>> a very good morning. i am haidi stroud-watts in sydney. >> good evening, from bloomberg's global headquarters. i am shery ahn. >> i am sophie kamaruddin in hong kong. welcome to daybreak: asia. ♪ >> our top stories, caution seems to be the word as markets head to the open. u.s. markets trading above 110. apple facing a partial iphone against qualcomm, but

escapes punishment in a separate case. defending global links. president trump says cc an acellent view -- says he sees next: view. more hintsmay give about plans to open up the economy. we will be joined by big yes say, including andrew forrest, and about 40 minutes. stay with us. >> let's get a quick check of the market close in the u.s. u.s. stocks and treasury yields gaining after two sessions of losses. every sector of the s&p 500 was in the green. oil surged after hinting toward continuing output cuts. we saw the dow and nasdaq gaining ground. we have every sector in the green. lots of positive energy. risk on sentiment after goldman

we could see stocks doing well despite a flat yield curve. not to panic, advising against panicking over that in version of the yield curve. s&p futures under pressure. let's see how we are setting up for the asian markets. stock: we could see asian investors continue to tip after the rebound we saw tuesday. opening highery after closing little changed on tuesday. up 0.3%. stock futures for seoul and tokyo markets hinting at gains. -- room for move caution. bulls may find support, trump's pick calling for an immediate cut to rates. this sparked a climb in the yen

and aussie bonds. u.s. stocks under pressure. wary of chasing bonds lower. lynas down 2.4% at the start of trade. jumping 34% tuesday before being halted for trade bid ofesfarmers made a $1.1 billion. lynas saying they will not engage with wesfarmers on this highly conditional offer. haidi: let's get you to first word news with jessica summers in new york. president xi wrapped up his short-term europe. he plans to work together to safeguard multilateral trade and improve global governance. joint statements of holding national ties is the best way to tackle common threats and boost prosperity.

biggest is china's trading partner and wants to solidify the relationship, well pressuring beijing. bordernt trump's emergency survived while democrats failed to overwrite the feet out. the win was short of the 2/3 majority needed. most republicans backed the president. the administration plans to use the emergency status to redirect money from military funding already approved by congress. boeing says it will submit a file software fix for the 737 a by the end of the week and say it has been flight tested. china suspended its own airworthiness certificate for the max. beijing says it has to make its own review of boeing's software fixes before allowing the airplane to fly again after two

recent crashes. top internetr regulator has been jailed 14 years for corruption. mingled with apple, facebook and other big tex. he was convicted of taking bribes worth more than $4 million from companies and executives. and also for promoting their businesses online. he was convicted after a one-day trial in october. the pentagon said it successfully tested and intercept system using two missiles to destroy an incoming rocket. they were fired from southern

california and hit a target over the pacific. it has been operating more than a decade, but it is the first time the pentagon used multiple rockets to destroy a single target. 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. i am jessica summers. this is bloomberg. said it is pleased by an international trade commission ruling that qualcomm's case against an apple patent is invalid. apple faces a penalty in the separate patent ruling. bloomberg technology reporter ian joins us from san francisco. walk us through the cases and what they can mean for the ongoing battle over patentss between the two giants. ian: it is more than just patents. two similar cases, but a different stages. the case closer to the point where it might affect the imports of the iphone into the u.s. was shot down. definitely a defeat for qualcomm. the second case has gone through another stage on its process. from qualcomm's perspective,

hoping to stop the iphone from being imported into this country. haidi: where do we go from here in terms of the latest rulings? ian: what we have to see in the ruling earlier today, around july, the full atc commission in whether to overturn this judge's decision. these companies are looking for a knockout blow, something which will harm the other in court or in front of a government agency that will make them give up, come to the negotiating table, and try to hash out fundamentals, how to value all these licenses that qualcomm has. >> you said earlier it is not just about patents, it is the broader fight between apple and qualcomm. how is that going?

ian: we have 18 different cases we are tracking. you want to do that at home? probably not. the next one that is going to come through and perhaps give us something of clarity is in the u.s.. they heard the antitrust case. at any moment to give a ruling on that. that is important for what it would say about qualcomm. it is similar to the case apple has brought against qualcomm, saying qualcomm is unfair sleep -- unfairly manipulating its position as a chipmaker to drive prices up. haidi: the battle continues. still ahead, crude oil has its best first quarter start this year in nearly two decades. we look at what is pushing up prices. shery: we will be joined by

brandywine's global's francis scotland. why the yield curve inversion may be different. this is bloomberg. ♪ his is bloomberg. ♪

haidi: we are counting down to asia's first major market open this morning. 1.10 level.up the a recovery rally when it comes to the nikkei and the topix. steeper declines this week, but seeing a recovery rebound yesterday. the sector continued after a public session on wall street overnight. is daybreak asia. i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. one of the bigger issues hanging over the markets concern the inverted yield curve, signals a recession ahead. goldman sachs telling investors,

do not panic. su keenan joins us. could and up doing well with the stock curve. it is notat argue positive for the market, but they argue it is different this time. they make a compelling case the market seems to adopt. let's look at the way we closed again. erasingee the dollar its monthly loss and writing. gold fell with oil back above $60, that would is trending slightly lower in extended trading. you really saw was the rally in bonds take a breather. we will go into the bloomberg. shery was nice enough to bring up the big chart of the hour. it is the fed's preferred yield curve invert. what you see in the middle screen is, last time we saw this inversion, we went right into recession.

