anchor: welcome to "daybreak: asia." i am paul allen in sydney. shery: i am shery ahn. .ophie: and i sophie kamaruddin we are counting down to the major market opens.

paul: our top stories this wednesday. asia civic stocks are set for heavy declines after president pushes terror threat items down. china confirms talks in washington, but officials also say retaliatory measures are being prepared against u.s. goods, and lyft sees a brighter future as performance beats expectations, but there is worry about ballooning losses. shery: we have breaking news out of south korea, the current account balance, the surplus at surpluslion, the larger 4han previous months, also $8. million much higher than the previous month in february. of course, we had seen exports take a hit in south korea despite the fact that exports fell for five consecutive sessions or five consecutive months. we are now seeing the surplus in

the trade, in the current account balance coming in higher than the previous month of march billion. let's get you a quick check of markets closing. downside pressure across the board in the u.s. with all 30 stocks on the dow falling, and we also had the s&p 500 in the red. most sectors were in the red, materials and industrials leading declines. we did get a small recovery in the late session, so we did close off the lows, but, still, it was all in the red, as you can see, and s&p futures at the moment down 1/10 of 1%. of course, a focus right now is on how these trade negotiations between the u.s. and china will unfold as we have the vice premier coming here to washington, d.c., later this week. let's see how we are setting up for the markets trading in asia. soph? shery, asian

stocks set for heavy declines across the region, the post holiday hangover likely to continue for japan with more losses expected after the nikkei fell. toyota among names to report today, and we are looking at a softer start in sydney after the rba held off on easing, and one index losing ground ahead of the rbnz decision. governor orr is expected to follow through with a rate cut, which would change pressure on kiwi, and the bank of thailand is expected to hold, and the bsp will have philippine trade data head of thursday's decision, and we will also get chinese trade figures, expert growth seen moderating after a strong march after policymakers worry about stabilization. paul: ok, thank you very much, sophie. we have a big interview coming up later today. we will be joined by jp morgan's

jamie dimon, 12:30 p.m. in sydney, so do not miss that. now, let's check in on the first word news with jessica summers. jessica? jessica: thanks, paul. pushing back against calls for a rate cut, saying the economy is in a "good place," richard also adding to jerome powell's comments that it is transitory, and agreeing that the fed is under no pressure to move in any direction. he also says policymakers will monitor events closely and will act as necessary. malaysia joined the easing cycle with a first rate cuts since the middle of 2016, lowering the overnight policy rate by one quarter of 1% to 3% as projected by a majority of economists surveyed by bloomberg. policymakers are bracing for slower growth. central bank will lower the

government forecast of 4.9%. and clouds are gathering over the euro zone. the european commission cut its overall growth forecast and cut the growth for its major individual economy. brussels now says germany will expand this year by just half of 1%, less than half the previous forecast, and it says downside risks in the region remained prominent. they also acknowledge weakness in manufacturing. global news, 24 hours a day on , air and @tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. anchor: just, thank you. back to our top story, stock bulls on the worst of the second day of selloffs, the dow down, the nasdaq falling almost 3%, but a late-session recovery helped stocks close off their lows.

keenan.g's su what happened today? su: there are many who say rarely do you see a 2% decline, and that is where it was by the end of the day, striking fear in investors, but because it was a repeat of what we have seen before, many fund managers believe to echo the sentiment of let's take what we have off the table and lock in the gains we have gotten so far this year. this solly -- the was heavy. the biggest decline or was the materials index, as shery mentioned at the top, also chemicals. let's go into a chart about how the chemicals and the s&p 500 reacted over the past two days. you can see it paired losses over the prior session but fell heavily, and it ended up losing for investors 20 billion dollars in two days. you add in the losses in the $22ls sector, it was a

billion in losses to those. chemical stocks at the top. notice doubt dupont pacing the losses of that sector, -- notice of dupont pacing the losses that sector, most exposed to china of its peer, and micron down. tech is exposed to these tariffs. aig, a very strong earnings report. they both got some followthrough. they were where examples of stocks moving in the opposite direction. also mention of all 30 stocks in and 90% of the stocks ended in the red. weekly, into the bloomberg, because the volatility markets, the warning sign is the title of this chart, which can be found. the first and second month vix futures, a warning. we saw the vix spike above 20 for the first time in two

months, and again, that was the biggest two a-day spike since october of last year, so -- the biggest two-day spike since october of last year, so, indeed, a bumpy ride. paul? paul: being sucked into the trade war, we have brent falling below $70, wti trading near 60. theyes, let's look at five-day chart for west texas intermediate, mainly traded in north america and new york. analysts say it really weighed on prices, not just because his actions are depressive for global growth but because they directly impact the oil trade, as well. a lot of traders closely following what happened with the u.s.-china negotiations. as everyone expected, we were sliding into home base for some kind of deal. check out the big picture. how weig picture shows have fallen 7% since the april high, and this is a big

speedbump. it is very much impacted by what happens with the trade deal. quickly, to copper, also moving lower, as were all of the medals this week starting with the trump tweet and the two-day selloff, real sucker punch to the medals. paul: ok, su keenan, thank you for updating us on the markets. travel,negotiator will amid mounting concern about the prospects for a trade deal, liu. china correspondent tom mackenzie has the latest from beijing, so, tom, where do things stand at this point? john: as you said, leading the negotiating team from the chinese side, he will be in washington thursday and friday for what are turning out to be absolutely crucial talks. these could be make or break conversations between the two sides, and the question is whether or not the chinese side

goes to d.c. ready to make some concessions to address the concerns we have heard from lighthizer and mnuchin that were highlighted monday, particularly around the enforcement mechanism and around things like intellectual property and around transferring those and making those into china's legal structure, or if the chinese side go there playing hardball. we have seen from the daily mouthpiece of the party out in the last few minutes saying china is confident it can deal with these trade talk challenges, that the omens, to some degree, do not look good. we have heard in the past that the chinese will not negotiate with a gun to its head, and we know as well from our sources that china is preparing retaliatory tariffs if the u.s. does, indeed, hike the tariffs to 20%, 25%, as they have said they will do. we have also spoken to someone from the chinese academy of social services, a think take in beijing, him saying that if the trump administration follows

