paul: welcome to daybreak australia. i'm paul allen. shery: i'm shery ahn. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering. wall street tumbles as china hits back on tariffs. president trump warns beijing not to go too far. stocks fall the most since january. investors seek safety with gold up the most since february. the yen has strengthened in early trading. oil dropping for a third day and

the racing earlier gains sparked by new tensions in the middle east. shery: later in bloomberg technology global link, uber suffers another day of selling. the stock down about 20% through its first four days of the market. islook at how the ceo selling the broad game. stocks losing more today as they did in the whole of last week. the dow lost more than 600 points. we saw stocks that are trade sensitive such as caterpillar and apple losing about 5%. more than 450 stocks lost ground on the s&p 500 which fell 2.4%. tech and industrials leading the decline. nasdaq testing the biggest decline of the year. 10 year treasury yields touched the lowest level since march. yields rebounding a little bit as we heard from president trump that he will meet with president xi jinping injure. -- in june.

that part of the curve. we saw a theme picked up last week for the first time since march. the commodity index on the bloomberg index. down for tenths of 1%. oil taking a big hit over concerns of supply and demand. and the economic outlook. we also had in the commodities sphere, soybeans and corn taking a hit on these latest trade developments. they are part of the commodity index. one asset class that really soared was gold futures, now above 1300. rising the most in two months. safe haven moves being felt across the markets. u.s. futures down as well, 2/10 of 1%, after the close. we heard that they are actually looking into more tariffs on $300 billion of chinese goods. all of this being felt across markets.

let's see how we are setting up for the asia open. paul: yes, the heavy hand of the trade dispute waning on things here. new zealand is the only market trading right now. off by 7/10 of 1%. nikkei futures, 1.7%. ised toey, the asx po open more than a tenths of 1% lower. we have been discussing that does reset about 20 minutes before the market opened. that is the very definition of a sea of red. the u.s. has detailed plans to raise tariffs of up to 25% on all remaining chinese imports. this is after china retaliated to current u.s. tariff hikes by announcing it would raise its own duties on $60 billion on u.s. goods. bloomberg's china correspondent tom mackenzie joins us now. what is the latest? tom: the latest lines from the

last few minutes in the details of the trade representatives outlining these plans and the system that has been put in place to stop the process around implementing additional tariffs on $300 billion worth of chinese imports. there was a time frame. from, june 17 they will be holding public hearings. seven days after the end of those hearings, there will be a comment period from those companies affected. this is the timeframe that may be takes us to the end of june. as you have said, we may be looking at a meeting between president trump and president xi at the g20. this list is comprehensive. it covers pretty much everything you would find in a walmart store. smartphones, laptop computers, clothing, shoes. you would imagine it will get whittled down as part of the hearings process, but 20% up on tariffs on an additional $300

billion of chinese goods is clearly significant. it comes after china detailed its retaliatory measures of the in of the day beijing time yesterday. raising duties that they already have on $60 billion on u.s. imports, as part of a previous move. they have tariffs in place. they will raise those from 5%, 10% to 20%. raising the level of duties already imposed. 10% to 25% on items such as chemicals, soybeans, corn, pork, liquefied natural gas. all these products that are being shipped over from the u.s. china says it still holds to negotiate with the u.s. and host the u.s. can meet it halfway. shery: really, we don't have much time left so what did the potential way for them to deescalate the current tensions? tom: absolutely. what we have heard from the u.s. side is that mnuchin and

lighthizer have been invited back to beijing, but we don't have any confirmation on when. happen, thatto would open the window for continued negotiations and these moves get underway. of course, we've got this potential meeting. president trump says he plans to meet with president xi at the g20 towards the end of june. many people really are now looking at that meeting as the only potential significant offramp as part of these negotiations. it has become increasingly clear that china wants a two-way deal, not a one-sided deal. so, this grand bargain that trump has been pushing for looks like a difficult call at this point. shery: tom mackenzie, thank you so much, our china correspondent. let's discuss more on the u.s. market reaction. a big selloff. china's retaliatory tariffs.

