haidi: haidi stroud-watts in sydney, where us chile markets have just open for trade. shery: good evening from new york. i'm sophie kamaruddin kamaruddin in hong kong. welcome to "bloomberg daybreak: asia." haidi: trade talks resume in beijing with big issues on both sides. the white house says there is no rush. talks could run on for weeks. ceo tim sloan steps down with immediate effect and continued

criticism of the bank's corporate culture. a big day for japan, did on a planet factoring upward. we are live in tokyo. shery: let's turn to south korea. industrial production numbers coming in worse than expected. 2.7% afterr, falling barely growing .1% in the month of january. falling much more than expected. the expectation was to fall half a percent. it fell 2.7% year on year. 2.6%, which is much more than expected at .7% decline. it is also turning negative for the first time since december. we have seen lots of risk for the south korean economy, including demand for chips has been slowing down. we had a profit warning from samsung and the south korean economy being supported by

fiscal stimulus at the moment. let's get started with a check on the u.s. market close. inrsday, we had more calm the market, with that serious treasury rally coming to a halt. yields rising, stocks rising, every sector on the s&p 500. most were gaining ground. financials led those gains. it took a hit from economic advisor larry kudlow talking about the u.s. china trade deal perhaps talking weeks or months, but it was able to keep those gains up for tenths of 1%. small caps also outperformed. futures not doing much at the moment. let's see how we are setting up for the asia open. >> not doing much at the start of cash trade. opening flat. we are seeing stocks gain ground 1/10 of 1%. risingi dollar, we get

rate cuts. in may and june for the central bank of new zealand. we have futures in tokyo higher. this after a choppy week of trade that will see the first monthly drop in 2019. securities says it is keeping tough to get bullish, adding to a cautious tone. with those numbers, investor output coming in worse, that will not be appointed comfort for investors or policymakers. sophie in hong kong, let's get the first word news. theresa may is rolling the dice to drive her brexit deal through parliament, asking mps to approve a paired down proposal. it will contain only the withdrawal agreement, not the causes that cover trade and security relationships.

speaker john bair cal has said they could not bring her vote back unless it had substantially changed. president trump has turned up the heat on immigration, accusing mexico and other countries are doing nothing to prevent people crossing into the u.s. illegally. his tweets, day after his administration signed an agreement with some of those countries aimed at reducing the number of migrants heading north. he wrote that mexico and others are all talk and no action. lift priced in shares of the top of an elevated range. -- liftedare offered the marketed range wednesday. the company will make its debut friday, trading under l the tickeryft. the listing is seen as a bellwether. tim sloan is stepping down with immediate effect amid mounting

pressure over a string of inking scandals. shares jumped in late trading as they named general counsel as interim chief. sloan has faced increasing criticism about corporate culture and sales practices. wells fargo was charging for services companies -- customers did not request or received. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ the bond rally east. we seeing the s&p 500 stay on track to close out its best quarter since 2009. su keenan joins us now. you have put into perspective. we had a volatile few sessions, but also the best quarter in years. su: s&p 500 up more than 12%. the take a look at how we closed the dollar, having its third day

of rebounding from a 15 month low. if we look at where the strength and weakness was, materials, chemical materials. losers, utilities and financials. go into the bloomberg for how financials may counts more than tech. gtv is where you can find our library of charts. the picture that emerges is the divergence between the financials to the downside and tech on the upside. back in 2014, it was very different. ultimately, history tells us that this works its way out, but this is indicative of the fact that monetary policy suggests odds are tilted to the downside. many are watching this dynamic for now. lululemon, the yoga pants maker, 100 delegate

the pants are one of their products. huge sale items on the holidays. they give a strong outlook and that had the stock up in double digits. the rest of these represent a big downturn in the for major telecom providers. they come amid fresh concerns over t-mobile. apparently, regulators were looking for antitrust concerns and are not persuaded by sprint's argument that it will be a corporate weakling if it is not allowed to merge and after the bell, states announced their intention to file suit to block this merger if a deal moves forward. that is a big development. in the meantime, oil is back in president trump's crosshairs. telling opec they need to pump more to get prices lower, but will move higher. is an interesting

story. that's go to the five-day chart. you can see the oil dips in this latest session, but rebounds toward the end of the day. this is the second time the president has treated out a message to opec to boost production rather than cut output because he wants to keep prices lower. he said it was very important for opec to do this and it appears that they are ignoring the treat, unlike the last time, where saudi arabia did an about-face and started to produce more, which level about the price of oil. this will be an interesting dynamic to look at. dramaticee oil futures rise, better 30% year today. that has put the bias for now. a lot of crosswinds for oil, particularly with the china u.s. trade deal in the balance. haidi: that is some of the

action from overnight. trade talks continue in beijing. comments from the white house economic adviser suggest that these hopes that a quick resolution to be dashed given that we have seen ongoing talks continue. talks could extend the weeks or months. on the one hand, a lot of people will be relieved today are not looking for a quick fix. on the other, does this tell us the two parties are far apart? greg: i think that's a great point. we have washington trade negotiators in beijing for a full day of meetings today. meetings which will continue next week when china travels to the u.s.. there remain significant issues

and space between the two sides. we have seen china offered to boost the purchase of u.s. exports, but it is not enough for the u.s. side, which is making significant dance -- a significant demands. besides seem to remain far apart, but for now, it doesn't seem to be worsening relations. larry kudlow today said it could take weeks or months, but they will be striving for a deal. all negotiating and a flurry of negotiations show that both sides are indeed looking for a way to keep talks going. china wasare hearing not happy with the fact that president trump wanted to keep tariffs on $250 billion of goods as leverage in order to enforce whatever trade deal comes out. what do we know on tariffs? greg: it is interesting. at the same time white house economic adviser larry kudlow was saying this could take weeks thatnths, he also said

