i'm paul allen in sydney. we are under one hour away from the australian market open. >> good evening from bloomberg's global headquarters in new york, i'm taylor riggs. sophie: and i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." ♪ paul: our top stories is thursday, japan and china remain closed. the rest of asia has a tough trading day as the fed pushes capitulation. it is being held back by transitory forces leaving

policymakers with no bias toward a hike or cut. china renounces a further relaxation in the financial sector removing limits on bank ownership and scrapping size requirements. taylor: i want to get to breaking news we have on south korea. they're cpi is coming in better 6/10 of 1%ed, rising beating estimates of 4/10 of 1% and coming in ahead of where we were on a year-over-year basis relative to last month which was about 4/10 of 1%. asare getting an increase well of 4/10 of 1%, better than the average analyst survey which was looking for a number of about 3/10 of 1%, and that is a rebound of what was on the prior month when cpi month over month fell by 2/10 of 1%. again, i want to bring you the headline numbers, the core cpi year-over-year comes in better at 6/10 of 1%. better than the expected for tenths of 1% which is what the hadage analyst estimate

called for. let's get to the market reaction with sophie. trading kicks off for the korean won, we're seeing reaction. the contractor breaking. the currency has been battered over the past month due to weak earnings and disappointing ecosystems from china. that has pushed it lower to the handle, two-year low. flipping the board to check in on futures, aside from a potential for the lawn. the kospi may resume gains. in sight we have a kospi looking to resume gains -- gains after losing ground. we would like to catch up -- catch in on the futures board to take a look at how we are setting up for gains in cut the kospi with soul trading resuming today. we will be seen whether or not green stocks can continue gains we saw in april. we had a near 3% game -- again.

getting hopes for a rebound after june. that may find more support after thann exports less forecast said last month. we will get first quarter results. plus we will get auto sales from your and a motor and other carmakers. we have plenty of corporate updates as well including from napa which posted a 7% rise in the first-half profit. it cuts it -- it did cut into dividends. we have aussie futures hinting at losses this thursday while kiwi shares are higher. all right. thanks very much. let's get a check of the first word news. here is su keenan. you.hank start with the u.s. and the latest on the u.s. attorney general william barr who was on

the hot seat before the senate wednesday. he now says he will not show up for a scheduled hearing on start with the u.s. and the latest on the u.s. attorney general williamthursday about sl robert mueller's russia investigation. the house judiciary chairman accused him of blackmail and said he may issue a subpoena for barr to attend. on wednesday before the senate, barr defended his handling of the mueller report in a tough session where democratic house members issued accusations that he misled congress over its findings. united states for israel to pressure on venezuela's if there is no peaceful transition of government. protest against the maduro regime are continuing although an appeal by opposition leader juan guaido for the army to abandon maduro seems to have failed. the trump administration is warning russia and cuba to stop assisting maduro and a warrant of possible sanctions if they do. have asked all parties involved not to engage in a kind of activity. we would prefer a peaceful

transition of government where maduro leaves and a new election is held. the president has made clear in the event there comes a moment and we will all have to make decisions about when that moment is, and the president will have to make a decision. the is prepared to do that if that is what is required. now, the defense secretary has been fired for the leak of private discussions about huawei's role in britain. evan millions and denies any part of the lake from a national security council meteor -- meaning that theresa may said he had not met the same standards as other cabinet members. she added "no other credible version of events to explain the leak has been identified." global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. taylor: thanks. forget weak inflation, president

trump bashing the fed, dave pala made it clear that he does see weaker inflation is temporary and therefore no need to shift policy gears now. our economics and policy editor kathleen hays is here with a recap. it is all the buzz word, transitory third what is behind transitory? kathleen: the federal reserve has added a new important word to its fed to speak lexicon. transitory inflation. that is what jay powell talked about over and over, even though their policy statement did acknowledge inflation has weakened. jay powell seemed to express confidence that this would be transitory. let's listen to what he said at the press conference following the fed's meeting. --ir powell: kathleen: what he said is that inflation has fallen to 1.5% year-over-year. let's look at one of our bloom -- our bloomberg charts. it tells the story well, one

picture is worth 1000 words. you can see on the right-hand side of your screen, the headline number fell to 1.3%. you can dismiss that as oil prices, they go up, down. the fact that the core is down to 1.5% year-over-year that got people thinking the fed could be getting ready to at least open the door to the possibility of a rate cut. said thatd president recently. jay powell said these are temporary factors. portfolio management services, the prices of those have fallen, that could be temporary. think of the shoes, clothing, how temporary cannot be if online shopping continues to keep prices low? he talked about airfares. autumn line, current policy stance is appropriate. no need to move rates in either direction. it is steady as she goes as andent powell pause inflation continues. paul: despite the tepid

inflation, jay powell was sounding confident in the economy overall, wasn't he, kathleen? kathleen: he is looking for a rebound in the second half of the year. we saw the adp jobs report, a measure of private jobs growth in the u.s. economy. it came in stronger than forecast in. he is confident that is one of the things that will boost the economy and inflation. the manufacturing number, the main one for the u.s. fell sharply last month. production fell. new orders fell. they are back to 50 which is contraction.h and jay powell stress the fact that the headline numbers are above 50, signaling growth. it seems like perhaps he is putting a lot of weight and hope on the fact that a trade deal may be within the u.s. and china's reach. that is the thing that would remove uncertainty and get export orders flowing and boost manufacturing numbers. on theso made a tweak

interest in excess reserves rate. the main thing is inflation is transitory, and the fed is on hold for the foreseeable future. right, global economics and policy editor, kathleen hays. thank you for watching those fed developments. anothertry is taking step to open its $44 trillion financial sector to foreign plans to, announcing remove limits on ownership and local banks and scrapped size requirements. the announcement came as the latest trade talks wrapped up in beijing. our chief asia correspondent stephen engle has the story. how significant is this? hen: it is another incremental step in the opening of china's financial system. this comes many months after the announcement that they would allow foreign companies to take majority stakes and security firms. this is another significant step, not a big weighing move necessarily, but china does not necessarily do things in one fell swoop. they do it in incremental steps.

