shery: good morning. i'm shery ahn. haidi: i'm haidi stroud-watts in sydney where australian markets have just opened for trade. sophie: i'm sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ our top stories -- u.s. stocks turning south on the final hour as investors struggled to put a positive spin on jay powell's testimony to congress. sterling rose to a two-year high as theresa may promised to let government decide on delaying

brexit. and, president trump has arrived in hanoi to meet kim jong-un, but the summit's eagles remain unclear and undefined. in hanoi is 7:00 a.m. and the city has rolled out the red carpet for president trump and north korean leader kim jong-un. they are here in the city. it has been a rocky start so far. a lot of uncertainty over the official venue for the summit that will take place on thursday. we know that president trump is meeting with the vietnamese president and prime minister later today. we have president trump also meeting with the north korean leader for dinner this evening. so far, it is a wet and rainy day in hanoi. a bit of a rocky start. u.s. journalists were kicked out of the media center at the hotel, right behind me on my left, because north korean leader kim jong-un was expected to stay there. this summit was announced only a few weeks ago so there was not a

lot of time for official preparations. we will be discussing all of this and what we can expect from the second u.s.-north korea summit. whether we will see a piece declaration of some sort or progress on denuclearization throughout the day, bloomberg television live in hanoi. we will be talking to the former u.s. ambassador to south korea. find out what a successful summit would look like to him. in the meantime, that in a check of the u.s. markets. we know that sophie, there has been a hit overnight. the chair jerome powell speaking to congress. sophie: yes. jay powell speaking of financial market volatility and uneven economic growth. u.s. stocks closed lower in the final hour of trade. we did have after leading the draw with caps at 2800. jpmorgan was among the biggest

laggards, given investors were not too happy with the investor day announcement. we have the dow and nasdaq declining by .1%. sentiment dented by lower earnings and growth forecast. u.s. futures nudging lower. we do have stocks in sydney gaining 1/10 of 1% after posting the biggest drop in eight weeks for the asx 200 on tuesday. led by banks and miners. today, we have earnings helping to drive gain so far in the city sessions. let's check in on one of those movers. jumping as much as 13% this morning after posting first-half net income of 16.3 million australian dollars. a 28% return on equity. the company says as a result of strong demand, 2019 guidance has been revised upwards. aps growth is seen in the mid to high teens. let's look at sydney, off by

what 1.6% after posting softer results for the first half. it has forecast a lower revenue due in part to rebranding and chinese regulatory approval. looking ahead to the second half, they plan to double the size of its marketing spent in china after no chinese formula sales were registered in the first half. that is a look at the big movers so far at the start of the cash session in sydney. haidi: sophie kamaruddin in hong kong. that if the first word news with jessica summers. jessica: sterling jumped since theresa may calmed fears of a no deal brexit. the highest level against the euro in almost two years. the prime minister promised to let parliament vote to delay the u.k.'s departure from the eu and blocked the prospect of a no deal. may says she will continue pushing for acceptable deal with brussels. possible, is not

britain will not leave without parliament's agreement. there are signs that china may be emerging from months of slowdowns. combining the earliest indicators of economic data which shows smaller companies are becoming more optimistic. other measures of inflation and trade sentiment signals to early to call it the bottom. chinese shares and the offshore yuan strengthen after president trump delayed additional tariffs. record high interests in indonesian sovereign bonds. jumping to $6.7 billion. that is six-time higher than the amount the government was hoping to raise. yields.s with high indonesia use an aggressive tightening cycle to stabilize the currency which rebounded almost 3% this year. the reserve bank of india has lifted curbs on three lenders at for the government injected funds to boost their capital

base. the banks have been removed from the so-called collection action plan, restricted from lending while they measure balance sheets. the rbi says it will continue to keep the banks under close scrutiny. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: thank you. that get back to the u.s. market close and extending trading. slipping into the red in the close after swings and losses all day. jay powell warned that growth looks uneven and talking about crosscurrents. su keenan joins us now. su: that start after hours because what we are seeing is two companies drop in a very big way. one of them weight watchers which has billionaire oprah

winfrey in its corner. also, mylar pharmaceuticals, forecast, they are worried that profits might be hurt going forward. toll brothers on the other hand very optimistic with its outlook. let's take a look at weight watchers. this has been a storied stock. they are rebranding themselves as ww. they say oprah winfrey will play a central marketing role going forward, but very disappointing forecast in numbers from the company. if you take a look at toll brothers, in the face of what has been a cooling home-building market, they blew away estimates. beat the highest numbers out there and those chairs doing very well after hours. you can see they had a tough year. down from 17%. they do build homes on the higher end of the scale. session, the regular

we saw trading at the top and a lot of this has to do with negative data on housing prices despite consumer picking up. su: a lot of it had to do with some of the comments from fed chairman powell on slowing global growth and married with the disappointing housing numbers. an 11% drop in the housing starts in december. we are getting this data late because of the shutdown. let's go into the bloomberg. we have our library of charts. we are seeing cheaper mortgages are not helping home prices. this is the mortgage rate, the blue. you can see the 20 city year-over-year change was the smallest in four years. the smallest gain. in terms of home appreciation, that is continuing to decelerate as buyers balk at purchases amid still elevated costs for homes and a falling stock market. that get into the snapshot. we did -- let's get into the

snapshot. weak asfutures a little we look into the trade for wednesday. let's take a look at some of the big movers. a lot of them have to do with earnings. home depot naturally came out with a disappointing forecast. sales growth will start to slow. that is casting doubt on the growth story. we notice the stock was down almost 4%. well was almost down 4% as on concerns the ftc has on the ceo's twitter story. the company keeping watch on what he does. they believe he did not violate any water, but of course, the court is looking to hold tesla's ceo in contempt. j.m. smucker and manifest, positive earnings stories. what a story for oil

futures as well. we saw both brent and wti hold steady after falling the most in a month on president trump's monday tweet. what is the story? su: a story of resilience because the drop was significant. trump tweeted out on monday "relax", a message to opec. we saw oil dropped the most in a month. if we can get that five-day chart, that would be great. it came back. the bigger picture on oil, we did see year to date coming into this -- that is a flawed chart. let's take a look at the next market that we are seeing just since late january. traders looking for the next driver. the opec outlook had been a driver. they were all the allies and the opec plus members exceeding

their initial promises on these output cuts. it was like they were going to rebalance the market. york, but58 in new nowhere near the plunge we saw that started out the week. haidi: su keenan with a wrap of the overnight action. part of what drove that was jay powell speaking to a dovish policy group on day one with his testimony to congress, reinforcing expectations that the fed is on definite policy pause. kathleen hays is here with a recap. was there anything he said that was much of a surprise or added to the understanding of this policy tilt? kathleen: i have to say there really wasn't, because after his press conference, after the january meeting, numerous fed officials made it pretty clear they are data dependent, they know they might have to raise rates, they will go report by report, meeting by meeting. it was pretty clear from questions he was asked and how

he answered them, because he made the same comment over and over -- we have to be patient. you heard that word before. in answers the questions from the senate banking committee, let's listen to one example of jay powell and what he said. >> the committee has decided that with our policy rate in the range of neutral with muted inflation pressures and some of the downside risks we have talked about, this is a good time to be patient and watch and wait and see how the situation evolves. kathleen: he says also, he sees a solid labor market. wages are rising and that is not a problem because he does not see inflation being pushed up that much. let's look at a chart. they can tell the story better than i can in words. the white line running around the top, that is where the mean gauges of paychecks.after running around 2.5% a couple of years ago, it is 3% year-over-year.

