>> good morning. we are under an hour away from the australian market open. shery: good evening from bloomberg's global headquarters in new york. ." welcome to "daybreak: asia paul: our top stories this monday, yuan false the in eight months as president trump threatens more tariffs on china. u.s. futures also on the slide. warren buffett heads out of private equity firms, accusing some of dishonesty. and north korea carries out a

live fire rocket test. the weapons may have included first ballistic missile launch since 2017. shery: we will be hearing from some big corporate leaders and central banks on "daybreak: asia ," including asia's finance minister and bbs's ceo. we saw a baby jump on the s&p 500, which gained the most in a month. taking this year's gains. to 18% the nasdaq composite closed on a record high. we had warren buffett saying berkshire hathaway has been buying amazon shares. u.s. futures taking a hit at the moment, down 1.4%. president trump says he will be raising tariffs on chinese goods on friday. let's see how we are setting up for the asian markets. sophie: we are bracing for a risk obsession ahead of the china open -- off session i had

of the china open and whether there will be retaliation to the trump tariff trek. -- tariff threat. 2/10i futures in chicago of 1%. the pressure could be on for sydni shares given the cautious tone. get a check on early -- 110 spot,ng at punching the most since august. earlier slot into the weakest level since mid february. the aussie and kiwi dollar dragged lower by tariff threats, fedh the focus on the rba decisions coming this week. oil prices are under pressure. wti falling more than 2%.

brent on the retreat amid trade concerns and saudi cut crude pricing to the united states. > paul: we will have more on tht story later on. let's get the first word news. su: u.k. prime minister theresa may is said to be rewriting her brexit withdrawal bill to clinch a deal with the opposition and break the deadline that has paralyzed parliament. the new clause would keep the u.k. in the eu customs union, guaranteeing no checks on goods crossing the border. one senior opposition figures has he does not trust the prime minister. >> sorry, not after this weekend, when she has blown the confidentiality she had. i think she has jeopardized the negotiations for her own personal protection. su: to india and bangladesh. the two countries have launched

a widespread recovery and relief operation after cyclone fani leslie trail of -- left a trail of destruction. another 14 killed in bangladesh. the storm was the most powerful to hit the area since the super cyclone killed 10,000 people back in 1999. more than 40 people have died after a passenger plane caught fire on landing in moscow. the aeroflot jet made an emergency landing after suffering problems after takeoff. the hard landings for automatic fire. -- sparked a dramatic fire. airport website and airport officials have confirmed 41 people were killed. 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 su keenan. this is bloomberg. let's get back to our top story, president ramping up pressure on china to finalize a trade deal during talks in washington this week. he is threatening more than double tariffs on more than 200 billion worth of chinese sales to the u.s.. let's get to washington. the administration has been talking up prospects of a trade deal. what happened? >> they had been talking it up from president trump on down. his economic and trade advisors as recently as friday. that is a battle in the trump administration between the trade itks and trade doves, and seems like something happened in the last few days to give the trade hawks the upper hand. one thing trump said on friday,

we know he is tariff man, he has said in the past -- we are getting close to a deal, but if it doesn't happen, that is fine too, maybe better. that suggests he thinks the trade deal is insufficient or there are problems with it. u.s. officials are worried china has been backpedaling its commitments on technology transfers. there is a pretty bank ask -- big ask of the chinese government in terms of what they are willing to give up to get this deal done. as we get to the final stages, there could be qualms over that too. china also has its trade talks that don't want to give over to the united states. shery: premier liu he goes to the united states wednesday. have we record any response from china so far? ros: we have not.

the chinese delegation starting talks wednesday is being closely watched to see if there is any change in the schedule or official word from beijing that suggests things are not going as planned. talk about difficult talks to go into after president trump's tweet today, the threat of extra tariffs, tariffs on goods that had not been taxed before. a very rocky environment. we really wonder what is going on here, is this possibly a bit of deflection by someone trump after the weekend's activities in north korea? it is hard to know. bid.: and ahead of a 2020 north korea may have conducted its first ballistic missile launch since 2017 in a challenge to the u.s. position in nuclear negotiations.

experts say a photo in state media shows what appears to be the firing of the short-range ballistic missile. our chief north asia correspondent stephen engle is watching these developments from beijing. what do we know? stephen: we're hearing from analysts this is probably the beginning of kim jong-un's push the line strategy, this following the collapse of the second summit between kim and trump in hanoi, where trump walked away from negotiations. kim, licking his wounds, has since met with vladimir putin. he has accused the united states of exhibiting that faith. -- bad faith. there was a live fire exercise saturday off the east coast of north korea that essentially included north korea's first ballistic missile launch. we're getting evidence from planet labs satellite image showing what appears to be a single missile contrail.

south korea saying sunday north korea tested what it calls a new technical weapon, as well as artillery. the south korean spokeswoman condemning the incident, saying it was against the september agreement to halt hostile activities. still the united states taking more of a cautious approach to this, a bit of a muted response. obviously kim jong-un is still trying to provoke some sort of heief on the sanctions that did not get from donald trump. paul: let's zero in on that more. if the intention of north korea was to get a reaction from the trump administration, it hasn't worked. what has been said so far? stephen: the trump administration, including donald trump -- we can put out the tweet he had following the

missile test saturday -- a pretty muted response from thep, saying kim recognizes great economic potential of north korea and kim doesn't want to break his promise to the u.s. president. we have heard from secretary of state mike pompeo, still believes there is an opportunity to get a negotiated outcome and getting north korea to denuclearize. however this is not necessarily a good step in that direction. volcano called the tests on its -- pompeo called the test saturday a short range test that never crossed international arteries -- crossed international boundaries, so not a threat. shery: still ahead, australian lender westpac sees a double-digit dip in cash profits. we will look at what is waiting on the bottom line -- weighing

on the bottom line later in the show. paul: some investors are betting on a rate cut from the fed, but a jp morgan investor says not to expect the exchanges. we speak to joyce chang next. this is bloomberg. ♪

paul: this is "daybreak: asia." i'm paul allen in sydney. shery: president trump has turned up the pressure on china to finalize a trade deal during talks in washington this week. he is threatening to more than double tariff and import new taxes. says a trade deal is likely, but the key factor is how to ensure it will last. jp morgan global head of research joyce chang joins us from singapore. this chart on bloomberg showing exports to china, also u.s. imports from china. you can see you was imports from china, the bar in blue, is huge.

