haidi: a very good morning. australian markets have just open for trade. sophie: welcome to daybreak: as ia. haidi: our top stories this thursday, sterling searched after the house of commons voted on a no deal brexit. review 737 orders worth

nearly $60 billion as the faa changes course and grounds the max. back in theump's headlines warning china he could still walk away from any deal he doesn't like. you a check onet the markets. ground oncks gaining the s&p 500 which touched a four-month high. every sector was in the green. the index past that crucial 2800 level. we have a little bit more positive eco-data coming out, including a rebound for orders and business equipment by the most in six months in the month of january. we also saw boeing holding on to gains. we have the dow gaining .6%. a little more positive sentiment across the market as we also have the u.k. parliament rejecting that no deal brexit. s&p futures higher by .1%. midweek,fter stumbling

asian stocks are looking at a day of gains. we do have the s&p 200 snapping a decline. some of the best performers so far, we have the likes of beech energy as we see crude trading at its highest level since november. pharma as wean still have speculation as to where the sigma deal may go after sigma rejected the deal to merge the two companies. some are pining that this is still a tactic to get api to sweeten its deal for sigma. , seeing what we are seeing. we have the pound hovering around 130 the after jumping more than 2% overnight. this as investors are

anticipating we will see an avoidance of that no deal brexit. there.sophie kamaruddin selena: the former governor of the reserve bank of india is the bank of japan and ecb are running out of ammunition in the event of another downturn. he said while the u.s. and china still have room to cut rates, tokyo and frankfurt have already done is quantitative easing as they can. the problem with both the ecb and bank of japan is they are already into negative interest rates. as far as qe goes, they have pretty much done whatever they can and whatever modest effect has had is pretty much there. my guess is that we have to look for other instruments in those countries. thata: the philippines is

risk of posting its worst expansion in eight years. the economic planning secretary said gdp may expand 4.9% at best the budget isn't past. that would be the slowest since 2011. he added that growth with the above 6% if the budget goes through. next month'ss election has already been targeted. an official says there has been a wave of cyber strikes saying that discredited the process. while china and russia have dismissed the allegations. u.s. defense officials are planning to test a cruise missile that has been banned for more than 30 years. last month, the trump administration withdrew from a 1987 treaty. after alleging that russia was already violating the agreement,

president putin responded by also withdrawing from the treaty earlier this. -- earlier this month. 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. wang.lina this is bloomberg. u.s. aviation regulators have taken a change of course and are now grounding the boeing 737 max 8 and 9. the u.s. was the last major domino to fall. after the president's tweets about planes being too complicated yesterday, he also played a pretty major part in this decision. and he was the one who pretty much announced what the faa has already said that they are going to reverse course. donald trump said that he is looking out for the safety of everyone, not just the american

people, but all people. he says that is paramount in that led to this statement. anwe are going to be issuing emergency order of prohibition to ground all flights of the 737 max 8 and the 737 max 9. in planes associated with that line. ramy: donald trump has said he hopefully sees that boeing will quickly come up with some answers. of course, boeing has taken a huge hit with market cap loss in the billions over the past week or so. the faa has cited new evidence going.r move to ground this is in relation to satellite flight tracking data that is combined with newly discovered evidence from the crash site, namely, they say there are similarities with what has happened with the indonesian lionair crash in terms of the

plane going up and going down with that anti-stall software possibly in focus. the acting administrator of the faa says that it became clear that the track of the ethiopian airlines was very close and behaved very similarly to the lineair -- lionair flight. after donald trump and the faa came out with this announced that they would band light here in the united states --ban flights here in the united states, it actually takes up just a bit. you can see the major drops over the past couple of days. over the past few days, ever since sunday, boeing is now down 11% since that crash. shares hitting fresh weekly lows. we will look ahead to tomorrow to see if it gets more traction. when we look around the

world, we have seen lots this is tensions of our. we are also seeing investigations into ethiopia's aircrafts with the country really snubbing the u.s. on this one. ramy: snubbing the u.s. in a big way because it is strange for the country of origin, or maybe country that is not even related to the entire crash. for example, ethiopian airlines is saying they are going to send those black boxes to europe and not the united states. the former transportation secretary said don't think about it. >> not at all because the ntsb is there and are an integral part of the investigation. when the black boxes are listened to, when the voices are listened to, the ntsb will be in the room. they are an integral part of this investigation, as they should be because americans were

killed and perished in the crash. i wouldn't read anything into it. ramy: so it is an issue of trust. the question here is, does ethiopia trust the faa or even can it? shery: thank you so much. withdrawe has voted to u.s. support for the saudi led conflict in yemen. some republicans also joined democrats on this rebuke against the president on the response he has taken to the killing of columnist jamal khashoggi. let's turn back to brexit. sterling jumping as u.k. lawmakers rejected a no deal brexit, opening the door to delaying the split past the march 29 deadline. the commons will vote on thursday on a postponement with no assurances the eu will agree. kathleen hays has been looking

at where this drama goes from here. a no deal to reject brexit and yet we have no clue what they actually want. does this mean we technically could still see a hard brexit? kathleen: possibly. i don't think anything can be completely ruled out. they rejected the no hard brexit, it probably lessons that likelihood a great deal. i was surprised the vote was as close as it was. there are still a lot of people in the house of commons who would be willing to say no hard brexit or nothing. theresa may reminded everyone that the legal default remains a hard brexit if no new deal is agreed by march 29 and if they don't call it off for a while. she laid out parliament options. they could leave with the deal she negotiated with the eu, i

guess that is not too popular. andk of the with her deal send it to a public vote. she said a second referendum would not be a good idea. it would erode public confidence of parliament. they could get a new deal and just have a short technical extension, maybe a couple of months to get all the details in place. or if they can't get a deal and they ask for an extension, it is going to be a much longer one, and that is what to cause a lot of problems for a lot of people. listen to what theresa may told them. >> there will need to be a much longer extension to article 50. such an extension would undoubtedly require the united kingdom to hold parliamentary elections. i do not think that would be the right outcome.