not a big move. inflation, yes, it was lower last year. it is up to about 2%. near target as jay powell said, but maybe not rising as much as wages. you doesn't say he is watching inflation expeditions very closely. our bloomberg chart shows inflation expectations, if you look at breakevens on five-year, 10 year notes, have started to move higher. we will see what he says when he is asked again. shery: because after all of the fed speak we have heard so far, the big question still remains -- why did the fed shift gears to policy pause last month? did we get anything from his testimony? kathleen: if i had been there, if many of us have been there, we would have asked this very important question. what changed, say, from november meeting to december meeting to january meeting? the global economy was already slowing. we saw concerns about the trade war.all of these things

were in place. what role did the stock market play? that question was not asked. we ask that to the chief economist at req economics. he said we already knew the fed was causing. the stock market must have played a role. let's listen. >> now the markets are almost back to record highs, so now what happens? if the fed response, puts the rate hikes back on the table, what happens to the equity market? the fed needs to be a leader and react to markets when they think the market is signaling something really fundamental. i did not think the december swing was that. shery: the fed might agree it would affect the economy. that is one reason we are causing. one more chart, because what is so important, u.s. financial conditions, that is the turquoise index. the white line is the average of the u.s., eurozone and asia.

stocks almost as high as they were before they started falling in december. this is easing of financial conditions. will this be something that maybe does tilt of the fed back towards hiking rates this year once, maybe twice, especially if we conclude the trade war, and china's economy does not slow down too much. maybe we will have better luck tomorrow because he will talk to the house financial services committee. a lot of members there. maybe we will get that question asked then. in newkathleen hays york, thank you. still ahead, the zach meaning of denuclearization remains unclear at of the second trump-kim summit. we get some insights and what is happening behind the scenes later this hour. asdi: first, sterling surges investors worst fears about brexit calmed. we would discuss that next.

this is bloomberg. ♪

shery: visit daybreak asia. haidi: i'm haidi stroud-watts in sydney. a brexit twist. theresa may says again she hopes to leave the eu on time on march 29 but also promised a parliament vote to delay if it is ultimately rejected. ramy has more. it seems like may it is preparing for different and games. ramy: it looks like that. some wiggle room over the next few weeks, at least through march 14. the idea around this is that which one is the lesser of two evils? one, whether it is a no brexit or whether it is a deal that was voted historically down, lost by 270 votes. this is the big existential question looking at. mrs. may does say she does not

want to extend the brexit deadline passed march 29. she said the absolute focus should be working to get a deal and leaving on that day. but, she also outlined a timeline. let's take a listen. >> if the house having rejected with the deal negotiated with the eu, then rejects leaving on the 29th of march without a framework, the government will on march 14 bring forward a motion on whether parliament wants to seek a short, limited extension to article 50. ramy: this is the if, if, then scenario. looking ahead, if the house of commons rejects that deal by march 12 and if ministers of parliament reject a no brexit deal by march 13, then on march 14, it could head to a possible extension of that brexit deadline. but, we are seeing some

interesting movements in terms of the sterling because we are seeing positive sentiment really come into that. let's look at what is happening in terms of sterling. sterling really right now is rising the most in the past several months, ever since november, ever since july rather. you can see when the news hit, rising to 1.32. it is also the euro. you can flip up the board and show that. the euro rising to nearly a two-year high. very quickly, i can show you the bloomberg brexit barometer is rising above zero. at its highest ever since the start of december. the idea that brexit could happen but it might not be a no deal, just some kind of deal in between. haidi: ramy with the state of brexit. let's get more on these catalysts when it comes to fx at the moment.

roderigo, let's start off with sterling. revisiont the upwards when it comes to sterling forecast. we are looking at levels around 1.37. is that overly optimistic? multiple scenarios now, but it seems like the market is pricing in for a kicking of the can down the road. >> yes, good morning. when we think about the sterling, it is still the idea of the probability of distribution in terms of outcome . what we have seen over the past couple of weeks, in particular the last few days, is that the probability of those more negative outcomes have diminished. if we think about losing a lot of the sections, it means the prospects of a labor government led by corbyn which is seen as a more concerning in terms of fiscal expenditure side, negative outcome for the pound. now, the idea that a hard brexit

wants to be avoided, it has become more clear when you think about not only the government but opposition, and also coming from europe as well. in terms of that probability distribution, it makes sense that the pound is rising. in terms of our forecast for the pound, we still see it hitting 1.35. we either get an extension for confirmation of the deal. the may deal confirmation would put into line to put it at 1.37. our cents is that that is not likely to be achieved on march 14. the extension looks to be the more likely outcome and eventually a no deal, remaining, plan the is likely to be the more likely outcome. haidi: what about the euro side of the equation? increasing concern from brussels and onlookers that it is not just about the impact of the u.k. economy but the fact europe

is structurally slowing even without the disruption of brexit. rodrigo: when you think about the euro, 1.13. risk positive outcome from brexit can potentially help the euro get to 1.17. there are structural issues going on in europe. if anything, that brings into line the ecb thinking. if you think the ecb will look to lift rates by sometime before the end of this year, that in itself will be europe supportive and that should lift expectations. you can see you are heading towards the 1.20 area. given the data, the more likely outcome is there will be a delay. shery: let's talk about the dollar because it took a hit after we got that u.s. housing start climbing to a two-year low in december, not to mention comments from the fed chair jay powell not helping with momentum.

are we expecting more headwinds this year? rodrigo: i think the general thinking in terms of data released for the start of the year, not only in the u.s. but across the major global economy, you should expect a soft patch. when you think about a soft patch and compare it to relative basis, the u.s. is performing a little better than others. then, the outlook for the dollar really is a function of the sum of its parts. if you think about the dollar coming under pressure, then we need to think about brexit resolution supporting the pound. we also have to think about improvement in the european data. and then on the other side, we have a fed that is very patient and the other question is how long will they be patient? will the fed look to start talking about lifting rates again? that will be the question for late 2019.

