the sentiment has been very positive, and i think it is important to keep in mind that it will certainly become more volatile over time, and here is why -- the big question can in 2017 was if the u.s. continue to decouple from the rest of the world in terms of growth, and it certainly showed that it did. i think the big question this year is if the u.s. can continue to decouple from the rest of the world. the answer this time around is that the gap between the u.s. and europe will persist, but the gap between the u.s. and china will narrow as the chinese

continue to provide a slow drip monetary fiscal policy, so within that backdrop, if you think about it, with a soft landing for the u.s., china probably re-accelerating closer to the second half of this year, and continued malaise in europe, that actually bodes quite well for emerging-market assets. we think this will be a year where we will see emerging-market assets do well, albeit with continued volatility. mean you are positive about china issuance as well then? >> absolutely. it is important to keep in mind already half of asian issuance. china is still punching below its weight in terms of the number of companies that could be borrowing. overall, the opportunity set in china is attractive.

importantt is really to do security selection. of us, we found some a check opportunities in china, especially companies with balance sheets that are quite pristine. they have had the opportunity to pre-fund to maturity. last but not least, we want companies that are strong and are taking market share away from some of the weaker players as the economy has slowed. yes, we actually are quite positive on china, but i want to say that it is not across the board, but if you can find a good manager that can pick the right securities, we think this is a great opportunity to be long china. >> chinese deleveraging has fundamentally altered the market itself, but at the same time, given the the leveraging efforts, will we see the government being keen enough to offer a large stimulus package other than the very tailored ? ols we are seeing so far

>> i think a continuation of the steady drip of monetary and fiscal policy from china is actually sufficient to bring china back of in terms of a relatively steady but strong nominal growth of about 9%. what is important for us to keep in mind this time around is we think the stimulus would be much more evenly split between both infrastructure spending as well side ase consumption tax cuts help consumers and also help companies. or a lot of the companies investors looking for a huge bang and things like commodities, we would be cautious, but we do think that stimulus will be slow and steady and will actually be sufficient and create a much greater demand in the consumer side. we have been focused much more

on local demand. industries like travel, we do see acceleration of things like consumer and nondurable goods as well as things like travel and leisure coming out of china into the rest of asia. >> always great having you with us. thank you. of course, you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. app available on the mobile . this is bloomberg. ♪

supply contracts sparking these concerns about a pullback by global markets. having said that, we are seeing in terms of trading action for arnold miners strickler to the downside. having said that, we did have seven days of gains. rio tinto as of yesterday was trading at a 10-year high. we also have a statement out from the world's largest steel maker, warning about weakening conditions in china. the slowdown in china expected to eat into demand for steel. china being the largest consumer, consuming about half of all of global supply when it comes to steal. renault is accusing partner nissan of collaborating with tokyo prosecutors on the carlos ghosn case. some staff have been contacted by nissan managers who introduced themselves by saying they are working with japanese investigators.

say thatawyers effectively converts nissan and its counsel into an extension of the prosecutor's office. disappointing investors with a weaker than expected outlook and continuing struggles in asia. it is just its forecast for earnings. the stock drop was the worst since july when the ceo took back over. bursting itsover biggest quarterly corporate loss after taking a $3.9 billion impairment. the loss was almost $4 billion in the december period. under pressure from weakening european china and home markets. meanwhile, it's u.k. production center is exposed to a disorderly brexit. coming up, we will be getting more insight into australia's

royal commission into the finance industry claiming two more high profile scouts. this is bloomberg. ♪

>> this is "daybreak asia." president trump says he will not meet his chinese counterpart ahead of the deadline for new u.s. tariffs. would get together this month, trump said no but added they may get together later. session-lowhit a after the news was reported. >> the president said a number of times that he expects to meet xi on trade.nt when and where is totally up in the air at the moment. does it depend on meetings this week? i would not say one way or the

other. it might. >> president trump's pick to lead the world bank says the global lender should follow through on a commitment to offer less to china and refocus on its commitment to dip -- to .mproving living standards it is not at all a disengagement from china but more a shift in the relationship so that more money can be available for the lower income or developing countries. >> federal reserve officials are keeping up their optimistic outlook. the vice chairman told an audience in prague that the u.s. ample growths employment. the dallas fed president reiterated his dovish stance, saying the central banks should not be stimulated or restricted at this point.

u.s. retailer sears will survive, for now at least, after a bankruptcy court approved chairman eddie lampert's $5.2 .illion rescue plan a judge rejected creditors' arguments that the sales process was unfair. they claim lambert plundered the company's assets and failed to invest in its future. >> thank you. another massive buyback in corporate japan. plan to buying its back as much as ¥100 billion in shares after the company came under immense pressure yesterday, following the most in three and a half years.