though president trump did say he would be willing to keep those tariffs in place for significant amounts of time, kudlow said it might not be all tariffs. it is not certain if all tariffs will remain after they have reached the deal comes but they will have more details. tariffs seem to be the big question, but as we are in a holding pattern with no new tariffs coming it does seem that we could be looking at a prolonged status quo in these negotiations. haidi: the administration seems to be pushing the envelope on geopolitical disagreements, including the sailing of the worship through the street. we know this is a sensitive area. greg: it is interesting. i think that the selling of the worship underscores that the strategic rivalry between china and the u.s. is greater than just trade and economics. certainly, that is a focal point right now. we have trade discussions that

focus on tariffs. but since sunday, the u.s. state department has hosted the leader in exile and shared -- sailed a worship through. the u.s. does appear to be willing to toe the line with china. as for right now, china does not look later -- does not look ready. how long that lasts remains to be seen. right now, china appears to want to silo the trade talks and take other issues piece by piece. really appreciate your time. still ahead, we are counting down to the latest jobs and inflation data in japan. plus, analysis from the fujitsu research institute. haidi: coming up next, warning shines of the treasury market even before the yield curve inversion. we'll get his forecast next,

this is bloomberg. ♪

haidi: counting down to asia's first major market open. littles getting a positivity across the asia-pacific to round out the week after the s&p. it is heading to its best surge ande have a that sent equities higher. a big day ahead when it comes to japan. tokyo cpi, retail sales, as well as labor market indicators over the next hour or so. this is "bloomberg daybreak: asia." i am haidi stroud-watts in sydney. shery: i'm shery ahn in new york. the u.s. treasury rally took a breather, but the month of march has been -- has seen yields 440 -- yields fall 40 basis points.

jim has been following the treasury markets for three decades. great to have you with us. why has this rally been so fast and furious? jim: i think the treasury market is perceiving that there is a slowdown worldwide and even in the u.s.. treasury yields are falling. the federal reserve at the same time is saying they are in no hurry to move rates. that is holding short rates in place. that is what caused the yield curve to invert in the last week or so. typically, a yield curve inversion means that the market is saying the fed is too tight and that is no different this time than any other time. the market is signaling to the fed, you should consider using. shery: two weeks ago on bloomberg tv, you said the german boom could go into negative territory. you thatchart showing really, we're there. we are subzero.

we continue to see negative yields and that rising across the world. will this continue? are we headed lower and lower now? jim: i think for the next few months, the answer is yes. the reason we are seeing yields fall and zero is no longer a barrier, which is why we are negative, is because economies are slowing down. the german economy has printed negative gdp. there are other economies in the eurozone that are printing multiple negative gdp quarters, said the economy is not good there. that is reflected in the lower yields we're seeing. i think we will continue to see that and it is not only there. the chinese economy is slow, the u.s. economy is slowing, and they are paralyzed in the u k over brexit. this is all leading yields lower. i figured will continue. haidi: it sounds pretty sanguine

that this is just signaling from the markets to the fed, as opposed to potentially signaling .ecessionary periods are you more optimistic that we might be setting up for another goldilocks condition? jim: the yield curve does precede a recession. inverted, which means fed policy is tight. it is too tight for a week. a week is not going to kill the economy. if it proceeds for a month, then several months, then yes. i would say this is bad and we could be looking at a recession. the fed has got away out to any time they want to take it. they can cut rates and we could see short and long rates fall, then the yield curve could steepen. why they could hope the data will get better. i think they are in the hold phase. it is not a strategy. we'll have to see whether they change. i have a suspicion that even

though today in financial reports, the fed said we are on hold, there is no talk about cutting rates, i don't know why the market is pricing that in, check back in three or four weeks if we are still at these levels. i think the fed will change their tune and be much more open to a rate cut. maybe we will see the yield curve inverted, because the fed will cut rates. elsewhere, switching away from the fed, you spoke to us the last time on bloomberg and said among the good news supporting the gains across chinese equities, is that still the case? to be fair, we were coming off a couple of really torrid years. jim: the rally in the chinese if youlooks eye-popping look at the last month or so. if you look at the last 10 years, considering how much it

is not very big. i do think there is a big hope in the chinese market that they would be a trade deal, the stimulus was going to work, they are fighting a bottom in the economic data. ahead ont has raised the hope that is what we'll see. the problem is, that is priced in and if we get it, there is nowhere else to go. the door for disappointment is there. we don't get a trade deal, the data does not come in as they thought, stimulus is not being built into the economy. anyone of those appointments could make it stumble. i think we priced in all the good news for right now. haidi: how do you -- how dangerous is it that this is coming from our credit? jim: in the long-term, it is very dangerous. the chinese have shown that the have a bad problem to begin with and throwing good money after bad is never a long-term solution for anything.

they will have to work through their problems. they can take solace, they are not alone. the chinese economy is struggling, but so is the europe and the u.s., so it is happening all over the place. right now, the st. louis fed president is speaking in wisconsin, saying the inverted yield curve has been unreliable in the past. saying, we hope we ended in normalization periods at the last moment. have we have central bank come back into the game at the right time or is this too late to stop the deceleration we already seen? jim: i will push back a little. the inverted yield curve is the signal you have the wrong policy. you're too tight. i know he is trying to put a positive spin, but the message

from the market is it is yelling at you, run policy, and you should consider using policy. used consider going the other way and the fed is not open to that yet. in a couple weeks or a month or here,f it is levels stay they might think that, but right now, they're pretty dug in. they are not going to cut rates. haidi: we will be talking at length about the recessionary signaling from the inverted yield curve. where do you find returns in this environment? jim: the easiest place to find returns is going to be the long-term duration or interest rates. the have been getting positive returns since the yield curve started to invert in early february. they outperformed the stock market as well, because the stock market stalled. environment, if that is where we are going, we could see lower yields and that could be a place you could see returns.

