haidi: australian markets have just opened for trade. shery: i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. i'll come to daybreak asia. -- welcome to daybreak asia. ♪ haidi: our top stories, china's robust start of the year faces a test as markets return from new -- the lunar new year. the yuan is under pressure from a strong dollar. negotiators meeting in beijing. the vice premier will join in the negotiations.

a new shutdown looms in washington as talks stumble on isitol hill and agreement 50-50 at best. let's get you started with a quick check of the markets in the u.s. on friday. the dow lost a quarter of a percent and the nasdaq was higher. the s&p 500 barely holding on to gains. we saw a check-led rally -- tech led rally. the s&p fell for the second consecutive week. you are now seeing u.s. futures marginally higher as well. we are heading for the major market opening in asia with china back from the lunar new year holiday. sophie: we will be testing the bullish start of the year for chinese markets as we see hong kong shares to go dip friday. that may not bode well for

sentiment in china. we have japan off for a holiday, so we might see lighter volume. stocks are nudging higher just about .1%. we have checked players leading gains in sydney but we are seeing movers to the downside. i want to highlight these two off 3% this morning. the net interest margin at the end of december and a drop in lending approval. .e are seeing a drop in aurizon we had the rail freight company affirming its target despite earnings to be dented because of floods. those are some of the early movers in sydney. haidi: let's get you to first word news. retail in china over the new 8% to $150 billion.

revenue from tourism was also higher. it was up a percent, $76 billion. the trade dispute -- 8%, $76 billion. the trade dispute has strained some but consumer confidence is robust. theresa may will ask parliament to renegotiate brexit, promising lawmakers of further chance to take control. she will ask the comments to remove the irish backstop from the withdrawal agreement if she doesn't come up with a new deal. parliament will have another vote. observers will have -- observers including the imf are concerned. well aser it ends predicated by some or send a on march a brutal exit 29 with the extension of notice it will not be as good as it is now. su: a bloomberg survey says there is a one in three chance

of recession in the u.k. in the next 12 months. the probability of the two-consecutive quarters of growth, that is up from 25% a year ago and 20% last year. the survey was done before the bank of england had its slowest forecast. avoiding a new shutdown, the talks stumbled over the weekend. they -- besides stopped talking. nine agencies would shutdown weeks after the record 35 day halt in washington. negotiators had hoped to announce an agreement monday but [indiscernible] before friday's deadline. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. haidi: u.s.-china trade talks

resume this week as the clocks ticked towards president trump's terrace deadline -- tariff deadline. another round of talks in beijing, high-level attendees. how are we expecting things to go? we should expect more reflash -- more whiplash. mondaydeputies in town today beijing time from the u.s. trade arm and treasury. these men will be working with their chinese counterparts over the next few days. then they hand the baton to steve mnuchin and robert lighthizer for trade. they will be here for meetings with the vice premier. the question is whether they can extract more from the chinese in terms of the structural issues and enforcement.

those are the issues. they get one or both on the table from the chinese, they could move things forward. the deadline is march 1. there was added uncertainty by president trump saying he was unlikely to meet xi jinping before that deadline after which tariffs could be increased. that is the concern. the consensus seems to be there will be some kind of movement that will allow an extension of these talks but much of it will hang on the trade talks in beijing at the end of this week. important. can the momentum we saw before the break be sustained? you talked about some of that momentum, recovery billion of value for chinese equities since the beginning of the year. they had a rough 2018. you saw the csi at 300, the shanghai composite above its 100

day moving average good given the trade tensions, what kind of start are they going to get in the year of the pig? if you look at the hang seng, the china into price index which closed down, down 3.7%, but maybe it will be a tough start for chinese equities. it will be focus on fiscal and monetary policy. that going to be trade will be in focus. other areas we are looking at, we have import and export data at the end of the week and we have the money supply data. additional stimulus for the markets in china. is a story we have been following for months, china facing mounting international pressure over the detention of minority. tom: this is the strongest condemnation from a muslim majority country, turkey.

they are saying china needed to respect the human rights of its muslim minority weaker -- uighur where at least one million people are held in detention. the turkish authorities, the foreign ministry spokesman saying they were being politically brainwashed. they were speaking after the death and detention of a poet and songwriter tortured to death. it has been mounting condemnation or the e.u. have spoken out, united nations, and lawmakers in the u.s. calling for sanctions on china over its handling of these people. the mass detention of these people in that area. been the strongest so far. this could open the dates for others to push back on china for a policy many see as a torrent. -- abhorrent.

sentiment inllish china could be facing a test when markets reopen after the lunar new year holidays. the mood could be solemn as investors are weighing new trade talks this week. j.p. morgan asset management strategist terry craig joins us. we had seen the global markets be cautious last week. we had lots of growth forecasts being downgraded from australia to the u.k.. could we see china now being -- playing catch-up? i think that is definitely the case. they had that holiday, and a lot has affected the markets. the news hasn't been to the upside here we have concerns -- been to the upside. we have concerns around global growth. unlikely to see any moves that

will get a deal on that. that added negative rhetorical -- s through, shery: the expectation was monetary easing in china. this chart on the bloomberg shows rrr cuts we have seen since early last year. the key rate really hasn't moved 2016, 2015. what will be guiding the chinese stock markets? the pboc or trade talks? it is a combination of both. think we think about the stabilization, given the slowdown we are seeing and the cisco until -- the sequential growth story on how the chinese economy can be stimulate by officials. we think it will come through the monetary channel and

structural changes. on the monetary side we get rrr cuts coming through. the question is how effective they will be if we think about demand in the economy given there is elevated deals of debt on the household and corporate side. they have demand for it. stronger stimulus from the fiscal element, increases in --rastructure spending ensuring employment growth feeds back into the domestic consumption story, we have seen that start to weigh in. it is important to remember before we had these negotiations, china was going to this control effect of its economy to rebalance. that will continue to we see stimulus measures coming through tong a waitress -- a way stabilize that. it is a case of saying we need people to think about stabilization. that is effective and reporting economic data. we have the market starting to