shery: thank you so much for your time. roderigo catril. you can get a roundup of the stories you need to note to get your day going on daybreak. bloomberg subscribers go to your terminal. we can see we're looking into the trump-kim summit taking place here live from hanoi. bloomberg television will bring you the latest. you can customize your settings on your bloomberg to get the news on industries and assets you care about. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. the number of jeep wrangler's is stoking concern that the american suv boom is reaching its limit. up from 116 days at the end of the start of the year, almost

nationwide.e supply chrysler expanding investment on trucks and suvs and killing off many of its sedans. much more to come on daybreak asia. this is bloomberg. ♪

jessica: i am jessica summers with their first word headlines. the nigerian president has won a second four-year term, according to bloomberg. the election was marred by delays, technical glitches and violence. the opposition party says the count was manipulated. early results pointed to him being reelected. sterling jumped as theresa may try to calm fears of a no deal brexit. vr highest level in almost two years against the euro. the promise by the prime minister to let parliament vote

on leaving the eu. may says she will continue pushing for an acceptable deal with brussels so brexit can happen on march 29. but if that is not possible, britain will not leave until parliament's agreement. signs that china may be emerging from months of slowdowns. combining the earliest indicators of economic data shows smaller companies becoming more optimistic. although measures of inflation, trade and sentiment signal it may be too early. chinese shares surged this week and offshore yuan strengthen after president trump delayed initial tariffs. oil rose after an industry report shows the price decline in u.s. crude supplies. american petroleum set to report stockpiles fell by 4.2 million barrels last week. president trump tweeted monday that prices are too high and called on opec to take it easy.

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. i am jessica summers. this is bloomberg. shery: thank you. investors got little information from fed chair jerome powell's testimony in congress. that see how markets in asia are setting up. sophie: we did see the aussie dollar react to jay powell's testimony, making most of the gains overnight on the back. the stocks remaining after the biggest stocks gain for the asx 200. being led higher by health care and tech. some of the best performers in sydney so far. bravora, rising as much as 14.5%, climbing to a fresh all-time high. the company says as a result of strong demand, full-year guidance has been revised

upwards. rising to the highest level for seek, despite posting a 5% drop in forecast for the latin american business. it has affirmed the net profit outlook for chinese job portal. it has cut its fiscal 2019 net profit outlook. we do have on the board vocus group, recovering from earlier declines. the company posted a 29% year-over-year drop but it has said it will take advantage of opportunities in the wireless market, saying it will not go with market share as it continues with the three-year strategic turnaround. taking a look at some of the lack arts in sydney. down the most since 2016, trimming revenue forecast. the lowest level in eight months on news that jonathan mann is retiring as chairman and the stake has been sold as a discount.

bega cheese under pressure, falling as much as 5.5%. first-half performance was waived by pressure and a lack in the timing of shares. it is seen at the lower end of guidance. the company is closing its facility. cheddar and mozzarella lovers, do not fret. it will continue to develop the business from other dairy sites. drama the rumbling huawei as literary taken center stage in barcelona. during the keynote address, why huawei defended the company from u.s. efforts to been 5g technology. >> huawei has a strong check record insecurity. billions of people around the world. the u.s. security accusation on nothing.s no evidence,

an market's go to l.a. gurman joins us now. what was huawei's argument? it has become does lightning rod for the u.s.-china trade relationship and now in barcelona. mark: huawei's bread-and-butter is their infrastructure and equipment. they are one of the global leaders in five j infrastructure. this allows these latest handsets from samsung and others carriers to make the 5g networking essentially work. these are the networks people have been anticipating for years. you need that equipment. huawei's businesses impacted if carriers around the world will not be using their equipment for their consumers and other phone makers to connect to those faster networks. this pointe know at if all this drama affecting

huawei's business at all? mark: in terms of affecting the handset business, it does not appear so. at this point, huawei is having very strong results across europe, asia and around the no effecte they have is the u.s. the u.s. is made up of phones from apple, samsung and the lower end devices. huawei is very exclusive to outside the u.s. where they have been very well. i don't see a correlation right now but the u.s. is a very important market and nowhere to be found here. haidi: mark gurman from bloomberg technology with a look at what is going on. breaking news crossing the bloomberg -- the u.s. house of representatives has voted to block president trump's emergency plan for his boardwalk. the declaration of the emergency happened halfway through february, saying he would divert potentially funds from defense

spending to build his wall on the u.s.-mexico border. the measure now goes to the senate with a gop majority. making a decision whether to defy then-president or go along with the kind of unilateral decision they criticized during the obama administration. 245 for, 182 against. designed to prevent president trump from taking funds from another sector. to be able to overturn a promise presidential veto, that vote goes to the senate. we know that house speaker nancy pelosi has put in place plans to declarationrgency as she sees as her cousin additional -- constitutional duty to defend taxpayer money. the senate has 18 calendar days to consider the house measure and take a vote on that. agendavery busy domestic

for the white house. of course, we know on the international front, low ambitions for the talks between president trump and kim jong-un with the two sides yet to even agree on their goals. and the definition of denuclearization. stephen engle joins us from near the mazza liam hanoi. waters the latest now the two leaders have arrived? stephen: let me set the stage today as you have said, the two leaders have arrived. donald trump arriving late last night on air force one after kim jong-un arrived by mercedes stretch limo from the border after getting off his train earlier in the morning. we are here in front of the ho chi minh mazza liam -- mausoleum. very significant for kim jong-un. kim's grandfather in 1964 came

to vietnam. we are hearing that kim jong-un wants to retrace the steps of his grandfather. the north korean leader has not come to be a nonsense that visit in 1964. i believe one of the regrets that kim jong-un had is he never had a photo with his grandfather. 's grandfather died in 1994 when kim jong-un was just 10 years old. he is apparently retracing the steps. there were rumors he might go to the bay. we have not confirmed that. it is a busy day today for both the donald trump and kim jong-un. donald trump will also come here. he will probably drive past this main boulevard that goes past the presidential palace. there will be a photo op at 10:55 a.m. local time, 11:55 a.m. hong kong, followed by a

president with the that 11:10 a.m. local time. then, there will be a working lunch with the prime minister in the prime minister's office which is a brand-new building just behind the presidential palace. a busy day for donald trump and kim jong-un. we are hearing kim jong-un might also pay his respects to ho chi minh later today before they meet for dinner later tonight and one on one for 20 minutes. haidi: high stakes, high pressure. is the summit in danger of being jeopardized by expectations that are too high or potentially too low? stephen: we have been here four days previewing this so we have built it up a little bit. we are a bit culpable. previewing what might happen. the white house themselves, sarah huckabee sanders, has said the media in general has played

up the expectations and they are kind of downplaying it because the whole issue of denuclearization is not going to be resolved today, tomorrow or the next day at this summit. we saw that very evidently in singapore in june of last year. a vaguely written document saying the two sides would work towards complete denuclearization of the korean peninsula. the two sides have not even agreed on what their shared definition of denuclearization is. trump's intelligence chief says kim jong-un is still arming up on the peninsula. a lot to hammer out. most likely, they will come up with a joint declaration of some sort which the pundits are saying will likely include the lowest hanging fruit and that is a political document or statements ending the war, a nonbinding statement we should say. it would not replace the armistice but it would be more