su keenan is here. we saw sectors that are more trade sensitive being hit the hardest. su: industrials and info technology. strategists say what is interesting is how quickly china pushed back with these tariffs, making it clear that they will not be pushed around. let's go into the bloomberg because we are beginning the week on the back of last week where the one day's losses equal all of the losses of last week which was the biggest weekly fall of december. a lost value of $3 trillion last week. let's take a look at the software and information sector which was among the hardest hit. you can see how quickly it dropped right off the top as those tariffs from china were imposed. let's take a look at some of the stocks that are directly in the crosshairs. apple down not only because of the trade concerns, but also it is going to face some antitrust

issues with its iphone app. that doubled down on the bad news. boeing and caterpillar down close to 5%. dow dupont pacing the declines we saw on the chemical related companies. tesla very much concerned because they are not yet taxing or levying the autos. there is a next petition that will come. aluminum steel hit very hard. paul: yes, su, on the subject of commodities also having a wild ride, we have oil, soft commodities falling. oil and bitcoin offering investments haven from the storm. update us. su: gold the clear winner here. three straight monthly losses for gold and all of a sudden it is off to the races. a bit of paring back in the extending traded. copper also coming back after a severe drop.

bitcoin off to the races, back above $8,000. the oil, a five day chart on oil so you can see how it had been rebounding on this shift in the gulf and plummeted on concerns that really these trade was will dominate the day -- woes will dominate the day. oil really in a downward trend for the short-term, if not much longer. paul: all right, thank you very much for that, su keenan. let's get an update on the first word news with jessica summers. er has beeni ordered to pay more than $2 billion in damages to a california couple that claimed they contracted cancer as a result of using the company's roundup weedkiller for about 30 years. it is the third trial in a row that baier has lost over claims that roundup causes cancer. the two previous trials brought

damages of $159 billion -- million. saudiays claims that two oil tankers were attacked in the gulf is a plot to stoke tensions in the middle east. saudi arabia says the vessels were severely damaged as they approached the single most important waterway for global oil shipments. it is yet to blame anyone for the attack and no one has claimed responsibly. tensions in that region rising after the u.s. deployed a strike group there. india for agher in third straight month in april, although it remains below the reserve bank's target, prompting talks of another possible rate cut. a fraction under 3% from a year earlier, the highest rate in six months and in line with the bloomberg survey. inflation has been since february but it is below the rbi's goal of 4%. global news 24 hours a day on

air and powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. paul: thanks very much. still ahead, msci awaiting china's a-shares and the emerging market index. we will ask what that means for investors. shery: next, today's broad-based selloff in the yo u.s. confirms the strategy of our next guest. he's all about playing defense. this is bloomberg. ♪

shery: we are counting down to this in the open with futures trading down 9/10 of 1%. more details on upcoming tariffs. $300 billion on chinese imports. the aussie dollar took a hit as we saw more details. i'mt now trading around --

shery ahn in new york. paul: i'm paul allen in sydney. you are watching daybreak australia. as shery mentioned, trade tensions rattled markets today. stocks sinking for the fifth time sessions as china responded to new u.s. tariffs. to discuss the day, russell investment director of investment strategies mark. the trade war, even though we are not really calling it that, apparently back on. if you want to get defensive in this environment, where is the best place to go? we have seen gold catching a bit. mark: days like today show the value of a multi-asset portfolio. whether it is an overweight to fixed income, going to real assets, gold or commodities broadly, infrastructure rates -- just onl tony anything -- owning anything else other than equities help you stay in the game.

you are going to make your money on the equity side of your allocation, but you need to own enough other things to see through days like this. if you look at the last seven or eight months, we have seen equity markets go straight down and then you got it all back in the first quarter. you get a little more in the second quarter and have given it all back in the last few days. a rocky ride to get back to zero. owning anything else right now will help people stay in the game to win tomorrow's battle. paul: you mentioned the long run. we are seeing some reasonable hits on u.s. equity markets in the past few days. over the year to date, still up. is this the time to think about sitting tight and staying long? mark: i agree with you. i think it is a difficult environment, particularly the news is being driven by trade and terrorists talk. you also have brexit. major events in the world that almost on an hour or daily

basis, any news can move it anyway. that is a difficult environment to trade in. you have your allocation. you sit and wait some of these events out because we think you will get resolution, particular to both of those events i mentioned. on days like today, if you want nibble on asset classes, that is fine. by making dramatic moves, you will whip yourself across the board. shery: this chart showing the rapid fall on the s&p 500, headed towards a 200 day moving average. now pricing in a quarter-point rate cut. will the fed come to the rescue again if these moves accelerate? mark: i think if you asked 100 folks and asked the rates would be up and 50 others would say the race would be down. the bond market has been given you one message and the equity market has been giving up another one.