take away positives from this. haidi: the diminishing of the powerhouse that is the chinese consumer, has that been overstated at this point in terms of the narrative we have heard? seems every global company that has seen weakness, there is another one. ceoeal, we heard from their who have defied the slowdown. -- ceo, who they have defied the slowdown. what do you see in china? rotate, not the flavor of the month but demand. we have seen all of that being affected by some of the concerns of growth around the world. alsony, trade disputes, strength in the consumer appetite for new products as well as a growing middle class. there is rotation between the types of goods consumers want to demand and how companies

position for that. business ---by-case basis for many companies. there is strong growth, we think about what is happening in health care, technology in china. being the chinese market versus international brands. the consumer strength story is still there. it is taking a hit by the increasing in the debt burden and changes. that could change again as we think about the tariffs or tax cuts that could come through, trying to repost consumption. -- re-boost consumption. you have this market that can still be tapped into. haidi: what about the sentiment gauge that is the yuan? we have seen resilience with the currency but you have the dollar index on the longest winning streak in two years. you add to that trade tensions, domestic show actual slow down, pessimism, does that suggest we will see weakness going forward?

we thought about weakness and whether it breaks through the u.s.n versus dollar being a key metric. the currency is less of fear indicator as it was in the past depreciation's. -- depreciations. the moves by the fed and the change in their on patient view of the world -- inpatient view on the world is hard for the pboc to think of moving their currency when we had rate hikes from the fed. it is breathing room but it is another policy tool they have to rebalance their economy. stay with us, j.p. morgan asset management's carry craig. we will look at the u.s. markets next but look at least stop --

what are you seeing? hi-fi rising as much as 7% to long for the second session in three to rise to a november 2018 high after the retailer posted a 4.2% increase in first-half sales and forecasted continued positive growth in the second half with australian sales at a faster rate. they did and of plans to open five jb hi-fi australia stores. shut one plans to store in new zealand and two in australia. haidi: all right, sophie there with movers in the early part. we want to pick up on that conversation with terry craig on how the market -- the markets are coordinating a shift to a dovish stance.

later this hour we will get more -- shery: trade talks between the u.s. and china. this is bloomberg. ♪ ♪

asia. this is daybreak i am haidi stroud-watts in sydney. shery: turning to the week ahead , earnings continue to be the big focus, but the potential for another government shutdown hangs over the wall street market. we could have the government running out of money again friday. kathleen: that will create a new host of headlines amid brexit and nato issues that are hanging over the market. let's talk about earnings. sherryket snapshot, as mentioned, it was mixed. onended up with a close up

friday. we will get into the negative forces on oil in a moment but as we go into the bloomberg, gtv is where you find the charts, you will see not only was the u.s. market in a down week, but the entire global equity market had its first weekly drop since the rally began in december. you are seeing an update in the momentum. what's look at the big names that are about to report. among them you have cisco, the graphicr, nvidia the processing company. they have run in to some headwinds, had a mixed earnings report. now they are out with fourth quarter. what is important for them, it sets the tone for the market. it is influenced by the crypto mania. processors used in those technologies, and with the gamers, we have seen negative forecast on gamers like electronic arts.

shopify, coca-cola, all of those will be in focus. companies,ergy financials, credit suisse, aig, all of those could set the tone, huge week for earnings. oil,: also looking at particularly as we see more of these hedge funds raising bearish bets. su: we have seen oil come down hard. in october it was at four-year highs. looking at the past five days, you see a lot of oil under pressure even as output has taken -- a lot of the downturn is concern over u.s.-china trade. hedge funds have boosted bearish obtained of change --

by bloomberg. brent crude losing ground because of the trade spat. there is concern that if this , china being a huge consumer, there are many traders who say if there is a resolution to the trade spat, it could be bullish for oil. you would see a dramatic turnaround. haidi: markets are also trying to figure out how much reading room the global shift to dovishness has created. room the global shift to dovishness has created. we got coordinated sentiment from central banks suggesting the only way to go is down with the level of growth we have seen. we have uncertainties in the trade war, domestically in the u.s., potentially another shut down as early as this weekend. do you think the markets have fatigue? they are struggling. that is a fair

assessment. it is a case of having the markets rally extremely hard over december, now this shift over what central banks are saying. the federal reserve opened the is it a positive or rate cut that comes on the fact of global growth outlook is not so strong or just a lot of risk, we should take a breather and see what comes through? it removes a big uncertainty especially from the fed that these guys could tighten. it is a bit of reassurance on the back of that. for me it is a case of saying the pause or the idea there is risk out there in the central banks are aware of that, really goes into the idea that can lift the markets in the near term but it does beg the question why they are doing it. if there is a downside to global risk, earnings which shouldn't be that great, we think about

markets not being so good, perhaps this rally might not the as sustainable as the market is thinking about now given the fact we have moved so far so fast. haidi: it is that questioned why they are doing it, that the narrative has changed even in the last few days and weeks. i kind of scratch my head. what has changed since mid-december? not a huge amount. the big one is the uncertainty with the u.s.-china trade relation and a lot of economic data, not necessarily in the u.s. but around the world hasn't lived up to expectation. there is softness and political uncertainty with italy, france or brexit. other countries are into that slow down as well. the global growth environment certain spent -- certain extent. the federal reserve knows it will not have as much growth this year thanks to the stimulus measures fading off. it wonders, should i be hiking

rates into the global -- lower growth environment are waiting for things to stabilize? shery: this chart showing earnings expectations as well, growth estimates are weakening with the second panel at this level. windows this economic slowdown we are talking about start to affect businesses' bottom line. -- bottom line? kerry: a lot of it has to do with recovery outside of the u.s.. we had thought about that case supporting really the u.s. economy and markets. we should see better earnings from the emerging world or into europe but so far we haven't seen that. the growth hasn't pointed towards that end the u.s. dollar hasn't moved in the way it should versus developed market currencies. so really the idea that

expectations could be looked up to, there is a case of seeing growth rates narrowed and also the u.s. dollar start to show it will depreciate which we haven't seen yet. usry: great to have you with area the jpmorgan global asset management strategist kerry craig. this is bloomberg. ♪

shery: we have a report saying that xi jinping could be coming to mar-a-lago according -- mar-a-lago. havedent trump's advisors discussed holding a discussion there next week to end the trade war. president trump announced he would not be meeting president xi jinping before the march 1 deadline on the trade truce. we know representative robert lighthizer and steve mnuchin are in beijing to hold high-level talks pre-we are now hearing president xihat

could be coming to mar-a-lago to hold talks with president trump. this is bloomberg. ♪ mp. this is bloomberg. ♪ i'm a veteran

