>> good morning. we are under an hour away from the australian market open. shery: i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: tension rises as washington confirms new trade tariffs this week. china has reneged on some of its commitments, say the u.s. behind the smiles, big differences remain. china says they will not rewrite

laws. increasingly really -- worried about corporate debt. lending standards are slipping. a big guestve coming up on daybreak asia. the dallas fed president robert capron -- robert kaplan will be with us in about an hour. let's get a quick check of the u.s. markets. futures falling 6/10 of 1% after we heard from ambassador lighthizer confirming that tariffs will go off on chinese goods on friday. secretary mnuchin also said the direction of the trade talks will return over the weekend. in the regular session we saw the s&p 500 falling as much as 1.6%. it closed down .5%, reversing some losses. but the biggest hit sectors with those affected by trade like tech companies that have exposure to china, not to mention machinery companies as well. the nasdaq was down .5% and the

dow fell .25%. we have to wait and see what happens with those trade negotiations. let's see how we are setting up for the asian markets. back in full swing with japan and south korea online. given thetures are green light for stocks in seoul and sydney with kiwi shares adding .25% after a two day drop. the start of tokyo trading may be clouded by geopolitical concerns after the large break. nikkei futures continuing to slide. we may anticipate more pain in chinese stocks after monday's steep selloff as we see extended selloffs -- losses with higher tariffs confirmed for china on friday. we will have policy decisions from australia as well as malaysia with some expecting rate cuts from both central banks. inflation data as well from the philippines today which may reinforce using bets later this week.

paul: thank you very much. let's get the first word news now with jessica summers. jessica: treasury secretary steven mnuchin is refusing the latest attempts to obtain six years of president trump's personal tax returns, writing to the house ways and means chairman, he says the request quote, lacks the legitimate legislative purpose and therefore he is not authorized to disclose the requested documents. democrats could now pursue more forceful mester -- measures like a subpoena. the federal reserve is stepping up its warning about corporate debt. 20%market for that expanded last year and lending standards are continuing to slide. businesses with the biggest existing debts are also the ones taking on the riskiest loans.

it also adds protection lenders are continuing to erode. in indonesia, growth slowed in the first quarter as global slowdown hit exports. in marchfraction of 5% from a year earlier. that is lower than the 5.2 percent median estimates in the bloomberg survey. asia's -- ittheast has been around 5% since 2016, well below the 7% target. the pilot of the plane that caught fire on landing in moscow says the jet was still heavy with fuel as it came down. the crew followed procedures with lending with excess weight but did not dump fuel, which is common practice. the pilot also says he does not know why the plane hit the runway so hard. initial investigations suggests the jet lost communications when it was hit by lightning soon after takeoff. global news 24 hours a day on

air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. paul: thank you. let's get back to our top story. the trump administration says it will raise tariffs on chinese goods on friday, accusing beijing of backpedaling on commitments during made during trade talks. our trade reporter and our china correspondent are both tracking this. you were at the treasury department briefing. what did they say? ere has been a clear turnaround in recent days in the chinese position in their mind and that they had seen the chinese really try and renegotiate a number of positions that they had agreed to before hand. one of the big ones we are told neither secretary steven mnuchin nor ambassador robert lighthizer

would say what the reneging happened on what we were told one of the big issues was a move to try and enshrine some of the commitments from the chinese in law and the chinese trying to backtrack on that and saying they would prefer to do it as a regulatory movement said. that, for the americans, was a dealbreaker. that is why we are going to be heading to tariffs on friday. shery: so far the reaction from china has been pretty measured, at least two president trump's tweets. what are we expecting now? tom: there is an argument that the chinese were caught flat-footed once again by president trump and these tweets over the weekend. we had that press conference yesterday beijing time where officials said yes, this delegation from the chinese side would still be planning to go to washington to continue talks. but they would not confirm the dates and they would not confirm that the vice premier will be the person leading that delegation as had been expected. that is a key thing to watch,

whether that delegation ends up in washington wednesday or thursday this week, and whether those talks continue. and if we do get these additional tariffs as trump and his team have said, raising 225%, then how do the chinese respond to that? 25%.said the -- raising to room to not much more impose further tariffs. they could just raise the level. the response from the chinese will be crucial in terms of talks and in terms of how they respond to these additional tariffs. shery: how much are we expecting the u.s. delegation to budge if china is not expecting to move? can we expect u.s. to renegotiate some of the deal? shawn: the message was very clear from ambassador robert lighthizer has been meeting these negotiations the last few months, which is they have hit a redline. there was not much more they

could do. they thought they were on the road to what he called a significant deal, what steven mnuchin and called a historic deal. but they really felt like the chinese had walked away from that. we have course do not know exactly what is happening behind closed doors. the chinese may have a very different read on that. we are not hearing from the chinese right now. ambassador lighthizer did stress that the u.s. is not walking away from these talks, that it expects to be sitting down with the chinese delegation on thursday and friday, that it him to lead that delegation, but it is hard to see how gianni's -- how the chinese will come with any commitment faced with these tariffs that would go into place on friday, the first minute of friday, as robert lighthizer said. that is a provocative move by the u.s. the chinese in the past have

walked away when they have seen things like that. it is hard to see a road back to a deal. that is a striking turnaround from where we were a few days ago, we are really the expectation and markets and across washington was that we were going to see a deal close by the end of the week. reaction one equities markets was quite instructive as well. tom, i want to point out that after a pretty nasty start u.s. equities clawed back. the small-cap index actually ended up positive. a different story in china. chinese stocks having their worst day in three years. things sete here are for more stimulus. tom: it is very hard to see how the selloff in the chinese shares does not continue. today we saw the national team stepping in on monday but they did not see through very much. they did not seem to have much

impact, buying certain sectors like oil and energy. timing have interesting around this targeted rrr cut for some smaller lenders. policies, certainly that is one to watch. bloomberg economics says if you do not get a trade deal in the near term, that you can expect to see -- if you see additional tariffs you can see a ramp up in stimulus from the chinese side. the policy response is certainly want to watch and how aggressive they will be. shery: tom mackenzie in beijing and shawn, thank you. coming up, we assess the trade war's implications for marxist -- markets. find out why they are planning for more market turmoil. paul: later this hour the fed issues another warning about corporate debt which is reaching worrying levels. this is bloomberg. ♪ bloomberg. ♪

paul: we are counting down to asia's first major market opens this morning. futures higher by about .4%. they change before the open. big day in australia. the reserve bank of australia reporting. think they will be a cut to the cash trade. japanese markets will be playing catch-up after the golden week break. sophie is here to check out the lay of the land after an epic holiday before the open in tokyo. sophie: an epic holiday indeed. asian stocks gained footing after monday's selloff. trade talks are set to continue despite tariffs threats. japanese traders return to their desks. we are watching for tech shares to play catch up.