the company gave a cloudy forecast and weaker profits across its playstation business slowdown continues, particularly when it comes to that crucial holiday. the company announcing it is doing a share buyback for as much as ¥100 billion or two point 36% of sony shares. let's look at what we are watching. big banks front and center once again. we are ending the week with two of the biggest names. the outgoing ceo, andrew thornton, the source of criticism, the target of scathing remarks from the commissioner and that royal commissioner report. there are wall street concerns that a trade deal will not be struck between the u.s. and

china before the deadline. cba seeing modest gains in what is an overall bit of a down market rounding up the rest of the big banks. the big banks have really rallied very high this week on this kind of perception that that royal commission report was less scathing and less hard on the financial sector reforms as perhaps it would have been, but nonetheless, the fallout continues and we talk about the biggest spots being claimed. kid of quitting after being specific targets of criticism within the final report. we will get some views now from our bloomberg opinion columnist here in sydney.

they have quite clearly angered the commissioner. >> i think that's right and it's quite remarkable the extent to which that made the difference. keep in mind, this has been going on for years. thousands of pages presented, but the performance in november has led to a very divergent outcome for the chief executives , essentially leading the commissioner to say they realize the scale of the problem and they will tackle it. the chief executive not so sure but then was extremely damming, which is what led to these resignations we saw yesterday. in some ways, i think that is a little bit surprising, given how he looked into these companies and into the sort of culture turnaround that they need to carry out. the fact that the performance in one day on the stand is making such a drastic difference is quite striking.

>> does it make sense for them to change leadership, given how the stock price load compared other banks? >> in a way, it makes a great deal of sense. a change in some ways would be do regardless of the commission just under his normal way of doing things. as you say, it has lacked since the royal commission started. they are clearly lagging behind. this is the sort of thing that might be enough to make a bit of a difference, so i can see why they would have done it. .> thank you so much for that the widening dovishness in monetary policy continues and the reserve bank of india

surprised with a rate cut. the bank of england warned the brexit clouds hanging over the u.k. economy could push it into recession. our global economics and policy editor is here with us. huge impact. his first meeting and right there, a cut. >> at think there's two things that are very important. he was appointed by the prime minister's government to replace some of they thought was not generous enough with dividend .ayments we are showing you a picture now. at the same time, there had been a pullback in inflation since while he was in office. he was maintaining tight policy and that is what we are seeing now. that is what was cited as he

talked about the reasons for the rate cut, which only 1/4 of the people interviewed by bloomberg were expecting. let's take a look. inflation has moved downward significantly for the next one year. headline inflation is expected to remain contained below or at its target of 4%. this has opened up space for policy action. >> jumping to the bloomberg terminal in looking at a chart which shows that there's no doubt that in asian has been coming down. here on the top is the key rate of r.b.i. drop by 25 basis points from 6.5 percent. mind you, they also dropped their hawkish stance. the next move will likely be a rate hike. now they aren't neutral. meanwhile, look what has been happening to inflation year over year. it is at the bottom of the range. here is the midpoint.

bloomberg economics has been saying that the previous r.b.i. was being too hawkish. what is tough now is that the prime minister faces tough elections this year. everyone is waiting for him to give farmers more money, to rev up the economy to get those votes, so i think that will be a crime -- a cloud hanging over this. from now on, they are in the right position and this is where they will stay for a wild. taken at seems to have toll, though, in terms of pressure that is mounting. rate hikes are off the table. >> absolutely. the bank of england, while it held its key rate steady, also cut its forecast to the weakest since 2009. of course, this is the biggest threat to the u.k. economy right now, what will happen.

already the toll being taken in terms of growth. inflation coming down, that's a relief, but the question is what happens as they get closer to the brexit deadline. mark carney about -- you can see press conference now -- he talked about the fault of brexit hanging over the economy and talked about their outlook. >> given the dynamics of the negotiations, we are assuming uncertainty remains elevated for a while and that financial conditions stay tighter for longer. second, we have downgraded our forecast for u.k.-weighted by zero point 5%, and that is material. over the past year, the global economy has transitioned from robust broad-based expansion to a widespread slowdown. >> let's look at our bloomberg brexit barometer because it shows you something very interesting -- it has fallen below zero for the first time right after the

leave vote passed. you can see how the outlook for employment, inflation, investment have all gotten together to paint a pretty negative picture. it is interesting, too, that the governor did not take rate hikes off the table. he says too soon to do that. anybody, however, who is looking for a rate hike this spring saying it could be at least until august and with 50 days until the deadline, this becomes more critical and meanwhile, the economy probably suffers a little more. many people losing confidence, holding back on spending and investment. renewed tradeext, all -- have traders all the world over piling back into the dollar. we are asking if the greenback is the best of a bad bunch right now.