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome.

su: this is daybreak asia. president xi jinping's top economic aid will be part of trade talks in beijing. the vice premier will join stephen mnuchin and robert lighthizer. the u.s. and china seek a deal to avert expanded tariffs for march 1. president trump said the sides are making progress. he also confirmed he is ready to impose heavier duties if necessary. in italy the populist leaders are testing their electoral support in a regional vote eight months in the government. campaignedpremiers heavily in the central region as

tensions rise to within their coalition. risede to within -- within their coalition. information,ing at security and infrastructure. and in thailand a month before the first general election since five years ago. a party linked to the former prime minister abandoned lands for the king sister to run for -- king's sister to run for office. the commission meets later monday and they call for the party to bend chart shut down. happy 50th birthday to the jumbo jet. the iconic plane made its debut february 1969, having been brought to life from drawings in 2.5 years. it was more than double the size of boeing's next largest aircraft at the time and the cockpit three stories off the

ground. ed the wishes of pan am and almost bankrupted boeing. 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. keenan. this is bloomberg. shery: metoo markets open at the moment, australia and new zealand, here is sophie kamaruddin. hiree: resuming gains but with check and material stocks. the aussie dollar is gaining but still trading near a five-week low after slumping 2.2% last week in its worst performance since october. kiwi stocks are extending gains for a fourth straight session, trading at the october 2018 high. the kiwi dollar is set to step a three-day decline ahead of the rbnz's decision.

they don't see a change in the cash trade in new zealand until 2022. jb hi-fi climbing the most in sixthey don't see weeks as it ss growth with his australian business rising at a faster rate. macquarie calling the results credible from the retailer in a challenging environment. sigma health care gaining 4.5%. they forecasted fiscal 2020 visawriting -- underlying $50 million to $60 million. this one is the biggest laggard, extending friday's drop after reporting results last week. sophie kamaruddin on the markets. a new u.s. government shutdown appears to be looming. negotiations broke down over capitol hill and republicans and democrats aren't vindicating. this is the prospect of a deal before friday's midnight deadline.

let's get to ros krasny here for us to lawmakers went into the weekend pretty off beat, but now looking down the barrel. quite a bit of a surprise given saturday afternoon into took aning the talks sudden turn and went off the ground a little bit as far as we can tell. we never know what happens in these very close discussions, but the focus all of a sudden turns from the amount of money democrats and religions want to -- and republicans want to spend on border security to the attention of immigration and customs funded in the next budget. that turns on a democratic effort to focus on obtaining criminals versus detaining -- detaining criminals versus detaining visa overstayers in the u.s.

that has come up in the past couple of days. i have been told this language was always in the negotiations but it has been a timebomb at a time when everybody thought an agreement was at hand. or two,ext day lawmakers will start talks. there has been telephone tag. president trump is going to el border, andon the that will refocus his attention on this issue once again. whether the final upshot will be the president declaring a national emergency or some other emergency measure to come up with border funding. some of his allies are allergic -- are urging this as recently as this morning. shery: another front with little progress is north korea's denuclearization. what are we expecting for this second summit?

ros: a lot of geopolitical watchers who came out of the summit between trump and kim in june, they expect the same thing this time around. week -- next week u.s. and north korean officials will meet in a specified third country, probably vietnam, ahead of talks scheduled for late february. they are scrambling to put together the framework of some kind of deal that could be discussed at the summit. as i mentioned, it is not that president trump has his people that come up with an agreement that he sweeps in and then signs -- he does it the other way around. he will meet with kim, they will talk about various things, and when he gets back to washington, his aides will put together a

deal after the fact. it is unclear what the u.s. and north korea want out of this, but we believe it is going to be a hard task for kim -- to persuade him to give up his nuclear ambitions. we think he wants relief from u.s. sanctions and to see the u.s. and south korea relationship somewhat eroded. haidi: thank you so much. shery: in the u.k., the prime minister theresa may appealing for more time to renegotiate her brexit deal with a new vote in parliament thursday. kathleen hays is here. another vote this week. deal,en: she hasn't got a but is the bottom line. february 14 is one of the -- if she doesn't have

a deal, they will vote. we learned bloomberg news reporting earlier today theresa may was actually sending a conciliatory level to -- letter to jeremy corbyn, head of the labour party. the telegraph said she agreed to talk with carbon about a soft brexit. we don't have any more details. apparently she is wheeling and dealing. parliament set to vote february 14. one of the things she wants them to do is be clear. you want a complete removal of the irish backstop cloth. the e.u. says they won't renegotiate. parliament says it must. she offered another vote february 27 in the event she doesn't have a deal. it should will make sure they have control and move ahead with the talks if no deal is in hand. don't discount theresa may. more on tony blair, former prime minister, another labour party

leader, who said something many said. no deal would be brexit of it -- would be devastating for ireland, republic of ireland, which could upset the deal which was the basis of the good friday agreement which everyone wants to avoid. haidi: there are red flags everywhere despite the uncertainty. when it comes to the bank of england we are getting new signs this could get very messy and more damaging. kathleen: this is the concern i think that is going so much more real for everyone in the u.k. that any mail reporting official in london saying could suspend operation in the event of a no deal. nissan said it would no longer produce its new suv in a town that is very dependent on nissan in the u.k.