symbolic, saying we're into a new phase of relations between north korea and the united states. thank you, stephen engle there in hanoi. we will have more on the trump-kim summit. what the u.s. needs to do to the nuclear eyes the korean peninsula. we would discuss that with richard johnson. this is bloomberg. ♪

this is daybreak: asia. i'm haidi stroud-watts in sydney. shery: i'm shery ahn. more on the trump-kim summit with someone who has the unique perspective. richard johnson was a member of the u.s. delegation with the with north korea

and now senior director of the nuclear threat initiative. thank you for joining us. we have come a long way since the six party nuclear talks. we have seen so many nuclear tests by north korea as well. heading into the second summit, what has changed since the june summit in singapore when it comes to not just lowering tensions in the region but denuclearization itself? richard: i think you have a couple of substantive changes. we have not had any nuclear missile tests since the singapore summit. that is good, but north korea is still making plutonium and highly enriched uranium to increase its arsenal of nuclear weapons. i think what has changed in the last few months, the u.s. has been able to get meetings at the worker level through special representatives. in that channel can continue, the work of actual detailed technical negotiations to work out, what does it mean to do

nuclear rise, that will be a positive outcome. the question is will this summit be higher on symbolism as it was in singapore or big on substance, as i hope it will be, in hanoi? shery: what is the least we need to see in odor to say there has been some sort of progress on denuclearization. richard: i would point out two things. one, i think process as boring as it is from a washington perspective is important. i think of kim jong-un and donald trump can say to the world my envoys are allowed to go into a room together and work out details on a piece of paper that spells out exactly what each side should do, that would be a positive new step. in terms of actual concrete steps, i would very much push for a material freeze. a freeze up production of highly enriched uranium and plutonium.

these other fuels used in north korea's nuclear weapons and most of them are produced at a nuclear facility. if we can get a freeze their and other facilities, along with verification by the international atomic energy agency come of this would be a big step forward. out, theseou point talks that are boring but completely necessary at a lower level, that does not involve trump and kim, have not taken place for that long. is holding another leadership summit so quickly cobbled together a mistake in the sense that president trump clearly feels the pressure to get a diplomatic win out of this? is there a concern there could be a policy missteps or he could give away too much without much substance in return? richard: i think that is a risk. you don't want to give away too much for too little. while the freeze would be positive, we should not do things that are irreversible. one of the mistakes we made in

the six party talks was the give we get were things that north korea could pocket like shipments of oil and energy that they were not able to get back once they violated their deal. i think you have to be cautious, but it do think having a high level meeting to kick off this process is useful because north korea is run by a dictator. it is a top-down system. if north korea's leader can say the envoysthorizing to work out these details, that is something we were missing in the six party talks. we would have meetings with our counterparts and they would say these are great ideas, but we don't have the authorization to go forward. that in itself is a good thing if that is the outcome. haidi: is the normalization of the north korean leader a good thing given the profile of denuclearization, the military and strategic issues, with very little about things like human

rights and other issues, problems that make north korea problematic? richard: i think we should go into any negotiation with clear eyes. in the cold war, we negotiated with the soviet union over the reduction of nuclear weapons and there were lots of human rights violations, prison camps throughout the soviet union. we criticized those correctly and ultimately, i think we pushed very hard in the helsinki process for those to go away. i don't think we should be silent and noting that north korea has these issues, they are a dictatorship, to have lots of prison camps. the immediate direct threat to u.s. national security and that of our allies in the region is north korea's nuclear and wmd program. i think you could do both. knew the talk to north korea about these very important security issues but still say we are not happy about what you are doing in prison camps, what you are doing in not allowing your

people to have outside access to the world, but let's get first things first. is a comprehensive, verifiable denuclearization still an achievable goal, or is it time to deal with north korea as a nuclear state? richard: i think there are two different ways of looking at that. de facto, north korea clearly has nuclear weapons, but in terms of the nonproliferation treaty, the regime that sets up the system, they are not allowed to have nuclear weapons. we should not treat them legally as a nuclear weapons state. we should work to do nuclear rise them. i think that you talk about cbid. i worked on the six party talk, that term originates from that era. i always thought the "i" was a problem because you cannot have an your reversible step when

nuclear scientists still have knowledge in their brain about how to wake this work. the way to actually make this work is to say get into the details, that figure out what we need to do to remove the threat and that i would say we need to work cooperatively with north korea. denuclearization should not be done to north korea, it should be done with north korea. we should work with them and have other partners come in to convert the program to civil purposes that cannot be used for nuclear bombs. haidi: really great to have you, richard, nuclear threat initiative senio director. our interactive tv function is on tv . dive into any of the securities on the bloomberg function. you can also have a conversation as well with instant messaging. it is for bloomberg subscribers only. check it out on tv . this is bloomberg. ♪

haidi: apple cofounder steve wozniak says he lost a lot of respect for mark zuckerberg after seeing him testify to congress. he also discussed a.i., tech startups and cryptocurrencies and apple's next big thing. >> we have seen massive value creation. time,was a period of psychology would often drive stock market dips. got to get out now. the psychology factor is kind of a fear thing. bitcoin might go up to $40,000 -- it went up to $20,000. i had some bitcoin, but never as an investor. i only had some bitcoin to experiment. how to find restaurants that would except bitcoin. when it went up higher, i said wait a minute, i don't want to be one of these people.

i have never used apple stock. i don't want one of these people to watch the price of bitcoin so i sold out. wherever it is, it is way over what i bought. i still experiment on new bitcoin devices. >> we've seen tech leadership across the board get into trouble online. thinking facebook with mark zuckerberg, jack dorsey on twitter. and you see these issues, you have spoken about this in the past, what is the messaging you want to send when you see these scandals? steve: i think jack dorsey is doing a lot more than mark zuckerberg to correct it. i lost a lot of report for mark zuckerberg watching him speak and answer questions, and supposedly taking some steps that are nothing, not one penny of facebook's income. i don't trust that. there is a company, the social web, called foursquare out of new york.

foursquare, you rate different restaurants and places you go, companies. they have been offered millions of dollars for their data on the users and they have turned it down because it is unethical. you can make a choice. you can draw the line at a good place, not a bad place. account.t my facebook i really never used twitter. yousef: is a time for the government to get more involved? a few legislative efforts but clearly that needs to be taken more serious? steve: probably. regulation is good. companies will not do a certain bad thing or governments will not do bad things. we have a constitution and the bill of rights, the government shall not pass a law -- you will not do, the government will not do certain bad things. that kind of regulation we need someone things are getting bad

and united states is way behind europe in recognizing a lot of these issues of data privacy. haidi: that was steve wozniak speaking exclusively with bloomberg. let's take a preview of the market open coming up in tokyo. sophie kamaruddin is here. sophie: modest gains could be the name of the game with futurist signaling a climb in tokyo. when it comes to stocks to watch, we are keeping our eye on recorakuten. they could be investigated regarding their reward programs. and watching machinery stocks, downgraded at more than half of the company's in 2019. hitachi construction being downgraded to neutral by jpmorgan. mitsubishi heavy was downgraded after its results. the company boosted its full-year net view. haidi: up next and the next

hour, speaking to a former u.s. ambassador of south korea and asked what he would consider to be a successful outcome for the summit. ♪ you.

