>> welcome to "bloomberg >> our topsia." stories this wednesday, wall street recovers as president trump strikes a more optimistic tone over trade. the dollar strengthens, but treasuries fall.

knock on effects from the trade war. john tells us exclusively, there is no need to cut rates yet. >> i think the policy is right. at of see any reason to have a bias upward or downward. nissan hits rock bottom as profit falls to a record low. we look at the turnaround plan. hery: unemployment rates for april coming in, 4.1%. much higher than the estimate of 3.8%. this is much higher than the previous month, when it was at 3.8% in march. we're not see the unemployment rate getting past 4% since early this year in january. we've seen weakness for the south korean economy, not to mention that experts and the china trade tensions have hurt every sector there. particularly, the private sector.

employment has been weak. the government has been trying to support economic growth through public sector job creation, but that obviously is not helped in april, with the jobless rate coming in at 4.1%. much higher than estimates. previous month. we have not seen this level early january. pretty weak numbers. take a look at how markets across asia are shaping up. stocks have been beaten down the that tensions around january low. let's see how we are setting up. sophie: let's take a look at the korean won. 11.87, asuptick to jobs numbers come in worse than expected. keep an eye on the one when the onshore rate comes later. checking in on how asian features -- futures are faring.

we are seeing them higher. stocks gaining ground. with markets in trade war purgatory, we may see tepid news , as there may not be time for a further correction. with the heaviest day of the japanese season upon us, japanese banks report, plus alibaba and tencent on tap. flipping the board, with trade tensions downplayed, that is offering relief to the offshore touchingch is -- after -- we may see more moves to stabilize the currency. for the past five sessions, it has been stronger than average forecasts. paul: thanks for a much. let's check in on the first word news with jessica. president trump has defended his strategy, saying it is merely a squabble. he insists the u.s. has been treated unfairly for decades,

but the trade war is likely to turn out extremely well. recovered. i the s&p 500 rose for the second time in three sessions, that it is still down since the terror threat escalated last week. >> the relationship i have with president xi is extraordinary. it is very good. he is for the china and i am for the usa and it is very simple. strongagain in a very position. if they want to make a deal, it could absolutely happen. u.k. prime minister theresa may is aiming to put the key piece of brexit legislation to parliament in the first week of june after the cabinet ruled that the oil is imperative to pass before mps leave westminster for the summer. jeremy corbyn says he will not support the deal without concessions. he doubts the credibility of the promises the government has

offered so far. well, u.s. aviation safety unions warned about flaws in the boeing 737 max several months before the plane was approved for service. a reporter says the latest theion of the jet was given greenlight, despite a vulnerable control system and problems with the fuel tank. the union said boeing had been given too much authority to oversee itself and its products. global news 24 hours a day on air and @tictok on twitter, -- @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. let's get more on what to expect arkets. chief equity strategist at bloomberg intelligence. we saw this nice rebound in the u.s., but it was interesting to see the rally we saw a earlier in the session faded into the close. , when weg can that be

have no visibility when it comes to trade? investors'ity is risk tolerance has been damaged over the last week. sentiment has taken up other hits that it will be a slow and volatile climb out, if this is the point at which we start a climate. it is too early to tell. it is rare you see momentum in stocks crash as much as it did in the last week in the midst of a broader ball trend. that is keeping -- bull trend. semiconductors and transport stocks turned over materially already past couple weeks. what i wouldoff of consider to be pretty strong levels. we want to continue to watch those levels for signs of strength, but it is too early to tell if this is the bottom. we seem to have priced in a a

lot of risk. the fundamental deterioration has clearly been priced in in the interim. the question remains as to how start toge this will bleed into economic growth. that is a question we will have to continue to ask ourselves for the next several weeks. one of the lessons during this whole cycle is not to be complacent. don't expect things are going to be sorted out quickly. as the confusion around the trade environment continues to drift, which asian equity markets are at the greatest risk? priced inly, we have a lot of risk in the u.s. and china, because that is where the initial discussions are coming. when you look at trade as a share of gdp globally, there are two economies that stand out as potentially more vulnerable to downside if this becomes a potter risk to global growth. that is the euro and korea.

these are areas of the world where more than 70% of economic output is related to trade. if this becomes a broader issue with trade, it becomes a broader global slowdown, i would expect those economies to potentially receive the greatest damage. it is worth noting that less than one third of economic output in the u.s. and china is related to trade right now. the relatively sheltered, even though the tariffs -- with respect to trade between the two countries, this could have broader impacts and we want to have a close eye on the economic data. the russell 2000 outperform other trade indices. when it comes to trade tensions or in thes markets u.s., doesn't make sense to veer toward more domestic stocks now that we continue to see these external threats? >> this is a really interesting question.

it's something we wrote about last week. the trade playbook. it would have suggested that maybe the russell 2000 is a better place to hide. last year was really unique for small-cap stocks in that they had this gigantic earnings boost related to past performance. the result is this year earnings growth looks weaker for small caps than it does for large caps. when you talk about domestic -- stocks, you want to pick carefully. small caps are a high tolerance asset class. they tend to perform well in risk tolerance. if risk tolerance is the story here, if global growth is the story, and small-cap earnings growth is falling at a faster pace than large-cap earnings growth, a will be tough for that performance in the small caps to indoor. we would say pick your spots carefully. large-cap domestic stocks have offered shelter from the storm.

small caps, you want to be pretty cautious and certainly selective. bloomberg intelligence chief equity strategist, thanks so much for joining us. the u.s. china care if -- tariff war has not yet shaken the number three man at the fed's fa of the u.s.trength economy. kathleen hays is here with her interview from the u.s. federal bank president in zero. -- in zurich. president trump once the fed to start boosting stimulus, like china has. what is the story? differentertainly two viewpoints. i don't think that either one is suggesting -- donald trump has said why doesn't the fed help me with the economy the way the pboc is helping xi jinping.

nonetheless, federal reserve is looking at an economy that even with a tariff war escalating seems to be in pretty good shape . that is exec they would john williams told me in several different ways. no matter what i asked him earlier today, he still says, as far as we can tell, the economy is in a good place. let's listen. what we need to do in the looking ahead at whatever happens, whether it is effects of trade issues or others, is really just keep our focus on achieving our goals, which is maximum employment. and adjusting our policy for whatever happens so we can best achieve those goals. kathleen: remember, the fed has said in the last few months that next week could move in either direction. they will watch the data. china's stimulus has boosted an economy that was weakening. he said that was a threat to the global economy.

