haidi: i'm haidi stroud-watts in sydney where australian markets have opened for trade. ramy: good evening in new york. i'm ramy inocencio. i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." haidi: our top stories is monday, talking trade. sources in washington say the u.s. and china are in the final stages of a trade deal that will the tariffs lifted. president trump lashing out saying the dollar is too strong and the fed chief is someone who

likes raising rates. seeking stability. china's big policy we kicks off with a promise of prosperity but always with a big picture in mind. ramy: let's do a quick reminder of how u.s. stocks ended the session on friday. this is where we stood. the s&p 500 up by 7/10 of 1%. it across the proverbial psychological 2800 mark. this was the first time it did that since november. its highest jump into weeks. the nasdaq, the highest jump in a week up a tenths of 1%. half of the most recent headlines we have been talking about in terms of a possible breakthrough in the u.s.-china trade deal. s&p futures getting a bump, up by .25%. not only that, we have that to look forward to, we have a busy week in terms of what is happening with the nationals peace conference and earnings on tap. a couple of decisions from central banks including the rba and the ecb. how does it turn out for you, sophie? sophie: head of the decision on

tuesday, we are seeing aussie stocks gained ground at the start of the monday session. up 1/10 of 1% with after pay and bingo industries among the best performers at the start of cash trade. kiwi stocks rising for a third straight day. futures in tokyo looking at gains for the nikkei 225 we have -- we could see the cost become online on the back foot after the three-day weekend for south korean market. when it comes to the trade front, optimism boosted the aussie dollar, the kiwi, as well as the cnh. this on prospects of tariffs being lifted to we have the cnh touching 69.86 against the dollar. the aussie gained as much as .6% on the news rising to a january 30 high. trading around 71 u.s. cents after posting a second week of lost on friday. a turnaround for the aussie dollar. hold: let's see if it can

ahead of the rba decision. sophie kamaruddin in hong kong. let's get more on the trade agreement taking place. tom mackenzie joins us from the forbidden city in beijing. what do we know so far about this deal that has been cobbled together? it is really the lines on the tariffs. for the chinese, during these negotiations with a u.s. counterparts, the priority had been the removal of tariffs on to budget billion dollars worth of chinese goods. their priority is getting the 10% on the $200 billion taken off. the impact on the exports in the drag on the economy and souring of the business sentiment at what we are hearing is the u.s. will be agreeing to that. the question is how they agree to that. the chinese want the tariffs lifted immediately. the u.s. is pushing back saying we want to have it phased in. as part of the deal process, as china goes ahead and implements its agreements. the tariffs will be phased out.

that is the u.s. side. the discussions continue. the fact that the u.s. is considering removing the tariffs in large part is seeming to be the element that is juicing the markets today cap what we are hearing is that the chinese are considering lowering tariffs on other products whether it is the chemical sector are chemicals imports from the u.s. or auto tariffs stand at 15%. some positives there for various sectors if this deal does come to the final course and is signed off by the two presidents. beare hearing there could this meeting in mar-a-lago in florida between president xi and president trump at some point in march 20 and of this much -- this month. this, how much of a win would this be for china if everything you outlined does come to pass? really, it brings them back to the status quo. it is a win. it would be significant for

china given the economic pressure they are under and given that concerns about the export sector. which we have seen. january was an outlier because of the seasonal effects. you saw the impact on exports as the front loading started to come off. there is that concern. going into this big national people's congress, this annual parliamentary event in beijing is a positive for president xi and his team. a had already been given window of opportunity when president trump said the retaliatory additional tariffs the 10% to 25% on the $200 billion would not be imposed. that was already seen as giving xi a window of opportunity during these discussions that will take place over the next 10 days. the fact that the u.s. is considering removing tariffs is a positive for the chinese. they will have to deliver on anything from intellectual transfer, to by about $30 billion of u.s. investments every year. haidi: other than the political

pageantry underneath the pomp and ceremony, what are the hard policy decisions we are looking out for? of course, many of the big decisions have been baked in. they are being put to the congress committee members to sign off on. the big areas we are looking for is the target around gdp. we are expecting that to soften. it was set last year at about 6.5 percent. reporting suggests leading up to this event that it could be softened to between 6% and 6.5%. we look at the final answer at report that premier li keqiang will deliver to the congress tomorrow. targets for the deficit. importantly, there is a foreign investment law that will be reviewed at the mpc, that may put in place stronger protections around intellectual techrty and it made ban

transfer. this is a lobbying fast tracked as a response to pressure from the u.s. that could go some way. alleviating that and other trading partners of china. that they are serious about banning the system of process of force tech transfer. 3000 delegates gathering in beijing. then goesff tuesday on for about 10 days. we will be hearing from the pboc, finance ministry, a lot to look out for. ramy: very busy next few weeks ahead. tom mackenzie in beijing. thank you. donald trumprs, lashed out at the federal reserve over the weekend blaming a toost rate hikes for strong dollar. policy editor kathleen hays is here with what he said and how the fed my three act. is it more of the -- of the president's usual fed bashing? kathleen: what a lot of people are talking about on the sunday news show, when our team is

writing about his donald trump returning from his trip to hanoi last week and speaks to the conservative political action conference, one of the leading conservative political groups in the country. they are calling it firing up the base. he complained about robert mueller's investigation into possible collusion with russia, using expletives to describe that. course, bringing out his familiar strain coming you have someone in the white house come he says, who enjoys making tighter policy. here is how he said it in his own words. pres. trump: we have a gentleman that likes raising interest rates in the fed. gentleman that loves quantitative tightening in the fed. that likes atleman very strong dollar in the fed. kathleen: well, i wondered who in the audience knows what quantitative tightening is?

let's look at a chart. it was getting a move in the dollar. you can see early in trading in asia, a little weaker as president trump says he does not want a dollars so strong that it is prohibited to u.s. business. he's has said that in the past. he said on the campaign trail, before he was running for the presidency, but it is interesting because jay powell have said that we need to go on pause. we want to be patient. i wanted to pull up a chart because it sounds like president trump is saying it is the fed's fault that the dollar, and here it is, has gotten stronger. it was weakening all through 2017. what was happening then? fed was raising rates what else was happening in 2017? president trump's approval rating, this white line, going down. isn't that interesting? low. still relatively it has gone up a bit more. maybe the dollar will follow.