the timing is obviously interesting with of the u.s. trade representative robert lighthizer and steve mnuchin here aboard trade talks is a wrapped up in beijing yesterday. it was also a holiday yesterday and we got the announcement. remove limits on ownership and local banks and scrap the size requirements for foreign firms that operate here. foreigne changes, insurance companies will be allowed to set of units in china. it could have large ramifications for the insurance industry. it could also potentially lead to a full-blown bank takeover by a foreign company. a foreign company. the potential shortcut of course to full market access. that has all kinds of risk as well with hidden liabilities, off-balance-sheet, etc. it is an interesting step, one that we need to watch. something the big banks will be watching closely. taylor: it is very interesting, i wonder if some of the reaction

from let's say these u.s. companies believe china? so often we hear that they will open up to foreign investment and u.s. companies can go in there and sometimes we are let down. that theyeve china, really will be opening up their sector and if so, has the u.s. or foreign reaction been positive? is again part of the negotiating process. this is why the u.s. delegation is here in china trying to get enforceable steps from the chinese. you are right. there have been more opaque promises -- promises and then the implementation in the application process has been very opaque. you will apply to dopromises --n the something, and then the waiting game goes on. the red tape here in china is quite significant. we have gotten some reaction initially. i mentioned the insurance industry. scott menard, the cio of guggenheim partners said, speaking at the milken itference in los angeles,

should be beneficial to the large players like goldman, like blackstone, whereas guggenheim, player could benefit from possibly managing the assets of chinese insurers. we also heard from blackstone at the same conference in beverly hills. steve schwarzman sounded positive that china would allow foreigners to on 100% of financial companies. that will happen in his estimation, pretty quickly. i come back to the buyer beware. will a large u.s. company playet from -- financial company or bank come in and buy out a chinese bank? buyer beware. due diligence has to be made. of nonperforming loans. they are increasing in this market. there are a lot of hidden liabilities off-balance-sheet. it is not necessarily the step banks would take. i have spoken to jpmorgan's jamie dimon multiple times about this issue. he will be here next week. we have an interview with him. we will get his opinion on this. wants 100% wholly owned bank

with the jpmorgan moniker on the building itself before he will go into this business. paul: all right. wise words there. chief north asia correspondent stephen engle, thanks very much. still ahead, we will have plenty more on the fed, former president dennis lockhart joins us later. hisor: jim bianco gives us reaction to the fed decision and what he thinks jay powell should do next. this is bloomberg. ♪ ♪

paul: this is "daybreak: asia." i'm paul allen in sydney. taylor: i'm taylor riggs in new york. as we have been reporting all day, the fed has announced no change in its key rates. knows a price. jay powell says they do not see a strong case to change that with a hike or cut. inflation was the twist in today's decision.

jim bianco is founder and president of bianco research and writes about bond markets including our bloomberg opinion. i want to start on that you had a great bloomberg opinion piece talking about the dual mandate has not kept up with the times. that brings us a question about why we are using the phillips curve if we can throw it out the window? talk about the dual mandate and if it is still relevant? the the dual mandate that fed has which was adopted in 1977 through an act of congress, is they have to keep employment as high as possible and inflation is low as possible. they need a theory that ties those two things together. that is the phillips curve. the phillips curve means that if unemployment gets too low, it creates inflation or inflation gets too high, it creates unemployment. when they move policy, they are working on both ends of the mandate. if the phillips curve does not a very loosee is leakage between inflation and unemployment which i believe is

the case and a lot of things, that is the problem for the fed. they do not have a theory that works on both sides and then they have to pick one or the -- one over the other. they keep forcing the spirit to work. we see it through today's press conference, that they keep talking about the relationship between inflation and employment, because of the dual mandate. taylor: another big thing about today was this new word transitory. i am calling it my buzzword of the day. i wonder how long does inflation have to stay low for inflation to low longer be transitory, and to mate -- and to be a structural issue? jim: that is a good question. it is not exactly a new work. janet yellen used that word the couple years ago. they said the low inflation is transitory and then they pointed out that people are buying clothes and that is low, and airline tickets are low. i thought they embarrass

themselves when they said portfolio management fees are keeping the inflation rate down. hedge fund managers charging two and 20 and cutting their fees is what.g disinflation is the fed is trying to say at any given time there is probably three or four things that are pushing inflation up. it is an index. there is always something pushing it down. there's always something pushing it up. i think they are failing to recognize the overall trend in inflation is down. it has been down. it has been down for a number of years. i think the market knows this. it wants the fed to recognize that inflation is low, and consider cutting rates later this year. when they say low inflation is transitory, that sounds like they are in no hurry to cut rates. and we are maybe even thinking if it's bumps up, we might talk about raising rates. i think that is why the market had a bad reaction to what the fed talked about today. i think the last time you are with us on bloomberg you said the bond market was telling the fed to consider easing. do you think it will tell it that more loudly now?

jim: i think so. we will probably continue to see the bond market. there is a distortion because of i oer, the interest on excess reserves that they cut in looking at the probabilities for a rate cut that will last for a few more days, but they were looking at a september rate cut, the market is pricing in a rate cut in five months. it sees no inflation. it thinks the fed should be cutting rates. i think that law will get louder and louder as they move forward from here. i thought the volatility you saw in the bond market, especially two-year yields, having a very large intraday move during the press conference, to be a signal to the fed that they are paying attention to what they are saying, may not like what they are hearing because they do not believe that inflation is transitory. they think low inflation is more permanent. we did see kind of a rate cut today. the five basis point cut on the interest of excess reserves, jay

powell calling that a small technical adjustment. nothing to see here? jim: that is the third time they have done it in a year. he is right that it is a technical adjustment. they are trying to keep the funds rate in their range. but they have done it three times. he also admitted he is not exactly sure why they can't keep the funds rate in its range. if this works, and it goes back to its range and does not provide problems, then it is no big deal. but if in two weeks or four thes for the next meeting, to the highreeps up end of the range and they have to talk about more technical adjustments, it might be time to start asking "are you really in crude -- and control to the funds rate that you think you are because you should not be doing these that's moved three times a year if you have everything under control. taylor: not be doing those moves on at least a technical basis if you have everything under control. thank you, that was a jim bianco.