it makes it less of a threat to the fed and their outlook for the u.s. economy. pounding the table again, saying if you help me out, the economy would have a nice big positive hit. let's look at what his tweet said when it came out on twitter earlier. you can see that he is saying that it will be a very big thing . this is what the people's bank of china is doing. it could be a home run for the u.s. economy. he goes on to say that he even thinks quantitative easing would be a big help. i do think the fed is ready to even think about that, but an interesting juxtaposition. one more thing to add, john williams spoke a few hours before trump out that tweet. i am sure he would have just moved on. still pricing and a quarter rate cut. not even opening the door a crack to rate cuts. kathleen: exactly.

it is not that he is not aware of what the trade war could potentially do. part of it is he could see that it could cut both ways. let's listen to what he says. asi do think of the tariffs like a supply shock. it has very effects in the economy. it will probably boost inflation by a few tenths over the next year. it affects demand and growth in the short run, but negative affects on the value chains and how the economic system works. kathleen: president williams rejected the idea -- or certainly didn't buy into it that maybe xi boosting inflation through tariffs could lead the u.s. to that rate hike. the fed is watching the data, considering their next move. clearly, h-1b what donald trump says and the tariff war on the radar screen, but unless it really affects the economy, not

going to move the dial. global economics and policy editor kathleen hays, thanks for joining us. up next, bank of america merrill lynch will join us. shery: later, discussing the outlook for china's tech giants. live from shanghai. this is bloomberg. ♪

paul: this is "bloomberg daybreak: asia." i am paul allen in sydney. shery: i am shery ahn in new york. president trump is calling on the federal reserve to help win the trade war with china. he says victory would be inevitable if the u.s. matched stimulus moves in beijing. bank of america merrill lynch says the next steps are not simply a game of chicken involving the president and xi jinping. it is a match between markets

and the fed chairman. merill lynch head of global interest rates and economics research david woo joins us now. great to have you with us from hong kong. what do you make of the president's tweet? is it just another way to hit at the fed, ask for help, and does it mean anything? will it active trade tensions get worse? -- will it act if trade tensions get worse? david: i do think trump is in a stronger position now than he was in september when the fed was hiking rates. there is no doubt the fed has stopped. from that point of view, that is helping to support risky assets. ironically, that is giving trump more ammunition to continue this trade war with china for the time being. shery: late last year, we saw sharp tightening in financial conditions which led the fed to change course. how are financial conditions at the moment?

david: the u.s. stock market until a week ago was an all-time high. -- from at real rates that point of view, there is no reason for the fed to cut rates. of recent -- light in some sense, you could argue tone overed's dovish the past three months partially reflects that they are starting to see the significance of the global trade war from the point of view of political uncertainty . it has been weighing on the economy the last three or four months. view, we arent of waiting with great interest to see what happens with this trade war. if it gets sorted out, i don't think there's any reason for the fed to cut rates at all for the rest of this year, given the strength of the economy. paul: we have got the market

so whatin cuts in 2019, does the market see that the fed doesn't? is, does theestion market know any better than the fed or vice versa? i have in doing this for a very long time. i don't think the fed has a crystal ball, that the market doesn't either. the market in some sense continues to be gripped. i seeing the market know better than tracking the data. it will continue to remain weak. i have seen through the valleys and the mountains, looking six months down the road. that theal view is fundamental economies are strong, but there is no doubt, whether it is brexit, the 2020 elections, these sources of uncertainty, which are currently

at the highest level in 20 years, in terms of political risk, have been causing companies to hold back capex spending and hiring, which is weighing on the economy. once these uncertainties start to lift, there is a lot of pent-up demand in this system that will get released. this is why the next few weeks or so crucial, as those trade wars dragged on for 18 months. this tradese, for war not to have negative permanent effects on the economy, it needs to end soon. they be a positive effect from this trade war as well? we were hearing comments from john williams that the trade war could push up inflation by a few tenths of a percent and the market expressed some skepticism the other week when jay powell was saying deflation was transitory. i don't know.

inflation -- iad wouldn't want to wish that on the u.s. economy. if you look at core inflation in the u.s., 50% is just basically housing and health care. from that point of view, if you take out the services, you are left with early 15%. what is coming from china is tiny. in the greater scheme, i think these tariffs are unlikely to have major impacts on inflation. have ahing, it will bigger impact on producer margins in china or the u.s., because so far, there is very little sign that retailers are passing on the tariff increase. shery: you mentioned pent-up demand coming out of europe. does that mean the dollar will weaken from here? david: for me, there are two major events for now. trade war and brexit.

brexit will have a bigger impact on the dollar, certainly versus the euro than the u.s.-china trade war. i'm still trying to hold out hope, but sometime between now and the european parliamentary elections, may and corbin are going to be able to strike a deal that would allow some things to get past that would basically results somewhat the uncertainty in europe. i was just in germany three weeks ago. all the german clients for telling me that all of germany is upset about brexit. brexit is giving everybody a reason to sit on their hands and one person was telling me that has 97-year-old grandmother is asking for daily updates. has had a much bigger impact on europe data than the u.s. china trade war. if we were to get resolution, i think the market will breathe a sigh of relief. i think cable will go higher.

view,k from the point of the outlook for the dollar in the near term depends much more crucially on whether we can get some certainty in this long-running saga of brexit. shery: we do get that health check of german gdp tomorrow. let's talk about china and the offshore yuan. we are seeing long time there close-out. take a listen. >> i don't have a vested interest in china's currency anymore. this is such an important moment in time for u.s. national security that all the work i've done over the last seven years is moving more into the political sphere than the financial sphere. shery: quickly, where's the yuan going? david: i think it is going nowhere. i really believe it is going nowhere. i think one thing i do -- shery: is that because the pboc is holding a steady?

david: -- holding it steady? david: no, because there is no deal between u.s. and china. if there is a deal, you could argue that it will remain -- that it will weaken from here. there is no deal, reason to believe that dollar china needs to move a lot. this gets to the point of the matter -- what are the chances of this thing getting results soon? to me, the most interesting thing that came out last week was what the vice premier said about the trade headlines for china. everybody knows, they want terms to be removed immediately. they want dignity to be incorporated and they want negotiation on the side upper current. the most interesting thing is they include nothing -- shery: hold that thought, we will continue after the break. of bank of america

merrill lynch. he will be back with us. this is bloomberg. ♪

paul: let's get a quick check on the latest business flash headlines. we expected things to be bad for nissan, but not this bad. predicting annual operating profits below the most pessimistic estimates and it is cutting for the first time in a decade. ceolts add pressure on the for a turnaround. jobs,starting by cutting and relying more on u.s. sales. shery: a top apple supplier posted first-quarter profits below estimates due to sagging demand drive. -- demands for iphones. the company is facing growing uncertainty with its founder preparing to run for president in taiwan.