exporters, another angle we have been looking at the last couple of days. trade deals that are in place with the e.u. have not been ruled over yet. if you are in the u.k., and need to input something, fresh fruit or another commodity and don't know when your package will arrive, and furthermore down the road, what kind of arrangement you will have with the nations, it gets complicated. this is a big problem. -- of the reasons the u.k. the bank of england led by mark carney downgraded gdp forecast for this year to the lowest since 2009, the depths of the great recession, bloomberg economists showed 30% are looking for a recession in the u.k. within the next 12 months. theresa may can pull a rabbit brexit, hat, avoid hard

get an extension, that would be preferred. it looks like the u.k. economy could be approaching a cliff or steep hill. clock is ticking. kathleen hays looking at that. parliamentary vote this week. raising the stakes, trade talks resumed in beijing as a deadline .or tariffs looms we will talk with a former australian ambassador to the wto. this is bloomberg. ♪ ♪

shery: counting down to asia's first major market open this morning. korean futures looking unchanged at the moment. a beautiful day in seoul. we are seeing market optimism across markets that are trading now. new zealand is higher as well. australia holding onto gains, but japan is closed on national foundation day.

we are heading to the china reopened after the lunar new year holiday -- reopen after the lunar new year holidays. arei: the u.s. and china kicking off another round of trade talks in beijing. the clock ticking down to president trump's deadline. seeing if we are near an agreement. i am joined by the former australian ambassador to the wto on -- and also the e.u. and japan. in all of your wealth of experience working in this space, this has been an unusual set of negotiations. how do you feel it is going? unusual. been we have had bilateral negotiations but these were raised to a stake which haven't existed. how is it going, i don't know. there are two possible range of outcomes. the first one involves a quick fix, and you can do that easy

enough by having china agree to take more goods from the united states, and the second is fundamental reforms which they are seeking. that is difficult. haidi: every time the u.s. has said we want structural reforms from china, china just says it will buy more soybeans. how difficult is it to put in enforce -- that involves one country making painful reforms at the nature of their economic system? peter: in china it is easypeter: to do because -- haidi: top-down. peter: they can do it. talking about foreign investment, which has been a very asymmetrical bit at this point in time, the u.s. has concern there. it means reducing the amount of subsidies they pay for their domestic sport. that is possible.

-- also less in the way of considered by the americans to be intellectual property. all are possible to do at the government level, but they are cold. all of those issues, the chinese believe it could lessen their hold of the communist party on society. we are seeing them reluctant on carrying out those changes. what is the likelihood they will agree? that is the $1 million question. the fact that they are engaging with the u.s. now means they haven't rejected making changes in the areas. 10% ofted states exports their products to china. china exports 20% to the united states. you are in a situation where from a sheet of numbers the united states is likely to come out a winner from a simple

tariff war. what the u.s. has done is weaponize tariffs in order to achieve these objectives. following the chinese economy, the united states economy and seemingly in good shape. it is a lot of pressure i would have thought on the chinese leadership to achieve an outcome. they will not concede on all issues, but they will have to do something substantial to keep the united states happy. rishaad: when it comes to -- shery: when it comes to multilateralismshery:, president trump ratified the asia reassurance initiative act which calls for the u.s. to be back on table withting multilateral deals. could they renegotiated the tpp? -- renegotiate the tpp? peter: there is a prospect. the timing is still unclear.

the united states is beginning to lose out as a result of the tpp. it came into being, into effect last december. , in a marketns like japan you have preferential margin over the united states -- highly competitive into the united states, and the united states is losing out in that market. over sometimes they will find it more and more difficult to compete in a market like japan. there is pressure on the united states. united states is surprised tpp 11 got together and renegotiated or the agreement without the united states. it hadn't been done before. it has been a heavy dose of u.s. leadership leadership there. -- u.s. leadership there.

to keep the tpp 11, which was a surprise to the united states. haidi: looking at soft data in terms of how potentially trade between china and the u.s. is impacting sentiment broadly in markets or is this leaders, we are not at the highs we were at at the middle of last year. there has been more optimism, beijing and washington talking at the moment. this is combined with reports with economic uncertainty. i am wondering how much does this lead to deterioration in animal spirits? you have different groups and have been the ceo of australia. e. austrad does this help companies making decisions to put money into their economies given global supply? -- global

peter: if some of these moves led to what would be seen as a breakdown of the order of the trading system, and the rules which -- overtime that will impact negatively on investor sentiment in trade. there is already somewhat of a deterioration breakdown in ofbal value, many of which course were made in china. we are already seeing some indication but there are other reasons. china is a more expensive market. other markets [indiscernible] indochina. we are going to see changes but not all of them can be [indiscernible] the current trade dispute. haidi: we know president trump is not a fan of the wto. you have been an ambassador there as well as to japan and

other things. do you worry about the undermining of global institutions? peter: it is important in the wto and yes, you have to worry it while it has not been very successful the last 25 years, every single major trade agreement, the tpp or others, all basically follow wto rules. people start freelancing and not following wti -- wto rules, you will have much less stable, much less predictable world trading system. important on this is the dispute settlement body. if they don't get more movement -- more members approved, they will be able to operate. that is a unique institution. it is rather rare in the world of multilateral diplomacy, trade or otherwise. makes binding decisions, --alties associated with

those final decisions. it is important that wto continues to do their business. haidi: thank you for coming on the air with us. gray, former wto ambassador and to japan and the european union. shery: looking at stories trending on the universe. bloomberg.com, the laundry list of allegations against malaysia's former leader as his 1mdb trial kicks off. among the most read stories, ubs changing its bonus system from 10,000 employees. it means staff would get half a month's salary instead of a variable payout. on tictoc and find out why elon musk and spacex could have a huge stake in the border wall debate. check out those stories. this is bloomberg. ♪

bloomberg users can turn to gtv , catch up on charts you need to have, browse recent also book for future reference. this is our library. check it out. i'm shery ahn in new york. haidi: i am haidi stroud-watts in sydney. let's get you a quick check of business flash headlines. boeing and aviation regulators will place a phone safety fixers for the boeing max until at least april. this was printed by the fatal crash of a lion flight. it stems from differences of opinion from safety experts how extensive the changes should be. they thought the crash happened when a faulty sensor triggered a storm. is looking at a

potential sale. the london-based lender has been gauging interest from potential buyers, known to ask standard chartered static. people feared local rivals have limited the growth prospects. electronic arts surged to its biggest gains since 2014 after the videogame maker said their latest release attracted 10 million users and 72 hours. apex legends is the latest free to play battle game. the attraction has outpaced even the early success of fortnite. that hit had rivals scrambling to catch up. shery: so three comes online at the top of the hour. let's turn to sophie kamaruddin. seeie: korean shares could upside after the kospi lost 1.2% last week. there are geopolitical themes at