through follows through with the tariffs threat, it means, i think, the tariffs will follow through. we need to prepare for the worst of the worst. that is from a member of a leading think tank in beijing, so, again, these are crucial talks taking place in washington over the next few days. anchor: is this a sign that those in the trump administration have the upper hand? certainly seems like the likes of trade advisor peter navarro and lighthizer who leads the negotiations from the u.s. side are winning the argument of taking a tougher stance, and even the treasury secretary, steve mnuchin, somewhat of a dove, came out and said his entire economic team is supporting this raising tariffs, and then you have got the noises and the voices from outside the white house, like stephen bannon , writing an editorial, an opinion piece, saying that even if there is a deal, it will be a

temporary truce -- i am quoting steve bana -- in a years long strategic war with china, -- i am quoting steve bannon. and with the democrats, chuck schumer saying it is time to hold out and backing trump's stance on tariffs. ironically, it is the farming states coming under the most pressure, so, yes, they seem to be winning the day in washington, but we do know that trump is concerned about the impact on markets, so, possibly, that will come into play at some point, but right now, the tougher, more aggressive stance from washington seems to be the position that is winning out in washington. anger: tom mackenzie in beijing, thank you. we have -- anchor: tom mackenzie in beijing, thank you. we have an alert, "the new york times" receiving a decade of president trump's tax returns, showing he had a loss of over $1 billion in business losses from

1985 to 1994. president trump's businesses seemed to have been in worse condition than previously known. we know that the president has built a narrative of business success around him. now, this is the fullest and most detailed look to date of the president's taxes, information that he has kept concealed so far. president trump lost so much money during that time that he was actually able to avoid paying income taxes for eight of the 10 years from 1985 to 1994, and now, "the times" did not obtain the actual tax returns. it said it received to the information contained in the returns from someone who had legal access to it, and those show the president had over $1 billion in business losses from 1985 to 1994. right, and we will have more analysis on the trade tensions between the u.s. and china later on this show, as well.

we will talk to someone from eurasia about why the u.s.-china threats increase the beijing mistrust of president trump. pushing back against speculation, the fed vice chairman rejects pressure to change rates. we will discuss that, next. this is bloomberg. ♪

♪ anchor: japanese markets had a tough first week back from the golden week break. let's see how they are shaping up, heading for the second day. in singapore, how are we looking? reporter: we may start to see nikkei futures in chicago, little change to the down side after something more than 2%, while the yen is going closer to the six-week high against the autos, 110, and japanese with earnings on tap, toyota

likely dented by sluggish sales, which could be offset by china, and posting in nearly 3% drop in april sales in the mainland, and fiscal earnings may have plunged at mazda, a 40% drop in consensus, and car buyers just losing interest in the u.s., even as mazda upgraded show rooms, and another in focus, yamaha motor, after missing estimates, but yamaha maintaining its full-year focus. looking at the board, we will watch softbank, as they say they are looking at consolidated earnings. softbank says that is because the recoverable loss of the unit is higher than its consolidated carrying amount of $22 billion, paul. paul: ok, thank you, sophie. richard claire to has pushed back against speculation the central bank might cut interest da has-- richard clari

pushed back against speculation the central bank might cut interest rates. we have a codirector of global income and a portfolio manager. you used to actually work at the fed, so maybe you can give us some insight to the inner thinkings. in ada says the economy is good place. is it? guest: yes. first off, thank you for having me on. i do think the economy is in a good place. they made a dovish pivot, certainly some hawkish remarks from powell at the conference last week, but generally speaking, i think the fed is focused on getting inflation higher, but given that growth has been strong in the u.s., there is no impetus to cut in the short-term. paul: but to what extent has the slightest -- latest develop it in the u.s.-china trade talks change the room, because we have seen the yield on the u.s. 10-year slipping?

eric: one week ago, the market was pricing in the high probability of getting a trade deal with the president's tweets and from china, and will he go to d.c., he is going to go, who knows, and the market is pricing in a high probability, and then you get an increase in tariffs over a week ago, so if a bad outcome from a trade perspective, that is something the fed would have to consider. anchor: it seems right now, investors are pretty much focused on the chinese economy and what would happen if a trade deal is not put into place quickly enough. we have seen the markets there and the economy starting to stabilize. how much of a concern is this for the global markets? eric: look. i think the rebound we have seen, at least in financial markets, in 2019, a lot of it is the fed and central banks getting more dovish but also a relaxation of some of the worst

trade fears, kind of taking off the worst trail of the distribution from a trade perspective, and if that were to happen, you have seen a shocking global markets. you would probably see more of one. at the same time, pretty significant stimulus from china that they have started to taper out if a bad outcome happens, i would expect them to ramp up their stimulus. anchor: if they ramp up their stimulus, would this affect economies, given the different nature of chinese stimulus, where it has become more into boosting consumption, into tax cuts, into empowering the domestic economy as opposed to in 2011 or 2015, when we had more externally focused stimulus measures? yes, great question, certainly something we need to debate a lot. my own view would be that it is going to be closer to 2016. a lot in the market are expecting. as you pointed out, the focus is more domestic consumption, not

as much industrial and commodity production like we saw back in 2016, but i still think, you know, if china gets into a tough spot, they will stimulate, and that will have a positive effect on not only chinese markets but global markets, and to some extent, we have already seen that in 2019. paul: quickly, eric, we have seen an awful lot of defaults, defaults of $6 billion. that is triple of last year. what is happening in the chinese market? any cause for concern? think from ak, i medium-term or longer-term situation, they are opening up the bond and stock markets. last year, the focus was cracking down on the so-called shadow banking system. from a corporate perspective, it is nascent, and a concern of ours. the right amount of credit quality analysis, like you have seen and western areas. along the short-term, defaults