you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb . it is also available on the mobile. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪ this is bloomberg. ♪

qualcomm earnings are in from its legal settlements with apple. investors looked past that and were disappointed with the weakness that they are seeing in china. bloomberg technology semiconductor reporter ian king joins us from san francisco. i want to start with the headwind that is removed after that payment from apple. $4.7 billion. you are talking about a company that rates in $22 billion in annual revenue growth. how much of a headwind is removed given that this is behind us? ian: this is a massive one. this is something investors did

not believe was ever going to happen. ify also were concerned qualcomm was able to achieve a settlement with apple, it would be on apple's terms and come at a discount. the numbers today according to the analyst i have spoken to indicate that was not the case. basically apple is getting a similar deal to everybody else. and on a gore forward basis, that is what they wanted to happen. paul: let's talk about that weakness in china. how severe is qualcomm seeing that? ian: their explanation was everybody is talking about 5g services on how exciting that is going to be. youa consumer now, would really go out there and spend several hundreds of dollars on a top end handset that very mellow -- very well may be obsolete in the next few weeks? the next couple of quarters is likely to be muted demand, particularly for expensive

phones until the 5g services kick in and get going toward the end of the year and into next year. all right. bloomberg technology reporter ian king in san francisco. thanks very much. let's get a check of the latest business flash headlines. national australia bank's profits rose on highs it -- on housing. cash profit up 7% to more than 2 billion u.s. dollars. but the bank was forced to cut its dividend due to mounting customer compensation costs. almost 800d out million u.s. dollars to customers who were sold insurance and given poor financial advice. raised beyond meat has ipo aftern in its pricing shares at the top end of an elevated price range. the maker of vegan chicken and beef substitutes sold more than 9 million shares, valuing the company at 1.5 billion dollars. the company is backed by and hollywood celebrities including bill gates and leonardo dicaprio. paul: zinger is considering

offering a monthly subscription to popular titles. the ceo says users who sign up will then be given extra content. soared in after-hours trading as they reported first-quarter sales in $265 million, a hat -- that is out of wall street projections. the stock is up 40% this year through wednesday's close. paymentsash and processor slumped after giving a disappointing forecast for the second quarter. it expects the adjusted revenue will be at best 555 million dollars and that is below expectations. frome blames competition digital payment rivals. the stock was up more than 50% over the last year before the after our tumble. tesla is being sued over a fatal crash in california. the autopilot system of 2017 model x not functioned and steered the car into a concrete barrier on the highway. says the model x

lacked safety features such as a properly functioning automatic emergency braking system despite being touted as state-of-the-art. let's check in on asian markets. new zealand is the only market trading now. currently higher by 1/10 of 1% after a tepid start. this is after we saw weakness in u.s. markets at the close. kospi futures higher by 1/10 of 1%. here in australia, asx futures looking weaker by half -- by .5%. a couple of things to watch at the aussie open, national australia bank as we mentioned reporting first-half cash profit up by 7% to $2.95 billion. struggling with ongoing compensation claims from customers who were sold dodgy insurance and given poor financial advice as well. still to come, former atlanta fed president dennis lockhart

will be joining us. hee -- he is here next to will talk about what jay powell and what the fomc should do next. this is bloomberg. ♪ . this is bloomberg. ♪

su: this is daybreak asia. we start with fed chairman jay powell who said the u.s. inflation is being held back by what he calls transitory forces, leaving no bias toward tightening or using. he spoke after they held rates study again, adding the current stance is appropriate and there is no strong case for moving in orher direction, hiking cutting. he has been attacked by president trump for not doing more to support the economy. weak first quarter performance wasn't expected and

i don't think is related to anything we did in terms of raising rates. it appears to be -- we don't know but you never know until with hindsight. some of it does appear to be transitory. an important piece of economic data, a gauge of factories. it fell last week. that signals manufacturing headwinds have extended into the second quarter and as companies continue to face uncertainty about trade issues. to 58%,-- it slumped missing estimates in a bloomberg survey. three of the five key components are declined. the u.k. there are signs from london that prime minister theresa may could be edging towards a brexit agreement with the opposition. this after a month of discussions going absolutely nowhere. labour partyt and

are talking a compromise and will meet in the coming days. may want to wrap up negotiations with or without a deal. and wikileaks founder julian assange has been sentenced in london to nearly a year in jail for skipping bail over a swedish probe into an alleged rape. while out on bail, he sought asylum in the ecuadorian embassy and stayed there since 2012. he is still facing extradition to the u.s. overcharges he d to illegally download government material. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. >> i want to get a check on the markets with sophie. on the futures are

hinting at losses after the asx 200 closed near an 11 year high. anz meeting expectations. looking at anz shares, it rose 2.8% wednesday after first-half cash profit. it was muted growth as home lending slowed -- home lending slowed. fell, whichnts it means anz might not get the expected rate cuts. now a similar report card with this one rising 7% to $2.1 billion but slashed dividend payout -- the lowest since 2011. the bank did see more challenges with the australian economy expected to jerk -- grow below trend. flipping the board, we are getting a check on aussie fund managers. nintendo reported a 26% drop because of a 91% decline in performance fees, market

volatility and brexit uncertainty. outflows of $1.3 billion and the wealth business continues to suffer from damage. outflows were nine times bigger than in 2018. thank you. let's get back to the fed policy decision. kathleen, how worried is the fed about inflation? radaren: it is on their screen. they have a 2% inflation target. they continue to fall away and .eadline pce the court takes out energy only 1.5%, moving in the wrong direction but jay powell told us at the press conference after the policy meeting, it is temporary. higher in the second half of the year. where does this leave the fed in terms of policy and its next

move the majority joining us, the former atlanta fed president dennis lockhart, president of the atlanta fed 2007 to 2017, very interesting. glad to have you on this day. i want to ask you this. if you were on the fomc -- always glad to have your. if you were sort of in the center, you could listen to dennis lockhart and know what the fed was thinking, would you be concerned about the fat inflation is falling? >> i didn't quite get that. kathleen: inflation is falling. if you were at the federal market committee, would you have expressed a view that is more cautionary, saying if it continues, we could have to do something like cut interest rates? people can over read the

situation. jay powell was really direct. they think policy is set at an appropriate level. they are in a wait and see mode i think are the foreseeable future. i would be surprised if there is much of a move in terms of policy perhaps for several months. unless you see a real change in how the economy is performing. the federal reserve has this 2% target. if inflation is falling and you don't respond, does that put the fed's credibility on the line? other people's criticism that the fed is not responding as it should? is certainly a lot of noise around fed policy these

days, coming from political circles. experience, they will do everything they can to almost totally ignore the pressures that are coming from either the white house or other people in the political arena. keep their focus on what they think their job is, that is to set policy in a totally nonpartisan, a political way -- apolitical way, and make decisions based on evidence and data and i was there for 10 years and i went to some 80 meetings. of thet is the mo federal reserve. they will do everything they can to simply stay the course and do it, the way they have always done it.