flipping the board we are looking for auto to move after toyota's u.s. sales mr. for april. carmakers will also be in focus with yamaha expected to report soft earnings and honda's reports expected later this week. plenty of other reports to react to including sony. switching out the board. since the company reported results april 26. back in the black but they cut profit forecasts after a quarterly loss. flipping the board, softbank is also on the radar. on friday asy 5% po considers a report -- an i reportedly or a direct listing. they have listings -- earnings on thursday. shery: we know global markets tumbled on rising trade tensions between the u.s. and china.

let's discuss all of this with wells fargo asset management investment strategist brian jacobsen. great to have you with us. we have seen the u.s. markets tumble at the open. but i have to say, they recovered much of those losses throughout the session. how long will this resilience last? brian: hopefully this will continue through the rest of the week. we really do need to see who it will be attends from the chinese side for these trade talks. are they changing people who will be attending? does it change the tone? last night when i saw the report come across as far as what president trump's tweet was that caught my attention, it made me wonder if he is just posturing for political reasons for his base in the u.s. or resist to a pand almost kind of cast all over the negotiations. i think the market initially

took it as though it was kind of a serious statement of intention for increasing tariffs on friday. but then as the day went on i think people are beginning to think we have not heard much else and the chinese have not canceled the trip, so maybe this is more posturing for domestic political reasons. shery: it has been really interesting to hear investors and analysts be surprisingly optimistic about the latest headlines. we have seen some sectors take the brunt of the fall, especially when it comes to the tech sector, which is both the china of machinery makers. are there some sectors we should be more cautious about as we go trading into this week, next week and we do not have more certainty on that potential deal? brian: i think you have identified the high data plays to the tone of the trade talks. it would be technology, especially semi conductor chips. but then also you would have with the material sector or

industrial materials as far as anybody who exports machinery to china. but then look at what happened in the agriculture market, soybean prices dropping dramatically on the news. there are a number of hotspots to really watch that are very high data plays on the tone of trade talks. favoring aually been few of the more defensive areas. not necessarily because we thought the trade talks would fall apart. we have actually been optimistic that we would see a resolution here. it is just that where valuations are, momentum seems to be waning a little, especially with something names that we have been biasing our portfolios more towards value-oriented areas. imagine your consumer staples, parts of health care, areas like that. we just see a little more value there. we continue to see these pockets of turbulence. see the 2, and we did

00 end in positive territory. did very well when the trade difficulties began last year as well. what other areas are you seeing value in? health care, some defensive plays. is there anything else you are looking at and this kind of environment? brian: my team just had our global portfolio solutions meeting where we take an assessment across asset classes about where we see the best opportunities and the biggest risks. within the equity space, which i think most people are most interested in, we tend to favor more domestically-oriented names for a defensive position, or if you can get yourself away from the u.s./china diad and think more in terms of the search for value opportunity in european equities, which we actually think have more value characteristics and perhaps momentum is beginning to turn more in their favor. but on the fixed income side, maybe notarea that is

as much fun to talk about in portfolios because you do not see tickers for fixed income instruments on the bloomberg every day. but we like areas like contingent converge about bonds, coco bonds issued by european banks. we see there is some good value there, strong fundamentals but a great way to generate some sustainable and substantial income. u.s. high-yield, we also think there are some good opportunities although we are not entirely enamored with scraping the bottom of the barrel of that particular bucket. but across asset classes generally speaking, we still say things as being with plenty of opportunities, but you have to be more careful in picking your spots. paul: we are also going to be speaking with robert kaplan in the next hour, the dallas fed president. do you have a feeling that the cycle of rate increases seem to be over? how long is this dovish tone going to persist, or do you

think the fed is happy where things are at the moment? brian: in my mind i think one of the biggest risks, ignoring may be the u.s./china trade relationships falling apart, i still think that is a low risk event. i think the biggest risk is another change in tone coming out of the federal reserve. if we see a shift in the momentum, we know the first quarter growth rate numbers were fairly muted. if we see that turn a little maybeonstructive, see inflation numbers firm a little, we do not think we are necessarily anywhere close to surpassing the fed's target, but they can change their tone very quickly. just as chair powell changed to january 4 when he spoke in atlanta and that triggered a massive rally in risk assets. if he suddenly changes his tone to be more hawkish, that can push things the other direction. we think that is one of the biggest risks, that better data could beget an mildly more hawkish central bank, which then

could induce more volatility. but for my mind i think that they should be on hold. i think that way but -- maybe we are done with the rate hikes. some fed officials have been talking about let's get another in this year and another next year, but i think we are at neutral and really, they may as well just say we stuck the landing. they did it. they hiked enough began it began to hurt, and i think they run the risk that if they hiked anymore that they would actually do some damage to the economy. shery: thank you so much for joining us today, brian. we have a big interview later this week. we will be joined exclusively by jp morgan ceo james diamond on wednesday. this is bloomberg. ♪

paul: petroleum has cleared

occidental takeover superior. that will allow chevron to either boost its offer or walk away with a $1 billion breakup fee. our reporter is tracking all this in houston. take us through the latest developments. rachel: we just got word right going forwardare with the occidental bid. it basically gives chevron the opportunity to walk away because they are ditching the original deal or they have until the end of the week to sweeten their somethingcome up with that the board might think is better. shery: over the weekend, total coming into an alliance with occidental now offering to buy anadarko's african assets. does this alleviate some concerns over debt? it goes a long way for

some investors because a lot of concern about if you can find buyers for those assets, and oxy said they wanted $10 billion to $15 billion, a big chunk. shery: what does it mean for chevron? you told us they could come back with a sweetened offer within the next four days. but this was a bid for the basin, to grow more sensibly in the region. rachel: and we know that chevron and the ceo are very committed to staying on the message of staying disciplined. on the earnings call a couple weeks ago the theme was definitely we want anadarko, but we do not need anadarko. they set themselves up to may be back away. but now i think that nothing can be read -- be predicted. i think it is too soon to say that we will see chevron come back. shery: in the meantime while

this drama was playing out we saw carl icahn getting in the mix and getting a minority stake in occidental. are we going to see more of these big-time deals we saw in the past in the oil industry? rachel: i think maybe the thought there was that carl icahn would push for a shareholder vote. one thing occidental was able to do because of an investment because -- from warren buffett was eliminate the need for that vote. it willnd of the day not generate the same kind of shareholder contention we might have seen if ultimately they needed to get there investors to sign onto this. shery: rachel, thank you so much for joining us. let's not get a quick check of the latest business flash headlines. up, are trying to clean leading to restate earnings for 2016, 2017, and part of 2018.

