haidi: welcome to daybreak australia. i am haidi stroud-watts. shery: i am shery ahn. sophie: i am sophie kamaruddin. we are counting down to asia's major market open. haidi: here are the top stories. power, patience and a long pause, rates will stay on hold for some time as the fed watches the global situation. sterling falls as theresa may request a brexit delay. the e.u. says it is up to her to drive the deal through

parliament. president trump said trade tariffs remain in force matter what happens in negotiations with china. mickeywhy rakuten ceo nottani thinks amazon will succeed in amazon -- in japan. looking at markets closed in the u.s., we saw a lot of pressure. it was a wild ride. we have seen versus -- a reversal of losses. thep's comments of that terrorists will remain in -- the tariffs will remain in place on chinese goods. the dow fell .6% and the s&p 500 lost .3%. we had a short rally for the s&p 500, all of the markets after the fomc decision but financials took a big hit, and that dragged

down the markets. the 10 falling to the lowest level in more than a year after the dovish turn. we were seeing u.s. futures unchanged. under a little bit of pressure now. after the markets closed, news from levi saying ipo pricing ford come in at $17 a share 3.30 7 million shares. 3.37 million shares. let's see how we are setting up for asia. sophie: japanese markets are closed. looking at a potential down day for asian stocks in the wake of slowing growth signals not only from the fed but also the bangkok, thailand are the japanese government downgraded its assessment of the economy since -- for the first time since 2016. philippines,e expected to hold on rates.

from new zealand fourth-quarter gdp data in line with estimates, growth accelerating at a faster pace. we are seeing a jump in the kiwi dollar, moving to the 69 handle. the anz looking unchanged. lower.futures nudging on the corporate fund, sigma health care on watch after forecasting a decline in earnings amid the overhaul. we have a slew of earnings due out from heavyweights like petrochina, earnings out from hong kong. haidi: big day for australian earnings and asian earnings per at first word news with selina wang. reporter: the european union is considering an unscheduled meeting to decide whether a grant of brexit extension period donald tusk said it is up to theresa may to drive her deal through.

asked for a delay until the end of june and said she intends to put her plan to the house of commons again. success,e for a final it may seem frail, and all the brexit fatigue is increasingly visible and justified. we cannot give up after the last moment of positive solutions. without opening up the withdrawal agreement. reporter: president trump has rebuffed china's tariff release. his comments lower any hope ongoing negotiations will bring a halt to the restrictions the countries have placed on imports. china is pushing her the removals to be part of any agreement. japan downgrading its assessment for the first time in three years.

the cabinet sites weakness in exports, rising sales tax hike in october. in 2016 they contracted sharply after a tax rise. the bank of japan is cutting its assessment of exports. the billionaire founder of ethic gains offering -- epic games offering grants to game developers. they burst onto the scene with fortnite. it boosted the net worth of two $7 billion according to the index. 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. wang.elina this is bloomberg. shery: the federal reserve stunned markets by sounding a more dovish tone than in

january, slashing its forecast to zero rate hikes and leaving the door open to the next move being in either direction depending on the economy. hays is here.n however the risks jay powell felt the need -- how bad were the risks jay powell felt the need to do this? kathleen: were they say, why are we hiking rates when inflation is barely at target -- those are the questions absolutely. jay powell faced the room full of reporters, a lot of great questions coming in. they might see strong economic fundamentals for we have a positive view of the economy. weakve seen week data -- data, but now is the time for the fed to watch and wait. >> the data is not currently sending a signal which suggests moving in either direction, which is why we are being

patient. we feel our policy rate is in the range of neutral, economy growing at trend, inflation close to target, unemployment under 3%. we must be patient and see how things involve. -- evolve. kathleen: the fed was supposed to cut the forecast from two hikes to one but instead, nothing. they also cut the gdp forecast. 2.1 from 2.3 is a big move. they talked about the slowdown in europe and china. jay powell did, and he sees a positive outcome even for china. he is worried about the past three hikes and tariffs taking hold. this one has been extended thing and left the door open when asked about the possibility of cuts to move in either direction. let's listen. >> we don't see data that suggests we should move in either direction for they suggest we remain patient and

let it clarify itself over time. when the time comes, we will act appropriately. the balance sheet runoff, the end of quantitative tightening is in september, in may. there are details about the composition. that is one more thing you can see where they said, maybe we have done just about enough, time to sit back and watch. dots wen terms of the are watching out for, no process of change. does that mean it is it? people taking this to the bank? kathleen: that is the big question. we have to remember what the dots are based on. gdp, inflation. it sounds like core inflation could hit 2% of 2018 but headline inflation could be getting weaker because of the oil prices.