play as preparations are made for the second trump-kim summit. we also have reports that three and president moon could reshuffle his cabinet as early as this week. stocks to watch, tb financial could move after reporting fourth-quarter results that missed estimates. lg corp. also boosting lower than expected. stockj logistics, the upgraded to overweight by j.p. morgan and there are reports the logistics player could be in talks with post indonesia to form a joint venture. also this one, the beleaguered chipping player reporting it is laying off 3000 workers in the philippines this week. shery: thank you so much. coming up on the next hour, we are counting down to china markets reopening after the weeklong lunar new year break. we could see them catching up to global stocks after china's bullish start to the year with equity markets recovering $380

million. we will discuss what to expect with this man. market open is next. this is bloomberg. ♪ ♪

jim marketsmorning have just opened for trade. sophie: welcome to daybreak asia. ♪ haidi: our top stories, china's robust start to the year as the markets returned from lunar new year. trade has dominated the week as negotiations continue in beijing. and theresa may wants

more time to finalize her brexit deal. all of these themes will play into the market. wehie: the start of the week are seeing japan closed for the national foundation holiday. chinese markets are reopening which will be a test for the bullish start of the year for chinese stocks. we have the kospi opening the outlook. let's look how stocks are kicking off the session in seoul. aussie shares are swinging to the downside. kiwi stocks extending gains for a fourth straight session. the kiwi dollar is set to have a three-day decline.

westpac is seeing no change in the cash trade in new zealand. the first wordt news with su keenan. may will last parliament to give her more time to renegotiate brexit. promising lawmakers a further chance to take control. she will ask the commons to reaffirm a desire to remove the iron backdrop from the agreement. if she does not come up with the new deal by february 23, parliament will have another vote. observers including the imf are increasingly concerned. well, orr this ends whether it has a result of a brutal exit on march 29 with no extension of notice, it will not

be as good as it is now. >> a bloomberg survey says there is nearly a one in three chance of recession and the u.k. in the next year. economists say there is a probability of two consecutive quarters of negative growth. it is up 25% from one month ago and up 20% from last year. the survey was conducted before the bank of england forecasted the slowest economic growth in a decade. steps to avoid a new u.s. government shutdown stumbled over the weekend when republicans and democrats in the u.s. stopped talking. there was a record 35 day halt in washington and negotiators had hoped to announce an agreement monday. the deadline is friday. in italy, the populist leaders are testing support eight months

into government. they campaigned heavily as tensions rise within the coalition. movement and right wing have been quarreling over issues like immigration, security, and infrastructure. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: investors are waiting for trading to kick off. it is the first day of the year of the pig in china. they have returned from a week long new year holiday. worries over u.s. trade relationships resurface. there is a new round of talks in beijing. mark, we are looking at shakiness when it comes to equities and trading but there

is also the issue of what happens with the yuan, given what we have seen with the dollar. >> absolutely. it will be a good signal if sentiment has changed among chinese traders. in the time they have been away, there was news from america that they have not yet been able to set a date for a meeting between the presidents. there is a report this morning that they are trying to get one done for the middle of march. is someders want to see kind of signal from the united states that even though the march deadline is coming up fast, the u.s. would be willing to go beyond that and not immediately raise tariffs just because the deadline has been reached. so we have the trade delegation going to china this week and they will be closely monitoring the signals, the soundbites that come out of the american delegation to be able to confirm

that talks are ongoing and they are still moving toward a negotiated settlement. that just because the deadline is coming there is not an automatic increase of tariffs by 25%. so we will get a good signal once trading starts in the few hours. that will give us a signal whether or not yuan traders have changed their views in the week have been away on holiday. coming outs a report about a possible meeting in mid-march and that night suit concerns. will the pboc reflected -- reflect it? moves,erms of absolute it is a relatively small decline. policy out -- policy is up one half of 1%. the euro is considerably weaker and that cuts at their basket. so there is room for the pboc to

it was onred to where february 1, but not by a huge amount. what traders will be looking for is the first few minutes of onshore trading. trading market starts in shanghai, it will give us a better indication of what the mood is among traders in china. dollarwe are seeing the index on the longest daily winning streak in two years but a lot of voices are saying it could be the year for dollar weakness. you have potentially trade policies seeing resolutions. is this the case of the dollar being the best pick out of a bad bunch? especially since other central banks are following the dovish mood? >> certainly. some of the things that have happened in the last few days,

the rpa is much more dovish than expected. and we have seen european growth. but there were things over the weekend. the fed production for gdp production was very soft. they are looking at a first order of 2.71% on a which is a very soft spot -- soft start to the year. that could undermine the u.s. dollar. there are other things coming out this week where we may see growth in japan not being too bad and that will probably weigh on the dollar little. seeing inth we are the dollar for the last few days might not be sustained. there are a few factors which could make a difference. and we will have other asian countries producing growth as well which might slightly surprise us on the upside. but we are looking at china and we are looking to see more data on china trade to see how it plays out and what the

performances are. a lot is up in the air. the early dollar strength we have seen in the past few days may not be sustained if some of these growth points come out slightly on the downside for america. foreign reserves, trade coming out of china this week. it is a data heavy week. mark in singapore. let's look at the result of trade talks between china and in derekand bring world bank. wallbank. we are talking about trade jocks -- trade talks progressing to a new level. towards aned inevitable extension of the march 1 deadline on the trade truce? >> it is hard to see how we are not.

