paul: good morning. yeah under an hour later the australian market open. our away fromr in the australian market open. selina: and i am selina wang. sophie: welcome to "daybreak: asia." selina: asia pacific stocks look set to drift, leading more important data from china. googles parent is a loser after hours. revealing a slide.

resultson reports final later this hour. the worst operating profit for four years. we have industrial production numbers for the month of march. the month of march coming in at an increase. been expecting 1%. that is after a surprise contraction in february. industrial production recovering , but on year, it was a mess. -2.8% on year. -- a miss. year. two .8% on shocking gdp numbers we got last week. contract and one third of 1%. these results are something of a mixed bag. we will get a bead on the south

korean economy tomorrow when we have trade numbers out. let's get market reaction from step -- from sophie kamaruddin. sophie: we are checking in on the korean won. little reaction to that factory output data. this is in light of puerto rico numbers. poor eco-numbers. the do see a bad hope in second quarter with exports expecting to see a clear rebound. let's flip the board and check on kospi futures. we could see declines resume insole. seoul. seeing new zealand index -- index up.

off to a mixed start ahead of chinese pmi data, which is a heavy weight number for today. u.s. futures trading little to the downside after closing at fresh highs. thank you for that breakdown. let's get to first word news with desiccant summaries. jessica: trade ash jessica summers. -- with jessica summers. jessica: significant issues remain but the enforcement mechanisms are close to done. sources in the administration warned that president trump may still walk away if he is not satisfied with the way talks are going. boeing has mounted a strong defense of it software. it failed to say whether the

original anti-stall program was flawed. the ceo refuses to concede that the software was defective and said boeing followed the proper regulations when designing it. that accidents, there was a chain of events that occurred. one of the links in the chain ass the activation of the mc system. that was a common link in both accidents. we know that we can break that link in the chain. jessica: virgin australia has reached an agreement with boeing to delay boeing 737 max 8 deliveries to july 2021. it will convert eight of its orders to max 10 orders instead. safety is always the number one priority. and iranays inflation

could reach 50% of the u.s. titans oil sanctions on the economy. last week, the administration said it would end waivers to reduce the islamic republic's influence in the middle east. iran was already dealing with a weakening currency, rising prices and expectations of a second year of recession. there is a record number of empty homes in japan as builders keep on building, despite the population shrinking. propertiesmillion including rentals and abandoned homes. that is almost 10% nationwide. a 2017 survey in china found about 1% of urban properties were empty. around 65 million homes. 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'm jessica summers. this is the bring. paul: thank you. -- this is bloomberg. the s&p and nasdaq set , which continue in after-hours trading. su keenan joins us with more. we had a mix of numbers. we managed to eke out fresh numbers. nasdaq is also higher. you did have bonds lowered. bonds. a big sale of not much going on with the dollar and you had the s&p financial, the strongest sector in the s&p 500. oil has been in a choppy session. bige go to the board of movers, earnings were the driving factor. we start with intel which

reported earnings last week. five straight days it has been lower. analysts are spooked by the cutting of the revenue forecast. chips has been a strong momentum sector. there is a lot of concern that amazon is moving into the free space, putting pressure on the company. is an online advertising platform that extends into asia and it got a big boost. facebook is also one of the strong performers of the day. let's go into the bloomberg. riske key pieces of the continuum are turning down. this is the index for oil. last week was a down week. had rocky times. this is the shanghai composite index. all of them have turned down

lower. that could mean choppy times ahead for the s&p 500. selina: did a little deeper into a preview ofrs and apple. su: let's look after hours into the size of the moves that we are seeing. we talked about googles parent company, alphabet, disappointing. notice theointing, food tech company starting to be a special area on wall street. it cannot with positive numbers. it is a company that gives solutions. they missed their eps forecast. looking to the future. let's go to apple. 830% what is ahead for apple is

what will -- what investors will be highly focused on. they will have a decrease in earnings growth. 30% -- what is ahead for apple is what investors will be highly focused on. it will have a decrease in earnings growth. anyone looking for an upbeat forecast is likely to be disappointed. selina: thank you for joining us with that report from new york. shares of alphabet are down more than 7% after hours. they missed analyst estimates on sales. at sparked concern that advertisers are putting their money elsewhere. how much of a surprise was the slowdown in advertising growth sue myrick we are seeing investors react -- advertising growth?

are seeing investors react negatively after hours. >> google was going to do well and shares hit a record before the earnings came out early on monday. i took a look at the graph. there was again every day apart from the past two or three weeks. paul: did google say why growth had slowed? executives, google do not share a lot of details on that kind of thing. they were always -- they were really hand -- hammered by analysts. the only slight clue the cfo gave was to do with youtube. they said the timing of some product changes early last year created some really strong growth in the quarter. that did not follow through into this quarter.

pressureas been under to cut some extreme and misleading content on the video service. google has been making changes to how it recommends videos. it is not clear if that has had an effect on revenue growth on google. it is certainly something to watch going forward. selina: this is a big contrast. there is competition from amazon. how concerned should investors be? >> the youtube situation might continue. they have made some product changes. on the amazon side, that is more to do with google's search engine, which is clearly dominant. when it comes to product searches, things to buy online, amazon is taking a lot of those searches. it is making money related to those searches. that is google's red and butter.

it will have to keep amazon out of that lucrative market. selina: thank you for joining us. we will break down samsung's earnings later this hour with mark newman. will coming up next, we ask andy where he sees growth in the markets and get his thoughts on the earnings season so far. this is bloomberg. ♪

selina: this is "daybreak: asia." stocks hit record highs ahead of a busy week packed with eco-data. we have region atlantic partner with us. andy, thank you for joining us. we want to get your take on the

earnings season so far. combined, those stocks, we have microsoft, amazon, alphabet and that is a feather in the cap. do you think you are on a leg up? forgotthing that people last year is that markets are cyclical. there was going to be a turn in the news. what is happening today is almost the opposite. a lot of negativity that has almost glossing it over. over half the stoxx reporting today. we are looking at the first decline since 2016.