let's jump into the terminal and look at dot go. represent each person, fed governor, bank president, their view is summed up into one dot, where do you think interest rates will be at the end of the year? these suggest they will not be anywhere. compared to what we saw before this meeting, if you could take this pyramid and turn it on its head, more dots, fewer down here. it has been quite a change. stick around because we want to turn to someone with knowledge of the debate behind fed doors. this guy was resident of the richmond fed when greenspan was chairman and during the 2001 recession. let's discuss what is happening. is the fed turning more dovish than even the markets had expected? is this another example of the

fed being a captive of the financial markets? iti don't think i would put that way but kathleen in her comments about inflation really put her finger on it. ,he thing that has changed within the fomc, is some of the balance of risk regarding inflation. just as much focus on the possibility of an upside surprise on inflation front as well as downside. the focus is now clearly on the downside and possibility of a downside with inflation getting less than they want and need. you see the chairman's comments reflected that, and many of the things members have been saying, in their speeches and tv appearances and testimony have

said the same song. we have seen them eliminate that overshoot they previously predicted. kathleen took us through the dots. it is a function on the bloomberg. what is this telling you? >> what are the dots telling me? shery: yes. >> basically the same thing. you said it well a minute ago. if you compare this plot with the previous one, in december last year, it is almost a reversal. you have seen a much bigger conglomeration below the 3% line than the three before. it is what i mentioned a minute ago, there is an expectation of more concern about inflation, more risk. the outlook for rates reflects

that. then you see it in the dots. now they are saying, you know, what the dot plot does is reinforce the growing view that the fed is not going to do anything. that is not to say there is no possibility of a rate increase but likely some possibility of decline. what about a rate cut this year? kathleen: jay powell was asked to that in a few forms. he said it is a good time to wait. what does that mean? what would it take to cut? >> it would have to be a strong negative signal. you could see it in a real economic data -- a sustained weakening in the job numbers, or perhaps consumer spending. most importantly if you get

signal in any of the inflation data or data on inflation expectations that suggest the inflation outlook is even weaker, it seems to be a possibility. that would trigger a downside move on the rates. kathleen: in terms of the global outlook, this year has slowed. thinksas slowed, but he china will come to a good buy. how -- good spot. al: that is part of the background. they don't talk about the balance as explicitly in this statement anymore, but they look at economic data among other things. most of the things, outlook for first quarter domestically is for much weaker gdp growth than we did see last year. the global weakening in china and especially in europe and

president draghi's comments regarding the ecb for the year had all of that play into the of the world. that raises the possibility of weaker inflation in the u.s. this year. haidi: what is the biggest downside risk? you said deterioration in business investment, is it shaking the consumer sentiment, the housing sentiment? al: housing is part of the weakness. have he said, and i would have this point of view, the outlook for the economy is favorable. you look at risk, and it is the case the most recent economic data has been on the weak side. use he it in the consumer spending data, the latest .nvestment, business investment housing has been weak for some

time. in 2019ill be weaker than it was in 2018, but i don't think anyone is looking for recession. it is the case when you see data ing in pieces of the first quarter and i think that is getting people's attention and i think the fed is working out -- watching out for any sign these movements persist. not worried about it yet, but i think they are more alert to the possibility something like that could happen. are you sensitive to the criticism this is a power p ull and that it is engendering complacency? i don't think that reflects the reality. think on several

occasions by the point made the point that the u.s. economy is in a good place. possibilities of movement in either direction. they are not sure what will happen, but they will be alert to any sign one way or the other. not a strong tilt that way yet. preparedhey would be to move in the other direction if necessary. there is a little bit of balance on the downside which in the way your thinking about it, i think it is a bit too strong. former president of the reserve bank of richmond. this is bloomberg. ♪ . this is bloomberg. ♪