stays so if inflation far below target, could they cut interest rates? expect any don't interest rate cut in the foreseeable future. however they are focused on inflation. the major variable today that i think will influence policy is inflation. , as theysatisfied should be, with the employment situation. the two objectives, inflation is the one that is more in focus or concerning. i believe they are focusing only on the monthly inflation numbers but also watching inflation expectations very carefully. if they detect that inflation expectations are really lower, the.5% or

public is beginning to believe there is no such thing as inflation or nothing close to their 2% target. then they may feel the need to move. also if we saw recessionary conditions develop, they might move for that reason as well. neither of those descriptions is really apt at the moment. to come back to something i said, they are in a wait and see mode. let's look at the economy. we did get the institute and ,upply management index today remaining above 50. it has been coming fairly low as well. when you look inside, that is what is significant. new yorkers have come down in the latest month. new export orders are below 50. we have seen a slowdown with the

purchasing managers index. how concerned are you when you look at the global economy and -- a long career in international banking? pmi is one data element that is important. it tells you about how i sector is performing -- a sector is performing in what is to be expected in the future. a lot of these are noisy. they jump around from month-to-month. of -- oneink one read index will influence their thinking. if you go back a few days, we were talking about really the strong first-quarter growth number, the gdp number. powell'soday in jay

press conference and also to some extent the statement, they the momentumthat of the economy is solid. inside, the consumer and investment numbers were sort long-term for the economy. that number is influenced by inventories. aey really have to take in whole variety of indicators and draw a synthesis from that. pmi alone is not going to sway the question i think for the fomc. the fed is undergoing a big re-examination of its policy framework this year. one of the key elements is the

2% inflation target. is it time for the fed to acknowledge inflation has changed, the growth curve is not flat and maybe it is time to move away from a 2% inflation target? more back into the policy the way it was during the greenspan years when the goal was price stability and inflation can down without the target? review do have a underway. my understanding is the review will culminate in the middle part of the year, june, july. in many respects, that review is the end of a beginning of a process that will take several , and they could change their approach to inflation from a let icons be bygones approach to one in which they would make up for past

under shoots trying to overshoot for roughly such a time. these arei can tell, ideas that are being discussed. they are far from making any equalon and i think it is odds that they would change their approach versus to stay with the symmetric approach they toe today and just continue try to achieve something around that inflation target. when you look at the global economy, there seems to be a lot of hope, bets writing on getting a deal soon, eliminating uncertainty for businesses and consumers. we will see a pickup in the u.s. economy and everybody's. what do you think will happen? >> there are some somewhat

encouraging signs. year, recall early in the the fomc and chairman powell were talking about crosscurrents in the economy. usedsed that word -- he that word in today's press conference. really referred to the concerns they had in the beginning of the year. he said and i agree with him that some have abated a little bit, circumstances approved -- improved. the situation in your part of the world in asia, it seems to be stabilizing a bit and the enormous chinese economy, the u.s. had a very solid first-quarter and can expect i think a continuation of solid performance. breathe moreght

easily now at this stage in the year that the momentum globally as well as in the united states is likely to continue. thank you so much for joining us. appreciate you taking the time. >> thank you for having me. kathleen: former atlanta fed president dennis lockhart. reserve of the federal in the turbulent financial 2007 to 2017. taylor: great conversation with our own kathleen hays. snubbing democrats, attorney general william barr says he will not show up to a house committee hearing about the mueller report. we will look at what democrats could do next. this is bloomberg. ♪ this is bloomberg. ♪

this is daybreak asia. i am tyler riggs.

-- taylor riggs. paul: i am paul allen. the latest round of trade talks have wrapped up with steven mnuchin calling it productive. discussions continue in washington next week. we have a reporter joining us from singapore. steven mnuchin's comments follow stark language from other officials. where do talks stand? reporter: it does. he said that stocks were productive and -- talks were productive. they will talk next week. this comes after the interim chief of staff mick mulvaney said that you are coming up to a decision point. at some point we are going to know may be the next few weeks there will be an up down decision. this is working, this is not working. we are waiting for the u.s. to decide which way they want to go. when stephen mnuchin says these talks are going on a per octave -- a productive fashion, that is

language you want to hear if you are looking for a deal. go, no go point. another thing that is interesting that mick mulvaney said was he was trying to downplay the idea we have had for a long time in markets that trump really wants a deal of put markets up ahead of 2020. mick mulvaney said there is not that impetus for a deal. not sure how much you can read that but the talk from mnuchin saying this is productive, it is moving the ball forward. taylor: not to be overshadowed by jay powell and all of the trade discussions, what attorney general testified in front of now heate committee, will no longer show up to the house judiciary committee. this is on the hearing of robert mueller's rubber -- russia

probe. what is the importance of him not showing up? derek: it is important. the senate committee is run by republicans and the house is run by democrats. the question is who runs the hearing, what tone it sets. graham graham -- lindsey started out a hearing with a laundry list of complaints about hillary clinton. we mentioned -- he mentioned her a dozen times. that is not what would happen in the house. it would be a different reaction. the justice department is not happy with the idea of having attorneys issue questions. there is sick the counties. .- technicaliies this is between the white house and democrats in general. there is a longer thing about the trump administration not wanting to play ball with democrats in terms of the oversight democrats want to

conduct. democrats have to figure out what is next. there is a level of escalation they have got to decide where they are going to go. there are deep divisions within the caucus about how far to move, how stark to go and they are very much unresolved. taylor: very much. that was bloomberg news senior editor derek wall bank. -- derek wallbank. international container business in the philippines has slowed across the board. but we were told better performing markets like mexico and africa are helping offset that weakness. seems there is a slowdown across the board, but we have some areas with growth, some areas with negative growth. overall we are looking at growth in the first four months of low single digits. across the board.

haslinda: where are you seeing growth and where is the slowdown? growth inin mexico, africa, although some areas have slowed down. middle east has slowed down. mexico isside from slow. -- latin america aside from mexico is slow. we have new boards that have come online that have provided stronger growth and what the global trade reflects. haslinda: is there any cause for [indiscernible] or are you going ahead with expansion plans? enrique: slowdown doesn't cause us to pull back. seeing slowdowns makes assets cheaper for entry costs less. should be, but it is still very liquid. 30,nvest for the long-term, 40 years.

