>> good morning. australian markets have just opened for trade. >> i'm shery ahn. i'm in hong kong. looking to daybreak, asia. to daybreak, asia. >> our top story, and low slow start for equities in asia. is cutting its forecast for europe and asia. president trump wants a swift trade deal with china to give the markets a boost and to drive his campaign for reelection.

-- we will beo live this hour in vancouver. quick check of our markets close in u.s.. we saw the stoxx falling for the third consecutive session. the s&p headed for its worst week at this year. health care and energy stocks led the decline. reports that u.s. stockpiles ballooned up more than expected. we also have the nasdaq dropping 9/10 of a percent. on the statecerns of the global economy. we saw private companies here in the u.s. adding fewer jobs than expected. the u.s. trade deficit in 2018 that 10 yearo high. s&p futures are under pressure at the moment. let's see how we are shaping up for asian trading. at there seeing pressure start of cash trade in sydney.

we have some mixed moves when it comes to the former so far in sydney. foot.oup is on the back keep in mind that the stock is trading ex dividend. we are seeing gains for stocks on the ndx 50 but futures are lower for japan and korea. oecdon the wake of the trimming its growth forecast. checking in on currency markets after the dollar rose to a three-week high after capping a sixth straight session of gains. we have the aussie dollar under pressure. slip into a two-month low. remaining a popular short among the biggest laggards along with the canadian loonie. the bank of canada toned down its rate hike signal.

waterh is also treading holding losses after retreating for the first day in three. amidst -- let's get you to first word news. regulators throughout their plan of how to -- agencies inserted a new standard for transactions that they would consider band. fire from wall street who said the amendment would make the role more troublesome to work with. we have been told the regulators may be calling for a rewrite on these changes. expects to reach $20 billion when it creates the first phase of capital raising for its flagship fund. blackstone has not set a limit for the fund as it approaches a record. was $21.7t pool billion at the height of the market in 2007. after the financial crisis, it took almost 40 years together

$16 billion for the next fund. the european central bank has said to be cut its forecast by -- to justify new lows for banks. it shows extensive downgrades for inflation and growth this year. officialast isn't until mario draghi speaks after the ecb latest policy meeting. the u.k. government is said to or monday benday the deadline for talks about leaving the eu. recentand brussels admit negotiations have been difficult. facesa may's brexit bell a comment on tuesday and if she fails, she will not send negotiators back to brussels for more talks. of huawei has the first 8 for theng on may

release of the cfo. two canadians have been arrested of spying in china. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. woes and a dropping oil supply. these are two concerns that sent stocks and oil retreating. we saw ge tomball after cash flow warning from the ceo. >> we saw the s&p 500 fall to a three-week low and it is now on track for the worst week of the year so far. we saw health care stocks and oil related stocks among the biggest decliners that wade things down. let's look at the big movers and

take a look at what they were. ge down for a second day. the ceo warned of a definite problem with cash flow which will add complexity to the turnaround. american eagle was up in regular session than fell after hours on a disappointing outlook. amazon seeing weakness although it's announcement for a joint venture with j.p. morgan chase to handle health care really took a dent out of a lot of health care stocks. let's look at the bloomberg. gtv is where you can find this. this has to do with the fact that it was eight days and at the end, nine days down, that could be a bearish signal. notice you go back to 2009, -- 2011 it signaled a downturn. we could see a downturn in stocks bullishness for bonds.

quickly to oil which had its own downturn. we saw an unusual surprise buildup in the supply. days, itlast couple has been down for oil after he was holding steady. if you go to the big picture, we are seeing the u.s. supply pickup again. it is causing an offset in sentiment where the opec again we are looking at the big picture of oil. we are up year today. that has been on the strength of the effectiveness of the opec output cuts. we are seeing u.s. supply buildup which is creating renewed concern about oil prices going forward. president trump said to be pushing his trade team to get a trade deal with china faster to boost the stock market and give a much-needed lift to his reelection campaign. trumpms that president

pays a lot of attention to the market, he might be seeing that markets are treading water. some of the factions in the white house that are advocating for a quick conclusion to the china negotiations have been using that to make their case to the president. they are letting him know that they believe that the markets will jump once there is a trade deal and that needs to be done soon because some of the effects of it such as increased soybean purchases by china will take their way to work -- take time to work their way through the economy. fixated on thes markets. he mentions them frequently. aides what ishis the market doing today. there is a definite push among his advisers to wrap this up

quickly. there's one group of hard-liners who are hawkish on china and want to get a fuller peel beyond just additional purchases of grain or u.s. products. they are trying to put the brakes on this so they can get this deal that they see as best for the u.s.. there is a tug-of-war. trump has suggested that he wants to wrap this up as early as this month. the signing ceremony with the chinese president. he is keeping pressure on his negotiators. >> the president has also been fixated on the u.s. trade deficit. this chart showing that the u.s. trade goods and services deficit really has been ballooning. we have now seen that the trade deficit has widened in 2018 to a

10 year high. how will this play into the president's strategy on trade negotiations? >> this is undoubtedly going to make him a bit angrier about the trade situation. ofis been paying a lot attention to trade deficits despite the fact that many economists tend not to. the tradeided that deficit with south korea and fora and india and the eu wanting to take additional trade actions. although the deal with china may be speeding up, we could see some tough trade talks coming out elsewhere most recently. has said that he wants to get rid of favored nation status with india and there has been no let up for the trade measures and tariffs that he has taken. right now, he has not spoken about it but it is undoubtedly

going to be part of the conversation at the white house. >> thank you for that. test says itr next is not too late for investors to cash in on the stock rally in china. our guest will tell us why valuations are still attractive. >> later, mark zuckerberg says there is no cap forward when it comes to facebook in china. this is bloomberg. ♪