are certainly painful. in the long term, it would help with capital allocation if you had some defaults within the chinese system. i think investors there would be forced to price risk. paul: all right. codirector of global income and portfolio manager, eric stein, thank you for joining us this morning. there is plenty more to come on "daybreak: asia." this is bloomberg. ♪

get a quick check of the latest business flash headlines. boeing fell after a downgrade. still beingashes underestimated, the effects, and they say it will take longer than expected, with public reluctance to fly on the 737 possibly a bigger problem than anticipated. the stock is down almost 20% from a record in early march. anchor: we have learned that uber has enough demand to price

its ipo at the top of the range, but we are told it is still a likely target, midrange, and strong aftermarket trading. projectinglyft revenue that beat estimates. however, there is concern that slowing growth and more than $1 in the of losses are first quarter. for more information on ride-hailing, let's bring in a guest. lyft reallytock in rally after the initial release of the numbers. it looked good, but then you dig into the numbers, and it really does not look that great, so how challenging is the environment for not only lyft but also uber. p: the first quarter, when you look at the overall guidance, which is around 52%, you start to question why with

their business decelerate, because this business of ride-hailing, there is some seasonality, but why would it do this so much? tough comps. at the end of the day, i think what they are trying to do is be less aggressive on the subsidies, on the driver and rider subsidies to grow the business fast, and focus more on diversifying. they announced they will be partnering with google's waymo, reallyike uber, lyft is focused on ridesharing, and that could be a problem given that this business is not profitable. paul: we also have the uber ipo coming up really soon. how is that going to be different from the lyft ipo? mandeep: i think they would have learned the lesson. they have advised their pricing -- revise their pricing to eight to 10 times sales.

it was priced to perfection, and that is why we have seen this decline, especially after we know what uber's financials look like, so i think uber will try to have it around seven times sales. more diversified, product wise, and it is not the fastest growing in food delivery, so i think investors will likely view it as a platform play for ridesharing in transportation as ifhole, and unlike lyft, they do not revise the pricing upward, it is likely to trade much better. strikeandeep, a drivers' would not be good for either uber or lyft. what is the way forward here? : the take rates, in the stoppedlyft, they have

disclosing it. they have been trying to squeeze more out of their drivers. this goes against them. given the regulators are not convinced they should treat the drivers as contractors and temporary workers, it is not clear to me that they are going to strive for higher take rates, and at this moment in time, it is just better to work with the regulators. paul: all right, "bloomberg mandeep.nce" reporter thank you. we will take a look at what the rbnz will do, next. ♪ ♪

jessica: this is drash. china has confirmed the top trade negotiator, vice premier the latest join round of talks in washington this week. the news is seen as a sign that is fighting keep afterations on track even president trump said he's raising tariffs friday. sources tell bloomberg china is preparing retaliatory measures against u.s. imports if new imposed.re sources in the u.k. cabinet say losing hope of reaching a brexit deal with the labour party.e

we're told the government will itn to plan b and options can realistically offer including canceling the divorce altogether. thailand's election commission a partyirmed that linked to the exiled former prime minister took the most march's general election. constituencies in the lower house of parliament parliamento military taking 97 seats. ant means both missed overall majority. the two are working to form a coalition. law enforcement from the u.s., thissia and singapore meet coordinates it approach to sachs when they raised bond sales generating more than

fees. billion in david solomon told us the firm had begun talks with the d.o.j. role in the scandal. global news 24 hours a day, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. paul: thanks very much. we have australian markets opening in half an hour. sophie, what are you watching? sophie: paul, we are watching csr after it posted a 59% drop sales in profits. the construction materials player says building activity is difficult to predict amid mixed economic sun club, a slight uptick in total lending growth year but weakness seen on a quarterly basis amid increased price competition and continued credit market slowdown.

aussie retailers, downgraded j.b.i-ify. checking in on aussie bonds. 1.29%year yield below after jumping tuesday on r.b.a. holdings. shery: let's talk about the federal reserve's policy pause is now opening the door for many central banks in asia to cut interest rates. our global policy editor athleen hays is here with look at who's cutting, who isn't. bank showed it is anything but patient when it rates.o cutting kathleen: global risks rising as we heard when several hours ago they cut the key rate. i wouldn't say as expected. more than half did look for it another almost half as big who said they might not. what's going on, they're looking at china, they're looking at the slowdown they've seen and

certainly at this escalating trade war with the first rate cut in nearly three years. the bloomberg library showing a chart, you'll see the rate cut back here, in around -- i can't down for you. ity 2016, they cut, held steady, raised a few months ago and said now it's time to cut again. see how much inflation is falling. that's opening the door to rate cuts. abouton't have to worry inflation getting too strong and here's one of the key things policyid in that statement after the meeting. there are downside risks to heightened uncertainties in the global and domestic environment, trade weakness intended commodity-related sectors. they have to watch commodities like oil closely. the policy pause has opened the door. if you want to walk through it, india has walked through the rate cut door. malaysia, the second asian

central bank to do so. zealand expected to do that later today. fill means meets tomorrow, also soected to cut its key rate the federal reserve looks like it may have started a rate cut possible made it more in asia. paul: perhaps they're setting up the bank of thailand meeting today, unlike other banks, can be holding the rate steady. why? kathleen: they're supposed to 1.75% after hiking 25 basis points in december. jump into the bloomberg library in the terminal again to see where we saw that rate come down a couple of times. you can see it come way down during the financial crisis towards the end of the crisis and into u.s. recovery, you steady, hold the key rate, then it.raise what, above all, what's happened -- here's one measure of inflation related to g.d.p. important one is this yellow one, the thailand c.p.i. year over year and you see it's down pretty low. 1.25%.