at 46%, the highest it has been in a while. the president's approval rating. it is something that i do not expect fed officials to respond to. maybe they will talk more about a strong dollar. a strong dollar does tighten financial conditions after all. also major central bank action. perhaps in action instead of what are we expecting? kathleen: we want to see what is happening in the u.s. , the consumer spending numbers came in, down 0.5%. as we wait for six fed officials to speak this week including jay powell, we expect to hear more what they say about the consumer in the economy and maybe the dollar. let's look at what is on my list. i start with europe. the ecb does not meet until thursday but it is important around the world, investors, traders, will they taking more dovish tilt? china, we were hearing about the national people's conference. traders, listening for the pboc

signals. the change in db -- in gdp outlook. if they we cannot, will they do more stimulus? in malaysia, their bank will meet on hold. the u.s. reaches the beige book at midweek. u.s. regional look at the economy. two weeks before they meet march 19 and 20th. on friday, let's look to the u.s. number. it will be the u.s. payrolls that will be closely watched. if jobs stay strong, that has to encourage the fed that they are on the right track toward an eventual rate hike, but still probably not enough to get them off the dime yet. global economic and policy editor kathleen hays there. let's get you to first word news. su: we start with u.k. prime minister theresa may who has been given the conditions that hardline brexiteers are demanding as the price of supporting her deal. members oftimes says the pro-brexit european research

group might back her if she agrees to a legally binding clause that overrides the withdrawal agreement. a stronger promise that the backstop will be temporary and a clear route out of the backstop if talks fail. the lower house in japan has approved a record budget for the coming fiscal year that starts april 1. one makers voted in favor of the abe government's $907 billion package. ensuring a can be enacted before the new year begins. under the constitution, the budget will automatically take effect 30 days after being passed i the lower house. the initial budget for last year was $873 billion. pakistan has reopened its airspace. this after releasing a captured indian air force pilot amid signs that tensions could be using. international flights were

disrupted when pakistan closed wednesday withstsigns that tend carriers forced to divert or cancel services altogether. there are still reports of clashes with both sides accusing the other of killing military personnel over the weekend. taken a giant leap forward with successful docking of its first astronaut ready capsule. this is the international space station. the craft was making its maiden flight in -- and the only passenger on board was a life-size robot named ripley after the "alien" movie character. in 2014, nasa gave spacex and boeing contracts worth more than $6 million to fly u.s. cruise to the iss. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. haidi: thank you. investor bill gross talks about the battle between

central banks, rates, and deflation as the bond king retires. to ubs about talk what they are watching out for as china kicks off its policy summit. this is bloomberg. ♪ t. this is bloomberg. ♪

>> i think to see concrete measures that will likely see sustainable growth. >> the market will likely see more supportive measures for sure. for its monetary policy and fiscal policy. the data points have been pour over the last three months, i think anything that sends a signal that they're backtracking will take a falling. >> the question is, we have not seen much difference regarding this.

it probably would be welcomed by the market. >> i think the chinese -- on the is trying one hand, i think the key is stability. with high quality, rather than uncontrolled growth. some of our guests weighing in on what they want to see from china's policy meetings in beijing. joining us to chime in on that from hong kong is wang tao. good to see you. transfers, sustainable growth, monetary policy, and details is what we heard. what is on your mpc wishlist, what is at the top? wang: as usual, i think the mpc will set the policy agenda for this year. we are going to try to look out

for the growth target for this year, what is the budget deficit, and what type of tech -- tax cut and how large that will be, what kind of infrastructure project and how much money the government is willing to spend? maybe also in line with the negotiations with the u.s. on trade, we could see more reform and opening measures as well. those are the things we will be looking out for. growth,ina's gdp probably first and foremost. hop into the bloomberg terminal. i want to show you and our viewers this chart in the gtv library. 6.4% is where we stand right now in terms of last year. looking ahead, 6.3 percent is what folks are thinking for this year for china's growth. we are now thinking about a flexible range that goes as low as 6%. what cause for concern might this be for you? been the growth has slowing last year. the fourth quarter, 6.4 percent

last year. the average was six .6%. our forecast is 6.1%. markets, very narrow between that and 6.4% or so. growth is slowing. that is part of the long-term trend of a potential growth slowing in china. this year, we have trade war and related uncertainties as well. i think it is natural to see chinese growth slower. the government probably should be -- it is good for them to set a realistic target between 6% and 6.5% were around 6%. that is enough to have an generate enough employment growth and stability. and also, the government should take care not to stimulate the economy too much to give people concerns about rising debt levels, and structural imbalance again. haidi: that is the issue. when you set a gdp target and in china which is unusual, given it

is more of a gauge of import rather than out port, is it really time to ditch the gdp because it results in so many inefficiencies in the economy? yeah, i think that is a good point. many people have argued that may be china should not continue to be so fixated with a target. i think many people in the market and also the government see that the target is an anchor of expectation of all of the things around it. i think they are still wanting to have some of the target. but we expect maybe it will be deemphasized, and also it will be lowered a little bit. hence the 6.5% or around 6%. i think this year, what many people are looking for is specific policies. cut,mentioned, tax infrastructure, monetary easing. but more importantly, what are some of the market opening

measures? what are some of the reforms that the government might be rolling out? haidi: are we expected to hear in the work report this continuation of a message that equity markets have taken, which is beijing has shifted from de-risking to maybe not -- to re-leveraging are prioritizing stability and growth over deleveraging? wang: i think so. that has already started with the meeting last december and the economic work conference. we heard from president xi's speech a couple weekends ago when he emphasized the importance of the financial sector. there is not a mention of deleveraging anymore. in fact, we are looking for growth to rebound this year. and we're looking for gdp ratio to rise by about six percentage points of gdp. to some extent, that is a and that is,

necessary to support growth. we are going to see more accommodative monetary policy and we will see a bigger overall fiscal deficit. ramy: just now you are telling haidi that there would be more stimulus, i think we are all expecting that. how much is too much? the tolerance for fiscal deficit what would be a number you think would be too much? the government always limits of the budget deficit to 3% or below. i think this year we will not see that exceeded. however, outside of that budget, we have quasi-fiscal spending can we have the local government financing vehicles. we have various other things. it is the local government bonds. we think the government will use these measures. what we call augmented fiscal deficit, it will expand by about

to one point 8%. something similar to the 2016 stimulus level. ramy: i want to get your take on the lines that have been coming to one point 8%. something similar to the 2016 stimulus level. out about this possible breakthrough in u.s.-china trade. we know it is tough to change the direction of a large shift that is china and the united states. if this came to pass, when do you think we might see some positivity from any kind of deal? timing i suppose is still about when president xi and trump will meet. and if they sign a deal, then we will get more details. moment, we can already expect something because we know what the u.s. is looking for. china buying more u.s. stocks is one thing, but also china opening the domestic market more so that will address some of the technology transfer issues. and china of course is

strengthening the ip protections, cutting subsidies to some of the domestic both sides and agreeing on a monetary mechanism and agreeing on a relative stable exchange rate. i think those are some of the key issues we should be looking out for. the market is already taking progress positively. id the business of course, think will also welcome, if there is a rolling off of existing tariffs. thethat said, i think uncertainty related to the ongoing negotiations and with the trade war and with potential restrictions on technology is still going to weigh down on spending. the u.s.-china trade relations is difficult for that to go back to the good old days. we think the upside for the economy is not very much. wang tao, joining us in

hong kong, great to have you. thank you so much for that. plenty more here to come on "daybreak: asia." this is bloomberg. ♪ ♪

ramy: welcome back. let's do a check of latest business flash headlines. elon musk is keeping his investors glued to his twitter feed again with the details of a new launch event this month. he is as the model y will be an suv and built using many of the components from the company's first has to manage -- mass manufactured car. it will be 10% bigger than the model three and cost 10% more. tax bill for miscalculating income workers for early retirement. and for its accounting of marketing and catering expenses. say the issuesrs go back to 2009 and include the cost of a 60th birthday anniversary.