>> this is daybreak asia. success atincreasing loring global investors may turn out to be a double-edged sword. let's ring our agent economy team. benefits of this global

inflow phenomena in the we are seeing. >> the benefits are threefold. one of the key once is a crucial offset because china has been so close for so long. the companies want to diversify now. pressure thatflow the government had to put the brakes on the capital curves. maybe they want to move wealth into an apartment in sydney or canada. that creates across the economy and outflow pressure. the other thing it does is it gives the government and companies more buyers for their bonds.

a white or deficit target saying there are going to be plenty of local bond sales. this opens another avenue of buyers. the third great hope is that by opening up to foreign buyers and investors, you see a quantum leap in terms of the communication of policy. the communication around not only economic policy but an awareness of market sensitivity. just like the entry into the wto saw that productivity improvement for the manufacturing sector, we see more professional financial sector in china. >> a big part of this rally has depended on retail investors. how vulnerable with china be and how exposed if we see that sentiment? >> probably not quite yet because the overall numbers are still very low. foreign investors are at 3% of combined stock market and bond market.

there is still a lot of money wanting to get into china. we saw msci last week saying it is going to increase the weighting of china into its emerging-market baskets. we are seeing china's phase entry into the bloomberg barclays bond indexes. there is a lot of pent-up pressure and that money will keep warning in. china could play this game for a little while. the risk down the road is that suddenly china is no longer a closed economy like it used to be. have some bears out there on the outside looking in saying this is going to grow up as too much debt but it never mattered as it was still funded. suddenly a few years down the road, we might get to a stage where china is far more plugged into the international environment. it would then have to rely on the sentiment of global who can turn called on china down the road.

we are not talking about a small emerging-market that can really suffer the winds of global capital. china is a monster. it is not going to be as vulnerable as the smaller emerging markets. it is a new thing for china. >> thank you, malcolm. we will be looking for another good day on thursday in the chinese markets. let's see how far the rally can go. great to have you with us. , positive forlm the time being about chinese stocks. there is a lot of pent up demand out there. do you agree?

>> i think this rally does have legs. in mind that we are coming off of a depressed 2018. correctionover 30% in the chinese market. frome just recovering those depressed valuations. i'm a fundamental perspective, valuations are reasonable. they are not expensive. earningstrades forward which is only slightly above the long-term average. they are not very expensive right now. remember that china is a policy driven market. we have policy on our side right now. coming out of the nbc this week, we saw a lot of policy support. more positive been inspected by investors. worth of taxb cuts. this will be positive for corporate earnings.

as well is stock market valuations. rallysaw chinese stocks compared to u.s. stocks, they weren't doing that well. this chart showing that the outperformance of chinese stocks really was not felt against the s&p 500. it was only recently that it seems to be catching up now. is this because of the fact that we can't expect more stimulus measures? that is certainly a positive tailwind. that is a clear reversal. last year,g policy now we are finally benefiting from the policy tailwind this year. ist said, the chinese market a stock pickers market. there is such wide variance and dispersion and the quality of companies as well as the quality of management teams. more so than other markets, it is about stock ticking.

forof the things we look are aligning ourselves with high-quality entrepreneurs who are innovative and disrupting her businesses. we are looking to invest in emerging compounder's. these are companies that are typically undiscovered. they are not very expensive from a valuation perspective. they are gainers and did industries. >> i wanted to ask you about valuations given the steep run-up. everys a chart looking at single stock listed in shanghai, trading above its long-term 50 day. where are you seeing value in terms of particular sectors and at what point does this rally get to the point where you think is time to take a bit of profit and go on the sidelines?

shares listedssed in the u.s. and hong kong. some of the sectors that we like our sectors that benefit from rising incomes. those include consumer goods and services and consumer experiences. exporters have been beaten down due to the negative trade war headlines. thatly, we like companies are benefiting from the digitalization of the economy. -- economy moving off-line online. one stock we like is a high-quality exporter that has been beaten down over the last year. it is called best way global. it is a compounder. it has been growing with earnings in the high teens over the past years. it is a very good industry structure. between two companies that

control 70% of the market which is global inflatable leisure products. it trades at 75 global earnings. it is a good value. >> really great to have you. thank you, jennifer. you can customize your settings to get the information on the industries and assets that you care about. this is bloomberg. ♪ >> the appetite for private

equity is still hot. our editor is part of the team the just reported the story.

give us some context on this fund and how blackstone managed this bigout fundraising. >> they managed to do it because investors have an enormous appetite for these long-term private equity investments. these firms don't just invest in companies, they invest in real whate, credit, and investors are finding is that the firms are delivering returns at a time when hedge funds are struggling and other assets are making the money that like to see. investors are going with the returns are. >> this is part of a broader trend. >> very much so. blackstone, the largest of the firms has announced it plans to raise 100 billion dollars this year. that is an enormous amount of money. others, they are all having success fundraising for a multitude of their different

businesses. real estate included. for aors are looking place where they can park their money for the long-term, avoiding the volatility that seems to be smacking hedge funds and other firms because private equity hold money for up to 10 years and longer. they can invest and sell their their time they feel is right. >> what does that tell us about blackstone itself? we heard that they were hoping to raise $100 billion this year. >> it tells us they are on their way. there largest fund on record in the bio world is $21.7 billion. nearing $20nd billion and they are not done yet. it tells us that investors have the boom andg when private equity is going to hit a wall. what this tells us is the wall is still a ways away.