they found evidence of employee misconduct. they say the impact of earnings on shares should be less than 2% for each year. warren buffett says he remains confident in the country. livestreamereogame has put ip plans on hold following president trump's threat to raise tariffs. they planned to launch a roadshow in the u.s. on monday but they may postpone by at least a week. tencent and has aimed to raise half $1 billion in share sales and starts writing by may 16. apple will unveil a range of new apps and upgrades at its annual software conference next month as it continues to dance between at makers and simultaneously competing against them with its own features. it would include core iphone apps like maps, reminders, messages, and new apps for the apple watch to make it more independent from the iphone.

coming up, japanese investors will be racing from backlash as markets returned from the golden week break. a look at the prospects. this is bloomberg. ♪ ♪

shery: -- jessica: the u.s. will raise oniffs on chinese goods friday, accusing beijing of backpedaling on commitments made during negotiations. the trade talks will continue, though. a chinese delegation is still set to visit washington thursday and friday. trade representative robert lighthizer told supporters that significant issues remained unresolved, including whether tariffs will remain in place. iran is signaling it may scale back some of its commitments under the 2015 nuclear deal in response to growing pressure from the u.s. a senior government official says tehran is not plan to abandon the accord as president

trump has, but may make minor reductions to some of its obligations. the official adds that eu leaders have been informed and the president will make the announcement monday -- wednesday. the lira tumbled as turkish -- --key's top electoral badr body ordered a revote. president erdogan refused to succeed that his afk party lost. the lira fell more than 3%, reaching its lowest level in seven months. a former goldman sachs banker has been granted bail and placed under u.s.. he arrived monday morning and appeared in federal court the same day. he pled not guilty to charges he broke anti-bribery laws and

conspired to launder money that was embezzled from the fund. a new united nations report says nature is in more danger now than at any time in human history and extension -- extension is looming for more than one million animals and plants. human behavior is a major cause. it also says many species face extinction within decades, on land and in the ocean. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. look to whatake a we are watching at the tokyo open. seems like a lot of -- long time. let's get over to sophie. sophie: we are about a quarter of the way to the earnings

calendar and we can finally gauge reaction to some results that dropped before the golden week break. bellwether posting a miss in earnings. profit may decline 15% this year as demand for equipment and china and southeast asia slows. murata also issued a soft outlook. highlighted plans to send ¥300 billion to boost output. ntt doccomo is projecting an 18% tumble despite beating last year's targets. flipping the board justice morning an industrial plant player projected a wider than forecast loss, if you hundred billion yen, citing the if -- the company has cut its operating loss forecast for the full year. paul: thank you very much. let's get more on japan's markets and bring in bloomberg's

asia managing editor. what is in store for japan today? well, it looks like it is going to be a very on golden -- back for welcome japanese traders after their prolonged to break. japan was off all of last week and yesterday as well. they are going to have to calibrate, recalibrate pricing for the declines that we saw across asia yesterday and indeed further declines, somewhat modest on wall street, but in u.s. stock futures as well. so, it is hard to see anything but a day in red for japanese stocks today. but the one kind of saving grace for the nikkei and the topix is that if you look at the japanese yen, it has not really gained

much of a haven bid off of this flareup in u.s./china trade tensions. the yen is only trading about one yen stronger against the dollar than when japan went on holiday more than 10 days back. an this is i think underappreciated story in global financial markets, this failure of the yen to strengthen despite a number of factors that should includingme oomph, policy differences between the bank of japan and the federal reserve. from a japanese stock investor standpoint, the fact the yen has not appreciated that much may help limit losses a little bit today. shery: why is that? is the japanese yen losing its appeal as a safe haven now? chris: well, it is very interesting. yenink that certainly the

has all of natural haven qualities that it always has. the large japanese net creditor position, the continuing current account surpluses that japan runs. but what is underappreciated, i think, is the outflow of capital from japan that is putting pressure on the yen to depreciate, countering all of that haven demand and current account surplus benefit that the yen would normally get. japanese companies are buying overseas targets at a record pace. japanese firms recognized that the source of growth is really not going to be japan because of demographics, because of the aging population. so there has been a massive overseas investment drive. it hits the headlines when we japaneseajor big deal,

retailer buys a 2 billion-dollar dollar american tomato plant in kentucky. but we forget week to week that this is a dynamic that is affecting the exchange rate as well. chris, after the u.s. close we saw some stocks recover some of the losses towards the end, but then after we had that media briefing where we got news on the future of u.s./china trade talks. we saw that big selloff in china monday. what other markets are you watching for reaction? chris: well, what is kind of interesting is the pattern that we have seen over the past 24 hours or so is very much the pattern that we saw last year during times of trade tensions. the asian stocks and in particular chinese stocks tend to get hit the hardest. and the u.s. tends to get not as bad an impact. europe was kind of on the

sidelines. you have had a couple of guests the past couple of days talking about this. europe seems perhaps a value play right now. the economy is coming back a little bit, so you might want to check out europe. but i think the main dynamic is that the u.s. continues to outperform china and asia during times of trade stress. shery: thank you so much for that, chris. can add one more red flag to the global central bank's worry list. the fed is stepping up as warnings about the perils of risky global debt. kathleen hays is here with the details. how much of a surprise was this? kathleen: they started issuing a financial stability report last year in november. it seems like the level of warning they are concerned about risk has definitely risen since

the end of november. i want to jump into the bloomberg library and take a look at a chart. they did say in spite of this chart i am showing you about u.s. corporate debt, beware credit markets. the ratio of debt to gdp now at record highs. it comes into a report when they said the banking system still looks resilient. they are not saying things are follow -- falling apart. however, they noted in the report that the businesses right now who have the biggest debt loads are the ones taking on the riskiest loans. banks provide lenders protection against the borrower defaults, but those protections have started to erode. standards for new leverage loans have deteriorated further over the past six months. here is something very specific that shows clearly how they are concerned. the historically high level of business debt and the recent concentration of debt growth among the riskiest firms could pose a risk to those firms and