haidi: really appreciate you coming on with us. you can get a roundup of the stories to get your day going in this edition of daybreak. on your terminal are right there on the mobile in the app. on the industries and assets you care about. this is bloomberg. ♪

haidi: live pictures of president trump in michigan, where he is appearing at a fundraiser rally. this the first time you are taking a live look at the post mueller president trump.

this is a victory lap after that report came out sunday with attorney general william barr announcing that mueller had not found any evidence of collusion between the president's campaign and russia. he is now in full campaign mode in michigan, a key purple state that will play a role in the 2020 election. if you want to continue watching, go to live go on the bloomberg and you can continue watching the event right there. you will find diary entries coming up later from these events you may have missed earlier. now, a quick check on the latest business flash headlines. the world's largest lender by a 4.1% increase in profit, boosted by china's stimulus policy. net income rose to nearly $45 billion, narrowly missing estimates. may suffer tos offer cheaper financing.

they posted a 5% increase in profits wednesday. haidi: europe's money-laundering scandal has claimed another big name. sweet bank has fired its ceo amid allegations that the lender was used to launder billions of dollars of russian money. the news comes as talks between investors instigate the fed lost confidence after she appeared to mislead the public about the seriousness of the money laundering case. shery: japan's largest messaging service is raising its founder to ceo as it looks to reignite growth by tapping into the country's drive to go cashless. he will form a powerful triumvirate with the current ceo and chief strategy and marketing officer. line is facing a stagnant user base and a business model that relies on advertising. guest coming up on

bloomberg. have an exclusive interview with the huawei chairman later today. haidi: coming up, traders are on alert. big-name banks cutting jobs. we take a look at what is putting pressure on financials next. this is bloomberg. ♪

we are getting some data on japan crossing the bloomberg. delays indicated, they are jumping to 3% from 2.5%. .hat is better than expected there was a concern that the type dish tightly for market conditions might have date. the job to applicant ratio is holding steady at 1.6%. the same as the month before. this is not intense of 1%. pace from 6/10 of 1%

in february, excluding fresh food and energy. this is still fairly off yet. there is the jobless rate falling to 2.3% against expectations. of course, we have other data coming out. are retail sales numbers as well in the next half hour. but it caught up-to-date with the first word news. >> it is prepared to talk to china to reach an agreement. friday will be a full day of talks before they had that to washington next week. the major issue is dealing with enforcement and the u.s. needs to be patient. not time driven, this

is a policy enforcement driven deal. things have to be done just right. as the president said, it has to be a great deal. boeing is being sued on behalf of a passenger killed in the ethiopian disaster last month. crashesve been to fatal in five months. the 737 max 8 is grounded around the world while boeing works on a software fix. they said they were close to a fixed before the ethiopian plane came down. of the prime minister won the most votes in the last election. the identity of the next government is still not known. gained alitary people .5 million votes. the opposition is seven point 99.

a new survey of the world's top airport shows asia remains dominant. this is number one. came fifth. the north american airports rank well down the main list. global news, 24 hours a day and on tictoc powered by more than 2700 journalists and analysts in with an 120 countries, this is bloomberg. >> let's go to hong kong and get a check of the markets. some returns.ng

the aussie stocks are thinking of momentum and climbing areember highs, gold miners here. this is at the end of 2019, heading for the best apartments since 2009 with a gain of 9.7%. you have tech leaving that advanced sector up nearly 22% for the time. outperformede commodity prices. australia's sees boosting earnings from mining and energy in fiscal 2019. they are warning that the sector is facing downside risk after a solid start to the year. real estate players have also rallied this quarter, putting resilient to the worst housing slump in a generation.

sherry: a shakeup at the top of --ajor u.s. bank, since some tim has resigned immediately. he has faced pressure to after any scandals at the bank. we are beinge and joined now. refreshments as to what happened at wells fargo and what tim sloan is leaving behind. >> he's leaving behind a deeply troubled bank. it is under 14 last consent orders. these are punishment orders by the regulators. he leaves a bank that is trying thishard to get past account scandal. there are challenges for whoever ends up in the seat after sloan. in terms of the interim

replacements, ellen parker is a alan parker is a newish person to this. >> he doesn't have a huge public profile. he was brought in after the scandal to help steer the ship around. it will be interesting to see how a lawyer navigates the bank through the situation. one of the things that is really interesting is that as he shepherds the search for a new external ceo, the big question is who wants that job. it is a very tough role. it is a troubled bank. it is a very daunting task. it will be very difficult for the board to be able to find somebody. emily: lots of news when it comes to -- sherry: lots of news

when it comes to succession issues. now that he is not in the offering, who else are we looking at? transitions,l ceo we have to look at the top players in the major businesses. we are talking about the head of the investment banking trading division, the cohead of the brokerage businesses and the head of international business. there are a few key people gunning for james gorman's top ceo job. sherry: thank you so much for joining us on that latest from wells fargo and morgan stanley. we have breaking news, we are hearing that astrazeneca will pay up to billions of dollars in a cancer deal. upfront, $1.35 billion and additionally, 5.6 billion dollars on milestones achieved.

this is on a cancer deal. $6.9 billion.p to astrazeneca expanded earnings for the year, highlighting a rosy outlook for a slew of new products as phuket drugmaker tries to become a cancer powerhouse. that they will be paying up to $6.9 billion for that cancer deal. that would be $1.35 billion upfront. they would try to raise up to $3.5 billion in raising shares. this japanese brokerage may be getting to set to cut 100 jobs over a number of financial houses. let's go out there where we are standing by with the details. what is behind the latest cuts at nomura.