we just hit record highs. we are hitting the first negative eps growth since 2016. of course, it matters. what should matter most of all is looking at valuations. today, but we are looking at is no growth with rising prices and back to the valuation levels we had six months ago or so. it should give us pause. from my perspective, this is not so much a breakout. u.s. markets are not likely to tumble because the rest of the year is looking pretty rosy. it is not a lot of growth to propel us to hit highs. -- new highs. paul: he still have that element offered by the yield curve not so long ago. do you still think a recession is on the horizon? this.ate saying

this time is different. if you look at prior periods, especially in the last, it was always driven by the central -- in the u.s., it was always driven by the central bank. they try a little too hard and where i to -- were to successful. the yield curve is not what causes recessions. the causes it is the fed taking the punch bowl away. this particular tightening cycle is different from every other one because it is not necessarily trying to take the punch bowl away. it is trying to give itself dry powder to redeploy interest rate to avert the next crisis. this might be more like an inverted yield curves that occurred in the 1960's and the economies of japan and germany, where there was no a session to speak of in the following 10 years.

selina: how does the gdp growth rate here into the markets? are they baking in the possibility that rate hikes could be in the future? >> i do not think they are. that is part of the risk. what is perverse about economic data is that we need to evaluate it on its face. we need to understand how the fed will respond to this. what is really interesting about 3.2% is not a single person expected it. amazing, out of the park performance. the reason it was so amazing is what happened in the first quarter. the longest ever government shutdown over the smallest difference in the budget. a game.d out a lot of it was from temporary gains. that the says to me is

rate cut in 2020 has become less likely. shifting to the chinese economy, do you see long-term come away for the government to keep on having that strong grubs -- jobs growth? >> it will have to find a way. stimulus can only go so far. what is interesting about the chinese economy is the makeup of credit and that is different than the u.s. what that allows is for consumer credit and corporate credit to rise to higher levels than it does in the u.s., where the government does a lot more borrowing, relative to other parts of the economy. selina: andy, thank you for joining us. you can get a roundup of the stories that you need to know to get your day going in today's edition of daybreak. subscribers go to dayb on

their terminal. you can customize your settings so you only get news on the industries and assets that you care about. this is bloomberg. ♪

selina: goldman sachs ceo says talks have yet to begin with the justice department over how best to resolve the corruption scandal, including whether a guilty plea will be part of a negotiation. we spoke to bloomberg -- he spoke to bloomberg in beverly hills. ways, i think of that the return over a long toiod of time is relative market resurgence, especially dealing with best-performing managers. it has been very strong. i think that has led to a

desire, especially in an environment where return seems to be coming down. i think that will continue. the movement in that direction will continue as we look forward. i think you are referring to the fact that there is a lot of capital formation. it used to exist for young companies in the ipo market. that is another wave. >> is a private equity? is it credit? is it really straight -- is it real estate? is the infrastructure? -- is it infrastructure? >> these are all businesses where we are managing money for our clients and we have opportunity to expand our franchise, given our unique position. >> you have about 170 billion now in alternatives. >> realistically, we are going

to grow. we have not put out a new target for the growth. we have been managing money at the firm for decades and we have an outstanding track record. we can get more of our clients access to those investments that have operated on the balance sheet and capital. opportunitiesood for us in the coming years. >> one of your competitors, deutsche bank, is under pressure and could be willing to combine or sell its asset management unit. does that business hold any appeal for you? >> i am not aware that the business is for sale at the moment. we talk about the fact that we would like to grow our assets. we want to grow them organically. if something were for sale, we would take a look.

i do not have a strong point of view. >> what about deutsche bank more broadly? are they less competitive than they used to be? >> they are going through a transition. it will be interesting to see how the leadership there figures out how to leverage the strength that the institution has. how they manage and balance some of the businesses. it is an interesting challenge. >> they want to remain a globally relevant institution. what are the odds on that? >> i do not have a strong point of view for that. , like our hand as a global institutional, financial institution. deutsche bank has a strong strength in europe and in local markets. it will be interesting to see how they choose to leverage,

given where they are. >> a question for you. todman has set aside money pay whatever fine or settlement results from that investigation and prosecution. do you expect prosecutors will require you to plead guilty? week made a statement last , that we do not think it is warranted by the fact or the law. i am not in a position to comment on that. we have not started discussions with the justice department about that. it does not seem right. >> as a practical concern, does it matter whether a firm does or does not plead guilty? we have seen citigroup, j.p. guiltyand others plead as parent institutions in the manipulation cases. -- it isess since

business as usual since then. on where not comment this will wind up. we are very focused on getting this resolved in the best way that we can. we will do that for our shareholders. was goldman sachs chairman and ceo speaking to the conference. let's get a quick check of the latest business lines. contrasting fortunes for big energy in china. profit felt when he percent on lower oil prices and shrinking earnings from refining. petro china reported first-quarter net income as higher production earnings offset its slump in refining. anadarko plans to resume talks.

anadarko directors agreed that the offer could reasonably result in a proposal. the chevron agreement remains in place. if anadarko claims the offer would be better, chevron would have four days to respond. ♪

>> this is "daybreak asia." i am jessica summers. thailand has cut forecast on slowing exports and expects the weakest expansion for three years. gdp is seen rising 3.8% this year due to the global slowdown and the fallout from the u.s./china trade war. the central bank is expected to keep the benchmark rate at one and three quarter percent. they needs tuesday to consider a stimulus package to boost growth. capitala may change its city as gridlock rose and reach breaking point in jakarta. it is home to 30 million people, with traffic congestion

estimated at $7 billion a year in lost productivity. this person was a front runner for the new capital. the government says any move my costs $30 billion. and take 10 years. the japanese emperor will and his 31 year reign voluntarily stepping down for health reasons. his imperial error is known as achieving peace. ceremony attional the palace in tokyo. it is the first voluntary abdication of the throne in japan in more than 200 years. he will now make way for his son. news, 20 for hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. blackstone chairman and ceo

stephen schwarzman sees a threat from the potential economy. he has been defending the thread and thinks chinese economy is looking solid. he spoke at the conference in beverly hills. >> china has stimulated its economy like they said they would when iteris went in. --as therefore weeks ago when the tariffs went in. four weeks ago. now you are seeing the results of that. some commentators that china's economy looks pretty solid now in the sixes, 6% growth. would surprise him other people, it did not surprise me. they had the ability in china to force money into their system to create growth. they are doing it, and it has been successful.