whether it is growing or not, that doesn't hamper us. enrique: what is the situation -- haslinda: what is the situation for you? enrique: it is very fluid. it is hard european down and speak something to negotiate with. hard to slowng -- down. we will have a question who can lead. haslinda: what if no resolution is found soon? enrique: [indiscernible] there will be very little damage. it is about recovering our outflow payments. paul: international container services chairman and regain -- then forget the interactive tv function. you can watch live and catch up on past interviews and dive into any of the securities we talk about. part of theme

conversation and send us messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ omberg. ♪

taylor: let's get a quick check on the business flash headlines. boeing is trying to move a court case over the lion air crash from the u.s. to indonesia. they say the dispute relating to the crash is being heard and resolved by the courts of the nation with the greatest interest in the matter. lawyers representing families of the victims say this would allow bowing to skirt responsibility and to lessen its potential liabilities. paul: tesla is being sued over a -- fatal crash. apparently the car steered into a concrete barrier great in the complaint the family says the model x lacked safety features

like a properly functioning automatic emergency braking system despite being touted as state-of-the-art. let's preview the market open with sophie ken rudin. -- sophie kamaruddin. sophie: mixed in seoul and sydney. in korea we look at the automakers after the u.s. april sales showing five of the largest players missed estimates. fiat posting the biggest drop and hyundai motor and kia posting losses. hyundai heavy owing to post narrow losses. there was a profitable 2018 of orders but momentum was weaker in the first quarter. due from s k networks and gx retail. that could benefit from rising food sales. revenueerate 95% of from food and drug stores in all of its sales in south korea. that is a snapshot this morning

at the start of cash trade in seoul and sydney, with japan offline with japanese markets for the rest of the week. plenty more to come. this is bloomberg. ♪ ♪

paul: good morning, i am paul allen in sydney. taylor: and i am taylor riggs. sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ paul: our top stories, japan and china remain closed with the rest of asia set for a tough trading day as the fed pushes back on rate speculation. jay powell said transitory forces are holding inflation back, moving them not towards a hike or cut.

taylor: removing the limits on bank -- andving limits on bank stuff. is get to the market action. this morningr in we see losses for the asx 200 percent and qb stocks are off .1%. i want to highlight this one sliding on the back of its net outflow for the first quarter. taking a look at currencies, the aussie dollar is holding steady along with the kiwi after jay powell pushed back against market pressure for a rate cut. the rba could ease before the fed with the meeting that will be live for the central bank. we have the kospi under pressure, off .5%. despite the inflation data coming in better than expected. it is adding to optimism of economic rebound in the second half. assets,t trading in new

we have pressure for the kospi while the korean won is climbing above the 1165 handle. decliningean exports for april but that came in sullivan forecast, so another potential reason for optimism. the korean won trading lower as the start of the unsure session, near a two-year low. re session near a two-year low. su: this snub making major news, the attorney general says he will not show up for a scheduled hearing on thursday about special counsel robert mueller's russia investigation. on wednesday he was on the hot seat before the senate defending his handling of the mueller report following democratic accusations that he missed -- misled congress over founding's. -- findings. he is accused of blackmail and

say he may issue a subpoena to make him show up. >> good faith negotiations, if they don't result in the next day or two, the next step is seeking citation against the attorney general. -- committee will convene mike rawlings will be present. i hope and expect the attorney general will think overnight and will be there as well. su: in the u.k. there are signs theresa may could be edging towards a brexit agreement with the opposition. to be goingseem nowhere. both the government and labour party are talking up a compromise and will meet again in the coming days. and the times is reporting the prime minister is set to keep the u.k. inside e.u. customs rules whatever happens with brexit. the united states is ramping up pressure on venezuela, saying military intervention as possible if there is no peaceful

transition of government. protests against the regime are ongoing although an appeal by juan guaido for the army to abandon the maduro -- nicolas maduro have failed. trump is putting out a warning to stop assisting him and warning of possible tensions if they don't comply. assanges founder julian has been sentenced in london to jail time, nearly a year in jail for skipping bail over a swedish probe into alleged rape. while out on bail, you may recall he sought asylum in the ecuadorian embassy and stated there since 2012. he is still facing extradition to the u.s. overcharges he conspired to unlawfully download classified government material. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am su keenan. taylor: we will hear exclusively senior executive vp about how ai and tech giants he is protecting the privacy of customer data. as ubs raises its 2019 gdp forecast, we will be joined by the head of china economic research to dig in to the reasons for the increased optimism. this is bloomberg. ♪

paul: this is daybreak asia. i am paul allen. taylor: i am taylor riggs. let's get a quick check on the business flash headlines. we will be watching hong kong listed casinos in the next hour after revenue in macau fell the most in three years as the slowdown in china continues to drag on high-end gamblers.

cross gaming revenue was 2.9 billion u.s. dollars in april, down more than 8% from a year earlier. analysts expect revenue to recover in may followed by further momentum in the second half of the year. this company has raised almost $50 million in their ipo. substituteen and the sold, developing company at $1.5 billion. companies backed by business and hollywood celebrities including bill gates and leonardo dicaprio. consideringa is offering monthly subscriptions. up ceo said users who sign will be given extra content. shares soared in after hours trading and zynga reported first-quarter sales of $265

million ahead of wall street projections of 242 million. the stock is 40% -- up 40% through wednesday's close. let's take a look at how markets are trading because you see a rough session over here in the u.s. and you are sort of starting to see some reaction over there with the australian index. that is, falling -- that is falling .4% but new zealand getting a boost of 3/10 of 1%. we had thesues when weaker aussie dollar relative to some dollar strength in the u.s.. they returned and year to date. but we have heard some currency forecasters that maybe the australian dollar was set to rise or strengthen really on the heels, a dovish fed but it looks like the selloff in the u.s. market is starting to translate

overseas as asia opens. paul: very much so and we will get more on that, how the fed decision -- as the show continues. let's talk about china for now. ubs is bumping up its 2019 gdp forecast for china to 6.4% including a milder property sectors slowdown. stronger real consumption growth. joining us now from hong kong is the ubs head of economics and chief china economist. can you explain your optimism for us? you have your target raised, so it seems to be bullish on china all around. we had a very good first quarter, better than expected with 6.4%. we were expecting 6.1%. the base is higher to start with. the if we don't change

momentum for the rest of the year, we get 6.4%. so our growth will stabilize from here. we didn't see recovery in the second quarter and stabilized from there. and what it is doing in the first quarter is notably property is not slowing down as much as we see your -- we feared. ,entiment has improved improving and some of that margins. thanks are easing -- banks see easing of credit and liquidity and improving prospect of a trade deal that helps with consumer confidence. done very well this year. that helps with consumer confidence. as a result we think the government doesn't need to push as hard as we thought they should on infrastructure and they still get a stabilization or mild slowdown compared to yesterday -- last year. how about pmi out earlier?