is, funds are sitting on a lot of money right now. the deals are getting harder to find. >> absolutely. asset price is very high. we have had a 10 year old market. companies are priced at very high multiples. at this point, i think if we have a little wait and see game and private equity. they are waiting for firms to lower their selling price. that may happen this year. that may take longer than a year. way, the firms can set on this money for a while. eventually, they have to deploy it if they want to make the nice returns. >> great to have you. blackstone said to be nearing the $20 billion mark for their flagship buyout fund.

the latest view from the fed and also global policymakers. that revision downwards to global growth from the oecd adding more fuel to the fire for those doves. this is bloomberg. ♪ you.

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>> this is daybreak asia. trump is pushing his trade team to get a trade deal with china to give him a lift ahead of the next campaign. we have been told he is concerned that a lack of agreement to drag down stocks. a former chinese finance minister has passed on the talks saying beijing will not make concessions. he also said some u.s. demands are unreasonable. a leading member of the bank of japan policy board has broken ranks to sound a warning about the upcoming sales tax hike. he says the economy could slide into recession with the tax is imposed despite a range of

government measures to limit its impact. he told business leaders that economists are underestimating last taxut since the rise hit consumption hard. u.s. regulators may scrap their plan for how to revise the volcker rule. inserted a new standard for transactions that they would consider band as proprietary trading. wall street says the amendment would make the world more troublesome to work with. regulators may now be calling for a rewrite on the changes. the democrats are moving to restore obama era net neutrality in defiance of republican skepticism. the measure would reinstate rules that barred internet providers from blocking or slowing traffic on their networks. public interest groups praised the bill but critics attacked what they call heavy-handed regulation. global news 24 hours a day on air and at tictoc on twitter

powered by mother 2700 journalists and analysts in over 120 countries. this is bloomberg. as markets are pricing in the chance of rate cuts, all of these stocks are extending gates -- gains. we are seeing materials lack of the index. off 5.2% this morning. holding.e dollar is jpmorgan turning bullish. yields are slipping ahead of trade in retail sales data. i want to bring up this chart on

the terminal that you can find on the gtv library. this depicts the waning fortunes of the aussie and canadian --lar which have gone slumped to two-month lows. neither currency is appealing with growth is being downgraded. length see a decent lower as neither the bank of canada or the rpa can sustain a tightening in the face of this growth story. domestic risks are focused as well. an official has reiterated the message that it can be patient on rate hikes as the latest survey of the u.s. economy shows growth is under pressure. our editor has a take away from the speech in new york. the fed on indefinite hold. >> that is the way it seems.

is not the fed policy leaning toward a hike or cut. howsked if he would justify he changed his mind. he talked about inflation. we also indicated appropriately that given the circumstances we are in with no inflationary pressures, given global conditions, we could afford to be patient in making future decisions around policy. he sees noliams said inflation risk out there right now. that is a strong statement coming from a fed official. he says he sees gdp slowing down but does not say is worrisome just normalizing. we are going to look at a chart that shows what the fed is tracking. growth via gdp and inflation.

this is a white line. you can see it hovering lately around 2%. it was much lower in 2017. this is the axis for gdp. it was pretty strong and 2019. well over 3%. look at that site to get the reading on the number. he is talking about how it is going to come down to 2%. that is a slowdown. he is just not worried. what is he worried about? i thought it was interesting to listen to his answers to the questions and what he had to say. another thing that changed for him was in september, there were signs that europe was slowing down. he said those signs are now showing up in actual data. they have materialized. he said the biggest risk for the fed to look out for are not domestic. it is coming from the international economy.

i think it is interesting is why it was downgraded. a big feature of this report, half of the districts these are reports that come from across the country combined into one report. they are talking about the government shutdown. andit created uncertainty that is putting weight in the economy going into this fed meeting on march 19 and 20th. that is also combined with harsh winter weather which slowed spending. it also said that the labor market remained high. a unemployment, well below 4%. wages are moderately higher. another chart i want to show you because it is important showing the push and pull for the fed. today we got a report that is a curtain raiser for the big jobs report. it is the adp employment report.

you have to jacket and volatile reports. the blue one is payrolls. they really sort of two 304,000. that was surprisingly strong. is adp and have a broadly track each other. line -- it hadte gone way up as well. it has pulled back to 183,000. it probably will not be anywhere near as strong as the one we saw last month. underscoring the fed being on hold, being patient. supporting this view of patience and not moving toward -- you still have a strong labor market signaling a healthy economy. facebook was one of the out performers in the wall street session that was down overall. four straight sessions have .ained

the company also shifting its strategy as it's looking to boost its user base. itk zuckerberg says that will focus on private encrypted communication. let's get to san francisco. let me get this straight. this is a shift toward privacy focused strategy for a platform that is not exactly known for being able to protect privacy. >> yes. from a business perspective, like the underlying message here is also that they will be bringing messaging platform and instagram together. that is like underscoring the shift toward stories away from newsfeed. what they are trying to do is a line all of these privacy concerns by bringing the permanence of the data. the data becomes ephemeral in a