this is bloomberg. ♪

shery ahn: this is "daybreak asia." trade concerns are back after president trump says he will not meet with xi jinping before the terror deadline -- the tariff deadline. even just a couple of weeks ago, the pretty known narrative seemed to be this was the year for dollar weakness and a return for the em trade. is that something we have given -- we have gotten ahead of ourselves? >> nice to be back. are at the stage that

the dollar has peaked. the dollar is about 10% overvalued than its fair value. it's not that we are calling for the end of the cycle. it is a way to strengthen earnings. it is very positive for dm -- four em assets. >> what would be required as a surge offor another dollar strength then? >> that is why we have been doing so much time on it. we think the dollar has peaked from here, but we still need a catalyst for our broad-based

decline. we think the fed pauses, hiking, turning to a more dovish side can be a run of the catalyst. suffered so much because of a stronger dollar, because of the fed hiking a couple of times in a stronger price, but this year, we can see all these factors helping, so we think it is really positive for .m fixed income >> despite the strength we have , withn the chinese yuan trade concerns this week, we saw a selloff. what is driving that? how much of it is to do with trade and how much of it is the economic slowdown in china?

at 6.65 at theng end of this year. this number is kind of an , but we can see we are starting to get more consensus. our forecast for gdp this year is lower than 6.5%, which is really low compared to historical numbers. it is actually relative. we think the u.s. dollar is leaking from here. s&p 500 probably peaking from the current level as well, so there is not much happening in the u.s. dollar, but it will be heavily driven by the capital globalfrom both the pound business and the global

acquisition debts. according to our estimation, this year it will attract passive inflow of up to 15 billion u.s. dollars and a similar number for bond inclusion as well. >> i want to get your views on the rupee after that surprise turn from the reserve tank of india. does this add to worries for rupee traders? do you expect to see that discounting and preferential treatment likely to continue? >> this is why we are so constructive on fixed income we expect because

positivity similar to 2016. we expect the u.s. federal reserve to hike and a softer dollar. the capital inflows will make local currencies strengthen and that will make the inflation expectation curve on supply and keep a low level so local central banks can have additional flexibility. last year, we could see r.b.i. , so we could see central-bank of indonesia also , butd 175 basis points this year, because of the expectation of capital inflow, the inflation expectation can

keep at low levels, and central unwind ande able to tighten. that is what we have seen yesterday. central banks to either stop hiking or joined the .eam to unwind >> thank you so much for being with us. we have breaking news out of japan. we have the current account talents coming in at 452.8 billion yen, lower than 469ctations for december of billion yen. it's also lower than the ¥457 billion we saw in the month of november. we were expecting the trade

balance to shrink a little bit. we have seen a stronger yen coming from those levels of 109, 110, to 108 at some point. of course, that really weighing on primary income. we are seeing the trade surplus 452 ¥.8 billion, and we will get more numbers out of japan very soon, but up next, german antitrust regulators are cracking down on facebook. why the social network says it is being unfairly targeted next. this is bloomberg. ♪

haidi: this is "daybreak asia." is feelingfacebook from another hit. the german antitrust authority has ordered the social network to stop its tracking of users

outside its own site unless is six consent for gathering and using data. facebook says the are unfairly singling it out. we have more on this from san francisco. what will be the impact on the company? >> it's hard to say right now because they can still appeal the order, but if decided, they have to get commission to combine the user data sets that power their data machine. they are able to collect not just information from facebook at all the websites you are on, all the places that use facebook analytics or ads, all the data youryour activity beyond facebook experience. the german regulators said this gives them way too much market power and that it is not clear to consumers what they are getting into.

>> what is interesting is on the publicity, the pr push front, you are seeing facebook issue a lot of apologies and contrition and promising to change, but at the same time, your work has indicated that they are actually collecting more data and more information behind the scenes. >> absolutely. i have a piece in "businessweek" which says facebook has been saying they do not sell our data, they say we have control over it, but what they are not talking about is the data they are collecting themselves and to what extent they are collecting it, so when they talk about privacy, they mean privacy from other people. they do not mean privacy from facebook and german regulators are the first to understand this problem and this delineation. when zuckerberg testified in front of congress last year, the questions he got were about if facebook sales data to advertisers. facebook does not because the

data is the thing that makes their advertising business powerful. it is something that gives access to users to target those users with information they have collected. >> let's get you a quick check of the latest business flash headlines. the british government said to be considering a partial sale in its stake of royal bank of scotland. we told you there has been no final decision on the timing or the size of any slowdown. atres may have to be offered a discount to reflect the uncertainty surrounding brexit. the government rejected 50 billion dollars into rbs during the financial crisis. amazon cut a deal in india to comply with new e-commerce resident -- new e-commerce much ofons by sharing its stake and its partner.