it was weaker than expected. does that really betray a chinese economy that is reliant ? stimulus, albeit targeted >> the april pmi coming down is to be expected. march was too strong. there was better data coming through but also in march there is some seasonality's. that chinese new year and positive news and sentiment april, mayi think industrial production number should be weaker than march, but better than the first quarter. they are you mentioned still in expansionary territory and some of the stimulus is coming through. the tax cuts for example planned , some of ition rmb is coming through in april and may and we haven't seen much impact.

same for an stressed -- infrastructure we see more issuance of government bonds but a lot of construction still coming through. i think we should see improvement. on the trade we saw a better data from the u.s. and europe alsoe see export volumes pitching up from the january february levels but not to the march level. march is very unusual. taylor: as you look to your revised forecast, educate the u.s. audience, we are about to go to bed and you are waking up, what is driving the increase in gdp? is it the emerging middle class, manufacturing, exports? what is the biggest tailwind? in 2019 the headwind is still u.s.-china trade conflict. we think the uncertainty could

have peaked. we will see some marginal improvement on trade and also the government stimulus is coming in. these two together should help. mainly the stimulus and policy easing is going to offset the majority of the headwind. it is still that. but the improving trade talks and the stimulus coming in and liquidity and credit helps with domestic confidence. compared to late last year the revival and recovery and dofidence from low levels to markedly better, that is an important driver for consumers and also for business investments that were not weekend as much. and labor markets were not hit as hard as we thought that they in february and march. it is a combination of factors

but mainly it is stimulus and domestic policy that is driving this. taylor: we had another headline across the bloomberg terminal today talking about within the midst of trade talks with the u.s. and china, one of the key points was china looking to open up a $44 trillion financial sector. how much of a net positive does that bring in terms of pulling in foreign investment into china? with the tradee talks with the u.s. and [indiscernible] opening speeding up its of the domestic market including financial services and automobile sector and others. for the longer term it could potentially be a positive. i am not sure how much that means for interactive investment. stabilizingnt it is for investment in the face of

trade related uncertainties. we will shift from china if they stabilize the opening sectors. isther benefit of course increased competition and better efficiency at home that could also help domestic investment and the private sector. paul: in terms of trade, is there still risks around this issue? on one hand we are close, have the signing ceremony penciled in for may. on the other hand we have on the u.s. side mick mulvaney saying there is no fever to achieve a deal, the u.s. wants to keep tariffs in place. do you think this could not happen? wang: i think the market by now is pricing in no escalation from here. rolling off of

tariffs but there is still uncertainty whether this will go ahead. and with a trade deal de-escalation of the tariffs, we think u.s.-china trade will remain challenged for years to come. there will be complex and uncertainties. the u.s. could impose additional tariffs down the road and there would be chauffer -- would be tougher restrictions on china's access to technology. that could be understood. that is why we think manufacturing compacts will be dampened by these uncertainties. we received a question from a viewer on our instant messaging platform that gets to the point. do you think the trade deal is going to be done by the end of may? wang: i don't know if it is by the end of may or it is june. it depends on the president's'

presidents'the two schedules. it could be done in a few months. there is the june g20 summit and it could be later, but we think it could be done soon. is done stand there will be remaining uncertainties and it will be difficult relationships going forward. taylor: as we look out the chinese recovery underway, i wonder what is the read through to some of the emerging markets. how much is china's recovery providing to the other countries, or are they in their china? es regardless of could they get a boost from chinese growth? wang: it is a fact that emerging market -- china's growth affects emerging markets. a lot of them have other issues

and how strong the u.s. economy might be. policy stand also matter. china's recovery or china's the stimulus is different from before. it is focused more on tax cuts, domestic tax cuts, supporting the private sector, opening the financial services sector and not so much of infrastructure, strong infrastructure and property is not a big part of it. compared to 2015, 2016 and compared to 2008 and 2009 it is not too big. the spillover on the rest of the world will be smaller even though it does provide sort of a support or an anchor to some extent. taylor: thank you. that was the chief china economist for ubs. don't forget our interactive function. watch us live and catch up on

past interviews and dive into the securities and bloomberg functions we talk about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ loomberg. ♪

taylor: china taking another step towards opening their financial sector to foreign companies. they are announcing plans to remove limits and scrap size requirements. the trade talks are wrapping up in beijing. financial regulation to reporter lucile liu has this. -- regulation reporter lucile liu has this story. reporter: yesterday within half an hour of the trade delegation

retreating behind closed doors , theyrt negotiations announced 12 measures they were planning to in the near future implement. these implement things like lifting caps for size requirements. foreign banks had to have $20 billion in total assets before they could set up branches in china. what we are hearing from analysts so far is that such removal of the caps would allow the smaller players to enter china's market, extending the financial opening. compared to the overhaul in shareholding that was announced late 2017, this time around it is specific and targeted at the banking and insurance sectors. encouraging developments but there is still hesitantly from foreign firms. what are they waiting for?

i say approvals and full ownership. we had the ceo's alliance say last month that this is cumbersome. they have had to apply for the national license and the provincial licenses one by one. that is a common complaint, the approval process is opaque and longer than anticipated. firms byhe securities managers and insurers can have foreign ownership by 2021. we are hearing from ceo's that 2021 can't come quite fast enough. paul: all right, bloomberg china financial regulations reporter, lucille liu, thank you. we are seeing shares declining in early trade on the asx national australia bank off a little more than 1% after

australia's biggest business lenders increased growth on housing and lending, but mounting consumer -- customer compensation costs led to them deciding to cut. bloomberg asia investing editor with us now. how much of a surprise was that? >> expectations [indiscernible] -- cut its dividends, took a half billion dollars charge. said it was $.94 from $.99. now $.83. for retail sellers, that is a big black to take. take.ck to the dividend was much more than we had been expecting. >> taylor: is the size of the cut indicating the worst is over or is it the beginning of what else needs to be done?

they still face challenges. the dividend cut as part of that. the capital is 10.4%, they need to get it to 10.5%. it is a long way off, part of the reason the dividend is being cut. they are still going through looking at customer remediation. the costs of customer remediation which are more than $1 billion australian could have gone further. when they are without a permanent seat -- they are without a permit ceo. he came and got sharp criticism at the commission for financial misconduct. the german is leaving. they need a permanent ceo to come -- the chairman is leaving. they need a permanent ceo to come in. the mostars, this is turmoil.