way than some other data controls marrying that with a shift in the business model toward stories. they are bringing all these properties together and expanding. >> we are also getting reports saying that facebook doesn't see a path forward in china. they would like to enable cross-border communications. that they actually cannot see any way to run services in china. really not great news given the facebook's market share gains have been slowing. could this communication push help? >> the market share gains is a different issue. as far as the china issue is concerned, the domestic competition is massive there. the opportunity for facebook there continues to be servicing the cross-border trade at --

advertisers. i think they will be restricted to that given a strong domestic competition. even despite the political issues. >> it is interesting. this is being framed as something that facebook says the user wants. what kind of changes near-term early potentially expecting? what you might see is something similar to what another has done with their platform. that brings their properties together and helps the monitor it. you might see something on that note but this year is going to be a transition year. transitioning toward this new business model and that does weigh on growth spending because of ad pricing.

longer-term, it opens the ad inventory that facebook would need to grow its market share in revenues. thank you so coming up, president trump wants to seal the deal with china. we will find out how realistic an agreement might be next. this is bloomberg. ♪

>> we are counting down to asia's worst major market open. nikkei futures are down after two sessions of losses for the market. the japanese yen is holding steady with 111 after hitting the fresh 2019 low against the dollar. this is daybreak asia. i'm shery ahn in new york. >> i'm in sydney. president trump is pushing his trade team to close the china ahead ofive him a lift

the election campaign. our guest has held positions pertinent to this conversation. we are hearing the president trump wants a faster deal so he can get a bump when it comes to the stock market and get a domestic win. particularly after what happened when he walked away from hanoi. does the rush to get to a trade agreement mean that we might end up with something that is not meaningful or in the long-term enforceable and sustainable? that any tradek is going tod make change the global economic outlook one way or the other. these talks have been a long time coming. both sides are under pressure.

both sides want a deal and both sides need a deal. with china, the president is looking at an economic slowdown and the tariffs are not helping. the uncertainty is making it worse. with president trump, after the midterms, he does not have the congress that he once had and he knows that the markets are looking to get this tariff war behind us. beijing can product -- promise on the low hanging fruit. they can pledge to keep the yuan stable. the longer-term issues of protection and challenge to china's innovation and tech ambitions, do you see much headway being made there? large chinese purchases of u.s. agriculture and energy could certainly put a dent albeit small in the bilateral trade balance. how we can gete

to a balanced relationship between the u.s. and china. very high saving rate. the u.s. has a low saving rate. with the u.s. dollar being the world's reserve currency, coupled with the structural issues, i don't see it happening. for the president to focus on the trade balance is a lose lose situation for him. to longer term china's market access and how they deal with foreign investors and firms and force technology transfer, that could be a more positive outcome. the trade point on balance, this chart on the bloomberg showing how big the trade deficit has gotten for the u.s. topping $600 billion in 2018 and also the deficit widened into a tenure high.

to your point that both leaders want and need a deal. a key question is, who wants and needs it more? argue both sides of that and feel pretty good about either one. probably looking at the data, china needs it more. we are all connected. china and the united states are interlocked in a lot of ways. we cannot get away from it. it is probably for the better. in our interest and vice versa. as soon as we get this behind us the better. these access issues of forced technology, transfer issues, these issues have been a long time coming. the u.s., european and other foreign firms frustrations in the chinese marketplace have been there and so if the chinese government over the next 10 days

can address some of those things, will it have been worth it? i don't know. if they can't address those things, that would be a real shame and all of this would have been for not. >> we have seen some changes by chinese policymakers. we have seen some new ip laws as well. how much effort would you say the chinese policymakers have made on the ip front? >> it is there. you do see it. the new idea and new legislation being floated to china about ending force technology transfer. -- world will be looking to china has to want to do this themselves. growingee a small but mass in china. the chinese domestic firms who themselves are pushing up against their own technology

frontier. strongerselves want intellectual property rights. once there are enough chinese firms that want stronger rights themselves, i think that will push china even further to make those changes for the long term. interesting, i wonder what your view is of the longer-term outlook for the chinese economy given the restructuring as well as the more painful structural forms need to be. the work report this week, does that suggest to you that they are pulling the same levers that we have seen before? this is the same growth playbook. >> they have a lot of issues here. -- they have ake lot of bad debt they did to deal with. it will be interesting. we are watching closely how they deal with that. down on themping

easy fast and loose money. they realize they need to do is to allow investment and capital to go where the rates of return are the highest. that may or may not be in state owned enterprises. that is going to mean the chinese government will take a hard look at how they feel. enough feel comfortable to allow capital to go where the returns are the highest. thank you for that. we have lots more to come on daybreak asia. this is bloomberg. ♪

>> let's get a check of the

latest business headlines. tesla has lowered its outlook for deliveries and is canceling plans to build a delivery facility in china. tesla has recently lower prices but bank of america notes that they have no plans to do likewise. >> hong kong opens later. -- februarye sells sales -- that is a decline of 9% from the same. last year. sales and china were down 13%. the earlyt is due to lunar new year holiday. >> amazon is ending its experiment with pop-up stores closing outlets in the shopping

malls across the united states. at the wall street journal says the shutdown is expected to be finished by the end of next month although it is not clear if amazon pop-ups outside the u.s. will be affected. growing its traditional physical retail stores. rock-bottom interest rates on homes are pushing japanese banks to search for yield. that is causing volatility. our asia finance editor joins us. what exactly is in this? they dropped a bombshell yesterday afternoon out of the blue. less than one month before the fiscal year ends. this includes ¥500 billion of write-downs. of problemsd a lot with software and information systems over the year and also it is closing a fifth of its branches over the decade.