>> are you putting more money into china at this point as blackstone? are you investing more heavily, and where ? steve: we just bought a company there. china is a harder company to invest in for outsiders. we always have to be prudent and thoughtful when you invest. we are looking in the real estate area as well. happensepends on what in the value solvents. >> tim was talking about the strength of the economy, and the bull market we have been in for the long time -- for a long time. he said the only thing we have to avoid is a mistakes. what could be a dumb mistake we could collectively make from a policy decision or a market position? steve: i think there are a lot of mystics you can always make. dramaticis really

change in the tax area, if the democrats win, for example, a lot of the things that some of their candidates are talking about. i think that would be the disincentive, it could have a certain psychological shock value. logic would say that would slow an economy. that is one of the things you could do. the other thing is that the fed could increase interest rates. i have not seen, for at least a decade, a fed that is unresponsive to the real world. people worry so much about the fed doing the wrong thing. even if you start making a mistake, and corrected almost right away, which is what happened as a result of the

the fed isesponse, the guardian of the system. they are not the enemy of the system. if we have a lot of wage inflation, or something else, it would seem somewhat unlikely, and they start increasing interest rates, most probably it is because it is the smart thing to do. ofis only when they get out a cycle where they think something is happening and isn't, then prosecuted all the way. i tend not to think the people there are in the business of making mistakes. that was blackstone chairman and ceo stephen schwarzman. let's get a look at what is to watch and go over to sophie kamaruddin. busye: it has been a

morning in australia with plenty of updates from resource companies. her company released update. and third-quarter outputs felt 5% amid shutdown set the processing plants. output at acadia was down 9% for that period. for beach energy, earnings and put keeps coming in at the top end. agl noted that market challenges do remain for the second half, including margin compression and higher input fuel costs. origins third-quarter update, the company noted that remains lower. guidance is high due to deferral of activity. we have nine entertainment signing an agreement to sell its newspaper business. cash proceeds are expected to come in at around 115 million australian dollars and will be debt.o pay down watching wide tech on its

swedish messaging pollution player for 12 million aussie dollars up front. selena focuses on the radar as it acknowledges it has been served with a class action proceeding on allegations of deceptive conduct in respect of fiscal 2017. plenty more to come on "daybreak asia." this is bloomberg. ♪

selena: this is "daybreak asia." i am in san francisco. paul: i am paul allen in sydney. as investors wait for signs on stimulus, today's managing indexes are front and center on the radar screen. kathleen hays is here with a preview. both the manufacturing and services are expected to stay at levels that signal growth. is this another reason for

pausing stimulus? kathleen: one of the big questions hanging around the world. wait for china's purchasing managing index on manufacturing and nonmanufacturing. let's find that services and construction. let's jump into our bloomberg library and take a look at the charts. we will show you where they have been. these two indexes and why there was so much concern around them earlier in the year. you can see the top line is the services index. in the state above 50, the dividing line between growth and contraction is expected to rise to 54.9 on the reason -- region from 54.8. it is manufacturing that has been an issue. manufacturing falling at a low around 44. this was as the economy was slowing. this was as the signal was sent to the people's bank of china for them to add to stimulus. trend, can see that the

assuming that we get that manufacturing from 50.8 to 50.9, we are meeting at this. bloomberg economics is skeptical it will last. talking about china's purchasing manager dynamics. manufacturingfor from europe, from japan have come in below 50. that's a bad signal for china. a recent gauge of small and medium-sized firms is low. march credit data was strong. that up.umping recent jumps in industrial profits was due to seasonal. manufacturing is not self-sustaining yet. that is why they think the government will continue to provide stimulus, perhaps more on the fiscal side. more infrastructure spending. on the people's bank of china site, the central bank is expected to cut their rrr rate by 50 basis points in the second or third quarter. selena: kathleen, thank you.

we are having some breaking news from samsung. ,ust out across the terminal the first quarter net income came in at 5.1 trillion won. the estimate was higher at 5.7 0 won.000,000,00 we learned about it because of declining memory chip sales. theomes and was releasing galaxy full after reports of screen failures. we learned that first-quarter consolidated sales with 52.3 9,000,000,000,001 consolidated operating with 6.2 3 trillion won. i want to bring our guest in here right now who joins us from bernstein, senior research analyst mark newman. we knew from the first quarter guidance that thing would be bad. is it worse than expected?

mark: i don't think there will be a major surprise on the numbers. i had not seen it. it just literally hit. frankly, i think that, at the moment, with the memory in a sharp downturn, the lcd display prices are at a sharp downturn. emphasis of investors focus is not on today's profitability, it is more on the signs of improvement later in the year. i think that will be the focus today. in the earnings it will be what kind of demand we are seeing, if there is a sign that this recovery is happening earlier rather than later. i think that is far more important than probability. knew going into today that q1 would be week. i think q2 would be weak. i think it is about recovering in the second half of the year. selena: samsung just said they

see second half chip demand in proving, despite uncertainties. investors are being optimistic looking towards the second half of the year. what are those uncertainties that would make investors cautious about that second half optimism? mark: there is always the uncertainty of central trade war. i think everyone is hoping china/u.s. has things as they settle down. also u.s./europe spats that settled down as well. if either of those gets under control, that could have an impact on global demand. i think that is the biggest thatrn at the moment, global demand does not pick up as much as expected the second half of the year, or that customers inventories are a little bit higher than expected. they can wait longer before they have to go and buy memory components, for example.