there is concern this is an ominous sign you could go into recession. it is when you see the yield, the rates on the 10-year falling below those, and that happened as of last week. goldman comes out with a note and it is adding to similar commentary we heard from morgan stanley, fidelity international, saying not to worry here. one of the ways it is different, international investors believe there are also dynamics outside the u.s. that could be responsible for what is happening. some say even though it is a reliable indicator in the past, you have to have a deeper inversion. riskthey are saying is, assets could do well even with the flat yield curve. that seems to be the message the market wants to hear for now. ofdi: su keenan with a wrap

trading action. a look at what to expect in terms of the global macro picture. we are joined by brandywine global management, francis scotland. the same uncertainties we spent much of last are talking about. the trade war, the slowdown in china, the brexit situation getting more complex rather than more binary. situation,d with a where even if we have a resolution, structural headwinds are at play for a slowdown? francis: that is right. a lot of things you talked about underscore what is at the moment for investors been a bull market and pessimism. it is remarkable. little more than a year ago we had a bull market and optimism. the buzz word was global synchronized expansion. have more countries

participating in the expansion of the global company than any time in decades. the imf was revising forecast. we have policymakers around the world gearing up to normalize, away from what they perceived to be extraordinary, unorthodox stimulus for most of the post financial crisis period. here we are a year later and the sentiment has shifted from optimism to dark pessimism. is,ou asked, the question will we have a global recession this year? haidi: it does not seem to take a much -- it does not take a fundamental change of data. see goldilocks this year where inflation remains muted and growth remains robust. on the inflation argument, another camp is increasingly worried about inflation rearing its head. we do not see inflation

as a big issue at the moment. the big swing that has taken place, the drivers behind this global growth have been policy, inflicted in the east and west. in china after stimulating their economy aggressively 2015, 2016. the economy did well in 2016, 2017. they focused on deleveraging the economy. containing shadow bank lending. there has been a significant slowdown in the chinese economy. the yieldrican side, curve has been flattening continuously as the federal reserve has been raising interest rates. the market's perception is the federal reserve's judgment on the neutral rate has been wrong. the neutral rate has been lower than the fed has been suggesting.

lastly, trade war rhetoric. the good news, all these policy measures look like they are starting to swing. in this environment of investor pessimism, it swings in the direction of china adding more the next move likely to be a rate cuts and increase. if we get some sort of improvement in the trade story, the good news is the anxiety fostering this pessimism could unwind to a global soft landing which wouldf 2019, be constructive for extending the global economic cycle longer than anyone is expecting currently. shery: our markets getting ahead of themselves? they are factoring in a potential rate cut from the fed. financial conditions really rebounding significantly from last year. after the fed's u-turn. can the fed hint of anything more dovish that has already

been delivered, given where financial conditions are now? francis: i think the rebound we have seen and risk assets and improvement of financial conditions you are talking about are just the market acknowledging or relaxing that the fed will not make a big mistake. in october when the volatility started, fed chair powell suggested the neutral rate could be higher. that was the beginning of this. the federal reserve has done a flip-flop on this in the last three months. i think the federal reserve has moved as far as they can, in order to sustain institutional credibility. the markets have rallied in reaction to that release of anxiety, but to get to the next step the rhetorical issue is, have they done enough? what the money market curve is telling us, the federal reserve needs to do more. shery: what can we expect from

china as well as the fed in the coming months, especially given there is a dead load in the chinese economy and the u.s.-china trade tensions continue? there are somebody forces at play between china and the u.s. at the moment. francis: you are right. there are many crosscurrents. in terms of china it is clear china has been engaged in a process of successive approximation to policy stimulus since the second half of 2018. economy tohe stabilize. they do not want to deleverage the system. the premier announced they want to see credit growing in line with nominal income, a statement they do not want to see deleveraging. interesting supply-side measures. they will continue at that. they made it clear they will continue doing that until the economy has stabilized.

china is the high beta growth driver in the economy. this will be significant to levering this global soft landing scenario. war, everybody wants a trade resolution. everybody loses in this story. it is not just chinese exporters that lose and a trade, but u.s. multinational companies, re-exporting back to america. their profit margins and supply chains would be disaffected by a break in the chain. each side has a strongly vested interest in getting a deal done. it seems to be the case we are hearing from the u.s. administration, they really want to deal. the president keeps talking as if they will get one. all of these things sound like a 180 reversal that drove the downturn in 2018, likely to affect a softer landing in 2019. francis, great to have

you. can get a roundup of the stories you need to know to get your day going in wednesday's edition of daybreak. you can go to dayb on your terminal. it is also available on the anywhere app. get news on industries and assets relevant to you. this is bloomberg. ♪ this is bloomberg. ♪

haidi: this is daybreak asia. i am haidi stroud-watts in sydney. shery: i am shery on new york. u.s.-trade tensions weigh on regions. theye milken institute, told bloomberg best company continues to focus on global issues to navigate the environment. tensions arey

never good for growth. we have been in asia for decades. our differentiation is that we operate in companies. we engage with local governments to bring solutions and innovation. >> what are your hopes for how the trade tensions will be resolved over the months or years ahead? >> i do not know. i have to hope we come to solutions because it is important to have clarity. >> the u.s. has also been their critiques of transfers of intellectual property back and forth between the two countries and the transfer of talent. an engineer gets experience in the u.s. and wants to go back to china for a job there. this may be bad for companies in general that are not able to generate business back and

forth, but do companies need to pick a side in this trade battle? >> i think there are two aspects. i.t. and skills. skills and movement of skills is an individual decision. you may have individual wishes to work in a country. that is the angle i would look at it. a global economy needs global skills. there is anof ip, opportunity to understand ip is the base for innovation. we see that perspective from all countries and companies. >> google has gotten pressure from the pentagon for the work they are doing in china. not just because of the possibility of a censored search engine they are going to implement in china, but because of their work in ai. are you getting from the u.s. government at this

time of heightened tensions? >> i think they are clear with the government across the globe in engaging first, helping them with technology and operating within the regulations of the government. china, a multinational company brought to china the cloud. it helps global customers who come into china and operate. we are explicitly focusing on building an ai plan with countries in many markets. we have an interest in singapore, australia. most of these initiatives are around building the right regulations as much as focusing on skilling people to use the technology. demystifying and working in partner with governments. that was raup -- that was haupt u.s. electric

carmakers plunged on the news beijinger. is harming subsidies on eligibility. two fell. 's would be-in suv meaningfully more expensive. 250, but a range of would be halved. shery: disappointments with bmw's partner. they missed estimates that under $900,000. they say they are still bullish on long-term growth and new bmw x3 is key to boosting sales. of the sales, 2/3 helping brilliant -- helping brilliance. haidi: being sued for age discrimination by a 56-year-old

bank worker who had worked for the bank for many years. he was oldwas told and said in his ways when he was laid off in 2017 and that is top level performance ranking had been downgraded in the previous two years. this is bloomberg. ♪ two years. this is bloomberg. ♪

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>> this is daybreak asia. apple is facing a potential ban on u.s. imports of some iphones after a u.s. international trade commission judge ruled it in fringed the qualcomm patent. however, in a separate qualcomm case, it when apple's way instead, highlighting the complexity of the cases. gains and closed down 1%. trade talks resume with president trump pledging "an excellent deal." robert lighthizer and stephen mnuchin will have talks thursday and friday.