they say back taxes for early retirement workers at pound -- amount to 10 million euros, 11 million dollars. coming up next, investigations into president trump ramp-up with documents requested from more than 60 people to d.c. next. this is bloomberg. ♪ rg. ♪ this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today.

su: this is "daybreak: asia." i'm su keenan with the first word headlines. reports from washington say most, if not, all u.s. tariffs will be lifted approaching a trade deal. beijing has made clear that removing the duties on $200 billion of chinese goods on day one would be necessary to finalizing any deal. bloomberg reported the white house once a summit between president trump and xi as soon as mid-march. china's big policy week began with senior leaders to ensure stability and keep what they say is the big picture in mind.

this as policymakers continue with reform. the chinese people's political conference said the major tax for the year includes building an "moderately prosperous society." and upholding president xi's core position on the communist party's central committee. president trump repeated his views that the dollar is too strong and hit out at fed chairman jay powell as someone who "likes raising rates." he said the u.s. is doing well, despite the actions of powell and his colleagues, and he wants a currency good for business. the u.s. dollar was quoted lower against the yen in early pacific trading monday after the president's comments. ei seal facing extradition has launched a countersuit. she filed claims in the supreme court of british columbia against the canadian government. the suit alleges false

imprisonment and the breach of her constitutional rights. the u.s. accuses her of lying to banks to make the process transactions for huawei with potentially violated sanctions on iran. global news 24 hours a day, on air and at tictoc, powered by over 2700 journalists and analysts in over 120 countries. i'm su keenan, this is bloomberg. haidi: let's get a check of our the markets with sophie kamaruddin. aussie stocks are climbing for a fourth straight day. led higher by tech and health care sectors, along with consumer staples and discretionary. we see the aussie dollar continuing to advance. entering the final stage. according to one trader, the aussie getting ground on demand as it competes with leverage funds who jumped in buying stocks on that report. let's check in on early stock movers in sydney. i want to highlight new form,

launching nearly 10%. rising the most in 16 months. it may be a potential takeover target for wesfarmers. it would allow the conglomerate to diversify earnings in a low risk way. that is being fueled by nufarm's shareprice decline that brought it to a four-year low friday. stopped gaining 10.2%. we also had an upgrade to buy at deutsche bank. six aussie dollars. bellamy's is rising. they retained their by rating, but cut the price. investors should play the long game, giving their prospects to boost chinese sales once it receives regulatory approval. i want to highlight after pay, extending gains and continuing to recover from the slump triggered by its results last month. a series of optimistic calls seemed to drive the support, including from bill porter and goldman sachs.

ramy: thank you very much. shifting to politics. things are heating up in d.c.ngton, the democratic-controlled house judiciary committee plans to issue document requests to more than 60 people this monday. probes are getting up and running regarding obstruction of justice, and abuse of power linked to president donald trump. let's get the details from ross krasny. democrats are getting busy in congress. really are. file this under elections of consequences. democrats in control of the house. they have subpoena power. they have said since the midterm elections that they would do this. the rubber is hitting the road. i had a very interesting interview with jerrold nadler, a new york democrat running the committee. should there be impeachment proceedings against president trump, he would run those. are seeking documents from 60

individuals and entities. anyone from individuals in the white house to the trump organization, department of justice. this will be very interesting. another democratic lawmaker was on tv over the weekend talking about getting together with deutsche bank and getting cooperation on a probe into possible money-laundering. stuff.ome really serious i think it's one of the reasons you saw him yesterday rail against the robert mueller investigation, congressional investigations. couldesident's oldest son get the document request. it is going to be an interesting week on capitol hill. presidenten that the walked away from the talks in was it at week, surprise that the u.s. and south

korea have ended key military exercises? ros: not too much of a surprise. sources aheadfrom of the announcement last night from the south korean and u.s. military. interesting developments after the summit without an agreement. pyongyang, has always hated these drills. they saw them as u.s. rattling. -- it seems like president trump didn't like them, he thought they were a waste of money and didn't understand what the intent was. are the onesve being scrapped for the time being. those drills were practiced for deploy forces needed to to south korea in case something disastrous happened between north and south korea. i would say people are seeing this as a win for kim.

it's unclear how it benefits the u.s. beyond the fact that washington is keeping its options open on north korea. it's certainly trying to show its committed. ramy: on the u.s.'s own southern border, there seems to be some meanderings with senator rand paul. his decision to post trumps emergency while find -- post trump's emergency wall funding. it may mean donald trump has to use his veto. it may mean republicans opposing him. ros: it's very interesting. rand paul is a constitutional conservative, a libertarian conservative. he's not really opposed to border funds on policy grounds. he's looking at the constitution. congress appropriate funds in the u.s. this wall emergency order has

the executive branch, president trump, saying we will take the money congress appropriated and use it for something else. he's the fourth republican we know of. that's enough to put the anti-emergency order over-the-top. when president trump vetoes this measure. we think it is when, not if. the senate and the house would need 2 majorities to override -- two thirds majority to override the veto. they are not there. peopleves chances for like rand paul, susan collins, lisa murkowski, to put a vote on the record, stand up for the constitution. it's really the courts that will decide what happens with president trump's executive order. krasny, bloomberg editor in washington. was thes, bill gross

biggest name in fixed income. as he retires, the pimco costar group has surprises of his sleep. he has debt -- he talked about debt, global deflation, and why u.s. government borrowing could go much higher. buildup and interest, it becomes a burden and deflationary if interest rates rise. even if they don't. press deflationary. in theirple, even 60's, don't spend as much. they don't need another house or car, they just need more health care. that's about it. technology is very deflationary from the standpoint of computers. also, amazon. amazon is deflationary.

those are three substantial structural situations which are not changing. the globe is getting older. the technology will continue. that's deflation. the central banks are fighting it with their quantitative easing, low interest rates. "we cannot deflate, because it is too large. if we deflate, companies will go under and the great recession , astleok like opposed to the world's largest roller coaster." this battle between central low interest rates continues to exist.

the question becomes can central banks inflate? it is a tossup. policy. talk fiscal let me ask you about modern monetary theory. in terms ofk monetary and fiscal policy, they are co-joined. they are becoming more and more the same. it used to be that the fed and central banks were their own separate think and accommodated the treasury. as we have seen in japan, the doj buys everything the government issues. they are the same. europe, it has been 30% or 40%.