potentially their creditors, and could i add if they got bad enough, to the entire economy. they have been warning since last year of weaker standards being issued for the leverage loans. clearly they have raised a red flag. and let's remember that jay powell, his specialty when he came on the fed board of governor thanking credit markets, he knows the stuff inside and out. it is no surprise to me he is the fed chair -- paul: in a couple hours we will be speaking with the dallas fed president robert kaplan. he raised the red flag on corporate debt as well. what is his argument? kathleen: interesting. in a special essay last may he went out of his way to tell us what he was looking at, also warning of the risks of corporate debt buildup, nonfinancial corporate debts -- not banks come everyone else -- as the percentage of gdp is higher than the peak it reached

into thousand eight, the beginning of the financial crisis. triple b debt, the lowest rated, 800 million over the 10 year 2.7 trillion high yields from 700 million to 1.1 billion. what he pointed out in that essay is you know how very high levels of corporate debt at the same time you have higher levels of government get -- debt. it is very interest rate sensitive. anything that upsets that could amplify the negative repercussions in a downturn. that is his concern. back in may as he issued that report he was asked about corporate debt and rates and he said this level is one more reason for us to pause and wait and see what happens. a terrific opportunity for us to ask about on that and more just about one hour from now. paul: that's right. global economics editor kathleen hays in new york, thanks. you will be back in half an hour as well to join us for that conversation with robert kaplan. we will be talking about the

fed's warning and policy direction as well. you do not want to miss that interview. coming up before that, we will talk to scott kennedy of csi on why he says china wants a trade deal more than the u.s. this is bloomberg. ♪

shery: this is "daybreak asia." i'm shery ahn the new york. paul: i'm paul allen in sydney. new u.s. tariffs on chinese goods from friday. with us now. is we have this media briefing during which we heard that the sticking point now, china's reluctance to change laws surrounding intellectual property. is this going to torpedo the

deal? steven mnuchin and said it was 90% done. what is the chance of bringing it back before new tariffs friday? scott: i think it is all up in the air. i have long expressed concern the paperwork along this a done deal for too long. i think the administration wants a deal, but they want a good deal. and negotiating with the chinese is hard, and there are still some big issues left on the table, including some of the ones that came up last week regarding laws that china needs to change, enforcement measures and the like. so, these are things which need to be addressed in order to get the deal to the level at which bob lighthizer can recommend to the president to accept them. paul: the difficulties of negotiating with china were brought to light by a guest we had earlier on, a former ambassador to china. he had a feeling perhaps the u.s. side did not have the experience to deal with it.

let's listen to what he had to say. secretarynt trump, mnuchin and robert lighthizer really did not have a lot of experience in negotiating the chinese. they are green about all of this, frankly. my experience is that with china there is a lot of talk, sometimes they will backtrack, sometimes not. you stick with it, you have to be patient, positive, persistent, and after a while you kind of get a deal. paul: so what is your feeling about how the u.s. side has been handling this? i know you have opinions on this, including a theory you described as the crazy uncle strategy. scott: certainly the trump administration has decided that patients with china is not the best strategy. instead what they have decided is scare the chinese with what i call the crazy uncle strategy. the president who has his own analysis of what the problem is and is willing to do just about anything to hurt china if that

will help bring a deal. and he has threatened the chinese and many others and has followed through on some, so he has some credibility with that. we have gone further along negotiations under trump than the obama administration i think. so he has some reason to believe that even though they are naive and young have made progress. he has not been a trade negotiator before. maybe you could say you have beginners on both sides negotiating over the largest economic relationship in the world right now. shery: it seems that with this administration we see a pattern of behavior, with the trump demonstration pulling out of the tpp, the paris agreement, the iran nuclear deal. this optic that the deals with america could be temporary, how risky is that when you are trying to get an enduring trade

deal that will stick for the long-term. scott: you are right. on the one hand, those threats have to be taken seriously and is what has gotten the chinese to the table. but the more time you bring those threats forward, their power is weakened. so the chinese have got to feel even if they made concessions right now, six months down the road,, a year, the trump administration will come back and asked for more. that means you might get a temporary deal, but it will not put the relationship back on an even keel regardless because of this pattern of behavior from the u.s. side. shery: at least for the time being. reaction from the chinese has been pretty measured. they are still planning to send a delegation to washington for the next round of negotiations. how positive a sign is that? scott: that is what the foreign ministry said monday. we will wait to see on tuesday,

really, if that delegation will include him. if it does that is a good sign the chinese will take the president's tweets in stride and see if we can have a serious negotiation. if he does not go, that is really worrying. my sense is that he probably will, but that is the big news of tuesday, is whether he will get on a plane and come to washington. paul: just returning to that original sticking point which the u.s. side says, robert lighthizer says, is there is a reluctance from the chinese to change laws around intellectual property and protection. on bloomberg we ran a story in march describing how the chinese were drafting new laws to do exactly that. what are we to believe here? scott: certainly the chinese did draft and pass a new foreign investment law, but there are other regulations related to protecting intellectual property even further that they need to

address. honestly, given that china is run by the communist party, whether in doing regulation is adopted by the national people's congress or the executive branch should not matter a whole lot if the party itself backs it up. one differences national laws are more likely to be implemented across all provinces and local governments a little bit more easily. but at the end of the day that should not be what makes or breaks the deal. my guess is there is a series of things, this being one of them, that the u.s. is raising. the chinese need to take this threat very seriously. shery: tell us, you are in washington. how much political support is therefore the present posturing at the moment against china? scott: there is not a lot of opposition. even senator schumer on sunday after the president's message said he needs to hold tough. i think what will happen is if

we get to friday and there is not much progress at all and the chinese eventually call the administration's bluff, what happens if we place these 25% tariffs across the entire trade relationship, that will then start generating much more anxiety and i bet you will see a little bit of movement in markets and you will all start going out interviewing farmers and others and that will probably lead to some divide here in washington. paul: you made an interesting point before. even if this is all somehow ironed out we get to that signing ceremony in may we were enthusiastically talking about last week. it is not the end of it. there are lots of other issues. an issue withue, the ending of waivers on iranian oil sanctions. that almost seems designed to pinch china. what was your take on that? scott: all the issues you just