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haidi: good morning from hanoi where president donald trump and kim jong-un are gearing up for their historic second summit. it is 7:00 a.m. in vietnam. i am shery ahn. haidi: and i am haidi stroud-watts in sydney. asia's major markets have sophie: just opened for trade. i am sophie kamaruddin and hong kong. -- have just opened for trade. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." our top stories this wednesday, modest gains forecast for the open in asia.

investors weighing the geopolitical drama, jay powell testimony, and hope for trade. asrling rose to a high theresa may lets parliament decide on brexit and a dojo divorce. you're counting down to the -- no deal divorce. we're counting down to the summit. let's get straight to the market action. sophie kamaruddin in hong kong. we have the yen up on the board here retreating for the 1.11 handle as investors wait for fresh catalyst. flipping the board for the open, the nikkei 225 adding .2%, resuming gains after we saw a decline for the nikkei 225 on tuesday, and we have the kospi ,lso opening higher, up .2% again resuming gains. we are seeing a little bit over sentiment picking up.

shares in sydney are gaining ground, up .2%. .esuming the advance the sense here is that despite we haveent resurgence seen in stocks over the past quarter, some investors are not buying it. they are not finding any good reason to trust it. investors need to focus on downside risk protection. let's get the first word news with jessica summers in new york. voted tothe house block president trump's declaration of a national emergency on the mexican border. the vote fell far short of the two thirds majority needed to foil the promised presidential veto. the senate where the republican majority must decide whether to defy their president. nigerian president mohammed won his second four-year

term according to bloomberg calculations from official election data. the election was marred by delays, glitches, and violence. opposition party says the cap was manipulated. nigerian stocks dropped the most was manipulated. nigerian stocks dropped. sterling jumped. highest level against the euro in almost two years as the prime minister promised to let parliament vote to delay the u.k.'s departure from the e.u. she will continue pushing for an acceptable deal with brussels so brexit can happen as planned on march 29, but if that is not possible, britain will not leave without parliament agreement. china may bens emerging from monsanto slowdown. a bloomberg gauge combining the earliest indicators of economic data show smaller companies becoming were optimistic.

measures of inflation, trade, and sales sentiment signal it may be too early to call the bottom. chinese shares surged and the offshore yuan strengthened after president trump delayed additional tariffs. and there is record high interest in indonesia's sovereign bonds. bids at its latest auction jumped. times to six raise. the government was hoping to raise. almosteat has rebounded -- rupiah has rebounded almost 3%. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: thank you. the white house has said low with the for the talks

two sides yet she agree on their goals and the definition of yet to agreeion -- on their goals and the definition of denuclearization. we know that they are in the city, but it has been pretty hard to get more confirmation about their schedule. there has been a lot of confusion so far. what do we know about the next two days? >> there's been confusion and .haos when kim arrived yesterday, late morning here in hanoi, he went to the melia hotel, where a lot of the american journalists who were booked by the white house were staying, and they got promptly kicked out of the hotel. a lot of the logistics were hastily arranged. it was not announced until a couple of weeks before it is actual summit, which will be held over the next will of days. there could be a little bit of chaos, but it is proving to be ethical to report on is we are hearing lots of different

speculation, -- difficult to report on is we are hearing lots of different speculation. these significance of the ho chi minh mausoleum behind me is twofold. one is the father of the communist movement in vietnam, and heelys at rest there. -- he lays at rest there. epm jong-un wants to rest the footsteps of his late grandfather who came to vietnam twice. thekim jong-un kind of has regret that he never had a photograph with his grandfather, who died when kim jong-un was 10 years old. so this is a very emotional trip as well for kim jong-un even before meeting donald trump for that second time. steve, those involved, they are busy attempting down expectations going into the second summit. yes.en:

sarah huckabee sanders, the white house spokesperson, has even said you guys, the media, has set the bar too high -- have set the bar too high on expectations. the goal is complete denuclearization, complete verifiable irreversible denuclearization. it did not even get close to happening in june of last year in singapore. what they want to do, the united states, is put meat on the bones to that declaration, get verification, get inspectors eventually. but that's always been the bugaboo, inspections and verification. well, we are going to have that face-to-face data today, a dinner between donald trump and kim jong-un this evening, followed by that summit.

we're hearing -- it has not been confirmed by the white house yet -- we hearing it will be at the ofropole, the grand dame hotels, the same year that the strand hotel was built and about the same time that the peninsula in hong kong was built. ame of the four grand hotels. haidi: very symbolic place to hold this second summit. stephen engle. coming up, much more on the big meeting in hanoi. the views of a former u.s. ambassador to south korea. what he thinks trump and kim could achieve. shery: and later on, the latest brexit as theresa may promises a parliamentary vote that could delay the split and avoid a no deal divorce. this is bloomberg. ♪

shery: you are watching "daybreak asia." .e are live in hanoi it is a rainy, wet day in the city. 18 degrees. very cold as well. we are gearing up to the second u.s.-north korea summit. president trump and chairman kim jong-un already in hanoi. the key question -- are we going to achieve any progress towards denuclearization? of course, that is a key issue, comesry elusive when it to the latest talks, the last reallyjune in singapore, not leading to much, but a general agreement. let's discuss with our next guest, former u.s. ambassador to and also nato deputy , secretary general alexander there shall -- general

alexander. throughout the fall, the koreans have dragged their feet. not been able to hold a meeting with their north korean counterparts until the later half of january. so can we really expect a comprehensive deal here especially on denuclearization? alexander: we are not going to get a comprehensive deal. i think the experts and the administration itself would be happy if they could even get some modest first steps towards genuine denuclearization. even that is far from certain. it's true they have finally got some engagement between -- but there's lots of doubts that any firm commitments were made going into this. it's kind of wait and see what kind of is really going to happen. the risk is the president will get so carried away with his personal chemistry with kim may-un that the details disappear, and we will end up

with another hollow agreement that does not actually get the denuclearization process going. i hope not, but that the danger. -- that is the danger. shery: mr. ambassador, you take me to my next point. is this personal relationship and asset or liability? alexander: i think it is an asset. we have to take the whole thing with a grain of salt. i mean, the two leaders are flattering each other and uttering each other up -- up forng each other political reasons. each is going to be looking out interests.ital that is kim jong-un's approach. i don't think he is sentimental about this. people worry that president trump, talking about the beautiful letters he received and how the two of them fell in love, maybe a little naive -- a little naive that this