yellow wood be tariff the -- would be the tariffs imposed so far. president trump is threatening to double these tariffs, and a 25%ential the 5% tariff -- tariff on more chinese imports. what would this do to the chinese economy? joyce: this is the height of brinksmanship politics and is making the outcomes more binary i of the friday deadline. there is not much leeway to go past that. economy has been recovering. what this will do is raise immediate questions on the confidence in the was equity market and china. the impact is not just the chinese economy, but as we have seen better numbers coming out of china and the u.s. equity

market hitting a high, is there more risk premium priced into most markets? --both markets? shery: what is interesting about the chinese economy stabilizing, manufacturing in the rest of the asian region has not kept up. why has that been? joyce: in china, you are getting the benefits of the stimulus. only half of the stimulus has been put into place. you have the cut put into place in april. you have the social security contribution cut coming into place in may. you had more fiscal first coming into play in china. regiont of the has not kept up with that. u.s. and china have stood out. this is the risk as we go into trade discussions in the coming days. paul: what do you expect to see happen in markets when we got underway in china?

in terms of coming back from golden week, chinese markets will have something big to trade right away. we have a chart to show the market reaction in the chinese yuan. what do you expect to see when we get underway later today? joyce: i think the chinese market had been pricing in quite a bit of good news, even though we do not have gone quite details. -- have concrete details. you can see the u.s. equity market more vulnerable here. the question everyone will be asking is, how much is this brinksmanship politics? that is something that will be finalized by friday. everyone had gone into this week thinking with 10 rounds of discussions behind, they are in the final round to actually put this to rest now. will the market be disappointed? roiledde tariffs have the markets. it means trade investors will be

focused on issues beyond china, including european tariffs. is what is going to move the markets even more than some of the usher issues -- other issues that had been in play. paul: that is true, we can't lose sight of the other trade deals that may prove to be more thorny than this one. how do you like the broader chinese economy? what do you expect in the pmi's we will have out later this week? joyce: we are looking at chinese growth this year at 6.4%, in the second quarter having quite a bit of stimulus come into place. what we have seen so far, actually quite strong momentum from china. you are right, we have laggers in the rest of the region right now. we view this quarter as one where some of the stabilization measures have come into place.

i don't think you are going to see that much of a pickup on the volatility. i think the signals from the government have been that they want stability in the currency, particularly as they go into the final round of discussions. shery: how different is the nature of chinese stimulus this time around as compared to 2011 or 2015? joyce: i think china is trying to get away from doing it the way they have previously, where it has been creating more debt. you have the income tax cuts and tax cuts. the question is, will this go into consumption so we will continue to see stabilization of chinese growth numbers? there are a lot of special issue government bonds. that issue has stabilized, but we have not seen the debt issue come down. we are seeing more stable macro data. the problem is consumption. we still need to see these numbers improve. the tax cuts have had the benefit of putting this into

consumption. the consumption side will show this. shery: just last week we had chair powell saying he had no reason to move rates in either direction at the moment. will a continuation of the trade war, whether we get a trade deal later on, will not have an impact on his? -- that have an impact on his thinking? joyce: for the fed, i think there is no reason to change that policy. looking at gdp data, we don't see the fed doing anything this year. we'll see a hike well into 2020. i don't see the basis for a rate cut based on the gdp numbers. i think you would have to see gdp much weaker than we have seen, or coming to the inflation target, which is not the case. the fed will be patient. i don't see a change in the direction of policy. i think the review coming up

will focus on multiple objectives the fed has. the inflation target is just one of them. that is the global financial stability piece of it. i think markets anticipating a rate cut was getting ahead of itself. joyce, you don't see the fed doing anything in the near-term, but we have plenty of other central bank action happening at the moment. five meetings in the asia-pacific, and you could argue for of them are -- four of them are live. which asian currencies are you watching closely as a result? joyce: what we have seen from the fed is follow the leader. more liquidation put into emerging markets across central banks. on average we think they can bring policy rates down another 65 basis points from here on average. from the current account surplus countries, it will not be as dramatic as that. this period of accommodation is

still in place across the globe. it is not just from fed policy, we see central banks right now are on pause mode. you still have considerable fiscal threats coming from china and the u.s. side. paul: jp morgan global head of reasearch joyce chang. we will be joined exclusively by jp morgan boss jamie dimon on wednesday the eighth, so don't miss that. this is bloomberg. ♪

shery: this is "daybreak: asia." i'm shery ahn in new york. singapore seeing and improving environment after posting better-than-expected first-quarter results. dbsn exclusive interview,

boskalis he is optimistic about the bank's performance. >> if anything, the first quarter saw tailwind as opposed to headwinds. on top of that, the fact that most of the central banks have levered off monetary policy tightening, perhaps in some cases easing monetary policy. that is helpful to economic conditions. therefore i think the overall environment is better than it was a few months ago. businessngly, our pipelines are looking quite robust. as far as we have transparency, they are looking quite good. i am quite optimistic. >> let's talk about the description risk, because that is affecting -- disruption risk, because that is affecting closuresbanks amid and job cuts.

are you concerned -- we see the aging of the population of local employees, whether or not they can be retrained? >> they can be 50 or 70 and know how to use facetime and uber, so if you can make the change in your personal life there is no reason that you could not make the change in your professional life. jobse relocating 500,000 in singapore in call centers and so on. we placed a strong development program for these individuals so we can find them alternative opportunities within the bank with an appropriate amount of training. to date, we have trained 1200 people. we moved about 900 people to new roles, and in the meantime we have been shrinking our staff requirements. we have been successful at doing this. we're pretty sure it can be

done, because we have been able to do it so far. the problem is if it keeps going, and if you protect out into the future, if more jobs go, it is not about how many jobs you can keep creating. for the time being it is something we have gotten our hands around. >> we have seen outside investors opening the door to virtual banks. do you see that coming to singapore? >> opening the door to virtual banks, it sounds like a fantastic thing. it is just getting a few more banking licenses. the real challenge is if regulators create an unlevel playing field and let new bank licensees do banking on different terms, less liquidity, etc., then that could be problematic. so far most of the regulators do not seem to be implying on creating an unlevel playing field. shery: let's get a quick check

of the latest business flash headlines. boeing is under renewed fire from pilots groups after admitting it knew months before the crash of a max jet that its alert system will was not working properly. he did not share this knowledge with the faa until a lion air jet went down. this is the second crash since ethiopia. cut: westpac trying to cuts amid uncertainty, of more than 250 million u.s. dollars in productivity. this after first our profit came in more than 20% lower than last year. westpac says australian economic growth is subdued and currently a difficult commercial environment for thanks. weighingftbank is

