paul: good morning. i am paul allen in sydney. we are one hour away from the australian market open. shery: good evening. i'm shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this thursday. fanning the flames, the u.s. debates that listing more chinese tech companies. beijing's slams what it calls an american -- american smear tactics. 500s fell.

asian markets are expected to follow. powell's patient policy. the latest fed minutes indicate a wait and see attitude towards where rates might go next. shery: let's get you started with a quick check of how markets closed. we saw the s&p 500 fall .3%. news that the white house could potentially target more chinese tech firms really did not sit well with investors. we saw tech shares down not to mention that retailers also had an ugly day and low, disappointing numbers really hit the retailing index which fell to the lowest in more than a week. leading they shares declines. wti falling in this session as we had some unsurprising buildup in u.s. stockpiles. do -- have to digest the minutes from the may meeting, showing a preference for more patience on rate moves.

not doinge is really much. let's see how we are setting up for the asian open. sophie: asian stocks could be set for declines. we are watching for weakness as well across tech and energy after the moves we saw on wall street. are focusedplayers on reports that the u.s. asked south korea to join its anti-huawei campaign. carriers in japan and taiwan stopping taking orders for new or huawei models get let's see how aussie bonds are moving this morning. three-year and 10 year yield slipping to record lows. the aussie dollar in precarious territory. the currency on board. central banks across asia moved to defend the currency from recent declines. optional you want willing above 6.93 as a way to see if the pboc will set it stronger. korean won trading below 1192 this morning after the bok

official said it is falling to rapidly in a short period. thank indonesia stabilized. indonesia stabilized after the jakarta protest. the most polish rupee forecaster -- bullish rupee forecaster sees it at 67. very much, sophie. first word news now with ed ludlow. sterling is setting records even as brexit thorns and theresa may comes under even more pressure to resign. the pound fell for its 13th straight day against the euro, dropping to the lowest level in more than four months. anothere minister lost senior minister. she quit the cabinet in protest at may's brexit plans. a senior member of the bank of japan says he is pessimistic about the economy and warns the proposed sales tax hike could country into

recession. he said october tax rise could further delay the drive towards 2% inflation by sapping demand. his comments follow unexpected first quarter growth. he said the headline figure marks weak consumption and spending. the rupiah has a five-month low after the latest violent clashes in jakarta. police fired tear gas and water protested his defeat in the presidential election. at least six people have been killed in the rioting. the president won the election. thursdaybegins later in india's election with prime minister narendra modi the clear favorite to win. despite around 900 million registered voters, the result is expected on the same day. exit polls suggest there was a

turnout of 67%, which means more than 600 million people cast a vote. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am ed ludlow. this is bloomberg. shery, paul. paul: thanks very much. the trump administration may be ready to stoke further tension with china as it debate blacklisting more chinese firms. would bar them from u.s. tech and potentially hold their global business. out at washington's tactics, calling them unfair and politically motivated. let's get the latest from joe sobczyk. joe, what is the administration's thinking here? joe: there is some question about whether the u.s. is going large,t targeting more important chinese companies as this trade war continues on. these companies that make surveillance gear and facial recognition technology have been

on the target list in the u.s. for some time over concerns about their role in china's repression of minorities and for possible espionage. it has been pressure in congress for the administration to crack down on those firms. but this does come at a time when tensions are particularly what and in the middle of are essentially stalled talks with china on trade. so this is trying to determine, for china, from china standpoint, whether this is a negotiating tactic or something larger than that. with: china has responded the foreign minister denouncing what it called smear tactics. take a listen. itshe u.s. keeps abusing power to willfully smear and crackdown on other countries into prices chinese enterprises. we have repeatedly stated our opposition to that.

we asked chinese companies to operate in other countries in compliance with market principles and international rules. shery: we have seen some rhetoric that is disheartening on both sides. joe: so far, the chinese response has been mostly rhetorical along with some stoking of anti-u.s. sentiment among their population. this may stem from the chinese being onshore about what exactly is trump's and goal here. -- end goal here. more threats to bring them back to the table to get more concessions in trade talks? the u.s. fundamentally trying to curb china's rise as a global economic power? that is a question that is not readily apparent even in washington, whether the administration has got an endgame here. that will be the important factor leading up to the g20 meeting, where trump could have a meeting with president xi, and

some progress restarting trade talks or perhaps even getting closer to a deal. paul: joe, from the very get-go of this whole issue, there was an understanding that eventually it would find its way to the consumers pocket. is this becoming a concern in the u.s. now? joe: it clearly is. steve mnuchin said today that he had spoken with the chief financial officer of walmart, the nation's biggest retailer, and a major employer, and about the effect of tariffs on prices as walmart and other companies have begun giving notice that the effect of the tariffs imposed are going to start to ripple through some consumer goods and the prices they are charging customers. this is articulately perilous as this has been so far mostly invisible to u.s. consumers but as prices rise, they will be doing so at the same time of the

presidents reelection campaign getting underway, so this does not serve him well. the administration is trying to work with companies, jawboning them, if you will, keeping a damper on some of the price rises they may be facing. some companies have reported lower profits as a result of tariffs, but eventually, they will be passing those along to consumers. shery: it depends on how big you are to be able to absorb those price hikes. thank you so much for that. joe sobczyk. the latest fed minutes show forcymakers will be patient sometime, even with inflation far below target. quite a contrast to market bets on a 70% chance of a rate cut this year. kathleen hays is here with a key point from the meeting. kathleen sending a deliberate message to the market.

kathleen:kathleen: it seems like they certainly have. the fomc minutes are so carefully written that it is hard to believe they did not pick and choose the words very carefully to include in this very important document released in washington. patient cause person -- pause persists. members observe a patient determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time. resonance asome well. john williams, president of the new york said, speaking today, echoing something he told me last week in an interview. there is no strong argument to make a move in either direction. we think that will be temporary. it will pick up growth in the second half. the fed minutes talked about that. the transitory nature of this drop in inflation. so far below the 2% target. world interest-rate projections are work page. by the end of the year, the odds

are more than 70%. that is the best in the market. the chance i should say of a fed rate cut are there and they linger even though it seems to view, and's inflation other commentators this afternoon, it shows there is not a big sense, no desire, to move fast ahead with the rate cuts. certainly not in these minutes or what we have heard from fed officials including jay powell when he spoke at that press conference after the may 1 meeting, which is where the minutes come from. patience, pause, persistence. we have seen an impact on the fed from that? kathleen: the latest fierce escalation had not yet occurred at that meeting. subsequently, said officials speaking yesterday. and again today, saying that this is one of the biggest risks to the economy right now.