will solve the vexing problem, but again, the experts have something more concrete in singapore, and i really hope they have succeeded. haidi: yes, so at the end of the day, you have a situation where on the substance in terms of achieving a deal that is enforceable, verifiable, that is actually able to, you know, to step forward what the next steps will be, the parties are very far apart. do you think having this kind of level of global normalization, of having the north korean on a global stage, is that a good thing? alexander: in the end, that is a good thing. we would rather not go back to where we were at the end of 2017 with all this rhetoric about war and little rocket man and "my button is bigger than your button" and all of that. at least the tensions are using between the united states and

north korea, and the conditions for a deal have improved, but the north koreans are very wily operators. everyone assumes if they can have their cake and eat it, too, keep some of their nuclear weapons and get a normal relationship with the united states, that's what they would like to do. this process is going to take a long time. we will not the definitive answers from this meeting as to whether he is ready to denuclearize, but if there is no concrete progress, it is going to raise a lot of doubts about the wisdom of this high-level engagement. go ahead. haidi: i was going to say, we know that president trump will be looking for a diplomatic win. he would not want to turn this into a letdown. he needs the domestic, i guess, win, even just in terms of optics. the north koreans are in no hurry to give any sort of

conciliatory approach in these talks. so what is the best case and are now that we could potentially come out with in terms of, again, another round of symbolic overtures from one side to the other? .lexander: i agree he has reduced his leverage. president trump has reduced his leverage by continuing to say he is in no rush to see denuclearization actually happen, which has confounded all the experts. why is he saying that if the whole goal of this exercise is to remove the nuclear threat? know, again, he's focusing on building up the personal rapport. hopefully, this time, it will somethinginto concrete. people talk about some roadmap that would define the stages of denuclearization and define the in-state. where is this -- end-state? headed in some

reasonable deadline for pulling that off? in return for that, if we are able to get that, i think we could do some lifting of suspends or at least them so that you could put them back in if things go backwards again. there's a lot of talk about a declaration on the end of the korean war, which would he largely symbolic. it would either the same thing as a peace treaty, which really can't come until the end of the process, but that, too, would improve the climate and give some more momentum to denuclearization. better if thebe north agreed to some concrete first steps or a down payment on denuclearization such as shutting down the entire complex where they produce the plutonium and enriched uranium for their weapons. stop the production entirely. they have other facilities, some known, some secret.

map, and an end of war declaration, might add up to a reasonably positive result for this summit. >> sure. but the issue there is the sequencing of events, isn't it? the end of the war declaration should be at the end after you actually get some agreement on the process. are thepens, and what risks involved if you get a flash announcement on the declaration of peace and then you get more pressure on lifting the sanctions against north korea without any progress on denuclearization? alexander: shery, it depends how this declaration actually is worded. what everyone on our side and south korea has been talking about is a pure political statement that after all these years, we now declare the war over. it would not be a peace treaty. it would not have any legal

effect. it would not affect u.s. troops in south korea. it would not dissolve the united nations operation that has been there since 1953. north koreans could turn around and say it is all those things, and we are not going to do another thing towards denuclearization until the u.s. pulls out 10,000 troops or stops all exercises with the south korean military, so you have got to be very careful about this end of war declaration, but it is meant to be something as kind of an atmosphere-improver, but not the same thing as a peace treaty, which would have a legally binding effect. shery: that seems to be the problem right now, because we are seeing at least the atmosphere improving, more confidence-building measures .ith two leaders meeting this is the second one already. at the same time, we are not getting anything concrete when it comes to the denuclearization process. what would be the first step

towards actually achieving what both leaders claim to be complete denuclearization? what should be the least thing that we have to see in this meeting? alexander: i think the minimum would be some substantial systemsof facilities or that are going to be dismantled. the north has offered token gestures in the past them at trying to sell the same horse twice with their nuclear test site, which actually was so overused that it really was no longer usable. but then, they offered the gesture that they would dismantle it. nuclear -- beyond the nuclear production facility, that. i would like to see them dismantle some of their missiles or at least take them off their launchers, which would reduce the threat to north korea still maintains. i think there's some things that could be done within the realm of possibility, but it would

only be the beginning of a process. that would be a lot better than what we got in singapore, which was absolutely nothing, ambiguous words on a piece of paper. the president declared victory, but everyone else besides him realizes singapore was not the great success that he claimed it was. haidi: ambassador, finally, what are the implications for the other regional players involved here? are we looking at beijing as potentially undermining the sanctions with regard to north korea and the peace declaration. where would that leave south korea? we know that president trump is looking for excuses in terms of the stationing of some 28,000 troops in the south. the south indeed, koreans are hopeful and nervous at the same time. they would like to see some first steps towards real denuclearization because it would remove the blockage on their priority, which is the improvement of north-south relations and starting up some economic projects in the

north which are prohibited by u.n. sanctions. at the same time, they may be worried that the president may enter into some kind of peace declaration with kim jong-un, which does have unintended consequences for the u.s. military presence in the south hehe may unilaterally, as did after singapore, announced the end of all exercises, which undermines the readiness of our andes andeaken -- weakens deterrence against north korean aggression. they are probably biting their fingers in terms of which way is trump going to go. i think the japanese are in the same boat. they are worried about some limited deal which neglects , doesn't dosts anything about the abducted japanese citizens who have still not all been accounted for, and i hear also concerns from both south koreans and the japanese

that kim jong-un might give up the missiles that threaten the united states but refused to give up the missiles that are korean -- atouth south korea and japan. that could drive a wedge between washington and its allies. there are many bad scenarios that could unfold over the next 1.5 days, and a lot of the expense is because when president trump kim jong-un go into the room one-on-one, nobody has any idea what's going to happen. haidi: all right, ambassador. such a pleasure to have you. the former u.s. ambassador for south korea, alexander vershbow. a great deal of uncertainty in terms of the possible outcomes. the trump-kim summit headlines. bloomberg subscribers go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. this is bloomberg. ♪

shery: this is "daybreak asia."

i am shery ahn and hanoi. hanoi.i am -- in how haidi: i am haidi stroud-watts. the deal has had 160 six days. that is up from 116 days at the start of the year and almost double the supply of cars nationwide. fearlut is a worry for chrysler, which has been expanding investment into trucks and suv's and killing of many of its sedans. tesla stocks hit the brakes as elon musk wrapped up his criticism of the securities and exchange commission. he tweeted that "something is broken with the sec oversight" after they held him in contempt. information that could be material to investors. a chinese tesla rival sword in new york, extending gains.

the stock gained more than 32% across three sessions since 60 minutes referred to the utility as "the tesla killer." their shares have risen 60%. let's take a look at the play. geopolitics front and center as we enter day one of this two-day summit and hanoi. we are seeing some -- in hanoi. we are seeing some gains. south korean shares in positive territory. we are watching the won there as well. aussie up. a heavy day for earnings in this part of the world. new zealand seeing some downside after the country posted its widest trade deficit since 2006. hong kong fo fourth-quarter gdp --

the fed in no rush to change policy. he says there are crosscurrents and conflicting signals. this is bloomberg. ♪ so with xfinity mobile