coming up next, we will have , includingavid woo his calls on emerging markets. this is bloomberg. ♪

shery: weakness in the u.s. economy despite the administration's mantra of growth. recentlyhe atlanta fed forecast gpm one point 6% and the economy has been expanding theely because of debt as u.s. raises spending. he says the bond market is extremely exposed. saudi arabia briefly shut its biggest pipeline after attacked runs targeted to stations. a rebel group in yemen claimed responsibility.

the u.s. ambassador to saudi arabia says saudi claims of attacks on oil tankers should be investigated but need "reas onable responses short of war." no one has claimed responsibility for the attacks. dismissed aump has new york times report that his administration is planning for war with iran and will send 120,000 troops to the middle east. tensions have been rising after trump revoked waivers that had allowed iran to continue selling oil to some customers. the president said the latest reports of war plans are groundless. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. shery: thank you. let's return to our guest david woo of bank of america merrill lynch. you were telling us about the

three red lines, which include negotiating. why is this important? david: what is important is what it doesn't include. they did not include anything about forced technology .ransfer, ip protection, huawei it includes nothing about market access, subsidies, which we all know are by far the thorniest issues in the last 18 months. from that point of view, if you ask me, the only conclusion to draw is that the u.s. and china 90% ofy converge on the their differences. it to me, that was the biggest take away from last week. as the two this -- sides move closer to ceiling a deal, both trump and xi jinping have overwhelming incentive to impress their people that they

got the best deal from the other side. they can sell it at home that the deal was a triumph. i'm not saying this is all about optics and theater, but i think we need to think about this hard and from that point of the, both sides having careful to prevent this thing from escalating out of control. this is the most important thing. this is where i think the next two weeks are important. in some sense, that means that negotiations are over, it will come down to xi jinping and trump to direct engagement. they will have to make a deal. it will be a phone call, a meeting. shery: president trump also loves this personal relationships. if we do get a trade deal, how does it bowed that we continue to see tensions on the sidelines? china mobile getting barred from the u.s., lingering tensions over huawei, how will that

affect the markets as we boldnue to see bill -- see -- see volatility. david: it will last longer than the u.s.-soviet standoff because china is much more formidable than the soviet union was. nevertheless, this deal will be historic. think about this. last week felt like the cuban missile crisis on wall street. this deal is going to go down in andory as a historic thing i think that is why i suspect that trump and xi jinping will think about how they are going to go down in history in this respect. from that point of view, if they can create the impression of a win-win outcome for the u.s.- china people, that is the most important thing they can achieve. -- trump, if you

look at the way he negotiated nafta, he has indicated that he is more interested in closing deals than getting everything he wants. there is posturing on both sides for good reason. i think the two are heading toward a deal and this is the reason the new chinese tariffs do not kick in until june 1. that gives you a two-week window to hopefully get on the phone and sort something out. among all their posturing the past few days, something interesting happened that i wanted to get your thoughts on. that was the move in bitcoin, climbing back above 8000. i went to get your thoughts on what is happening. is that money slipping out of china? that is don't know if china. it could be china, but somehow i don't feel it is china, because i think the chinese market is quite orderly and in the past, when r&d went down big-time,

that was when you had big skyrocketing bitcoin. it has weakened to an extent that you feel -- i kind of feel -- i have no idea, nobody knows, because the corn transactions are opaque. i feel like it has something to do with argentina. there is nervousness about approaching elections. default. may have to suddenly, the market is pricing in a high probability of default. it may have something to do with argentina, even venezuela. paul: on the subject of the emerging markets, you said back in december that you would not touch emerging markets with a 10 foot pole. in the current trade war environment the past few days, are you looking at that 10 foot pole again and thinking it is appealing? david: i think you are exactly right. i said i wouldn't

touch emerging markets with a 10 foot pole was because trump just lost the midterm elections. i thought that this was going to cause him huge leverage in his negotiation with china. atjinping now looking washington, saying he could be out of here in two years time, especially with the stock market tanking. i thought there was no chance we would get a trade deal. coming into 2019, perhaps the most surprising thing is that until two days ago, the sides were converging at the speed of light. 10 days ago, guests were telling you where going to get a deal within a week. i think from that point of view, that is what i'm focusing on. think there are a lot of reasons why both sides were converging and i am assuming that those reasons remain. what happened in the last 10 days, nothing more than optics and the fact that it will force

both sides to a deal very soon. if that were to happen, there is no question it will be very bullish for asia. i like korea and australia. on monday, after china two --ted, there were aussie dollar what below 70 and dollar korea exploded to the top side. view, youpoint of will see pent-up demand in the u.s. being released. you will see imports, which are right now very low inventory in the u.s. picking up. you will not see a cascading effect through the entire supply chain, especially asia. onike korea and australia the back of a deal, which i hope is going to come sooner than later. shery: how much of the stimulus in china is spilling over into these economies? the stimulus shape right now out of china is very different from

what we saw in past downturns. david: you are very right. very little. if you look at korean export numbers, taiwanese numbers, they remain very weak. of view, if you look at stimulus in china, it has been properly related. ip came in stronger than expected by a lot has to be german with construction related. cement production was up 20% last month. housing starts went up. i suspect that is not sustainable. the number of unsold apartments in beijing has been going up. there at the highest level in five years. i think it is very clear that chinese policy stimulus is not going to be enough to carry the chinese economy if there's no end to this trade war. that is where this trade war has to end. korea and taiwan are not just being affected by the chinese slowdown. chinese exports to the u.s. is

about importing parts from taiwan, japan and korea. when the u.s. stops importing, that hits the asia-pacific countries very hard, independent of the weakness in chinese growth. shery: does that mean we are going to see more easing coming from these emerging-market central banks, especially given that the fed is on hold for who knows how long? david: we just basically doveshed a new hawk and index for asian central banks across the region. ago, there have been some improving sentiments. if you look at the speeches, statements from central banks, the general feeling is that there has been an easing of financial conditions. i don't know to what extent these central banks have to jump in and start cutting rates. some central banks may have more

room to cut than others. we're still calling for the r.b.i. to cut rates after the election. maybe indonesia, there is a bit more room. countries like korea, it is not clear to me that the recent weakness is going to continue in central banks. from that point of view, this is why the outcome of the trade war is so important. the next two weeks will be important, because the longer this trade war drags out, the more permanent damage it will do to the global economy. this is why the window for doing a deal is closing rapidly. i just want to get back to appoint you are making earlier about the european fascination with how brexit is playing out. there is another uncertain factor being introduced and that is the brexit party, which is pulling extremely well in britain. what does it mean for risk in terms of breast get -- in terms of brexit? and also the increasing the real