in the u.s., 20% or so. no longer. they are almost one in the same. if you look at it, if the monetary and fiscal policies are together, why can't the government have a $2 trillion deficit if the fed is going to buy it like they do in japan? it hasn't been inflationary. it is deflationary forces. trump, or the next president, whoever they are, could go to $2 trillion as long as the fed is willing to accommodate it. haidi: that was none other than

the cofounder of pimco, bill gross, speaking with erik schatzker. latest movext, the in currencies. a breakthrough in trade negotiations seems nearer than ever. one strategist joins us next. this is bloomberg. ♪

ramy: welcome back, i'm ramy inocencio in new york. haidi: i'm haidi stroud-watts in sydney. you're watching "daybreak: asia." optimism is growing that the trade war may finally be approaching an end as the u.s. and china are close to reaching a deal. we will see what it means going forward. a financial markets strategist at suncorp group joins us now. let me start on the news we have seen, the offshore yuan, aussie, the kiwi, the proxies seeing positive moves on the idea that we can get close to finally a

resolution on the trade front. take a look at this chart. looking at yuan volatility, highest levels this decade. even though we expect a currency pledge will be part of this eventually trade deal, it is not a one line bit. growthou look at the story in china, it is patchy. i do think positivity of the trade deal can give the yuan more strength. one of those that falls on uncertainty around the outlook china and globally. it prices more capital inflow back into china. the equity market is doing very well. even over the next couple of days, we have the session meetings in china. the focus initially will be on the gross targets, but also the fiscal side, whether or not they will pledge more fiscal stimulus to get the economy picking up momentum as it goes on.

haidi: the shift away from deleveraging. how hopeful is the dollar side of the equation? donald trump attacking the greenback yet again. it has been counterintuitively strong, given where the fed is at the moment. peter: the fed has paused. looking of the world is great. on a relative basis, the u.s. stands out. haidi: best out of a bad bunch. peter: exactly. what you need to see for the dollar to fall away is europe needs to grow from her. towardsneeds to shift more of a tightening bias. the ecb is meeting this week. they will downgrade their macro forecast and push out there forward guide. the story will remain pretty firm. if you look at payrolls at the end of this week, it looks like it will be another good number. potentially for a tick in wages. ramy: switching back to the trajectory of the yen.

have saidf analysts it could see a little bit of a rally over the course of this year, but end slightly lower. i'm curious on where you weigh in on this. peter: at least in the short-term, it can head towards 6.6. of chinah story out really needs to show improvement for it to be sustained. if you look at the capital flow position, the current accounts has shifted in his direction in china. that is a headwind medium-term for the currency. it is the dollar story you need to take into account. while the dollar is likely to remain firm in the short-term, on the second half of this year, some of those tailwinds supporting the dollar are likely to fade. probably look a little healthier. the fed is probably on hold while the other banks eventually start to flag movement next year. that gives the dollar a bit of a

headwind. of limits how far the dollar yuan can bounce back. it also depends on what the mechanics of the trade deal and the final trade pact look like. whether there are mechanisms around the exchange rate. ramy: looking at the aussie, it is up by about a quarter of a percent. it had been on the down over the past week, or for most of it. what do you think you have to look ahead to, especially as we wait on the decision? peter: it is a big week locally. data wise, we have the rba tomorrow. we are not expecting change in policy. we have gdp on wednesday. 's speaking on a very timely topics, the housing market and economy. data, the gdp numbers, partial data points to

a soft number once again. it is a question of how soft. whether or not it really shakes the rba's confidence in the medium-term story. the keys will be the underlying drivers of the weakness. whether or not it is consumption or other factors. from governor low, i think he is probably going to repeat the neutral stance and message. just reiterating, it depends on how the data unfolds. in terms of the aussie, from a data flow perspective locally, the risks are that it weakens further. again, we are at $.71 or so. that is kind of the average we have been in since september. we don't really see it break into much out of that 70-72 range as you get the crosscurrents coming through. local headwinds versus optimism offshore. getting ahead of themselves in terms of possibility that we will end up with an outcome that is positive. peter: in the short-term, it is

not around whether it is in medium-term, it is avoiding the hard brexit and falling out of the eu without a deal. now.oks ever so unlikely even pushing at article 50 kind of gives you a little bit of sentiment of improvement -- improvement in sentiment. what the trade deal looks like will be the key for how how it is medium-term. in the short-term, that narrative will give more support. haidi: great to have your, peter dragicevich joining us in sydney. plenty more to come on "daybreak: asia." this is bloomberg. ♪

ramy: welcome back. in japanese banking, a big deal announced just as the asia weekend got started. mitsubishi ufj agreed to buy the aviation finance division of germany's deese f bank. it is one of the biggest since it was created.

russell ward joins us from tokyo. walk us through the details. big dealit was a announced last friday. it's one of their biggest acquisitions. if we measure it by the face value, the 5.6 billion euros of aviation loans, it would be the biggest deal since the bank was formed in 2005. it is all about expanding abroad. the familiar picture with japanese banks, with rock-bottom interest rates, the slow economic growth, and drive to expand out of japan. mufg has made a lot of other acquisitions in other areas. buying banks in southeast asia. they announced a deal to buy the asset management of the world bank of australia. is, the latest expansion aviation financing. a few years ago, 2016, they started an aviation financing

business in the u.s. they said they want to be a leading player in this area. it is a key pillar of their business. haidi: does this mean we are seeing a greater output for cross-border deals in japan? russell: i think so. the momentum for cross-border acquisitions among japanese companies will continue. the macro drivers i just mentioned will not change. we have the shrinking population, slow economic growth. last year, $190 billion worth of overseas deals bu done by japanese companies. 2 billion. the acquisition of shire. this year, we see the $18 billion worth of deals. not the same pace as last year. we have many months to come. there could be big deals down the line, as well. ward, are finance editor in tokyo. let's get a preview of the market open in japan and south

korea. sophie kamaruddin in hong kong. caps off. south korea coming back online after the long weekend. focus. it will be in we had the drop off on friday and the latest you political developments. futures inking and developments in the kospi. stocks move after the fill trump/kim summit. there could be selloff in the short-term. keeping an eye on auto stocks after the slump in u.s. sales. dragged down by weak demand for suvs. toyota, nissan, and honda joined ford in low numbers. speculation builds over potential scooters to acquire next on. local media reported that tencent, partners, and bain capital made the shortlist. net share marvels joins the mbk. tencent and bain formed teams of

other candidates to watch for netmarble. haidi: let's take a look at our asian markets. zealand,lia and new trading has been underway. trade up and center again, adding sentiment is monday morning trade gets underway. all the stoxx about 6/10 of 1%. we see a bit of a rally for kiwi stocks after the currencies rallied on the latest report could beff relief imminent for chinese goods as part of this trade deal. in nikkei futures looking positive, 0.8%. kospi looking lackluster. it will have to play catch-up after the long weekend. we could still see a bit of a pop at the open when it comes to trading. ramy: coming up on the next hour of "daybreak: asia." withve an exclusive

standard life aberdeen co-ceo martin gilbert. we talk strategy with the u.s. china trade were and rising geopolitical risks. the market open is next. this is bloomberg. ♪

haidi: i'm haidi stroud-watts in sydney. asia's major markets have just opened for trade. ramy: good evening from bloomberg's global headquarters in new york, i'm ramy inocencio. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." haidi: our top stories this monday. washington says the u.s. and china are in the final stages of a trade accord that would seek tariffs lifted. seeking stability. the big policy week kicks off with a promise of disparity.