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su: this is daybreak asia. i am su keenan. we start with president trump who has turned up the heat on china, saying he intends to bump up tariffs on a range of goods from friday. despite positive comments in recent weeks from both sides, the president hardened his tone, saying he is not satisfied with the pace of trade talks and tariffs on $250 billion on chinese goods would increase to 25%. reports from north korea say kim jong-un personally oversaw a live fire rocket test that may have included the first ballistic missile since 2017.

a reporting group said he watched the large caliber long-range multiple rockets and tactical guided weapons into the sea off the east coast. president trump brushed off the kim doesn't want to break his promise on denuclearization. achael cohen is set to begin three-year prison sentence monday after being convicted of campaign finance violations, bank fraud and lying to congress. new york prosecutors rebuffed his request for a final meeting where he would offer more information about alleged wrongdoing by the president and people close to him. the countdown to the australian election is well underway with just 12 days to go. health care and climate change head the labour party manifesto with this man vowing to take visionia forward with

and purpose. and former prime minister tony abbott could lose his seat at the election. by survey shows him trailing 56% to 44%. thailand's king has been within twoowned years after he took the throne after the death of his father. three days of elaborate ceremonies caused a 30 minute -- cost $30 million. they are still awaiting official results from the inconclusive election last month. the king issued a number of public statements in contrast to his father. 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. thanks very much. the rba holds a pre-election

policy meeting tomorrow. economists and traders anticipate a rate cut amid a sharp slowdown in growth and inflation. let's bring in the editor madam -- malcolm scott. compellingreasonably counterargument that says they shouldn't move. split.economists are it is 50-50. the market odds are about the same. the case for is all about inflation. the inflation targeting central bank, a couple of mandates but this is one of them, inflation between 2% and 3%, nowhere near the latest reading. it has been below 2%. if you look at a quarter on quarter, it is zero percent. if you are in inflation targeting, there is scope to cut by the question is do you agree the other argument is the declining house prices. for quite a while the rba was happy to see the frost come out

of the opening markets but sydney down almost 14%, close to 15%, it is starting to hit consumption. if you are a central bank that 6, 9, 12icy how to months, maybe an insurance cut makes sense. paul: we are less than two weeks away from the election. ical.ba meant to be apolit malcolm: it used to be they would not cut during an election campaign. more recently there has been president for a cut that has become a key part of the electoral debate but the rba does want to stay apolitical, so that could be a reason to move to the sidelines. there is not a lot to be lost by giving one more month. the other thing that might cause the rba to hold off which many

economists expect to cut but later, they haven't telegraphed it so far. normally you want the central bank to start to signals markets they are thinking of moving this way. there was a bit of a switch towards neutral a month or so ago but no real telegraphing a cut was imminent. this could give reason for the central bank to think i have forecasts announcing this coming friday, that is a good time to update my gdp, my inflation forecast and then i can start to prepare the ground for that cut. it would be a little above. shery: new zealand has a cigna -- similar line, a decision on wednesday. does that play into the rba's thinking at all? malcolm: they might want to get in first to say we are the first developed nation to cut rates in this cycle. looks likew zealand

they are number two. but there is currency matches between the two. it is not insignificant. if the rba does not lower interest rates and new zealand does, you anticipate the new zealand dollar to weaken, the australian dollar to strengthen but it would be welcome from the rba. the big cushion that has allowed the governor not to cut has been the weakness in the australian dollar. that helps the economy. he certainly wouldn't want any sort of bounce in the aussie. shery: thank you. we will also get policy decisions from southeast asian central banks. sophie takes us through those. what are we expecting? sophie: we have rate cut contenders in south asia, the philippines and malaysia especially given the policy room -- they may hold steady along

with thailand which is to decide this wednesday are the boj could be unchanged on the key rate throughout the first half even as the governor last month said the door is not closed on rate hikes but they have been cautious of late. have a forecast for gdp growth with expansion slowing the most in three years, cutting the forecast to 3.8% and lowering inflation outlook. as for malaysia, cnn begin speculation for a shift easing toing its march meeting arrange that is lower than the government projection of 4.9% for the year. some inflation also fueling for a basis rate cut and that would affect last year. either tuesday or later in the year. there is still outside risks given inflation pressures but

also oil prices are turning higher even as the drop in wti and brent this morning. that could allow malaysia to keep up for 2019. centrale philippine bank governor hasn't been shy about the prospects of a rate cut what is the likelihood they will move? said easing he has status is inevitable and is a matter of timing. half of the economists polled by bloomberg see this unwinding as -- hikes. rate kite here's what he told haslinda amin on the sidelines in fiji. >> we are looking at possible monetary easing. has done the normalization process, same with japan yesterday. [indiscernible]

so really the right economy [indiscernible] of bullish us a lot for monetary easing. this decision will be preceded by ego data, inflation and inflation and gdp figures. inflation will moderate for a sixth straight month to below 3%. question thursday will be when will the road in consumer prices be enough for the bank to cut rates? paul: that is one to watch closely. indonesia will release first-quarter gdp numbers later on today. a growth in southeast asia's largest economy expected to remain above 5% fueled by spending and the reelection of the president. report with the

finance minister here. >> we are facing the first from the -- and hopefully from the political side in indonesia elections with [indiscernible] in charge for the next five years, a clear program and [indiscernible] people, international community. i think it will be -- track record. facingstill [indiscernible] not yet clear. a strong growth will create the possibility of the federal reserve, given it will not decline -- so that will create another emphasis.