that is the biggest concern rather than supply. the other concern would be somebody like samsung, or one of their competitors has too much capacity. i think the opposite is happening. everyone is cutting back on capacity. the concern for any kind of delayed recovery would be a delay in the pickup of demand due to potentially trade tensions, trade war. do have some or a still crossing the terminal on these results. caps on saying it is the overall memory market in the second quarter being likely to remain slow. more broadly, i believe it was last week, when hundred $16 billion in semiconductors over the next decade able to take on qualcomm and income -- qualcomm. that seems to be a vote of long-term confidence. had a hugeompanies

amount of success in memory semi conductors and made this commitment to invest $15 billion for the non-memory business. this is a business where -- that had limited success. technically they have done well. but inve caught up, terms of market share they are way behind. they see an opportunity to capture more sayers -- shares. they are continuing to invest. if you look at the actual numbers, it's not the really accelerated rate of investment. it is actually maintaining the elevated ratetly of investment that has been investing in this non-memory semiconductor. it is proving to the market that they are here to stay. of --k there is a lot there is a lot of whispers out there that say, it will imminently shut down this

business because it has not really been that successful or havetable as a would liked. but they are doubling down and continue to invest in the business. i think that the non-memory semi -- istor business is huge a huge potential growth story for samsung. there he little share, big market. that is a lot of upside for the next five to 10 years. paul: one thing that is not reflected in this state of numbers is the more recent troubles with the galaxy fold, the folding phone. what sort of reputational risks is there? mark: it is a bit of a mix on the full double phones. -- foldable phones. they never released it. it was something for friends and

family, basically. because of that they have delayed the launch. i think the problem with the product we have seen in the , it somewhat upset by this innovation factor that they are trying to push ahead. this is a new technology, nobody has ever done this. folding screens in half and does not fail in the middle. that is a remarkable achievement. most of the funds did not fail, just a few had problems. they need to go back, fix those problems. ultimately, i think they will emerge stronger with a better foldable phone that will hit the markets. is difficult to know. i would imagine that later this year would be a foldable phone. perhaps we will he or about that day. willnk, looking back, it

not be a big damage for them. look at note 7. the battery fires, a bit of a was thebut the note 8 best-selling one ever, i think. they come back from these because they can still come out with good products that the customers want. that is what is critical. what investors care about is components, memory semiconductors and displays. that generates far more profit than the phones themselves. though the phone still generate a lot of profits, it is an interesting area of focus. what about the galaxy s 10? longer upgrade cycles, how is it holding up? numbers of galaxy s 10, have not looked at them but there was bullishness early on in the year

as the product came out. the numbers have not been so strong for galaxy s 10. the smartphone phone market is weak overall, not just the galaxy. the smart phone market is shrinking. single digits are down year on year. similar to last year. samsung was no exception to that. chinesecompetitors, competitors, in particular, takei is beginning to shares from samsung, apple, and others. i think that is the big concern i have, it's not really about the actual units, or the actual profits, it's more about the competitive dynamics and how much better are the chinese getting, and are they narrowing the gap? it appears they are narrowing the gap in terms of shares and technology.

that is a bit of a concern for samsung going forward. sanford c bernstein senior research analyst mark newman. thank you. don't forget tv , there you can watch us live and catch up on past interviews and dive into any of the securities or bloomberg functions we talk about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only at tv . this is bloomberg. ♪

paul: it's a big week for australian earnings with the big hanks reporting. analysts are forecasting messy results. they have grappled with a couple of issues in the housing market with the oil commission thing. our investing editor is here. talk about these issues for us. >> it looks like, as you said,

it will be a messy earnings for the banks reporting this week. one of the main things was the downturn in the housing market. a few years we talked about the booming housing market in australia. that has gone the other way. now we have seen prices sliding. so more growth is slowing. they admitted they are probably being too conservative. on the other side of that they are grappling with higher funding costs. that is compressing the interest margins. that, which is a big part of the banks business is probably the the area under most pressure. this issuelain to us of the royal commission? what kind of toll has that taken on the royal banks? peter: that is in other big things we are looking at. -- that is another big thing we are looking at. we saw the bank have a $525

million charge on cost arriving from the royal commission. basel for remediating customers who have been given poor financial advice, sold bad insurance products. the banks are turning with -- dealing with legal bills end improving their technology -- and improving their technology and things that led to these problems. making sure they have the systems in place, to figure out what went wrong, and to pay people back for when they were charged for services they did not receive. it really is taking a big financial toll on the bank. many of the banks are looking out to get personal advice. they had to shelve those sales while they seek problems in those units. even when it comes to high lending rates. trying to win back some of those costs.

it does not look good to be raising homeowner rates when the -- and the banks have caught flak for doing that. selena: thanks to our investing editor peter. a quick check of the business headlines. profits are soaring at china's largest insurer. they thought a net income of 77% to nearly $7 billion. strong rally in chinese stocks helped investment rallies jump sixfold and operating was up 20%. it has been a strong start to the year for this company, it has been more than a third and they outpace benchmark gains. add we were to highly anticipated ipos of 2019. the office giant that refers to itself as the wii company filed in december for what would likely be the second-biggest u.s. public offering of the year behind uber. softbank is a neighbor -- is a

backer and value the business at $47 billion. let's preview the market open in south korea and australia. paul, on the eve of the labor day holiday we do have stocks looking at a lower open in sydney and seoul. u.s. futures are nudging slower. we are keeping an eye on the first order results. we have lg electronics and many more. the cosmetic player was downgraded. we have quarterly updates from australia and banking results. i want to highlight goldman sachs warning that there may be a heightened level of earnings downgrade in australia into the junior and after first-half weakest sincethe the global financial crisis, and trading conditions have remained subdued.

of a are characteristics negative trend in consensus earnings revisions over the past six months. that is a preview of cash trade in seoul and sydney. plenty more to come on daybreak asia. the market open is next. this is bloomberg. ♪ alright boys, time for bed.