if this intensified, it could slow the economy significantly. another fed's begun consider as we speak about the minutes, jump in the bloomberg. in an interview today talked about the yield curve. he said we are flirting with inversion. this,d when you look at it is just a teeny bit inverted. fed officials say it has to go much lower to become a flashing signal of recession. however, he said this signals sluggish growth and the trade tensions are part of this you'll curve flattening right now. people are concerned around growth. he said he is watching it very closely as an important signal so he has the minutes from the meeting that ended on may 1 and it will look ahead to all kinds of things. what happens next in the trade wars is what happens in the g20 meeting. the fed is on alert, but not ready to do anything yet.

shery: kathleen hays, thank you so much for that. still ahead, we will ask what else markets are watching today with global head of research, who will join us in new york, next. paul: plus we will speak to a former official at the trade representative's office who says president trump threw away most of america is leverage when he pulled out of the tpp. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. the tech sector retailers and energy stocks all took hits as .he s&p 500 fell su keenan was watching all of the action. goldman sachs believes this stalemate is going to go on for quite some time. they think the odds are higher

for a lack of agreement, which will continue to weigh on the market, and we also saw, you know, a lot of other crosscurrents coming from earnings, which we will get you in just a minute, but retailing continues to be a big theme, and we got reports showing both sides of the story, which we will get you. we have got futures relatively flat, and as kathleen went through the fed minutes, it did not have a big impact on the markets. stocks stayed down. yields were still higher. let's go to some of the big movers of the day. target really came in with a surprisingly strong report on sales. there comparables were much higher. improving e-commerce. they surged the most in more than a decade. that really gave a more positive the trend ons the gloomy retail story. lowe's really had a dismal

report. nordstrom disappointed in a big way after hours. all of that providing a counter to macy's optimism a week ago. qualcomm had a double ma, down not just on the huawei story but on the reallyust ruling, not approving it. morgan stanley having negative comments, saying it is no longer a growth story. that really hurt the stocks. but going to the bloomberg. gtv is where you can find our library of charts. this chart had a very strong rally, particularly peaking in april. as you can see, it has come down hard. a snapshot of the market. joining us now is jay jacobs. great to have you here. we really did not see much reaction to the fed minutes despite the fact that we really did not see any discussion around the rate cut.

will all of this change given how markets are now pricing and rate cuts and also valuations really are not that cheap? jay: i think where the fed is right now is a very difficult position because you could see a case for cutting rates and you could see a case for raising rates. inflation heads into the system because of chinese tariffs. you could see a very big case for raising rates. the market is trying to digest this information and the fed is saying we have to wait and see more. shery: could there be some sort of president trump put? given the fact how much he loves looking at the levels of the stock markets? our markets pricing in that he will -- are market pricing that in? jay: that is absolutely possible and there is the fed put. the fed has been supporting the markets for nine years now. even though the macroeconomic picture is looking more gloomy and the valuations are pretty full, the market really does not see a chance for sustained downturn, but they could be surprised if there is no trade deal.

tradeyou made a case for -driven inflation, giving the fed reason to raise rates, but of course, a trade war would be not too good for growth either. you could see some stagflation as being the case. really high tariffs causing prices to go higher as well as a selling out economy at the end of the cycle, so the fed could be in its opposition -- in a tough position if that happens. paul: we have been talking about the impact on the tech sector and the fallout from huawei. now potentially, this ban on chinese surveillance camera manufacturers as well. i want you to take a look at this chart on the bloomberg. notwithstanding all the gloom, check out contracts on the nasdaq, reaching the highest of the year. what is the story here? are there opportunities in the tech? do you buy now and hold on?

jay: we are seeing that investors might be much more better apt to look at more specific areas of technology. we are seeing a lot of these targeted policies affecting the chipmakers, but there's other parts of technology that are pretty unaffected. social media companies have experienced 20% year-over-year revenue growth. china great firewall has already been excluding facebook, so i think people need to be more refined about how they are thinking about technology and not just looking at the broad sector anymore. shery: you like tech software companies? jay: exactly. they are much more domestic oriented, building solutions for u.s. enterprise for english-speaking language. you do not see as much of the trade wars affecting most software firms like you see with the chipmakers that design the chips in the u.s., have them built in asia, and they get assembled in china and shipped to the u.s.. they are at risk of that

disrupted supply chain now. shery: health care has been another sector that has been really underperforming here in the u.s. are regulatory concerns valid at the moment? jay: absolutely. culture has had some of the best earnings yet has been one of the worst performers. the market is saying we care much more about what congress is what the data is showing in the financials. sort of policy decisions of congress, that could really big a big -- really be a big impact. paul: what are your thoughts on apple right now? that is something we were discussing in the last hour. applerse, there could -- could because will tee in the trade war. if huawei funds become unappealing, is there an opportunity for apple? jay: they are at the crosswords of this u.s. china trade war. this is the second biggest company in the u.s.. it is probably one of the best well-known brands in the world.

if china were to retaliate, it would be against apple. however, you are starting to see this market of the smartphone arrow starting to really be trade iszed, where less and less likely. it could be an opportunity for apple. it is a threat right now. very of 2:10's. do you have any contrarian goals in this environment? jay: one way people can look at playing this environment is covered call strategies. these are more nuanced but you end up giving up the upside and you start to see the premiums really start to build when there is more volatility in the market. we are starting to see interest as people look for the choppy sideways markets and they are not sure which way they are going to go but based higher volatility going away. shery: could we see stronger dollar, and what would that mean for profits? in the first quarter, we saw a stronger greenback printing those results. jay: the stronger dollar is

damaging for the technology stocks. that portion is coming down now in the u.s.-china trade war. a stronger dollar has often been blamed for low earnings. q2 earnings are expected to be pretty much flat if companies are trying to grasp for an excuse. they will blame the u.s. dollar along with the trade was. jacobs.ay you can get a roundup of the stories that you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. airlines havet

filed demands for compensation from borrowing from losses caused by the grounding of the debt. air china and china southern airlines company filed formal claims. china eastern says it is asking for damages. the state-run carriers operate 53 of the 96 max planes now lying idle in china according to local aviation data. has gonetish steel into liquidation, putting 5000 jobs at risk and adding to the gloom in u.k. manufacturing suffering from a weak pound and brexit uncertainty. nationalize the steelmaker, the bailout was denied. prime minister theresa may says all options have been explored and it is unlawful to provide a guaranteed to company. shery: the world leading oil exporter has hired traders and i'm killing your has reported in and iron ore in

the middle east. it would push it into the top tier of global filtrate is. it already has a branch in singapore and is uttering opening an office in europe. -- considering opening an office in europe. renault andant nissan to strengthen their ties. bruno le maire called on the two theiries to "consolidate" alliance. the partnership has been rocky since the rest of carlos ghosn for financial misconduct. he denies all charges. pretrial hearings start later on thursday. shery: qualcomm fell the most in more than two years after a u.s. judge ruled the company violated antitrust law by abusing its position in the cell phone chip market. the ruling says qualcomm used its power to charge excessive licensing fees from fun makers and suppress competition. all comes that it strongly disagrees with the judgment and will seek an immediate appeal. themg up next, the huawei

is already -- ban is already rippling through the chip sector. it could deliver a blow to apple. that is coming up. this is bloomberg. ♪ ♪ . .

