paul: welcome to "bloomberg daybreak: australia," i am paul allen in sydney. emily: -- ♪ ed: > -- here the top stories. the treasury keeps rolling with yields at a 20 month low. the shares is the risk could justify a rate cut. beat sales estimates but suffers a loss, the largest of any public company.

part of australia -- one of australia's biggest energy companies says it once to protect itself from the trade war. we bring you an exclusive interview. shery: let's get you started with a quick check of the markets here in the u.s. stocks rebounded after falling to the 12 week low. we saw the s&p 500 gain 2/10 of a percent. we had a series of data coming out that shows that the economy was on solid footing. 2/10 of ained percent. we saw technology stocks leading gains with the nasdaq of 3/10 of a percent. below that was still level. we have the energy sector weighing on the index. wti is falling 4% in this session. we saw a smaller than expected drop in u.s. stocks.

we are continuing to see some tensions over trade, so not surprising that we continue to see the treasury rally. let's see how we are setting up for the asian market. sophie: asia and are pointing to a mixed session. qe stocks opening lower ahead of the minister's post budget speech. treasury yields march lower again. that could see the bond rally resume. watch.stocks are on day when it comes to ego data in the region. we'll have china's manufacturing emi, which comes a day after modi was sworn in as prime minister. we would get data from thailand and japan and from south korea. industrial output also do later in the morning. facessee if governor the

calls for a rate cut, given expectations for moderating inflation. thanks. let's check in on the first word news with ed. china is fighting back on the trade war, putting purchases of american soybeans on hold. bloomberg has been told state-run grain buyers have not been -- and not received instructions to place orders. the countries agreed to a tree's in december. the move was designed to show could will toward getting the dispute result. i u.k. official says president trump and prime minister may plan to discuss huawei during his state visit to london. the u.s. needs to convince allies to exclude the telecom giant from five g networks. the u.k. has not made a decision. they fired her defense secretary over a week that british intelligence secretaries would

not push for a ban on huawei. seven south korean tourists have drowned and 21 remain missing after a sightseeing boat capsized in budapest. it collided with a cruise ship on the did you during a rain. only seven people were rescued. attempttempt to -- will to raise the bow, but have warned it could take days. modi has been sworn in as indian prime minister. officials conducted a lavish ceremony at the presidential paris. -- presidential palace. ministers need to arrest an economic slowdown and boost employment after receiving a resounding election mandate. 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. this is bloomberg. bond: the u.s. government

market rally shows no sign is running out of gas, with growth concerns potentially set before cut rates. kathleen hays is here. reprisingseem to be global growth expectations, and we have just seen -- we've just heard from the fed chair. kathleen: just enough to maybe hold your hope out. it eventually will get on board and look at the global economy and the risks as the precipitating factor for the next rate move. i happened today is interesting, because bond yields across the board hit lows in the afternoon after mike pence said the u.s. can double tariffs on china if necessary. let's jump into our bloomberg library and see what happened to the yield curve we watched so closely. now out to about 16 basis points. has gone flat to eight to nine.

the 10-year note guys low as % today. the vice chair of the federal reserve said it is watching the flattening yield curve. they realize there are factors making it flat. it has inverted for a while. hislso said something about response to the economy and downside risk, everything that is going on globally, which did seem to open the door a crack to a rate cut. attuned to potential risks to the outlook and if we saw a downside risk to the outlook, that would be a factor that could call for more accommodative policy. that is definitely something in the risk management area that we need to think about. kathleen: on the other hand, let's remember he also said the

economy is a very good place, with some inflation. it doesn't sound like a guy who is that worried, but he did admit that the risks materialize around the world and that is something that could make it the more accommodative for the rate cut. paul: obviously, one piece of data is inflation. that doesn't look so good on the latest gdp report. growth held up well. what happened? is interesting, because first quarter gdp revision came in at 3.1%. that is a healthy number. there was inventory building last year ahead of the tariffs coming on that helped boost that number. nonetheless, it was supposed to boost to 3%. the problem is, when you look at inflation, the core -- on a quarterly basis was at 1%. the weakest in three years.

jump back into the bloomberg and we will take a look at this number all by itself. 2% is the target. 1%. it is going in the wrong direction. this is the concern. in that gdp headline number, consumer spending was stronger. 1.5% now, but it is weaker. focus on all the more a report out tomorrow into the income and spending report that will have april numbers on the pce. our bloomberg economics team is waiting to see if the readings for the first month of the second quarter show that this inflation weakness is starting to rebound. we shall see. bloomberg global economics and policy editor halfing hays. -- kathleen hays. for the month of may, losses are still significant, 5.3% with financials and retailers under pressure. su keenan has more.