the bond market is saying things are slowing down and the fed chair is taking his cue from the bond market. i don't think you will see the fed really be the story for the rest of the year. i think it is all about trade and tariffs and brexit resolution. we think the u.s. is more highly valued, particularly more than emerging markets as they are selling off. and europe because europe wins with a brexit resolution but also trade and tariff resolution, particularly germany. you want to make sure your assets are globally allocated. shery: we are seeing the three-month, 10 year curve inverted. will the fed be watching this and is this a concern for you? mark: i think within version -- we all look at it very closely. it flips, inverts for a day or an hour. we need to see a more sustained period before sending a real message. i think a volatile days like today, we are obviously defensive. money will move into the fixed

income part. i don't think yoany one or two day move is sending a strong message. the economy is doing well in the u.s. i think it is a valuation measure at this point. an inverted yield curve, i don't think it is getting too much notice as of today with everything else going on but we need to see a longer period of that before we believe it will be a recession. paul: another risk event coming up in a few days on may 18. president trump will decide whether or not to impose tariffs on european automakers. to what extent could a new front on the trade war push out and disrupt things? mark: i agree. i think it is all part of the same broad conversation. everything related to trade or tariffs. certainly, the market is taking its cue from this issue. last year on days the market would rally strongly, a lot of

times it was based on good news on trade and tariffs anywhere. whether it was anything going on in europe and china. trade and tariff is the issue right now that the markets will zero in on. the fed is in the background, but they have taken themselves out. they were last quarter's story. i think any trade talk, anywhere, is going to be what will move markets on a daily basis. paul: thanks very much to mark eibel, russell investments director of investment strategies. make sure to catch our exclusive interview with new york fed president john williams. kathleen hays will talk to him about inflation, the state of the market, and the escalated trade war. that is later on this evening at 7:30 p.m. in sydney, 5:30 p.m. in hong kong and only on bloomberg television. shery: you can get a roundup of

the stories you need to know in today's edition of daybreak. bloomberg subscribers can go to tv on your terminal. you can also customize your settings so you only get the news from the industries and assets you care about. this is bloomberg. ♪

paul: this is bloomberg technology global link. i'm paul allen in sydney alongside shery ahn in new york and emily chang in san francisco. let's take a look at the top global tech stories of the day. emily: here's what we are watching. apple slumped as the supreme court gave users the green light to press ahead with a lawsuit to artificially inflate prices at the app store. it could add pressure on apple to cut the 30% commission it charges on app sales. the app store is not a monopoly,

according to apple. the escalation in the trade war hitting tesla the hardest among major automakers with investors betting it will not be long before cars are again subject to higher tariffs. shares slumped to more than 6% on monday at one point, the lowest level since january 2017. the leading exporters to china sell in frankfurt, while gm and ford assemble in new york. the chinese owner of the gay dating out grindr is saying it's being required to sell the app under a deal with the u.s. for national security. it prohibits it from accessing any information from users or passing data to any china-based entity. those are the top global tech stories we are watching. shery: uber continues on its rocky wrote after a disappointing gave you on

friday. it's down nearly 20% from its ipo price. let's take a closer look with brad stone. how much is this to do with uber itself and how much with the broader selloff we are seeing in bond markets? brad: some of it definitely attributable to the market. a terrible day for the dow jones, nasdaq. you look at google, amazon and apple, down 3%, 4%. uber is down more than 10%. a terrible day on friday too. i think you are seeing the public market a lot less optimistic about uber. they see a company that lost $1 billion in the first quarter with well-funded competition china,ft and didi in and post makes in the u.s.. a company without necessarily a path to profitability. some of these problems are not specific to ridesharing. some are specific to uber.