bed: this is "daybreak asia." smearis denouncing u.s. tactics as the trump administration debates blacklisting more chinese tech companies. that would widen the crackdown beyond huawei with a new potential blacklist group. bar mayidth of our -- keep others from u.s. technology and further escalate tensions between beijing and washington. itshe u.s. keeps using power to willfully smear and crackdown on other countries' enterprises including chinese enterprises.

we have repeatedly stated our opposition to that. we always ask chinese companies to operate in other countries in compliance with market principles and international rules. of federal shutdown in washington could be back on the cards later this year. treasury secretary steven mnuchin is warning the government may face default in what he calls late summer unless congress raises the debt ceiling again. the limit came back into force on march 2 and so far, the treasury has been able to move runs around and take extraordinary measures to keep default at a. the signs of increased tension and iran as the country's supreme leader has crucified his own president and foreign minister over the 2015 nuclear deal. the ayatollah says they did not follow his wishes in the negotiations and he told them so at the time. the ayatollah has the final say on all matters in iran. his remarks show growing internal pressure in tehran and

increase pressure with the u.s. in any in my inner is called to meet with regulators thursday to a timeline. queensland needs a and an idea where the operations going. a serious as it will stick approval for management plans the next two weeks. football's governing body has scrapped plans to include the -- for the world cup to include more teams. after pressure from -- on growing the tournament, fifa said the impact would be too great on qatar meeting the world cup will not be expanded until 2026 with fifa having already approved a 48-team format or the joint hosts u.s., canada, and mexico.

sherry: -- shery: let's head back to hong kong. sophie: we are watching the korean yuan as its rapid decline has authorities worried. the currency touches its most oversold level since 2013 even as officials say the decline is expected. the bank says it may have come .oo late let's pull up the board in sydney. we will be watching reaction. a 47.3 percent premium to a closing price on may 1 within guysy value of roughly six -- million aussie dollar's

equity value of roughly 776 million aussie dollar is. focus after a delayed release of new huawei handsets. softbank was due to release a report friday. effects of moving down the .ipeline : goldman sachs says apple could lose almost 1/3 of its profit of china bans products in response to president trump's terrorist. even if it is not an outright ban, we have seen japanese south korea and products being boycotted just by chinese consumers. how badly could apple get hurt here? you.completely agree with

there's no chance of an outright and where apple products would not be able to be sold or marketed in china. what is very likely is an informal boycott. whenever there is a situation like you alluded to, there is going to be a push towards national champions like huawei. that means people in china are going to want to buy products built in china or by chinese companies. in many respects, huawei is the apple of china, a homegrown rand just like apple was brought up in steve jobs' parents' garage in california -- homegrown brand. people are not going to want to buy iphones in the middle of the turmoil the country is facing alsose of the tariffs but because of the trump administration been in the u.s. what way equipment. >> qualcomm shares took quite a beating in wednesday trade after

a u.s. judge ruled against qualcomm in an antitrust case. the judge really did not hold back, did she? not at all. it is interesting because this comes a few weeks after qualcomm's wide-ranging settlement with apple in order to continue to supply apple with hygiene modems and other technologies down the road. my colleague and i reported on bloomberg technology that today's ruling will not impact the agreed to settlement as of now. there are no plans for the settlement to be amended because of this. paul: thanks very much. china's biggest airline seeking compensation from boeing for auto delays and losses caused by growing of the set -- losses caused by the grounding of the 737 max. how much of a threat is this for boeing? >> this adds just another layer,

exposes another layer of risk for the plane maker. this is one of their biggest customers. we are talking about 53 of 96 grounded and an alliance want compensation for that. when you look at that fleet, it accounts for 65% of air traffic within china in 2018, so this could stack up to be a pretty big hit for boeing, and these kinds of cases are unlikely to stop with this single airline. days, airlines operate on very thin margins. they are pushing bees planes to the max trying to get the most out of them, so when they are grounded, losses i look quick and they are in a position to tilecompensation -- losses up quick and they are in a position to seek compensation -- up quick.

there's a lot at stake for plane makers because they have these relationships that they are not walk awayition to from. there's a lot of leverage the buyer has over the seller in this case. >> china was one of the countries to ground boeing planes when those issues arose with the max 737. how much is this to do with potentially trade tensions playing here and what have we seen in terms of similar claims in the past. >> certainly the broader issue for china is that they are looking to get into the aviation space. in many industries, they are looking to compete with the big western companies like airbus and boeing in that space. theh for them to do so if project is going to take many years, but there are companies that plan on a very large scale, so it is potentially the case that the pressure here has that , given thetum

deterioration in trade relations between the united states. boeing islike obviously not affiliated with the government. it is a private company, but any time government officials travel to negotiate trade deals, often is sending representatives with them and very often, plane deals are a big part of that. it would not be at all unlikely for the next trade deal with china to include a component that involves the purchase of airplanes. when you start demanding compensation and lowering the price, that can have an effect. i think it might be harder to say that there is a direct role or this type of issue in trade talks because this is a question where they are asking for compensation for products that did not perform as advertised. legal issue.

there's a lot of layers to it, but it's in the backdrop of these trade talks and of the broader competition with china in the aviation space. more broadly, boeing is trying to get that plane back in the air. what's the latest? officialse the faa testifying before congress saying they expect to take their time with this. one of the officials said even if it takes as long as a year to we don't want any shortcuts. they are trying to underscore being very careful about reviewing the proposed fixes by boeing. they have formed an independent panel or at least a panel that includes members from eight to give aand the eu third set of eyes to the proposed fix that boeing is making here. they are taking a very slow approach and a very careful approach in trying to get these planes back up in the air.