the weakness of the global economy, and other projection for 2019 is much weaker than what was originally projected previous year. we have to be vigilant. haslinda: the other thing is oil prices this year. how will that impact your budget? if any? used in terms of the oil price [indiscernible] when we discover [indiscernible] breach of the experience from the year before in which we are assuming lower oil prices. when we are revising up, the oil declines. from the budget point of view there will be a responsibility the oil price will be lower than what we assume, meaning the revenue will not be as high, both in terms of tax and nontax

revenue. and that other commodities like rubber,lm oil, even that is something [indiscernible] economic globally. they are becoming softer in price. indonesia economy, it is diversified. also strong.e is theave a good income tax in first four months. we also have a good value added tax although we introduce a new policy of accelerating restitution that is impacting our net income. i think the economy is still doing very well. shery: the indonesianshery: prime minister there -- finance

minister. occidental is adding more sugar to its bid to buy anadarko. we will check out what will go into this offering when we come back. this is bloomberg. ♪

this is daybreak asia. i am paul allen. shery: i am shery and. occidental has delivered a revised proposal to battle -- to buy anadarko as it battles with chevron. it has increased the cash portion of its bid and promised to pay a breakup fee with chevron. su keenan has the details. they really want this access to the permian basin. su: it seems that way. this is what wall street calls a love triangle. by updating the latest terms or revised proposal, they really effectively sidelined chevron's

bid and puts chevron in the position of having to come back if they can with a sweetened deal. all that is going on with occidental in this bidding war, they are trying to win control of anadarko and become the leading producer in what is really the fastest-growing , no mexicoin woodlands. we know texas based anadarko will resume talks with occidental over $76 a share bid two weeks after announcing the share deal with chevron. .29 shares of occidental for each share of anadarko, that is at8% cash, -- if you go look the shares and how they have been performing, all three were up friday as the market rose.

it probably is going to put a lot of pressure on the players. they arel believes uniquely positioned to drive significant value and growth come anadarko's -- from anadarko's portfolio. they got financial support from berkshire hathaway and that certainly again puts more pressure on chevron. a conference call is set for monday 8:00 a.m. eastern time. over the weekend we heard occidental will sell the africa total for $8.8 billion to , the french company that is contingent on the bigger deal coming through. must watch these on merger monday as more events are expected. paul: that story continuing to evolve. don't forget the interactive tv function.

you can watch us live and catch up on past interviews and dive into the securities on bloomberg functions -- or bloomberg fortunes we talk about. become part of the conversation and send messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ ♪

asia.this is daybreak i am paul allen in sydney. in newi am shery ahn york. warren buffett is stepping up his criticism of private equity firms, accusing some of being dishonest. he was speaking of torture halfway's meeting -- berkshire hathaway's meeting this weekend. our reporter covers berkshire hathaway and she joins us on the phone. this isn't the first time he has hit out on equity but this time

we got to see potential, his potential successors in action as well. reporter: we got to see greg which it wasre subtle. it was a ton of questions but it was important to see those guys in action. investors continuously trust warren buffett and charlie munger given the track record but these guys are new and not as much in the public spotlight wasresident monger, so it important to have time in front of shareholders. paul: the subject of share buybacks came up a lot. why was that? katherine: it is an interesting topic because many companies, millions of share buyback every has --t berkshire companies as well as acquisitions.

so they changed their policy last year which opened up the avenue more. -- not that many opportunities for well priced acquisitions around so it is an important lever for him to be able to pull. what did they say about the recent investment in occidental? katherine: it wasn't much of the time which was surprising to folks. about howalked important the bill -- the deal was. it is this -- it is his classic playbook, invest, get some stock and generate a high return. he said he would like to see more deals, he is known for doing financing like that with goldman sachs and bank of america. if we were to see him do more of these deals, investors might

calm down on the concerns that -- concerns on his ability to deploy cash. paul: our finance reporter joining us on the line from omaha. westpac targeting a range of crosscut after reporting a first 20% less year.p our australia reporter joins us. looks like they were hit hard by the misconduct calls. wasn't pretty for them. they are announcing a $617 million -- that is more than what national australia bank had last week. 22% drop in cash profit for westpac basically because of weaker business conditions, three mediation and the reset of the wealth -- remediation and the reset of the wealth cost

down earlier this year. for earningsty season for australia banks. interestwe saw net margins contract across the three major banks that reported over the past week, even macquarie bank last week came out and said their profit isn't going to be as good as the last year which saw their fair share of shares drop as well. on the interest margins, they announced a seven basis point contraction in line with national australia bank. that anz reported a 14% contraction and net interest margin these are figures people will watch closely. it will be telling whether the banks can turn this around going forward into the next six months. this hard to tell at stage. we have weakening economic conditions in australia,

softening housing market going on for a little bit further as well. we will see what happens. the rba rate decisions tomorrow if they cut, time will tell whether they actually pass on ast benefit on to consumers well given the contraction in the margins. shery: we will look forward to that. our bloomberg's matthew burgess in sydney. standard chartered remains bullish on investment in iran and will be signing deals for its half a billion dollars for a power project there. they have financing deals with two unnamed companies that should be finalized by the end of this year or next. last year standard chartered signed an agreement with ge for power projects valued at $600 million. paul: singapore might follow

hong kong and hand out licenses for virtual banks. reason said he sees no the monetary authority would not make the move that is downplaying the likely impact on singapore's traditional lenders. banks have lower operations across. he said he would consider the newcomers as a threat in modern banks. want to get you across breaking news on the bloomberg terminal. we have been talking about president trump's tweets he is unhappy with trade talks and is thinking about more than doubling the tariffs on $200 billion worth of chinese imports pay we have a response from china to this in the wall street journal, considering canceling trade talks. it appears to be quite an escalation in response to president trump's tweet about the renewed threats. try not just china considering

canceling the sox. the vice from your was due in -- considering canceling talks through the vice premier was due in washington. sophie: on the futures have swung to losses being given by geopolitical risk and tariff threats from the u.s. u.s. stocks are being dragged lower while the yen jumped to a five-week high and the aussie dollar going lower. weighing on yuan the aussie dollar. stocks in sydney to watch, westpac after it rounded out a corporate earnings season. macquarie shares continue to come under pressure after losing on friday and the stock was downgraded by j.p. morgan. and this one is being investigated by a german authority in connection with tax fraud. they will refuse to enter deals with an aussie lender.