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paul: good morning. i am paul allen in sydney where it the major markets open for trade. >> i am selina wang. >> i am sophie kamaruddin in hong kong. welcome to daybreak asia. paul: our top stories this tuesday. asia-pacific stocks look set to draft with japan on a break this week. features a little changed in hong kong and city. samsung confirms weak results in the first quarter, but these

improvement in the second half. ahead tonvestors look the latest factory floor readings in china. we are expecting to see further signs of stabilization. let's get straight to the market action with sophie. sophie echo -- sophie? sophie: japan is still off-line for the week. we are seeing a muted start for cash trade for the asx 200 over more red flags are raised over soccer earnings weighing on the market. morgan stanley is worried that trading updates may rip that -- may provide a spoiler. we have updates coming from new cresco which saw a drop in third-quarter output. we are seeing kiwi stocks gain ground, i had of the labor day holiday. ospi,e seeing the ki off .1%. the won is up against the greenback. it's at the two-year lows, which

has made it the worst asian currency this year. that was reinforced by the bigger than forecast drop in industrial average is that we got this morning. some are seeing a turnaround in the second quarter for korean exports. that would bode well for the korean won. let's check in on samsung shares after they missed estimates. the stock is off by .5%. we got those results as we are taken into account samsung's earlier profit warnings about looking ahead. the company seeing a recovery in the second half when it comes to demand. paul: thanks very much. let's get more on that samsung story. we are joined by bloomberg intelligence tech analysts. intelligenceg tech analyst. what was your key highlight for the earnings call? >> the key highlight would be whether they reduce production,

whether they try to temper the supply. the demand is still quite slow in the second quarter. in thepect a pickup second half, a lot of uncertainties remain. if management is going to show supply discipline, then the hopes of recovery is stronger. in the earnings call, the company indicates that they will reduce input for chips by at least 10%, if not more. indicate any waiver cuts for the yuan. it's worth noting that despite looking weaker than expected, samsung did improve their gross from the year prior, so how did they manage their expect -- manage that?

whenever they transition to a new note, they cut costs. steepeding has been so in the first quarter, much worse than the market has suspected. it's worse than what management has expected. the cost reduction from tech migration is not enough to offset. that's why margins hang significantly in the first quarter. quarter tohe second remain sluggish. we have seen previously, samsung announcing an investment in semiconductors over the next decade. what are the plans outlined today -- capx plans outlined tody? ay? the expectation has been if this company reduces capx,

that would be good for the long-term balance. they are trying to spend quite a on semiconductors. that may hurt the sentiments in return. shareholder the expectation is the company has a lot of cash, and they will share at least half with shareholders. come out with the semiconductor investment plan, the expectation may be -- but now, with the seventh -- the semiconductor investment plan, the expectation may be different for investors. paul: thanks for joining us with that breakdown. we have more breaking news. nxp,time, on the second-quarter revenue of 2.2 5 billion. that is better than the original llion.te of 2.15 bi

first quarter loss of one share of seven cents. revenue 2.1 alien. that is a slight beat of 2.09 billion expected. investors are watching a whole close to earnings and economic data. we're joined from singapore by mark cranfield. what you watching echo -- what are you watching? >> a big day for china data. andet the manufacturing pmi some others a few minutes later. chinese shares have been a bit rocky for the past week or so. small-cap stocks are coming down even further. china traders will be looking for support for the stock market before they go into a three day break. arepmi numbers, we expecting them to be a repeat of the march numbers, up 50.5.

bloomberg economics is expecting we may have seen the best for a while, that the next couple of months may be not so encouraging, because the stimulus effects are starting to wear off. when people are seeing in the numbers right now, maybe the best we will get for a little while. they may be stabilizing chinese stocks. it would be a relief after several days of selling in the markets there. with the tech number some samsung and alphabet, could seeing, we continued rotation out of tech into financials. that's what led the s&p over the last above days. us in good numbers in singapore, with financials leading the way. would strong pmi data, coupled with the better-than-expected gdp numbers to just at the worst of the economic downturn is behind us? mark: that's certainly the

message we're getting from authorities in china. they are happy with the way the stimulus went. they are seeing results already. that's confirmed in the industrial production data as well. that's a good start to the year. some investors are worried that there are signals that china may step back slightly from that. want to riskon't overheating the economy. for the second and third quarters, they might just go back to more of the micro measures they have been doing. if we get the earnings coming through, the bank earnings have not been too bad, and if other major chinese companies show decent results, there will be a reinforcement of the good mood. we are getting into a more difficult period for investors. the low hanging fruit has disappeared. now people are going to have to be more discerning about how they read the data and the earnings for companies in the months ahead. it will be as easy's as it was in the first quarter. selina: we will be watching to see if there is any

reinforcement. marckk cranfield. let's get to the first word news with jessica summers. backe trade talk switches to china this week amid increasing signs a deal may be close. treasury secretary stephen mnuchin and the u.s. team will travel to beijing, having said significant issues do remain, but the enforcement mechanisms are close to done. a source with any a administration warns president trump may still walk away if he is unsatisfied. boeing has mounted a strong defense of the software systems linked to two fatal 37 -- 737 max 8 rashes. they failed to say that the original anti-stall program was flawed. their ceo refuses to give heed that it was defective, and that boeing follow the appropriate regulations when installing. the system was activated by incorrect data readings in both crashes.

>> we know that in both accidents, there was a chain of events that occurred. one of the links in that chain was the activation of the system because of the erroneous angle of attack data. that was a common like them both accidents. we know that we can break that link in the chain. the imf says inflation in iran could reach 50% as the u.s. tightens oil sanctions on the economy. last week a much of the british asian said they want and sanctions waivers granted to a handful of countries buying iranian oil to reduce their influence in the middle east. i read was dealing with a weakening currency already, rising prices, and expectations of a second year of recession. is to decide whether to plead guilty to charges relating to its link to malaysia's scandal. the bank had previously placed the blame on a rogue employee. according to the financial times, u.s. prosecutors have senior told seniors --

officials that goldman should played guilty. ceo david solomon told bloomberg that nothing is decided yet. >> we haven't even started discussions with the justice department. we are very focused on getting this resolved in the best way we can. ourill do that for shareholders and our clients and try and get behind us as soon as we can. jennifer: global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. summers.ca this is bloomberg. still ahead, it's a big week for chinese automakers with a fleet of top names reporting numbers. it will have an illness -- we will have analysis from auto mobility ceo and founder bill russo. selina: we will look at chinese pmi numbers. this is bloomberg. ♪

paul: this ispaul: "daybreak: asia," i am paul allen in sydney. selina: i'm selina wang in san francisco. as investors wait for any side that china is putting it breaks on stimulus, today's purchase managing indexes are front and center. our global economics and policy editor kathleen is here with a preview. kathleen hays is here with a preview. another reason for positive stimulus? stimulus? >> that remains to be seen. here in china and beijing, it is not just these markets we are watching, but it's markets around the world. purse -- thates, sent a signal to the world that the economy was slowing down and getting hit by the brunt of the trade war. we have seen a lot of stimulus. the question is now, could the pboc be ready to pause? these numbers are going to look

pretty good. the two key gauges are both expected to stay above 50. 50 is the dividing line between expansion and contraction in services and manufacturing. that blue line is the services index. nonmanufacturing. it is posted comment at 50.9. at 50.9.ed to come in the white line, the manufacturing line, it dipped below 50 for a few months. now it is expected to make well above. bottomllow line at the is new export orders measured by the purchasing managers survey. still looking week. a bit of an uptrend there, maybe. economics is saying markets have jumped the gun on guessing the people's bank of china will be done with stimulus. they are looking for another cut in the rrr rate.