>> thank you so much for the latest on boeing. coming up next, we will did into -- escalating tariffs that stat with a former u.s. trade negotiator. this is bloomberg. ♪

paul: let's get back to the escalating trade war as president trump continues to raise the stakes. has been a former u.s. deputy trade representative and joins us now. we have seen things ratchet up again in terms of pressure. we have already seen wally targeted, obviously now the u.s. threatening to ban five chinese

surveillance firms -- we have already seen huawei targeted. is this really only all about trade or is there something bigger going on here? >> with huawei, there's no question there is legitimate criminal u.s. law enforcement. that's little question president trump has made statements that have suggested that he wants to use that kind in hisrcement negotiations with china, but the united states has legitimate reason to be engaged in the investigation of huawei and the imposed.tly paul: pretty much every candidate wanted out of the tpp in the most recent election campaign, but with the u.s. have then and a stronger negotiating position for all of this had it

remained or joined tpp? >> absolutely. the transpacific partnership served many important purposes for the united states, but one of the biggest is that it really put china and a corner and gave the united states great leverage for future trade negotiations with china. it was made up of 12 countries, all of which touch the pacific, but it was also designed for more countries who touched the pacific to join the agreement. it had a whole a session process by which new countries could join and every country that touched the pacific ocean was lining up to join it except russia, china, and north korea. even india and pakistan were sending signals they wanted to join and they don't touch the pacific. what would have happened is within a relatively short time, every country touching the pacific besides those three -- india, china, russia, north korea -- would have been in the agreement or in the process of joining the agreement and the chinese would have had absolutely no choice but to join themselves.

that would have put the united states in a position where the u.s. holding the key to china's entry, china cannot enter the tpp without u.s. approval, could have sat down and had tremendous leverage in insisting china bring itself into compliance with all of its wto agreement before even talking about entering into an additional tpp trade agreement with the united states. that leverage was leverage that the obama administration spent eight years of painstaking negotiations with tpp to create least have over china, at for the next president to have over china and then president trump which are the united dates on his first full's estate stay in office, not even beginning to comprehend the implications of what he was doing -- then president trump with the true the united states on his first full business day in office. of sendings help and

some of the issues that have come out from withdrawing from the tpp prematurely -- will this some of thetting issues? >> some, not others. the strategic element of the tpp will not be replaced by a bilateral agreement with japan alone. the u.s. european talks, that is a different story. for one thing, that does not affect the strategic dynamic in we are east, but also, still stuck in the since the europeans will not talk about agriculture and to be fair, the obama administration, which was negotiating with the european

union ran into the problem of the europeans not wanting to talk about it and the trump administration has run into the same problem. of thet a strategic goal administration -- we have heard president trump zurich directly under his watch china would not become a top superpower. >> that the great question. contrary to the world in which president trump lives, on this planet, china already is a superpower. is the official policy of the united states and they think there is a consensus on both sides of the aisle in the united dates, both ends of pennsylvania avenue, political appointees, career people, i think there is a consensus that the main objective is to bring china into compliance with its wto agreement obligations to the united states. iny things china is doing its current economic expansion

and plans violate basic trade obligations that china has with but just the u.s., and you -- the au and other countries. we respect those obligations with respect to china, and we expect china to do the same with respect to us. in a world where china is following its wto obligations and still expanding tremendously as an economic power, then you have a lot of division of in america. you might have president trump still saying he wants to shut down china where others of us are a little less afraid of china. they play by the rules, we feel confident the american worker can win on a level playing deal. paul: what does president trump need to be able to take a poll on the ground and say it was all a success, all worthwhile? >> president trump is a massacre

-- master of what i call the inner of success. he completely failed in trade negotiations with south korea and had tremendous theater of success and failed with all of the most important things in the north american free trade agreement renegotiation, and he again not quite as good but fairly good theater of success. heck of a lota for president trump to convince anyone he has succeeded. the reality is he just does not have the leverage that he would a way thatceed in most experts in the united states would consider a success. he threw away the tpp leverage. his bluster and baloney does not create leverage, contrary to popular belief. the leverage of the retaliatory tariffs were undermined when retaliated with their own tariffs. he does not have the leverage he to get what people

here in the united states would consider a successful result, so he is stuck escalating and or trying to fail and then trying to declare victory, which would be a lot tougher with china than it was with south korea or the north american countries. >> thanks so much for joining us today. more to come on "they've rate: asia." - on "daybreak: this is bloomberg. ♪

>> fallen auto tycoon carlos ghosn begins the rig's legal fight -- the biggest legal fight of his life. he heads to pretrial hearings in tokyo for alleged misconduct, which he denies. the first pretrial hearing. what are we expecting? as you said, this is the

start of what is likely to be a long legal battle for carlos ghosn. we understand that the more serious charges against him will be presented, and it's up to the prosecutors and his defense team to argue to the judge which beces of evidence should admitted in the real trial and which should be kept out. >> how is his lawyer expected to lay this? >> we understand he is going to step out of the car when he arrives today. he has been quite clandestine in his movements around tokyo when he has been leaving jail in the bail attempt. we understand he is going to be making a little bit of a show to remind the media that this is still around, that this is still something that he is focused on and that he will go into the court, which will be closed to media. we will not know what actually takes place until we hear from

the lawyers. we think that the defense lawyer will be using this as an opportunity to restrict what the prosecutors can put forward in the actual trial. this is a new procedure that was introduced in japan in 2005 to make trials less unwieldy and less long. so it will be able to decide what is admitted and what is not in this trial for carlos ghosn. >> the trial could be less long, but we have seen this saga continues since he was arrested in november. does this mean that we could actually see a trial date now, that the trial is closed? >> we understand that the trial will not be until early next year. this is the first of what could be many of these pretrial hearings. there could be three, even or of them for each of the charges, and there are four main indictments against carlos ghosn, the two breach of trust charges and the less serious

charges related to his compensation. >> thank you so much. asialoomberg news global managing editor there. of course, nisa will be one stock -- nissan will be one stock we will be watching. what are you looking at? futures pointing to losses across the board while u.s. futures are also moving ground. the yen, we do have gaining momentum moving toward 110, rising toward a second day with trade and brexit chaos. 10-year yields falling to a record low and futures hinting at gains on strong external factors and strong demand. the tokyo security said watch demand. when it comes to stocks to watch, we will be watching for

continued reaction to the u.s. ban on huawei as several japanese companies comply, including panasonic, and japanese telcos. the state department reportedly they should not provide any services in sensitive areas in the country and when it comes to japanese telcos, softbank has said they will comply. for that.ks very much still to come on the next hour : we will be: asia speaking to storm burke -- on the managing next hour of "daybreak: asia." stay with us. we will have the market action as japan and south korea open. this is bloomberg. ♪

paul: good morning. i'm paul allen in sydney. asia's major markets are about to open for trade. sophie: welcome to "daybreak: asia." paul: our top stories this thursday, markets look set for modest declines after trade tensions pushed wall street down. u.s. debates blacklisting more chinese tech companies. beijing has started what it calls american smear tactics.