mentioned, whether it is huawei, controls,il, export none of those are going away. i do not think the u.s. is open conflict with the chinese. i think they will be looking to resolve that. the overall relationship within the u.s. and china is in a downward trajectory. the question is could a deal likely -- provide some underlying stability so that we measured,level of reasonable routine measure the way the u.s. and soviets developed it in the 1970's following strategic nuclear talks. i think that is the best we can hope for right now. but even there, given the administration's strategy and leaving uncertainty as a possibility, the chinese might not feel comfortable enough for that to be the kind of relationship we could settle into. shery: always great talking to

you, scott. of course you can get a roundup of the stories you need to know to get your day going in today's addition of daybreak. bloomberg subscribers go to your terminals. also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪ t. this is bloomberg. ♪

shery: let's get a quick check of the latest headlines. anadarko's board is backing a takeover deal from occidental, leaving chevron with four days to boost its own offer or walk away with a $1 billion breakup fee. occidental raised a cash portion, eliminated the need for a shareholder vote, and pledged to pay the breakup fee on anadarko's behalf. it broke up --

a bank missed expectations after setting aside more money than anticipated. -- income of $1450 the average ofof estimates compiled by bloomberg. icici has been accelerating the recognition of stressed loans under the new ceo. let's preview the market open in japan. let's get it over to sophie kamaruddin. sophie: aside from the latest trade lines, tuesday issue -- shaping up to be a big day. on the central bank front there could be a chance for the rba and malaysia cut rates. aussie futures are climbing ahead of that after the long weekend. after being out of action for more than a week, japanese traders see a challenging return as the yen holds recent gains. nikkei futures sliding.

contracts extending monday's decline. some futures coming through in singapore trading. bond markets are back online as well. expected to be firm after the holiday. when it comes to stocks to watch, panasonic on the radar. a near 40% increase from 2018. aheadecom we are watching of its earnings. graincorp. shery: coming up on the next hour of "daybreak asia" we will have in-depth coverage of the return of japanese markets with rogers investment in visor ceo ed rogers. soon after that we will be joan -- joined by robert kaplan. the market open is next. this is bloomberg. ♪

paul: i am paul out in sydney, with the major markets have opened. shery: i am shery ahn. sophie: i'm sophie kamaruddin and hong kong. welcome to "daybreak: asia." paul: our top stories this tuesday, asia looks set to fall as japan returns and u.s. features are sliding after washington confirms new tariffs on chinese goods. big differences remain.

rewritesays they won't bought to strike a deal. shery: the fed is worried about corporate debt. robert kaplan joins us this hour. let's get straight to the market action. asia in full swing. what are you seeing? sophie: japanese investors are playing catch-up. the nikkei 225 opening lower at .4 burn -- down 4% -- .4%. the 10 year yield falling as much as 1.5 basis points earlier. cast treasuries on the mood -- move. hovering around the 2.47% we saw in the new york session. the mood in korea. the kospi back online, off by 1%. some pressure coming through for the cost be -- kospi, off by 1%.

some pressure for the won holding at the 11.71 handle, after falling to a two-year low last week. asx 200 gaining ground, while the aussie dollar is below the 17 mark. over in wellington, the nzx 50, a two-year drop -- today drop. -- two day drop. shery? shery: let's discuss what is happening in japan after they came back from the golden week break. let's talk with ed rogers, ceo and cio of rogers investment advisors . he is on the phone. we are expecting the japanese markets would fall, but we have seen the japanese yen strength in during the holiday. a lot is happens, including the

raising trade tensions. the japanese yen, it's strength not as much as expected. is that helping the equity markets in japan not to plunge as much as we have feared? thanks for having me. the market has opened down. it's not a major down. these are fairly small moves. the negative news on the trade talks, it has been absorbed. you are seeing some small yen weakness. these aren't major moves. market has rebounded note, that was the final and that is where japan has picked up the song, as it were.

shery: it's really interesting with the japanese market, if you take a look at it long-term. we have seen it lag. linee seeing but the white of the top, has lined. what is going on in japan? it continues to be a bit the point -- disappointing. there is a lot of energy around the u.s. markets. most of these things are missing in japan. volume. not a lot of participation, led isthe japanese, is why -- weird that it is a market that continues to lag. paul: if you are looking for

money to work in japan, where do you go? ed: it's a great question. it is toway to address along/-- a d stick long/short approach because of its consistent lag. there are some sectors that are losers, that have significant problems. that is all been well discussed. some of it has not been discussed. the impact of the labor shortages is real. see few years, you will companies go under from a lack of labor. you are seeing a cutback in activity, the hours that the stores are open. real, and it will increase significantly if it is not addressed. there is the ongoing drags in japan. the key one is inflation. the bmg continues to be

heroically optimistic about it. will the 2% target ever be reached? 1.5% range in the current environment is positive news. they set the 2% target, and that is an absolute number. that will be hard to achieve if the rest of the world does not cooperate. seeing a significant slowdown over the last year in china. you are seeing some markets that are critical to help japan reach a high inflationary goal. the rest of the world is not cooperating as much as it needs to. paul: that was ed rogers, ceo and cio of rogers investment advisors . we do have a little bit of breaking news out of korea. the bok says they will take

market stabilization measures if needed. we did have some disappointing data out of korea that led to a few emergency meetings at the bank of korea. needed, market stabilization measures will be taken. let's get a check of the first word news now with jessica summers. jessica? the u.s. will raise tariffs on chinese goods on friday, accusing beijing of backpedaling on commitments made during negotiations. the trade talks will continue. a chinese delegation is set to visit washington on thursday and friday. trader prison of -- trademarks of the robert lighthizer said significant issues remain unresolved, including iteris will remain in place. they really do not have a lot of experience at negotiating with the chinese. they are green about all this. is thatience with china

there is a lot of talk, sometimes they will backtrack. sometimes not. you have to stick with it and be patient and positive and persistent. after a while, you get a deal. jessica: the federal reserve is stepping up its warning about corporate debt. thatat the market for expanded 20% last year and lending standards are continuing to slide. stabilityby annual report says this was the biggest existing debt -- the ones with the biggest existing debt are picking on -- taking on the riskiest loans. in indonesia, growth slowed in the first quarter as the global slowdown hit exports. gdp rose a fraction over 5% in the march. from a year earlier. that is lower than the 5.2% median estimate. growth in southeast asia's biggest economy has been up 5%

in 2016, lower than the sum percent target. -- 7% target. the pilot of a fiery crash landed plane said it was leaking fuel as it was coming down. the pilot also says he does not know why the plane hit the runway so hard. suggestinvestigations the jet lost communications when it was hit by lightning soon after takeoff. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. summers.ca this is bloomberg. paul: coming up next, dallas fed president robert kaplan joins us live to talk about the risks posed by the latest trade war escalation and how that will affect fed policy. shery: the rba is an focused as the central bank raises pressure