one wants to have to get involved with electing members of european parliament. she was very emphatic that you have to deal with the consequences of your actions, in other words, if you are not going to take my deal, and what to throw it back on you, you have got to do something, too .they vote tomorrow on whether or not to extend article 50. they don't want to vote for theresa may's deal, they will undoubtedly don't -- vote to do this. haidi: so what happens from here? kathleen: it's interesting. it is like one of those puzzles where you can choose any direction and the where it takes you. one story that theresa may is preparing a third vote on her brexit deal after holding secret compromise talks with the dup ers,pre-brexite

apparently the tory lawmakers are calling among the conservatives who voted against the earlier deal, are having private talks with the brexit secretary, attorney general, to find some changes in the legal as it of the irish that -- aspect of the irish backstop. that was the problem after theresa may made her visit over to strasburg and thought she had a legally binding agreement with the eu on the table, but then the eu says it's guaranteed assurances as to whether or not the u.k. could easily get out of this caps off if the eu -- backstop if the eu wasn't living up to their side of the deal. the chief brexit negotiator for the european commission says it is not going to be that easy. you're going to have to tell us what you want this extension for. you can't just have this as a tactic. everyone is talking about, what

does this mean for the u.s. economy? the bloomberg brexit barometer has sunk into negative territory again. it goes back to just after the original brexit vote. it has gdp, inflation, all kinds of things. carmakers having issues, many japanese companies saying they won't use plans. it is getting worse and worse by the day. this is certainly a big company overview page economy. a big thing hanging over the u.k. economy. later on, we will be live in beijing to find out whether china's invest recovery is holding up this at the economic lowdown. this is bloomberg -- economic slowdown. this is bloomberg. ♪

haidi: we are counting down asia's first major market opening this morning. that session is shaping up. we're looking at a little bit of upside when it comes to nikkei's futures. the latest economic data suggesting that the u.s. economy is on firm footing, but that inflation remains muted. a big day ahead when it comes to gauging the strength of the chinese economy with retail and investment as well as industrial production numbers. this is daybreak asia . shery: always great having you on.

we finally broke above that 2800 level for u.s. stocks. does this mean that finally, we investors joining the party? david: i hope so. it has been an area of resistance. abigail doolittle is an exceptional -- is exceptional market technician in her own rightan. we close above 2800 today, but we need a meeting close up of 2800 to continue that advance. we are right here again. we need to move higher from a technical standpoint. i think we are getting the fundamental data is going to move the markets higher. shery: when you look at this chart on the bloomberg, you can see that when it comes to the global profit outlook, analysts ofing curved the scope the downgrades.

we be worried that the u.s. earnings recession could start any day now? david: that is the consensus estimate. right now, the consensus estimate for the u.s. is about growth, or earnings earnings contraction in the first quarter. when we get about to this point in earnings forecast, we are seeing the lowest numbers, the most downbeat or most negative numbers for earnings forecast for the coming quarter. typically, we have seen about a 4.1% outperformance when we move through the quarter and get those actual earnings. the other thing is, these earnings forecast were looking at negative numbers and pessimistic view earlier in the year. some of the data coming out now, we had a very good durable goods number today, up 4% versus a -.1%.

on monday, we had a great retail sales number in the u.s.. we have other economic data that continues to come in good. housing was looking good the last few months. just recent housing data have improved. i think this will believe those earnings estimates a little bit. we know that the actual earnings comes in quite a bit better than consensus estimates. we think we will eek out a nearly positive earnings number and we won't even see a negative earnings number for the first quarter. we will not start the earnings recession in the first quarter for the u.s. haidi: what has been interesting over the past few sessions is that after a lot of trading, we are seeing relative resilience when it comes to investor sentiment, despite a fair few domestic and global headwinds. sense that the underlying stabilization mechanism is really the power push?

david: i think that the biggest catalyst for the markets right now is that the fed changed the message at the beginning of the year. the volatility in the fourth quarter was a mixed message from jerome powell, the chairman of the federal reserve. we were far from neutral on october 3, close to neutral in infamous presser on the december meeting that sense markets down, cascading in december. 4, the message changed in has been consistent that the fed is on hold. to go back to the 60 minutes interview on sunday that reinforced that. i worry about using this work, but we are almost in the goldilocks economy, outlook for the u.s. economy where the data is just good enough that we

continue to see positive economic data, the inflation numbers are just low enough that the fed can be on hold, the economy is still doing well. dangerous place of complacency to be in, to expect robust growth to trickle through for the rest of this year and inflation to stay relatively neutral? david: it is a dangerous place to get comfortable. i think investors need to be cautious because we are at sayls that if we -- let's my earnings forecast is off or if the fed changes based on new data. right now, what i have said is that the fed is back on our side. that wasn't the case in the fourth quarter. the fed right now is back on the side of the market. that is very important for u.s. market and really markets around

the globe very haidi: not only the fed, but the ecb releasing fresh stimulus. david: the ecb -- there was a point last year where the ecb expected they would be tightening by sometime in 2019. they have come full circle to where we had got a type of stimulus with probably stimulus measures coming in this year that will be needed. the biggest problem in europe and the reason we are avoiding the eurozone equities is brexit. when we talk about the troubles in europe, we had poor earnings growth. that is where we are concerned about earnings growth, economic growth. we are seeing the worst in years. look at all of the time and energy being consumed by brexit, not only the u.k., but in brussels and other matters they

need to get to both politically and businesses that are picking and businesses trying to make decisions with the uncertainty weighing on them. --t is what we refer to as including italy arguing with the eu, the yellow vests in france, brexit being a case of major turmoil right now. there is so much political turmoil on top of a weeks earnings growth in europe. -- weak earnings growth in europe.we think we need to avoid eurozone equities at this time. haidi: always a pleasure having you. you can get a roundup of the stories you need to know to get your day going in this edition of dabybreak. you can customize those setting so you just get the news that

you care about. this is bloomberg. ♪

a quick check of the latest .usiness flash lines lawmakers in berlin were told past security related events uawei work under review. sources say german intelligence is pushing for huawei to be kept out of5g in the country. bank focusesnwealth the on meeting recommendations afford inquiry into misconduct. the bank says it is still committed to the plan but for now is concentrating on issues such as compensating customers.

coming up next, find out why the former r.b.i. governor says the bank of japan has little ammunition left to avoid a downturn. this is bloomberg. ♪

asia, i amdaybreak selina wang. concerns about the safety of the have led7 max 8 and 9 people around the world to reconsider for pitches -- reconsider purchases worth $57 billion. kenya airways says it could switch to the rival airbus a320. lion air will do the same. this comes as the faa has reversed course and joint international moves -- joined international moves to ground the plane.

sterling surged and started to cut back as the house voted against a no deal brexit. this allows for the split to be delayed while the government tries to find an orderly divorce. parliament will now vote on thursday whether to postpone brexit which is two weeks away. theresa may is expected to ask that you for a two-month extension -- the e.u. for a two-month extension. >> the running to be longer extension. it would require the united kingdom to hold european parliament elections. >> [indiscernible] i, i -- i do not think that would be the right outcome. unioner: the european adopted a contingency measure to offset anything in the event of a new deal brexit. it covers a wide range of barriers from air, sea and road traffic and students.