need to hikeally again but do they need to cut? of thailandat bank officials are watching, they've had low rates for a long time. like to hike rates in order to build policy space for rates. cut key after the december rate hike, two officials were clamoring for hikes, another reason to hold steady. risingc risks have been since a contentious march 24 thetion which can hurt economy. the u.s.-china trade deal still not in place with potential tariffs coming. they had to downgrade g.d.p. year.st to 3.8% for this still near potential but many reasons for them to hold steady for now. at rate cuts at all. paul: thank you very much, global economics and policy editor, kathleen hays. focusr central bank in rb& z expected to cut

low but a record economists divided on whether it will be today. why so much uncertainty willunding what the rbnz do? marketnything to see bits appear ahead of this decision, clearly a lot of uncertainty in the market, after that r.b.a. hold yesterday. twoi think there are schools of thought on the rbnz, having adopted bias in march, there's expectation the governor will want to get on with the job. domestic data the last few weeks soft so he's been delivered the conditions he needs to justify pulling the cut trigger. on the other hand, the economy is not in bad shape. growth has slowed but it's still above 2% and as we saw from the yesterday, there's an

equal argument to sit on your hands and wait and see what happens. urgency to bel cutting rates. is the r.b.a.'s decision to hold have any implications for the rbnz? matt: it shows there's no urgency there. paradoxically, if you want to get stimulus into your economy, you want to get a lower and boost that inflation outlook, you want to be doing it when you're one of banks, notentral when everyone else is doing the be thatng so it could it's delivered the rbnz another and pull theahead rate cut trigger today. that. thanks so much for matthew brockett in wellington. we'll have more analysis on global monetary policy in the

next hour. this is bloomberg.

♪ shery: investors are waiting to see if china will offer enough concessions to stave off more week or play hardball when talks resume in thursday. on j.p. morgan's asia pacific chair says she thinks beijing will retaliate should president trump ahead with new measures and spoke with us at the j.p. morgan global china summit. the relationship between very, obviously, is complex and it is full of twists and turns, ups and downs. they say, sometimes the darkest hour is before dawn. the two sides have undertaken negotiations for the past many months, probably 10 rounds of

negotiations, right. negotiator,top viacom premier liu he, is heading to washington later this do hope eventually the two sides will still reach a deal even though the road ahead remains pretty rocky. >> do you think a deal will happen? >> eventually we hope and believe a deal should happen because a deal between the u.s. beneficial to be both countries but also to the large.economy at >> economically, china cannot likely let this slide without retaliation. do you expect renminbi other steps?r any >> i don't think the chinese the theip will use renminbi to retaliate because interests. chinese beijing, at a forum in president xi jinping emphasized

rmb china will not use the as a tool because a stable rmb is in the best interests of china. china is a very large importer as well as exporter. the rmb is devalued, it will make all imported products from to components much more expensive. also, a deappreciation of the r.m.b. would dampen domestic confidence so at this juncture believe the chinese r.m.b. will not depreciate too much. it would help exporters but how detrimental from your estimation has this trade war been on the chinese economy? hashis trade friction provided extra incentive for chinese companies to upgrade becomeechnologies to more globally competitive. instead of relying on cheap to reallyhave increase their technological so eventually china will remain competitive not

because of lower costs but because of innovation. was our conversation with j.p. morgan's asia-pacific vice chair, jing ulrich. joining us from new york, michael, great to have you with us. more consensusbe about where the china-u.s. trade go, evenons could after the deal is reached, there seems to be an understanding this will not be the end of the road. we heard from former white house strategist, steve bannon, in an opinion piece, saying that even if agreement is reached, it be a temporary truce in a year's long economic and strategic war with china. if that's the case, where do the two sides go from here? lot will depend, obviously, on the decision that president trump makes on friday. goes ahead with tariff

escalation, i think it's going to take some time in an optimistic scenario for the two sides to resume talks. we do manage to avoid this escalation, i think there's still quite a good chance that have a deal by end june. but i think more broadly, that point is absolutely right. this deal, if we get a deal, the shift intothen implementation and i think the implementation is going to be rocky almost from the beginning. and the kind of disputes that we see this week are going to be the case going forward so this to -- is going to have uncertainty surrounding it remainder of the the trump administration. they: and we are now seeing president facing his own challenges domestically. just a few minutes ago, the "new york times" releasing 10 years of the president's tax returns included eight years of

paying income taxes, of returns that said he had one billion dollars of business losses. how will these domestic issues inect the president's hand dealing with china going forward? michael: i think that the issues peripheral to the trade dispute are not going to have a very big impact on this. some extent, president trump seems so far to have dodged the which wastant bullet, impeachment. being heor the time feels confident the economy is strong and there hasn't been for himitical ble back to the trade war. if you're looking for issues might lead president trump to moderate his stance, it's reactionbe the market if there is escalation and the political reaction including of his base,ts like u.s. farmers.

paul: i'm glad you mentioned that, michael. of market reaction, some of the most profound market reaction we've seen has been in soybean prices. is this potentially a pressure point that the chinese could on with president trump? that's a pretty important voter they begin suffering pain. michael: it is an important pressure point. farmers, many of them are hurting and they had been not only award to trade deal that removed tariffs that china had put in place but of china stepping up and purchasing u.s. agricultural goods as part of and the fact that we might be seeing that disappear beenearly one thing that's impacting agricultural markets many farmersay, seem to be standing by donald trump. agenda and ihis think their faith is somewhat conditioned on the fact had a trump will get a better deal down the

road. sole -- so we don't see as much the agricultural expectty as you would given crops and prices. rhetoric around the trade deal changing the political climate. the 2020head to presidential election, any candidate who wants to stand a has to chance really now take a tough line on china, don't they? michael: i think that's right. what we're seeing reflects buildingthat's been for years and that trump has laid bare but now that he has heven a hard-line approach, is forcing the rest of the political conversation to go in so i think that's right. the candidates will be competing on china.tougher interestingly, joe biden did not go that route earlier so he may

be an exception but generally speaking, i think that's where the conversation is going and the temperature in the u.s. onlyds china i think is rising. shery: yet with this latest standoff between the u.s. and wonder how much damage vice premier liu he could have taken. as one of the progressives out there. seehere a chance we could hard-liners in beijing making a comeback and what would that mean for negotiations? michael: i think it's a risk. i think if the vice premier, it looks like he's traveling to the as planned which is positive. but i think if this blows up, there is a risk that he is weakened politically and of premier liu is not just the chief negotiator for u.s. but is also an architect for many chinese reforms. think it's a dramatic risk in policy but it's something to watch that could china'sader impacts on economic reform agenda.