possibility that a brexit party could hold the power in a general election? david: that is a very good point. this reinforces my point earlier, which is that this must be placing huge pressure on the labour and conservative parties to do a deal on brexit. clearly, the voters in britain are not happy that this thing is being dragged on for this long. -- whenalso the reason you look at the latest pulled it came out the u.k. over the weekend, the conservative party is polling at 11% for the upcoming european parliamentary election. this is also the reason that theresa may is finally starting to engage with the 1922 committee. costis why the political of dragging her feet is starting to become obvious. the political cost for dragging their feet becomes obvious,

politicians have to react. to makew, no one wants a decision, because no one wants to be faulted by voters, but if you are now being faulted already, that is probably going to focus on getting things done. leave itll have to there. always a pleasure. thanks for joining us. david woo, merill lynch head of global interest rates and economics research. onre is plenty more to come daybreak asia. stay with us. this is bloomberg.. ♪

paul: let's check in on what to watch in markets this morning with sophie in hong kong. sophie: we are watching the sun, which had been downgraded to underperform with a steep cut to the price target after a dismal earnings report as the carmakers slashed its profit forecast. analysts reckon not all the bad

news may be aired. also watching gold producers on the news that saint barbara has agreed to buy atlantic gold in a deal that values the canadian canadian.722 million first half results were in line with guidance and shareholders billionote on a $2.7 takeover deal in late july or early august. on the acquisition trail, applied recently to acquire a turkish player. has confirmedare the closure of several distribution centers and job cuts as it seeks to target we will have a health check on the chinese economy later today when its two largest companies report earnings.

alibaba and tencent will shed light on how the world's second-largest economy is faring amid the trade war and economic slowdown. let's cross to shanghai and gartner director of research sandy shen joins us. these results after we saw stabilization in the chinese economy. when it comes to the future outlook of the sector, how much are we expecting the trade war to impact these companies? sandy: i would expect quite an impact from the trade war, because for alibaba and tencent, their primary businesses are coming from the china market. alibaba had some international expansion initiatives, like going to southeast asia and european markets. that is mostly going to serve the chinese consumers traveling overseas or trying to import products from overseas merchants. i think the impact they are likely to see is those merchants

coming from the u.s. who are -- importace rates duties thanks to the trade war. , the: online shopping trend has been downward. is this going to have an impact on these companies for the next few months? think, because the china economy is quite stable at this point, and imf raised growth rates for china in the economyear, i think the is going to do quite -- is in quite a healthy state. even when you see there is a seasonal downtrend for the shopping rate, i think overall, we expect quite healthy growth throughout the year.

especially when the consumer confidence still remains at historic highs. it is going to have a pretty limited impact due to the seasonal trend. let's talk about tencent as well. i have another charge for our viewers and it shows analysts showing less optimism on stock prices. on another chart, that does decline. i am wanting your opinion on that. what is the analyst investment community wanting to hear from tencent in terms of the story going forward? tencent's primary business is in social and online gaming. right now, they have the number one position in the chinese market, and they are also trying to get more in order to further

growth and penetrate this market. i think the gaming business still looks quite healthy. tot's they probably need develop furthermore is the b2b business, because the consumer business has become a very dominant player on both the social side as well as the entertainment side. they seem to be lacking a little side, especially in digital work-based collaboration. they have been trying to push enter tries -- enterprise we wechat butterprise they have not been adopted by the companies they expected. on the other hand, the competition from alibaba seems to have an upper hand.

this is where they are tense and need to further develop. paul: gartner director of inearch, sandy shen shanghai. thanks for joining us as we look forward to those earnings from alibaba and tencent. more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

paul: -- >> we were expecting it to be bad. it was much worse than even the most pessimistic analyst estimates. the ceo said they hit rock bottom. a number of analysts say there are further ways to go, because

their outlook for the 2020 fiscal year looks pretty bleak. even the ceo is asking investors for more time, 2-3 years before they returned to the pre-ghosn crisis levels. the lowest annual profit in a decade. they were predicting annual operating profit well below the most pessimistic analyst estimates. about half with the analyst community consensus is expecting. this is not going to please investors, they have cut dividends substantially for the first time in a decade. this latest report card gives shareholderand chairman and opening to push harder for more control and perhaps even a merger. again, related to that, puts

lots of pressure on the ceo to deliver a turnaround plan, which he is not actually formally announced. he has said he is going to cut some 4000 jobs, revamp the u.s. retail chain, because that is one of the key areas of weakness. poor u.s. car sales. shery: what is next for the alliance? >> that is the big question. keep in mind, we have this bar chart where we can show for the first time in about a decade that the earnings of nissan are going to be below that of renault. keep in mind, one of the big arguments for nissan to gain more equitable relationship in this alliance was the fact that it was more dominant in the key markets of the united states and china. --was the bigger tribute are it was the bigger contributor to profits. because of these woes, it is not that black-and-white anymore.

nissan and overtaken analysts are starting to/expectations for the stock. just in the last hour, an analyst downgrading nissan shares as they are about to open. they are opening at 840, that was the close yesterday. ¥520s cutting the stock to . watch for carnage on the markets today for nissan shares as the analyst community and investors are not pleased with these results. shery: thank you so much with the latest on the song. we will be previewing the market open in japan, south korea industrial you, watching nissan closely. we are setting up for broad gains, but look at nikkei futures. we seeing them swing to losses. further gains after the u.s. rebound led by tech stocks. plenty of catalyst with tencent earnings on top.

as the japanese earnings season wraps up, we are watching for results. the company is mulling cutting headcount. the screen maker expected to announce a charge related to declining sales. results are due from megabanks and japan postbank, which is reportedly to end its home loan tied up, according to the nikkei news. watching ae're battery plant in china. batteries are also on the radar after the u.s. added lithium ion used in china to the tariff list. the aussie dollar is little changed to the downside with local wage data and a slew of chinese activity indicators that will offer more have -- more news on the health of the economy. rallies for the aussie dollar capped by the ongoing debate over easing and trade concerns.

plenty more to come on daybreak asia. this is bloomberg. ♪

,aul: i am paul allen in sydney where asia's major markets have just opened. shery: i'm shery ahn in new york sophie: and i am sophie kamaruddin in hong kong. welcome to "daybreak: asia of your cup -- asia." stories, top asia-pacific stocks look set to track the recovery on wall street as president trump sounds an optimistic note on tariffs. the new york state fed president sees knock on effects from the trademark.