's leaders regret the u.k. failure to bracket -- leaders regret the u.k.'s failure to back the compromise. >> why would be extend these discussions because the discussion on article 50 is done ? we have the withdrawal agreement. it is fair. reporter: global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i have selina wang. this is bloomberg. shery: we have breaking news. johnson & johnson has been overed to pay $29 million women's talcum linked cancer. it is linked to causing illness per they were found liable for a california -- women in california, the attacks linked to cancer. johnson and johnson is facing 13,000 claims that this product has caused cancer.

we are getting the order from authorities they will need to pay $29 million of damages over that to women in california who had cancer linked to the talc powder. let's get a check of the australian markets. sophie kamaruddin has a look. sophie: stocks in sydney are set to step a four-day drop led higher by resource players while the aussie dollar is near a one-week high as we count down to the key monthly activity data due out later this morning. it could come in around 5%, and that would be the weakest point for three years in china. the aussie dollar could retest the 70 line. we have the three year yield, three basis points within the cash rate target. seeing the 10 year yield higher.

breachedr 2% levels it yesterday for the first time since to -- since september 2017. this one is climbing 4.2% despite a disappointing update for graphite price below guidance, but the company said production is expected to be on track. i want to highlight beach energy, leading higher. tracking the rise in crude, trading at november highs on the signs of tightening u.s. supply. this one is set for a fifth day of losses following the construction materials provider. they are in the first place for australian builders. be -- ubs is cautioning it is too early to get cautious for the sector despite the rally in the stocks. haidi: sophie kamaruddin. traders will be watching for

china's first batch of indicators. they will show an investment recovery is holding up even as the economic slowdown undermines output and consumption. tom mackenzie joins us. what are you focusing on when the data comes out? these are three main cylinders of growth in china will be looking for and only one of them is expected to be firing. that is the investment. surveys showing up to 6.1% because of the increased infrastructure spending that is starting to kick in at the end of 2018. the other area is retail sales or that will remain flat -- retail sales or that will remain flat. it is disappointing for policy who put in a cut to personal income tax to spur greater consumption. that is not really having the desired effects according to surveys. industrial production is expected to soften.

it has been impacted by the trade war and tariffs. over january and february, exports from china fell 5% overall and from the u.s. down 15%. there is expectation of fixed asset management picking up towards this month and later in the year as the bond issuance structurece to investment kicks into place. we have had other policies by the national people's congress, cuts to taxes and fees grew they have themselves set at 6% and 6.5% gdp. haidi: pointer on the trade front with these negotiations -- quieter on the trade front with these negotiation's. anything on the president? has comeident trump out and is trying to assuage the concerns in china. there are concerns president xi

could go all the way to florida only for president trump to baulk at signing a deal. that is the fear of chinese officials who watched what happened with north korea and the meeting in vietnam. in 2017 and 2018 you had u.s. officials going back with what only for trumpls to say i don't like this. chinese are concerned. they want to get this stitched up before they sent president xi over. president trump saying we can meet after this deal is finalized or after we have the details in place. his are his comments from robert lighthizer, saying there are major issues around enforcement and tariffs. shery: we saw the u.s. state department releasing its human advice report. this could hamper trade relations especially near a

trade deal. tom: they could be another flash point. this painted a dire picture of what is going on in china where internment of a million muslims. the u.s. has described china's human rights abuses as remarkably awful, saying china is in a league of its own. talking about the uighurs and others who have been detained. they are described as concentration camp. -- camps. i answered there was increased pressure on the chinese -- listen to what this man had to say. asi suspect it will as long long as you continue to have these detentions of people that have not really committed any crime. they are being for the most part detained because of their

religion or because of their beliefs. the tv screens in beijing have gone black, pointing to the sensitivity of it. you have to wonder if things are as one official said, boarding schools, why they would need to blackout the conversations we are having now. the u.s. undermining -- despite relations, the u.s. will still work with people around the world if it is in the interest. shery: it is really a surprise, the screens going black. tom mackenzie there in beijing with the latest on chinese trade. the former governor of the reserve bank of india said the jeep -- the bank of japan and the ecb are running out of ammunition in the event of a downturn. >> the problem with the ecb and bank of japan are they are

already in negative interest rates. qe, they have done what they could. effect itt monetary has had is out there. there is more ammunition in the central banks tank. we have to look for more solutions. shery: this is our chief asia correspondent and the current. -- correspondent enda curran. people say there is still room to cut. reasons the the debate is surfacing is because a lot of the developed world is facing the problems japan faced in recent years which is slow economic growth, capital wage gains, sluggish productivity and anemic inflation. even though there is no shortage of criticism how japan has responded, there -- to emulate

what japan has done, in the past two decades they move from negative interest rates into the world of massive asset purchases. the have gone into a world of flat curves, controls and rates, negative interest rates. there is a feeling that even if the rest of the world doesn't want to follow japan and they found a solution or tonic, there could be no option but to follow. that goes to the point of the bank governor of india that they are running out of time to do so. japan's experience is -- haidi: japan's experience is relevant. enda: it is afflictingenda: much of the developed world. you see it in australia and high employment levels, lackluster wage gains, sluggish productivity. there is no tonic. people are looking to buy in the

absence of a political solution. this is moving to the debate of more unorthodox policy measures and what can be done with interest rate ceilings, mixing up a variety of asset purchases, the world of yield curve control . the world economy is slowing down, we have the bank of china meeting, and we are not on the cusp of an outright slow down like 10 years ago but the fact policy makers are having this debate shows you they are thinking about what options are in their toolbox and what japan can do. asia economicef correspondent there. let's get more on boeing as airlines reconsider billions of dollars of orders for the 737. the growing pressures on the faa as is grounds the max. this is bloomberg. ♪ s bloomberg. ♪