and thegoing to do that second or early third quarter. more fiscal stimulus for info structure spending. they don't think the government would be ready to call a halt on stimulus just yet. hearing optimism on progress being made on a key part of the u.s. china trade deal. someone in a position to understand how talks are progressing. what did steve mnuchin say and why is it so important? manyeen: we hear so signals and hence that deals are going ahead. mnuchin, speaking on foxbusiness earlier today, saying that he thinks they're getting closer. he says a completed agreement will have a real enforcement mechanism. there is still work to do, but they are getting closer to getting this done. christine lagarde was asked about this.

she hearkened to president xi jinping's speech on friday, where he switched gears and started talking about all of the issues that are on the table in these negotiations. let's listen to christine lagarde. >> if you read very carefully at the end of the speech, there were a couple of paragraphs in which he is discreetly broadcasting what i believe will be announced in that deal. i mechanism between governments to make sure there is ample notation, and if there is implement asked if there is a pulmonary -- implementation, there is enforcement. we are being told that president trump could still walk away from the table if he is not satisfied with results. president she's -- x'i's

right-hand man will can thank you -- continue to try to hammer home these deals. in terms of leverage and pressure, agricultural income income wast farmers' the weakest in three years. it's a small part of total but it's a important constituency for any elected official. especially for president trump, especially when his trade war is pains forthese agricultural exporters. we'll wait to see where they will get and how quickly. paul: our economics and policy editor kathleen hays. we are expecting the latest pmi reading from china later. manufacturing data is likely to have been in expansionary territory in april, including stabilization and growth momentum. let's look ahead to the reading. economist at by

merrill lynch, xiaojin zha. is it going to be sustainable? chinese manufacturing pmi will come out today. it will be slightly down from 15.5 in march. it is still quite a healthy reading. it is up from above 50 in the previous month. cycles,that in the past when pmi comes back, about 50, it stays at 50 for the next few a major downside surprise on growth. if you look at activity indicators, such as the high frequency level available in it remainedfound quite healthy. jump intost want to

our chart library and show you a chart. that the pmis data, the rebound in march, i had a strong seasonable actor -- seasonal factor. there was a. -- a period where we saw a lot of stimulus. how reliant will those numbers be on those two factors? we have already seeing some green shoots coming out from the chinese economy, not just from pmi, but also from a range of various indicators we saw in march. it also showed some broad improvement in the chinese economy. we are quite confident to say that the worst in this current cycle is behind us for the chinese economy.

we would continue to expect some modest growth improvement in the coming quarters. .2ina: in your research, you the bank of america activity come tracker, which rose to 4.9% in the first quarter from 4% in 2018. what is the significance of that and is it due to policy measures? we think that the indicator has rebounded for four months consecutively. it shows that the impact of previously -- previous policy easing has kicked in to support the chinese economy. while the market has been quite disappointed that the pboc dismissed the rumors about the cuts, the pboc may not be ready to introduce tightening at the moment. selina: how do you see the

policy stance changing if the u.s.-china trade deal is signed? for the pboc, and more broadly, the top chinese and make as, to move policy stance more neutral will depend on two important conditions. they need to see more evidence within the chinese economy that sustainability is sustained. deal, that would remove some external external -- and thatn the economy, would make their policy more neutral. selina: thanks for joining us. you can get a wrapup of the stories you need to know in today's edition of "daybreak." it's available on mobile in the

bloomberg anywhere app. you can also customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪

selina: singapore's estate own is seekingldings more investments in america. it accounts for fit -- the u.s. accounts for 50% of its holdings. the fund says they are recoverable increase that to a fed. -- a fifth. >> the u.s. has been a market we have been underrepresented. tech space,k at the life sciences, agriculture, tech enabled consumer businesses, financial services, anywhere isre technology is thriving something we want to be a part

of as an organization. from a u.s. perspective, we are increasing our presence. we see positive opportunities every week that we are in business and we see that trend continuing. it's not to say we are focused and bullish on other markets, but from a broad investor mindset perspective, we want to have our representation in the u.s.. a new office in new york and san francisco and we will continue to staff those. >> we talk about tech startups. some say silicon valley will actually be in china, as opposed to the u.s. both markets could be as important. so why the u.s.? >> i agree with your premise. but you have to look at it in the historical context for temasek. china is about 25% of our portfolio and the u.s. is 15%.

we think that's not visited him of the opportunities. -- that is not presented tip of the opportunities. we are not trying to drive to a if wen percentage, but were trying to drive things as the opportunity presents itself, people would be more comfortable if it was more than 20% of the portfolio. but there is no date, time or a specific percentage. we just think the opportunities are there, and we are upper -- underrepresented. paul: some breaking news on the bloomberg terminal right now. artolomeong eduardo b as ceo. he has been interim ceo since march. not a huge surprise he stepped into the role after the former ceo took leave. this was after federal prosecutors demanded his exit. bartolomeo eduardo as ceo.

let's give you a quick check of the market action. .25%.x, weaker by the cost be weaker as well. -- kospi weaker as well. this is bloomberg. ♪ the latest innovation from xfinity

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is" i've jessica summers with the first worksite -- word headlines. al hunt is down 2.8% in china. that is compared with forecasted falls of 1%. business confidence is improving, raising 277 from 75 this month. thailand has cut growth forecasts on slowing exports and now expects. the weakest expansion for three years. gdp has seen rising 3.8% this year.