haidi: theresa may is rolling the dice on getting her deal through parliament. let's get the latest with our reporter. where are we at? reporter: what a mess. she came over and now wants an extension to june 30 after spending three years saying the 29. was going to leave march . that is not going to happen. where does this take us? she is going to brussels to meet her fellow leaders -- it is not a given. but it seems this will in fact happen. this takes us to the next stage. she has said i will not ask for an extension. june 30 or that is it. that opens up another series of scenarios. will she quit if she cannot get her deal through? will be have a second referendum

-- we have a second referendum? shery: give us a timeline. we have about nine days to go out since the deadline. when can we see the parliament vote on her deal again for a third time and when do we see that he you summit? there is an emergency summit. guaranteed.s not thursday and friday she will meet the 27 leaders, and they will discuss the extension. it will be conditional. you have got to get this through. you have failed twice, you have nine days to get this done. it looks like it will happen next week. she can come up with something or put parliament -- ask them to sort of open it again. if it fails, she is in a real bind because of the european parliament elections. the last thing the e.u. wants is nigel farage running around and

populating that place. that opens another can of worms. they don't want this to happen. we are into a game of it is no deal or long extension or give you time to have a new parliament, second referendum and lovely things. shery: how did you come to this code word you had three years -- come to this? you had three years. flavia. thank you. this is bloomberg. ♪ ♪

"bloomberg is technology global income." i am haidi stroud-watts. let's look at tech stories. emily: google has been fined $1.7 billion by the european

union in its latest antitrust judgment. up $9.3f probes racked trillion, which is making changes to how it displays ads. netflix jumped to a five-month o positives to tw analyst reports. a strong slate of international shows can fuel the subscriber edition while the record use of penetration to the u.s. and consistent satisfaction trend. analysts think outperform ratings on netflix seen in the final quarter of 2018. the billionaire founder of epic games is offering grants to game developers with no strings attached. the winners won't have to use epic's game design software or the store. they burst onto the scene with fortnite that got 200 million

players worldwide. that boosted sweeney's net worth to $2.2 million. those are the global talk -- tech stories. also sat down for a one-on-one ceo forw with rakuten's the addition of 1.0. while the company is losing ground to amazon, the ceo said he is not worried about competition. is a different market. the consumers are safe -- japan is a different market. the consumers are sophisticated. .he quality is very high they want to receive a clean package. not necessarily the amazon approach in the u.s. will do emily: japan. i want to bring in our senior global tech editor brad stone, who knows a lot about amazon and

amazon in japan. how does it compare to rakuten? brad: what a wonderful quote saying amazon's approach isn't clean. amazon is a larger business. the numbers i have seen, 25% market share versus 20% for rakuten. isis different, like alibaba a bundle of different apps. they are strong in banking, fintech, a grocery deal with walmart. amazon took the conventional approach logistics, warehouses, ensuring same day and next day delivery. that is why they got a lead. shery: amazon is also big in india but the indian government changed the rules. brad: they have gone big. , andbezos invested starting in february the government changed the rules that said foreign-owned firms like amazon and also flipkart

wouldn't sell products to steepers or offer discounts. it ties one hand behind amazon smack -- amazon's back. it is still one of their biggest opportunities, and i expect them to continue to invest. haidi: what about china, it is the world's largest market. they say amazon lost out to alibaba a long time ago. brad: in terms of the massive chinese e-commerce market, yes, they have lost to alibaba. but there is a market people don't talk about, which is, overseas e-commerce. the base of the big base of manufacturers to sell to other parts of the world. that is where amazon with shipping containers and aircraft is doing well. shery: thank you so much for

that. brad stone in san francisco. that is "bloomberg technology global link." this is bloomberg. ♪ this isn't just any moving day.