,> if you ground the airplanes money will be lost and there will be some inconvenience. neither one of those is an earth shattering event, and no airline should fly an airplane it doesn't think is safe to avoid money -- losing money. >> they are conversations that need to take place, decisions .hat need to be made if the number one priority at the department is safety, which it is, then this has to be done. >> my concern is the transparency on aviation safety overseefaa's ability to a company as large as boeing to ensure the safety of the flying public. those questions are in doubt as a result of the actions taken by boeing and the faa on this. aviation experts weighing

in on safety concerns regarding boeing 737 max. an aviations consultant. great to have you. is it too little, too late? the decision was only taken after other nations had already taken similar steps. >> they did on the basis of the two airplanes that crashed possibly for different reasons, possibly the same. mostly the pilots were not trained properly, probably. around the airplanes, boeing will have a software fix small ones can deal with an we will be back in the sky in -- and we will be back in the sky in two weeks. haidi: what led to this decision? >> a combination of finding out probably the ethiopian pilot was

in properly trained and we know the pilot was alone in the cockpit. 200pilot -- copilot had hours and should not have been sitting there. same thing with lion air which history withable safety. so doing something with smaller u.s.nes to train from -- carriers have been safe. i agree, it is the rest of the world we have an issue. shery: if you are thinking they could be back in the air in two weeks, why didn't boeing just ground the flights in the first place? it was not like the dreamliner. michael: i don't think they had to. in the u.s. we have highly trained pilots. they say this aircraft is fine. the issue was the result the world where we find out carriers like ethiopian have pilots in the cockpit that don't have

enough training. they are trying to do a software fix that will fix that issue itself. shery: let's stop about the fact china was the one that took the lead -- talk about the fact china was the one that took the lead. they are conservative with aviation safety but we can't help but wonder if there is political reason given the tensions with the u.s. what do you think? michael: i think they did that entirely on the basis of safety. i don't think it had anything to do with trade issues. whether you agree with it or not -- i don't believe it had anything to do with trade. everything was safety. i will take issue with the points you made about pilot training and safety records. ethiopian airlines has a good safety record. and u.s. pilots had concerns over the safety of this aircraft we heard from the flight

attendants that they would prefer aircraft be grounded as a precautionary measure. pilots were trained in the u.s. or are american or come from western training. pilotre is an issue of training, it is something that has gone wrong with this aircraft and function we are talking about, that does go back on responsibility to boeing. islets found there was an issue with the autopilot system and addressed that. foreign pilots work for carriers globally, they are trained on own standards. as far as ethiopian goes, i am sorry. if you have a pilot with only 200 hours in the sky, that is not safe. i don't care how many they train, that is a major problem. in the u.s. we didn't, elsewhere we did.

it gets back to pilot training. haidi: i want to focus on the business implications. this is the work horse, it makes up a huge component of their business for boeing. we heard for the likes -- from the likes of norwegian that they will be seeking compensation. is this going to be bad for boeing? seekingould be compensation. michael: absolutely. every country has lawyers working tonight. some airlines have been damaged i this, and boeing is responsible for it. it will be a hit, but in terms of orders canceled i don't think it is in the cards except lion air. we don't see any real pushback. as far as what you are saying but will this be a hit on boeing's bottom line, bank on it. shery: what about other suppliers to boeing?

michael: if major orders are cut, it would be a big issue for engine manufacturers, component manufacturers. i don't think there will be any really a cut spirit airbus, the only big game in town, they are backlogged forever. they can't take up a huge cancellation as much as they would like to. china has no airplane on the horizon ready for the next five years. we are ready to do business with boeing or you don't have any airplanes. shery: air passengers, how will they be interacted -- be impacted? michael: it is the good news. globally it is less than 350 out 22,000 air flights. in china they are grounding 1.5%. it is not a big hit to the transportation system because there are not a lot of these in the sky.

that goes back to the point of what harm has been done with mainland fleets, major american flights if they were to have grounded a couple of days earlier. the fact the ceo called president trump to try and reassure him about the safety of their fleet, are the political implications to close, the faa is to close with boeing? close with boeing? michael: they are nonpolitical. are the political ramifications -- yes there are some because the faa is a political appointee , but it had to do with the fact that in the u.s. we didn't have a safety problem. the rest of the world did. now it will get fixed. for your time.u international president and ceo. thank you for joining us.

we will have an exclusive interview with another ceo on bloomberg markets asia. this is bloomberg. ♪ ♪

shery: let's get you a quick check of business flash headlines. softbank and other investors are in late stage talks to reject -- unleashed $1 billion into a uber's self driving unit. at least one automaker and together it would take a minority stake in uber's unit with a valuation between $5 billion and $10 billion. this could come next month if talks succeed. haidi: spotify: for apple to be investigated by the -- spotify to beling for apple investigated by the e.u. for its streaming services. they have ever-changing rules and a 30% tax on apps that compete with apple music.

this comes after elizabeth warren called to break up facebook, apple and others. you have been having trouble using social media today, you are not alone. facebook, instagram and messenger are having problems. reports of trouble include logging in, posting photos and sharing comments. facebook is investigating an offer refunds to advertisers. there's and offering refunds to at -- facebook is investigating and offering refunds to advertisers. atwill have a new guests 8:40 a.m. hong kong, 11:40 sydney. looking at the market open in japan and south korea. some cheer likely ahead, the nikkei 225 could recover most of wednesday's losses. and the fed looking at a policy meeting. the former r.b.i. governor says

boj and ecb have little ammunition left. nissan and mitsubishi motors, several executives had for the exit, keeping an eye on -- head for the exits. looking at this sony acquisition. also discounting disparities at a china affiliate that could book a ¥12 billion charge. 2018 earnings, after the market close, and peace talks could move today as south korea is not the immediate [indiscernible] looking at korean electric battery makers like lg chem as well as they have been from a giant chinese government new energy car substitute list. haidi: coming up we are joined person to generale's talk about the market open.

headwinds facing global markets. this is bloomberg. ♪ ♪ you.