there is no need to cut rates yet. >> i think the policy is in the right place. i don't see any reason to have a bias upward or downward. shery: nissan hits rock bottom as profit falls to a decade low. we checked the road ahead with the turnaround stock in neutral. we will be watching that stock closely as japan, australia get underway. sophie, what are you saying? sophie: japanese starts are gaining ground on the heaviest day of the earnings season that will see results from the three megabanks, reports from nissan and nikita. the yen slipping a touch. offkospi is under pressure, .1 percent after edging higher on tuesday. plenty of catalysts to drive moves in seoul. that they plan to raise auto insurance premiums. the korean won trending up

slightly as investors digest the latest jobless rate at 4.1%, worse than expected. aussie shares adding .1% after a two day decline, while the aussie dollar under pressure by .1% ahead of wage data and monthly activity indicators from china. in wellington, stocks are gaining ground. the kiwi dollar sticking to a tight range. shows sixd jobs data straight monthly drops. paul: thanks, sophie. let's get the first word news with jessica summers. jessica: president trump has defended his china strategy, saying it is merely a squabble. he insisted the u.s. has been treated unfairly for decades and that the trade war is likely to turn out extremely well. wall street recovered as investors digested the positive comments. the s&p 500 rose for the second

time in three sessions, though still down 3% since the tariff squabble escalated last week. pres. trump: the relationship i have with president xi is extraordinary. he is for china and i am for the usa, and it is very simple. we are in a very strong position. they want to make a deal. it could absolutely happen. saysca: jeffrey gundlach he sees weakness in the u.s. economy despite the administration's mantra of growth. he says the atlanta fed forecast real gdp at 1.6% and the economy has been expanding because of debt as the u.s. raises spending and fuels deficits. he says the bond market is extremely exposed. u.k. prime minister theresa may is aiming to put a key piece of brexit legislation to parliament in the first week of june after the cabinet rolled it imperative that the main bill is passed

before mp's leave westminster for the summer. jeremy corbyn says he won't support may trophy has a concessions and doubts the promises the government has offered so far. u.s. aviation safety unions warned about safety flaws on the boeing 737 max several months before the plan was approved for service. a report at the time says the latest version of the flagship jet was given the green light despite a vulnerable control system and problems with fuel tanks. the unions said boeing had been given too much authority to oversee itself and its products. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: thank you. the u.s.-china tariff war may be escalating but has not taken the faith of the number three man at

the fed when it comes to the strength of the u.s. economy. bloomberg economics and public policy editor kathleen hays is here with more from her interview on john williams. williams is not worried enough about trade to call for a rate cut, unlike the president. kathleen: the president has been calling for a rate cut for some time. he thinks the fed could do more with inflation so low to rev up the economy. with the trade war escalating, a bigger threat of economic disruption and more inflation. john williams -- remember, number three guy at the fed. jay powell at the top, rich claire, then the new york fed president. he is watching it. he thinks it is going to have an impact, but not a policy changing impact. let's listen. tariffs is a the supply shock. it has various effects on the economy. if it is flex -- effects

inflation, it will boost inflation by a few tenths over the next year. it affects growth in the short run. also negative effects on the value chain and how our economic system works. economistfrom an standpoint, very important what he said about this having an impact like a supply shock. say oil prices go from $50 a barrel to $100. it would have an impact on inflation. but if they stabilize at $100, the stock boost inflation. same with tariffs. he says they will add a bit to inflation, but at some point that levels out. he did mention china in the context of being less of a worry for the global economy because all these stimulus they have put into the economy has helped stabilize it. europe is still a mixed bag, but china looking like it is on

stronger footing. not quite what the president had to say. paul: he is not too worried, john williams, about the tariff war, izzy? kathleen: he is not. he can see it has impact on both sides, but that is down the road. i guess that's the idea. it may have some effect, we don't know how much. we do know, according to john williams, the economy came into this year in a good place. he expects the strength to be sustained. inflation is below target, not such an issue for him. let's listen to what he said. >> what need -- what we need to do with the fed, whatever ,appens, trade issues or others is keep focus on achieving our goals, maximum employment. we are close to those goals now. and adjusting our policies dance for whatever happens -- our policy stance for whatever

happens. kathleen: while john williams said china has stabilized its economy, donald trump sees it in a different light. he thinks the trade war with china has escalated. he needs help winning at. let's look at a tweet he put out earlier, because it sums up how he thinks this is working and why the fed should be doing something. china will be pumping money into their system and reducing interest rates in order to make up for the business they are and will be losing if the federal reserve ever did a match, it would be game over, we win. china wants a deal. president trump suggesting they could do more bond purchases, quantitative easing. when you look at what the fed is saying, john williams, this is not in the cards. the fed has to see damage in the economy, the data. ester george, president of the kansas city fed, goes further. she says cutting rates now to

boost inflation, which is a bit below target, could cause asset levels and cause a recession. she is dead set against them. strong voices coming out of the fed saying wait and watch. john williams did not rule a hike or cut out but has to see reasons for it in the data. paul: global economics and policy editor kathleen hays, thanks for joining us. malaysia stocks are mixed in early trade following the u.s. equity rebound. garfield reynolds is head of the asia bloomberg markets my blogs. he is here with me in sydney. not quite the same enthusiasm in this part of the world. garfield: even in u.s. equity markets, the close was not convincing. was as president trump trying to think out loud positive thoughts about the trade talks, it's sort of faded into the close. early on we are seeing a little

bit of nervousness out there. the australian dollar has ticked down a little more than 0.1%. the u.s. equity futures are also slightly off. i definitely think we are in for a pause, perhaps on both fronts, for the moment. the australian dollar in particular has a reason not to shine. it has got wage data coming out today and consumer sentiment data. both of those could add to the case for rba rate cuts. paul: garfield, let me pick it up here. in terms of that lack of enthusiasm, i do wonder if those who had risk appetite have been burned a few too many times in this part of the world. garfield: the other thing is we didn't see any strong action from china yesterday. yes, we had president trump pulling bama his punch, as it

were, but there were no strong statements from chinese authorities. there was an unwillingness to let the yuan go much further down, but no strong actions. no state backed funds buying. hugether factor is we had declines in a lot of risk assets, then a tempered bounce. that could be interpreted as optimism on trade, or just exhaustion among sellers. the best case scenario seems to be we get a deal at the end of june. that's a long time to be uncertain about what's going to come. shery: it means you really don't know how you are going to trade. are we stuck in limbo when it comes to these market levels? garfield: i think there is going to be a lot intense wargaming going on, trade war gaming. some preconceptions have been overturned. -- maybe youlong

could end up calling it phony war period, where everything that came out was about how we are making progress, without ever getting anywhere concrete. now battle has been joined. if you are investing, you want to be asking yourself, ok, which assets are going to offer me a victory, depending on how i think the trade war is going to play out? do i think chinese shares have gone down too far because china's economy is resilient enough and china's stimulus is going to be strong enough to pick those backup? or do i think u.s. shares are going to power ahead to fresh highs as soon as those are out-of-the-way, however it is out-of-the-way. so i want to be looking for positions to take in there. the same goes for commodities, bonds. bonds look extremely pricey in developed markets, so there might be opportunity people are