>> we would be anticipating -- we were anticipating some cuts ura for a -- nom while given the trouble the bank has seen. the 3000 strong workforce in europe is too big. things got worse since you give that interview. the bank recorded its worst quarter -- its biggest net loss and a quarter since the global financial crisis. that was due to write-downs and a write-down on the acquisition made in 2008. that is the source of much of the banks was in europe. continuation. the bank has announced a global review into the business. the guy is expected to deliver

some of the findings of that review to businesses at the for next week. sherry: what is next for the company? russell: we will be expecting them to put these cuts into some sort of strategic context. the bank is in a bit of a bind. they don't have the skill to compete with the biggest banks on a global scale. to goternative to that is to japan which has had growth struggles. see him put these cuts into some kind of context. it would tell us where he sees them on the global stage going forward. sherry: thank you for joining us. the federal reserve's new patients as one support -- has won support.

they will give a boost to a challenged market. kathleen hays is what the ceo has had to say. win someeel good to appreciation. kathleen: i am sure that ceos say a lot of things about fed policy from time to time. of toyota north america. he said that he thinks this pause will help rescue the auto market from what looks like a bit of a slowdown after peaking at over 18 million units sold per year. that is very high. they are starting to come down. he said that fed chair call was the right call. we have seen this succession of interest rates in the past. in other words, the rate hikes. typically, you don't see an interest rate increase.

playingeeing auto sales out this way. you can see the great recession outly knocked the heck of auto sales. the rates have risen. there are a lot of things driving the support. there is an interesting thing to think about. sherry: supporting rate hikes is one thing, cutting rates to prevent a recession is another thing. we heard from our previous guest to say wait a couple of weeks. we might get that in the offerings as well. they are clearly not considering that. emily: he was speaking in puerto rico. -- kathleen: he was speaking in puerto rico. he said we are going to get 2%

gdp growth. he doesn't think there is any more risk of recession than it ever has been. let's look at one of our favorite charts. here is two recessions, here is the next one. here we are again, just a little inverted. that is the signal. jim was speaking in madison, wisconsin. what jim said is this has been a very reliable indicator in the past. he has pounded the table on the yield curve before. he says normalization from the fed has gone as far as it can go. >> the central banks are considering cutting rates and the feds have paused to that publicly. we had a deputy governor of the

philippines. >> we actually had an interview and he says it is fact. they are looking for ways to get 2%-4% target.the we will look at the key rate of inflation. there is a trend in monetary policy around the world, making many nations feel more sanguine. look at this, 175 basis points. member how the philippine peso theetting -- remember how philippine peso is getting beaten up? now what has happened? the big rate hikes have had an effect. it is down to 2.3%. the philippines are looking like they could start thinking about

cutting at some point. sherry: thank you so much for that. coming up, losing steam. we will look at why japanese production has gone for a fourth straight month. this is bloomberg. ♪

this is daybreak asia. i am shery. heidi: i am haidi. let's get this over to our senior economist. see this through to wage inflation? martin: i'll think so. the labor market is totally empty. --panies are computing

competing heavily. they see this as a structural problem. they are investing in digital digitalization-- heavily. they are focusing on how to get the operations more efficient, how to cut some slack and some services that might not be entirely necessary. not increasing wages except for in some pockets. haidi: that takes us today's essential question of ergonomics. is it a structural or technological issue? it is just a different world. the phillips curve is not as correct as it was in previous years. in a lag because japan is in such a big. of inflation?

martin: it is a deflationary mindset. , the labor working market is totally empty. job -- this is rare for an economist. the quality of labor has been providing to growth. on the other hand, total factor productivity. innovation has been slowing down. very well educated women have been entering the labor market again. they have not been implanted in the most innovative ways. companies are setting up new platforms, they are focusing on how to get the operation done in a much better way by not increasing wages anymore. shery: we will see -- will we see wage negotiations in japan?

martin: companies are cutting back into production because the outlook is not as positive as it was last year. they see they cannot hand out any additional hikes and prices. they are focusing on getting productivity up. sentiment is down as we will see. it is about productivity when you look into interesting companies. >> we are getting the latest numbers out of japan right now. it is growing 1.4%, as much as expected. we have been coming in line for these numbers. year-over-year, it is a fall of 1%, also, a contraction from the previous month of january. haidi: retail sales are growing.

that is about what is estimated. this is disappointing when it comes to retail sales numbers for the month. i saw that link into domestic demand, it was a bit more of a stable picture in japan. what do you think of the numbers today? the picture is stable in terms of private demand. investment was optimistic. companies are cutting back on .roduction ane factors will just remain empty labor market. they are focusing on efficiency. haidi: sales are also missing expectations.

great to have you with us as always, martin. that was martin schulz. if you missed out on this interview or others, you can watch it by going to the function, tv go on bloomberg. you can watch us live and dive into any of the securities or bloomberg functions. questions, send us those questions, the lower left side of that screen. this is for bloomberg subscribers only, check it out on tv . this is bloomberg. ♪

>> this is daybreak asia. shery: i am shery ahn in new york. haidi: i am haidi. if you're that you a recession proof investment, why not try this liquid stuck? revenues rose by almost a third last year.