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haidi: good morning, i am haidi stroud-watts. asia's major markets opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin. welcome to "daybreak asia." ♪ haidi: our top stories, sterling surged as the house of commons voted against the no deal brexit. theresa may will seek a two-month extension. orders and worth $57

billion as the faa changes plans on grounding the max. changes inping china, affecting tencent and alibaba. south korea getting underway. let's get to the market action. sophie: seeing as shares in tokyo, the nikkei 225 adding .9% and attending to bring back the losses on wednesday. we have the yen holding steady ahead of the boj, kicking off its policy meeting. there have been words of caution for the central bank given the series of disappointing economic data japan has had to contend with. they are looking at a slight downgrade this month, giving you a sense of what is like on the ground. .3% this adding morning, keeping an eye on

electric vehicle makers -- electric vehicle battery makers. they were excluded from a subsidy list in china. looking at stocks in sydney and wellington, the asx 200 set to drop, the being led higher by research materials. there seeing of course countdown to the chinese data dump at 10:00 a.m. hong kong time, output and 5%, the weakest prices in three years. -- at 5%, the weakest prices in three years. the british pound is steady after the jump overnight, below the 133 handle against the dollar. we are seeing sterling the best-performing g10 currencies so far in 2019. traders are looking to buy bids currency whenever there are little developments on brexit as we count down to the

u.k. parliament. in the u.k. parliament. ramy: the senate defied president trump and voted to remove u.s. support for the saudi-led conflict in yemen. republicans joined democrats to rebuke the president for his dissidents regarding jamal khashoggi. this would allow them to remove u.s. military support in 30 days. president trump threatened a veto. the former governor of the reserve bank of india said the bank of japan and ecb are wanting -- running out of ammunition. the governor of the bank of india said while the u.s. has room to cut rates, tokyo and frankfurt have done as much quantitative easing as they can. they will have to look for other solutions. >> the problem with the ecb and bank of japan is they have negative interest rates.

as far as qe goes, they have done what they could. whatever effect this has had is out there. they need more ammunition in the central bank tank. we need to look for other instruments. ramy: the philippines at risk of posting its worst expansion in eight years with a delay budget approval prompting cuts in growth targets for this year and next. the secretary of growth said gdp could expand 4.8% at best, the slowest since 2011. growth would be above 6% if the budget goes through. indonesia's next election is being targeted from china and russia in an attempt to disrupt the result. a senior election official said there have been a wave of cyber strikes, and they included attempts to manipulate content and create fake voters. china and russia have dismissed those allegations. global news 24 hours a day, on

air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this isy inocencio, and bloomberg. haidi: u.s. aviation regulators have changed course and are grounding the boeing 737 max 8 and max 9. the u.s. was the last major country to do so after 14 others ordered a ban after the ethiopian airlines disaster. mark engle has been following this. -- stephen engle has been following this. the president played a key role in this. stephen: that is right, trump taking the unusual step of announcing the faa ruling it was going to ground the entire model 9, afterx 8 and max the faa siting new evidence of satellite flight tracking data and new discovered evidence from

the ethiopian crash suggesting parallels to the lion air crash that involved a problem with the anti-stall device in this aircraft. the lot built into the cockpit, that perhaps the lion air crash took control of the airplane because of faulty sensors, indicating a stalwart it was not. opening minutes of take off and pitches the nose down. i had conversations last night with an active triple seven pilot who is aware of these built into it boeing aircraft. he said -- built into boeing aircraft. he said the flight patterns were similar and it was obvious to him these two incidents in lion air and ethiopian were very, very similar. he mentioned the software that is installed in the new 737 maxes are counterintuitive to

how boeing pilots are trained. take control when there is a problem. that automatic software was pushing the nose down. that is where led to a problem. one main solution is counterintuitive. push the autopilot on. that is counterintuitive to what boeing pilots are trained. earlier we spoke with the former ntsb chief jim hall who is critical of boeing and the faa for not grounding this model earlier. >> the change in that budget to sell certification by boeing into its own aircraft and since that time you have problems with the 787 and no problems with this airline, with this model. you know, certainly you can drop the dots and see boeing has worked hard, lobbied hard to put themselves in control of their own destiny. they are not doing a good job on

aviation safety. stephen: here is a quick statement from the acting chief of the faa. it became clear that the task of the -- the track of the ethiopian airlines flight was close and behaved similarly to the lion air flight. this is a day after he put out a statement saying the aircraft was in her worthy. -- was airworthy. shery: is the reputation of faa and boeing already heard? -- hurt? stephen: it has taken punches to the face. boeing was on a tear under dennis muilenburg. the stock had tripled. we saw booking booming. revenue topped $100 billion for the first time in its history. the 737 is a cash cow, 79% of the order book, one third of

operating profit. 500 were going to be delivered this year alone, then we had these crashes and the follow. muhlenberg is an engineer by training. he takes what i have been talking to people in the industry, he talks -- takes the tact of limiting communication until he has all the data at his fingertips to say what happened, instead of what vr executives are -- pr executives are saying. he can get ahead of this and limit the pr reputational damage. this is something that will be studied for years. the dreamliner fiasco, they did have it grounded. it was 123 days. boeing got the plane fixed and flying. a previous just on bloomberg last -- guest on bloomberg last hour said once the fixes are in

place, they should be back in the air in a couple of weeks. shery: thank you so much. still ahead, we will dig into the fight over 5g. stocks connected to a continued to surge. haidi: and more on the latest drama with brexit. what is the next step for theresa may? this is bloomberg. ♪

shery: this is -- haidi: this is "daybreak asia." shery: sterling jumped as u.k. lawmakers rejected a no deal brexit, delaying the split past march 29 your they will vote on a postponement with no assurances that you will agree. -- the e.u. will agree. looking at where this drama goes next, kathleen.