jeff gundlach has blasted the head of societe generale after shares fell to a new low, tweeting that frederick adair has no idea what he is doing except running the bank into the ground. a market rout sent trading revenue tumbling. announced a 500 million euro saving plan in order to take into account the environment and improve the structural propensity. >> coming up on the next hour of "daybreak asia," central banks around the world are following the fed's pivot to dovishness, and asia back from the lunar new

year holidays. we have the outlook for the chinese retail sector in the year of the pig. the market open is next. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life

like never before store. the xfinity store is here. and it's simple, easy, awesome. haidi: a very good morning. asia's major markets just opened for trying. shery: welcome to "daybreak: asia." agent looks to end -- asia looks to end -- president trump sees no meeting with china. >> sony announcing a share billion.orth $1 andhe eurozone his slowing

italy at loggerheads. >> let's get straight to the asian market action. japanese as well as korean stocks just coming online. we are watching out for sony and other massive share buybacks for almost $1 corporate, billion. this after sony stocks falling in the previous session. a down start when it comes to trading in japan. sydney stocks also tracking lower at the minute. we are just getting a bit of malaise across the asian session in terms of sentiment, as we had that report out overnight saying the presidents of china and the u.s. won't be meeting before the march 1 tariff deadline.

bringing questions whether those tariffs on chinese goods will kick in. we get the latest on trading after a three-day break for hong kong. not exactly coming into a bully and market. -- a buoyant market. >> think of england added to the , delivering its latest inflation report. the bank renewed pessimism with governor mark carney saying the fog of brexit is racking up the tension. the u.k. economy growing at its weakest pace in a decade. more fundamentally, it is creating a series of tensions in the economy. tensions for business. although many companies are stepping up contingency planning, the economy as a whole is not yet prepared for a no deal, no transition exit.

>> the rbi delivered an unexpected rate cut. the kind of stimulus narendra modi needs in this election year. a sharp reversal from october. the governor opened the doors to more easing and brought growth back into focus. that is in contrast to his predecessor, whose sole aim was to meet the r.b.i.'s 4% inflation mandate. the relations between two founding members of the european union plunge to a postwar war. byis responding to attacks populist italian lawmakers. france was angered by a meeting between a french minister and a so-called figure in the yellow vests movement. president trump's pick to we itd the world bank says should refocus on its core

mission of raising standards in impoverished countries. >> it's not at all a disengagement from china, but more a shift in the relationship so more money can be available for the lower income or developing countries. >> global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> some asian markets are reopening today after the lunar new year holiday. we will take a look at what to expect with our bloomberg strategist mark cranfield. in terms of hong kong coming back online today, this kind of misery or undercurrent of uncertainty when it comes to the street talks playing out.

>> probably people will be concerned that they have not been able to schedule a meeting before march 1. as yet, they have not said whether that means the tariff deadline will be extended further. we just had reports from poli tico see president trump will sign a ban against chinese telecom. it is getting murky on that front. there needs to be clarification quickly, or markets could have a bleak move. we are seeing tokyo stocks already down. the mood is not quite so good. on a week to week basis, since china's been away, markets have not moved that far. if this continues through the weekend by the time they come back on monday, it won't be looking too rosy. we could see high volatility,

special chili with the -- especially with the yuan, which has been meandering around. markets are closed. hong kong coming back will be quite significant. >> in terms of the aussie markets, we are continuing to watch this slide when it comes to the aussie tenure yield-- 10 year yield. a widening deficit when it comes d treasuries.r an we have the rba minutes out later today. where are you watching as to where this goes next? mark: this is a trend that began last year. not surprisingly, because the rba was on hold and the fed was raising rates. you expect this spread to get wider anyway. what kicked in this week was the rba governor clearly made an equal bet between rates rising and rates falling. four a longtime, people do not

think the rba would even consider a rate cut, but that now it is back in the picture, it will start to bring rates down. when the data, particularly housing related, continues to stay week, the market will be pricing in a full rate cut. we are getting close to the idea where the market is looking for one full cut before the end of the year. the rba may take this as a green light they have room to move. we also have new zealand to consider as well. new zealand is starting to sound quite dovish. there is a possibility new zealand will cut rates before australia. this is a kind of double winning that will keep yields low in both places. this spread could get even wider before it finds a stabilization point. >> i'm watching sony stock

soaring more than 4%, the most since december 27 last year. we have heard sony will buy back up to 2.36% shares worth ¥100 million. that share buyback will start between february 12 and march 22. your point on monetary policy, let me turn to the rbi. we saw the surprise rate cut. we had expected them to hold. chancehere was a slight there were a few people looking for a cut, but it certainly was a consensus -- wasn't a consensus decision. the gap between bond yields and inflation is wide, so they have some cushion to work with. some may see the cut as coming early. continues,n

india would do this later in the year anyway. it is such a contrast to a year ago, emerging market countries where raising interest rates. significantfirst emerging market place to lower rates. this could be a new theme that could spread across the rest of asia and other parts of the world. people will be watching this closely. >> president trump has confirmed he and chinese president xi jinping will not meet before the trade deal expires march 1, that deal avoiding further tariffs on chinese goods. was this much expected? it was a very ambitious timetable. president trump has to meet the north korean dictator kim jong-un at the end of the month. stephen: there are two big issues on both of those fronts.