emily: the uber ceo wrote a letter to employees addressing the market slump. said to hang in there. he compared what's happening with uber to what happened with facebook and amazon in their initial days of trading. do you think that is a fair comparison? brad: my colleague pointed this are-- facebook and amazon the right comparisons to make in terms of companies that were maybe understood after they went public and went on to great success. there are plenty of other companies that got poor reception's and continued to get pummeled by the public markets. shareholder lawsuits and all sorts of things can be in store for a company like uber now with the reaction it has gone from the ipo. he's hoping it is a facebook or amazon type situation, but the proof will be in their next quarterly performance and durability to get to profitability and pare back the losses. shery: is this part of the

narrative where we see these unicorn economy dynamics play out when you have venture capitalists throwing money at unprofitable businesses but the public market is not willing to do that? brad: that is right. this might end up being a verdict for the way silicon valley has operated for the last 10 years. these companies staying private for much longer. investors tolerating losses and really pricing these companies in the sense that there was an expectation they might become monopolies. certainly, investors thought uber would have more of a market share dominance. i think there is still hope they can outmaneuver companies like lyft in the u.s. or door dash or postmates. the problem is the market has been funding all of these companies and you have investors like softbank that have kept these companies afloat. the monopolist prices have not appeared, and as a result, uber is getting hurt by the public investors. emily: you wrote a book about

uber and got to know a lot of uber employees, some former employees. many of these employees have been through a lot with ceo changeover and scandals over the last couple of years, whic h the ceo seems to have righted the ship in that respect. a $62 billion company at this point, but half of the valuation what bankers floated. how will this impact employee morale? brad: it certainly cannot help. a lot of these employees and late investors will be locked out through a period of time. silicon valley really depends on an appreciating stock price for long-term loyalty from employees. it could create a problem for uber. this company has to innovate its way out of this hole. uber was a very innovative company in the first few years of its life. they are in a market situation right now where they have to keep coming up with new things to outmaneuver their competitors. paul: all right, bloomberg

senior executive editor brad stone, thank you for joining us. bloomberg technology global link. don't miss bloomberg technology live from boston all week. 7:00 a.m. in sydney. ♪

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paul: it is 8:30 a.m. tuesday in sydney open. the market open is 90 minutes away. trade turmoil sweeps the world. futures rise more than 8/10 of 1%. i'm paul allen. shery: i'm shery ahn. you are watching daybreak australia. let's get the first word news with jessica summers. jessica: president trump plans to meet chinese president xi jinping at next months g20. it could prove credible amid the divide over trade. stocks tumbled across the world as the u.s. raises tariffs on chinese imports and beijing heads back. the president says china still

wants to make a deal and warns beijing not to go too far in retaliation. china says a solution must be found. >> raising tariffs will not solve the problem. we never give in to pressure from outside. we are determined and capable of safeguarding our legitimate and lawful rights and interests. we hope the u.s. will meet china halfway to address each other's legitimate concerns based on mutual respect and equal treatment, and strive for a win-win agreement. shery: facebook may soon be unfunded by another democratic presidential hopeful. joe biden says you might consider breaking of the company and that dismantling large tech players is "something we should take a hard look at." elizabeth warren has been the most outspoken democratic presidential candidate to press for greater regulation of silicon valley's most prominent companies. global news 24 hours a day on

air and on tictoc on twitter, powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. paul: thanks very much. let's get over to asia as we head to the market open to check in on what the futures are doing. nikkei futures off 1.7% now. well.weaker as futures pointing lower. a theme emerging. new zealand is the only market trading right now and that is also weaker by almost 9/10 of 1%. we are bracing for another bloodbath, another difficult day for equities in the asia-pacific . to talk about it some more, asiaberg's across asset editor is here. the does not seem to be any end to the selloff. andreea: we are seeing a broad-based assessment across

all markets. commodities sell off. as well as u.s. equities which had a pretty significant decline. we are seeing investors reassessing this goldilocks scenario which pretty much dominated trading in the first quarter and the first few months of the year. up ineither side giving this trade war. it is becoming quite a bit of a concern. overnight, we heard the odds of the federal reserve cutting interest rates increasing. banks talking about the possibility of a recession. morgan stanley saying the trade dispute is prolonging the economic slowdown. jpmorgan warning u.s. stocks will fall another 10%. it's a broad reassessment. if you step back from the day to r-tat maybe