>> later in the biggest democratic exercise in the world, some 600 million people have cast a vote in india. we will be watching closely how those indian assets performed after they jumped earlier in the week. >> japanese stocks are under pressure this morning while the by escalating trade futures ahead of trump's trip to trade futures. i want to check in on softbank shares, which are under pressure, off i 3.5%, this morning sliding in reaction to japanese companies falling including panasonic, also up by 1.2% this morning. checking in on the mood in seoul, the korean yuan very much in focus after authorities warned traders of the expected decline at odds with

fundamentals. the currency trading near a two-year low and traders seem to be pushing it toward 1200 with job by officials not seeming to track the selloff -- jawboning by officials not to me to track the selloff. the aussie dollar is in precarious territory off by .1%, edging closer to its flash crash low. miners be also watching futures. we have 10-year yields down just about three basis points this morning while the kiwi dollar is holding steady after a two-day decline. paul: thanks very much, sophie. let's get to first word news with ed ludlow. bed: sterling is setting records even as theresa may comes even more -- under even more pressure

isresign -- ed: sterling setting records. the prime minister lost another senior minister as the leader of the commons quit the cabinet in protest of may's brexit plan. the rupee henna five-month low after the latest file it clashes -- the rupee hit a five-month low after the latest violent clashes in jakarta. at least six people have been killed in the rioting. the winner took the election with more than 55% of the vote. >> i will not tolerate anyone who disrupts security which will disrupt the democratic process and the unity of our beloved country, especially those rioting on the street. >> there are signs of increased tension and iran as the country's supreme leader has criticized his own president and foreign minister over the 2015

nuclear deal. notayatollah says they did follow his wishes in the negotiations and that he told himself at the time. he has final say on all matters and iran. his remarks show growing internal pressure in tehran amid growing tensions with the u.s.. the bank ofber of japan says he is pessimistic about the economy and warns the proposed sales tax hike could tip the country into recession. he also said october's tax rise could further delay the rise towards 2% inflation by sapping demand. and expectedfollow first-quarter growth, but he says the headline figure marks weak consumption and spending. global news 24 hours a day on air and at tictoc on 20 -- on twitter. i'm ed ludlow. this is bloomberg. shery: thank you for that. the trump administration may

blacklist more chinese firms. such a move may bar them from ..s. tax -- u.s. tech beijing called washington tactics unfair and politically motivated. bloomberg learned earlier this week that the administration had held back on moves against huawei because they do not want to jeopardize a trade deal. if they go ahead and target these five more chinese companies, is there any chance of a trade deal than? >> i think that targeting additional companies would certainly be an escalation, but i think that it is an important point to note that these are things that would be done over security concerns and not trade concerns, but i don't think you can be -- you can fully say that these things are distinct because any move to target major chinese companies, particularly huawei, but also these securities firms does decrease

the ability to go get a trade deal. even if they start separately, it's hard to keep them separate. one of the things that i think is fascinating, and there was a really good bloomberg story on that chinaaid if -- does not necessarily know what the u.s.'s endgame is, what the u.s. critically wants. the question is -- is this a trade conflict or a bigger conflict, something about china 's rise overall? they are if in things that you would operate with different strategies depending on which one it actually was. things.are different paul: the targeting of those surveillance companies does at an interesting new dimension, the dimension of human rights because these companies are thelved in monitoring ethnic populations in china. that is something that has been on the radar of human rights

groups. what sort of territory are we veering into now? >> i think that is quite right. you have seen pressure in the united states domestically from not just human rights groups but lawmakers on both sides of the aisle who are concerned about what is going on in the west of china, concerned about what is detention of people that some say are detention camps and china says our training centers, but any involvement with that does square at some fundamental american values and i think some fundamental global values even though you have not seen the pushback from some nations, particularly some muslim nations like saudi arabia and pakistan, that you might have expected usually for something like this, but to the degree that these surveillance firms are linked in therehat sort of thing, is additional pressures that come up that are not related

really to trade in any way, so i guess i would leave you with this -- people tend to think of this as a u.s.-china trade war. i would posit that there is more going on and that it is more interconnected and more diverse, so if you are looking at this through a real sort of black/white prism, you are kind of looking at it the wrong way. on, so it lot going is messy and so the solutions might be more messy, too. paul: thanks for watching that ever evolving story for us. india begins counting votes today after a mammoth six-week election, the largest aquatic exercise in the world. the result will be announced later. prettye counting is quick. prime minister narendra modi is widely expected to retain power. delhi.a amin is in this is truly an enormous

exercise in democracy, isn't it? haslinda: enormous is probably an understatement. voters,ion registered six to seven percent turnout, making it about 600 million people who turned out to vote. these are massive numbers, mind-boggling numbers, and when you consider the fact that it is thest country from himalayas to the dense jungles in the south, it's amazing it actually took place without a hitch. you talked about how the counting will be quick. it will be. it will start at 8:00 a.m. today . it is expected to end at noon. some say because of the verification process, which is new, that could take additional time, but the trend of who is winning, which party will be leading in the next few hours, this is how it wins. basically indians voted using computerized machines. hundreds and thousands of them

across states, across the country as the election took place and these machines have already tallied the numbers. that's why the process is so quick. it has gone digital in a sense, different from what happened in thailand. we're still waiting for those .umbers in the lead up to the elections, we know exit polls have isicated that narendra modi in the lead. in fact, indicating it could be a landslide victory. exit polls not that accurate, but if you look at the opinion polls leading up to elections, they also suggested narendra modi and bbg a.p. -- the bjap will come back to power even with a slimmer majority. in 2014 when he first campaigned to be the top man in the country, this time around he is on -- this time around,

as his popularity was twiddling, pakistan came to his rescue. they really helped garner nationalist sentiment and hence brought the people to him. they say this particular election is the referendum of his five years, but his five years have been pretty mixed, but what has happened is the situation, the tensions with pakistan. >> it was interesting how much foreign policy and national security played into this campaign season, right? term ford a second narendra modi look like? >> just to put it in perspective, when you look at the countries, the $2.6 trillion , the likes of germany, innce, the u.k., and others 2023, we're talking about one

point 3 billion people poised to overtake china as the most populous country by 2030. modi willive years, have to capitalize on the potential of the country. to fulfill the pledges which he did not fulfill in his first five years. remember, he came to power promising growth, promising jobs. that has not happened yet. we're talking about 7%. the fastest-growing major economy in the world, but 7% is not translated to wealth throughout the country, especially for the poor. he promised 10 million jobs a year. that did not happen. remember, just to put into perspective, one million indians come to the workforce every single year. that means he needs to create jobs, and for that to happen, he has to look at manufacturing, investments in manufacturing.