what can we expect? more -- a lot more back and forth. they don't want theresa may's deal and march 29 is just around the corner. when i saw the closeness, i didn't realize there were so many who said let's keep the hard brexit on the table. theresa may said it was used as a bargaining chip, putting leverage on top of that you that -- the e.u. that they would consider that. she reminded them that the legal default remains a hard brexit if they don't have a new -- new deal in place by march 29. she says you can vote for my deal, the one i negotiated after two years that you said you don't want. you can also put into a public vote, a second referendum which she says is a bad idea. it would erode the public's confidence in parliament. she said this is the best you

can do. many covet the new deal and want shorter extension. what if you can't get a deal and you will have to ask for extension? it will need to be a longer one. here's what theresa may reminded them. >> there will need to be a longer extension. such an extension would require the united kingdom to hold european parliament elections. >> [indiscernible] >> i -- i -- >> [indiscernible] that would beink kathleen: the right outcome. she said you must deal with the consequences of your decisions. interestingly that the times of london has a story out citing unidentified people close to the inner workings of prime minister may and her conservative tory colleagues. there are discussions of maybe a third vote on her deal. that might seem crazy but think

about it. the one main reason of her compromise with the e.u. being rejected when she hopped on a plane to meet with michael barnier is her attorney general said this is not legally binding. theresa may thought it was. the e.u. says it is guaranteed, there are insurance policies. now they are looking at hammering out legal details and getting something in place that would have that legal binding aspect. would that be enough? a lot of people criticize her for taking too long and not grasping how serious this is, but she doesn't give up. shery: crisis after crisis. thank you. isning us from singapore nick amar consents, chief economist and head of economic sector research. the u.k. parliament has kicked the can down the road.

does this mean delaying brexit is the same as the economy taking longer to recover from this uncertainty? nikola: i would make a couple of points. as we heard from kathleen, delaying brexit also depends on the e.u. agreeing to that. totheresa may made clear parliament, they have to give the e.u. a reason to delay brexit. if we think of a scenario that is a significant risk that is moving to hard brexit, that would create a significant shock which we would estimate would be 4% of u.k. gdp and 1% of euro area gdp. that is something that is in no one's interest. at the same time, a continued delay would be granted by the e.u. if it is clear what reason

it is for. theresa may has said there are two possibilities. ask for a short technical extension and do her deal, or ask for a longer extension with the idea to explore other options. in that case the u.k. parliament has to tell the e.u. what they want. what theresa may is doing is trying to push brexiteers into signing up for her deal, because they are fearful if there is prolonged extension, that would amount to a softer brexit or none. in terms of the economic impact getting to a deal, we need to the u.k. willhat stay in the you at least until december 2020. there is still the question of

negotiating a future relationship so there is a lot of uncertainty surrounding the whole brexit story. depending on what happens next from a structural point of view, brexit will cost the u.k. economy a cost of a full point of gdp per annum. this is why it is critical as they come into the spring council that we see more progress on europe area that is why the european parliamentary elections are the 23rd to the 26th of may. shery: we are seeing downsides play out in the european economy so much so that the ecb unleashed a new round of stimulus. how bad is the situation, and how does brexit exacerbate? michala: there are number of factors weighing on the euro area economy. some are linked to the auto

industry and some are linked to the brexit uncertainty, and others still to the dynamics of global trade. if those can lift, hope is we would see some improvement from the slowdown that we have seen in the european economies. my concern is the u.s. economy is going for a more substantial slowdown into 2020. there is a restaurant fiscal oficy but from the maturity the cycle and our expectation the u.s. will not be able to generate a similar fiscal impulse -- keep in mind it is half a point of gdp -- not be able to generate that again next year. that means we are expecting economies to slow to 1.5% next year. that will act as a headwind on the euro area. with slowing global dynamics i

would not say we are in any scenario or going for recession, but we are for a slower economic outlook. that is why putting in a place of structural reform is all the more critical. president draghi made this point strongly at the ecb press conference. he was asked about the ammunition the ecb has, and he keeps saying for monetary policy and europe to work more effectively, it required structural reforms take place. is about completing the banking union, capital -- it is about completing the banking union, capital, all of this long shopping at risk -- list we go through. this is critical for europe to .e able to grow haidi: we are looking at a global economic recovery. expectationsor

with a resolution on trade or brexit, if that goes any sort of substantial degree towards undoing or reversing the cyclical or in some cases structural slowdowns we are seeing? michala: i don't think it will cycle,te the economic but what it does do is lift uncertainty headwinds. if we take this specific case of the u.k., we can see the uncertainty headwinds had a dampening effect on investment. that is true elsewhere. if we get a good resolution on the u.s.-china situation, we move brexit uncertainty, it gives a lift of confidence and will take away downside risks. i took -- told you if the u.k. goes towards no deal, that spells recession for the u.k. coming into the leader stages of

this year -- later stages of this year. if we don't have hard brexit, the u.k. could still move at unexciting pace of growth but still growth. amoving uncertainty is positive, but the cycle is maturing. u.s. fiscal policy will become less accommodative, and it doesn't change the fact that for central banks, it is very challenging to provide a significant amount of stimulus especially in japan and europe. haidi: that is the concern, they are running out of ammunition. but centralis, banks are low and cannot -- alone cannot face the -- fix the structural issues. there are a number of structural issues in the u.s. that need to be addressed.

there are discussions about inequality. we have seen this driving populism in a number of countries. addressing that through fiscal policy alone is insufficient. we need to look at things like education and inequality between companies. we need to reduce the reliance on debt. governments need to take action to face these actions for this china and europe. it is about government reformuting and making efforts. haidi: really great to have those insights, group chief economist and the head of economic sector research joining us. you can get a roundup of what you need to know in today's edition of daybreak here go to dayb on your terminal.

it is on the bloat -- the mobile in the bloomberg anywhere app. customize settings so you get news on industries and assets you care about. this is bloomberg. ♪ s bloomberg. ♪

asia. this is daybreak i'm shery ahn. haidi: i am haidi stroud-watts. looking at the business flash headlines, brookfield asset management buying a majority stake in 03 capital, creating one of the largest money managers. they would take a 62% stake in oaktree's person joined the board of the other and they will be run independently. shery: softbank and other investors in late state talks to inject $1 billion into uber's self driving unit. other investors include at least

one automaker and together they would take a minority stake in uber's unit with a valuation between $5 billion and $10 billion. this could come next month if talks succeed. haidi: if you have been having trouble using social media, you are not alone. facebook, instagram and messenger are experiencing technical difficulties around the world. reports include logging in, posting photos and sharing comments. facebook is investigating an offers refunds for advertising. -- and offers refunds for advertising. calling out apple on how they treat users. spotify said apple created untenable situations by imposing that and a 30% tax on apps competes with apple music through this comes days after elizabeth warren called to break up facebook, apple and other big tech companies.

haidi: china's national people's congress will pass an overhaul of regulations when it comes to foreign investment. you about new rules and the potential impacts. this is bloomberg. ♪ cts. this is bloomberg.