there will be in an outcome. we saw a respite overnight when trump said he would meet with xi at the end of june, but that is the end of june. five, six weeks away. i think we are in for this period of volatility as these trade negotiations really change, not even day-to-day, but almost alberto our -- hour to hour. we are in for probably another significant down day in asia today. shery: we have a usc are come out with more details on that extra tariffs of $300 billion of chinese goods. we saw the selloff in the u.s. trade sensitive sectors, industrials, tech leading the decline. tell us who the winners and losers will be here? andreea: obviously, one of the winners is the japanese yen. the yen is seen as a safe haven. along with gold and the u.s.

dollar. investors are flocking to the save haven assets. we have seen emerging-market currencies and commodity related currencies, especially the australian dollar take a beating within these trade negotiations dragging on. the yen's safe haven status looks like it is likely, they are likely to continue. againstready up 2.6% the dollar in the last month. we have citi securities saying it could actually rally to around 105. shery: thank you for that, andreea. you can find her charts on the gtv . to tariffs hit commodities grains and liquefied natural gas. mike is following all of the action. let's take a look at soybeans

because that is a huge export from the u.s.. this chart showing how much china has pledged to buy from the u.s. which is more than 7 million tons. so far, what they have imported, those lines in blue which do not measure up to the commitment. have we seen any response from china in what is going to happen to these agricultural goods? mike: i think most of those commitments are off the table at the moment. soybeans are down 5% approximately since the trump tweet that announced the tariffs. the significance is the stock market is down more. what i see in soybeans is the cure for lower prices is lower prices. this is a discount pre-growing season. farmers are not going to produce. they will plant, they will find any reason not to take losses. right now, there are losses in soybeans. that significance has happened.

farmers will just boycott. paul: let's talk about gold which is suddenly fashionable in this environment. it has broken through $1300, but you see a lot of caution as well. mike: i'm quite concerned about the potential upside in gold. you look at gold volatility, the market compression is the most extreme in two decades. it is just a market that is a tinderbox waiting for a spark. this might be the spark to break out. the path of least resistance is up. the dollars potentially peaking and volatility looks like it is bottoming, that leaves little room for gold to go anywhere but up. gold rallied in q4 last year because stock market started to recover. it looks like it is resuming that recovery trend. shery: oil retreating significantly as the trade were escalates. where is the trend going? mike: oversupplied markets go

down easier. liquid fuel production and consumption, u.s. will be energy independent from liquid fuel standpoints by the end of this year. that is helping to embolden the president with iran but that is a market with limited upside. there is little room for wti to go anywhere else but down, so i am very bearish on crude oil. paul: bloomberg intelligence commodity strategist, mike mcglone. let's turn now to emerging markets, saudi arabia and argentina. they see billions of dollars flowing into the stock market as msci announces the list of securities it is adding to its benchmark. 30 stocks from saudi arabia and eight from argentina will join the msci's benchmark. it is at the close of trading on may 28. garfield reynolds has been tracking this. run us through these stocks.

not too many surprises. garfield: a lack of surprises. they also expanded the number of china stocks. we have a chart that shows it is very relevant. can see there has been's about performance from the saudi and chinese stocks as these inclusions have been coming along. there are some reasons for those gains outside of the msci. china has the best-performing stock market in the world, steel. rebound and some stimulus. saudi arabia has benefited from the rebound in crude prices. on top of that, they have been outperforming because investors have been anticipating exactly this would happen. the percentage for saudi arabia is very much in line with what people were looking for. there might be a little bit of buyers remorse for those who did get an early because they managed to get in just-in-time for the shares to fall.