president trump has been very vocal in saying there is not going to be a full deal until he and the chinese president meet. if they are meeting after the march 1 deadline, you're the options are an extension, or, if the u.s. feels like this has completely collapsed, some retaliatory effort. so far, it does not seem like we are headed toward the latter. week whene more this there is the meeting with steve mnuchin. policies are starting up quickly in beijing. i'm interested in this for a couple of reasons. one of the compositions of who is going, the u.s. delegation has a bunch of names you have never heard of the thing to note is that one of them deals with fossil energy. two of them deal with agriculture. so the u.s. is sending a team

that somewhat signals some of the things they are interested in seeing china deal with. it is not necessarily your steel and aluminum folks but it is soy folks. so we will see what the result is from the low-level talks and then the higher level talks and then we should get an indication maybe even later this week that says what will happen between now and march 1. soyi: you talked about the people being present at the meetings and that is essentially what we have seen. after every round of meetings we have seen china essentially lifting the olive branch and buying more soybeans. are we expected -- do we expecting to see more in terms of harder to enforce structural reforms? >> that is one of the things i am not quite sure how much steve

mnuchin and robert lighthizer can get out of china this week. that might be a conversation that is really a principled conversation between the presidents for whenever they might be. is the united states principally concerned about intellectual property. that is probably number one on their list. and they are also concerned about enforcement because the u.s. view tends to be that china can commit to whatever they want notommit to but they do necessarily believe china will stick to it. so the u.s. wants really stiff rules in place to ensure china lives up to whatever commencement's they make -- commitments make. the report the report that came out from axial's says -- axios says that white house has informally discussed having a meeting with the chinese

president in mid-march at mar-a-lago. that is a significant place for a meeting because it is president trump's winter white house. it is a place that president trump brings people when he really wants to impress them. --s is this presidents president's alpha place to go. thinga really significant if that ends up being the location. >> and so much uncertainty about what is going on here in the u.s. as we could potentially be headed toward another government shutdown on friday. what do we know? last one liked the [laughter] i do not expect another one yet. is nok the expectation

worse than a 50-50 chance. that is not very reassuring. but they had talks that were going on but it did not include wall money for the president. so if he is going to insist on a ton of wall money, he will be sorely disappointed. they are looking at a framework of a small, incremental deal and one place where it has gone down is over the issue of detention beds. literally where'd you put people you have apprehended for the night. you putally where do people you have apprehended for the night? thinga really technical but keep in mind the issue of children separated from their parents in detention is a third rail issue for the left and not one that they want to negotiate on. haidi: derek, we appreciate your

time. coming up, more on the trade talks and looking ahead to the chinese reopen after the break. shery: first, the outlook for quantities. that is next. this is bloomberg. ♪

shery: this is daybreak asia. the pickup for commodity investors this week as china's return for equity trading. there is a growing list of woes. get over to our bank analyst. i want to start on this issue because it is clearly a story that has been moving.

let's take a look at our library to see the huge surge in ion or concernsre and these about the ability to supply local markets. in move has been extreme terms of what prices have been tracking compared to futures. is this a sustainable situation and is it enough to offset the bearish factors of the chinese slow down and the fact that margins are still being compressed? >> it is a really interesting situation. it will be mitigating. where they are talking about 4% of supply being sidelined by vale and regulators, it is not

clear yet how much of it will return on how quickly. so if we look at the market before this happened, the market but if you move it at 4.5% of global supply, that is a significant spike and it has caused this market reaction. up to $100 could get per ton once all of the supply disruption risks are accounted for. >> in terms of what it means for australian minors, we have seen , do you see the upside continuing? the major beneficiaries from this disaster have been the bhp.

their oil is not the only one the market is looking to buy now . their reliability will be a premium as well. so we are seeing the benefit translate, in particular castille and aluminum in china reald we are getting to a possibility of negative margins in china. shery: we are seeing iron ore imports and the chinese economy is falling. the top panel on the chart shows you that. the bottom panel is the steel industries latest pmi and we are seeing contractions. is this telling us that volume growth may have already peaked? it is something we are really

considering. we are viewing it as it will probably be flat this year. instruction investment is the key area they could see a rebound. there are a lot of risks as we saw from the manufacturing index. it is not clear when the momentum will turn but our expectation is that it will turn. credit lending in china is leading the downward indicators and we are concerned we could be in a subdued environment for commodities in the first half of the year and that risk to the not being able to pay the price the market is asking them to. that is really what the risk is, see it lasted three

weeks. shery: these are the same concerns we are seeing on china risks for oil prices. you put brent at $72 per barrel by midyear. why do you not more concerned about the oversupply in the markets right now on the potential be could see more u.s. shale drilling? concernsare definite and it is not that we are not pricing ma'am. -- pricing them. we felt at the end of last year went opec came through with the deal the market never believed it. we think the market will start to price in exactly what opec and saudi arabia is willing to do to balance the market. keep in mind that we are seeing

disruptions to venezuela and iran production and that is something that once you aggregate it, it will balance the market and push it into a slight deficit by the end of the first half. that is the view that we are positive on oil. we are trying to grapple with what is a real price for oil given how much volatility we have seen in the space in the last 12 months. haidi: a quick word on gold. has your view changed in the last few days since we are theng a resurgent rally in dollar? given the assumptions we have the start of the year about dovishness at a weaker u.s. dollar? much has not changed too in the last week.

i would say the idea that the fed has become more dovish really means gold looks better. it is something we thought initially it would not be as dovish and we were thinking $1300. midpoint for trading. but that is not the case. we expect gold might track above the $30 -- $1300 per routes -- ounce.s -- what we have seen of the last year, the u.s. dollar will hold all the cards and if we see them weaken it will be positive for gold and vice versa. shery: thank you so much for that. plenty more to come on daybreak asia. this is bloomberg.

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shery: here's a quick check of the latest business headlines. reports say toshiba will cut into the forecast. the nikkei 800 says the target will be lowered from the $550 million in november to between 180 and $270 million. the report blames higher costs for draghi down earnings. toshiba is expected to maintain by 2024. >> jp morgan says they continue to see positive sales growth but in january voluntarily increased

along with customers holding off purchases. coming up we are just over one hour away from the chinese markets entering the fray.