asia.this is daybreak i am ramy inocencio. sterling surged and then came back as the house of commons voted against a no deal brexit. the split will be delayed while the government attempts to find an orderly divorce. this means parliament will vote on thursday whether to postpone brexit which is over two weeks away. theresa may is expected to ask the e.u. for two months. >> there will need to be a much longer extension to article 50. this would undoubtedly require the noted kingdom to hold -- united kingdom to hold parliamentary elections in a you

parliamenty elections. i don't think that would be the right outcome. >> the problem is the lunatics appear to have taken over the asylum. the u.k. doesn't have a functioning government and i can't answer your question about what is coming. theresa may not only has no idea what is coming but what is coming tomorrow. ramy: the european union adopted contingency measures to offset provision in the event of a no deal brexit. air, sea and road traffic to the status of foreign students. failure,et the u.k.'s but the chief said there can be no more discussions. concerns on the safety of the boeing 737 max 8 and max 9 have led people to reconsider

purchases worth $57 billion. will be a final decision when the ethiopian airlines crash is known. will do thelion air same. it comes as u.s. aviation regulators reversed course and joint international moves -- joined international moves to ground the plane. contesting a cruise missile that has been banned for more than 30 years. the trump administration withdrew from a 1987 treaty that allows the testing and appointment of certain ground-based missiles. russia was already violating the agreement, they said. is important also withdrew -- president putin responded by withdrawing. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ramy inocencio. this is bloomberg. haidi: looking at asian markets.

sophie: asian stocks resuming gains after stumbling midweek. the yen is study with a policy meeting. policy meeting. jumping 2%, retreating from the [indiscernible] theresa may is looking to put together a third vote on her brexit deal. the aussie dollar under pressure, off .2%. holding a four-day gain a-shares in sydney rising for the first day in five. there are gains in wellington seoul.ul -- and energy leading gains in tokyo in terms of sectors. with of the biggest boost, it is softbank. looking at the movers across the region, softbank shares in the

¥11,000 level, october high, amid reports softbank and toyota are part of a consortium negotiating a $1 billion investment into uber's self driving cars. looking at daimler house, they could have a ¥12 billion charge after accounting disparities at a chinese affiliate. this one felt wednesday when the company was fined 100 million yen. other steelmakers across the region rising as people wait to assess the impact on steel and aluminum output. shery: oil has risen to its highest level of the year so far. brexit -- brent $57 a barrel with west texas also rising. they have not been that high since november. u.s. stockpiles fell despite forecasts they would rise. our energy reporter joins us now

from singapore. does this mean we are seeing a tightening market? reporter: i am not sure we are seeing a tightening market. we are seeing signs. that is why prices have been rising. we are in a position of oversupply according to analysts are reporters have talked to. there was the analyst expectation stockpiles would 3.8 6but it fell by million barrels in the u.s.. on top of that, gasoline stockpiles also fell. that was a pleasant surprise for the market than expected an increase. fell,mport of oil also showing venezuelan sanctions and operations by opec to cut output our study to take barrels out of the market. that is -- cut output are

starting to take barrels out of the market. folks will watch how these players move forward. opec and opecs of plus, russia managed to get halfway to meeting its target for the oil curve agreements that were made. they have a few weeks to fulfill that. in terms of supplies, what are we seeing? stephen: we have seen saudi arabia which is the defect out opec.n in open -- in they are taking the lead, putting -- going below what they will cut. you are seeing some nations push out. this is led to the charge of saudi arabia. russia has been saying since december they would cut. seems the market expects them to meet at least part of the cuts they promise. other nations are doing their part but there is less oil coming out of venezuela because

of u.s. sanctions. that is also affecting the supply side in the market at the moment. haidi: thank you for that, bloomberg energy reporter joining us there. china planning to approve new .ules for foreign investment the sweeping overhaul would affect a range of companies including ford, alibaba, tencent are looking at the implications with our asia tech reporter from hong kong. what are these changes that could be passed on friday? reporter: the best way to look at the most accurate -- most interesting aspects is there is a gift and potential uncertainty introduced into the new proposals of this law. the gift is previously clauses that were introduced in the previous draft law for years ago could introduce that people dubbed as vei killers, china's

largest technologies committees including alibaba and tencent structures with restrictions on foreign investment laws in china. those could have rendered structures illegal. now those terms have disappeared from the latest draft laws. you can see the investors in these tech companies are breathing a sigh of relief. the uncertainty is they are resending the joint venture laws that have governed china's jv for more than two decades. ndter they resend -- resci those laws, there will be uncertainty going forward. shery: thousands of foreign companies may need to renegotiate contracts. how significant are the changes?

lulu: one of the lawyers we interviewed says it is not so much what is going to change, more that you could be reopening and maybe the partners don't want to repeat their wedding vows if you actually open a can of worms. it is not like what is actually going to change but a devil is in the details. execution of how they will comply with the new company laws going forward. shery: lulu chen. the prospect of 5g as chinese telecoms are jostling for position if enough profit margins get squeezed. we will look at who is on the front row. this is bloomberg. ♪ this is bloomberg. ♪

shery: this is daybreak asia. i am shery ahn. haidi: i am haidi stroud-watts.

5g has become a lot of convention -- contention between the east and west. let's take a look at all of this. we have the head of asia telecom and internet research. she joins us in hong kong. we have seen outperformance in this sector. this is really an industry that has become a national champion issue for beijing. thank you for having me here. outperformance is really related to the week markets. -- weak markets. they are outperforming in the current market environment. in terms of 4g, china is late in growing up the 3g and late for the 4g. they want to be early in 5g and on par with the rest of the world. we are unlikely to see much investment in 2019.

investing 58 alien dollars this year but -- $58 billion. it is still not available right now. the only aspect is [indiscernible] to grow are looking alone in china. which will only come out in march 2020. most of the 5g capex will be like next year instead of this year. growth in china may not be as aggressive as 4g because china back then didn't have a very big 3g network so they had to get 4g in a year or two. billion dollars. because of his application is in the early stage they might role on this coverage in key cities as well as industrial areas.