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jessica: this is "daybreak asia ." i am jessica summers with the first for headlines. president trump is in hanoi. lowwhite house has said a bar for the talks because they have yet to agree on the meaning set outlearization and the ultimate purpose of the negotiation. it is still not known where the formal summit will take place. of india hasank lifted curves on three lenders after the government injected funds to boost their capital base. banks have been removed from the prompt corrective action plan in

which banks are restricted from lending. the r.b.i. says it will continue to keep the three banks under close scrutiny. lawmakers in brazil have approved president bolsonaro's choice to leave the central bank. senators voted overwhelmingly of roberto following unanimous support of the affairs committee. he is in favor of fiscal discipline, tight control of inflation, and autonomy for the central bank. "--manager has been oil rose after a report showed a surprise decline in u.s. crude supply. the american petroleum institute was said to -- a drawdown would be the first since early january as official data confirmed it later. president trump tweeted that prices are too high and called on opec to take it easy. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700

journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thank you. let's take a look at how asian markets are shaping up so far this morning. sophie is in hong kong. sophie: some green shoots coming through. asian stocks edging higher, led by gains in tokyo. the nzx 50 is extending losses. the kiwi dollar gaining ground not too far off from a three-week high while the aussie dollar is looking to doubt -- gains. the yen is holding steady after retreating from the 1.11 handle. investor appetite is being put to the test as many managers say they are finding it the recovery,rack but goldman sachs may offer some room from him is him, seeing

signs that the global economy has already bottomed out. checking in on some stock movers, hyundai motor climbing amid some news lines. the hedge fund elliott management has asked the carmaker to raise it dividend payout. we have komatsu losing ground in tokyo. the stock was cut to neutral. some pressure may be coming through on ubs turning bearish on caterpillars growth outlook. is rising the most since december despite posting a drop in first-half profits due to results from its latin american unit. there is continued growth for its anz business. it wants to pay an interim dividend. sherry. -- shery. haidi: thank you so much -- shery: thank you so much for that.

jay powell delivered a ,elatively upbeat view repeating over and over that the fed can be patient when it comes to hiking rates. kathleen hays is here with a recap. the fed chair has a dovish grip and he is sticking to it. he certainly is. if you listen to his testimony today, his answers to questions from the senate ranking committee, he said this is a solid economy, a labor market that is stronger, recovery that keeps going, yet it has muted inflation pressures. marketsnoted financial getting more volatile. he mentioned that the international risk of a global slowdown and some big question marks hanging over that global economy. he made it pretty clear he is in no hurry to raise rates at this point. >> the committee has decided in theth our policy rate

range of mutual with muted inflation pressures and the downside risks we talked about, this is a good time to be patient and watch and wait and see how this situation evolves. kathleen: he said he sees more labor markets slack, more room for the economy to grow. check into the bloomberg library for average earnings. inflatione core deflator, that is a very important gauge when the fed is watching to see what inflation is doing. average hourly earnings, running 2015 to 2017, 2 .5% year-over-year. they are at a high level over 3% year-over-year. deflator.e core tten to the fed target. that has to be what he is looking at now. he said he is watching it asian expectations closely.

you see the financial market starting to think maybe we are going to get some more inflation in 2019, but a recent survey closely watched so that consumers expectations of inflation have gotten to an all-time low. haidi: kathleen, it was a bit of a missed opportunity to explain the core question of what we have all been wondering. what happened between december and when they shifted gears? i wonder: -- kathleen: if we are ever going to know. fed officials -- what really made you move? they give us a whole list of factors. the chinese economy slowing, various kinds of concerns, and the volatile stock market, but nobody asked him on the senate banking committee that is the question. earlier onconomist daybreak australia, said he is concerned about that. the fed signaled it is

definitely data dependent. let's listen to what he had to say. the equity market is almost back to record highs. so now what happens? if the fed response, they put the rate hikes back on the table. andfed needs to be a leader react to markets when they think the market reacts to sit milling something really fundamental. and i did not think it was that. kathleen: interesting, isn't it? if you look at financial conditions, another very simple chart. financial conditions have gotten a lot tighter as the stock market fell going into the end of 2018, but look what's happened in the beginning of 2019. financial conditions have gotten looser again. this is financial conditions in the u.s.. even globally, you can see they are getting looser again.

tomorrow, jay powell is testifying to the house financial services committee. we have had a lot of political by senatorsade today. we will expect the same thing in the house tomorrow. maybe someone will ask one of those all important questions that have not been asked yet and we will find out what else is on jay powell's mind, particularly when it comes to stocks. >> kathleen hays. turning to across the pond, mayme said she -- theresa says she hopes to leave the e.u. on time. she promised to delay brexit if they reject her deal. ramy inocencio has her deal. ramy: that is exactly right. basically, it is looking at what here andfor the u.k. whether actually the ministers of parliament, whether parliament will actually pass

something they voted down by historical levels. 270 votes in terms of all loss for the same exact deal that miss may is going to table again. there are no concessions by the e.u. .t is either that or no brexit which is better. that is the question here. the absolute focus should be on getting that deal before the march 29 deadline, but then she said if that does not work out, there is a plan c, and she talked about the timeline. take a listen. if the house rejects the deal and then rejects leaving on the 29th of march without a future framework, the government will on the 14th of march bring forward a motion on whether parliament want to seek a short, limited extension to article 50. ramy: let me walk you through that in terms of a chart. this can make it just a little bit clearer in terms of what she

said. then"s the "if, if, scenario. that could happen. the vote could happen by march 12. if that does not happen, ministers of parliament can reject that and with no deal, that could happen by march 13. 14, mrs. may will ask for a vote to extend that brexit deadline. the idea is it could be for a few months until the end of june. we know that you want to push -- e.u. wants to push that to 21 months out. that could be a bargaining tactic. but hop into the bloomberg terminal because i want to show you the sentiment, the bloomberg brexit barometer sentiment in terms of where we stand. this is at its highest ever since november 30 of last year, is we are seeing that there the idea that brexit could still

happen. maybe not a new deal brexit, but some kind of compromise at some point possibly over the next few months. >> we saw the pound surging off today's developments. investors seeing a bit despite for the time being. -- respite for the time being. ramy: sterling rose the most since november into its highest since july. not only that. if we take a look at sterling issus the euro, that actually almost its highest in the past two years as well, so we are seeing some really terrific superlatives with this kind of relief rally or at least a sigh of relief from investors. two of the great indicators in terms of what people are thinking. been --ish pound has has seen a great start year to date. this is the function on your bloomberg terminal. in the g10, it is the best

performer, up by 3.9% after the canadian dollar and the new zealand dollar. the skeptics are on the rise because they are wondering that with these gains, these recent gains just today, that could the sterling actually see a temporary top until there is more clearance from theresa may and whether brexit will or will not happen. with themy inocencio latest on brexit. coming up next, as chinese stocks continued a strong start to the year, the market still has room to run. we are hearing from ubs wealth management, next. this is bloomberg. ♪