a global shift in easing with the highest gods for moves expected -- it is a close call for the election in less than two weeks. ♪

paul: i'm paul allen in sydney am aware asia's major markets opened for trade. shery: from bloomberg's headquarters in new york, on shery ahn. sophie: welcome to "daybreak: asia." paul: the yuan fell the most in eight months as president trump threatens more tariffs on china. u.s. futures are on the slide. oil falls sharply with investors being moved by a surge in u.s. drilling. shery: india's giant election enters phase five, with social

media playing a vital role. we will check it live in new delhi. japan and south korea are closed this monday. sophie has a check of the markets in sydney. we have the headlines from the wall street journal that china is considering canceling trade talks this week and washington. -- in washington. sophie: that is feeding into risk off sentiment. tracking the declines we are seeing in wellington. westpac also in focus this morning. we see the aussie and kiwi dollars coming under pressure at the start of the week that sees both australia and new zealand deciding policy. to ratebeating the rba cuts. the yen earlier jumping to a five-week high, now trading at 162, while the offshore yuan is back above at 6.81 level about

the dollar. wti falling more than 2%. brent also under pressure as well amid trade concerns and after saudi cut crude pricing to the u.s.. gold trading higher this morning. paul: let's get back to our top story today, president trump ramping up pressure on china to finalize a trade deal. he is threatening to more than double tariffs on more than 200 billion in chinese imports to the u.s. and new taxes on imports. a real shift in tone, here. what is behind this threat? >> certainly a shift in tone. he and his administration have been something as well they could be close to a deal with china, and have been saying a lot of progress has been made, including talks administration

officials had in china just recently. now this tone is taking a more threatening kind of approach, saying there will be doubling of those tariffs he has threatened in the past if china does not make moves the u.s. wants. there are two big things behind this. one is u.s. administration officials are concerned china may be backpedaling on its agreements, such as the crucial issue of technology transfer. the other is politics. president trump is facing pressure from china hawks in his administration, using the opportunity of the talks to push china. he is going to be running in 2020 and wants to make the case he has been tough on china. this obviously is a shift as we have seen from headlines from the wall street journal, that china could be deciding to not come for further talks.

this could have serious implications. shery: and it could have serious applications for the u.s. economy. thing could get more expensive for consumers in the u.s.. could this client? -- this backfire? jodi: that is a good point. president trump is talking about -- raised the possibility of billionon another $325 worth of goods which have been left off the list so far. those include products that would affect u.s. goods, things like smartphones and computer technology potentially. those are things u.s. companies and consumer groups lobbied hard to keep off those lists in the first place. that threat could have affects on the u.s. economy , as you

noted. paul: how far-reaching could the implications of these threats become? jodi: as we are seeing from headlines that china may not consider coming to talks in the u.s., this could affect the state of negotiations. it is a balancing act for the u.s. administration. if they want to get more out of china, they threaten, but they could also risk the progress that has been made, and that would upset the markets. markets have been pricing in that there has been progress on these talks, and if they think they are off, that could have big ripples throughout global markets this week. shery: all of this coming at a time the president faces a pre-election bid in 2020. how will this play into his calculations as he tries to satisfy china hawks? jodi: it is a balancing act for him. on the one hand he made the case

he wants to significantly reduce the trade deficit with china. he is really banking on that. he has only started using that as a campaign issue, that he, not his predecessors, have been able to make a dent in that. to run on that, they would need to make a deal somewhat soon so they could see the effects taking place in 2020. yet at the same time he is facing pressure from members of his medication, china hawks, who want to see these talks as an opportunity to push china on issues like intellectual property practices that they have not been able to do in the past. it is balancing act. president trump also likes to threaten, he likes to use tariff s as a way to push china. we have seen in the past. he did not go ahead with doubling of tariffs under two other significant occasions when

he threatened to do so, so this may just be another threat, another tool in his arsenal of negotiating strategy. shery: thank you so much, jodie snyder, our senior international editor in hong kong. let's get to our asia economy and government managing editor in tokyo. we have seen the chinese yuan falling more than 1%. u.s. futures at new lows of the day. we are seeing big reactions in asian markets, already in a pretty data heavy, policy decision heavy week. focust's right, and the for markets has been basically turned on its head. last week it being u.s. macro data, the jobs report, the federal reserve suggestion that continues to be patient on

interest rates. all of that is now gone and the focus is. square on- is full trading again. news from the wall street journal that china is considering canceling the talks has put another leg down. we are seeing u.s. stock futures tumble. what is interesting is -- this latest warning from trump that they may impose tariffs comes after a very strong performance in u.s. stocks. selloff infact, the american stocks in the fourth quarter that had given the white house a kick to get trade talks going again. one question investors may start to explore, to what extent has the run-up in stocks this year given trump a little leeway to be more aggressive with china?

and to what extent will the retreat in stocks, then, put him back to the table? we are seeing a profound reaction in the markets open, both asx in australia. anz is weaker, so are the aussie and kiwi dollars. japan is closed for golden week. how will this be priced in on tuesday? chris: you have to think the japanese stock market is going to sell off significantly if all of the news we are hearing so far continues as it has been going, especially if the trade talks are canceled for this week, and it looks like tariffs are going to go up on chinese imports. japan has been particularly vulnerable. we have seen japanese exports failed to recover, even after

some bottoming in the chinese growth rate. there has been no recovery in japanese exports. for that matter, korean exports have been particularly week. with the yen rising, with signs of the trade war may be back on, the japanese market will come back to a real thud, i anticipate, tomorrow. shery: we are seeing wti falling more than 2% at the moment. how much does this have to do with demand concerns as we see renewed trade tensions? chris: we saw some news from saudi arabia that they were going to cut prices on june exports to the united states, which had already given the oil market a negative tone. s aregain, if trade tariff going back on, if trade volumes are going to be hit, there is

less demand for basic commodities, including crude, so there will be a significant hit to an oil market that has been going quite strongly over the past few months. bloomberg's managing editor chris anstey joining us from tokyo. let's get the first word news with su keenan. su: we start with north korea. reports from that country say kim jong-un personally oversaw a live fire rocket test that have included first ballistic missile launch since 2016. he watched the launch of multiple guided weapons into the sea off the east coast. president trump brushed off the news, saying kim does not want to break his promise on denuclearization. today u.k., theresa may saying