the ¥500 billion accounts for those. this also relates to a rebalancing of the securities portfolio due to foreign bonds. we don't know the breakdown of which securities they are referring to but the ceo said yesterday that they are trying to reduce negative carry which means the bond portfolio has been losing money over the years costing more than it is returning. does and thereally score with negative interest rates in the bank of japan. thanks event massively going overseas buying up these foreign bonds. >> thank you. take a preview of the market open in japan and south korea. being cast as the

oecd trimmed the outlook for japan. expect a risk off mood today. when it comes to stocks to watch, keep an eye on as k telecom. its outlook was cut to negative. producersching energy toporarily halt power plants reduce the level of fine dust in the air. the dust problem as to expectations. a nikkei news report, it will hold six of its plants in japan by the end of september. we are keeping an eye on japanese suppliers of huawei. city says the earnings boost would be negligible as they account for only 5% of sales at

those firms that do supply it. hour,ing up in the next an exclusive with mmg ceo jeffrey dow. we're going to ask him about the mining sector. also perhaps the outlook for the commodities market especially as they are a primary producer of copper and zinc. >> looking ahead to that interview, look at the asian markets. we are seeing australia keeping its head above water. despite weakness in the aussie dollar and generally a downbeat view on the economic situation. new zealand is trading flat at the moment. we are seeing a mixed lower finish or start of the trading day. softer footing after we had u.s. stocks falling overnight. trade data disappointing the oecd also lowering.

it a lot of great news when comes to the global economy. we do have aussie data out in the next hour. this is bloomberg. ♪

haidi: good morning. asia's major markets have just opened for trade. shery: good evening. sophie: i'm sophie kamaruddin in hong kong. i'll come to -- welcome to "daybreak: asia." haidi: our top stories, news about growth. foring expansion forecasts asia and europe. giving the markets a boost and driving the campaign for reelection.

shery: and bucking the trend by betting on the jumbo jet. sophie: we are seeing a risk off mood. the yen is gaining ground. course, friday's u.s. job data. the korean won is trading just thew that handle below dollar. stocks in sydney, shares rising for a second day. the aussie dollar is holding onto overnight losses.

i want to highlight really quick , spiting freight third straight day. haidi: let's get you to the news with elena. >> reaching about $20 billion when it complete capital raising. it has not set a limit as it approaches. the largest pool with 21.7 billion dollars at the height of the market. after the financial crisis, it took 16 billion for its next fund. and sitting a new standard for transactions for proprietary

trading. the policy board as sounded a salesg about the upcoming tax hike. the effort toe limit its impact. it hit consumption hard. european central bank is said to be ready to cut its forecast by enough margins to justify new lows for banks. air told the latest ejections show downgrades for inflation and growth with the consumption -- the assumption of a pickup.

huawei's cfo has appeared in court to begin her battle. she has been under house arrest in vancouver is being detained re-months ago. they say canada is engaging in political persecution. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: president trump is said to be pushing his trade team to strike asa deal with china to boost the stock markets and give them a lift ahead of his election campaign. derek, not really surprising to hear this. you have known about his fixation with the stock market. it is really shaping his economic policy. that is exactly right. how is your 401(k) doing?

that is the question he loves ask at campaign rallies. that we havee recovered from that. it is a point that the president likes to highlight. the president is incredibly sensitive to equity markets. the president might be willing to cut any deal, not just a deal. we see the clear trend every time there is positive china news. you get a bump in the u.s. and china as well. that trade deficit given how much the president focuses on that number would be displeasing as well. >> absolutely it will.

u.s. trade deficit hit a 10 year record today. it is much larger than the president wants it to be. what he looks set to judge how policies are working around the world. it is important to note that the trade deficit is not just a result of what he does and does not do. a lot of it is currency related and how well the economy is doing. the insatiable demand for imports. there is a lot more to it than the trade policies. this is a president who watches numbers closely. this is not necessarily prompting a revision of strategy. this is a president who recently said they would pool preferential trade status from india because they thought india was not opening its markets well

enough. look for more from this president and his trade strategy, not less. shery: it seems the private sector in the u.s. is also getting involved. we are seeing a group representing kitchen and bathroom cabinets has filed one of the biggest trade cases ever against china. >> patel happy mri that i got my kitchen renovation done last year sue myrick i saved a ton of money. this is an ongoing trend. you should see this as the next step in a trend rather than something new. they are following the same playbook. all of those things are headlines that have run on the bloomberg terminal, but they are looking at a situation where you

have an administration that has very verbal to a lot of these challenges and willing to install antidumping penalties on importers. this is just the latest. it is 2 billion and possibly more. this is real money coming up. at some oflooking these home repairs and renovations, it could very well increase the cost of all of that activity. haidi: we appreciate your time. our next guest discusses tensions between the u.s. and china is not going away anytime soon. devon, when it comes to the kind of market psychology we are being and how the trade war is playing out, there is more to suggest that a positive trade