for pre-election rate cuts. this is bloomberg. ♪

shery: the trump administration will raise tariffs on china on friday, accusing china backpedaling on previous agreements. tom mackenzie joins us now. china's reaction has been extremely restrained. alice affecting behind the scenes? we have this press conference on chinese officials yesterday, saying they still plan to send their delegation to washington. the did not confirm the dates. the expectation was that these talks would be continuing wednesday, thursday, friday time. the officials here in beijing did not confirm a date. they say they are deliberating

whether or not to delay this delegation in light of what we have heard from president trump and lighthizer and mnuchin tariffs would be raised on twitter $20 billion worth of goods. the chinese response in terms of these negotiations will be grew show. with these tariffs do come into place, how to respond. the chinese said they would retaliate. what steps they would be taking if they see tariffs raised 25% on these $220 billion worth of chinese exports is something others will be looking at. in terms of the media response in china, it has been muted. there is a controlled line on how these trump tweets are playing out. very little response on the chinese media. we saw the targeted triple archives going into place for some of the smaller lenders. we may be looking at additional policy responses.

this trade deal falls apart, you could see the chinese stepping up their stimulus message -- measures. tensions haveade in implications for the global economy. let's have some reaction from inside the world's most watched central bank. joining us is dallas fed president robert kaplan. also with us is kathleen hays. we welcome our global audience on bloomberg radio as well. robert kaplan, thank you for joining us. you heard todd -- tom set the stage. to what extent are you watching that and how does it change gdp growth for the fed? we watch it carefully, particularly in my district, the

largest exporting district in the u.s.. point, these trade uncertainties have not had a material impact on overall gdp. they are having a big impact on certain industries. i can tell you broadly, and our -- in our district, the impact on companies' supply chains, the justice, the ability to manage their costs, so it if it gets worse -- if it gets worse, we could have a bigger impact. we have started to see the chinese economy stabilize. how will this affect the chinese growth picture, and is this a concern for you as you look at global growth decelerating? one of the concerns i have had is global growth is decelerating.

china looks like they haven't stabilizing. part of the route -- have been stabilizing. part of the reason is they've significantn sub -- financial stimulus. they had just cut the reserve right for banks -- rate for banks. they are doing some things to stimulus growth. growth is solid. it's ok. i would say they are not out of the woods. my sense is they think they are not out of the woods. shery: a year ago, almost of the day, you are in beijing, and we interviewed you on the same kind of setup, and the same emphasis on trade. one year later, this seems to be heating up again. where are we now? how big of a risk? what i said a year ago

is this will take an extended. of -- period of time to work through. i will reiterate what i said. i will update it. there is the trade balance, and that is the most straightforward. then there is intellectual property and technology transfer. the other issue is the nature of the way china runs its economy. subsidies. how they use state owned enterprises. how much axis there is for western companies. that is very complicated. if you make an agreement, how do you enforce it? this is a complicated agreement. for the u.s. to step up and address these issues. this is a very complicated agreement, and people in the yes should not think -- the u.s. should not think this is easy. there are a number of different areas. >> you were many hats at goldman

sachs. one of them was you are the head of asia banking. this is a region you know. get deeper into the weeds on subsidizing state owned enterprises. this has been a stumbling block. allowed chinese technology do be transferred, it is easier to stop suddenly subsidizing these state owned firms. china has gone through quite an evolution over the last 30 years to corporatized many of these state owned enterprises. privatize where they could. many of these enterprises are not commercially viable. do ishey are trying to build the private sector. build consumption. try to build their economy that way. usingem to wean off

leverage, which means excess investment in infrastructure, state owned enterprises, and let gdp float to some extent, that is a challenge for them. is try tohave done target, andy 6 .5% he is leverage, but particularly investment in infrastructure and state owned enterprises to plug the gap. one of the issues is putting pressure on them to open up their economy and wean off some of those practices. it's a challenge. it's something the u.s. needs to be addressing. it's a challenging thing to negotiate. we have seen china change the shape and nature of the stimulus this time around. do you see the spillover from

the chinese u.s. -- the chinese support not being felt in the wider world, how will that affect the global growth prospect? robert: my responsibility is the united states. china, it is on in affecting a number of u.s. industries, particularly agriculture and their ability to sell to china. is other broad effect, companies in the united states are trying to manage their costs and logistics and supply chain, including with china. what companies are finding is they can't rely on those rearrangements. they're trying to fall -- find alternative arrangements. less pricings have power and they have to be able to effectively manage the cost. uncertainty is making it harder for u.s. couple needs to do that. -- companies to do that.

having a substantial or material impact on u.s. gdp growth. it is having some chilling effect on industries'abilities to manage the costs and the way they do business. paul: let's talk about some of those industries. we have seen agricultural products, particularly grain and soybeans hit hard in the wake of this news. how deep in a do you think those problems could become? persist, it has only had a negative effect. it will continue to have a negative effect. persists, a number of companies i talked to, about 30 ceos a month, what they tell me they are doing is they are looking for alternative arrangements either in malaysia or vietnam or other countries, or taking a look at mexico as a

way to change their logistics and supply chain arrangements. the longer it goes on, u.s. companies are adopting. inserting a number of industries that selling to china. >> is china kicking its debt problem down the road. i think a lot of people said they should stimulate their economy, but this -- the economy is slowing down. are they prolonging the day of reckoning? a lot of people think the risk is rising that their debt issue could end badly. robert: our work at the dallas fed suggests they have a significant debt issue in china and they have a significant nonperforming loan issue. that is why the government last year cracked down on the shadow banking system, to try to get a grip on that. one thing china has is they are not reliant on global capital. they have a high savings rate here. it will be a painful thing to

manage this amount of leverage it.wean off of they of such a high domestic savings rate that they can deal with this problem, probably effectively, without the crisis. the other thing they have done is put on tight currency controls. the other thing they've done quietly is there currency depreciated net last year and that this was to go on here, they would let there currency depreciate again this year. at the in order to help manage it. -- that is in order to help manage the that. -- their debt. shery: we are seeing global markets in turmoil with the trade tensions. if we do not get a trade deal soon, will the environment change and what are the implications for the fed? i keep a close eye on financial conditions.