-- investments in manufacturing have fallen by 15%. he has to look at infrastructure, the bottleneck of the country. that will come only if he can address land acquisition reforms, labor reforms. lots of unfulfilled pledges which he needs to address in the next five years. fory: thank you so much that. we will look forward to your reports in new delhi. we will have special coverage friday life from new delhi and mumbai as indian markets began election -- again reacting to the official election results -- indian markets begin reacting to the official election results. talk to the ceo of nuremberg investment management about the mutual fund firm's two big investment strategies. this is bloomberg. ♪

paul: no news may be bad news on

the trade fronts as simmering tensions continue to grip the markets, and this is despite a lack of real development overnight. jason brady joins us today from hong kong. thanks very much for joining us. nothing concrete on the trade front overnight. notwithstanding this potential blacklist, the five surveillance companies we have been talking about today. we also have president xi longng talking about a march. all signs currently point to the trade war getting more severe. is that your reading of it? >> i think there's a lot of political points to be scored here. ,ou see rhetoric from jinping as you just mentioned, someone who is never above some strong words is the trump administration. continued political point scoring. my question is for two economies

so incredibly interlinked, i mean, you see boeing, of course, and apple from an american company standpoint, then traveling in asia and i have see inre kfc's than i america. to take a phrase from the company's tagline, there is nothing here that his finger .icking good it will all get negative before it gets better as economic outcomes follow up on policy. surveyed -- paul : bloomberg surveyed 279 firms and found that 1/5 are considering moving away run china. is that the sort of sentiment you are picking up on? >> it is. not so much moving away as adapting to a new reality. i don't think that the promise of china has gone away. it's one of the biggest markets in the world. it is very much an important market for a number of companies all over the world. i just believe that this

tension, these challenges are real challenges and with government policy beginning to impact economic outcomes, i think it is something every firm has to take into account. from our standpoint, we are expressing more -- we're investing more into china, taking a long-term view because in the end, these are two economies that cannot get away from one another. they are inextricably linked. given the new reality with trade tensions, do markets also have to adjust on what trade sectors they invest in? showing thet philadelphia semiconductor index really all over the place. volatility has been great. we are seeing headed for the 2008 month since the financial crisis. even if we get a trade deal, we could continue to see these tensions around technology, some people calling this a new tech cold war. is this something that markets should be prepared for?

>> i think it is something we'll need to prepare for. it's not just the trade war i think is causing some of these challenges. you mentioned volatility, particularly in the tech sector. there are a number of firms where valuations anticipate continued significant growth where the fundamentals may not support that. not quite the same as the semiconductor industry, but tesla maybe gets mentioned all the time, maybe more than it should given a company of its size. if you the cabal to volatility inherent in that pricing, you have a $30 billion equity market the debt is trading at $.80 on the dollar, so that indicates that there is an expectation of volatility security with their little upside, which is the debt, is discounting so much and that is indicative to me of the market environment and -- in tech generally and perhaps overall. the fedould we rely on

to come to the rescue? we had fed minutes out and officials were pretty heartened by improvement in the stock market. is this something that markets can still count on? >> i don't think so. i think the fed has done a lot of heavy lifting. you have seen them go much more slowly with regard to rate rises then really you have ever seen them go. at this point, they stopped hiking. they have looked at the fundamentals. the fed's job is to do things, unspoken third. inflation is a little low, but in their view and in mine, that is not the biggest challenge. unemployment is very, very low, so that is quite successful. financial stability is a bit in question. you have valuations again, both in fixed income and in equities that are not low, some vulnerability, some volatility, so that is what the fed looks at. ultimately, if they had their scorecard being where stocks are, they are not actually managing what they need to be managing.

paul: we were speaking yesterday on the show to james bullard of the st. louis fed. he said he felt the fed over did it on tightening, but i understand you feel the fed has maybe overdone it on easing. >> james bullard has a lot of contacts and is in a lot of meetings that i'm not an, but as i travel the world, travel certainly the united states, speak to investors, speak to companies, there has been an underlying strength over the last multiple years that the fed has been very cautious with. now that is rolling over a bit, but it is rolling over in the context of the fed really not having a lot of room to support. i really view the fed as having been behind. today, the fed is really walking a knife edge. if they move too quickly or to either they engender inflation and instability or cause a slowdown.

they have painted themselves if it into a corner by not raising rates a little bit more aggressively in the market essex is me, when the economy was stronger, so now it is a question of what do you do? they are really not where they need to be as far as being ready for the next downturn. paul: that was my next question. we have seen a lot of easing across the asia-pacific region here in australia. have central banks and developed markets got enough ammunition left if there is another downturn? >> i don't believe they do. let's take a bit of a step back. we're looking at fundamentals, but ultimately, you rolled out up into a broader picture, a macro picture. take a step back and say more than a decade into recovery, you have significant amounts of accommodation that are still in the system. i think the expectation has been that global growth will equal or exceed what we have seen in the past, but productivity growth

for one, population growth in major markets is the same, so expectation needs to be lower for growth and potentially returns. i think the central bank mantra has been let's stimulate to get us back to where we were. ultimately, i think what you see in australia is a repeat of some of the same mistakes that were more than a decade old. then again, it's people. shery: when you said earlier you're looking more into china, is that also because potentially the pboc and policy makers in general in china have more ammunition against a potential downturn? >> we have been investing in china for a couple of decades, so i'm looking into china both as an investment manager and also as the ceo of thornburgh, looking at the long-term future

of chinese investment management markets. what you say is true. there is a lot of ammunition, and i fear that ammunition will ofused in the context countering a trade war for perhaps a lyrical points, maybe too much loosening, too much accommodation -- countering a trade war for perhaps political points. that would be a mistake to me, but managing the long-term future of the economy, which is of course very bright really needs to be on everyone's mind, not what the latest headline has been and how we score points. always great talking to you. thank you for that. of course, you can get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." this is bloomberg. ♪

they: let's get a check of latest business flash headlines. the french finance minister wants me know and nissan to strengthen their ties. and nissan tolt strengthen their ties. he called on the companies to advance progress and consolidate their alliance. the partnership has been rocky since the arrest of carlos ghosn for financial misconduct. he denies charges and pretrial hearings start late thursday. paul: foreign companies are scrapping plans to sell huawei handsets as the impact of u.s. -- thebins spreads impact of u.s. supply bans spreads. kerry is fear the blacklisting of huawei will mean it will not have access to the most popular versions of the android operating system -- carriers fear. u.k. prime minister theresa may suffers another blow as a

high-profile cabinet minister quits. more ahead. this is bloomberg. ♪

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: i'm ed ludlow with first word headlines. china is denouncing u.s. smear tactics as the trump administration debates blacklisting more chinese tech companies. that would widen the crackdown beyond huawei with a potentially -- potential new blacklist group. >> the u.s. keeps abusing its power to willfully smear and crackdown on other countries' enterprises including chinese enterprises. we have repeatedly stated our opposition to that. we always ask chinese companies