deal has been priced in given that we are seeing diminishing reaction. >> i think so. perhaps one of the things that we need to do is perhaps to remember that i do not think this is a function -- a dispute over trade. it is an issue around a wider confrontation going forward. while i think the economic consequences will result in some kind of trade deal being struck, i think there is a wider deterioration. it has some significant locations for market over the medium-term. opportunistic. where would he be investing at the moment? war think that the trade

has resulted in the acceleration of policies out of china. the consequence of that, we think that the asian market should be a beneficiary. focus on domestic stimulus means some of these more domestic oriented companies. i would say that there are other areas emerging markets that look interesting. i would also look at india. shery: we are seeing central banks turning more dovish around the world. that is not surprising with the numbers we have been getting lately, cutting the global growth forecast. have policymakers responded in time? think it is good that they

have responded. have seen is that there has been a tightening of liquidity for a number of years now. the pause is good. i think we are seeing the consequences of that liquidity coming out of the market. you need to see whether or not growth will be able to stabilize and recover against some of the difficult backed up have seen coming through in the second half of 2018. 2018 was a year of exceptionalism. will that be the case for 2019? when we look at what happened in 2018 versus 2019, things are marginally better.

the second thing, you had worries about china and the slowdown. thirdly, the impact of texan-ism. this year, we see that it is not the same divergence of growth between the u.s. and the rest of the world. the second thing i would say is that china was keen on this inflation. in the short-term, there will be some kind of trade deal struck. the response we have seen in markets to date is probably appropriate, although our preference would be that it would be done over a longer period of time. the markets are set for a better return. reasons plus the potential for a weaker u.s. dollar. a little more positive

when it comes to emerging-market or has not gotten too popular at the start of this year? tr positive for emerging-market. that we have seen the best of the rally. there are issues that are coming up where we might see a pullback. we have yet to see the details of any u.s. china trade deal. somebody needs to lose on something. message wouldkey emerginge think markets versus last year. do want to continue that conversation, so stick around. he does stay with us. next, more with devon.

ask where he sees opportunities. haidi: later in the show, digging into the trend in the money sector. our exclusive interview. this is bloomberg. ♪

haidi: this is "daybreak: asia." devon.still with us is global head of equities and head of global emerging markets. good to have you with us. thank you for sticking around. it is always about the geopolitical tension really affecting how the market performance will unfold under the court -- over the course of the year. we have 70 elections. when youtive these in

consider where the markets in asia will go? remember the things to is the buyer and asset. they drive these asset prices higher. politics is typically one thing that people get concerned about. as you have seen in emerging markets, they get priced quite quickly. concernsthe news and about upcoming elections are in the price. india would be a classic example of that. that people are not populism that we are seeing across the world. for me, that boils down to the simple issue of intervention. increasing amounts of state intervention, not just in emerging markets. it is more profound in developed

markets. whether we are talking about direct intervention, i think that is the concern that we have with regards to market over the next few years. aboutt regard, i wonder develop markets and emerging-market. shery: they are already pricing it in because they have seen it inthe past, as i continues developed economies, how can it affect economies in the emerging-market such as thatpore russian mark >> is very much a concern. one of the things that might come out of the ongoing protectionist issue between the u.s. and china is perhaps a further breakdown interregional trade.

also, places like mexico. there are potential winners. it does create uncertainty. that means increased volatility. risk is back. i want to draw your attention to india and get more thoughts on that. he is turning his eye when it turned -- when it comes to the trade relationship with india now. looking at the extraordinary graphic growth and story that is india. we have seen stocks performing pretty well in this part of the world. she already mentioned political risk given that it is a election year, but the geopolitical risk with u.s. -- is that something

that is crucial that will be the next hurdle for investors to get over russian mark -- to get over? >> no. one can never be too complacent. ,f there is a trade war actually the trade issue is a smaller one. rightly, there are concerns about the elections coming up. we have seen one of the weakest market this year. a lot of that in the price. we look at the underlying growth rate, they look pretty robust. in my opinion, the big reforms that india requires, whether that is capitalization of the --ks and tax reform, it had

india should be able to sustain stronger growth for longer. it makes them one of the more interesting market. --ry: haidi: does the ability of china for a slowdown -- is that a queue for the markets in asia? >> in terms of sentiment, yes. the devil will always be in the details. what sort of reflation is implemented in china? that will take some more time to work out who are the beneficiaries of that. issues are the main drivers of the markets. yes, it is positive news. have seen this huge rally in the equity market, but at the same time, we continued to see government bonds advancing.

this chart is showing the yield premiums over u.s. treasuries really narrowing the yield. following the most in three weeks. this is all coming as we saw the chinese government lowering the economic growth target. hello this shift affect bonds there. last year we saw a bigger shift into bonds. ralliesr, as the market , you will see money coming out, domestically at least into the equity market. one of the big things about china, it is relatively small, given its economy because it has been restricted for investors to come into. one of the big names over the next few years is the opening up of the chinese bond market. there will be opportunities there as well. shery: what about consumption in

china? seen them trying to support the economy with recent tax cuts. these moves by policy makers help the consumption sectors in the chinese equity markets? >> i think so. that is one of the priorities for the government. one of the concerns that people can still have has been the creation of debt the explosion of debt between 2008 and 2018. that is something the government has been trying to tackle. the emphasis will be about trying to make an environment where domestic consumption is the driver. investmentto fix the and the like. it will be in priority for china. the other big benefit from trying to emphasize led growth