while there was some global china, what iin am looking for is whether credit spreads widen in the u.s. and whether the ability to borrow, financial conditions tighten. i think this would have to go on for an extended period of time. even then, i'm not sure how significant it would affect financial conditions in the u.s. the response has been muted so far. we will have to monitor this. shery: thank you so much. dallas federal reserve president robert kaplan is sticking around. we'll get kathleen hays back. you have any questions for robert kaplan, you can use our interactive tv function, tv . you can send us messages during our show. that is the bottom left side of the tv screen. it's for blue versus covers only. this is bloomberg. ♪ paul: let's get a quick check

of the latest business flash headlines. backing a board is takeover from occidental, leaving chevron with four days to boost its own offer or walk away with a billion dollars breakup fee. the cash portion of the offer is limited the need -- eliminated the need for a vote. a $9 millioned up deal to sell their south african gas fields. shery: apple revealed a bunch of apps and upgrades as their annual conference gets underway's. they are tried to woo app makers while competing with them with their own features. new apps for the apple watch

will make it more independent from the iphone. paul: more from robert kaplan in a moment. effect may him tackle price pressures and what it calls transitory inflation weakness. this is bloomberg. ♪

secretaryreasury steve mnuchin is refusing attempts of four the house to release president trump's last six years of tax returns. he is not authorized to release the documents. democrats can subpoena. iran is signaling it may scale back some of its commitments under the 2015 nuclear deal response to growing pressure from the u.s. a senior government official says tehran does not want to

abandon the accord, but may make reductions to its obligations. eu leaders have been informed and the president will make the announcement on wednesday. turkeys topbled as electrode body l5 the local election istanbul and ordered a revote. it is a victory for president erdogan, who refused to concede that his party's candidate had lost in the city where he built his political career. the lira fell more than 3% after the decision, leaving emerging-market losses at its lowest level in seven months. former goldman sachs banker robert being has been granted barrel -- robert ing has been bail, from his trial surrounding a malaysian scandal. he arrived in new york on monday morning and appeared in federal court the same day. he pled not guilty to

anti-property laws and conspired to launder money embezzled from the fund. a new united nations report says nature is in more danger now than at any time in human history with extinctions limning for at least one million types of animals and plants. the report says species are being added lost at a rate hundreds of times faster than in the past, with human behavior a major cause. says many species face extinction within just decades both on land and in the ocean. global news, --global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. japanese stocks sliding after the weeklong holiday. let's get the sophie kamaruddin for a check of the market. one of the big moves in tokyo -- what are the big moves? after itony is jumping

returns to black in the first quarter. softbank climbing on speculation it is weighing an ipo for its vision fund. and hitachi as well. there might be supportive and by structural reform. let's look at some of the laggards. su, downgraded to neutral. damaged.it forecast is shintezu under pressure. over in sydney, green core is falling the most in five years. fortescue's leading gains on the asx 200, rising as higher price pressures aren't going away.

paul: thanks for that. and the midst of all these trade headlines, you might have missed one. the federal reserve is escorting mornings that -- of high risk corporate debt. a recent report shows that the firms with the worst credit are taking on more debt. let's bring in kathleen hays. kathleen: the federal reserve under jay powell, a november issued its first financial stability report. this is the second one coming out. they mentioned a rise in leverage debt. concluded that the financial stability of the system was not being upset. they note that the financial system looks resilient. protections that banks give

lenders to some of the borrowers are eroding. for newtandards leveraged loans have been deteriorating over the past six we want to bring back in robert kaplan, president of the federal reserve bank in dallas. you warrant in may about this rise in corporate debt. are you and your colleagues trying to let us know that you are getting more worried about this buildup and nonfinancial corporate debt -- in nine financial corporate debt? robert: i am trying to raise this issue. the issue we had 10 years ago is the lenders were overleveraged. the financial system was overleveraged. we don't have that issue today. issue we have now is the borrowers, particularly nonfinancial corporate's have a high amount of leverage. triple b debt has tripled.

we are trying to fly this issue, it meansn a downturn, more corporate cash flow will go to service debt. to cap x be able to go and other operating costs. it could be in amplifier, a burden on the economy during a downturn. i hope by flagging it, people take advantageo of the leveraging. they may turn out. out and buy some possibility. >> some people have blamed the fed. they say it is your fault. your cause people to reach for yield. should you get back on the right type -- rate hiking path? a dual mandate. for employment, and price stability. employment and price

stability. to keep your eye on "excesses and imbalances." when rates are this low, asset prices elevate. the other thing that happens is borrowing money is accretive. when ifactor for me, think about the path of rates, it's something we have to take into account. when the run rates this low for this long, and is this a accretive to use leverage, it improves earnings per share to use leverage, we have to be mindful of it. >> we have a question from one of our viewers wondering if you're getting worried about the increase in u.s. --consumer credit card defaults. have consumers reached too far as well? could it be a little bit of a red flag? robert: we are watching that very closely.

loans, thes, auto terms on auto loans are much more liberal. on the whole, the u.s. consumer is in better shape from a leverage point of view than it was 10 years ago. corporate's are more leveraged, but the household sector is in a better shape. it's not that they have reduced debt, but their incomes have gone up. debt to income of the household sector is much better. we have a strong job market. i will continue to watch it. the consumer, from a balance sheet point of view, is in good shape. universally, but i think that is something we will watch. it's not as much of an outlier as this corporate debt issue is. 2019, withoutto any rate hikes on the table. in the last fed meeting, people were saying inflation was falling away from target. surely the fed will give us some sense that a rate cut could be

on the table if this continues. you are not in that camp. robert: not yet. let me differentiate. there are two elements of inflation. one is the cyclical elements. the items that change every month. in that regard, i believe some of these recent headline inflation measures, some of the jobs are transitory. we do a measure at the dallas fed called the trim mean, lori cross -- where we x out moves to the downside. aat shows we are running at stable way around 1.9, 2%. that is muting inflation is the structural part. i mean technology. technology enabled disruption. businesses don't have pricing power.