even though the economy of china in mustthe slowest pace be decades. it is counting further revenue growth of 14% this year. this surged as much as 246%. closing off more than double its price at the start of trade. as theh is holding distributor of water and agreement. they floated to more than 50 million shares, three times the three-month average. >> the men who said sony is finally calling it a day. he is seen as the architect of the company's turnaround and will be retiring in june after three decades at sony. heairman a year ago. he will continue to act as an advisor and retirement. he became ceo in 2012 and cut

costs, selling off units and refocusing on the playstation. a kick out of the top of the hour, let's turn to sophie now.uddin he -- sophie: this could add to some caution about the korean factory input and slower growth japanese retail sales. in tokyo, we are keeping an eye on pharma stocks. paid.illion will be we do have sales pharma on the radar after announcing positive results from a cancer drug treatment. this is the go-ahead from the data safety board to continue studying in an early outsiders trial. a choppy wrapping up with for japanese stocks, this is the first monthly drop in 2019 even so, this topic is

still headed for the best quarter since december of 2017. haidi: let's look how markets are faring. this is in new zealand and australia. this is the call from j.p. morgan about cuts this year. we are seeing upside when it comes to kiwi equities. we are watching some of the big miners. we also had some of the remarks out yesterday as well. here are nikkei futures. they are looking pretty positive as well. next: coming up on the hour of daybreak asia, a big week for chinese banks as the big four report earnings. we will unpack the trends.

the market open is next, this is bloomberg. ♪

haidi: good morning. asia's major markets have just opened for trade. shery: i am shery ahn in new york. sophie: welcome to daybreak asia. i am sophie. >> our top story this friday, trade talks resuming, big issues on both sides. the white house says there is no rush, talks could go on for weeks. boeing is being sued over the

claims that the seventh 37 max design was not safe. -- 737 max was not safe. speaking rightis now. they are kind of planning a rate cut. faster u.s. growth in a second half of 2019, saying that weaker data is temporary. u.s. economy is the hottest on the planet, nobody is close. a bit of perspective right there. let's get right to the market action with sophie kamaruddin and see how we are setting up for trading in asia. sophie: you're looking at the nikkei and the topix gaining ground. the yen is holding steady at

this number. we are seeing this rally continuing to ease. investors have been closely watching this level. it will see if the boj will alter its planned for april. they will release that plan this friday. we will gave the reaction after the latest round from japan. we saw forecasts coming in .4% higher for retail sales. we are checking in on the mood in korea. touch, .4%.ing up a this is firming up after we saw a decline. we are keeping an eye on korean bonds. they have fallen below the rate but there.

factory output coming in worse than expected. checking in on the mood in sydney. we have stocks climbing in sydney. this is a path a percent. there is the benchmark after seeing the bond valley east with an aussie tenure yield back up above 1.77%. checking it on sony, it is moving a touch in tokyo, getting a quarter of percent. retire in june after a tenure of more than three decades. its smartphone units by march of 2020. a few new signs to consider. haidi: let's get the first word news. >> we start with theresa may rolling the dice to drive her brexit deal through parliament once again.

they will do it only the withdrawal agreement, not the security relationships with eu. a speaker has says that may could not bring her vote back was it's especially -- substantially changed. -- you cannot bring it back unless it was substantially changed. the identity of the next government is still not known. the military party gained about 8.5 million votes tied withopposition 179.9 million. boeing is being sued by

passengers killed in the ethiopian disaster. they had to fatal crashes in five months. -- the 737 max 8 jet is grounded throughout the world. wells fargo has mounting pressure over a string of breaking -- banking scandals. alan parker is interim chief. increasingaced pressure about wells fargo's practices. they are charging fees for services that customers did not request or receive. t has raised $3.2 billion in its initial public offering.

the ride hailer offered just 273 million shares. $16 per piece. the company will make its debut on the nasdaq, trading under the ticker. posting -- the listing is seen as a bellwether. 27 hundredmore than journalists and analysts in more than 120 countries, i am su keenan, this is bloomberg. you, trade talks are continuing in beijing. larryre comments from kudlow, they could -- hopes that there would be us with revolution. they are looking at longer-term,

structural enforceability issues. it sounds like we are looking at that time frame being kicked down the road a little bit. >> you are right. this signals confidence on the part of the u.s.. 20 end of last year, there was a sense that u.s. strategy had changed and we were a celebrated toward some kind of deal on the table. the markets have turnaround since then. they're talking down prospects over a session in the u.s.. the u.s. considers themselves back in the driver seat, they are willing to take their time. they will not just take their time. they want to push hard on some of these other structural issues. they are now managing expectations on a more copper

heads of deal. >> what will happen to those tariffs on chinese goods? what that impact be on both the chinese and u.s. economies if they have those $250 billion of chinese goods remaining in place? they don't want to remove all those tariffs because those would give up their leverage. the u.s. sounds like they are willing to remove some tariffs if they feel a trade agreement is being reached. tariffsnts all the taken off the table. it does not sound like this will happen. this comes down to the enforcement of the agreement. parts of the chinese economy that want to monitor whether china would be comfortable in an economy known u.s. officials to inspect their data. those are the metrics that the

u.s. will be looking forward to considering before they left any tariffs. the treacherous is holding. the removal of some tariffs are on the table but the u.s. is not willing to give up its leverage altogether. >> thank you for that. that was the chief economics correspondent. be attalks continue to the center of attention. the focus has shifted from recession to trade optimism. is this what is driving the markets right now and mark -- right now? >> this trade deal would have been done and dusted already and all of the tariffs would have been taken off but that is not the case. there are no signs that it is getting any worse. the can is getting kicked down the road. they will still take several weeks before we get a deal.