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sydneyit is 9:30 a.m. in . futures looking flat. up and down sessions for wall street getting some comfort in the rally after the fed turned even more dovish than expected and the financial sector weakness leaving to a uninspired close. -- leading to an uninspired close. shery: you are watching "daybreak australia. ." reporter: the fed said interest rates could be on hold for some time as raising interest rates said no data suggest either moving up or

down, adding policymakers should be patient and let this play out. they slashed the number of projected rate hikes from two to zero. >> the data is not sending the signal which suggests moving in either direction which is why we are being patient. we feel our policy rate is in the range of neutral, economy growing about trend, inflation close to target, it is a great time for us to be patient and watch and wait. growthr: new zealand's accelerated in the fourth quarter driven by consensus -- construction and services spending. annual growth was 2.3%, the weakest since 2013. the kiwi dollar climbed as investors had a slightly lower chance of cuts last year. the bank said it is not planning to raise rates until 2021. the boeing drama taken a surprising term, french experts

working with flight recorders will not carry out future analysis of the data. people were expected to ask another country to invest the data. -- investigate the data. indonesia threatening to ban imports from the european union in retaliation for the blocked position to impose new limits on the palm oil and green fuel. jakarta has to protect the interests of 20 million people whose livelihood is tied to palm oil. e.u. could be among the targets for a boycott with indonesia meeting 10,000 aircraft in the coming years. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am selina wang. this is bloomberg news. shery: getting to the action with sophie kamaruddin and how we are setting up for the

market. earningshere are aplenty on tap. looking at losses, slowing growth. , downgrading for the first time in three years to reflect the rest -- risk sentiment. the yen is gaining ground. now we are having kiwi stocks under pressure. the and -- asx 250 is off after gains on course for the first weekly drop in seven. --are seeing the kiwi dollar there was initial selling and reacting to the year on year rent, but growth met quarterly estimates for the fourth quarter. pushing the kiwi dollar into the 69 zone. roseing-market currencies to a nine-month high overnight while the dollar was dragged lower on the fed's dovish tone.

danny faang said this is a bullish outcome with markets pricing away the final step of the hawkish fed. on a week of second gains. looking at a deer to date view, currencies of 2.5% and morgan stanley said the next stage of that rally is here. haidi: thank you. let's look at what we are watching us trading gets underway in asia. adam haigh. we saw the rally in treasuries, dip in the dollar. as we see reverberation across asia, how far does this falling yield have to go? adam: there is some way further to go. aussie bonds, seeing a line with treasuries but not as much of a move. you get a sense that differential between the u.s. and australia is closing.

trend that you have seen in dollar over the last year has been broken. to sophie's point about how this pertains to emd investments and asian emerging markets is you have a ticking from a dovish fed that even much of the market had been expecting, maybe not expecting them to go this far. people have been calling time on the rally we have seen and emerging-market equities, the em currencies, also being given a kicker to the equity argument. but thesis still holds -- that thesis could be amplified slightly after the movement from powell and his colleagues. emf fx andens asian equities. certainly either has more to run given the dollar trend line is supportened and should

fx. shery: there is one pension in australia that is emboldened. they have a tilting in favor of risk. no cash or bonds. why are the confident? adam: in many respects it is the story of a fund that is able to benefit from its young member base. they managed $20 billion u.s. worth of retiree money. wristers and restaurant workers, and really what they are doing is going against the grain of what you have seen in australia pension funds more probably, a story of decreasing levels of equity risk, increasing of cash the last several years. wanting to stay heavily tilted in equities, 50% of the fund, and then have it in enlisted assets. water filtration lance, those

long-term unlisted assets, and stay away from cash where they see returns very low, not pertinent given interest rates are going nowhere. adam haigh.ditor you can find his shorts on the gtv chart library. president trump has rebuffed relief,plea for tariffs saying duties remain in place after he can be sure beijing is complying with any trade deal. it lowers hopes ongoing negotiations bring a hold to restrictions. -- definitely likely to complicate trade talks now. >> this has been a sticking point whether the u.s. would immediately lift those tariffs or keep them in place sometime.