concerned china is backtracking on earlier pledges while beijing is pushing back at proposals it sees as one-sided. two new bloomberg surveys sees the pboc less aggressive while maintaining steady injections of liquidity. we spoke to said policy makers will continue to reduce the amount of money lenders must keep in reserve. the earliest cut is expected next quarter, with two more in the second half and three 50 basis point moves. israel moved tanks to the border of gaza after threatening a powerful response of rocket attacks. follows a night of violence after militants continue their missile strikes. the violence comes to weeks before the israeli general election. vowed not to

escalate the tension. 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. i am jessica summers. this is bloomberg. let's take a look at how markets are faring in the early session. mixed: we're looking at a picture. led lowercks up 0.4%, by consumer staples and health care. a group under pressure, leading the declined by 4.5%. lynas also under pressure. they say they will not engage with wesfarmers on a takeover offer. the gaining ground, up 0.3%. a health check on risk sentiment this morning. aussie bond yields resuming the decline. now trading at 1.81% this morning. let's check stock movers of note in sydney.

challenger is gaining ground, after surging 9% tuesday. it did emerge as a potential takeover target. company is a japan good potential outcome. beach energy snapping a two-day drop. as 3.8% earlier as oil prices are climbing. policy uncertainty remains over the fossil fuel industry, especially in light of the country's aging energy grid. producers in sydney slipping. whitehaven by as much as 1.5%. a government plan to improve generation capacity. aluminum share price under pressure. buyers of the commodity are less sure when a refinery will restart. thank you. in the u.k. lawmakers preparing to take control of the brexit process.

a powerful critic of prime minister theresa may's deal may now be getting behind it. kathleen hays watching this as they prepare for big votes. jacob potentially coming around. this could be huge. be.leen: it could extra huge given what theresa may went through, chasing yet another vote. let us take over, we will find a consensus. that when sheing woke up this morning, it turned in hist jacob rees-mogg i do not like her deal, but it is better than the alternative. this is important because he is the chairman of the conservative brexit caucus. he has been so much opposed to her deal.

her deal is in no way a good deal, that against that, there are threats of a delay in many who want to frustrate the results of the referendum. this is a difficult political situation. guess what? dealsa may has to get this passed by friday to prevent two things nobody wants, a hard brexit or very long extension. who may meet with mp's offer support in exchange for resignation. she has not gotten support from brexitn ireland, supporters might support it just to ward off the softer brexit. it is interesting the telegraph is reporting in addition to that jacob rees-mogg, there are 10 more euro skeptics on her side, including david davis, who says it has a reasonable chance of becauseand it better, if not, there could be a complete cascade of chaos. an official telling bloomberg they are considering the vote

thursday, but only if there is a chance of winning. maybe this gives her a chance. [laughter] haidi: i want to say, what happens now? but we know it leaves the door open to so many possibilities. let's try to run through. they want to take control of the process. they said theresa may could not get the consensus. we can do it if we have an indicative vote. thing they could vote on but probably will not because it has been rejected twice, a no deal departure, the hard brexit. other things, a candidate style free trade agreement, may's brexit deal, the only the e.u. approved, membership in a customs union, which would keep no tariffs on goods between the plus, and.k., norway the single market.

free movement of goods, capital services and labor. one that could pass on the list, revoking article 50. stop the deal entirely or just pause. wednesday, tomorrow, instead of theresa may taking control, the bench and mp. to beill select the plans voted on around 7:00 p.m., voting yes -- voting yes or no. we could see a credible set of alternatives. at least that is what people are hoping for. another exciting day looms for the brexit melodrama. haidi: [laughter] .athleen hays, in new york let's take a look at commodity. oil heading for its best quarter in 17 years. crude prices rallied. issues facinger facilities in the gulf of mexico

. goldman sachs head of research says he sees markets stabilizing the next couple months. balancedarket will be most likely by the end of april, early may. they will have to talk about exit strategies and they want to. haidi: let's bring in aaron clark. this latest surge it seems to be ofven by compliance out russia. do we expect this to be sustained? >> there are a few factors. quite high right now relatively to where they have been. set, up about 32 percent, trading around $62 a barrel. brent is up 62%. trading around $68. the main factor is the opec cuts in january, scheduled to go through the first half of this year. we have seen that curb global

inventories and supply. the sustained, kept prices higher. the other factors have been disruptions from venezuela and iran, but those are the main factors driving it forward. we will have to see if opec continues to implement those cuts. they are scheduled to go through the first half of this year, but we will have to see if they want to continue them or if there is an exit strategy after that. haidi: we have seen pressure on prices because of global health concerns. what are the factors traders are looking forward to later this year? i think they will look at opec. the big question is, what opec does in the next few meetings. they have one scheduled in may and june. people will be watching those closely to see, especially saudi arabia, what they say after those meetings. also, u.s. shale producers. u.s. crude production is at a

record high. oil exports jumped 70% last year. there is a reason to think those will come down anytime soon. particularly with prices in this higher range. both those factors going forward are what people will watch. opec meetings and u.s.-shale output. shery: thank you so much. coming up, we are joined by fortescue founder by andrew forrest. live again this is bloomberg. ♪ .

haidi: this is daybreak asia. i am haidi stroud-watts in sydney. shery: i am shery on in new york. itsru is under -- warning

seven-year streak of sales gains would be threatened if president trump puts tariffs on cars and auto parts. subaru is the only one to boost u.s. sales in the last decade. they attribute success to 87 consecutive months through february. the commerce department has delivered on whether imports threaten national security. ultimately the price of the car. depending who you listen to. they affect could be anywhere from $5,000 to $7,000. raising the monthly payment someone would have to pay from $700.o $675, that is someone's mortgage payment. rejected an acquisition bid from wesfarmers. the decision is based on stakeholder interest in current market conditions. a 45% premium on the previous post.

they are a key producer outside of china on rare earth metals, used in cars, mobile phones and missiles. shery: mcdonald's wants to know exactly what customers want before the even order. it is making its biggest acquisition and 30 years, spending $300 million to buy tech company dynamic yield to personalize menus. cary -- cv -- vary menus depending on the weather and the diner. this is bloomberg. ♪ er. this is bloomberg. ♪

shery: this is daybreak asia. i am shery on in new york. haidi: i am haidi stroud-watts in sydney. the forum in asia is underway on hainan.