to be rewriting her brexit withdrawal bill to clinch a deal with the opposition. sources say the new clause would keep the in the eu customs union, guaranteeing no checks on goods crossing the border. demand, buty labour one senior opposition figure says he doesn't trust the prime minister. >> no, sorry, not after this weekend when she has blown the confidentiality she had. i think she has jeopardized the negotiations for her own regional protections. and the comelia, down to the election is underway with 12 days to go. health clear and climate change --health care and climate change has the opposition going to take australia forward with purpose. a new poll suggests prime mr. tony abbott could lose his seat at the election. it chose him trailing the

independent by 56 point to 44. 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 su keenan. this is bloomberg. an update onhead, the world's largest exercise in democracy as india enters the fifth phase of voting. we will be live in new delhi later. shery: a look ahead to a big week of central bank rate decisions. this is bloomberg. ♪

paul: this is "daybreak: asia." shery: this week will put central banks to the test as a speculation builds for a global shift to easing. it's still a close call for the rba. what is on the pressure for the

governor to act? sophie: subdued inflation is among the factors that could encourage the rba to cut rates. jp morgan said the deterioration in core inflation warrants a more immediate policy response, as you can see on this chart. core inflation for australia in white, cash flow the line in blue. bank ofalaysia, malaysia stoking speculation for an easing, trimming its forecast in march to a rate lower than the government projection of expansion for the year. 25lation fueling bets for a basis point cut. there is still upside risk to inflation with oil prices trending broadly higher this year. when it comes to the philippines, bsp governor has said easing is inevitable and it is a matter of timing.

hold byeconomist bloomberg see the key rate at 4.5%. lower than forecast growth could tilt the policy board toward easing this thursday. inflation expected to moderate to below 3%. the question with be when a slowdown in consumer prices will be enough to cu rates. shery: is here with the philippine central bank governor has to say about their push to ease monetary policy. year, two be a years, that is our target. we know our job is not done. i think one of the reasons why we got an update is because of the structural reforms we have

new economicof the statistics. we have done a lot of reforms. we have strengthened the central bank to deal with new challenges. we have nationalized the system, --ch was hanging as far back national payment system, so tax reform was also part of the structural reforms. and nobody has been urging us to do this, we did it on our own. program,have an imf there is nobody telling us what to do. it is only fair we get an upgrade. be possible,uld in one year? >> we have to go from stable --

publicly. does it still reflect true value? >> it is stable. got a hefty we international research -- more important, 82ths billion u.s. dollars. we have a constant inflow of dollars. outsourcing. yearsly in the last two we had foreign investment. confident that if we get enough dollars to support --

we are not anticipating, by the way. our participation in the foreign exchange market -- >> given the calm stability in the currency, does it make sense to build down? what do you do with it? get minimal interest rate. i think we are happy where we are right now. more than seven months of import. the rule of thumb is three months. for emergingk markets over now that there are some signs there is stability in the u.s.-china trade war? >> i cannot speak for all emerging markets, but as far as

we are concerned, we are ok. for example, our that to gdp ratio -- debt to gdp ratio is around 40% and declining. >> so you are comfortable. >> very comfortable. paul: that was so looking's central bank --philippine's central bank governor. the philippines just one of five asia-pacific central banks this week. here in australia we have the rba moving as well, or potentially not moving. really on the horns of a dilemma with their dual mandate. >> the key question in my head is how they will balance labor market data, good jobs numbers in march, against a very obviously week cpi number we had for the first quarter.

it will be interesting to see how much they attribute that to the fuel price movements we have haven't -- we have had, oil prices already unwinding, how they stack that together and signal or they go in the second half of this year. paul: this development this morning on u.s. china trade, this is something the rba mentioned in the past. is it going to be a factor? sarah: certainly. because it is a holiday, we will not get much insight as to what sort of response is going to be in terms of direct movements for trade negotiations. i expect them to mention it for sure. shery: despite the fact that we have seen the chinese economy stabilize in recent months, we got a disappointing surprise when it comes to the pmi numbers we got last week. this chart on the bloomberg

showing how the manufacturing pmi in china unexpectedly disappointed in april. is this going to be a concern in the future for the chinese economy and for the asian region as we go forward, and perhaps trade tensions could get worse from here? sarah: it certainly is. i think we can be somewhat reassured by the fact that the authorities in china are taking action this year. if we saw a deterioration as a result of escalating trade tensions, or that the economy was not performing, we would expect them to step in and put further stimulus in place to support growth. certainly it suggests a bumpy path in the near-term. we will have to wait until we get more details about what president trump's comments mean about the outcome of trade

negotiations between the u.s. and china, and the chinese authority's response. of course china is important within the asian supply chain. it is a downside risk for the entire region, not just the chinese economy. shery: how much is chinese stimulus helping the asian economy as a whole, including australia? we have seen the aussie dollars struggle, copper prices struggle as well. given the nature of chinese stimulus has changed from the past. sarah: for the broader asian economy, looking beyond australia, it has been supportive. we have seen indicators across the region start a turnaround in the last month or so. that is related to the china story. the florida t -- the slowdown and thes arrested supply chains are helping the region more broadly.

in terms of australia specifically, that at least partial shift away from stimulus toward traditional infrastructure investment spending, that means the positive impact is perhaps less than it has been in the past. in terms of the aussie dollar, prices have been quite supportive. we are seeing a playing off of the push and commodity prices against weak domestic data. we have held around 71, 70.5. we have not gone through 70 u.s. cents. to me, that is because we have supportive commodity price movements against disappointing domestic data. paul: there are a lot of bullish calls about the aussie dollar. those headwinds seem to keep piling up. callve the rba potentially ing as well. are those calls overcooked, do

you think? sarah: they are putting a floor on the currency, certainly not breaking out from it either on the upside. what will it take for the markets to go through that floor? perhaps it is a cut for the rba tomorrow. that will signal to markets there is a real concern about the domestic economy. on the other hand, they will probably stick where we are. in currency terms, sticking like 70.5 band. 71 to paul: thanks very much for joining us. let's get a quick check of the latest business flash headlines. it is increasing the cash portion of its proposal to 78% would owe chevron for their existing deal. tomore than a 20% premium

rival chevron's bid. occidental has agreed to sell anadarko to four african nations. shery: westpac is trying to cut costs amid concerns of the australian economy. targeting a 1% saving in expenses as opposed to last year, and cuts of 250 million u.s. dollars in productivity after first-half profit came in more than 200% lower than last year -- 20% lower than last year. westpac says it is in a difficult commercial environment for banks. paul: boeing is under renewed fire from regulators and pilot groups after admitting it knew months before the crash of a 737 next jet that its alarm system was not working properly. however the plane maker did not share its findings with the faa until a lion air plane went down in artesia -- in indonesia in

october. coming up next, chinese markets reopen after almost a week of holiday hibernation. we will look at how investors will react to president trump's threatening tariff tweets. this is bloomberg. ♪