day, butnd on the brutal end to the month. a rebound from the 12 month low. let's get into that snapshot. we are seeing red on the screen. you notice the futures are flat going into the friday trade. let'ss significant, but take a look at the big movers. again, the size of the move is notable. some of the issues -- it is important to know, it was down. big momentum. it deals with securities for the internet and software. they came out with a very good forecast. sprint is higher on new news about the deal. dollar trade retailer also had positive news. health-related and drug-related stocks still under pressure. speaking of pressure, let's go into the bloomberg and look at the gap.

sales have been under pressure. in the regular session and reporting after the bell and getting slammed. take a look at the after hours, trading has been down as much as 9%. it is now down more than 12%. sales down across the board. is on a the cfo conference call, not pushing a lot of the blame on the tariffs, but has plenty to say about them, saying tariffs translate to a tax on consumers in reduce dependency, but it is still 21%. shery: i mentioned earlier, oil took a big hit today. kathleen: we have the supply data out a day late because of the holiday and it was very bearish. we saw a big drop. look at that, down 4% on the day for oil. if you look at the big picture chart, you have to remember that we have been up 45%. oil on a tear starting off the year.

in april, down 14 present. ince then, i do -- a decline the stockpile. the glut a u.s. production adding to trade concerns. the spat with china will hurt demand. thanks for a much for that. is still to come on "bloomberg daybreak: australia," shares higher in late trade after he delivered its first report of rising revenue. still losing $1 billion in the quarter. he tells next. shery: plus, we jolt down into what is causing inversion in the yield curve. all of that next. this is bloomberg. ♪

shery: i am shery on the new york. i am paul allen in sydney. you are watching "bloomberg daybreak: australia." let's get

back to the markets where the bond rally continues to flash a warning sign. the gap hitting its lowest point since 2007. joining us for some perspective is the chief investment officer, carol schleif. thanks for joining us. i want to get this one out of the way. take a look at this chart on the bloomberg terminal. in terms of what the bond market oddslling us, we see the of a recession are rising to their highest in quite some time. is this the week where we start dusting off our obituaries for the bull market? piece of it isa traditionally an inverted yield curve does lead one to pause, but you have to step back and ask, what is causing it to invert? -- we wouldions demand it to be inverted for three months or more and a

quarter of a basis point for a sustained time. you have to ask what is causing that. the fed at the short end means that is going to keep it high. part of it is, you have to step back from a fundamental aces at the models we are looking at the fundamentalre the models we are using to look at the economy broken? that the fed retaining dotted line, although they may step in if things get worse. the market pricing in three cuts for the rest of the year. where do you see it hitting? shery: -- carol: three directives being onlytion -- the fed has subscribed to those first two. in his comments today, he did

talk about if the economy weakened sufficiently, that of the employment and inflation, if that weekend, that might cause the fed to come back. three rate cuts priced into the market seems that investors may be getting a little ahead of their time -- of themselves. shery: you are right that volatility is not amended, but indid see after the market the fourth quarter, the fed is making a huge u-turn, especially as financial conditions tie-in. carol: a piece of what the fed was doing was not just reflection on volatility. a lot of that was not necessarily fundamentally derived. a lot of a related to program trading that was going on. when you parse back and look at what caused the biggest swings, it was more mechanical things going on in a lot of funds than a reflection of the economy. the fed has insisted throughout is data dependent.

that is a difficult task, because the numbers are muddied by the government shutdown, by what may be happening ahead of tariffs or in anticipation. there is a lot to watch for the fed, but they are watching the data and listening to what their companies are saying. shery: in the meantime, as we have trade tensions continue, we have seen one sector that has been badly hit and that is in semiconductors. this gtv char on the bloomberg shows the philadelphia semiconductor index had its worst month since the financial crisis back in 2008. given how this sector can sometimes mirror what the economy will do next, should we be worried about where this sector is headed and given the changes in the supply chain these days, is it perhaps a long-term positive that all of these firms are now readjusting? carol: i think that is a great

point. a piece of it is through all of this is the economic statistics are muddied. there is a focus on the fed and a lot of other specific single point items when what we ought to be doing is asking how our business is behaving and thinking. that big piece is in the near term, there are a lot of reasons , not the least of which is the trade tensions with southeast asia. you have also got potential trade tensions with the eu, brexit issues causing a lot of these managements to rethink where they are going to spend, -- where they are going to expand, where they are going to supply themselves from and how do they rebuild it? at least the potential of muddiness in the short run, but in the long run, if you have a flexible global supply chain, that benefits everybody over the long-term. it is just a little volatile and difficult getting there. know you would say volatility is normal and it is, but is it normal when it is