they opened the event by calling for development and warning of weak global growth and heightened competition among big powers. tom is in hainan. set the scene for us this year. tom: as you say, this is a gathering of senior chinese officials from the pboc, the finance ministry. we are expecting premier li keqiang to speak. china may be further opening up the economy here at a time when it remains in a trade war with the u.s.. those discussions continue in beijing. it is an opportunity to hear from chinese officials about the atmosphere of the environment. chairman andy the founder of fortescue metals, andrew forrest. let me kick off with what is happening with the disaster. according to smp, a deficit of

29 million tons. what does that mean at fortescue? will you ramp up production? can you take advantage of that deficit? , irew: i think the tragedy have been through those operations. for me, deeply, personally tragic. yes, i think there will be a supply deficit and our operations are massive. we have huge railway lines and ports. you cannot turn down the dial that easily. can to do everything we see how we can help the people of china. that since we started 59 years ago. i cannot give you a guarantee. looking at investing more in high-grade iron or as a result? andrew: we have two major

projects. one being approved. we are on the cusp of a project double play my oldest project. i kicked it off in 2003. it is called the iron bridge project. very high-grade, but we are careful because it is tough technology. we're making sure we get this one right before we pulled the trigger. both these projects coming out of the gate as we speak. tom: what will be the longer-term ramifications? coming into the environment and long-term community involvement in these major projects. upstream it was quite common. fortunately, we have a very

strong downstream. they will probably become a thing of the past. see, they have not worked practically. tom: switching focus to china, there is concern about the slowdown. are you seeing that impact your business? what is your impact of the outlook for iron ore for 2019? andrew: i admit a very old man once said to me, china is slowing down. he is still saying it and he is still wrong. china, since i first came here 30 years ago, was growing fast. it is now growing volumetric lee at paces unprecedented in the world economic history. when you hear of the slowdown, one noncomparative figure, a percentage on last year's growth. volumetric ume,

growth. my goodness, this place is growing at the size of the australian economy each year. it is catching up fast to the u.s. economy. it could catch up in the next decade easily. this place is on the move. tom: you think iron ore demand for 2019 will be in line with the 2018 or above? andrew: no, i think you will see it about in line, but we do have that potential deficit. wrong planning and mismanagement, i do not like to see it because of a disaster. we do have to face the reality of a potential deficit. tom: to what degree is the infrastructure spending expected to take up -- tick up? andrew: it will be strong. you have infrastructure sprawling all over the country. a 200% increase in railways,

carriage rides. medium and high speed rail being laid. this country has a long way to go. know there are talks in beijing between the u.s. and chinese side. to what degree has your business been impacted by trade tensions, and how do you expect them to be resolved? andrew: i would say two words, cool it. think of the long-term interests of your countries in the world you live in. there is no one in north america and no one in china who wants serious tension between americans and china. you are the two biggest economies, you are really good people, you have spent a lot of time with americans and chinese, fantastic people. tom: you think they will get a deal? andrew: i think they will get a deal. tom: are you concerned about being victim of a push back from china?

we see australia being held up at the ports over concerns of huawei. is that a factor for the business? andrew: there is going to be among the sovereign titles, spying,round corporate corporate espionage. that goes on. the fact that chinese firms are doing that and chinese governments are saying, we do not know anything about it, that is to be taken with a grain of salt. there is pushback. countries have been spying on each other since adam was a boy. you got to leave businesses out of it. what you guys do at the sovereign end, knock yourself out, but do not bring it in to where we need a level playing field. wena, america, australia, need a level playing field to serve our customers best in business. tom: you have been focused on

latin america, south america, exploring the potential around lithium, gold, copper. what is the potential? is this an important part of fortescue's business in the next decade? andrew: the next decade. we have serious copper haveveries which we do not any idea if they are commercial, probably not, the geologically they are interesting. all the way from argentina to ecuador. it is very large. a fabulous family of nations. they really deserve to see living standards improve. the mining industry, when it is environmentally friendly, like everything fortescue has ever done, is probably the best industry you could have in a country because it drives employment, export growth, and national income. tom: one last one, potentially.

if china's demand for steel, iron ore, was the big boom, what is the next one? is it fertilizers, copper? andrew: what you can talk about is growth. you will see copper growth, iron ore growth, growth in battery materials. you will see steady growth. keep away from the boom. that implies there is a bust. there is a construction boom and bust. my goodness, that is a bust or a boom. no, it is not. you build things and get income from them. i know bloomberg covers audiences which are hard, business people watching bloomberg. i have not met a person on the planet yet who is not concerned, who was not aware, our oceans

are filling up with plastic. you had something dramatic happen in china. it impacted your country, mine, britain, everywhere. china has stopped suddenly taking everyone's plastic garbage. it used to be a business. the other day they said, no more. countries like australia, britain, we have panicked and said, where do we send our plastic garbage? we all thought we were recycling it. wrong. we were sending it to china. now we are sending it to thailand, vietnam, indonesia. guess who was the greatest trouble getting rid of their plastic? those countries. we need a solution to plastics in the ocean. this is looming so fast, bloomberg, you need to start paying really attention to it. tom: andrew, that is a really important message. thank you for bringing it up and your insights into the

opportunities in the mining sector and china as well. andrew forrest from fortescue, the chairman and founder. shery: tom, thank you. let's get a preview of the market open in japan and south korea. sophie: stock futures hitting gains for tokyo and seoul. we are seeing the young picking up momentum, strengthening 0.1%, snapping a two-day decline. we are keeping an eye on aussie airlines.s -- asean gains, andhly sales a potential increase on tariffs. realigning under a new software product and solutions business. --s shows you the topix actually, we will not go into that yet. let's get a check on asian markets. shery: we are seeing the asx 200

losing ground. we are continuing to see utilities. tech is the only sector gaining ground. plenty more to come. this is bloomberg. ♪ you.