is it reduces the dependency on global trade on which there is this outstanding issue with the u.s. haidi: we really appreciate your time with us. global head of equities there joining us. you can get around up on the stories you need in our addition of daybreak. burke subscribers just go to your terminals and it is right there on your mobile. settingsustomize the to just get the news on the industries and asset that you care about. this is bloomberg. ♪

shery: this is "daybreak: asia." haidi: let's get you a quick check of the latest is not flash headlines. plunging intoever new york after lowering outlook deliveries in the first quarter

and canceling a plan to build a production society -- facility in shanghai. tesla has recently lowered prices, noting that they have no plans to do likewise. investors are being -- shery: investors are being warned to temper towards china. cautious about the role that china will play in the long-term strategy. citing the custom block on the model three saying the issue highlights u.s. firms doing business in china. february sales so, extending our slump christine at the beginning of 2019. about 242,000 vehicles. sales in china were down 13%.

february small is actually due to the early lunar new year holiday. knowsmpany's cfo finally when the extradition battle will start. >> thank you so much. ♪ want more from your entertainment experience?

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haidi: we are getting breaking news nicos and bloomberg. the trade balance coming in at $4.55. almost twice as much there. experts rising from a month earlier. earlier, from a month getting more details on that trade surplus just over 4.5 million aussie dollars sales rising by 0.1% month on month. that number was slightly shy of estimate. you expect things ending to really rebound in january, but we have not seen that, just a

10th of growth. bouncing back from the half percent contraction we saw. household consumption has been at the core of the can learn for policymakers, including the rba, given that we have seen that severe slump. that is expected to seep through. .hat was a big component we saw australia on a per capita basis. the trade balance number coming in almost twice as much as expected. $4.55 billion. the aussie dollar falling just above that handle, .2%. missing estimates at the trade revising.lso

of 3% for imports. let's see how markets are reacting. we are seeing that decline somewhat for the aussie dollar. we did see a drop of .22%. we are seeing some defending the aussie dollar. twocurrency is trading at a month low. in the long term, they see the aussie dollar at the five. a little bit of optimism on the back of that data. there is some more bearishness for the aussie dollar. it is extending gains at a six month high, adding a third of a percent. thenikkei 225 down and

kospi nudging lower. a gloomy outlook for the economy there. trimming the forecast for japan and korea. we do have the yen rising for a second day. the central bank is expected to cut economic forecast. inn it comes to sectors tokyo, that is the tech sector. players continued to slide after and moreg a 30% drop worries are percolating to the sector. sliding for a third straight day in tokyo in the wake of a news workt that they will stop by the end of september. they may be looking to halt operations overseas as well. shery: let's get to the first

word news. pushing his trump trade team to strike a deal with china. the president knows the market has risen each time the markets advance. he is concerned a lack of agreement could affect stocks. the foreign minister has cast doubt on the talks. some u.s. demands are unreasonable. said to havent is sunday or monday as the last day for talks. the eu is pessimistic that a breakthrough is possible. we are told that if she fails, she will not send negotiators back to brussels. the democrats are moving to restore obama era net neutrality. the measure would reinstate

that barred internet providers from blocking or slowing on the networks. public interest groups raise the bill attacked what they called heavy-handed regulation. mark zuckerberg said they will focus on encrypted communication. zuckerberg says more people dislike what he called the digital houseware provided by facebook and instagram. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. fed official is reiterating reasons why paul's makers took a dovish policy turn.

the ecb will do the same. .ur policy editor the topbly one of federal reserve not -- members. anyone who wants to make a point about the economy. very closely watched. a wall street. he laid out all the reasons why he sees the fed being patient. not wary because we are going way over potential. people were hawkish. the fact that inflation is not a problem. that seems to be the reason that they are on hold for the indefinite chair. risks do notry

seem to be out there right now at all. that we do notng need to tighten the monetary policy as much as we previously thought. not out there at all right now. that is a difference meant then in september he thought more hikes would be needed. i think it talks to a very important point. the white line is the city inflation surprise index. we go way back to 2000 and. is interesting is it has been under -- it has been downside for so long. for a while you were getting upside surprises. look how it has gone down. the surprise is

index for the world. this is on every central banker's mind. is the, what john said signs of global growth have turned into actual data. he noted that pretty much everybody out there right now is revising their forecast, especially european growth. issues,it and italy's populist. not to mention the slowdown in china. always adding more doom and gloom to the mix. what about global growth forecast? kathleen: maybe getting more support more central bank turned dovish. the organization for cooperation

and development. of forecast was for growth 3.3%. it was seen at 3.5%. downside risk could materialize. from 1.8% int cut november. germany's outlook cut from 1.6%. this is all happening. the report comes out as the european is getting ready to issue its policy decision on thursday. getting a pretty interesting scoop that they are poised to cut economic forecast pretty substantially. the idea is this will inform the basis of their debate for how much they put back into play in terms of long-term loans.

we will not get the actual numbers. that is what they are reporting out of europe. of feedback. a lot taking that new position. they were saying for months that their first rate hike, once they stopped bond purchases would come in to 19. maybe not this meeting, but starting to lay the groundwork. haidi: kathleen hays there for us. breaking news when it comes to the chipmaker. we are seeing the stock falling 14%. figure than any drop since may of 2012. over thisdecline

trading session. at 13 of therarily facilities, including all nine in japan. due tontinued to pileup plunging demand out of china. to decline compared to 2018. also considering halting plans overseas for a few weeks. it has already notified other companies. that is according to the nikkei news right now. declineeeing a massive by almost 15% at the moment. appearing in court to begin her legal battle. joining us now, krista, you were there. what was the atmosphere there?