the global to slowdown and fallout from the u.s.-china trade war. the central bank is expected to keep the benchmark rate at 1.75%. the cabinet meets on tuesday to consider a stimulus package. willese emperor akihito end his 31 year reign on tuesday, stepping down for health reasons. known asial era is achieving peace, and will come to an end with a traditional ceremony at the imperial palace in tokyo. it is the first voluntary abdication of the throne in japan in more than 200 years. i keep will now make way for his son. indonesia may change its capital city as gridlock and population growth meech -- reach breaking point in jakarta. it is how to 30 million people. traffic congestion is estimated at $7 billion a year in lost productivity.

the government says any move might take 10 years and cost dollars --y billion $30 billion. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. get a market check. here is sophie kamaruddin. sophie: asian stocks are mixed, but mostly lower at of chinese pmi data. new zealand kiwi stocks extending gains. most sectors under pressure with cindy, the asx down .3%. won is flirting once more with the 1160 handle. it is samsung, the biggest drag on the index, falling 1.4%, stepping a today rise after

missing on estimates for the first quarter. highlight amore pacific. they were downgraded to underperform on its results, which meant -- hit at further market compression and sales lighting cost hikes. of samsung's bio unit have been arrested as part of a probe into a budget accounting fraud. ofy take -- a quick check aussie stock movers. i want to check out the maiden holdings, sliding 9% after posting a 6% drop in total revenue for the third quarter. options falling 30% more in sydney and melbourne. domainrgan downgraded group, falling as much as 8.5% in sydney.

retail climbing to a six month high as it begins the second half on a firmer footing. same-store sales rose across their for businesses. four businesses. selina: all of china's before biggest banks have reported record profits. asiahief north correspondent's stephen engle is tracking it from beijing. what can we clean for the bank'' report cards? >> we've seen a slowdown in the u.s. debt chinese economy, followed by stimulus. -- a slowdown in the u.s. economy followed by stimulus. they have been encouraged by authorities in the government to lead to risk year -- risk year enterprises in the private ses in -- riskier enterpri the private sector.

in the first quarter, we saw the biggest surge in bank lending, 800 61 billion u.s. dollars of fresh loans in the first quarter. a fifth more than the same period the year ago. the same lending, you will raise the specter of sour debt. that's what we are seeing in the latest quarterly results. four of the top five banks onterday, as well as agbank friday. the world's largest banks on seeing aming loans rise of 770 million u.s. dollars. the biggest quarterly increase in three years. if a similar story for the other policy banks. china construction bank's rose the most since 2016. highest npoting the

since the first quarter of 2017. this is something they will have to tackle down the road in provisioning. paul: how much will be needed to offset these nonperforming loans? >> that's the big question. how will that way on earnings echo -- earnings? bad on reports, despite concerns about the bag -- bad loans. the lenders are expected to grow at the fastest pace in five years. we're getting good bottom lines, but the provisioning down the road could limit those profit gains to the single digits going forward. icbc profit rose 4.1%. ccb profit of 4%. a similar profit across the board. bank, 4% rise.

-- bank of china, 4% rise. loan provisions could offset what we are seeing in mild revenue gains. that could restrict earnings and growth to mid single digits in 2019. b maybe to raise credit costs later this year. -- could need to raise credit costs later this year. paul: profit soaring again at the country's largest insurer. 77% in thes shirt first quarter to nearly $70 billion. -- their invested investment income rose 70 fold. stephen lamb joins us now. were there any troop -- surprises in ping an's numbers? i think the most important part of this result is how the

margin trend has been for the insurers. they definitely have delivered, given the fact that a year ago, the numbers were pretty strong. in the first quarter, their new business margin increased by 5.9 percent. 5.9%. is a lot of pressure for insurance companies to sell lower margin products. they have delivered. deb the next couple of quarters, there will be a little bit of a higher bar. percentage point increase is doable. selina: what about other companies? how is a faring -- how are they faring? life also has 28% new business growth.

they had a slump in a year before. there was a base effect here. we have seen improvements in margins. that's a good sign. some companies like new china cpic, theiror margins have increased. this quarter looks good. how about looking ahead for the rest of the year? steven: the way we think about it is that if you look at the two sides of things, we talked about on the operational side, the bottom line, the way forward, is that the investment performance is still the best catalyst for these companies. in the last three quarters of last year, they had easier comparisons because of the slump in the equity markets. if the equity market momentum come out, could continue, this

will bode well for the insurance companies' bottom line. the second is the uptick in the local bond yield. we had a huge slide in the first quarter this year. we have a decent rally in terms of local bond yields since the beginning of april. that is important for the medium to long-term interest rate return for these companies as they invest more in fixed income assets. to steven lamb. we will have more chinese earnings next. we will also look at what lies ahead for automakers with automobility ceo and founder bill russo. this is bloomberg. ♪

paul: this is "daybreak: asia." i'm paul allen in sydney. selina: i'm selina wang in san

francisco. chinese automaker byd has shown a 30% jump in first order, demand forts strong its new energy-efficient vehicles. automobility ceo and founder, bill russo joining us live from -- shanghai. how are they performing against her expectations? -- your expectations? bill: it's a mixed story. the companies like great wall and byd seem to be sustaining the storm and finding a way to prosper. the market is structurally changing. are growingehicles in popularity. ability demand continues to increase, but the way they satisfy it is changing. selina: we tend to talk about china's auto market as one sweeping group area talk about us -- tell us about the

difference between the tier one and two -- tier two cities and the rural areas. growth andemand lower tier parts of china has stopped. it is declining. lower income areas of the country have gotten conservative about where they spent. that is where the growth has been happening. with a slowdown in economy, people are switching to alternatives. alternatives include used cars. they are available in much higher supply. demand havevices on grown to become popular with more than half a billion people using apps. change in structural how people are satisfying their mobility needs. there was another interesting alternative i want to get your thoughts on --ounced by gigli, the

talking about the world's first methanol powered truck. is that sustainable? where do you fill up with methanol in china? bill:bill: when you talk about alternative propulsion technologies, there is some degree of demonstrating your capabilities, to be be able to innovate. there are alternatives to the traditional gasoline powered vehicles that are being developed by automotive industry players.there is no government incentive to move toward methanol. there is a lithium ion-based battery electric vehicles and fuel-cell electric vehicles. that has an opportunity in the future to replace the carbon-based propulsion technologies. mentioned the blowout results of byd. profit jumping 632%.