the growth outcome could be more than the 4g era. capex will be recorded -- accordingly less aggressive. haidi: is there a player that is preferred? elinor: can you repeat the question? haidi: is there an operator that is the preferred 5g layer? -- player? elinor: china mobile. they get 2.6 gigahertz which is it is less than the global standard. the important work is for the equipment to support that technology. china has huawei with another frequency van in the 5g equipment. it will not be that difficult. with lower frequency they will need less coverage and have more better penetration for the 5g

network. china mobile will be out performed in the 5g era. shery: huawei is seeing many challenges globally as countries are cautious about using their technology when building 5g infrastructure. will this have bigger repercussions for china? elinor: i think china is still trying to go outside of china, supply 5g equipment to the rest of the world to gain skill. but china is [indiscernible] if you look at the three chinese , they are recruiting domestically. that is a big market for huawei. in china it is difficult to beat the china 5g coverage because the government -- it is crucial for the fundamental growth of the economy. they are giving out 100 megahertz spectrum for free for the three telcos. china has a huge amount of cash

flow. they are spending $30 billion u.s. in cash flow. supportl help them to the 5g rollout in china. on top of that, huawei equipment is catching up to the world level. they offer at a lower price. if you look at china's telecom network coverage, it is the best in the world and best run industry in china. shery: there could be significant savings if we saw mergers. china unicom, china telecom, could we see some? elinor: for the rollout, i don't think there would be much for the 5g rollout this year. it is a trial basis. they are trying to network and test applications. human.till beyond the it is serving the machine. they are testing different

,pplications in manufacturing health care, smartphones. this application still is in early-stage of the applications, so we don't likely to see a lot of the 5g rollout this year. haidi: what is your assessment on the proposal we will see a major -- merger between the third-largest and fourth-largest telecoms in china this year? that came through the people's congress a couple of weeks ago. who are the winners and losers? goesr: the probability down right now because each of the china unicom and telecom is awarded with 100 megahertz 5g spectrum at 3.5 gigahertz frequency band or they will roll out their own network -- frequency band. they will roll out their own network. for business operations

[indiscernible] they have highly overlapped network, two g, 3g networks. if you look at these two, they will handle multiple networks at the same time. that will lower the upgrading efficiency for the -- operating efficiency for the company. it is never about laying off people. that would lead to internal competition. two people competing for the brunch level and the head quarter. that will take a year to digest or integrate. very negative for the 5g rollout in china. haidi: thank you so much for joining us. extremists art of the interview or any other -- if you missed part of the interview or any other, tv is your function on the bloomberg. you can go into securities or functions we talk about.

if you have any questions for the guests, you can ask the guest a question. lower left side of the screen. bloomberg subscribers only. tv . this is bloomberg. ♪ berg. ♪

shery: the former congressman beto o'rourke will seek the democratic presidential nomination. we have seen him run in the general elections against senator ted cruz in the midterm

elections. he lost. he was a former democratic congressman from west texas street we are hearing media reports saying he plans to seek the democratic presidential nomination. china's largest online travel company ctrip is doing its best to put the boeing crisis and slowing economy to one side as it looks to expand globally. the ceo welcomes the international response to this 737 issue. government isthe taking the right action to put people's lives first. we welcome that action. we created our sos program so when things like this happen, when there is a tsunami in japan , earthquake in nepal or las vegas shooting, our team within a few minutes will reach out to all the passengers, contact

them, have hotel partners open shelters to provide protections and fly them back right away. when this unexpected situation happens we have measures to protect customers. shery: you are facing more external challenges from a slowing chinese economy. we are continuing to see signs china and globally. the sale of air tickets, domestic sales account for half of your sales. are we seeing any impact? jane: i think we are very bullish on chinese economy for a couple of reasons. the gdp per capita for china right now is only 8000 per person. if you compare to the u.s. and europe, it is 40,000 per capita. second, urbanization in china is has 40% to 50%, versus usa 80% of urbanization.

the third is chinese companies and family spent a lot of investment in their children for their education. that is the investment into the future. for the next 10 years we believe china still will grow, leading the way for economic world. ctrip is well-positioned. have $9.1 billion in cash saved up. could you use that to make acquisitions? jane: we earmark our cash carefully. we want to secure enough for operations. we have enough resources to expand our business within china and outside. we also reserve some for potential investment but very carefully. the third, when we have additional cash, that it will be

used to either buy back our shares at the right price and return value to shareholders. how concerned are you with rising competition from alibaba and the broader economic slowdown in u.s.-china trade tensions? jane: our growth strategy is clear in terms of domestic markets. we are very dominant. .hina is growing so fast the high-speed railway gives us opportunity to penetrate further into the second and third tier cities. we are excited. outside of china we see millions sent to the rest of the world, creating jobs for countries receiving chinese customers. we will keep up with our growth. ceoi: that was the ctrip earlier. let's get you a check of business flash headlines.

missing 8000 is cars violated emissions standards. jeep, dodge and chrysler models from 2011 to 2016. it will not be fined or face allegations and say the recall accounts for last year. they -- this comes eight months after they agreed to pay $800 million already last year. shery: volkswagen canceling a stock sale of its truck decisions, saying it needs for a better market environment. it could have been the biggest ipo, with vw seeking to raise $3 billion up to $30 billion. it is the slowest start to the europe's haidi: spinning off the mortgage broking business, and it focuses on meeting recommendations from acquiring a financial --

the bank is committed to the plan but his common sitting customers. -- is compensating customers. let's get back to sophie kamaruddin for a preview of the markets. sophie: on the radar tencent andr hsbc raised its target -- watching china unicom after profits beat estimates. a telecom plans to boost spending 29%. afteriation on the radar it could be caught up in boeing's woes. the max 8 comprises half of their undelivered aircraft on order, prompting another group to cut them to buy. we will look at the aviation ceo on the show later.

looking at signs of a chinese stock rally coming out of steam -- running out of steam after china suffered a biggest loss since october and the insider selling announcements which securities says could see retail money run for the exit. that could deplete up momentum in chinese stocks. haidi: u.s. futures shaping up like this, a little bit lower after three sessions of gains for the s&p. taiwan looking optimistic and china treading water as dollar-yuan is up at the moment. looking at industrial production numbers out of china. this is bloomberg. ♪ ♪

you said you are in charge. jean-paul: no one wanted to take it. [laughter] david: people are happy when they usual products. jean-paul: you make people happy. david: can you tell the difference in brands? jean-paul: not from far away. david: a four-week vacation, is that a requirement to be french? jean-paul: -- david: -- jean-paul jean-paul: --

>> would you fix your tie, pl