the june summit we have with kim in singapore did not net a lot of deliverables, other than vague promises. there is still lots to be done on that front. if there is going to be a kim-trump summit followed by a trump-xi summit, one of them would likely be lost in the wash. that would likely be the trump-kim summit. these are issues that need to be addressed wholly and individually. it is good president trump is putting off a meeting with xi jinping to address those issues between the two largest economies in the world for a later date. trump hearing -- donald has said they are not going to extend the trade truce deadline beyond march 2, however the likely was a clip -- likely

resolution is they will have to delay those tariffs on an additional $200 billion worth of goods. we are not sure when they might down the road. we're hearing from economic advisers white house larry kudlow saying a trmp-xi meeting is often the distance, but added so far they are getting a good vibe in the trade talks. we are getting steve mnuchin and china lighthizer going to for these talks. if they were going to meet the deadline of march 1, it was going to be an end date -- a band aid resolution, addressing the easiest issue of them all, and that is the trade deficit, instead of the bigger reform issues the trump administration wants to address with the chinese. those are intellectual property rights violations and forced

technology transfers and state support of key industries. refers that those next round of talks could be quite awkward. politico sources saying president trump will sign a ban on chinese telecom equipment ahead of the world congress next week. we know that hallway and -- in theand zte have been sights of the u.s. and other countries. the implications of an executive order signed with a straight up ban? politicothat is what is reporting, that the directive could come from the united states at the end of this month. it is interesting, because we know zte and the likes of huawei have been restricted from government contracts. this would extend it to the nationwide carriers in the private sector in the united

states, which would be quite damaging to the ambitions of the chinese teleco equipment makers. keep in mind, the u.s. telcos don't have much impact on the chinese market. the chinese market is fairly closed. this will have ramifications on sentiment for sure in these trade talks. kong wasahead, hong the world's biggest ipo venue last year, but that could see a wave of selling. we will be talking about that later in the show. >> up next, central bank dovishness continues as an announced surprise rate cut in u.k. --and the this is bloomberg. ♪

>> this is "daybreak: asia."

haidi: the spreading dovish mission in militan -- dovi shness in monetary policy continues. our global economics and policy editor kathleen hays is here with more. different economies, similar policy outcomes. it seems like a memo was sent out to central banks this year. kathleen: you get that feeling something happened. they are not exactly picture-perfect mirror images of each other, but if you look at the reserve bank of india, the new head of the rbi delivering what some are calling an election cut for prime minister modi. that may be unfair, although he replaced a staunch inflation fighter. a bloomberg chart will show you

there is room for a rate cut when it comes to inflation. let's listen. >> it is noteworthy the part of inflation has moved downwards significantly over the period of next one year. headline inflation is expected to remained contained within its target of 4%. this has opened up space for policy action. kathleen: i am going to show you a chart from our bloomberg library. you can see along the top of this chart, this flight line -- white line. these were the rate hikes put in place. by thest rate cut led new head of the rbi. you can see at this level, certainly does not look like inflation is a threat. there was talk about a need to

promote growth. from primeng will hang as a cloud. the bank of england know that they have a big cloud, and it is brexit. the key rate kept at 0.75%. they cut their forecast for gdp growth at the lowest since 2009. let's listen to what mark carney said about not fog -- the fog of brexit hanging over the u.k. economy. is causingof brexit a series of tensions in the economy. tensions for business. although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no deal, no transition exit.

>> now we put the spotlight on the bloomberg brexit barometer. what is inflation doing, what about growth, what about uncertainty? this is right after the referendum to leave passed. here we are two years later and the brexit barometer is below zero again since the first time for that vote. this is mark carney's concern. he said it is too early to take rate hikes off the table. some were looking as early as may, others now saying not until august. it depends what happens in these negotiations, which seem to have gotten very strident, as we are 50 days away from the brexit deadline. you can imagine anyone is hardly thinking of any new investment at this moment. >> our next guest saying a decade of easin monetary

policy failed to put the economy on a sustainable growth path. now.ins us great to have you with us as always. everyone seems to be turning dovish at the moment. have the fundamentals changed, or are the central banks capitulating to the markets? >> i think many central banks are reacting to the fact that the global economic situation has worsened, global economy has slowed. it also is a reflection of the fact that several years of monetary easing simply did not do any good in terms of bringing them sustainable economic growth. there were only two major central banks which tried to increase interest rates. the fed went a long way in terms of hiking, and the bank of england tried that. we are still at crisis level

interest rates. the bank of japan is fighting a 25-year-old recession and inflation close to zero. they are not going to do it. what you saw with the u.k., with the reserve bank of australia and india today, they are all others which are joining the group, because the bigger central banks have shown they don't have the ability to keep tightening anymore. >> as kathleen mentioned earlier, that rbi rate cut coming ahead of national elections in india. how much of the move has to do with the fact that they can afford to do this, given inflation has been tame, and how much has to do with politics? komal: i think both were significant elements. clearly that inflation was low was the reason cited by the governor. if you look behind it, there is still a lot of the year left. these are the times in which you