seeing there. the decision process has become a lot more complicated. in particular now we have a bit of a breather. that gives investors the chance to do some deep thinking. where is the good play? the previous week and a half has just been battened down the hatches and try to hang onto positions. shery: thank you for that, garfield reynolds joining us from sydney. back to sophie for a check of the markets. nissan slumping after being downgraded to underperform , mcquarrie sliding to a september 2012 low. mcquarrie has cut its price target about 38% after the dismal earnings report, which saw it/profit forecasts and dividends. analysts reckon not all the bad news may be fully aired. let's check again on another mover, to keita sliding the most

since december after losses following its megamerger with shire. it expects nearly $2 billion in losses. paul: still the calm, how to play china's consumer sector in the middle of a trade war. we speak to the manager of a top-performing fund focused on china equities. shery: how is the trade spat affecting asia's central banks? détente joins us next from hong kong. this is bloomberg. ♪

shery: this is daybreak asia. i am shery ahn in new york. paul: i am paul allen and sidney. economistsley's u.s. say if a newly implemented tariff remains for three or four months, the fed may have to cut rates by 50 basis points. that is one scenario as the fed faces what it calls a unique

situation. let's assess the potential impact on policymakers and economies in asia. joining us from hong kong is morgan stanley asia economist deyi tan. thank you for in joining us. we had numbers out in this part of the world. we had some rather shocking korean jobs numbers, worse than expected. the imf also saying singapore in 2019,ing to be 2.3% a substantial reduction from 2018. are we seeing impact of the trade war flowing through some of the asian economies? and what are the central banks going to do about it? >> i think the trade tension is key here. our assumption is this is going to be a temporary escalation lasting three to four weeks. if that is the case, a gradual recovery is the best case because they are going to be offsetting mitigating factors from policy support. chinese policy easing will work

and spill over to the rest of the asia region. the other thing to watch is the u.s. financial -- is the u.s. financial conditions have used and we expect the fed to stay on hold before hiking in september and december. financial conditions will probably be easy. the monetary trade policy will turn in this part of the world and you will probably see it easing by indiana, philippines, korea and the second and third quarter of this year, which will provide some support for the economy. just as importantly, macro fundamentals will differentiate growth performance. indonesia and india are the two strongest in this part of the world. reforms post elections will also have tailwinds. paul: we spend a lot of time talking about the negative impacts of the trade war, but are there any economies that can benefit as u.s. importers look for alternatives to the chinese

goods being hit by tariffs? >> this is a question we are being asked by investors. we can think about it in terms of trade substitution or relocation away from china. korea and taiwan are some of the biggest exporters to the u.s. hearing of things being relocated to lower-cost economies. our view is the speed at which this happens is unlikely to affect negative impact from trade tensions. the reason is it will take time for export capacity to build up. at point is if you look china's global manufacturer export shares, it is about 17%. japan, 19%. it takes the whole of the region put together to parallel the export capacity in china, which makes it difficult to displace china and the manufacturing supply chain in the near-term. happen in to slowly

the lower-cost economies for this to pick up. shery: we have seen the chinese economy starting to stabilize. this gtv chart showing the economic activity data we saw in the past few months, starting to pick up. we saw the latest numbers on industrial production. there are the expectations for that. andmuch of the stability recovery will spill over to other asian economies? >> specifically for the april numbers, we see moderation compared to march. on the ip numbers, it will soften because march has augmentation because of the shift in chinese new year driving. core saw in april, production of core consumption growth as well as the manufacturing pmi index, it

appears there has been some softening. i think numbers will soften and consumption has also dropped in april, so that will be a little bit of a drag. the big picture story for china in the april numbers is still stabilization. date -- it will probably still take time to assess the impact from the trade tension. the rest of the region has not seen a lot of spillover from chinese policy easing yet. the heaviest indicator are the korean export numbers, whereby april export volume growth has gone into positive territory. we need to see more evidence in the upcoming months. shery: does not mean we are going to see asian central banks start to ease more? last week we had asia, the philippines, a rate decision by indonesia. with the fed on hold, how much room today have to try to boost their economies through monetary policy? >> asian central banks

definitely have room to cut rates from here. another 25 we expect to 50 basis points in the second quarter of this year. b.i., 75 basis points cut in the third quarter. philippines, bok, another 50 or 25 points cut each. this point of the cycle is still very benign. four of the five banks have inflation in the lower half of the target region, even below target. the inflationary environment provides room for them to ease, but there is downside risk to growth from trade tensions. tension,terms of trade how long does this have to drag on? potentially how bad would it have to get before risk of recession in asia becomes an open question? >> right now the best case assumption is three to four weeks because we believe --

whereget to a situation there is extended escalation, meaning three to four months, the reality is asia's growth will stay lower for longer. we will see more policy easing kick in. what this means is growth will probably decelerate in the third quarter of this year before picking up by the end of this year as policy easing kicks in. the global economy will probably get into a recession. the amount of policy easing we can expect to see will not be sufficient to offset the negative impact from trade tension. if that's the case, asia's growth will probably fall to the lowest we have seen in 10 years. paul: deyi tan, thanks for joining us this morning. and get a roundup of the stories you need on today's edition of daybreak. bloomberg subscribers, go to dayb on your terminal, also

available on mobile in the bloomberg anywhere app. you can customize settings so you are only getting news on the industries and assets you care about. this is bloomberg. ♪

paul: this is "daybreak: asia up your coat -- asia." urging userspp is to update the app following news that weakness has allowed outsiders to hack into phones using commercial spyware from israel. whatsapp says it made changes to block further attacks. hackers were able to install surveillance software developed by israel's nso group. israel has denied any knowledge of the attack. paul: longtime china bear kyle bass has closed his near four year wager against the offshore yuan. his capital management company entered its short-term back in

july 2015 and held the petition -- the position as recently as march. >> i don't have a vested interest in simply china's currency anymore. it is such an important moment in time for u.s. national security that all the work i have done over the last seven years is going to be moving more into the political then financials we are. shery: the top apple supplier posted first quarter profits below analyst estimates due to sagging demands for iphones. net income came in at 636 million u.s. dollars for the march period compared to the 767 million dollar average in a bloomberg survey. grow is preparing to run for president in taiwan while the smartphone market is stagnating. paul: plenty more to come on

daybreak: asia." we are going to look closer at nice as losses. those shares declining sharply in tokyo. more on nissan in a moment. this is bloomberg. ♪

jessica: this is "daybreak: asia ." president trump has renewed his advice for the fed. he says jay powell should echo what the pboc is doing to support the economy in china. he tweeted beijing will be pumping money into the system and reducing rates to make up for the business they are losing in the trade war. he added it would be game over if the fed did the same and he still thinks china wants a deal. president trump has dismissed a new york times report that his administration is planning for war with iran and will send 120,000 troops to the middle east.