to operate in other countries in compliance with market principles and international rules. >> a federal shutdown in washington could be back on the cards later this year. treasury secretary steven mnuchin is warning the government will face default in what he calls late summer unless congress raises the debt ceiling again. force on came back in march 2 and so far, the treasury has been able to move runs around and take extraordinary measures. later thursday in india's mammoth election with prime minister narendra modi the clear favorite to win. they will start the tally at 8:00 a.m. local time, which is 10:30 in hong kong. the result is expected on the same day despite around 900 million registered voters. experts said there was a turnout of around 67%, which means more than 600 million people cast a vote. has scrapped plans to

expand the 2020 world cup to expand teams. this is the impact would be too great on the host qatar to expand from 32 to 48 teams. the the has already approved a 48-team format for joint hosts u.s., canada, and mexico for the 2026 competition. global news 24 hours a day on air and at tictoc on twitter. paul: thanks very much for that. breaking news right now on the bloomberg. nikkei pmi manufacturing for the month of may has moved back into contractionary territory coming in at 49.6. it has been taking up since a big slide in december. pmi numbers moving back into that contractionary territory.

we are seeing no change to the japanese yen. let's check in on what is happening at the markets. sophie: it is looking like a risk of tape. stocks will be following with kiwi shares bucking the trend while the yen is climbing higher with bonds. the 10-year yield slipping to a record low while treasuries are holding steady. citigroup says it is trying to get out of 10-year treasury's after the rally, seeing a potential rise to 2.6%. weighing onyers are the benchmark with oil trading at a three-week low and copper futures extended declines. let's check in on currencies. we had the aussie under pressure this morning. the korean yuan is firming up just a touch after [inaudible] analysts reckon that will not derail the dissent -- the descent of the one.

i want to highlight lg, which is falling as much as 5.4% as the u.s. reported missing about the company when asking south korea to join its anti-huawei campaign , but brewer is gaining ground, surging to a record after nasa announced plans to buy back shares. tech shares in tokyo mostly lower. softbank is also under pressure on the retreat after saying it will delay the release of new huawei models with one initially slated for this friday. softbank-backed chip designer arm is also complying with the band. over in sydney, leisure jumping to an october high -- leisure jumping to a high. farmers nudging slightly higher deal.he takeover that.nk you so much for

the latest fed minutes show policymakers will be patient for some time, even with inflation far below target, quite a contrast to market best on a 70% chance of a rate cut this year. with keyhays is here points from the may meeting. perhaps a message to the market -- do not get ahead of yourself. kathleen: absolutely, loud and clear. read my lips, or at least read my fomc minutes. basically, the patient cause persists -- the patient pause persists. here is one of the key sentences from the minutes. members observed that a patient approach -- that is the word -- to determining future adjustments to driver rates for the fed funds rate would likely remain appropriate for some time . the president of the new york fed was speaking at a new york fed event earlier today on housing, and he kind of justified and explained this a little bit more in layman's

terms. >> we have an economy growing above trend a little bit below our goal, are going to basically be right where we are in terms of interest rates, and i don't see any strong argument today based on what we have seen in the data or other information to argue to move interest rates one way or the other. kathleen: many are looking for a rebound in consumption and growth in the second half of the year, which he thinks will boost inflation eventually, especially with tight labor markets on top of that. he, too, says the temporary drop in inflation down to 1.5%, far away from the fed's 2% target is not going to last. that's with the minutes said as well. basically, what are we getting? a fed that is saying we do not really have much appetite or a worldut, but interest-rate projections jumped right in. look at december of this year, painted as the

best, the chances around 70%. we will see who wins this battle, but right now, the fed is pretty sure it's not going to move in that direction. kathleen, the fed pretty sure, but how about the market yet the things have changed a bit on the trade front since the minutes of that meeting was taken. kathleen: absolutely. that is so important because we had the trade war, but until very recently, it felt like they were making their way towards a deal and maybe by the g20, we would have something where they could shake hands if not eat at mar-a-lago before that, but we know things have escalated. the president of the boston fed speaking for a second day in a row in new york saying that one of the -- tariffs are one of the biggest risks to growth. speaking.ent why is the yield curve so

important? if it gets inverted, it could be a strong signal of inversion. one more look at the yield curve , and the difference has gotten pretty much to be zero. it is even a little bit inverted the last week or so, and he is saying this is a sign of concerns about sluggish growth, a concern trade tensions are and will take a toll on the u.s. economy. he is watching this closely. markets are watching this close -- closely. a lot is hanging on this trade war. >> thanks very much for watching that story for us. u.k. prime minister theresa may has suffered another high .rofile cabinet resignation she says she no longer believe the government will honor the results of the brexit referendum. with theresaatest may's brexit plan, and why might

that lead to the loss of their job? >> she is hanging on by a thread, it appears, and her plan was to allow a call for a vote on a second referendum, allowing parliament to vote on that, but only in exchange for voting on yet again inan early june. the problem for this -- with members oft a lot of the conservative party and of her own cabinet think she went too far in what she is offering with that second referendum -- the vote to have a second referendum. they say they feel betrayed by that, and at the same time, it does not go far enough for those who has been calling for a second referendum. she is really losing support all the way around. she has not gained any from the opposition labor party, and the calls for her resignation are increasing. at the same time, she is trying to get this plan through in early june but there does not

seem to be really any support for it. this is the situation which she finds herself with these european elections occurring as well. are we expecting her to resign in the next couple of days? what will happen after that? >> there are a lot of calls for that, and there seems to be more pressure. theresa may has hung on before. we have had these types of conversations before and she has still hung on. this appears to be different because this plan has already failed -- her withdrawal plan has failed in parliament three different times. this would be a fourth ale year and it looks like it may not even get to that. -- this would be a fourth failure. with the election, her party couldlose seats which mean more pre-brexit folks are innocent and see, which could result in more calls for her resignation. that's what we have to watch for

in in coming days. at the same time, she will continue to try to push for this event that folks do not seem to be listening, members of her cabinet are trying to decide what to do, what their next move will be. >> the pound seems to be pricing in those hardliners, falling for a record 13th session against the dollar. thank you very much for the latest. coming up next, india's mammoth election reaches the final stage. vote counting starts in a few hours. of the get the views societies. this is bloomberg. ♪

>> if the u.k. were to be a company, how would you fix it yet the >> the first thing is you have to be honest with the people and explain what a mess is -- what a mess the economy is in, what a mess the social system is. paul: india's election results withue later on thursday the likelihood that narendra modi will secure another term. for a snapshot of the markets in mumbai, let's get to sophie. how our markets looking in the main event? sophie: asian stocks have enjoyed a rally throughout the

process. modi's coalition secures 300 seats, some analysts see it touching 12,000 points, but a mild selloff or a massive one could be in the offing if seats fall below 250 or 200. banks have been among the out performers. bloomberg intelligence says election results do pose more risks that are for lenders. shery: thank you for that. is the asiaow society policy institute associate director. great to have you with us. exit polls in india have a reputation for being wildly inaccurate. is the strength of a projected victory reassuring for the prime minister at the moment back on >> the timing is bad because we just had the us trillion elections which were a surprise for everyone. no one is taking anything for granted. the magic number is 270 two.