shery: it was interesting this markets, weg the wasn'telloff, but it armageddon. despite trade tensions rising, we saw markets recover in the late session of trading. i wonder if this is giving trump a signal that it's ok to go ahead with more just on chinese goods but the potential section tariffs that could be coming on auto parts. he has to make a decision by may 18. not to mention that aluminum and steel tariffs are also still in place. think that's right. although there's a strange now,ack loop right somewhat fragile feedback loop in the sense that markets are if presidentide trump is serious about some of the trade threats, currently the china trade threat. but are not convinced. and that may be giving president some additional confidence.

if he does go ahead with trade friday, then the markets will react and then i think you see an interesting tug war within the administration they wantf how hard to push and if things get really bad, i think president trump will look for an off-ramp with china. an important opportunity to find be the g-20p will june wheremit in xisident trump and president will attend, an important ackstop to either complete deal or de-escalate, an thertant date to mark on calendar. paul: if there's one thing this saga has taught us is that abrupt about-faces can be expected from time to time. as we count down to friday, what do you think the chances are the tariffs will be pulled at the last minute? hard to it is very handicap at this point because

there's much we don't know about really at that are the heart of the substance and dynamics.al i tend to be cautious. probablyhe chances are evenly split but i tend to think they lean a bit more towards the withgoing ahead escalation. i think the fact that president onmp issued this threat sunday for tariffs to proceed on friday, not a long period of time, it's a high-pressure, tactic but i think that he is not afraid to walk away. would not be surprised if they manage to avoid tariffs. certainly very possible but i tend to lean cautious and think it might be more likely than not see tariff escalation on friday. eurasia -- we'll be

speaking to the bank's deputy, apex c.e.o. ♪

shery: this is "daybreak asia,". quick check of a the latest business flash headlines. range of launching a cheaper pixel smartphones with its line of premium devices to sell in large numbers. cheaperrocessors and materials will allow google to $399.it at that is roughly half the price pixels.xisting the move is google's latest attempt to compete with apple samsung. shery: singapore's mobile carriers are asked to take a

step towards introduce 5g wireless services as early as next year. plans to allocate spectrum for at least two networks. singapore has been slower in 5g13 south -- 5g than south korea and the u.s. paul: key units, -- grand real estate, raised almost $3 billion a deal offered on monday. evergrande last tapped the december 16 with a three-year issue. marketlet's preview the open with sophie. athie: futures are pointing losses across the board with the nikkei 225 set to drop more than hope with -- open as hangoverholiday

continues. in seoul, automakers, sales from inported cars in south korea fell 30% in april. i.b.e, the purchase of securities saying that shipments rose 31% in march as prices dropped. samsung and chip prices downward trend as well as samsung may cancel preorders of the galaxy fold if does not ship by end of may. metals tumbledse overnight led lower by zinc. coming through on codelco. as we wait for production update later this wednesday.

to come on there next hour of "daybreak asia." we'll be joined by oxford head of india, keshor, this is bloomberg. ♪

paul: i am paul allen in sydney where major markets have opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in singapore. welcome to "daybreak: asia." paul: our top story this wednesday, asia-pacific stocks look at heavy declines after president trump's terrorist threat pushed equities down -- tariff threat pushed equities down. officials retired tory measures

are being prepared against u.s. goods. hondags from toyota and amid rising trade tensions. we had lived at the global china summit in beijing where trade tensions are a hot topic. we will have big interviews coming up, including an exclusive with jamie dimon. shery: the market action, it seems like a difficult open for asia. sophie, what are you saying? sophie: that is one way to describe it. the nikkei opening with more than 1%. this is near a six-week high. on-site risk for japanese traders over the holiday.

watching for the first time here on sale. when we take a look at what is going on in korea, the kospi is under pressure as well. the korean won remains under pressure, continuing to falter against the dollar. this as the finance minister are economic downside risks rising. in sydney, checking on how stocks are faring there. off .2%. the aussie is lex waiting in the wake of the rba, keeping steady bonds and the higher tracking gains in treasury. , rate cut would put pressure on the kiwi dollar while bonds may have limited upside, even as easing takes place. already below that break.

asia. across the board in paul: thank you very much for that. let's get to first word news with jessica summers. jessica: president trump's businesses lost more than a billion dollars between 1985 and 1994. the newspaper cites printouts of transcripts of his federal tax forms. it says he lost so much money that he was able to avoid paying income taxes for eight of those 10 years. the treasury department said it would not release his personal and business tax returns to congress. the fed vice chairman is the latest official to push back against calls for a rate cut. saying they are any good place. echoing jay powell's comment about inflation being transitory and that they are under no pressure to move in either direction.

it will continue to monitor events closely. and auditorymy policy is in good place? our focus is stable employment. we do not see a strong case to move rate in either direction. we will always be looking for indications on that. are gatherings over the euro zone. slashing the outlooks for major individual economy. brussels says germany will expand by .5%. that is less than half the previous forecast and a downside risk for the region remains prominent. they note exceptional weakness in manufacturing. thailand, election commission has confirmed that a party linked to the exiled former prime minister took the most seat in march's election.