the consumer has enormous computer power in our hand. when a business has a cost increase today, it is as likely that it will erode their margins and they will be able to pass it on. that is muting inflation. >> but those are not transitory forces. those are permanent forces. buying stuff online because you can get better deals is not transitory. when you get worried about inflation? robert: there's a reason i highlight the structural issue. it means inflation is not running away from us. , the not as susceptible structural forces, not susceptible to monetary policy. we have to take that into account. i think we will just have to monitor this very carefully. to lower theined

fed funds rate to address it at this point. i'm not sure lowering the fed funds rate, i think it is better cyclicalng with inflation. deals ashink it it well with the structural ones. i will keep an open mind. i wouldn't stand pat. >> what would change your mind? what would make you think about the rate cut? if i saw a greater slowdown in gdp that i expect that is going at 2.5%. i saw the job gains reversed or slow down. if i became convinced that this downward drift in inflation, even the cyclical elements, i would have to look at that. i'm not convinced that is what

we will see. is iase case for 2019 believe we will end the year with the trim mean around 2%. we are more likely to see pce drift up based on my forecast. willing that i won't be to act, but not yet. i want to watch and be more vigilant before making a judgment. >> let's look at the other side of the coin. what would you have to see in the economy to say, i guess maybe i will change my forecast. i could see a rate hike in 2019. i will be watching growth. i expect the job market will tighten. if i saw evidence that inflation i don'tn away from us, expect that. i expect inflation forces will be muted.

that's what i will be watching for. i think it has been said by others. i don't have a bias for the next move going up and down. i think we are in the neighborhood of neutral. i will keep an upper mind. >> >> >> you're always welcome back to talk with us again when you are ready to change that judgment. the doors always open. we have more perspective from the fed later on tuesday. bloomberg television speaks to vice chairman richard declaring on tuesday. this is bloomberg. ♪

paul: it's a big day here in sydney. the reserve bank of australia holding a pre-election policy meeting today. in's -- isis expected. let's bring in malcolm scott. knocking, a few things to balance for the rba, isn't there? >>. there are pros and cons reflected in what the market price is, about a 50/50 chance. the survey has outlook this split. it's about 5050. arguments to cuts being low inflation. we have in inflation targeting central bank between 3%.

it is currently running 1.3%. that's is reduce interest rates. -- says reduce interest rates. the main argument not to is that there is an election coming up, do we want to do that in this period. not doing too badly. unemployment is 5%. maybe it makes sense to keep the firepower. it's already pretty low. there's an argument to preserve that power for later. with a very tight election coming up, would it be better to have more sense of what the fiscal package could be? do we know at this point where we are headed? both sides will put some tax cuts in. if the liberal national coalition takes power, they will

put tax cuts out across the board. more money will be coming to consumers. for the labor opposition, which at this stage, is on target to theirhey are targeting tax cuts of the low and middle income earners. they are more likely to spend those dollars. either way, the fiscal side should put more money in people's markets -- pockets. the big question is, what is up with the housing market? it's the big east coast cities. realabor proposal is to back some tax concessions on property investments. if that were to accelerate declines in the property market, we could see the wealth of fact stamp can touch and -- consumption more than it has. thank you so much. malcolm scott, our asia

economics managing editor. softbank, rising on reports that is weighing on ipo for a $100 billion vision fund. sprint'ss before long-running sale to t-mobile look increasingly shaky for softbank and its $19 billion stake. asia tech to our reporter. >> these are two hypotheticals that are combined. they create one big? . .- one big question mark softbank spent close to $80 billion of the $100 billion in the fund. $20 billion of dry powder sound like a lot, but it is not that much. we know they have a fairly long pipeline.

a lot of that money is already spoken for probably. they are shopping for investors for the second fund. having more money to invest themselves would give them more control of the future. i think the ipo is more of a hypothetical. questions of the ipo competing with the portfolio companies that are not listed. it is clearly something they are considering. what about this long-running sprint t-mobile deal? that is a far more real concern for softbank and their investors. story from some colleagues in the u.s., laying out the various options softbank has in the deal does fall through. you had some analysts lowering their prospects for the conclusion of the deal to 50/50, a long way down from 80% a few months ago. it's not clear what the boj will do.

if they give approval, will states in california and new york block it? it still has serious problems for softbank, in part because lessas shown a lot willingness to put money and telecoms and put more money intel -- tech companies. paul: thanks for joining us on that story. still more to come on "daybreak: asia." stay with us. this is bloomberg. ♪

paul: stocks expected to fall across asia today as japan returns from that long holiday. president trump, hurting the markets more with the tariffs threats. longer --ions are no she says trading tinges are no longer driving the action. -- tensions are no longer drop in the action. >> it has to depend on the market interpretation. china rallying, it did not pick up onto the pboc cut the reserve ratio on january 4. starting from april, they have stepped back and said they don't want to flood the market with too much liquidity.

showed a, the pboc it was by saying that waiting to cut the reserve ratio for very small banks. it is the markets interpretation. is the pboc willing to reopen the liquidity cap again? the markets will be cautious. the word they are hearing is stability. they are talking about giving them stimulus, or anything like that. it's probably not going to be like yesterday's big drop. i think the market will be very cautious. the absence of stimulus, and with stability the does word, what will be the big market driver in china? shuli: the driver has been earnings the past month. they have reported first quarter earnings. earnings are not that great.

the financial sector is doing kind of well. financials, the return on equity is dropping. at a-shares, the big caps are outperforming the small caps. those with a better earnings growth are performing better. paul: shuli ren, thank you for joining us. let's get over to sophie kamaruddin for a preview of what is on the asian agenda today. aside from trade lines, investors have other catalysts that may drive sentiment. inflation data from the philippines do this morning. -- due this morning. rba with policy dishes and's on tap. tap.olicy decisions on

taiwanese trade data is likely to show a continued drop for april, which will put more pressure on their markets. digi.com.highlight stoc haves stops -- been upgradedks. rce is going to combine their asia operations too great a company with sales of $13 billion and earnings of $5.5 billion. paul: thanks for a much. before we headed over to asia,"erg markets: let's look at how we are place. japan returning. the nikkei down 1%. the kospi, off 1%. positive territory in australia,

up .67%. economists are split on where he will be heading. let's have a look elsewhere. features from the u.s. looking weaker -- futures from the u.s. looking weaker. a rebound in china after monday's selloff. 2%. that is it from "daybreak: asia ." our market coverage continues as we look at the start of trade in asia. stay with us for "bloomberg markets: china open." this is bloomberg. ♪

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♪ >> is 9:00 in beijing shanghai and singapore. welcome to "bloomberg markets: china open." i am tom mackenzie. >> and i am yvonne man. >> and i am david ingles. let's get to your top stories today. tension rises as washington confronts nutri tariffs. u.s. official says china has learned on some of its official commitments. >> talks will go on, but beijing says it cannot be right chinese law simply to strike a deal. >> and china's would be starbucks heads for a share ale in new york, hoping to raise half $1 billion. ♪