.u: this is daybreak asia i am su keenan. president xi jinping's top economic aid will be part of this week's trade talks in beijing. he will join treasury secretary stephen mnuchin and trade representative robert lighthizer as the u.s. and china seek a deal to expand -- avert expanded tariffs march 1. president trump said the sides are making progress but also said he is ready to impose heavy duties if necessary. retailing catering sales in china over the new near holiday -- lunar new year rose 8% from a year ago to $150 billion. the state broadcaster said revenue from tourism was higher.

billion.than $76 the trade this -- trade dispute is a, but figures show consumer confidence remains robust. , but figure show consumer confidence remains robust. the first general election in thailand since the coup five years ago. a former prime minister abandoned plans for the king's sister to run for office after the monarch opposed the idea. they will meet later and talk for the chart party to be shut down. happy 50th birthday to the jumbo jet. the plane made its debut in february 1969, having been brought to life from initial drawings in 2.5 years. it was nexte the size of boeing's largest aircraft at the time with a cockpit three stories off

the ground. it defied the wishes of pan am and at that time the cost almost bankrupted boeing. 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. keenan. this is bloomberg. haidi: with look at the asian markets this morning. the absence of japan, sophie kamaruddin in hong kong for us. sophie: japan offline for holidays. early in asia session we are seeing a mixed bag. we have the cost easing -- the ozzy using declines while stocks are extending losses led lower by financial companies. kiwi shares are going close to a november 2018 high. set to snap a three-day decline, a -- rising from a two week low. the rate decision is on

wednesday. all 18 economists [indiscernible] a record 1.5% low. on how kiwi bonds are faring for the moment. we have a 10 year yield above 2.1% after dropping to a record low 2.8%. this chart is reflecting the amounts we are seeing to global growth. and stock movers particularly in seoul, netmarble gaining ground on a report the korean company will make a joint to visit with forent and become partners a controlling stake in this other company. fourth quarter results disappointed and the forecast was billions of won. we are seeing an athletic maker under pressure, its year to date it drop down to 18%, sliding to the lowest level in three months

, as trade worries are being reignited. that wase bullish mood starting to build in china at the start of the year will be tested today when equity markets reopened along with the new year holiday. our reporter joins us from hong kong. we are seeing resistance with chinese stocks, able to break through key levels. do we see more volatility or uncertainty given this is the week we also get another round of trade talks? week was a poor performance in offshore chinese assets suggesting a softer start monday when chinese mainland markets reopened but historic impact of spring festival indicate otherwise. i found interesting that this is from local media saying over the asia rose the

next five trading days after the break. the 47%dramatic from chance of increase on the first of trading day. probably there is volatility ahead today, especially after last week, poor performance. there is optimism over trade negotiations. beijing foroming to talks, and that after the white house officials indicated the trade deadline could move. i think unless there is trade talks, we could still see optimism growing.

shery: what about chinese volatility? we have seen the offshore rate, given the pessimism over trade talks, what can we expect this week? yuan, the i think the extende yuan, we can from the index. a lot -- the uncertainty is over -- the reasonse and concerns but i don't think the talks breaking down and [indiscernible] should continue and we have seen trump-xi meeting could be postponed after march 1, they still and meat, and then the terrorists deadline could extend. concern.ee a big i don't see a trade issue to be another big reason for the

weakness. shery: thank you so much. let's bring in the chief strategist and head of research at boko haram -- boca am international. we have seen the rally in the chinese markets. they are underperforming u.s. stocks. how close are we to the bottom for chinese shares and especially we are coming back from lunar new year holidays with global sentiment with trade not being that great? >> we had a good rally in the u.s. given the fed has somehow [indiscernible] monetary policy and economic numbers and earnings season could be better than expected. in china, the chinese market especially mainland is now missing most of the action, but having said that, one has to realize the chinese market has stopped making new lows since late october. even though the chinese market hasn't been participating in the

rally, i would say up a run 2400, that should be the lowest level for now. haidi: i found this interest -- this interesting chart that when you compare u.s. stocks and chinese stocks, u.s. sales to china have been performing better than chinese stocks with a high share of sales to the u.s. investors are thinking u.s. firms will do relatively better no matter what the outcome is. what are your expectations for how these on talk -- these unfold? hao: it is interesting. what the chinese are saying is china is probably going to buy more from the u.s. so the import, especially from the u.s. is going to increase and it is beneficiary to the u.s. firms. since the course of last year, we have seen exports going to

the u.s., that will be affected by the u.s. tariffs, starting to search. that is an indication u.s. importers are building up inventory in anticipation of any sort of uncertainties in light of the trade talks. going into first and second quarter this year, importing those could be slower for the u.s. importers. so therefore i would say after suffering sort of a horrific year, the chinese market could outperform this year. haidi: it is interesting that we have seen china buying more as an infant -- overture. we see a boost in soybean purchases but in terms of the deeper structural reforms, supply-side reforms, opening up to foreign is mrs. and enterprises and -- businesses youenterprises, have

considered these to take place -- for the trade force to be enforceable and enduring? hao: last year we have seen [indiscernible] people's legislative council. some of the sectors that used to be close to foreign investors are being opened up especially the financial sector as well despite -- i would say those things are pushing forward, especially given the importance of the trade talk and demands from the u.s. side. ongoingsay it is an reform. china has been on this for the last 40 years, now we are publicly going to the acceleration phase. one of your notes you point out the key differences

between what the fed does, the u.s. and the pboc is china is managing the economy, not managing prices in the market. the fed -- there has been increasing criticism this pivot to dovishness is -- has capitulated to the market. is that a key distinction what we can expect from the recovery in the chinese markets that is not a mandate that they have? i think the pboc showed from it is restraint despite the chinese market went through one of the worst years in history. even though for the chinese market it is not long. it is one of the worst years in chinese market history. despite all the difficulties, the pboc actually has been easing monetary policy with some sort of a restraint. going into the new year, what we the pboc getting

more proactive this year. we have seen the preview she trying to read extend in 2019 and also coming out with all this targeted lending facilities to help ease the pain in the real economy. ofould say there is a lot things the pboc can do. cut a couple of times last year and i would say cutting off the key lending rate would be on the cards. shery: the key difference from 2015 is the all-important housing market is not as distressed as it was four years ago. given the pboc will get a lot of criticism over leverage mounting, does the government want to deploy a heavy-handed tactic? hao: housing is one of the most resilient in the global history. -- also because of

the buying restrictions the chinese government put on buyers. the chinese housing market, the prices seem to be stabilizing at a high level. beng to 2019 housing will one of the key constraints that is limiting what the pboc can do. if you look at the weighted , it is lending rate actually rising despite the falling economic growth. that is unusual in chinese economic history. the borrowing rate is too high for the chinese firms to borrow and expand -- the pboc can do more in terms of easing the lending conditions for many chinese businesses. haidi: and if that includes a headline rate cut, is it diminishing returns for the stimulus that they rollout?