tensions have been rising after trump revoked waivers that had allowed iran to continue selling oil to some customers. the president says the latest reports of war plans are groundless. pres. trump: fake news. what i do that? absolutely. but we have not planned for that. hopefully we are not going to have to. we would send a hell of a lot more troops than that. jessica: saudi arabia briefly shut its biggest oil pipeline after attack drones targeted pumping stations. a rebel group in yemen claimed responsibility. the u.s. ambassador to saudi arabia says separate saudi claims of attacks on oil tankers should be investigated but need reasonable responses short of war. nobody has claimed responsibility for those attacks. i ran dismissed the claims as a plot to stoke further unrest. australia's devastating drought is forcing one of the world's leading weed exporters --

leading wheat exporters to make a purchase from canada. the department of agriculture has issued a permit for one shipment. prolonged drought has fried wheat crops and production is expected to crumble 19% with shortages likely to continue. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: a mixed picture across markets in asia. let's take another look with sophie. sophie: asian stocks are trading mixed with early gains evaporated in tokyo. the kospi looking little changed, but to the upside, eking out gains after rising tuesday, while the asx 200 is halting a two day drop. pulling up some movers in the region. duty-free operators are trading mixed amid a news report that

south korea may grant licenses in november for five new duty-free shops to boost consumer spending and tourism. the licenses are expected to be awarded to large companies. in japan, to keita falling the most this year after forecasting a surprise operating loss due to the acquisition loss from the deal to buy shire. mitsubishi gaining ground, rising 11.2%, the most since 2016. investors liking plans for a $100 billion buyback that could raise eps by 4% for the current fiscal year. rakuten and is gaining ground, making move into entertainment with a movie studio to set up a joint venture for distribution in japan. checking on nissan, falling the most since 2016 on lower dividends and profit outlook. investors looking cautiously at the carmaker, which has been

ever roiled in many concerns. paul: thanks, sophie. let's get more on nissan after it heavily missed earning estimates. worse than even the most pessimistic forecast. joining us on the line from lewis.jan she just downgraded the stock recommendation from neutral to underperform. you have got a price target on nissan of ¥520. currently sitting at 788. so you are expecting a lot worse, by the sounds of things. >> yes. i think up to now a lot of support from the shares had come from the fairly generous dividend. even when profits had come down, they had maintained the dividend from the ¥57 level. now they have broken with that implied packed that they don't cut dividends, there could be further concern if they don't

deliver on plans that they would cut the dividend even more from the forecast ¥40 for the current year. , think without support gone shares have been trading at around eight times te. we use the average of march 20 and 21 earnings forecast to come up with our 520 target price. paul: not all the bad news out there yet. one more bad news are you expecting to hear from nissan? >> the critical thing is going to be execution. they have come up with a transformation plan, but a lot of it depends on the success of new models in the pipeline and the success of their ability to rollback incentives in the u.s. market and reduce fleet sales in the u.s. market. if they are not successful on any of these points, there could be further risk to their transformation plan. they also have quite a punchy

target for the china market, 9.3% retail growth. they work on a calendar basis and year to date are flat, which is good in the context of china, but catching up to the full-year growth of 9.3% could be challenging. china is their most profitable market, so critical to their forecast profitability. shery: have they factored in the restructuring costs they are planning to carry out as well? >> i believe that that is included in their forecast. to some extent, i would like to anything, have, if been a little bit cautious on the cost front. i hope they have been. you are absolutely right. things like material costs. if we were to see tariffs imposed. they have pretty good localization in north america, one of the best among the japanese. it could impact the material and parts cost of their vehicles. shery: bloomberg is hearing that

nissan continues to push back on to renew on renaud the merger initiatives. do the latest results give the upper hand to renaud? >> that seems to be the thinking in the press. did my view, to convince the minority shareholders that this is the best thing, renaud needs to show why it would be good as a nissan shareholder for the company to emerge fully with renaud. the other issue is they are in unchmidst of trying to sta the red ink in their automotive business in the u.s. would a full merger not be a massive management distraction at this point? there are a number of issues outstanding that renaud needs to address to make this a viable proposition. paul: janet, what about the face

of the ceo? he described this result as rock-bottom. he does have a plan for restructuring. it is not going to be enough to save his job? >> it is true a lot of the promise, particularly with their weak product lineup, is the result of decisions made for were five years ago. to some extent, he is in charge now so he has to execute. the second is there has been a number of departures at a senior level within nissan. they had their management team on display at the endless meeting yesterday, -- at the analyst meeting yesterday. it is not clear who the best successor might be for mr. saikawa. himself must be thinking about who his successor might be. there is a number of candidates and perhaps over the next six to 12 months we will see somebody

who stands out as being the best person to lead nissan in the next phase of their, hopefully, turnaround. shery: janet lewis, thank you, head of asian auto research at mccoury. oil is giving back gains after an industry report saw a big jump in u.s. crude supply. prices closed more than 1% higher in new york after drone attacks briefly shut down saudi arabia's main pipeline. let's bring in asia while reporter sharon show. we have two forces pulling in different directions. what should investors be watching? >> that's correct. oil prices are falling about 1% today. i think the industry data that shows u.s. inventories will rise by 8 million barrels is playing into it, as well as the trade tensions between the u.s. and china. it is important to watch

geopolitical tensions in the saudi'sast, because the biggest oil pipeline has been shut down. their tankers have been attacked in recent days. it turns out that you man -- yemeni rebels claimed responsibility behind this attack, and they are backed by iran. i think it is a big development in progress right now. aside, whatitics other significant events do we need to keep an eye on for the oil markets? opec.: we have we have the meeting between opec key members and saudi arabia happening this week. they will be assessing the oil market and publishing a report later this week, so that's one thing to watch out for. i don't think it is going to

opecate anything on what is going to do with their output cuts, because they have a ministerial meeting in late june. the trade tensions still happening is a key factor to keep an eye on because we have the u.s. treasury secretary saying he wants to visit china for a meeting on trade talks. presidents two meeting at the g20 meeting later in june. those are key events to keep a close eye on. shery: when it comes to supply and the opec supply cuts, how has compliance look so far? sharon: compliance has fallen a little bit according to the recent reports. trumpe u.s. president brushing china and asking them to increase production. we noticed that supply globally

has been really short, and we have seen a lot of unplanned and planned outages, so supply is already a bit short. not as muchnce is , butme of us have expected right now supply seems to be an issue that investors and analysts will closely keep an eye on. paul: asian oil reporter sharon cho, thank you for joining us. still to come, we meet china's top-performing equity fund and ask where the world's second-largest equity fund is coming. this is bloomberg. ♪

pa this is "daybreak: asia." i am paul allen and sidney. shery: i am shery ahn in new

york. the next couple of hours will bring indicators from china which will tell us whether the economy continues to stabilize. retail sales may have edged down last month, but still above 8%, 8.6 percent for april, according to estimates. let's discuss investment opportunities in china's commercial sector with michelle leung. what are you expecting in terms of consumption numbers out of china this morning? >> good morning to you. we expect april to be flat. we have seen a sequential q4rovement on retail sales, 2018. general checks from our coverage universe, which is mainly growth and consumer driven equities, we have seen a stronger consumer activity.