a promilitary party took 97 seat , which means both missed an overall majority. they are competing to form a workable coalition. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. p thank you -- paul: thank you very much. traveling to washington for the latest trade talks despite mounting concern about the prospect of a deal. correspondent enda curran is here. what are we expecting from the delegation in d.c.? " -- >> there seems to be consensus

that the threat of tariffs was the way to go and that they should impose them if china does not come up with new offers in the talks on thursday and friday. changed their view. they would have a job to do to commence them. they will deliver on the pledges. different areas around enforcement and strategy. , if the premier cannot deliver something new that does not satisfy the trade talks, it appears we are heading for a new round of tariffs. impact ofl see any the latest trade tensions on export data out today? >> the numbers has been picking up and we have seen other indicators in the pmi beating

that they were picking up. there is a seasonal effect to trade data in the first quarter because of the lunar new year. justig rebound was hired because i believe god in the anthony expecting a leveling out in the trade numbers. skewed be a little because of the oil price and what is happening in the oil market. the big picture will be where do trade talks go in d.c.? shery: thank you so much for that. of course, trade is also a hot topic. towerclass a number correspondent stephen engle.

what is the mood there like? is on the minds of all the participants that you can see behind us as we launch our exclusive coverage. we have very pleased to have our first guest here. congratulations. what will you be telling your clients, who are probably waking up this morning with the market selling off significantly overnight. a little more nervous than they were last week. >> yes. thank you very much for having me here again. you are right. i am going to ask the same question to jamie dimon when i interviewed him on stage in an hour. mr. trump seems to have time to

his tweets perfectly with our conference. everybody is talking about it. havely, his latest tweets affected the binary outcome. these tradem all of negotiations and people have to readjust their expectation. we had a discussion last night. is that it will go to the table and we will try to negotiate. it is still going to washington today to negotiate. outcome.al positive it from a market stocks havechinese a 10% risk premium. , it was 20%.k

there is further potential downside pressure. if you think about the currency, although we think the pboc will , it isstop the currency 690unreasonable to go up to from the current levels. with one a few hours ago. it will have a potential negative outcome on the u.s. economy. 0.2% on consumer prices. >> you have to factor in that perhaps this is the end of the rally that we have seen. up onlly, if tariffs go friday and there are additional,

that means talks have failed. the chinese have said that they will immediately retaliate. >> we could see the other side , ifhe argument, which is things do not fall apart by friday, you could see something by friday. a positiveve outcome, but clearly it is becoming more binary. becomes -- >> where are the people going to put their money? >> that is the most likely outcome. assuming that by friday we have a decision. you know what will happen and you can adjust your expectation. it takes forever to materialize.

people were concerned. >> what does it mean for your business? this year you got approval to take majority control in new security venture. jamie dimon eventually wants 100%. true that. claims are the chinese side has backpedaled on their promises in the negotiation process, how concerned are you that they could backpedal or delayed licensing process? >> that is true. we are not concerned about that. the process is relatively straightforward. you have to go through inspections. , youyou go through that get granted a license. you have senior positions. we are actually not that

worried. to debbie delays? but we are not upset about that. >> now that you have approval, you must be gearing up. the seniorly all positions because we have been working on this for 2.5 years. of people within the ranks, i would say 80% to 90%. >> what kind of license do you plan to apply for? the rest of it, we could do it at the banks. activity,e banking but this allows us to do traditional equity and equity advisory activity. proper banking activity. >> what stood out?

we got another approval of opening up some of the size restrictions. door forly opened the basicallycompany to buy. not looking at buying a chinese bank. it is too opaque. >> we had a bank already. is ont to build on what the ground and increase the balance sheet. it would just make things more complicated. withat are your priorities this new security venture? the markets are absolutely volatile right now. do you expect the license to be approved this year? >> yes. according to the timeline, once you get a temporary one, you have six months to complete.

, thatdid the math right comes to around september. you could ask for a delay, but that is not our plan at the moment. >> thank you for the interview. i will be talking to jamie dimon as well. save me some of those hard questions. exclusive of the jp morgan global summit. shery: thank you so much. we will be looking forward to all those conversations and we will have an exclusive interview with jp morgan chairman and ceo jamie dimon. do not miss it in about two hours from now. this is bloomberg. paul: the world's most valuable company is overhauling its strategy. looking to capitalize further on drinking. marketsobal part -- poised for lift off. we will be live in tokyo for the

latest market action. this is bloomberg. ♪

shery: this is "daybreak: asia." paul: i'm paul allen in sydney. a quick check of the latest business flash headlines. we are told it will likely target a midrange price to ensure strong aftermarket trading. bullish.l is being investors are worried about slowing growth and more than a billion dollars in losses in the first quarter. fell afterng shares a report from berkeley. saying the crashes are still being underestimated. boeing's recovery will take longer than expected and public the 737 maxo fly on

8 will be a bigger problem than anticipated. in seven has dropped of eight sessions. general motors self-driving unit has attracted more than $1 billion in fresh investment. this is the third round of investment in the last year for the cruise unit valued at $19 billion. they want to start an autonomous ridesharing service. dayy: facing a tough hump following the tumble in the s&p 500. chriserg's energy editor joins us from tokyo. whatwe traded in the u.s., was interesting is that we saw the losses earlier in the session but later we saw some recoveries. there is still hope that asian

markets could do better as they progress? they certainly started off significantly in the red. we will see what happens in the next hour or so as china comes online. that may help to set the tone. thething to keep in mind is u.s. is almost playing catch-up a little bit. the other markets really got walloped on monday. in the mind a 6% tumble chinese main equity gauges on monday. we did not see that kind of job in the u.s.. some of this may be a little bit ,f catch-up or a reality check as the crucial u.s. china talks approach thursday and friday. what will also be important to watch out for is what china says

with regard to plans for retaliation, if the u.s. does proceed with raising tariffs on friday, how does china respond? there have been some indications with people familiar to the matter talking to bloomberg that there will be some retaliation, but china has not said this on the record. the foreign ministry pointedly declined to comment on any retaliation. just how bad can the breakdown get? that is a big question in people's minds. headlines that we will want to keep an eye out for today. the question is particularly relevant to the oil market. what is happening with oil prices? is this the beginning of a trend

or is it merely transitory? it is hard to tell isn't it? the oil market has been so volatile, not just the past few days, but going back a few months. both supply and manned shift at play. weeks,s that every few brent and westn oras heading up towards 90 $100 a barrel. we are heading back towards 40 and 50. it is really hard to tell. i think there is no doubt that oil has been moving in the trade headlines with regard to the u.s. and china. long way towards determining the direction that we had.