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markets just major opened. sophie: welcome to daybreak asia. shery: our top stories, optimism is asian stocks head for their best quarter since the beginning of 2012. the benchmark up 9% this year. boeing says it will have a software fix by friday but the planes are still facing issues

in china. sophie: global trade and slowing growth are on the agenda. pressure for markets across asia after the biggest jump in two weeks. sophie? sophie: pressure coming through in tokyo. declining,and topix the yen looks to snap a two-day decline. today we have about 1500 stocks trading ex-dividends on the checking on the topix. on the opening in seoul, marginally under pressure as samsung's up by one point 2% continuing to decline in the wake of its announcing a surprise profit warning. ach, apple potentially facing showdown with qualcomm. 1135, theust above

korean won. resuming declines as we see health care, utilities drag on the benchmark. the aussie dollar holding steady. stocks and wellington gaining ground, the kiwi dollar up. we wait on a policy decision later. we are expecting a hold at 1.7 pipe percent -- 1.75%. let's get you the first word news. will submit ag final fix for the 737 max 8 are -- the 737 max 8. china's aviation regulator suspended its own certificate for the max. beijing says it needs to make its own review of boeing's proposed fixes before allowing the plane to fly after two recent fatal crashes.

apple is facing a potential ban after. imports of iphones a u.s.-international trade commission judge ruled on a qualcomm patent. in a separate case the verdict went apple's way. that shows the complexity of the battle between the companies. qualcomm, 2.6% jumps on the ruling. apple closed down 1%. president xi jinping wrapped up europe.tour of he vowed to safeguard multilateral trade. he says upholding international ties is the best way to tackle common threats and boost prosperity. the eu is china's biggest trading partner and wants to solidify the relationship while pressuring beijing on trade practices. trump's border emergency survives as democrats in the house failed to override

the veto. 248-1 81 win was short of the two thirds majority needed to overturn the veto here it most republicans backed the president despite unpopularity with the emergency declaration. the administration plans to redirect money from military funding already approved by congress. china's former top internet regulator has been jailed for 14 years for corruption, showing an official who it mingled with apple, facebook and big tech. was accused of taking bribes from companies and executives seeking help with regulatory issues and promoting their businesses online. he was convicted in china after . one-day trial global news 24 hours a day, on air and on tictoc on twitter powered by more than 27 hundred

journalists in more than 120 countries. this is bloomberg. look at the take a start of trading in japan. these majorfor asian markets, nikkei 225 down half a percent. the cost be also in the negative also in the negative. when it comes to trading in sydney, new zealand holding onto modest gains ahead of the reserve bank of new zealand meeting where they are expected by usd onto the neutral through another meeting. there looking at the end of best quarter in seven years. not much positivity from wall street. a moment us rally gave equities a chance to breathe overnight, thewe are looking at

resumption of trade talks inween china and the u.s. terms of major data points. as i was saying, the u.s. and china resuming negotiations, attempting to find a deal that could lead to transpacific piece. is, i guessndent this will be the agenda this week. tom: inevitable that it will be on the agenda amongst officials but also executives meeting at the forum. some of these questions to the executive vice presidents of the chamber of commerce. lighthizerchin, arriving in beijing. they will continue talks at a high level. what do you think they will focus on specifically? to be on. pleasure , but a tranquil setting

hardly tranquil in the u.s.-china economic relationship. or six areas that we as a community talked about needed to be done. increase market access, increase protection of data, how do we deal with tech transfer? making sure it is my condition of doing business in china at the sub central level. we wanted to deal with the issues around intellectual property, patents, and copyrights, and also major structural reforms. will we get meaningful reduction of subsidy practices? tom: the big issues are, how do we deal with -- >> the big issues are, how do we and with the tariffs gekko how do we make sure we have the appropriate mechanisms for verification, and enforcement and implementation? those issues are front and center. we have the outlines of a deal

but i think what will happen thisweekend next week -- week and next week is come to a resolution around the tariffs. how much will come off? how the wii and sure we have the right monitoring mechanisms and enforcement principles in place? says he hassident no plans to remove the tariffs. that would be seen by china as problematic. the priority for them has been to have the tariffs removed if not rolled back at the least. that will provide a potential hurdle. .> we are in the end game the president says he wants to keep the tariffs, to hold them hostage over china's implementation. we had issues in the past with china fulfilling commitments on trade deals between the u.s. and china. there is no question that is one of the last issues to be decided. if the tariffs --

>> we don't like the tariffs in the first place. we think it is a tax on american business and farmers. we said that from the outset. but we think it is time for china to step up and provide meaningful structural reform am a deal with tech transfer issues. we are pleased in some areas. china is moving him a foreign investment law. -- on the foreign investment law. they have dealt with tech transfer issues. the devil is in the details and we need the details. how do we ensure that this agreement can be verified, implemented and enforceable? x going back to the foreign it comes downe, to implementation. are you getting any sense from your chinese counterparts that they are serious about implementing the letter of the law, that it will have a

significant impact for the operations of western foreign businesses operating? where we started. china denied they had a tech transfer issue. today it is incorporated in the foreign investment law. is not enough. the language has to be implemented. the issue is how it is done at the sub central level. i confident this is a step forward. the question becomes implementation. that is where lighthizer is focused. anddo we make sure china forces its obligations and what steps will it try to take to allow the united states to retaliate should china fall short of the obligations? have clarity on what enforcement might look like? >> there is a monitoring mechanism being discussed. low level dialogue but that will lead to high-level engagement. that is not enough.

we need something tangible that gives the u.s. the right to retaliate should china fall short of its obligations. but this is about building confidence. the other day, this trade agreement is not going to solve the problems we have. it will be a step in the right direction. that is what we need. we need confidence building measures. the burden is on china when it comes to structural reforms and tech transfer issues and intellectual property, but we are hoping the tariffs can be removed on the u.s. side. this is important for the bilateral relationship and the global economy. tom: which of your members do you think are best placed to aroundom changes intellectual property and tech transfer? >> lots of members will benefit. it will be purchases done as part of the commodity providers, the lg gas and there are many other winners.