the big picture is always in mind. ramy: president trump lashes out against the fed again. he says the dollar is too strong and jay powell is someone who likes raising rates. let's get straight to the market action with sophie kamaruddin. looking at my bloomberg terminal, it looks green across the board, risk on. sophie: no misery so far this monday. here's the open in tokyo. .09%. 225 adding the yen trading near a 2019 low. positive start to the week on reports that the u.s. and china are closing in on a trade deal. checking in on the kospi after a three-day break for south korea, gaining .08%. it snapped a two-week decline. in theg to the action tumble. shipments deepened in february, down 25%. also watching for peace talks to move after the latest developments from the failed

trump/kim summit, and south korea ending military drills. the u.s./north korea talk breakdown will have little or limited impact. keeping a look out on the activities, you have kiwi shares . climbing for a third session aussie stocks. rising for a fourth straight day. -- isn is our sliding fighting. gold output had a high time. a quick check on some movers early in japan. in korea, we have the sun gaining ground. katau jumping 2.4%. this on a local media report that tencent, as well as bain capital are among the candidates to acquire next on. there's been a lot of speculation on the potential suitors. we have more clarity on that front this morning.

sophie kamaruddin with a look at the early movers in the japan session. optimism about a possible trade deal is moving the chinese currency. offshore yuan paring some of the earlier pop we saw. doing better against the u.s. dollar on the reports that we could see most, if not all, u.s. tariffs on chinese goods lifted. yuan is the second-best performer out of asia. let's get it over to beijing, where tom mackenzie is with us. what do we know about a potential deal? it seems to be getting closer. out of washington, reports say the demand, the priority has been the removal of tariffs on $200 billion worth of chinese goods. the u.s. are actively considering it. the question is whether they phase out the tariffs or get rid of them immediately. that is the chinese priority.

that's what they are pushing for. there is no decision yet from the white house around these tariffs. certainly there is a suggestion that if this deal does get finalized in the next few weeks, the removal of tariffs could be part of that. hearingr side, we are from the chinese that they could look to change some of the jb structures around businesses operating in china. they could speed up processes and cut sanctions on a range of sectors and different products. auto taxes currently stand at 15% for cars. they could cut those. we are looking at additional purchases. they pledged the chinese to purchase about $30 billion worth of cultural products and energy products. companies could benefit from that in the u.s.. there is still negotiations ongoing between the two sides. from bloomberg and

others suggest we are getting closer to some kind of deal. numbers andse figures come to pass, how much of a win will it be for china especially as, the economy slows down, in terms of growth? illustrates the chinese focus on their exporters and the fact that they want the tariffs removed. economists have said 10% is a small number. it will not affect gdp too much. i think it is probably about sentiment. business sentiment here has soured. that is largely because of the trade war and tariffs. it real size is china -- it real the size is china's point. as you say, around the time in. it is interesting that this news is coming out just as the national people's conference gets underway. of as secured something win, even before this moment, with trump pledging not to attach additional tariffs, or at least to extend the deadline

indefinitely. there is a window of opportunity for president xi. it will give his team comfort as they look at some of the issues, the domestic issues and challenges they face. haidi: in the next 10 days, it will be key for policy out of beijing. what are you watching out for? tom: we get the so-called work report that will be delivered by the premier on tuesday. as part of that, we get a number priorities,policy specifically for the economy, set for 2019. a gdp target expected out tuesday. stopting suggests it may between 6% and 6.5 percent. we will get the deficit target. deficit will be expanded from 2.6% to about 3%. we are expecting tax cuts. we have a chart that shows what has been happening. tax cuts in 2018. ,ou saw the tax revenue fall

government revenues falling. there's a question to a much further they can go in terms of tax. morgan stanley thinks he may be looking at cuts worth about $120 billion. others, like the chinese avestment bank, are expecting big tick up in local government bond issuance to support and fund infrastructure spending. infrastructure spending plummeted in 2018. policymakers want to sure that up. they are a couple of things to look forward to, as well as the number of on foreign investment, which could strengthen intellectual property and ban forced tech transfer. that would be important in light of that conversations with the u.s. and china around the trade tensions. ramy: tom mackenzie in beijing. the latest as we look ahead to the national people's congress this week. shifting gears. president trump has lashed out at the fed, blaming rate hikes for what he says is the too strong dollar. his comments come among a litany of complaints in a two-hour speech.

our global economics and policy editor is year. -- ise said and why anyone concerned? kathleen: he certainly came back from his trip to hanoi fired up and went to the conservative political action conference to fire up his base. you can see he's getting ready to deliver the 122 minute speech walking across the stage. believestely said he jay powell is on the wrong track in so many words. rather than try to explain it to you, let president trump explain it himself. >> we have a gentleman that likes raising interest rates in the fed. we have a gentleman that loves quantitative tightening in the fed. that likes atleman very strong dollar in the fed. kathleen: the gentleman is jerome powell, chairman of the federal reserve.

i want to put these point in perspective. the fed raises rates a lot, they could strengthen the dollar. trump said jay powell likes raising interest rates. he recently has signaled that the fed can be -- also that he likes quantitative tightening. in other words, reducing the fed's balance sheet. now it is seen more of a tightening. what is actually going on? jay powell just said last week that they are going to announce their new balance sheet runoff. their plan to stop this run off fairly soon. randy quarles said second half of the year. jay powell said that's a big deal. he said the fed can be patient on rate hikes. when it comes to the strong dollar, trump doesn't want a dollar so strong that it is prohibited to the u.s. when it comes to the federal reserve, they don't talk about the dollar as a policy tool. it's the result of what the fed

does on rates. that's another when you have to put a little bit of thought around as to whether or not it's true. it's also interesting, jay powell having said the fed can be patient, has changed the outlook in market. world infrastructure projection -- interest-rate projections, you are not sitting -- there is no chance according to traders of any kind of rate hike. this is the probability. the highest you get is 11%. around october, when the fed was around its rate hike past, people have seen two of them. now, zero chance of rate hike this year. jay powell seems to have gotten his message through. maybe not so much to president trump just yet. haidi: it's another week for love fed speakers, potential bank decisions in asia, as well as the ecb. what are you watching kathleen: six fed speakers, including jay powell.