they thought they would be having a benefit to sell on those shares to those who now have to buy them because msci benchmarks tracked $1.8 trillion worth of shares worldwide. be selling theo lower price and they bought them. shery: does it matter that these announcements are coming at a time that em assets are struggling? paul: shery was asking does it matter that this comes at a time where em assets are struggling? garfield: it depends on your outlook. those who are tracking, they have to buy the shares. for another, we are talking about long-term investors. if you are going to take the longer-term view and say, well, in fact looking where china shares are now saudi arabia,

shares are now, they might offer a bit of risk reward profile for a year or two in the future than they did a couple of months ago when they were much more elevated on a nominal basis and regular valuation metric such as -- paul: in terms of saudi, pretty important step for them when it comes to modernizing the economy? garfield: absolutely. this has been one of the key things that the regime shift has been pushing for, has been wanting to do. it want to project that more modern image. they wanted to attract foreign funds into the capital market. they also need to attract foreign funds into their capital market because the oil price has -- is very unlikely to ever sustainably hit the sort of $100 a barrel level. that would bring easy money for the saudi arabian kingdom back.

need theally kind of kindness of strangers now. getting msci inclusion is an absolutely vital step in that process. shery: garfield reynolds, thank you for that. coming up next, asian trade center founder deborah helms joins us to discussed the latest tariff twist and the fallout for consumers and the economy. this is bloomberg. ♪

paul: i am paul allen in sydney. shery: i am shery ahn new york. u.s.ext guest says the increasing pressure on china is making the trade deal more likely, but she is not convinced. deborah elms is founder of the asia trade centre, normally based in singapore. she joins us from washington today. we have seen the u.s. trade

representative's office, with more details on potentially more tariffs on $300 billion of chinese goods. what effect will this have on the chinese thinking on policymakers as we approach negotiations? deborah: i think that is the question, of course. from the u.s. perspective, the plan is to increase the tensions, and by increasing the tensions, really focus the attention on beijing and make sure beijing understands the u.s. is serious. if no deal is forthcoming, every single product that is exported to the u.s. can anticipate tariffs and potentially very high tariffs, 25% on every single product that is exported to the u.s. the difficulty if you are china t enough to have them back down in the face of overwhelming u.s. pressure,

especially at a fairly sensitive time in china? shery: the logic in the trump administration is that no deal is better than a bad deal. how much is that the case for the chinese as well? deborah: i think that is the really great question. i don't think there are negotiations as such. normally, you have two parties. the two parties want to come together on a corroborative outcome. i think the difficulty in these talks, the u.s. wants most of the gains to come their way because they say the chinese have not played ball for the longest time. the chinese need to get. the u.s. therefore needs to do very little. that will always be hard to solve, especially when the tensions ratchet up, the chinese are likely to say maybe not. maybe we don't need to have an outcome. maybe we can continue to resist. if you have two parties that they can no deal is better than any deal, you don't get a deal. paul: as you were speaking, we

saw a list of some of the products. the list that the u.s. will be targeting but there were some fascinating things, including things like live primates, sewage sludge, ice hockey gloves. in retaliation, the chinese seems targeted -- computers, textiles, meat, lng. china cannot match tariff per tariff so what other measure chemchina take if -- can china take if things escalate from here? deborah: the chinese so far have been trying to be a bit more restrained. they also don't import as many products, at least goods, as the u.s. does so they don't have many things they can retaliate on in tariffs. they have a lot of things they could do if they went after u.s. service companies. one option for them is to start being much more challenging

around services. for example, checking every u.s. service supplier. let me see your licenses, qualifications. if you have staff on the ground in china, let me see their visas, paperwork. where did they go to school? let me double check their qualifications. you could make life quite difficult. you could slow down things at customs. there are a lot of things you could do that would make life quite complicated if you are u.s. companies in the services space, invested companies in china space. you could, if you really wanted to escalate things, deal with the chinese holdings of u.s. securities as well. i don't know if we will go that far, but in terms of harassing u.s. companies, there is a lot of space the chinese have yet to exploit. paul: plenty of opportunities to throw some sand in the gears on the china end. on the u.s. side, consumers are really going to pay the price