can have full priced inflation rise. inflation in india could quickly on how theed harvests and the monsoons work out. saying inflation has been vanquished in india is premature. the prime minister has to face elections in a matter of months. they have been wanting to get hold of the excess reserves with the bank of india to lend more, populist spending to help the farmers, so this is in line. i don't see much urgency and having to cut the interest rates now it would have been better to wait for a while if you had only set politics aside. >> i am wondering what they may be thinking at the moment. is it political capitulation

for the rbi, given the hard-fought battles it has had with the government? komal: it really is. they staunch monetarists, there is a stark difference between the two previous governors and the one today. now you are talking about a civil servant, someone who has worked for the government his l ife long. that is what you see today in india. >> this idea of moral hazard relates to the question of whether you are seeing an implicit capitulation by major banks to the wishes of the market. do you see that moral hazard playing out? komal: i think that is very much

in the works . it all started recently with january 30 with chairman jerome powell in the united states, completely pivoting on policy. from december 19 to january 30, he was a completely different person in terms of attitude. inflation and unemployment, which is the only two objectives the central bank should be considering according to its mandate, simply did not change. they fell to what happened with the markets. the markets know that the next time they need help, they can power to makeon sure the markets don't go down too much. that is a very risky proposition, because you are going to make investors speculate more and more. 007,ou look back to 2006, 2

the expectation was mortgages could do no wrong, they would always be supported, and the fed would back them up. it just did not happen. that is the risk we run. we risk speculation will increase and not being able to support it at all. >> always a pleasure to have you. breaking news coming out of australia. we are getting a report a cyber security breach at australia's parliament house is being investigated by authorities. evidence data has been stolen on the computing parliamentary network. the house speaker and senate president saying in a joint statement all user passwords have been reset. there is no evidence this is an attempt to influence the outcome

of the parliamentary process or disrupt the political processes, according to the statement. the local abc news network reporting it is likely to be a state-based attack, and security agencies are looking into whether china is responsible. shery: let's get a latest check of business headlines. some renaults say staff have been contacted by nissan managers who introduced themselves by saying they are working with japanese investigators. renault lawyers say that effectively converts nissan and its counsel into an extension of the prosecutor's office. rover's ownerland posted the biggest corporate loss after taking a $3.9 billion impairment. the loss was almost $4 billion in the december period, worse

than they had to indian -- the hit to indian oil. its u.k. production center is exposed to a disorderly brexit. >> fiat chrysler fell the most on record after a disappointing investors with a weaker than expected outlook and continuing struggles in asia. its full-year forecast at earnings of $7.6 billion, well below estimates that ranged as much as 28% higher. the stock drop was the worst since july, when it's ceo took over. sony rose the most since late december after announcing its share buyback worth almost $1 billion. it will run from next tuesday until march 22. last bought back its own shares in 2004, $6 million worth, related to its decision to fully merge sony computer

entertainment into its parent company. this is bloomberg. ♪

>> this is "daybreak: asia." australian security authorities are investigating a cyber breach at the parliament house. there is no evidence data has been stolen on the parliamentary computing network, and all user passwords have been reset. breach may be a state-sponsored attacks and looking into claims china may be responsible. president trump says he won't meet his counterpart in china on tariffs. me meetded the two later -- may meet later. lows&p 500 hit a session

shortly after the news was reported. >> the president has said a number of times he expects to meet with president xi on trade. when and where is totally up in the air at the moment. does it depend on the meetings this week? i wouldn't want to say one way or another. it might. hopefully the meetings will go well. >> theresa may failed to make any breakthrough in her brexit talks in brussels. with just 50 days to go until brexit, may is demanding changes to the so-called irish backstop. the eu won't budge and is warning of danger to come. federal reserve officials keeping their optimistic outlook. the vice chair held an audience in prague as the u.s. economy enjoys at or close to full employment and inflation on the 2% target.

global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> we are just getting breaking news. the monetary policy statement from the reserve bank of australia coming through. it left rates on hold. this would be why we saw that dovish tilt in tone. to rba cut its gdp forecast .35, flashing that forecast, a 1.25%. the household consumption estimates have also been lowered from the forecast period. the rba saying the consumption

reassessment is due to revisions due to data and the market decline we have seen in the australian property market. rba reiterating what was said earlier this week, what was seen as a game changer to the dovish tilt. the interest rate outlook is now more evenly balanced than previously. again reiterating previously, the narrative has been the next move is more likely to be up than down, now saying we could essentially get a cut just as likely as we look at a hike. 0.25%.g gdp forecast to we are far from the inflation target. the aussie dollar dropping 0.5% to a month low.