at least we're moving toward a deal and there is no immediate threat that anything else will be thrown at the market. that is all good. time, when you hear there is a very good chance that the fed has reached a mutual point, these factors help to make the general optimism rise of it further. -- a bit further. things are not too bad. i can stay invested in the market and generally i'm feeling good about things. it is building up to a picture where people have more companies, they can stay invested. haidi: the markets always want more. there is a sense that the markets that are already locked and have good news on trade. what about the fed? we were told to give the fed a couple of weeks.

they are saying this tune about a couple of rate cuts. is this something that the markets are starting to expect or even factor in? >> we have gone a bit too far on that. pricing and rate cuts has gotten way ahead of things. for 2020, there is some expectation that the rate cut is coming, that is so far off. the price and could move back to a more neutral stance if the u.s. data is strong. people will be looking to see about the u.s. health. there will be a rate hike this year. that is good news for risk taking. for now, we will probably see the bond market becoming less of a factor. i think it has gotten overdone. people are pricing into much. we will go back to a more

neutral stance. bonds will probably play less of a role. the focus will shift back to emerging markets and probably commodities as well. you can follow all of the day's trading action on our markets live bob -- blog this friday. you can get a markets run down in one click, it is ongoing commentary and analysis from bloomberg's team. you can see what is affecting your investments at any given moment. hong kong is kicking off a virtual banking revolution, --es line drives -- joins us james lloyd joins us later. york and live from new sydney, this is bloomberg. ♪

>> we should not take any further action on these mistakes. >> they are not taking it seriously. haidi: this is daybreak asia. i am haidi stress more. -- heidi strathmore. 5% increase in profits. bank of china, bank of , john isner from hong kong is grace will. great to have you with us. give us your assessment of the latest earnings reports from china construction bank. >> there were no major

surprises. looking forward into 2019, our expectation would be that most of the state banks would see a slight decline in margins this year. partly owing to the push for the state banks to be doing more -- lending but also lending to these private enterprises. impact onhave an these margins. >> we are seeing nonperforming loans at the highest level since at least 2004. this chart on the bloomberg is showing that. how challenging will it be for these chinese banks if they reduce shadow banking activities but still sustain adequate loan growth? grace: it is a real issue.

there is a need to migrate some time,se but at the same the largest banks also have a vague of the tory capital requirement they have to fill. this will be very challenging. >> is there pressure when it comes to the rate hikes using? given that we have seen the easing of priorities in terms of policy issues? grace: we do expect some regulatory softening. especially in areas such as shadow activity. in terms of the directional these declines of relative to gdp. in terms of scale, it will not decline as much. having said that, at the moment,

we don't expect any acceleration in bank loan growth. part of that is because of bank capital. as we have seen with the earnings, the banks have been reporting profit growth. they are basically just generating enough profit to sustain their own capital ratios. maybe if we want to see increases in those capital ratios, they would have to do it through an external capital raising. >> we have seen systemic concerns from smaller lenders and regional lenders. his that's still a worry? -- is that still a worry? grace: it is. some of the policies that were has used --that funding pressure for the

small players. a lot of them are shifting their business models and putting more emphasis on growing retail banking. there making use of these online electronics. they are struggling to get by. metals --ower capital levels, will that restrain aggressive policy easing? grace: at the moment, we don't expect any credit stimulus. whether this might be through tax cuts or preferential tax just looking at the capital situation within the we gog system right now,

see how the banks can afford another large-scale stimulus of lending boost. this could help with alleviating some bank funding pressures. in order to give up the growth of consuming the capital, that is where this is. if they want to grow, they are going to need more capital. it will be difficult for them to raise capital in this environment. the banks have issued instruments for some of the perpetual bonds. even then, there is quite a bit of capital needed to reach the vegas for requirements. >> thank you for being with us. that was grace would. the head of greater china bank. you can get a roundup of the stories that you need to know to

get your day going in this addition of daybreak. available on the bloomberg anywhere app. this is bloomberg.

>> this is daybreak asia. shery: i am shery ahn in new york. haidi: i am haidi in sydney. boeing is being sued this month over claims that the 737 max was not designed safely. angus is here with the story. there is a report that they are considering mixing their order for the 737 max. there are all of the struggles in china. things keep getting worse for boeing.

it is particularly interesting. was claims that the 737 max unsafely designed. it specifically picks at the anti-stall system on that aircraft and how boeing failed to one of the defect. it is interesting because we know that boeing was working on a fix for that even before the ethiopian crash happened. they were working on that software. that ifperts telling us boeing is found guilty, that crash could prove particularly damaging. interestingly, we heard that garuda formally scrapped the 737

max planes, saying that they lost trust in that aircraft. it is a very sensitive topic in indonesia. wentis where the model down in october. we also have an airline digging for narrowbody jets. -- picking airbus for narrowbody jets. >> what about the upgrade of the software? where are we on that upgrade? angus: that should be submitted to the faa -- the u.s. regulator by the end of this week. it went under several tests, even before the ethiopian crash. that patch should be on board by the end of the week and then we will defer the tests and approval. it is not clear if that will be enough to get the fleet back up

in the air. thank you for that. >> let's check the latest business flash headlines. -- moneylaundry money laundering scandal has claimed another victim. this lender was used to launder millions of russian dollars on her watch. three topic investors say they in bonnesen.ce ,> this was a 1% increase boosted by china's stimulus. nearly $45rising billion. -- two nearly $45 billion. ccb posted a 5% increase in profits on wednesday. >> the most valuable liquor

stock says that revenue rose by almost a third last year, even as china's economy grew at the lowest rate in more than three decades. they reported for your privates of more than $5 billion, leaving its own estimates for january. foreeting its own estimates january. >> here in asia, we are seeing a much broader session after what a choppy-- it has been week for asian equities, particularly japanese equities. we are seeing the nikkei 225 benchmark on the way up. we are also seeing gains pretty much across the board, including here in australia where we are watching some of the iron ore .iners the fallout will continue to put upward pressure on iron ore prices.