especially after consumer spending in the u.s.. it's the weakest since 2009, down 0.5%. let's look at my list. i start with the european central bank. there's so much question about the direction of the central bank. if the ecb is getting ready to maybe make a more dovish turn on policy. next, we are watching. tom mackenzie talked about the national party of congress. traders and investors are waiting to see what signals may be sent on perhaps more monetary stimulus. he talked a lot more fiscal stimulus. another thing to be watching is malaysia. there central bank is on hold. we are mostly going to see what they say about future moves in the policy statement. that's another want to keep on your list. next, we take a look at the fed on wednesday. it releases its look at the u.s. economy region by region ahead of its meeting on march 19 and 20th. for the u.s., the jobs report

friday. it will signal a lot about what they may be thinking about future rate moves. it will also be something people are wondering about. it is a really great and busy week. haidi: looking for to it. our bloomberg global economics policy editor, kathleen hays. let's get the first word news with su keenan. su: we start with u.k. prime minister theresa may, who has been given conditions that hardline brexiteers are demanding as the price of supporting a new deal. members of the pre-brexit european research group might back her if she agrees to it a legally binding cause that overrides the withdrawal agreement. a stronger promised that the irish border backstop will be temporary and a clear route out of the backstop if talks fail. the lower house in japan has approved a record budget for the fiscal year starting april 1. lawmakers voted in favor of the abe government s package, insuring it can be

active before the new europeans -- the new year begins. it will take effect 30 days after being passed by the lower house. the initialing budget last year was a hundred $73 billion. has reopened its airspace after releasing a captured indian air force pilot cross-bordere they tensions may be easing. international flights were disrupted one pakistan closed its airspace last wednesday, with carriers forced to divert services altogether. there are reports of crashes from both sides, accusing the other of killing military personnel over the weekend. taken a giant leap forward with a successful docking of its first astronaut ready caps off at the international space station. the craft was making its maiden flight and the only passenger on board was the life-sized dummy

named "ripley" after the alien movie character. in 2014, nasa gave spacex and boeing combined contracts with more than $6 billion to fly u.s. cruise to the iss. -- crews to the iss. global news 24 hours a day, on air and at tictoc, powered by over 2700 journalists and analysts in over 120 countries. this is bloomberg. i'm su keenan. still ahead, signs emerge of a u.s./china deal. we hear from chile's vice trade minister about his country's ties to the top to economies. haidi: up next, our interview with martin gilbert. we get his thoughts on trade, brexit, and the company's global strategy. this is bloomberg. ♪

haidi: i'm haidi stroud-watts in

sydney. ramy: i'm ramy inocencio in new york. you're watching "daybreak: asia." hit out atrump has the fed and repeated his criticism of the strong dollar. let's get reaction of across to singapore with juliette saly, standard wife aberdeen co-ceo mark gilbert. juliette: very happy to have martin with us. ofdid hear those comments the president overnight lashing out at jay powell at the fed. do you agree with his comments that the dollar is too strong? how does that impact investment decisions? martin: we have to ask why he is commenting on the dollar. toclearly wants it weaker boost exports and continue growth in the economy. i think the u.s. is doing fine. growth is good. from management, you ignore the u.s. at your peril. -- the stockso do

that do continue to do well. juliette: speaking of stocks doing well, you said last year equity was the best investment for 2019. we have seen. do you stand by that? martin: we are hopefully going to go back to what i would call normalized markets now that quantitative easing as almost finished. that brings back stock pickers. business like ours, which is bottom-up stock picking style, more tending towards value quality,an growth and had a tough time the last few years, until the last quarter of last year. i hope turning back towards active, rather than more of a passive style of management. juliette: does that continue when we see the fact that the u.s./china trade relationship is thawing?

we are getting closer to some sort of agreement. martin: hopefully we get closer to an agreement. i think trump would like to reach agreement. it's whether we can take the government, who really are more -- tend more towards being anti-china than he probably is. juliette: is that still the greatest risk, or is the fact that we are now approaching march 31, is brexit a greater risk? martin: i think china is a much bigger risk than brexit. brexit is a more localized risk. for the u.k., clearly. probably a bigger risk for ireland than anyone else. their supply chain comes in through the u.k.. you see predictions that if there is a hard brexit, ireland could see a significant slump. it is a risk.

it is a risk for europe, as well. a lot of their experts go to the u.k. there was a big parade deficit with the u.k., which is very significant. terms of what about in what businesses will do if fund managers stay in london? is it a positive outcome? martin: the fund managers are staying. what we have done in the fund management world is locate blin, we already had businesses in luxenberg, which is where our funds business tended to be located. as far as fund managers are concerned, they are reasonably well prepared for a hard brexit if it came to that. juliette: what happens to sterling? martin: sterling weakens a bit. there is certainly -- i don't feel there's anything in sterling towards a hard brexit. stilleople in the u.k.

think some sort of deal will get done. at the lastet done minute, when they have to reach a negotiation. juliette: let's talk about your business. there was a huge slump in your stock prices when mitsubishi usj sold out. down frome a thumbs investors about the merger of standard life and aberdeen. how did you read it? martin: mitsubishi has been a long-term shell of hours since 2008. when they bought a business in , mitsubishist year told us they would sell the stock. when you play such a large stock , it has most of that back already. ofwas a strategic decision theirs. as you know, the very strong relationship continues with

aberdeen standard investments. juliette: what does the merger mean in terms of further job cuts? martin: the job cuts were already factored in when we did the merger between the 2 asset management operations. the industry as a whole is going through a tough time. is we gotat we feel ahead of the game in doing this merger. we have s -- we saw these tough times in the industry coming, pricing coming down, tougher markets, more passive -- active to passive. it is going to be tough this year. we think we are ahead of the game. juliette: there could be further job cuts? martin: no, tough in terms of revenue. you could never rule out making a business more efficient. the great thing we have is because we did the merger, it

gives us scope, weather is duplication, to cut costs. a lot of it is technology. a lot of it was the technology back offers and so on. there are a lot of complement three businesses. one was the leading u.k. server. juliette: you touched on duplication. you are a co-ceo, it's not popular with shareholders. what is the likelihood you return to one ceo? martin: i don't need to make that decision, it's up to the board to decide when they want to make that change. it is co-ceo, we have very different responsibilities. he tends to do more of what i would term the running of the business, running of the asset management side of the business. i do much more of the client side of the business. we are very complement three strengths. it certainly works for me. juliette: thank you for joining us very much, martin gilbert,

standard life aberdeen co-ceo with me in singapore. chat, bloomberg's juliette saly in bloomberg. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to your terminal. it's on the mobile, in the bloomberg anywhere app. get the news on the industries and assets relevant to you. this is bloomberg. ♪

haidi: i'm haidi stroud-watts in sydney. ramy: i'm ramy inocencio in new york. you're watching "daybreak: asia." let's do a quick check of the latest business flash headlines. tesla's ceo is keeping his investors glued to his twitter feed with details of a new launch event this month. will be an model y suv built using many components

from the company's first manufactured car. it will be about 10% bigger than that model and cost about 10% more. orce facesh a tax bill for miscalculating incomes for workers in retirement and marketing and catering expenses. the german newspaper says the issues go back to 2009 and include the cost of 60th birthday celebrations. he says back taxes for early retirement workers amounted 10 million euros, about $11 million. ramy: facebook and its instagram unit are suing four companies and three people based in china for promoting the sale of fake accounts, likes, and followers. facebook says fake accounts can cause spam, front, and misinformation campaigns. it used ai software to find and disband more than 2 billion fake accounts last year. coming up, pressure builds on australia's prime minister as more lawmakers quit ahead of the

upcoming election. we will have the details next. this is bloomberg. ♪ you.

all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome.

su: this is "daybreak: asia." i'm su keenan with first word headlines. reports from washington that say most if not all u.s. tariffs on china are to be lifted as part of the trade deal approaching its final stages. sources say beijing has made it clear that are moving the $200 billion in chinese goods from day one would be necessary to finalizing any deal. bloomberg has reported the white house wants a summit between president trump and she as soon as -- and xi as soon as mid-march. senior leaders pledging to ensure stability, and keep what they said is the big picture in mind.