for this eventually? deborah: i think they are already paying the price. as these tariffs go up and as they move into more consumer facing good, obvious consumer facing goods beyond just backpacks and some sports equipment, and into things that you buy every day or you buy regularly, consumers will see prices go up. as consumers see prices go up, many of them will say wow, that is quite a lot of sticker shock when you have seen prices go from where they are to 25% higher, potentially more. firms will be paying 25% more, but that is not me a firm will only charge 25%. they could charge less, they could charge more. they might take advantage. i might as well charge extra because i have to change my whole supply chain, my costs are rising. see what happens. it could be any amount that u.s. consumers would have to pay. shery: we continue to see president trump bashing the

democrats, using this trade talk opportunity to do so. this sweet from the president yesterday saying that china is hoping that joe biden or any of the others gets elected. they love ripping off america. president xi, could he prefer to drag out the negotiations until after the 2020 elections which is what the president is implying here? deborah: that is a great question. i think for xi, it is hard to say what his preferred strategy is in washington. i think what is also important is to realize that inside china, there are a number of key deadlines this year. that is probably far more important for xi than whatever is happening in washington in 2020. for xi, he is looking at deadline in china that is especially important this year. that is far more relevant to him than a u.s. election that at the

moment for him seems some distance away. if you want to say why is he hardening his position in china, it is not because of u.s. elections, it is about chinese domestic politics that require him to be measured in his response and also not be seen to caving in to u.s. pressure at this moment when it is very important for the party in china to remain strong. that is much more important than whatever happens in washington. shery: so, u.s. officials right thatot happy, saying beijing has reneged on that agreement, not wanting to enshrine the changes in chinese law. if that is a redline, how do you find a breakthrough here? deborah: that is the difficulty. i think with the chinese were hoping for -- it is not a normal negotiation where the chinese give something, america give something.

you have to have some cooperation. you are not going to have the u.s. give in the sense of removing tariffs that already exist, it really is a one-way capitulation by china. china gives everything, the u.s. gives are grudgingly a small amount of tariff concessions. i think that is very difficult for the chinese. the more the united states says we are not going to relieve the tariff pressure immediately or in the near term, the harder it is for the chinese to say, well, in response, we will lock in our response and legal changes -- in legal changes. that is the difficulty. how do you get the chinese to lock into legal change when the u.s. will not remove a little bit of win-win outcome that there might be on the table? that is why i think these talks will go far longer and be far more difficult to close than most people seem to anticipate. shery: we will wait to see both sides. deborah elms, thank you so much

for that. asia trade centre founder. more on the trade war with one of the more expert voices, carlos gutierrez, former u.s. secretary of commerce will join us next. that exclusive interview is coming up at 8:30 a.m. hong kong, 10:30 a.m. sydney only on bloomberg. paul: you can watch us live and see our has interviews on our .active tv function tv> you can dive into any of the securities and become part of the conversation by sending us instant messages. this is for bloomberg subscribers only. check us out. this is bloomberg. ♪

shery: i am shery ahn in new york. paul: i'm paul allen in sydney. you are watching daybreak australia. that get a quick check of the latest business flash headlines. uber suffered a second disappointing day with shares closing more than 17% below last week's ipo price. staffo sent in email to acknowledging another tough day in the markets and morning of difficult a few months ahead. he also says that facebook and amazon faced a rocky road, but shares have recovered. shery: were knowledge -- renault fell as emissions failed to use on cars. the systems designed to filter particulates in the capture did not kick in at several temperatures.

renault recalled diesels amid criticism of a possible emissions device similar to the one found at volkswagen. paul: volkswagen is heading back to the markets, reviving ipo plans for its truck division and looking for buyers in other units. vw of do have the unit listed by august and offering a joint venture. a truck maker jump in u.s. trade on the ipo news on hopes of a complete takeover by vw which currently owns a 16%. shery: plenty more ahead on daybreak asia. we speak to for thos fidelity investment manager. volatility for asian markets. paul: that is almost it for daybreak australia this morning. trading in new zealand is underway. we are seeing it weaker by more than 1% now.

one hour away from the open in australia. futures pointing weaker by a little under 9/10 of 1%. all the action coming up on daybreak asia next. this is bloomberg. ♪

morning.d i am paul allen in sydney. we are one hour away from the australian market open. shery: i am shery ahn, welcome to "daybreak asia." paul: our top stories this tuesday, the t ariff-driven selloff. investors seek safety. gold gained the most since february while the yen has strengthened