>> this is daybreak asia. with thesu keenan first word headlines. china will have trade talks with washington. that is after president trump and pence will pop-up tariffs on a range of goods from friday. the president says he is not satisfied with the trade talks and that tariffs on $200 billion of chinese products will increase from 10% to 25%. haveou and bangladesh launched a widespread relief operation after fannie left

damage long the coast in bengal. -- 30 killed in india and bangladesh. a super cyclone killed 10,000 people back in 1999. more than 40 people have died after a passenger plane caught fire upon landing in moscow. --s just made an emergency just made an emergency return and a hard landing prompted the fire. airport officials have confirmed that 41 people were killed. king has been formally crowned more than two years after he took the throne after the death of his father. three days of elaborate ceremonies cosmo dinardo million dollars. awaitingis still

official results from that inconclusive election. the cable is many statements about that in stark contrast to his father. how do more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. -- oilprices are down prices are down, the chinese yuan is down. u.s. futures are down. sophie? you watching, phie: aussie shares are extending declines for a third straight session. banks are rounding out a disappointing earnings season. kiwi stocks are extending lawsuits. japanese markets are closed for the long weekend. nikkei futures are being traded in chicago. there are steep losses of 2% a month to these trade was.

they are flipping the boards. the yen climbing to a five-week high. the aussie is extending declines. as 1.25%. most since 2016. pba is noting that the metals are the most at risk from the u.s.-china trade went. watch out for the aussie dollar. we'll check how australian bonds are gaining ground, a 10 year basis point.g the three year yield has fallen below 1.25%. fragile chinese markets will return from a three-day break later on. let's discuss the outlook with malcolm scott and our global markets editor, adam. what are you watching, adam? adam: think about how quickly this has turned.

that is what you are seeing and investorst reflect. all of a sudden, as investors have been building up to this idea that we will get a deal they wouldeek, that iron out some of the key, concrete things, that has all gone out the window. you have seen fairly pronounced moves in currencies. clearly, the chinese currency trading opsware has been printed been hitg offshore has pretty hard. we will see this as we get to the china open, a lot of pressure on equities. the first things investors are doing is assigning a little more risk to equities. the risk premium in equities has just gone up over the weekend. what that will mean is china markets get up and after a few days of holidays. what you're getting for your earnings for chinese shares is looking a little more under threat now that the trade tariff

tensions have wrapped up again. all, big change of sentiment. it means people are reassessing the situation. backse markets are getting in, there has been a little bit of domestic flow in terms of news. nothing is setting up the core and getting people upset. >> malcolm, i want to bring you into the conversation. it has all changed dramatically in the space of a few hours. maybe this is a negotiating tactic from donald trump. the chinese side says they may call off the talks completely. the yuan has fallen more in more than three years. where do you see the yuan heading from here? malcolm: we have already seen the australian dollar and what it has done. as adam was saying, markets had built in some sort of deal. this was meant to be the week that by the end of the week, it and take a big

delegation. 20 and of the week there was going to be some sort of framework. now, a couple of tweets from donald trump and all of a sudden that does not look quite as certain as it was. these have been the two defining .hings for markets the second one is up in the air. we have the wall street journal reporting that the crew may not go. they are considering pulling out and they don't want to be negotiating under the sort of threat. there will be no deal. the rhetoric from the trump administration had been talks of regressing. even trade talks -- hawks had been talking about how far they had come and how close they were to a deal. does donald trump really want to kick this off and his claims to

have that strong economy threatened by a deepening of the trade work? -- thee chinese side, it economy is starting to stabilize. to they really want to have this? there is a lot of logic for both sides to come together. mention, japano is still on that very long extended holiday. we talked about some things that might happen. we have seen some moves in the end of it. japan, if that is your job, what are you doing today? adam: it is not a golden week anymore for japanese traders. as you said, the move has been strengthened. this is as of monday morning. i would not be surprised to see traders asked to come back to their trading desks to sort this

out. we saw a very pronounced move in the nikkei. they moved on the order of 2.5% lower. setup when cash equity market start on tuesday is that prettytiments are fragile. you have to be alert as a trader. paul: thank you very much to both adam and malcolm. coming up, oil is under pressure thanks to new trade tensions. we'll get the outlet from jvc energy next. this is bloomberg. ♪

>> this is daybreak asia. shery ahn in new york. paul: i am paul allen in sydney. it has been quite the morning.

we have between from donald trump threatening to more than double tariffs on imported chinese goods with more than $200 billion. he is not happy with the trade talks. china responding. reaction.ry profound we have markets in australia sliding. currencies are sliding, the yuan strengthening. texas is slipping right now. let's get into this a little more with our next guest. this is the founder and chairman of the consultancy firm jvc energy. let's start with the oil price and the impact of these trade developments. where are you expecting it to hit from here? we all see that not only can trump tweak, he can send a quick