as policymakers continue with reforms. the chinese people's political taskrence says the major includes a "moderately prosperous society and upholding president xi's core position on the communist party central committee." president trump repeated his view that the u.s. dollar is too strong. and he lashed out at jay powell as someone who "likes raising rates." he said the u.s. is doing well despite the action of powell and his colleagues referring to the fed, and adds he wanted a currency that is good for business. lowerllar was quoted again to the euro and yen in early asia-pacific trading on monday after the president's comments. the huawei cfo facing theadition from canada as u.s. has launched a counter. she filed claims to the supreme

court of british columbia against the canadian governments and police. it alleges false imprisonment and breach of her constitutional rights. the u.s. accuses her of lying to banks to make them profit transactions for huawei that potentially violated sanctions on iran. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. ramy: thank you. time to see how the asian markets are shaping up so far. sophie kamaruddin is on those. i'm seeing markets are holding onto gains over the past couple of hours. sophie: taking up on that lead we saw from wall street on friday. asian stocks rising. the aussie dollar, kiwi dollar, offshore yuan are climbing in optimism over a u.s.-china trade deal. playing catch-up perhaps in a given a series of negative news for korean traders including the

sharp drop in february exports we got at the end of the week. the cost be adding 7/10 of 1%. utilities and tech helping lead gains. in on these korean peace talks, several of these players under pressure after the u.s. and north korea did not reach an agreement on denuclearization last week. kb security says there could be a selloff in the short-term. might give back into these peace talks if the selloffs make valuations more attractive. flipping the board to check in on auto stocks which are lower in tokyo and seoul in the wake of the brought slump u.s. car sales for february. he end a mortars -- he end a motors, pressure may be coming. in the wake of last thursday's they may consider cuts at their factories in china. sunday and pm orders -- and kia motors.

look at other movers in japan as well as inside korea. russell 10 rising 4.4% after it was disclosed that the founder is said to be a big winner from the impending ipo. the biggest holder of class a share with a 13 point 1% stake. rising on news it is among the companies shortlisted to acquire . -- to acquire next on. target ofecome the major bidders. we do have that story very much at the front, given the speculation around next on being a quieter -- being acquired. haidi: all right, sophie kamaruddin in hong kong. two more ministers have quit the australian government with the likely of that -- election defeat looming in a few months times. let's go to our reporter. how bad is this looking for scott morrison now? jason: it is not a good luck.

we always expect some turnover and lawmakers -- lawmakers approaching election. some people retire for obvious reasons. one governments seem to lose power coming you find the turnover rising dramatically. that is what we are seeing at the moment. i guess for prime minister scott morrison, i think it is the caliber of the retirements that are going to occur at this next election in may that is particularly concerning for him. weekend, we had defense industry minister stephen hisboat announce retirement along with defense minister christopher pine. that also backs up with julie bishop, the former foreign affairs minister, also announced she was retiring recently. in total, that is a total of six ministers who have announced they are retiring at the next

election. not a good look for the government. and the main labor or position has been making political mileage out of this, saying that basically, these ministers can smell the tea leaves and see they will lose power. so they are working now. chance is there that mr. morrison could cling to power? jason: there is always a chance. the polls are not pointing that way at the moment. they are pointing to a comfortable win by labor. they have come in a little bit in the previous couple of months. last year, it of was the polls that were pointing toward a wipeout for morrison's government. now it is looking a bit closer. the government is trying to point to its policies on border security, saying labor cannot be trusted in that area. i guess the government also has got another ace up its sleeve in the fact that it is holding a budget next month where it will

be able to put out some goodies for the electorate. probably in the form of tax cuts for the middle class. abilitypointing to its to decrease the size of the budget deficit and put the deficit back into balance. it will be running on those economic agendas as well. haidi:'s economic policy likely to change under a labour government? beon: a lot of it will steady as she goes. some of it will change. the biggest change will be for policymate and energy areas. promising toen really ramp up its funding for renewables, and basically try to cut carbon emissions. the other area that is quite different between the two major sides is in the housing policy. cutur is promising it will

some tax benefits for wealthy property investors. that is interesting timing, of course, because the property markets really came off in recent months, especially in sydney and melbourne. once again, the government is saying, this is bad policy, that they should not be trusted to handle the economy. the general consensus among the australian vote is the government has lacked economic vision and is probably time to give the labour party a chance. scott there in canberra. the u.s. and south korea have agreed to and two of their two biggest exercises. jodi schneider joins us with the details. is this something of a surprise given president trump away from those knocks -- those talks in north korea? but this is still something of a concession to pyongyang? jodi: this has been a

long-standing demand by the north korean leader kim, that south korea and the u.s. give up these annual military exercises. this is definitely the u.s. trying to ease tensions, if you will, with north korea, just days after that summit collapsed. that they left without an agreement. they said these will be replaced by some more limited, modified exercises that they are calling alliance, but they will be much less, and much less significant than the kinds of exercises they have had in the past. interestingly, president trump mentioned in his press conference after that summit a fan oft he was not spending more money on these exercises. moreestioned the wisdom, from a standpoint, he said it was costing a great deal. that has been a long-standing concern he has had. criticism he has had of funding

military exercises with south korea. it may -- that may part of it. this is certainly a bid by the u.s. to try to ramp down any tensions. back ined time, washington, d.c., the democrats are ramping up their probes involving president trump. there are a lot what is the latest? jodi: the chairman of the house judiciary committee, but democrats control the house of representatives, is saying he is going to issue subpoenas and request for documents to more than 60 people as he seeks to widen these investigations of president trump and his dealings. he says he is looking into things like possible allegations andbstruction of justice, other related kinds of things. last week, michael cohen made some very dramatic and potentially damaging allegations against the president, including

saying things like he had basically done things while president, while in office, signed checks for hush money to former -- two stormy daniels. -- to stormy daniels. nadler and the democrats in charge of the u.s. house of representatives are going to really widen their investigation. that is promised when they took over the house of representatives, this is what they said they would be doing. we can expect more hearings and investigations into the president, including things he did while a candidate and potentially allegations of things he did while a sitting president. ramy: they have only just begun. jodi schneider coming to us from hong kong. thank you. the u.s. and china's trading partners are anxiously awaiting and watching talks between the could one of them is chile which hosted a summit. i spoke to the country's vice

president -- vice trade minister. china and the u.s. are first and second trading partners. how ituation and evolves, it is paramount for us. not just because of the development of trade, but the prospects of global growth and therefore trade. it affects the commodity prices. it affects the change. the price of the different currencies, etc., oil. macro sort ofy factors relevant in connection with the situation. and we are following it very closely. not just from the aipac perspective or development perspective, but the g20 where we turn -- where we participate. ramy: if you could have xi jinping and donald trump in the same room, what would you say to them? >> at the end of the day that there is no good outcome if the

situation is not resolved. the sides of the players are big enough for making the situation very complicated, if they are not able to find common ground. when two elephants collide, it is the grass that suffers. there are many countries that have this kind of trading relation with both china and the u.s. all over the world. of course, we are counting on remainhis year to also as a vital space for a building consensus and exchange ideas around the benefits of free trade. course, the host for aipac this year. how can chile, aipac, be that medium, not just to facilitate an understanding trade between u.s. and china, but across the whole block? abouthink it all comes making a peck relevant. -- making aipac relevant.