we would expect april to be flat following on a strong march, maybe not the strongest march, but better than january and february. shery: this gtv chart showing the absolute amount when it comes to retail sales, exponentially higher since a decade ago. about the top panel still showing the trend of deceleration. is this a concern for you? does it matter when you invest in the consumers in china? >> we believe consumer growth is a generational theme. long-term we are very bullish. we don't pay attention to short-term data, month-to-month. from our channel checks on the ground, we are on the ground in china from our conversations with management, we don't see any slow down near currently. we don't think there is any change of long-term consumer

to domestic shift consumption growth in china over the next generation. paul: i know you like to be contrarian in some of your views. what do you like in the space? >> we take a differentiated way to investing. we don't invest in consensus loans or momentum stocks. we like to invest in growth with a value overlap. what we mean by that is we like to invest in can't -- in companies with high growth, attractive valuation. if you look at our portfolio, the earnings growth of our pe'solio is about 30% and are about 12 times. the benchmarkbeen for us for the historical five year track record. what we look at is the stocks that are under covered,

misunderstood, or ignored by the markets. we will enter into positions when the market is not focused on these stocks. we will enterprises with a margin of safety. once the market understands the growth, we will ride a couple hundred percent share price increase. this is how we generate. if you look at what we have done over the past couple of years, we were up 5% when the market went down 20%. currently we are up over 25% despite the recent pullback. our profile doesn't follow the market data and neither does our investment portfolio. we don't hold any of the names you would typically see in a long china fund. involved in the chinese consumption side, i would imagine your knuckles would have been white over the past few weeks of the trade excitement. being long, are you able to

ignore the drama completely? >> we obviously keep an eye on what is going on in the market. we don't tune it out completely. we track it. when we make investment decisions, we tend to focus on fundamentals. we have our boots on the ground and be very close to management and we tend to make decisions that are not following the herd. we look for valuable locations and stocks that either are cheap because of the secular growth theme that the market has not quite understood or appreciated, or we look at recovery growth seems where the stock has lost over 90% of its value and there is a pending growth improvement insight, but the market is not quite focused on that and we will invest early at cheaper prices and ride the market cap. sometimes we invest in small caps that migrate to mid-caps or

mid-caps migrate to large caps through share depreciation. shery: how supportive do you toect the chinese government remain when it comes to tax cuts and other policies? >> this is critical for the chinese government. it is critical that the number one priority is to shift the economy towards consumption growth. what is critical is to have all policies in place to make growth smooth and undeterred. we have seen recently there has been a lot of policies rolled off on tax cut fronts and vat reform and even down to subsector level, the government has rolled out policies and subsidies for the home appliance sector. we expect all of this to over time generate stronger consumer activities in these sectors and stronger consumer activity overall. shery: great to have you with

us, michelle leung. don't forget, if you missed any part of that conversation, your function is tv on the bloomberg. you can catch up on past interviews, also watch us live and dive into any of the bloomberg functions we talk about. become part of the conversation by sending instant messages during our shows. for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: top apple supplier hawn high precision posted lower than expected profit amid slumping demand for the iphone. the wider smartphone market stagnates and terry grow prepares to run for president of taiwan. our asia tech reporter joins us there. earnings say hai's about apple's core business? quarter, in the first slowing iphone demand has affected hon hai margins. about $19.8come was billion, and in that sale about 18% compared to the year ago period. abouthone shipment fell

30% year-over-year in the first quarter, so that has hit hon hai. at the same time, hon hai is trying to cut costs to pop up its financials. so far it has scaled down its android, tencent business a little bit and is trying to cut its staff to save cost. 'sul: how does terry grow presidential bid complicate things for the company. -- company? debby: the company is saying it has professional managers overseeing each business group when terry is running for president, but in fact terry is the only person in the company who can coordinate across different departments and business groups. with terry trying to focus on his presidential bid, market watchers are concerned there at't be a second terry gou

foxconn who can pull itself together at a difficult time when the u.s. is trying to hit chinese imports with new roundup tariffs. applencludes handsets for , which foxconn is also making these products for the cupertino based company. we will be watching how terry gou's potential departure from the company will affect hon hai's business further. paul: thanks for joining us out of taipei. let's get a quick check of the latest business flash headlines. disney taking control of hulu to compete with netflix. they struck a deal with comcast that sees who lose value soaring to more than $26 billion in five years. even that will only be a fifth of netflix's current market cap. nearly is guaranteed a $6 billion windfall by early 2024.

disney expects hulu to more than double its subscribers by then. shery: the chances of jet airways making it back to this guy took ahead as the ceo followed his chief financial officer out of the company. he cited personal reasons for leaving at jet has yet to announce a replacement. the resignation comes after a jet's received only one conditional bid from a short list of potential investors. let's get a preview of what to watch and markets. sophie is in hong kong. sophie: we will be watching for reaction in singapore to the imf cutting the 2019 gps growth forecast to 2.2 percent, given the exposure to risk. we have had a bunch of earnings from singapore already. class we will be watching for reaction to you ovi sharing plans to boost revenue outside singapore to around 50% of total income by 2021. battery players announcing plans to build two plants in china to produce a total of 200,000

vehicles. last month a china top producer signed a 10 year supply deal with vw. watch chinese telecom shares amid mounting volatility with the market pricing earnings risks. speculation it may sell its 60% stake in a real estate project in shanghai. could be value $3 billion, one of the biggest deals on the mainland. hutchison also interview after reports allege the company may be concealing $7.4 billion of debt. that is a snapshot of what to watch at the open in china. our markets coverage continues with bloomberg markets: china open. this is bloomberg. ♪

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there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ 9:00 a.m. in beijing, hong kong, singapore. welcome to "bloomberg markets: china open." are counting down to the open of trade. david: today's top stories, the asia-pacific mixed. the recovery on wall street failing to lift sentiment. yvonne: nissan a loser as ,rofits fall to a decade low with a turnaround stuck in neutral. tom: the new york fed president sees knock on effects.