there will be improved market access for banking, insurance, securities. there will be winners in this. the pharmaceutical industry should be winners as well because we expect there will be greater patent protections dealing with regulatory data protections. these are important. the copy right industry will be winners. the tech industry will benefit if there is improved data flow, which is an outstanding issue. if there is improvement in dealing with tech transfer issues. there are unknowns in that regard. the details are still coming out. how concerned are you about the chinese reaction? we had the disasters around the and now we see the chinese president, the chinese were the .irst to ground the aircraft is there a concern that there is retaliation, that boeing is being used as a bargaining chip? >> i am concerned about the heat

out here, it is hot. that said, not as hot as the u.s.-china relationship and boeing is important. we hope boeing is able to sell planes into this market. that may be part of a package but it is not the only issue being discussed. the other day, this isn't just a trade discussion. this is a competition issue. this is a question of two different economic models. how far will china moved to ensure its economic model is more consistent with international norms? that is what is at the heart of the discussions so we have a level playing field, and open market. we want to make sure our market is open but we want to insist china open up its market and not protect sectors of the economy, like it has done. to an executive from u.s. bank who says the licensing application is maybe being held back until we get a deal. you have a number of members

whose applications or deals may just be turbocharged if we get a deal. being sidelined. >> there is a lot of uncertainty right now in the relationship. uncertainty among government actors at the central level as well as the local level in china, uncertainty among business leaders in terms of decisions on investments, companies with logistics issues. let's put uncertainty to rest by having a good deal that is comprehensive and in during. that is the u.s. is thetimistic -- that goal for china and the u.s. i am optimistic. closer they are getting and i think the next two weeks will be critical. tom: myron brilliant, the president of the u.s. chamber of commerce talking about the trade talks. a crucial couple weeks and we will be paying attention to beijing.

mnuchin and lighthizer talking to chinese counterparts. , our chinamackenzie correspondent. boeing says the software fix for the grounded 737 max is imminent. we will have the details. coming up, as u.k. parliament reworks the eu divorce plan, we will find out what the future might hold for theresa may. this is bloomberg. ♪

shery: breaking news. one of china's largest brokerages says one of its hedge inds lost 100 $39 million 2018. the hong kong unit is facing potential litigation on the loss by the hedge fund of $139 million. we also had the company, the brokerage reporting for the full

year, the lowest analyst estimate. income loss of 50%. from mostlyng foreign exchange wages. we heard that in february from one of its hedge funds, which cut up citigroup in that as well. we are hearing from jf securities that one of its hedge funds lost $139 million in 2018 and is facing potential litigation in hong kong as a result. what investors will be focusing on as trading gets underway, a down session so far. we are joined by mark. with u.s. stocks closing higher and the treasury market taking a breather, is risk returning to wall street? it is not returning to asia today. >> people are reassessing the outlook for earnings on equities in relation to bonds.

people are running their models and looking at the relative yield basis. equities are overwhelmingly attractive. if you look at the u.s. yield curve, possibly rates going up touch lower, the potential returns on equities look good. fed modelss based on are making people think, all we need is reasonable growth in the second quarter, the fed out in -- out of the way in terms of no changes to interest rates, bond yields low. we are beginning to see people look at the gains. we had in exceptional first quarter for global equities, but it could still look decent in the second order. pick up at the end of last week seems to be behind us and people are getting optimistic. just on the basis that all we need to his -- all we need is reasonable growth. energy shares rallied on

wall street. that was due to the fact that oil surged to cousin of some comments from russia hinting that they might be committed to those output cuts. at the same time, you have global growth concerns playing into this. which side of the equation will investors be looking at closely? ark: in the oil market there are lots of technicalities. russia committed themselves to serious cuts in production, which is a good thing for keeping oil prices high. as you can see, the futures contract is getting pretty close to the 200 day moving average, around $61. that will be a tough level or the oil price to break above unless the rest of opec joins in. disruptions in the united states keeping production down there but the u.s. is a huge factor in the oil market

and if we see increased production in america, that will overwhelm what we see in opec. at the moment, there is a standoff between opec and non-opec countries. but that won't last forever. the u.k..turn to lawmakers prepare to take control of brexit. a powerful critic of theresa --'s deal may now but beginning behind it. our editor is watching this as we prepare for big votes. let's talk about the fact that we have a brexit hardliner indicating he could back may cost deal. >> just when you thought theresa may was a dead woman walking, to terrible defeats already in the house of commons, the vote a saying you can't have control, we will try to put something together. him.is pictures of

he is important because he has been a skeptic, definitely opposed to the deal. he is the chair of the conservative exit caucus and the head of the brexit european research group. if you don't get their approval, maybe you don't have a chance. if you -- if he says he doesn't like her deal but her deal is better than none, because there is the threat of a long delay and many people in parliament want to frustrate the result of the referendum. he is afraid the deal won't happen because the soft brexit will thwartxiteers it. theresa may has to pass a deal by friday. either you have a hard brexit or a long eu extension and i think it is important that the guardian is reporting for the u.s. in the evening that 10 more of the hard-core brexiteers are

saying they may back it. david davis saying it has a reasonable chance of passing. he says the alternative is a complete cascade of chaos. we will see how this plays out. in the house of commons that will be done by 7:00 p.m. and we should have results by tomorrow night u.s. time. haidi: the drama continues. we are getting news out of cathay pacific, an announcement we expected yesterday. cathay pacific to buy hong kong's only budget carrier for 4.9 3 billion hong kong dollars. this to generate synergy for the business. we had reports that was going to come through yesterday. breaking into the budget segment, which has been eating own business, the

acquisition of the airline announced for just china five billion hong kong dollars. cathay pacific expects the deal to creates energy for business as the budget continues to gain ground in asia. lots more to come on daybreak asia. this is bloomberg. ♪ ♪

will: boeing says it submit a final software fix for the 737 max 8 the end of the week. are tracking all of this. where are we at? >> looks like boeing finalized the software fix. this is the solution to the anti-stall software that the 74 -- the 737 max 8, it was the indonesian crash and potentially the ethiopian crash. that will be submitted to the faa for approval.