that's not a name you hear of much outside of china. are there big things in the offing for them? byd has made forays into commercial bus sales outside of china. if you have her the outside of the chinese territories, it is in that segment. it's not known very well in the developed markets. the prospect for company like that depend on being able to do well in the domestic market and being able to differentiate on certain technology fields. -- an early mover in the lithium-ion battery compulsion based technology. than 60%arket is more of the global sales of electric vehicles. it's an indication that companies like byd are on the front end of the trend toward electrification. selina: when it comes to ev,

tesla's disappointing earnings last week highlight the need for that country to expand beyond the u.s. -- company to expand the other u.s. elon musk said they can't reach 2000 vehicles a week. reach 2000hey could vehicles a week by the end of the year. where do they fit in? bill: they've established the brand. three years ago, people in china may not have known them. today, they do. they have a highest import for both the brand and elon musk. they are late, they are not localized. they have some catching up to do. the mass-market brand of electrification has not been established yet. the challenge for tesla will be if they can compete in the

mass-market, and that means making cars here and sourcing components here as well. selina: what impact have you seen on the auto tariffs in the industry so far, and what do you make of the recent government ouncements toann cut the vehicle import tax? bill: that's a move on china's part to get people to localize. , that would be an advantage, if you're to have a factory overseas that is selling into the market. the initial response by the car companies that have been importing to china, such as bmw and tesla, is to open up additional capacity to produce in china. that is not helpful if you are trying to keep jobs in the u.s. if companies start to relocate their factories here, the fact is, china's market is bigger and more profitable than any other market in the world for car companies. they will do whatever they can

to protect their business year. that means shipping some of their manufacturing capacity here in tears get in the way. paul: on the subjects of tariffs, we have some encouraging words from stephen mnuchin that a deal is getting close. how important is it for you yes manufacturers -- auto manufacturers on both sides to get some resolution here and get some certainty? bill: it's critical. the uncertainty is driving delayed business decisions. you don't know where to put your manufacturing footprint. now, u.s. companies are suffering from a cost penalty for goods that were manufactured in the supply chain in china and used in the assembly of the vehicles in the u.s. it increases the cost, no matter where you produce the cars. if you have additional tariffs in the mix. resolution of this issue is critical in order to get

businesses back, and know where they can source their components as well as their factories for some of the cars -- assembling cars. paul: automobility ceo and founder, bill russo, thanks for joining us. don't forget, our interactive tv function, tv go, there, you can catch us live and catch up on our past interviews and dive into any bloomberg fountains we talk about. you can become a part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ paul: let's get a quick check

of the latest business flash headlines. talks resume on a $38 billion bid from occidental, a move that could discover and already a deep -- agreed deal with chevron. the accidental offer could "reasonably result in a superior proposal." they say the agreement with chevron at is still in place. chevron would have four days to respond. itsify has beaten all of rivals to reach 100 million paying subscribers, adding more users in the latest quarter than analysts expected and boosting confidence that it has lots of room to grow. was $.79 aly loss

share, twice what the market expected. competition from apple, amazon and youtube has done little to slow their growth around the world. theready to add we work to list of highly anticipated ipos of 2019. the shared office giant that refers to it as the "we company." has filed a report that would be the second-biggest public offering behind uber. softbank is a major factor -- back her. -- backer. in a worrying sign for tesla degrees, the value of its -- deliveries, the value of its cars ready for sale has talked to billion dollars for the first . the inventory accounted at the end of march was a rise in 6% from 2018 and up to 90% from a year earlier. tesla at your bids the increase for the longer time it takes to deliver model threes outside of north america.

selina: the vice chairman of citigroup says the middle east will continue be a driver of group -- growth. >> we do see activity slowing in europe and large part of the uncertainty that is the geopolitical uncertainty. we see a change in leadership across the continent. a change in leadership in the european council. a change in leadership in the bank of england. we have the brexit dynamic. we have a change of leadership in germany. you have a number of factors at play that create an environment of uncertainty in europe. europe remains a critical geography, when it comes to capital flows that are core to

what takes place with capital between the east and west and within the west. >> giving with all of the uncertainty, deals will be on ice for it a period uptime? >> it has slowed. you have to be that much more disciplined. disciplined,e more a large pool see of capital available in europe. people are being very disciplined about how to deploy it. >> people have been talking about activity out of saudi theia, do you think that activity in the middle east is propping up the middle east region? >> it is one of those areas that you see an increase in activity, and large part because of the 70 plus billion dollar saudi arabia transaction and the access to

the debt market. that gives us confidence that the activity is there. we expect to see continued investment out of the middle east and other geographies, as well as investment in the geography. we look to that as a growth area. landscape, the middle east will continue to be a driver of growth geoe conomically. within itsa consumer own context. a large consumer and the driver of growth. citigroup vices chairman mcgwire. let's get a preview of the markets. sophie: we are bracing for a busy session for mainland markets. in hong kong, we have earnings lower ahead of china's three daybreak. we will be watching reaction to agm resorts. 20% drive in a

revenue for the first quarter. group may come under pressure after reporting a 10% drop in operating profit. we see concerns over bad loans, which could see a 4% growth for the industry counteracted. official pmi data for china is doing minutes. as you can see from this chart, we are seeing pmi remaining in expansionary territory for april while we are seeing new export orders. the white line, remaining week. stabilization may support chinese stocks, which have lost some with with

>> it's 9:00 a.m. in beijing, shanghai, and singapore. welcome to "asia open." stephen engle. >> trading is quiet ahead of manufacturing in china, should be open. mainland markets for a three-day break. >> samsung, weak results. but improving chip demand in the second half. >> china's star in the spotlight as bad loans continue to rise. with urging more lending, the situation could get worse.