head. day for japanese carmakers. we have honda and toyota set to report earnings. people get a preview -- you will get a preview, next. this is bloomberg. ♪

paul: we get to tech under the hood at toyota and honda when a littlet earnings later. let's bring in bloomberg intelligence analyst is man. what are we expecting from toyota? >> they had a really tough quarter -- steve man. we's bring -- what are expecting from toyota? >> they had a really tough quarter. japanese market is still

relatively small, but in the u.s., they are facing higher incentive cost, but also a huge shift into pickup trucks and suvs. to the local automakers like gm and ford, their product is not as strong as gm, ford and fiat chrysler. very strongxpect earnings for the japanese automakers the last quarter. honda?does that include we see this intensifying rivalry in the u.s. >> we do. if you look at honda in the past few months, they have talked about how they shut down part of .he production plant one of the most popular sedans in the u.s., the honda accord.

that is a sign that sedan sales are beginning, as well as for toyota camry. consumers there are also diverting into the pickup truck that gm is selling very well in that market. shery: i we seeing any impact and u.s.china tensions? >> definitely. ,here are a number of headwinds direct and indirect. friction, if there is an s greater in the trade war, can numerous will be more reluctant to open their pocketbooks. go ahead. itry: we will have to leave there because we are running out of time. thank you so much for that with a wrap-up from bloomberg

intelligence. next, back to the jp morgan global china summit in beijing. we will have an exclusive interview there. this is bloomberg. ♪

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jessica: this is "daybreak: asia." topa has confirmed the trade negotiator will join the latest round of talks in washington this week. keepare fighting to negotiations on track, even after president trump said he is raising tariffs. sources tell bloomberg that china is preparing retaliatory measures against u.s. imports, if new tariffs are imposed. mike pompeo has made an unannounced visit to iraq to show support for the government as washington ramps up pressure.

american officials say there are indications that they are planning to retaliate on tougher sanctions. information about the threat remains vague. sources in u.k. cabinet say ministers are losing hope of reaching a brexit deal but the opposite -- with the opposition labour party. they concluded that talks are stalling and any agreement looks increasingly unlikely. that would mean the government will turn to plan b and what option it has. they include a new deal brexit or canceling the divorce altogether. as law-enforcement from the u.s., malaysia and singapore for this week overwork state investment firm. the bank is under scrutiny for its role in helping the fund raise $6 billion in sales that generated more than half $1

billion in fees. david solomon told us that they had not begun talks with the boj over its role in the scandal. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. are seeing some heavy losses in markets across asia. let's turn to sophie with a check on the market. asian stocks falling across the board. regional bonds are valuing. checking those gains in treasury. more than 200 stocks are falling on the nikkei 225, led lower by yamaha motors. as much as 11.2%, extending losses for a seventh straight session on the disappointing reports. falling after they

missed estimates and japan airlines shares under pressure falling to a low after confirming that it is canceling 18 domestic flights due to a system error. it is unknown when the problem will be fixed. sliding in tokyo. reporting earnings today and samsung getting laid down. a few lines are in place here. look at samsung falling as much as 6% to a november low as prosecutors units asraided limited they grapple with an accounting scandal. paul: let's get back to our coverage of the global china summit in beijing.

>> that is right. and weld's largest maker do have the ceo with us. thank you so much for joining us here at the jp morgan summit. everybody's mind is on the trade tensions and the uncertainty it is causing in global markets. we had the imf saying that we could get global growth down to the region. already, there were some headwinds in the economy. do you share those concerns that the global economy could take a hit because of this? >> absolutely. they are providing most of the industries. quarterit already in four and we saw demand going down. a very particular year in china.

if i talked to the customers, there is a lot of uncertainty in how that goes on. on top of that, you have the issues of possible tariffs on the auto industry. >> there is slight growth. if you look at the numbers so far, the first quarter is minus five. it is a difficult situation. >> does this hurt your turnaround story. forecasting at the lower end of your range for growth this year. do you revise it at all? >> no. we confirmed. the first half is more difficult. we have betting on growth in the

second half. right for the are itustry to .8% growth, should be making it. it does not change our plans. more responsive to the customers. i am not assuming this. i know that china is key tear turnaround and growth lori. you signed a new deal for a $10 billion project until 2030 for a new plan. at all trade war expedient the approval process of that? >> it helped. if you want to be successful in china, you need to have a long-term commitment to this country. 134 years in china.

already in thed 1990's. sticking to this were viable role, we have 8chan to build an integrated site. it accelerated a little because that is part of an opening story of china. on the other hand, that is how it works. >> this will be the single largest investment. >> that is true. >> other companies are standing on the sidelines. >> we had not. if we invest in industry, a lot of investment. you have to think long-term. you cannot be too much

influenced by short-term. -- it is 50%2013 of the global market. you have to be in china. >> let's talk about sales. scale plannedl not necessarily for china. it is going to be huge. there has been a little bit of a little bit of pull back on demand. does that make you reassess how you will build it out, where, what size? pointare on the tipping that it is coming. integration of speed and commercial. battery, the materials -- it

is the largest growing market. 25expect something like billion euro market in 2025. it is an interesting area to be. we are established already in production in japan. up ae very much building value chain in europe. >> i you considering building a plant in china? >> building or acquiring. i think it is a good thing to be long-term in china. cheap,ot want to be commercial materials. that 10 billion framework agreement gives you the ability to maybe expand into eb?