let's look at what is happening with the rest of this market session on friday here in asia. a pretty muted hand. u.s. stocks taking a slide on pessimism we will get a trade deal from the u.s. and china. we had downgraded forecasts from europe. japanese stocks seeing a decline. sony with its massive share buyback plan, almost $1 billion in the works. sydni stocks trading flat at the moment. this breaking news pretty significant when it comes to australian growth and rate expectations. shery: no wonder we are seeing that dovish turn, including the rba and other central banks. in hong kong, as the bear market returns, som investorse worry some companies will only

watch. shares could be about to cash in . manyre we seeing so lockups inspire in hong kong just now? -- expire in hong kong just now? >> last year was a very busy year for ipos in hong kong, as the city was host to the biggest venue for ipos. we are seeing the back end rolling out six months after listing. january.e xiaomi i madewas a big expiree that everyone worry about the valuations we saw last year. billions and billions of dollars being lifted in hong kong. have moreer, we still ipo 40 companies whose

lockups are due to expire. a lot to watch for on the special situations desk. >> and what do we know about these expirees on the horizon? sofia: today we have china tower. that lockup expires for some shareholders. it is a different story to show me. aom brought down iti valuation target, it was still an extremely valued ipo. as soon as you could sell the shares after a badly performing ipo, you could still make a huge profit. 30% sinceas it risen its last listing, it is not a flashy tech stock. it operates most of china's telecom towers. the 5g story is very much a growth story in china.

even though we saw citigroup cutting its rating on china tower last week, it was just a valuation call. their bullish stance on the stock has changed. even though we are likely to get a relatively bearish market in hong kong today, given it has been closed for the past few days and we see bearish macro views, given what donald trump has said about a meeting with xi, traders tell me you would not expect what happened with xiaomi to happen with china tower as well. twohe end of may, we have stocks went too many people highly overvalued. that could be a completely different story at the end of march. let's take a look at the japanese session. sony is on the big move in tokyo, announcing its biggest

ever stock buyback. shares in tokyo rebounding from yesterday's heavy losses of 8% in the thursday's session. bouncing back today on the new s. let's bring in our tech report. what is the rationale behind this? >> this comes a week after their earnings. looks like management solve the bloodbath from this week. shares were down since earnings reported. they pulled the trigger on $1 billion worth of buybacks. this is unusual for sony. the last time they bought back shares was 2004. they frankly have not had the resources to do this. they have been in restructuring for a long time. they were doing pretty good, so they did not need to do buyback. but now earnings are pretty poor, prospects in the short term are not great.

smartphone is a drinking market. playstation 4 is growing old. -- smartphone is a shrinking market. this will be the first of many buybacks, to be honest. the ceo is very financially acute. he is concerned with what investors and shareholders think. that can't be said for every ceo in japan. in that sense, yoshida is unusual. i think you will reward -- he will reward shareholders with more buybacks. >> how does this play out in other countries with the slowdown in china? body knowsknows -- no if smartphones will pick up again. there is a lot of uncertainty. the one thing is certain is if you have cash, you can use it to

buy back shares. we saw softbank yesterday. it was crazy. that is what i think ceos will keep pulling on. that is the level investors want. you have sony for whom this was the first stock buyback in 15 years. i think you should get ready for more. >> softbank's founder also added about $17 billion to the value of his company on thursday on his plans to buy back shares less work than one third of that amount. our tech reporter joins us. $17 billion for $5.5 billion. sounds like a steal. is that the buyback talking, or are investors getting closer to what they think softbank is worth? >> we call that funds

mathematical distortion field, in a nod to his idol steve jobs. has worked outth in its favor. he continued to simply talk up the book, convince investors softbank is worth more. he is now actually making the right moves. they listed the domestic telecom operations in december. he is buying back shares as well as paying back 700 billion yen worth of debt. you have the prospects of a sprint-t-mobile merger. can --through which you he can fund his riskier investments. according to softbank's own calculation, they are still only halfway through the share price son believes is fair, so so

there is likely a long way to go. >> what could help close this perceived gap? would we see more buybacks? the earnings two days ago, someone put up a slide listing the company's various assets. all of them, alibaba, sprint, are mature companies that are not likely to show a lot of growth. mostly discounted division fund. it has been mostly a complete black box. as it shows up in earnings, people take more stock of its actual worth. to give you an example, in the last quarter it contributed 179 billion yen. year investors can look

forward to listings of companies like uber. at at least in the short term, there is quite a bit of upside for the fund. these returns are quite unpredictable from quarter to quarter. >> pavel, great to have you with us. coming up, the lunar new year shopping day may provide a clue to shopping strength of consumers in china. we look in detail at the year of the pig. coming up next. this is bloomberg. ♪

>> this is "daybreak: asia." haidi: markets are returning from the lunar new year break and saw millions of chinese shoppers and travelers spending over the holiday. it may provide a clue as to the strength of the retail sector on the mainland.