-- tweet, he can send a quick message. it doesn't change the tone of what everyone expects to be a difficult week ahead of us. the market right now is going by the news. we have seen oil priced in now. what comes next. the market is in a wait and see position. paul: another factor of all of this is the end of waivers on the iranian oil sanctions. do you think that will affect prices vary much -- very much? considering the grade of oil that iran produces? johannes: they have been bringing the prices up. we have seen the prices softening of it. the market has sufficient

supply. plus, including russia, they have enough ammunition to supply more barrels. of course, that means a big stress to opec. i is a member of opec. -- iran is a member of opec. we don't know the reaction of iran. we don't know how many battles they can sell into the market. right now, we may expect them to sell a million barrels. opec is up in the market to look fairly stable. we would assume with the lack of medium style barrels that we usually see coming from iran, the market has a normal spread. they are all looking for those barrels. ifgeneral, the question is iran will stay put or will they

start barking? shery: it is not only about the iranian sanctions and iranian oil. we are hearing at this moment that the u.s. is deploying a strike group to send a message to the iranian regime. this is according to john bolton. they have not responded to any attacks. how much does this spread uncertainty in the middle east that could affect pricing? johannes: you may have noticed that they have established what we have called the middle east security alliance. it is like an arab nato. the objective is to form a coalition against iran. adding a strike force is trying to heat up a little bit of tension here. depriving iran from the ability

to sell its oil, basically it with a military strike is trying to provoke iran. the question is if iran will sit out trump as they are currently trying to do. inflamed?ebates the all of this will lead to more tensions. all of those tensions have the potential to raise prices. shery: what about u.s. oil production? plungedupply has really . that is the line in blue. the daily output of the u.s. has continued to rise steadily. how much are investors focused on u.s. drilling instead of the geopolitical tensions in the middle east? johannes: the u.s. situation is very successful. see anothert, we 1.4 million barrels of oil supply coming in this year. if you look under implied

production in the u.s., it comes close to 30 million barrels. at the end of the year, we were at 12 million. all of that is something that is in the pipeline. these are not yet officially confirmed the numbers. the pace of growth that the u.s. is able to churn out is huge. strugglehe underlying that opec is facing. they are trying to maintain prices relatively high. by having rises high, they give u.s. producers devoted to hedge their production forward. seen a week ago, this as enough to allow this just requires the us but is a hedging on one day. struggle because they have to cut the barrels. that is where the struggle,

comes in with -- struggle comes in with the alliance between opec and russia. they are more reluctant to allow prices to go to high. -- too high? shery: what is the future for opec? the u.s. has shields dominance growing. johannes: in the next three years, their share is going to decline from 41% to 38%. keep onl have to cutting to make more room for u.s. production growing. at the same time, when oil demand is softening, the demand growth is not that robust. we project this year cause meant to be below one million barrels. all in all, the market is going to be continuing to see opec management and the requirement for opec management. that will be a tough job. have the latest news breaking out of occidental saying that

they have delivered a revised this company.y they are offering to pay $76 per share. they will pay the breakup feel from anadarko in order to win this bidding war against chevron . how important is this deal for them? important is the premium base for all of these producers? johannes: it really has unlocked a lot of supply. the deal we are seeing right now that prices where they are right now, the big oil prices have enough ammunition in order to go for not only investing in a string but investing in takeovers and paying a premium to get that done. all of that is showing you that the market is very profitable. oil business is good. you can see that down the line,

the ability of opec to maintain a stable price is going to be harmony -- bys this harmony in the opec organization. .hery: that was the founder if you missed out on any of this conversation, you can go to the bloomberg or tv . you can dive into any of the securities of the bloomberg function we talk about. you can be part of the conversation by sending us instant messages during our shows. this is for bloomberg describe her as -- subscribers only. check it out, this is bloomberg. ♪

--ry: this week and india india how the largest democratic election. her southeast immigration reporter wrote that this is a critical phase pharrell gandhi no -- gandhi now. >> he has held this date since 2004. before him, his mother, father and uncle also held it. gandhis a lot to the family. shery: where has he been

focusing his campaigns of our -- campaigning so far? >> he focused his campaigning here. he has been campaigning in his own state over the weekend. in thelso campaigning eastern state of west bengal. only won two in the 2014 election. they are hoping to increase these at this time. special are very collections given that india has a very young demographic, there involved in social media. we just talked about the effect of social media on the election. tens of millions are now online.

a lot are impacted by social media use. this is a powerful body that uses -- a powerful body effectively uses social media. this will determine who wins the election. shery: what are the key factors affecting this election outcome? >> social media plays a huge part in the election in india. in particular, the messaging app "whatsapp." we see a lot of violence and rumors being spread on whatsapp. the social media giants like facebook have been trying to work out a way to control what is going out to the masses and making sure that their messaging apps and social media platforms thissed -- are not used to i violence or spread fake news. they have contracted out to private companies to see if they

can monitor the fake news and take it down when it arises. with millions and millions of people on the internet and rumors spreading so quickly, i think they are fighting a losing battle. shery: a difficult issue not only in india but worldwide. that was ruth. let's get a quick check of the latest business flash headlines. warren buffett is wrapping up his criticism of private equity firms, accusing some of being dishonest about how they calculate their returns. he says some manipulate the way they presented their treasury bills in order to appear -- improve their appearance. he said if he were running a pension fund, he would be very careful about what he was being offered. deal of is weighing the an initial public offering on its $100 billion mission fund. a handful of figures have discussed the idea. this would give investors in the

fund a way to cash out their stakes. delisting rather than a traditional ipo is under discussion. standard chartered remains bullish on investment in iraq. signing dealse worth half $1 billion for power projects there. they should be working with two international companies. these deals should be signed this year or next. they signed a deal with ge for power projects worth near $600 million. the chinese markets reopen in about half an hour. this is after the labor day holidays and after trade tensions are already affecting the yuan. sophie: they will kick off a fresh trading month after a rough april. yuan is affected the most

since the october. -- since october. this is the most since january of 2016. putting the board, it won't be a quiet week for chinese investors. we will get another private survey at 9:45 a.m. this morning. this has been modified sing a family. we will round out the week with data due on thursday. now a check on what stocks to .atch at the opening they raised the price target by 9%. this sizes the carmaker operation -- the price target was boosted to $445. -- shery: thank you for that. if only handed over to bloomberg markets asia, a quick look at how markets are trading.

we are seeing this falling for a third the second of session, down 1%. we are awaiting that rate decision tomorrow. most to leavect it at 1.5%. kiwi stocks are losing ground. this is for a second consecutive session. we do have the kiwi central bank also making a great decision on wednesday. they are expected to cut the official cash target to 1.5%. u.s. futures took a big hit after president trump said that he will raise tariffs on chinese goods and we are seeing the chinese yuan also at the lowest level since january of 2016. that is it from daybreak asia. ♪

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stephen: and stephen engle. yvonne: i'm yvonne man. david: i'm david in less. nerves are dangling. president trump threatens more tariffs and beijing may cancel talks. yvonne: the mood is turning increasingly sour despite recent trade optimism. slightly lower.