shery: still ahead on daybreak asia, the hong kong banking revolution. will this change the sector? we will have inside, next. this is bloomberg. ♪

su: this is daybreak asia. i am su keenan with the headlines. we start with the trump administration. they are willing to talk to china for weeks or months to reach an agreement. as the twow spoke sides resumed negotiations in beijing. ofday will be a full day talks before they head back to washington next week. the major issue is deal enforcement and that the u.s. needs to be patient. not time driven. this is a policy enforcement

driven deal. things have to be done just right. as the president has said, it has to be a great deal. heatump has turned up the on immigration, accusing mexico and other central american countries are doing nothing to stop people from crossing into the u.s. illegally. administration signed an agreement with those countries to reduce the number of migrants heading north. people in mexico, honduras and others are all talk and no action according to him. onto japan, industrial production. the latest data shows that it rose last month but not enough to undo the damage. factory output rose 1.4% from a month earlier. that matched analyst estimates. retail sales were disappointing. barely improving on the month earlier and missing estimates of

a 1% increase. match aess rate fell to 25 year low setback in may. onto australia, australia launching a drive to repair his relationship with china. huawei gotned after these contracts. they will try to improve ties. this will bring together the private sector, industry lobby groups to engage with china at all levels. world,ew survey of the asia remains dominant. hastrax says that singapore the number one for the seventh year in a row. third, hong kong came in fifth. they did take the best dining.

vancouver came in at 17th. denver is the best u.s. hub at 32nd. to 74th.five places andal news, 24 hours a day on tictoc on twitter, powered by more than 200 journalists and analysts in 120 countries. i am su keenan. this is bloomberg. >> we are seeing trading underway. >> we have the stocks surging by the daily limit in tokyo, rising the most since 2005. they had this cancer drug deal with after zeneca. they will be paid one point three $5 billion up front. they will have up to 6.9 additional billion --

let's check in on the terminal for a broader view of the markets. we are seeing bonds slip and asian stocks that are positive in a choppy trading week. more on the year-to-date belly. it looks like investors have been able to overlook stocks and data points that we saw this morning. 225 adding a tenths of 1%. ledks in sydney are being higher by tech and health care sectors. asy are also gaining ground they are driving iron ore heise is higher. i want to switch it out and check on the stock movers across the region. i want to highlight minerals in sydney. they added. announcingter commercial production and developing plans and noting that march output remains on track

despite an impact of cyclone veronica. a new hope on the other hand is sliding down to the third session. highlight seoul gaining. this sunscreen product has become the most popular in china . the company is expected to post a record profit for 2019 according to the securities firm and 10 more new products are to be released this year. you will like this, including a face mask. i know that you like that very much. >> i got a dozen yesterday. i do like them. thank you. a friend of ours is about to have an unprecedented level to china's $13 trillion bond market. on monday, some of the onshore bonds will be added to the bloomberg barclays global aggregate.

let's start with a significant this inclusion as. >> china has been trying to open up about market. this is a very important su of approval. the people's bank of china has opened the bond market in 2016. even with those efforts, only about 2% of china's market would have this inclusion. china could see $113 billion of inflows this year. that will offset capital inflows from china.

there is hope that this will become much more organized. -- marginalized. >> foreign investors only have 2% of the bond market. what is holding them back in terms of confidence? >> they talked a lot about the lack of liquidity. they are very risk-averse,

family trend the bonds in the market, liquidity is number one. commercial banks are the biggest players in that market. they cannot trade government bond futures. they are not allowed to trade government bond futures. they are not as mature. of course, there are always concerns about capital curves. >> tells about the impact on the yuan and onshore bond prices. n: we are not expecting to see any huge moves in the bonds upon conclusion. it is not going to have any immediate impact on prices.

in the longer term, investors are saying that we are going to see more active inflows as well. we will not see huge appreciation upfront. if the inflows are small and mild and gradual, we will not seek massive moves. in the longer term, the yuan assets will be supported. >> that was our china markets reporter. the parenthetical bloomberg owns the barclays. issued its first and less. it is surprising that goldman sachs estimates will be worth this much. hong kong is set becoming -- to

become a battleground. our correspondent joins us. when i used to do banking in hong kong, not that long ago, i remembered being locked out of my banking and then taking the best part of a month and hsbcple trips to headquarters to get a new password. anyone who banks in the city, the idea of a virtual revolution is available. is this a game changer in the works? not comment on individual bank performance. anecdotally, you speak to what is on the streets. there seems to be dissatisfaction with some of the local banks. i think this is the most interesting thing to happen in many years. this is introducing a new wave

of competition into this market. it is a highly profitable retail banking market to begin with. what we are seeing is some of the industries converge. we are multiparty joint ventures being formed, distribution players and so forth. i think this is positioning hong kong as original innovation later. this is an opportunity to build a local, regional and global champion right here in the city. >> is the infrastructure and regulatory support their? yes, it has been regulatory change that has spurred this on. they introduced a series of new policies called the new era of smart banking. they have been introducing a number of facilitators and enablers. payers an immediate platform. that was launched. there is virtual bank

authorization, it is capping it all off by enabling new competition. regulators have been hitless supportive of it. >> which traditional banks are at most risk in hong kong? are they jumping into the bandwagon with these virtual banks? >> i'm not sure i would describe it as a bandwagon. this is a really great opportunity to build greenfield propositions. that is unencumbered by legacy, technology, processes and so on and so forth. in terms of all of all those likely to be impacted, we have to think about mass consumer banks in the market. anyone who is seeking to serve mass market with traditional consumer products, it is likely to be impacted. the net effectiveness is beneficial for all customers. the incumbent banks need to respond by a celebrated -- accelerating medical services.