some of the initial data in terms of visitor numbers and spending -- shery will talk about box office takings as well -- it has been pretty positive. we are seeing markets and investors may be ahead of themselves when it comes to the domestic chinese consumer? >> when you look at the macro indicators from these chinese reports, it is indeed experiencing its slowest growth in 30 years. if you look at it from a broader context compared to the rest of the world, it is still one of the healthiest and fastest growing countries in the world. ourou talk to a lot of retail and global consumer clients, they all remain positive about the china outlook and continue to invest in the strategy in china. if you look at chinese shoppers, at the most recent statistics at hong kongnew year,

reported a 35% increase over this past week in the tourist numbers. overall it is still quite healthy. what point do we start to see this anecdotal deterioration of animal spirit? does it depend on sectors? last year we saw these consumer related disposable income related darling stocks taking a real hit on these fears that the trade war will start feeding into the way consumers will tighten their pockets. what will be the catalyst for that? james: what you find now is chinese consumers are becoming more mature and sophisticated. what you will see is an increasing dynamic between the consumer segments. the way to winning this is catering to the local consumer

tastes. for an example, when you look at the beginning of e-commerce, right now you will see the growth of social group purchasing platforms. they really exemplify the need to cater to different consumer segments. one looks at the rich urban high-value items, cosmetic items as well as women's fashion. another looks at the tier three, four city consumers. each have their own perspective groups and catering. it is really about catering to this. haidi: james, you talked to businesses being positive about the chinese economy. i spoke to the ceo of imax theater, and this is what he had to say about consumption there. >> a lot of the sectors in china

you guys have been talking about have been suffering, things like auto and steel in the bigger areas. consumer discretionary, the movie business, premium entertainment, that has held up pretty well. i think it may be more of the export of the economy suffering more than the internal consumption part. haidi: how much of the slowdown have to do with being sector specific, and how much is businesses being able to adopt to growing trends? james: i would agree with that sentiment. in our latest chinese travelers report, average travelers are going on 2.1 outbound trips per year, which is an increase of 6%. there is still appetite to spend. the winners that take share of wallet are people catering to the chinese consumers.

we believe the tech companies are taking the forefront. with their wealth of consumer and, with their epay system understanding of analytics, they are forming a lot of alliances with various retail sectors, in the supermarket space, hypermarket space. they are fundamentally providing a better value position to customers, with retail providers with retail expertise and tech companies providing the technological know-how. if you look at the e-commerce wall in china, there is key -- three key aspects. one, it will require business registration from third-party merchants and vendors.

this means they will be liable to pay tax. some of those smaller merchants do not do that today. third is the biggest, ip protection and counterfeit. the intention of the chinese government is quite clear, to provide a healthier and more regulated e-commerce system where there is greater trust and consumer confidence. how it will be enforced will take some time. it will take sometime to materialize. we believe thee, area hardest hit will be in the area -- that is the former -- the informal channel of e-commerce sales. many of these are small opportunistic people that do now eal in full accordance of the law. once these new e-commerce laws are passed, they will be required to pay tax and register

their businesses and they will suffer from a difficult economic my dome -- model. there could reports be a crackdown on these practices. how is that impacting the retail market in the chinese economy? >> at the moment, there is not yet a strong crackdown. that is what i was alluding to earlier about how long it will take to materialize. there are larger companies that have the right qualifications. they have the right businesses and licenses and the ability to diversify and source their products properly. those will be all right. it is really the smaller investors, the smaller individuals that don't have the right qualifications. they, once enforced, will take the hardest hit. from: james yang,

principal oliver wyman. go on youro dayb terminal and available anywhere on the bloomberg app. you can tweak your settings to get news on the assets and businesses you care about. this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: things don't look any better for carlos ghosn. renault says they had evidence he may have misused company funds to pay for his marie and 20 themed wedding in 2016. let's cross to tokyo and our conglomerates telecom. does this news make it more or less clear what side renault is on? >> it does seem pretty clear that renault is willing to come out against carlos ghosn's activities. the strategy from the beginning for nissan and the prosecutors has been to portray ghosn as an out-of-control executive, spending money with no interest for the company itself.

if there is any link at all, as about the by renault opulent wedding and use of corporate funds, that could be disastrous for him. even if there is no direct link, just keeping this in the media, keeping this allegation out there. that in fact this crazy opulent wedding took place at the versailles palace. it does not get any more opulent than that. haidi: [laughter] the symbolism is really something, isn't it? what kind of leverage does this have to determine who the next chairman is going to be? >> that was the other big story. you had them coming to loggerheads, nissan and renault over who would be the chair of

nissan itself. having the support of nissan's shareholders will be important. still, renault has the manpower to determine who is the chairman of that company. that 43% is very hard for them to overcome. haidi: thank you very much for that. before we hand it over to bloomberg markets: asia, let's look at trading action at the moment. we are watching the u.s. and australian treasury premium rise to at least a 30 year high. that yield slight beat -- slide beat the 10 year after the rba slashed its forecasts significantly. this is bloomberg. ♪

rishaad: it's 9:00 a.m. in hong kong. this is bloomberg markets china open. yvonne: here are the top stories this morning. asia looks set to end a week after declines in trade. president trump sees no meeting with china. haidi: sony jumping more than six weeks after announcing a share of all must $1 billion. adrs rose. gathering inds australia. darby is cutting. reserve rates across the economy.