can they secure that? you saw the last few days of the inction, no time was wasted the leadership making sure their coalition partners will not abandon them at the last minute. how much does the range of options in the marginal victory affect the prime minister's' drive in their policy agenda in his second term? >> what your collie just mentioned, if they are able to get to that point, there coalition partners, they will be over the 272 mark. they are to get two to 80 or 300, they will have enough stability to be able to pass anything they want to. to 200 or 300 -- if they are able to get to 280 300. paul: narendra modi's first term, he did not exactly cover himself in glory when it came to

getting trade agreements. what's the story there? >> you are hitting a right on the head. his focus on tracking the investment in india on a trade issue, having not a very market active, market-oriented approach. with theseen that trump administration. the president that and to take away gsp preferences from india. negotiations have been going on for several years now between asia-pacific countries and india is seen as one of the more obdurate obstacles, really holding those negotiations from getting any further. paul: is there any reason to think things might change if narendra modi gets back in? >> in the first couple of years, if he does have a majority on his own and he does have a strong coalition, he might have some room, but you saw in the last year when there was a lot of uncertainty about how this election would go, his in and was not to open up trade, not to

open up the economy, but to focus on things like rural income guarantees -- his instinct. making sure people in rural areas have jobs, have subsidies. if he is in a better position politically, he could potentially see that, but as the international community has learned since 2014, this is not a pro-market per se prime minister that a lot of people thought we had in 2014. that's really interesting. he did take big steps when it came to stabilizing the macro economy. how would you rate his policies on the economy in his first term? >> overall, the economic record is mixed. on the macroeconomic side, you -- you have the fiscal deficit come into a lot of order, but on the jobs front and the growth front, you have not had as much success. he has talked about getting 6% or 7% growth annually.

we have seen a lot of experts, a lot of analysts really put that number into question, questioning how the government reaches that number. what really hurt this government leading into elections is that earlier this year, there was a jobs report put out by the government's national survey organization which said india currently has the highest unemployment rate since the 1970's, so this took everyone by surprise. it really does not match what you think is happening in india which is growth over time, so a rural areas and a lot of normal indians are not seeing dividends of the economic policies that modi keeps talking about as successes and this might come back to bite the party a little bit. how unique was this election season in terms of how much foreign policy and national security played into it? >> it was very unique. february, you had a terrible terrorist attack in kashmir. over 40 personnel in the indian side lost their lives.

coming so quickly before an with hindud nationalist very active on the foreign policy front prime minister, i think modi really capitalized on that happening. india actually did not do so well in skirmishes with pakistan. there's a lot of international skepticism as to if modi was able to achieve the things he wanted with the strikes in pakistan, but he did achieve a political victory within india where he was able to show the indian public that he acted forcefully, stood up to pakistan, and talked about what he had done. previous administrations might have acted against pakistan but kept a pretty low rate are -- radar, kept a pretty quiet as to what they did. did he not keep quiet but bumped his chest a little bit, and that really got in andian public riled up way that i think really helped him going into this election. so much for you

being with us today. we will hear from some big indian corporate leaders later today. we had an exclusive interview with a cfo and about an hour after that, we will be joined by a coo. this is bloomberg. ♪

paul: the u.s. is considering cutting off the flow of vital to five technologies beijing video surveillance companies. let's bring in peter elstrom. tell us about these companies that the administration is now going after. are nothese companies household names outside of china, but in china, they are very big companies. these are the leaders in surveillance equipment including cameras and artificial intelligence that do everything 3-d facial recognition to images. it's interesting because if you are in beijing and you go along the highways and see these cameras on the light poles, the will be popping. they are taking pictures of people driving along the highways, but the equipment is not just use in china.

it is also used in london's subway system and other places, too, so these places are the leaders in surveillance equipment, partly because there is a big market in china and partly because there is a lot of data they can use without the same privacy concerns you would see in places like the u.s. last year, congress had addressed the issues concerning reports they were linked to the abuses of minorities, and now we are seeing that perhaps the trump administration could make the same case if it goes ahead with these moves against these firms. the u.s. administration, according to sources we have talked to, is concern about how the equipment could be used certainly against the minorities in western china. in addition to that, more broadly in espionage or all sorts of spying in other regions, too, so there are

concerns about where the data is going exactly at this point, and that is the reason they are weighing this ban on companies buying american components which would be a big blow to their business. they really need american supplies. usry: thank you for joining today. let's now get a quick check of the latest business flash headlines. china's biggest airlines have filed demands for compensation from boeing for losses caused by the grounding of the 737 max jet. air china and china southern airlines have filed claims with the plane maker while china eastern says it is asking for damages as losses widened. thecarriers operate 53 of 96 max planes now lying idle in china according to local aviation data. paul: british steel has gone into liquidation putting 5000 jobs at risk and adding to the gloom in you can manufacturing that is suffering from a weak

pound and brexit uncertainty. governmentas for a rescue and calls to nationalize the steelmaker, a bailout was denied. prime minister theresa may says all options have then explored and it is unlawful to provide a guarantee to the company. the world's biggest oil startedaudi aramco, has moving further into the trading business. 's expansion plan would push it into the top tier of global fuel traders. it already has a branch in singapore and is considering office in- opening an europe. sophie: keeping a close eye on the currency markets with offshore yuan trading steady this morning, below 694, as we wait to see if the pboc will set the daily 16 stronger than expected for a fourth straight day. that has helped stabilize the currency after tumbling about

2.5% this month. theireung intention to support it. central bank support has helped the you want in a record losing eer it's pinst its currencies. china says it will not devalue currency trade exchange says china has the tools to cope with fluctuations in the forex market. paul: thanks for that. before we head over to bloomberg markets: asia, let's take a quick look at how markets are trading. the u.k. currently weaker. we had japan pmi manufacturing numbers for the month of may coming in, back in contractionary territory. also weaker by a little more than one point 5% while in australia, the asx is off by

.2%. financials, the worst performing sector, down 1%, so that sector really weighing on the local markets here. let's take a look at futures at the moment. u.s. futures down .20 5% following a day of losses on the s&p 500, being pressured by .hose trade tensions we are also seeing the chinese offshore yuan slightly weaker. we are waiting for that open in china. we saw some of those potentially targeted tech firms really take a hit in the last session. the china open is bloomberg. ♪ next. china open is this is bloomberg. ♪

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