>> the hearing was quite a short one. the biggest thing to come out of it was the next court appearance, which will be may 8. that is the biggest thing to happen in the hearing today. the atmosphere was pretty crowded. also, a lot of interested members of the public. i think i was one of the last people allowed in the courtroom. hearing,f the actual there were protesters, media, interested people outside the courthouse. wase was one man who burning the chinese flag. certainly, a lot of public interest in this case. one of the many legal issues include -- involving huawei.

>> one of the most important things to look at is she has now sued the canadian government and order patrol. she has alleged that her rights have been violated through this process. that is something that we will have to keep an eye on as the proceedings are going on. company from that, the is actually planning to sue the united government over its ban on using hallway -- huawei technology and equipment. separate from that, you have allegations in the u.s. that they have stolen trade secrets on t-mobile. a lot of different moving parts to keep an eye on. shery: thank you for that update. china's demand for oil has been peeking. earlier than the market consensus.

then joins us from hong kong. what is putting the brakes on china's demands? >> a couple things are putting the brakes on demand. chinese travelers favoring high-speed rail for travel. marketenetrating most aggressively at the moment. and look like they by 2025.ce it is not part of consensus. there are other forecasters out who see demand expanding after 2040. the largest energy producer in china sees a peak in 2030. istainly, morgan stanley forecasting peak crude oil

demand. interesting.quite does this mean that china skipped this crucial step that most nations go through that is a huge deal? >> most certainly. over the last decade or so, could demand out of china has driven the global market quite extraordinarily. it is not all bleak. they are also pointing to indiana. it is a bright spot. a lot of users are focusing on india, picking up the slack and. that would be good for crude producers. it will certainly hurt. the biggest losers there according to morgan stanley will

be the refiners and gasoline stations, which is no surprise. shery: thank you so much. coming up next, we will be joined by the mmg ceo. hisxclusive ceo to discuss strategy. this is bloomberg. ♪

haidi: china metals company has reported revenue for the full below$3.7 million, 5% estimates. jeffrey joins us in hong kong. let's set up the outlook. copper is one of the major asset. strength in the u.s. dollar and we in china. progression in the trade talks.

see huge reaction. how do you assess demand? >> we still have very strong in copper. investment.major it is very positive. 6% growth. it is a significant number. upgrade and also, the future energy needs. also, starting to facilitate. that means you will have very strong demand in corporate and

the internet. in terms of what we are seeing in the earning sector, it seems we are entering this period where dealmaking is picking up with momentum. view look like? >> yes. we are focused on growth. we have demonstrated average growth story so the market by conditioning world talk conferences over the past three years. had strong support from major shareholders. now we look at growth and growing our existing assets. believe we have quite the growth potential. also, our africa operation. looking at opportunities.

the mixture, it will be the right match for us. you have -- shery: you have been seeing some challenges with that in mind. what went wrong there and what is your outlook stable copper supply? is particularly related to the community blockade. the conversation is interesting. that will transfer to the community according to the settlement agreement. is operating in peru. many companies are facing issues like us. we are looking to the community. creating a solution

for the long-term. industry should find a solution for the long-term. also focusing on regulations, especially after that mining disaster. what is your company, specifically, doing to address risks? proud about our ratey performance and our of one. reduction.further management is our current focus in brazil. i believe we have our standard procedures and control measures

in place. the way we are working with the , they work around the senders. thank you so much for your time today. if you missed out on any part of that interview, you can always turn to the tv function tv on bloomberg. you can watch past interviews or watch us live. if you have any questions for our guests, the lower left side of the screen let's you ask the guest a question. this is for bloomberg subscribers only. check it out. this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: let's get straight to the markets and see what we should preview later this morning. behie: we are going to watching the chinese carmaker posting a drop in sales last month. rising competition is having an impact. expect a discount from the carmaker to continue. we have seen a gain so there might be a little bit of a dent in the optimism on the back of these sales numbers.

keep an eye on tencent as well after a very downgrade. they have cut the stock to neutral, urging caution and optimism over earnings. this after dramatic recovery has investors scratching their heads. near 50% rebound from its october low. i want to check in on technology after a series of ratings earning it upgraded. it has been updated. food for thought. it did miss estimates for the quarter. reported aompany near 40% drop in animals for february. just a few of the potential movers in taiwan as well as greater china markets. haidi: once to watch there. we will be leaving you with

these live pictures out of beijing. the national people's congress continues. getting moreefing, details on some of these reform measures that have been announced so far this week. very much clear this shift. prioritizing the stabilization of growth. shery: softening it growth target and they are trying to push forward with trade talks with u.s., a key focus right now as we head into this briefing in beijing. the china open is next. this is bloomberg. ♪

anchor: it is 9:00 a.m. in shanghai. welcome to bloomberg markets china open. anchor: we are counting down to the open of trade. here are the top stories this morning. stocks -- cutting forecast for asia and europe. trump want toent switch trade deal with china to give market to boost and drive his campaign for reelection. cfo has ae huawei