some of it has been tested so far in test flights. another blow to boeing overnight, and china has withdrawn the planes certificate of air worthiness. no matter what the faa says raises doubts it about when the aircraft could return to the skies in china because china has control of the process. shery: in the meantime, another boeing 737 max made an emergency landing. >> it is not related to the system but we know a southwest seven 37 took off from orlando, declared an emergency, and had to return. it was just carrying pilots because the grounding still asks pilots to test the plane. it landed safely. there was an engine problem, not

like what we saw. just what boeing didn't need. shery: much more to come on daybreak asia. this is bloomberg. ♪

shery: this is daybreak asia. 's pick: president trump for an open federal reserve's should cuthe fed rates by have a percentage point. he told the new york times the fed was wrong to raise rates in september and december. he insisted if he is confirmed, he would not be a dead -- not be a dud or a sycophant to the president. trade talks resumed with president trump promising an excellent deal. robert lighthizer and stephen mnuchin fly to beijing for talks thursday and friday. their counterpart traveled to

washington next week. the u.s. is concerned china is backtracking on earlier pledges while aging is pushing back on proposals they see as one-sided. two new bloomberg servers -- steady -- maintaining injections of liquidity. the median estimate of 29 economists and traders say policymakers will continue to reduce the amount of money lenders must keep in reserve. the earliest that is expected next quarter with two more in the second half and 350 basis point moves. israel has moved tanks to the after with gaza threatening a powerful response to the resumption of rocket attacks. this follows violence as the israeli air force bombed targets across the gaza strip and militants continue their missile strikes. the violence comes two weeks before the israeli election. hamas thousand not to ask --

escalate tensions. say nissan paid tuition fees for all four of carlos ghosn's children at stanford. we are told that is part of his employme contract after he became ceo in 1999. this is not common among executives and would have been valued at more than $600,000 according to stanford's published fee schedule. global news 24 hours a day, on air and on tick tock on twitter, powered by more than 2700 journalists in more than 120 countries. this is bloomberg. but seeing a markets are shaping up this morning. that rebound in asian stocks on tuesday, looking tenuous this wednesday with regional shares on the back of

japan. about 1500 stocks trading on the toyota, sony, among them. being weighed by chipmakers, sam sign extending declines, and in sydney, stocks off 0.4%. bond yields push lower once again for australia. the 10 year yield up by about two basis points but we are aeing economists forecasting move above 2% by the end of the first quarter, which is around the corner. on the shares in sydney. they are fluctuating today. gaining as much as 2.4 percent. we are seeing moves in the stock after the rare earths minor -- a takeover bid. this ceo says the bid is too low and opportunistic and the miner

can offer more value in its current form. they would only talk with potential partners who could add value. is not says lynas pursuing talks with other partners. shery: a new survey shows economists feel china will flirt , witheflation this year prices contracting in the second half. that indicates low expectations many have for the economy in 2019. our correspondent has details. despite the fact that we are expected to see monetary easing and more fiscal stimulus measures from china, why the low expectations? negativenforces how the outlook is for the pboc. if you look at the median forecast, 0.3% growth over 2019, some people are talking about contraction in the second half of the year and the picture

doesn't turnaround in 2020 or 2021. that suggests we are heading for a prolonged battle on the ppi deflation front. that means downward pressure on profits, higher real cost for companies, and that would be -- an extrahallenge challenge when the company -- the economy is under pressure. this will be key to watch over coming months to see whether china can hold off a slide into deep deflation. shery: what is the outlook when it comes to the consumer side? enda: it is not especially altogether much rosier. there is not a suggestion of deflation, but it is in line with the global peers, the global slowdown. economists looking for deflation around 2%. the government set a goal of 3% so it is a way of doing that.

the broader story remains with consumer prices slowing down, it will keep the focus on the retail side of things and keep pressure on the official sector. do more to- may stimulate demand. no one is talking about an outright benchmark interest rate that it indicates the authorities have worked to do to ensure china hits that turnaround points. enda curran there. let's get you the latest on the breaking news. buying china'sis only budget carrier. the number is four point nine 3 billion hong kong dollars. we knew they were in talks. let's bring in our intelligence analyst to has studied this. from what i see out of the silla

from what i see, this is a low-risk way of getting into that budget market that has been eating away into the market segment. >> to look at it, we see this as a new day for cathay. if you look at the landscape and the rivals, in singapore and japan, couldn't afford to be left behind. it made sense for them to buy the airline. we believe this is positive for cathay and should help them get into newer markets while avoiding pitfalls. it is not a total about-face. they were resisting a push in to the budget segment. what is going on with a

three-year transformation plan? >> a few things fell in place. the transformation plan is getting better. the opportunity came along and the had to start the some their own. it would have taken them much longer to establish a new budget airline and this came around at the right time. it makes sense. doesn't it make sense from a fleet point of view? >> yes. if you look at cathay's business, it caters to the premium side of the business class. the leisure market is where the hong kong airlines focus is. japan, thailand, that is where chinese travelers are going. cathay, i think it should be a full product offering going forward. haidi: how this -- how does this position cathay to grab a chair

-- a share of china's market? >> that is key. the chinese carriers have been growing over the last few years get backy will try to the market show they have been losing to chinese carriers. it is a long process but they are headed in the right direction. shery: thanks for joining us. in singapore. xi jinping wrapped up a short tour of europe, promising to work together on global governance. let's find out more from our senior international editor in hong kong. suspiciousuntries, of chinese influence and investments. how did gigi paying's visit -- affect their view of

china? >> his message has been trust me and trust china. he said in a press conference that the world and europe should mutual suspicions about each other and should instead theyo work together, that cannot let these mutual suspicions get the better of us, was his comment. he is trying to downplay concerns about things like potential hacking by china of five g networks, the trade tensions. he is trying to put a spin on it as, trust us, we are here to help. his visit is meant to quell the tensions. hasident macron says there been deep tensions with china but at the same time said they want to work towards mutual understandings and there is respect for china. haidi: what about tech and huawei? we know it has been a

point of contention. >> you would think it would be a point of discussion given that we have a confluence of events happening in france, the visit by the chinese leader but also a awei launch event. but there has been little on purpose.f huawei macron wants to use this as an opportunity to clamp down on the tensions on the world stage with china and the u.s. and the trade tensions and to make this a state visit where they can talk about moving forward. obviously, the tensions with concerns about hacking 5g networks are still there and this will continue to be a major concern, but this week we haven't heard much about it at all. jodi, thanks for that.