>> how great in your assessment is the threat for china on cyber? >> we have to be aware that we are relying on their technology for critical infrastructure. a sense of caution filtered into chinese market sentiment amid signs the authorities may be nervous about a rally that they helped debate. the index dropped more than 1% of the close following its biggest one-day gain since 2015.

the securities regulator warned of an increase in unregulated margin debt. can chinese markets maintain the bull market momentum? ubs is maintaining its positive stance. joining us is the bank's head of securities -- equities. great to see you as always. bull, have been a china it's been a difficult few years. what is the basis of this rally? a lot of it came out of these kind of remarks from president xi jinping suggesting that they are pulling back on deleveraging and prioritizing growth. that really sparked the rally, didn't it? >> certainly i think two things. helped alle has also the emerging markets, but also since october in fact, we in the to see the pickup

signs of the stimulus not just being announced but having an effect on infrastructure. we are seeing it in many other pockets, be it credit growth or elsewhere, so certainly, it has helped. the rebound today happen faster than we would have expected. we look at it from a portfolio point of view. we are taking some profits in our positions, but in this case was more on the high-yield site and the bond side which was dominated by china. it is not a completely switched off or on but more gradually taking some profit in her mission that we had a strong rally and we think it can continue. especially on the equity side. things do not look stretched by any measure. shery: i want to drop this chart looking at the lack of correlation from the rebound. it has stayed within its

borders. we have seen correlations across other markets during that. the chinese equity markets as being a very domestic story because at the same time, you are still getting some pretty irrational behavior like the day we saw every stock with the name securities in its name limit up 10%. correlations ultimately in the long term will increase beyond levels we have seen in recent years, but we are simply not there. even though they have opened a couple of gauges and through when push comes to shove, it is not always fully correlated. probably up until the point we have had significant conclusions in the indices, it will probably only be a gradual process in any case. shery: you still prefer large caps over small caps.

i wonder how you feel about the consumer darling names that came under pressure at the end of last year. chineseebt of the consumer, has that been largely overdone and over negative in terms of sentiment? we do not particularly focus on the large consumer darling at this stage -- darlings at this stage. it is partially on the large caps, partially cyclical, but it's banks. that leads me to another topic that we are favoring right now, yields. the banks do offer those yields. we have some other recommendations, especially on site across a pack. at this point, and especially when it seems that from the u.s. side and the mainland of course in china, the rate pressure is, if anything, easing or subsiding. it should help those type of stocks. not really so much the consumer

names and focus at this point. >> always appreciate your time with us. you can catch bloomberg interview with the hong kong exchange chief executive later on at 5:30 p.m. in hong kong just after half past 9:00 if you are watching in london. this is bloomberg. ♪ this is bloomberg. ♪

>> you are watching daybreak asia. bloomberg's kevin cirilli joins me now. hanoi to new york. ray to have you. you are both at the singapore summit. you are here now and hanoi. aside from the weather being rainy and wet, it seems to be a pretty different environment. kevin: it is. when you look at just how kim jong-un arrived here, shows up at that hotel right behind that lake behind us, and the white he says is corps -- do not like the arrangements of this. he goes to the vietnamese embassy. is white house press pool you need to get new room. the u.s. delegation sided with kim jong-un because he did not want to be in a hotel where

these folks were. i mean, it is so different than what we saw in singapore, which is so much more tightly controlled. shery: we really have only seen the announcement of the stomach o -- summit a few weeks ago. they did not have much time to make the preparations. kou have been trying to stal kim jong-un overnight. how did that go? >> stalking him is always fun. it is always very high security and you can tell by the number of cars and the number of north korean guards and propaganda reporter showing up that kim jong-un is indeed going to step out of the hotel or go for a stroll. there shery: was a picture overnight of kim jong-un, and he shery: there was a picture overnight of kim jong-un, and he did not look that healthy. he looked tired. then: they provided

transportation with the airplane back from north korea to singapore. itself, muchsents more so, i feel, from the sources i talked to, you have talked to sources as well. the chinese presence is here in hanoi. invitationard of the from my own sources that he was invited to talk trade after this north korea negotiation. we have seen the chinese presence so important for the region. it's not only just about north korea being a close ally, but it is a buffer for china. there can be no korea unification with china in the way. >> choosing keen -- xi jinping's approval is something he has always wanted. he went through china to have the whole world watching kim jong-un.

who kept track of donald trump's airplane? everybody's eyes were on kim he took atrain, when car to the melia hotel, people were outside waiting north .orean flags, clapping kim jong-un wanted this. he wanted to be the center of attention. kevin: we talk about the politics, and we have to, right? president trump is facing the mueller investigation, michael cohen will be testifying. the democrat-controlled house, but that is politics. dire situation in north korea, if you can even call it an economy, and you look at how they are grappling. the u.s. is saying, essentially, look at vietnam. look at the foreign investments

that have flooded into the country. this could be you, kim jong-un, if you wanted. shery: the north korean economy, 40 times smaller than south korea. they are excited about the potential of getting back into north korea in those joined into korean projects. -- inter-korean projects. >> they need the summit as a buffer to get the u.s. administrations approval because the united states is one of the strongest countries with some of the heaviest sanctions on north korea, and without the u.s. giving the green light, south korea cannot go on with these economic cooperation projects with north korea. shery: great to have you with us. for our audience, join us. we will be live on half an hour time on tictoc. there is more with sophie in hong kong. sophie: we are going to be watching if the shanghai composite can break 3000 points.

the key level it has treated the months. some investors are saying it could be the real start of the bull market. draw attentiond, to morgan stanley's outlook for greater chinese markets as recent trading has lifted both onshore and offshore equities to base case targets. stimulus proving stronger than expected. morgan stanley has boosted targets for 2019 on four indices by at least 7% from previous estimates. for hong kong, we will get fourth-quarter gdp data. we have the financial secretary due to present the budget with a longer list of problems to address haidi:. that is just about -- address. haidi: that is just about "daybreak asia it for "daybreak asia." -- that is just about it for "daybreak asia." we are on the ground in hanoi and vietnam as the leaders have forady arrived, setting up their 20 minute one-on-one

session this evening, followed by a dinner with the two leaders and their aides as well. looking ahead for the next two days of crucial talks. will denuclearization be one step closer at the end of these talks in hanoi? let's take a look at how the markets are doing. upside for the nikkei 225 as well as in seoul, watching the reaction in the one bank and andh korean bought -- won south korean bonds. rio tinto is the one to watch here in sydney today. bloomberg markets: the china open is almost upon us. this is bloomberg. ♪

>> is 9:00 a.m. in beijing, shanghai, and singapore. welcome the bloomberg markets china open. i'm tom mackenzie. >> we're coming you down to the opening of trade in hong kong and mainland markets. david: this hour, we're counting down to the summit. as seenaits a meeting as short in goals and definition. >> jpmorgan is selling stocks on the dovish fed. tom: china's electric car hopes soar again. investors like the opening