some of thew ceo search is underway. what is the number one challenge? to restore customer trust. that is a big job. paul: we will leave it there. thank you for joining us on the national australia bank earnings out today, the shares of a little more than 1%. plenty more to come. this is bloomberg. ♪ ♪

su: this is daybreak asia. i am su keenan. chart -- chairman jay powell said the u.s. is possibly being held by transitory forces. he had no ties word -- why is toward tightening or easing. current stance's is appropriate and there was no strong case of moving in either direction of raising rates or cutting them. he has been repeatedly attacked by president trump for what trump says is not doing more to support the economy. >> the week first quarter was not expected and is not related to anything we did in terms of

raising rates. we don't know this but you never know until with hindsight, some of it does appear to be [indiscernible] su: an important piece came out of the u.s., factories. it is the weakest since 2016, signaling manufacturing headwinds are going into the second quarter as companies face uncertainty about the trade issues. the imf -- institute for supply to 55.8nt index slumped and missed every estimate in a bloomberg survey. three of the five components declined. president trump is to ask congress for $4.5 billion for the southern order with mexico. this with the white house warning the department of homeland security they are in danger, running out of money to deal with immigration.

the latest request does not seek extra funding for the border wall but may be met with skepticism from democrats after the president's decision to get federal money for the project. so the u.k., the defense secretary has been fired from the private discussions about huawei's role in britain. he denies any part in the lake's. theresa may said he had not met the same standards as other cabinet members, and she ordered -- said no credible version of events emerged to explain the leak. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. paul: we have a large amount of breaking news. pmi's for eight asian countries,

i will give you a few of them. at 50.4a pmi coming in for april. indonesia still in expansionary territory, but it is a decline from march. malaysia and contraction, 49.4. south korea is one we are watching closely, 50.2 pmi manufacturing for april. back in expansionary territory after the 48.8. we have other numbers from south korea this morning. cpi for april coming in better than expected at .4% year on year. we also had pmi up for thailand, the philippines, india and vietnam. but i will let you find those yourself. let's get a market check. sophie: quite a busy morning so far. we have stocks trading mixed with the asx 200 under pressure. we have japan and china closed

for the rest of the week. the focus is on the risk mood. lower. is trading .1% it is weaker with the golden week break. seoul, the kospi is up while the korean won was pushed below the 1163 handle perhaps on the back of the pmi data. forecast inflation and export figures as well. up .2% while resource and financials weighed the most. theing at the should -- players, we have not shares flying after the severity of dividend cuts. it was slashed 16% to the lowest since 2011. this overshadows a slight improvement in earnings from them. asx under pressure as is less than rosy. increased compliance cost.

the stock has been downgraded by goldman sachs and credit suisse. , the mosts up .4% since june 2016 after a steep drop in first cash profit -- first half cash profits. brexit uncertainty adding to those woes. this one is set for the biggest drop since 2014 after they reported net cash outflows of $143 billion but other parts of the business did fare better. now looking across, getting optimism, we had this one jumping 11.5%, climbing with which are finding support under wesfarmers waiting thisey agreed to buy lithium player for $545 million after the proposals to buy linus. thatcher rising after tuesday's

earnings report that beat estimates. it was overweight by j.p. morgan. 4.9%g innotek is climbing this morning. in h investment does see earnings improving because of expectations for greater smartphone shipments at the firm's major north american -- story in the u.s. continues to be inflation. we are moving further from the 2% target and investors along with president trump continue to see a rate cut as logical. jay powell doesn't agree. our policy editor kathleen hays is here with his logic. i learned transitory is not new but i am calling it my buzz word. tooleen: i think so because there was such a focus after the meeting and in the

market reaction to put that letters.y word in bold you see jay powell taking the hourm just about half an when he got this policy statement which did acknowledge inflation, the court below 2% and market-based measures. inflation expectations remaining low. when he talked about inflation, the drop below 2% even further. let's jump into the terminal and look at this chart. you will see he said look at that. we got the core at 1.5%. it is transitory. lower prices for portfolio shoes,ent services, airfare is cheaper, it is transitory. people wonder, are they still transitory but when we spoke to dennis lockhart, he was president of atlanta for 10 years.

the great financial crisis and recession. he said he agrees with jay powell. don't get excited yet. >> people can over read this situation. jay powell is really direct. they think policy is set at an appropriate level, they are in a wait and see mode. i would be surprised if there is much of a move in terms of policy for several months. kathleen: that is someone who has been there and done it. he thinks the current stance is appropriate. stocks,ins you sign turned around after the press conference. lot about tepid inflation, weaker order sales, but overall jay powell sounding

confident. kathleen: the labor market is looking good. still signaling growth, still above 50, but the weakest since 2016. what did jay powell say about it? is positive even if it is modest. he expects a rebound of growth, didn't say much about signing a trade deal. you can't help but think jay powell like the international deal is fund, when the signed, markets can put this behind them. you'll remove the uncertainty and help the economy move ahead and this general sense of the labor market shows job creation. one more thing, they did tweak one little thing, the interest rate, you don't have to focus on it too much.

otherwise they haven't changed. we are watching inflation but maybe weaker inflation isn't -- maybe we have to see weaker growth as well. hays, thanks for that. you can get more analysis on the policy direction in today's edition of daybreak. go to dayb on your terminal. it is also available on mobile. west texas crude is continuing its slide on a report that shows u.s. oil supplies swelled to the highest since 2017. stephen joins us now. and whathe u.s. report does it say about how traders will react? stephen: the market is better supplied than folks expected. analysts said we wouldn't see as high of a stockpile, but we got almost 10 million barrels last week. we saw production in the u.s.