coming up next, the pursuit of -- economic gender parity. we speak to the president of croatia on their efforts and personal journeys to leadership. this is bloomberg. ♪

haidi: 202 years. that is how long the u.n. expects it will take to achieve --nomic chaired near parity gender parity. i spoke to the female presidents of the u.n. general assembly and the republic of croatia about the push for gender parity and their rise to leadership. i come from a modest -- a modest background. if you visited my village he would say there is no chance -- you would say there is no chance of a person from here would

become president. because of my loving parents, my dedication, and the fact that i decided never to take no for an answer when i want something, and to fight for it, i broke those glass ceilings i was, and it wasn't easy. it was at great personal cost. mostgh all of this, the difficult thing is feeling, as a mother, as a woman, then as a you always feel insufficient, that you are not giving your children enough time. but i always try to make whatever time we have to be really quality time, that we are reading, exploring the world, discussing the issues of the world, including gender. >> we have to overcome guilt, as well. males never feel guilty when they are not available for their

children. that is the natural thing. but you have a wonderful husband that i have the privilege to meet anti-feel so proud that he took that life choice. do you feel about becoming the first assembly not to mention the first latin american woman to u.n. general assembly president? >> i think it is a big honor but it is a huge responsibility because you are a woman, and you are supposed to make the world better, so the expectations multiply. fix things that our organization hasn't been able to six or decide over for 20 or 30 years, but you are there and you have to prove yourself and you have to really show that you serve your purpose. that happens every day. i was minister of defense in my country. when i was appointed

minister of defense. stereothat would typically be a man's job. >> it was tough. i had to work hours and hours to study and understand and really prove myself. it so happened that at the end of the day, it was a great working environment with a lot of respect because they learn to appreciate what you are able to do. and the issue is, we have to prove ourselves that we are fit for purpose all the time. within the u.n. what have you accomplished towards gender parity? >> i think we have a huge agenda. gender equality and women's rights as part of my priorities. we are working every day to make sure that every resolution, every decision, every panel we put together has gender balance. when i appointed my own cabinet

of 40-something people, i had 60% female diplomats and only 40% men. i just wanted to walk the talk, in a way. when i appointed co-facilitators, countries that support and have key negotiation processes within the house, 60% of the co-facilitators are female ambassadors. thecompare that only in house, only 45 countries have appointed female ambassadors to parity. so i make sure happens every day in every action, and now, i am very delighted to have, when i thought about organizing the first-ever meeting of female presidents, i said basically, what we want to get out of this is to say these are the challenges we face, but this is the difference we can make, and send this message to the younger generation because young,

talented leaders are so afraid of getting into politics. they are afraid because we are bombarded, we are mistreated by formedia, we are insulted our very condition of being a woman in politics. there is violence against women in politics and i think the media has a great role to play. shery: i want to ask you that because i don't want to put pressure on the media. >> we are a democratic country. thated to put -- point out what they are doing is important because they are creating trends and they are still treating me as a woman. my last speech at the u.n. general assembly, most of the headlines were about what i was wearing, what kind of hairstyle i had. and of course, whatever you do is never good enough if you go

one way or another. and i was thinking, next time maybe i should wear a shirt that says agenda 2030 and the media will report on the substance. don't see said you yourself as a woman, as a politician, as a woman. what does that mean? brexit means that i see myself as a person -- >> it means i see myself as a person. whenever i am in any kind of environment doing whatever, playing soccer or being at a high-level conference, i never think i am a woman, i am different from these people. i would like to believe i have been elected because of personal abilities. shery: a very candid conversation with the president and the president of the united nations general assembly. plenty more to come on daybreak asia. this is bloomberg. ♪

haidi: a check of the latest business flash headlines. subaru warns its streak of monthly u.s. sales gains will be threatened if president trump puts tariffs on cars and auto parts. they are the only carmaker to boost u.s. sales every year in the last decade. the commerce department delivered a report on whether

imports threaten national security. disappointment for investors in bmw's china partner. they missed estimates, coming in at just under $900,000. they save -- they say they are bullish on long-term growth sand the new models are key to boosting sales. they offset the slide in demand for their own brand cars. mcdonald's wants to know what customers want before they order. they are making their biggest acquisition in 20 years, spending $300 million to buy a tech company to personalize menus. the new technology will allow restaurants to vary their menu depending on the weather, the time of day, local preferences, and can suggest specific add-ons. the rbnz is supposed to reverse its policy position.

thateen, is there anything might push them off the policyholder gekko >> not likely. if anything it would be the global concerns. the world expects them to keep the key rate at one point 75% again, maintain the neutral stance of suggesting we are not going to raise or lower rates. the inflation rate climbed to 1.9 percent year-over-year and the core rate up to 1.5 but basically in the middle of the key target rate. let's look at new zealand's gdp because it expanded at it slowest rate in five years. it is in our library, let's jump right in. better consumer spending, better business investment, the concern is, exports get hit as the deficit widens because of the u.s.-china trade war and the uncertainty. 2.3 isn't bad but it is not over 3% as it was. it is not what it used to be, up

near 5%. this is the concern people have. in the end, people will be rbnzng for, what will be signal? anything they say about global i justhe things mentioned. another question, in the midst of the global bond rally, is this going to be a concern that they have shares, as well? they don't have an inverted yield curve but if you jump back in the library, i want to show you, we have seen this selloff in bond yields. the new zealand bonds aren't on here but after the asian bonds came down they bounced up a bit or willink what adrian say if he is asked questions, the global bond rally, the move down in yields isn't so much a concern even in new zealand about what is happening in the economy. the u.s. is driving this and

there are concerns about u.s.-china trade war and brexit. we will see if anything neutral as far as the eye can see. no rate hikes probably until after 2020. haidi: let's get you a preview of what else we are watching and markets this morning in asia. are watching cathay pacific as it agreed to buy hong kong express, making a move into the budget airlines. cosco shipping, goldman sachs gave the stock a new rating. they are likely to bottom this year. we are watching shema properties. price for thes stock on 12% on sales growth momentum. keeping an eye on earnings, coming fast and furious. check the board, ccb, air china, electriching other vehicle players as china scales back subsidies for the industry. .aidi: lots to watch

before we handed over to bloomberg markets asia, let's take a look at markets already open. a down day across the boards. nikkei 225 off by 0.7%, negativity coming through in kospi off zero point 5%. japanese stocks seeing declines. not much of a rebound despite a positive session on wall street. stocks off by 0.5%. new zealand trading higher. shery: and market coverage continues as we look ahead to .he start of trading the china open is next. ♪ want more from your entertainment experience?

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♪ in beijing and singapore. welcome to "bloomberg markets: china open." we are counting down to the open in hong kong and mainland markets. vowing to safeguard global links. trade talks resume tomorrow in beijing. boeing will have a software fix five friday, but new issues in china. new handsets that will change the game.