the net effect as consumers and as small businesses, hopefully we will all benefit. >> commerce money are we talking about? money are we talking about? james: you reference to the goldman sachs investment. that has been part of it. payments in terms of transaction fees. we expect to see disruption in wealth management products, potentially mortgages down the line, everything is up for grabs. won't say it is a big bang, it will not happen overnight. given the players we have seen authorized, given their very well -- the very well players, we will see real construction. >> other companies home-grown,

localized platforms? at opportunities for potential global companies or companies that have that cross-border reach as well? think great question, i cross-border is a key the point of this. they received 33 applications for new bank licenses. that was shortlisted to eight. as of two days ago, three of them have been granted authorization. of a three are comprised joint venture between bank of china and hong kong. also, jardine's, that is one of -- region's largest largest conglomerates. also, pcc w.

thirdly, the mainland chinese interest technology company. very innovative in the space. it has been granted a license. we have seen an interesting mix of multiparty joint players. they are backed by the security interestingquite an mix in the first three authorizations. >> watch this space. they did for joining us, james. that was james lloyd. we will have more on this tie up .etween estrogenic a live from new york and sydney, this is bloomberg. ♪

>> this is daybreak asia. haidi: i am haidi in sydney. shery: i am shery ahn in new

york. firm surged to the daily limit, after zeneca is paying almost $7 billion to team up with the company on a new cancer treatment. our correspondent joins us. what drives this huge deal? >> makes lots of sense for both companies. after zeneca has been working to transform itself into an oncology powerhouse and cancer powerhouse. -- also have volkswagen ag daiichi. both of these companies will be developing a drug that is unpronounceable.

they will be developing this together. it could be a win-win for both companies. cancer drugs are really expensive to develop. it makes a lot of sense for them to do it together. we have seen some other big cancer drugs. the biggest one announced was in january when bristol-myers made the $74 billion deal. that deal is still in flux and facing a lot of opposition at the moment. >> we are hearing about how after zeneca might be potentially looking to fund this deal. zeneca mike beebe -- astrazeneca might be willing to fund this deal. >> they are trying to make this deal work. the potential is immense. cancer treatments are in such

demand. usa markets like japan where you have asian populations. ,ou have a potential in china they have one of the highest cancer rates in the world. not a lot of options for many citizens. a lot of the drugmakers are trying to see how they can get into oncology and make some serious money when it comes to cancer treatment. that was bloomberg's senior writer for global business on the latest between astrazeneca and daiichi. you can dive into any of the securities on the bloomberg functions we talk about here on bloomberg tv. also joining on the conversation, -- join in on the conversation, send us instant messages during the show. this is bloomberg. ♪

daybreak asia, i am shery ahn in new york. haidi: i am haidi, in sydney. in global art market grew 6% 2018 to over $67 billion. that is according to the art market report. china fell to third place. is the founder of art economics and the ubs global art

market report says political and economic tensions and a tangible effect. -- had a tangible effect. is lesstends to happen certainty in the economy. the deal is market grew by 6%. market grew by 6%. easierthis is probably to sell privately and by privately. has maintained its position at the top of the market, what are the drivers keeping it there? same -- it is the same fundamental thing. it has the government bubbles, it also has the cultural

infrastructure and expertise. it is also regulatory, the environment there is very friendly to business. these features have really supported the market and made it the leading center globally for years. >> there has been a lot of certainty recently. what do you think is the main impact of that? >> they do filter down, they seem to be filtering down very easily. we have seen so many changes and things happen so quickly. is selling plans. people perceive that it is not a good time to sell, that can make a market contract. >> look at the timing market. do think trade tensions play into that? clare: china acts like a normal market.

the context filters down. in 2012. mainly there was such a strong run of consumption in the chinese market. it is looking like a market in new york when tensions and supply issues when into the market. the gallery sector did fairly well. the overall market slowed. the trump administration brought in a tax on all chinese imports. they were also going to apply that to works of art. whether that came to china or not, they really rallied against the government and artworks. it shows how much i regulatory cange -- even a small one have a big effect. it would have meant a lot for chinese sales.

>> that was clare mcandrew, the founder of art economics. let's get a check of the latest business flash headlines. japan's largest messaging service is elevating its founder to co-ceo as it looks to reignite growth by tapping into the country's drive to go cashless. chief strategy and marketing officer -- they are facing a statement user base. -- stagnant user base. their market relies on advertising. >> sony could cut as much as half of their staff working on smartphones. they are looking to/x cost. japan will be in resigned -- reassigned.

they are looking to cope with the shrinking smartphone markets. >> if you're looking for a recession proof investment, try the most valuable liquor stock. revenue rose by almost a third last year, even though china's economy grew at the slowest pace in more than three decades. they are targeting further revenue growth of 14% this year. that is it from daybreak asia, our market coverage continues as we look ahead to the start of trade between shanghai and shenzhen. markets -- blue bloomberg markets to china are next. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

♪ to "bloomberg markets: china open." i am tom mackenzie. will hold a briefing on its 2018 annual report. yvonne: i am yvonne man. we are counting down to the open of trade. stories, taking time to talk trade. negotiations resume. treatment a big astrazeneca billions for research. virtualong kong issuing