rise to the highest level ever around 12 million barrels a day. this is happening at the same time when opec and other people are talking about a tightening amid sanctions on iran as well as a drop of exports coming out of venezuela with their own political issues. going forward the traders are going to look at the united supplyand see how much they will add. the story was tightening in the market and it had been bullish that prices had risen. it was the highest level since last week. now there will be more bearish news. there is more supply, and folks and analysts expected -- that will be a big topic going forward. we can't have a global supply in demand conversation without bringing in opec. where do they stand on their

production cuts and targets? saudi arabia has come out ahead of the game. in december they were already cutting and saying they wanted to catch. saudi arabia despite the recent -- despite the u.s. administration not allowing for a continuation of exports intoiran and import countries like japan and india -- saudi arabia said there wouldn't be as much tightness. you are seeing saudi arabia has always been on the fence about reduction cuts and they have always said we need to continue to cut and see weakness in the oversupply erase itself. russia had been more skeptical. they had said from the beginning they want to wait and see what happens. at the same time there have been indications they could boost

supply after cutting for two years. they have been slower to cut supply then saudi arabia had. arabia -- than saudi arabia had. they are looking at u.s. supply and inventories, and it will be a topic before deciding how to move forward with the production cut regime. taylor: it all comes back to u.s. supply and inventory. thank you. up next we will take a look at decision isthe fed moving emerging-market currency. that is all ahead. this is bloomberg. ♪ is bloomberg. ♪

taylor: the dollar is rising after fed chairman jay powell said the recent weakness in inflation would likely be just temporary. let's discuss all of this with standard chartered head of asia

and south asia fx research -- i will spit it out. it is getting late. talk to me about your dollar calls. it is very interesting. you expect to the fomc meeting to be neutral on policy stance. that is what we got, not a hike or cut in either direction that led to dollar strength. calls onriving your the long dollar? is it the fed or something else? sure. it is more to do with weakness in the number of emerging-market currencies through local market are turningss -- more negative for the domestic currency and you would argue positives globally have already been in the price so markets already know the fed has been dovish for a while. markets have been hopeful after

a positive q1 data from china. over the next couple of months an unwind of that. the global factor has been less supportive, local factors across .merging markets that is why we are biased to be long dollar against emerging market currencies. it is not a by dollar or sell dollar against, but in terms of local stories we see more signs of negatives coming up over the next couple of months. taylor: talk to me about those local stories. if it is not a broad call against em but individual markets, what market are you most bullish on? so currently in asia we have a long dollar against thai baht. it has been and a performer for a number of years now, but we are in a situation where the

thai baht is too strong. the realistic exchange rate is the highest since the asian financial crisis. and you have concerns domestically with elections, reserves coming up in a week's time. seasonally we see deterioration in the account, the tourism slows down. we could see pressure built up on the thai baht. apart from that we are looking at relative value for stories. we have a long yen versus a short korean won. for the korean won it is a story of semiconductor weakness. markets have been too bullish or too optimistic about recovery in semiconductor sales. we think that might be unlikely. the korean won could come under pressure. rates on asia and it is driven by local stories, not a big bond on the dollar

now. paul: i want to get your thoughts on the aussie dollar we have the reserve bank of australia meeting here next week. they are posting a 50-50 chance of a cut. there is a few confident souls predicting a rally in the aussie. where do you see it hitting? divya: on the rba we actually think they are not going to cut in may. we think they will in the last quarter of this year. australia continues to be strong and that is something the rba has emphasized again and again that they are focused on that. a cut is unlikely. in that kind of scenario over the next few weeks you could see some upside for the aussie. for the full year we are bullish. most of it will come in the second half of this year. they really have to improve data from china.

first -- it big usually shows up sustainably integrated with a couple of quarters of lag. this year we will see better data from china. it will be clear we have seen a recovery in growth that can support the aussie in the second half of this year. paul: on the subject of china, bank of america merrill lynch says there is attractiveness to the yuan-dollar carry trade until the trade deal is finalized. do you agree with that? divya: we are slightly bullish on the chinese yuan. we are targeting 6.5 on dollar-cny. there is focus on the current account in china slipping into deficit for the first time in over two decades. is morethe portfolio

interesting for a is more interesting for us and we are seeing as china opens up its bond markets, it flows into china. -- inflows into china are picking up. as a result we are a little bit more positive on cny for the remainder of the year. trade deal is largely in the price unless there is a surprise. i think markets will largely ignore it if the trade deal does happen. we will have to leave it there but thanks for joining us on the bloomberg daybreak asia. the standard chartered head of fx research. still more ahead on daybreak asia. this is bloomberg. ♪

taylor: chinese tech giant tencent is protecting data privacy as a fundamental redline for the company. the senior executive vice president spoke exclusively to bloomberg and discussed the future of artificial intelligence. ismaking sure user data always protected. we look at it as the fundamental redline. line ofhe final defense. we are the first line of defense. asare the line of defense far as users' data protection is concerned. we cannot and would never drop

our users. -- trap our users. -- the way we make sure this is known to users, the value propositions when we look techeck in the space of -- in the space of artificial intelligence, there must be data -- curated and analyzed. a the corporate company with set of responsibility, we must make sure each data -- such data a men's for social growth -- amends for social growth. even from a stage of product development to the stage of future, cure ration a feature and into the days of data [indiscernible] in terms of operations for users. we support the users.

reporter: i want to bring up if you want to communicate with friends or anybody else securely, you don't do it over we chat because it is not secure. the government does censor just about everything, and you can be held accountable for what you communicate over we chat. can you say with confidence 100% of your data is private? the way we look at issues of priorities, we do our best to make sure we protect our user privacy. there are many, many technology -- technologically driven efforts put in place. this is a line we would never cross in the privacy of our users. stephen: how does this method you are bringing out now really resonate as you try to expand internationally, and what are

your priorities? which markets? you have opened a ai lab in seattle. where else are you prioritizing? horizon, immediate there is much to be done for the hundreds of millions of users in china. we don't look at geographics in a specific manner. we look at how do we make sure , artificial intelligence, technology is used to make sure we it has the living styles and make sure technology is built for good. living stylesance and make sure technology is built for good. paul: china and japan are closed for the week but hong kong is online. sophie: will be watching autos -- we will be watching auto stocks. they had a volatile april.

you have morgan stanley downgrading guangzhou auto and dumping motor. this one was raised -- they reported a 63% drop in first-quarter net income. and this one posted results on tuesday. flipping the board to check in, looking at reaction to the philippines winning the s&p ratings upgrade. this is a weeklong roadshow in europe. they will be raised to triple b plus. ♪

♪ david: your father was in the agriculture business? randall: do you know what animal husbandry is, david? david: i started out as a animal husbandry major myself. [laughter] randall: i'm getting a robocall too. david: you are getting a message right now? [laughter] randall: it is literally a robocall. i said in spanish, the next person to speak to me in english is fired. i don't care if the building is on fire. david: you are now rapidly trying to build out 5g. randall: it is conceivable we will move into a world without screens. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