it is a framework agreement right now, so you could expand, if you wanted to. >> yes. maybe more investments in china going forward. >> are you looking at any targeted m&a? >> no. there is a growth story. wants to come back to growth. it is very much here in china. we are on track. your time onfor bloomberg television. very much looking forward to it. looking to we are today's decisions in new zealand and thailand after a cut in the region.

this is bloomberg. ♪

shery: this is "daybreak: asia." paul: i'm paul allen in sydney. until banks in thailand and the philippines i after joining the easing cycle. our next guest says the next backdrop has turned up more supportive for the region. the rising trade tensions. let's bring in the head of india and southeast asia. that malaysianh move. easing for the first time since 2016. in some respects, blaming the macro environment. there is a bit more to it than that in malaysia, isn't there? are alsoial conditions

tightening in malaysia. hikedid make a token rate when the fed was changing course , earlier in their cycle. the unexpected dovish turn by the fed at the start of the year -- the global backdrop remains uncertain. room to takethem off that one rate hike they had put in place. attentions turn our to the two other central banks that would be picking decisions. the philippines and thailand. what do you see in each of those cases? factor has been happening back home in asia, inflation has been coming off sharply. -0.3%. malaysia, we saw you are seeing the same trend playing out in the philippines,

coming off a decade hi. percent to 4%e target. pricesent rise in oil brought a bit of upside. esau transport inflation picking up a little bit in march. overall, the trend seems pretty strong. them to i am expecting hike twice this year. the trade-related uncertainties -- todd to the town side the downside risk. we have to see how this meeting pans out. it is a pretty close call. hi rand, the situation is slightly different because of the debt -- thailand, the situation is slightly different because of the debt. contrary to what the central

bank, the bank of thailand would want, we have seen using of conditions. that is not a trained that they seem to want to anchor at this point in time. it makes it seem to is better supported at this point. a positive scenario seems more likely. shery: let's talk about the chinese economy. president trump threatening tariffs on 200 billion dollars of chinese goods. this chart on bloomberg showing chinese exports to the u.s. and u.s. exports to china as well. the line in yellow would be where the tariffs are at this point around 10%. the president now threatening amount ofadditional chinese goods.

thatf the chinese imports though into the u.s. what would that mean for gdp growth in this economy? >> definitely, that is a worrisome scenario. before i get into what they would do for the economy, we are still working with the baseline, despite the weekend of loss, which is quite consenting. hikee not going to see the coming in this friday, that trade delegation is still going from china to the u.s. it is not as large as it was expected to be. the trade in terms of agriculture. a stable currency and assurance from china in terms of protection on intellectual property rights.

the deal would be fragile. maybe in the future, we will be tariffthe new threat of hikes. the earlier hike would be taken out of the system. the optics have definitely deteriorated. what happens if they actually go ahead and do it? if they raise the taft to 25% -- the tariffs to 25%? off thisr china comes year and a couple percentage points next year. that over theow next year or so. moves to higher china, on imports from which are not on the tariffs at this point in time, the impact

is much worse. not take into account further easing from china. shery: we still need to see the effect on the chinese trade data marche the numbers for were pretty strong, given the new year holidays. >> yes. that is true. was betterde data than the u.s. trade data. of course, in the coming days, we see that with macro policy easing, providing some support to the economy. it should so -- show some improvement. external demand issues are likely to remain subdued. that is the picture that is

evolving so far. shery: thank you for joining us. plenty more ahead on "daybreak: asia." this is bloomberg. ♪

shery: let's get a quick check of the business flash headlines. being asked to take a step towards 5g wireless services as early as next year. they plan to allocate spectrum

for at least two networks. singapore has been slower in moving towards 5g. suddenly owing more money costs forts looking aircraft and other assets as liabilities. 3.2 times the earnings, up from 2.4 ratio. the accounting was have not changed. says not panic. marketback in the bond with a bang, issuing the largest for aublic yuan bond sale property developer. state raised almost three. -- $3 billion on monday. they priced a little bit over 6%.

bond market ine july 2016. most beleaguered companies undergoing an overhaul. new strategy for its cash cow. china'sy liquor, national drink. what new policies has the chairman put in place? >> a lot is happening. i think is the first time in the decade that the market is talking about now tie's governance. -- about their governance. one of the very important policies is that in february, mau tai touted the business and operations. now the group is investigating

the brands. if they can meet the quality of standard, some of them will be shifted under the listed company. too, the distribution increase the proportions. group morees the controlling power of other brands. shipping more resources. paul: out of the financial benefits of all these -- how did benefits?ial implemented, be increasing profitability and revenue, it can definitely be expected. remains the question that while it is good news for

the group, whether shareholders can eventually get benefits. for example, on monday, it already announced a new company that is held by the group. yesterday, shares dropped a lot. questionthought to whether the increase in profit would go directly to the group. also this morning, the stock exchange started to question and explain.i to whether it would have conflict. this question remains to be seen. shery: what are the challenges ahead for the company, going forward? mentioned, it is very good for the group because it can increase reputation and overall profitability.

the question is whether the listed company can actually get benefits or if the benefit would go directly to the group and shareholders would gain little. if so, it would be a potential risk for the target price of moutai. paul: thank you for that. let's get a bit more on moutai. sophie. optimists of the prospects, raising its price target. a 40% upside from tuesday's close. that moves to a higher valuation as they say their ability to raise self price is not fully reflected. they see a chance of a price hike in 2020. stock advised on tuesday as investors bought consumer related stocks. it was relatively efficient.

stimulus is also helping the industry. that might already be christ to -- priced into valuations. exclusivewill have an interview with jamie dimon and about 90 minutes. -- that is it from "daybreak: asia." bloomberg markets, china open is next. this is bloomberg. ♪

♪ welcome to9:00 a.m., "bloomberg markets: china open." we are counting down to the open of trade. here are the top stories. slideacific stocks on the after president trump's tariff threat. officiala confirms an will be in washington for talks, but retaliatory measures are being prepared against u.s. goods. the latest tonz step into the spotlight, a rate cut may be