engagement of the officials level, it is very important. we need to translate that into action when it comes to our citizens, when it comes to women and others which will be the driving force of growth in the future, and how these new economies, the regulation of the newcomers a new economy will be there. and how as a community, we should embrace that. and maximize the benefits. ramy: that was chile's vice at an aipacer roundtable in atlanta, georgia over the weekend. investment solutions has larry hathaway tells us why he thinks the u.s. and europe have joined asia in a "post-peak environment." this is bloomberg. ♪

welcome back.

i'm ramy inocencio in new york. haidi: i'm haidi stroud-watts incident. you are watching "daybreak: asia." our next guest says the greatest opportunity is in emerging markets. he sees on yields moving higher reflecting unfinished business i the fed. joining us from hong kong is head and chief economist. great to have you. thank you for joining us. faced a stumbling block in terms of surprising strengths of the u.s. dollar, despite the fed being essentially patient and steady as she goes. does that change given the job earning the president trump is once again doing to the greenback? larry: i'm not sure if trump's comments about the dollar themselves will be the catalyst for dollar weakness. i would say if the u.s. and china can find agreement on trade, it is probably going to be part of the solution to dollar strength. tariffs,u.s. imposed

the dollar appreciated amount -- among were currencies. the removal of tariffs is probably going to be part of a story that helps the dollar to depreciate, in part because a removal of the threat of trade wars is good for rest of world growth or whether that is china, emerging asian, or for that matter, europe and all of those things would reinforce the tendency for those currencies to appreciate. i think a lot hinges on trade rather than comments from the president. trade, whichg on in turn, we are seeing that positive impact when it comes to the chinese yuan trading. is the chinese currency becoming more of an anchor in terms of correlation with other em assets including currencies, but also increasingly so, emerging market equities? larry: i think there is an element of that. although i think the common thread over the last year has been less concern about trade

and what that would do to global has established a correlation between the rem and be and other currencies. if we remove that aspect, there is every chance that the ram and be will find its own story. others largely linked to things going on including this week's mpc congress. we think that will be important in terms of setting out an agenda to continue the rebalancing story in china, but also to bolster growth after the weakness last year in that context. i think that will have a positive impact on the ram and b. it will probably spread elsewhere but it is a different story than what we have seen over the last 12 months. ramy: just generally speaking, you are pushing this concept about a postpeak investment environment. before we get further, help me understand what you mean. are you saying we will never get to the highs we have seen before? larry: postpeak refers to things like economic growth and also earnings growth.

it is pretty clear that we reached a peak, at least a mini cyclical peak last summer in the united states. the fourth quarter gdp figures at 2.9% year on year growth. we are well off of the faster rates of annualized growth of the second and third quarters. it is also true in terms of earnings per the second and third quarter, the s&p 500 earnings were growing at more than a 20% clip. down to mid teens now. at the end of the year, probably in single digits. it is a slowdown mostly of gdp growth to earnings growth. that is changing the nature of markets as we have seen in both the declines of the fourth quarter and the stabilization since then. this is a more precarious investment environment given the best of growth on the best of earnings is behind us. ramy: looking ahead, what are some potential opportunities in this environment? what would you advise investors here? start first with

what we think is the most mispriced asset class. and that is arguably long-duration fixed income. i.e. government bond yields. as u.s. treasury yields. they do not reflect in our view the probability that we are going to continue at trend like growth but with moderate increases and inflation from here. the market seems to be telling us that we are down as far as the fed normalization is --cerned and we met never may never see normalization from the ecb. that is probably incorrect. these economies are slowing to trend, not below trend. there is still upward pressure on wages and poor prices as we will see at the end of this week employment nonfarm report. it is more likely than not that the market at some point this year will have to grapple with the idea that policy will be normalized in both regions, tending to push up interest rates. the first opportunity in some sense is to try to find

instruments in fixed income that avoid the duration risk for those investors prepared to do it to go short duration. haidi: really appreciate your time and your insights. larry hathaway, investment solutions had and chief economist. tv comey you can watch us live there and catch up on past interviews and dive into any of the securities on the bloomberg functions we talk about. join in on the conversation. send us instant messages during the show. it is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ ♪

i'm haidi stroud-watts in sydney. i'm ramy inocencio in new york. you are watching "daybreak: asia." let's do a check of latest business flash headlines. in the new survey from citigroup says s&p 500 companies repurchased more than $800 billion of their own shares last year surpassing what they invested in new equipment for the first time since 2008. the jump is due to president trump's tax overhaul. is still dominating companies use of cash over the longer term with investment exceeding $6 trillion over the past decade. has stepped down temporarily as the minor comes under scrutiny for failing to prevent a second fatal dam collapse in brazil.

five-year schwarzman became chief executive, 18 months after the collapse of a dam operated in partnership with bhp. he said at the time, never again. however a dam burst january 25 and another collapse last month killing 169 people. ramy: bill gross has a parting shot for anyone hoping to th be the next king of the bond. he says the era about performance may be over. he retired on friday after 48 years in financial markets. he's is lower yields and razor thin treasury spreads mean central banks have change the nature of the game. >> i think there are things to look at that still exist in the market that can generate alpha. the probabilities of generating historical alpha in the same way are much less than they were. let's preview what to watch in markets.

with sophie kamaruddin in hong kong. what are you looking at? sophie: this monday, markets reopened after a four-day break. reading to the latest for taiwan which will fell to a three-year low. later today, trade data due at midday. export growth expected to have moderated to less than 1.5% for january. stocks to watch in taiwan, watching companies including a material which may move on reports that apple may -- has made orders for the 5g iphone. budget for companies to move after the bea chairman said he expects local electric car subsidies to end. ahead of tuesday's and pc in beijing, let's check in on how the csi 200 is heading off. 25% this year. outperforming all other major stock gauges." goldman and jpmorgan said chinese markets still have further to go.

when they see optimism. and wen it comes to support for chinese stocks. value can bet found. before we handed over to the next show, the sense of buoyancy as we had this report that perhaps the trade deal is getting closer. china could be on the cut. new zealand trading in an all-time high. seeing gains in australia as well as tokyo. for the kospi as well. ramy: that's it -- that's right could that is it for "daybreak: asia." market coverage continues. make sure to stand by for bloomberg markets -- for "bloomberg markets: china open." this is bloomberg. ♪ want more from your entertainment experience?

just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.

>> is 9:00 a.m. in beijing. welcome to "bloomberg markets: china open." i'm david. yvonne: i'm yvonne man caret we are counting down to the open of trade in hong kong. and i am tom mackenzie live from beijing where china's leaders will announce new policies over the coming days. our top stories is monday. throwing a deal. sources in washington say the u.s. and china are in the final stages of a trade that would see tariffs lifted. speculation lifted the yen but weekend the dollar. that is