-- roll out? to gdp ratio is close to 300%, one of the highest in major economies. but it is a difficult time, there has to be some trade opportunities between short-term and long-term. we are seeing structural reforms that we discussed now and the supply-side reforms. in the near term because of difficulties the korean economy is facing, if we continue to put money through constraints how the real economy is operating, veryprobably it is not constructive at this stage. i would say there are maneuvers that should be expected from the pboc. haidi: always a pleasure to have you on, chief strategist at bocom international in hong kong. theresa may wants more time to hammer out a brexit deal.

taking a look at the issues that remain with a split less than seven weeks away. this is bloomberg. ♪ ♪

the nobel prize-winning economist paul krugman said with increasing headwinds in the u.s., it would be a bad idea for the fed to raise rates. he also spoke of the chances of the largest economy entering a recession. be asi wouldn't definitive but it seems likely. there seems to be accumulation of smaller problems and the underlying backdrop is we have no good policy response. the fed can't cut rates very much. fiscalpolicy, there is space if we were prepared to use it, but this current leadership might not respond in any nimble way. odds we will have a

recession. yousef: when you look back to the last crisis and compare to our odds now, is the u.s. in good shape to withstand? paul: we are not. we came into the last one with interest rates above zero. lots of room for interest rate cuts. we came into the last prices with public debt substantially lower than it is now which i don't think is a big factor objectively but it is a psychological factor. then we came into the last crisis with remarkable leadership. enjoywant -- i do maligning government officials but our current treasury secretary [indiscernible] we are in much worse shape. we don't have a crisis of that magnitude about to hit us. we are worse shape to deal with whatever shocks come along been 10 years ago. -- than 10 years ago.

yousef: what is the biggest risk facing the global economy? paul: i see two. not sure which one is biggest. one of them is china. i am in the camp predicting a chinese crisis over inadequate consumption. it keeps not happening but it does seem to be getting closer to that point. the other is europe. the euro area is experiencing a slowdown close to recessionary levels already. was paul krugman. riske global economy is at . how big of a blow would a hard brexit be to european and u.k. growth? kathleen hays has a look at what is coming. the brexit clock keeps ticking.

kathleen: we know theresa may is trying to buy herself time. weeks or so just to be able to go back to the e.u. and hammer out a deal. we know our porting over the weekend a conciliatory level -- she sent a conciliatory letter to jeremy corbyn. she is agreeing to talk with corbyn about a soft brexit very we will see how the tories react to that. a vote this week is going to occur one way or the other because february 14, she will not have a deal. we can bet on that. kermit -- parliament gets to vote what is next. she wants them to reaffirm the irish backstop clause in me -- clause eliminated. she has offered to have another vote february 27 if she doesn't have a deal that will allow them to take control, make sure there isn't a hard brexit.

she is trying to assure her colleagues that is what is on the table. parliament taking over if there is no deal in hand. the bank of england cut its gdp forecast to the lowest since 2009. 30% of economists we surveyed say the odds of the recession are 30%. haidi: in china, the government has taken steps to protect the economy from the impact of the trade war and prevent this existing slowdown from getting worse. what are we watching? kathleen: you just had a fascinated -- fascinating conversation talking about the pboc and rate cuts, but they want to see credit expansion. that is a number that will be out no time soon. the government sees it as important. we will look at chinese credit measured by social averages,

financing. you can see how it has been erratic, very strong at the end of the year, coming down. bloomberg economics is looking for another move up to $3.3 trillion. , this would be seen as a positive sign the economy is getting help you we will look at trade data. exports are expected to slow but not as much. cpi, ppi down. gauging u.s. economy to see how much the trade war is taking a toll on how much more the pboc might have to do to give it help. hays there with a look at what we are watching this week. more to head -- more to come. this is bloomberg. ♪ ♪

political tensions rising again in thailand, over a month before the first general election since look to five years -- the coup five years ago. our bloomberg editor joins us from bangkok. what happened over the weekend, and where do we stand now? reporter: it was remarkable. friday night the king came out with a statement from the palace is sister barring h

from being a prime ministerial candidate to the party linked with the former prime minister. they later acknowledged order and presumably the election commission will now rescind her nomination as the prime and a serial handed it. -- prime ministerial candidate. the election commission meets in bangkok. we don't know if they will have a decision today. they have until the end of this week to rule on candidates, whether they are eligible or not. the consequence of this is heightened political tensions in thailand which has always been a bit of a tinderbox. now moving to the elections, when you think it would be more stable, things are becoming more volatile. possibly this will pull more people out to the polls when

they take place. that remains to be seen. could we see -- what would be the fallout? margo: we don't know. there are calls for it to be disbarred due to what its call throwing the monarchy into the election campaign. the monarchy by constitution is supposed to be above politics. we don't know. it would raise political tensions somewhat. haidi: appreciate your time. margo talley in bangkok. before we go to bloomberg markets: asia, looking at how the markets are trading. the china reopen after the new year, japan is off for foundation day. we are seeing markets trending over after a muted hand from wall street. aussie stocks, not a great deal

of inspiration with that or in seoul. shery: seeing a mixed picture with the s&p 500 futures. they are down .1%, reversing gains. futures in taiwan higher after the session was unchanged friday. futures werehina unchanged four hours ago. the offshore yuan gaining .1%. that is it from daybreak asia. markets coverage continues and we will look at the start of trading in hong kong, shenzhen and others. haidi: the china open is a must upon us. this is bloomberg. ♪ his is bloomberg. ♪ the latest innovation from xfinity

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rishaad: 9:00 a.m. here and hank on and shanghai. this is bloomberg markets china open. >> stocks begin a week on a conscious note with investors looking ahead to trade talks in beijing. is march 1 tariffs deadline looming. ramy: negotiators meet in beijing. federal reserve gives another warning about the risks of the rate rise. we will hear from paul krugman.