chinese regulator is pushing for the history to lift in conjunction with agreement, and now the president is saying he plans to keep them for some time until he assured china is complying with terms of the agreement. he didn't way out -- he didn't wouldout what the u.s. be looking for in terms of compliance. it is unsure what he means. this will complicate the negotiations going on from around the clock. pushing ahead, the chance to get some sort of agreement that can be signed next month. the deadline has gone back and forth as we have gone along and the president's original optimistic deadline was going to be for this month, but that is not going to happen. haidi: that kind of changes the potential timeline for when we get to resolution.

we can go beyond april for some sort of agreement which would be typical for the sorts of trade negotiations going on here. there are complex issues, and the u.s. has got [indiscernible] china is looking for its own interests, so there is a number of difficult matters to be settled, including how they will determine the agreement is being enforced and complied with by both parties. the u.s. wants to go beyond simply china buying more goods. they are looking for structural changes that are going to be fairly difficult negotiations to get through. our congress -- haidi: how congress editor with the trade negotiations. in australia, the property slump is worrying the bank, but people

are shrugging it off. there is a sense of calm. paul: there is a number of reasons. a -- them is the s&p notes in a report, expected to remain elevated but they are coming off a low base your this is something even the reserve bank of australia, something the bank governor -- two out for the third years ahead on repayments. this is thanks to low interest rates, keeping borrowers afloat. the other thing is employment is strong. the unemployment rate, 5%. a number of bondholders are pointing to this. australia aaa rated securities have a defensive play. nevermind the gloominess of the price falls in the moment.

adam: -- shery: labor market numbers very important for the rba. we will have more. paul: expected to hold steady, a current rate of teen thousand jobs added for -- at the current rate. 15,000 jobs added for february. it is noted any sustained downward trends in jobs, unemployment begins to pick up, that is one of the key factors that could lead to a cut in the cash rate. unemployment numbers in australia are famous for throwing up all sorts of surprises. the leading indicators going into this are mixed, drawbacks declining. the vacancy rates are high. and the way they run the survey, every now and then they rotate out a simple group so it gives you a weird number. loss ofis predicting a

5000 jobs in february, but it could be seasonal to do with the sample rotation. shery: thank you so much. coming up next, a former financial intelligence officer joins us to talk about fed and global debt. this is bloomberg. ♪ this is bloomberg. ♪

shery: i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. u.s. equities enjoyed a recovery before fading to a close, signaling the rate hikes this year as economic growth has slowed. let's look at all of that with the vice president here. whichnt to see this chart shows the key points, what happens when things take a turn. this is looking over the past few years. inhaven't seen persistent --

the blue is u.s. gdp. in the white is the fed funds target rate. in the middle of one of the longest expansion or recovery times economically, globally we have seen. so much of it has been fueled by debt around the world. where thee a position fed and other bankers are dovish, do they have the monetary policy space to deal with something if it goes wrong again? that is a great question. during years of expansion, debt gdp, itcentage of usually decreases. we haven't seen that. since this expansion started, debt as percentage of gdp has increased a lot. that will put added pressure on

government, central banks around when we do go into recession. 2020,eople are calling 2021 but whenever it is, usually recession,of governments and the fed have to add stimulus to the economy to boost. , think what we are seeing here the fed continues to keep rates low, they might decrease, some people calling for a directories -- a decrease of this year, that will reduce a flexibility when we do go into a recession, whenever that might be. haidi: in the meantime the markets are assuming on the one hand fed patienc4e until the end of this year and growth to be relatively resilient. is that goldilocks? >> it is.

it is interesting because we all expected the fed to be dovish, but we didn't expect them to be this dovish that they were today. i think markets, investors, we are hoping they will be dovish but when they come out and it is dovish, what has changed from the last meeting, they were expected to increase rates two times. now all of a sudden that -- what has changed in the economic forecast and what they are reading? that has given investors pause and it gives me pause. i want them to be dovish. i think corporations do. when they are this dovish, it gives people cause. haidi: we have seen the markets really -- shery: we have seen the markets really rally given the dovish pivot.

showing where the s&p 500 has gone as a dovish outlook continues. we have expectations on rate cuts as well. focus on investors going forward? will it be the fact economic growth is slowing or inflation is muted, and that seems to be ok. >> great question. you mentioned the first is global growth. i think it is a concern, but right now a lot of people are focusing on trade. if a trade deal gets done, hopefully it will change global growth. that is the assumption. if a deal gets done, we will see a rebound or soft landing and global growth will recover. i think inflation has taken a backseat. it has caught people by surprise . we haven't seen inflation uptick given the labor market.

right now the focus is on slowing global growth and the fed raised alarms. global growth is slowing more than what people think. shery: what does it mean for emerging markets? they have taken good signals from the that dovish fed. the currency has rebounded. this could slow down their economies. how much of a double-edged sword that had turned more dovish? turned more dovish? ryan: emerging markets had a good rally, a lot of inflows might -- trade was getting crowded. but the dollar is weakening. we saw that after the fed announcement. the dollar has weakened.

that poses well for emerging markets. i think emerging markets still have room to run. the rallies, when you consider the weaker dollar, you have also got china is going to run for a soft landing. there are things that provide opportunities moving forward. and the dovish fed, maybe it is over dovish, but the weaker dollar poses good news for emerging markets. haidi: thank you so much for joining us. the former financial intelligence vice president. breaking news on valet as there are concerns of [indiscernible] they have suspended operations here in this state, where we had the devastating dam collapse that killed around 300 people. they are saying they have

suspended operations at one of their biggest iron ore mines, saying the impact of the shutdown on a hold is around 10 million tons per year of iron ore. it suspended operations here we will try to get -- operations. we will try to get more details. it is one of the biggest areas for iron ore globally. we could see another reaction. a lot more ahead. this is bloomberg. ♪ ♪

motor'solls-royce sidestepping the slowdown, recruiting -- recording record sales in china. the ceo said he is confident rolls-royce can navigate declining demand in the biggest auto market. all, not surprising

but we are not really part of the car market. we are talking about high-end luxury goods. it is a car, that is true. but our clients don't need -- they are fulfilling their dreams. they are commissioning their piece of art. it is true luxury goods. so we are decoupled from the ordinary car market. demand is coming and luxury could get hit. >> that is the concern if the economy is starting to get weaker and consumer sentiment is weekend. knowing 80% of our clients are running their own businesses, and if you are doing that, it affects your decision on if it is right to buy -- on the other side we are coming off a strong last year, record year, even more in china with growth of 50

thinkr 40%, and we are i very well underway when it comes to new product. -- we are justar launching our first ever suv. new stores weopen haven't seen yet. haidi: if we see a slowdown on luxury spending, tiffany, champagne, other producers, would that concern you? >> definitely. -- it is probably also the case for our luxury goods. we have seen that. we are used to it. not in all countries always worldwide everything is perfect. for that reason some markets decline, others are going up. it is interesting.

success in the market for what is really going on in the economy. haidi: what is going on in the chinese economy? >> from our side it is strong. more't want to call it reserved, but definitely strong and i am confident we should see again this year a record year in the chinese market. we have all of our worldwide dealers here and our chinese ,ealers, very flamboyant optimistic about the future. shery: our exclusive interview with the rolls-royce ceo in shanghai. looking at business flash headlines, 145 years after turning out the first pair of jeans, levi strauss is proving fashionable to investors. money for their ipo, pricing above the market. they will trade from thursday on the new york stock exchange under the ticker levi's.

the largest listing this year at least until lyft next week. netflix jumped to a five-month high thanks to two positive analysts. imperial capital set a strong slate of international shows good fuel acquisitions and netflix's user penetration is showing consistent satisfaction. and -- there are outperform ratings on netflix and amazon. marketa preview of the open in australia. sophie kamaruddin in hong kong. sophie: futures hinting at losses in the start of cash trade. looking at bonds, we are seeing australian debt gained ground, setting eight basis points of 2016 record lows are watching tracking that fed fueled charged.

-- record lows. plenty of central bank decisions on tap in asia. for more on what to look for -- this is bloomberg. ♪

haidi: good morning. i'm haidi stroud-watts in sydney where australian mochas are just open. shery: good evening from new york. i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: asia." ♪ haidi: top stories this thursday. patients and a long-haul peer the fair -- fed chairman says to stay on hold for some time as he watches. the global situation play out. . theresa may requests a brexit