being driven by these factors that you describe? , a unique president sending out tweets in the early hours, how do you price that kind of volatility? you go back and look at a long-term chart, even the and you look at a wobble for the last 12 months, which on a day-to-day basis doesn't feel like a wobble, but you look at it on a long-term chart, which would put charts in our last strategy report and it really is a wobble in the long-term upward trend. always a long list of items for markets to be fretting iout and even in my career, can go back and list out also to things that the markets face in the long run. that is where we really do try to stay nimble in the short run and focus on the long run. shery: now that we are over a year in in his trade tensions, when you look back, should we be

concerned that china has become more hardline, that their rhetoric has hardened in recent days? is the whole idea of these trade tensions was that the u.s. would be able to outlast china when it comes to economic growth and the state of the economy. is that going to happen? carol: i am not sure we ever bought into that argument. we said for that entire time that it was unwise to shortcut and dollar for dollar match the tariffs that could potentially go on. there is an awful lot of things that can go on. we think is in the state draw too hard of a line in the sand that no one can save face and back away from. have a welled to integrated, well functioning system, and it benefits everybody to did -- it benefits everybody. it seems like both sides are intent on wanting to talk, but

hopefully we get settled down enough that there is enough room in the interim for them to meet at the table and get something done. shery: we will be looking forward to that meeting. thank you so much for that. , deputy chief investment officer. you can get a roundup of the stories that you need to know to get your day going on today's edition of daybreak. bloomberg subscribers, go to dayb on your terminals. also available on mobile on the bloomberg anywhere app. you can customize your settings so you only get the news you care about. this is bloomberg. ♪

paul: i am paul allen in sydney. paul:shery: i am shery on in new york. let's get a quick check of the latest business flash headlines. we've been told it is considering major cuts in global

banking and markets. pressuredlint managers to cut costs. reductions are expected to begin as soon as june and will continue across the rest of the year. in itstill hiring banking unit and plans to add staff in its asia unit by 2022. the casino giant is taking a stake in cron resorts. that makes it the second-largest investor in australia. melco will pursue ac on crowns board. shery: the u.s. china trade war has landed a blow on a couple of high-profile brand names. calvin klein and tommy health figures. company fell the most in a -- blamingming the it on anxiety among choppers to

buy less. it has trimmed its outlook for the year and says disappointing chinese new year sales were a result of the trade dispute. are getting a boost after hours following its first earnings report as a public company. the world's largest rideshare company reported first-quarter sales that beat estimates, but also lost $1 billion among the largest loss of any public company. bloomberg intelligence senior analyst joins us from new york and, investors seem to be liking what they are seeing right now. should this suit some of the concerns we saw as they debuted on wall street? mandeep: i think they performed expected, especially on the top line. they already gave us on audited results, the bookings at 41% looks strong. they told us that the take rate and the core platform margins will improve for the rest of the year. they bought up this quarter and you expect -- they also talked

about more rational pricing. that started positive. they are seeing lyft be less aggressive when it comes to pricing in the u.s. market. they expect more rational pricing to improve the take rates. paul: our margins going to keep improving for uber, and if so, where is that likely to come from? mandeep: i think higher take rates are a positive. they are talking about gradual improvements and it comes from bringing down insurance costs. that is a big drag. also expenses. investors would want to see payment expenses go down as they keep drawing revenue, because right now, payment expenses are about 12% of total revenue. those are the main margin levels. delivery wasw food

a diversification way for them. how is that going? mandeep: it is going really well. food delivery grew 100%. about $2 billion, especially in light of amazon investing in delivery. you know that is a big market and a fragmented market. the fact that uber is now the largest player in the u.s., is a validation that they are able to base and caper them for food delivery expansion. it helps that it is higher engagement. at the end of the day, they have got 90 million riders. if they can engage them using ridesharing and food delivery, that will show up in the margins. paul: bloomberg intelligence singh,analyst mandeep thanks for updating us. coming up next, one of us china's biggest independent oil and gas producers looks for the silver lining in the trade war. we have an exclusive interview

with the ceo just ahead and we will be checking in on markets as well. this is numbered. ♪ -- this is bloomberg. ♪

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paul: friday morning or in sydney. . the market open in 90 minutes. futures pointing hi. an update on wall street. i am paul allen in sydney. shery: i'm shery ahn in new york where it is 6:30 p.m. you are watching "bloomberg daybreak: australia." let's get first word news with ed ludlow. reporter: the fed vice chairman says the central bank is prepared to ease monetary policy if it sees mounting risks to u.s. growth. however, he stresses the economy is in a "very good place" with inflation low.

they say that risk assessment and not just data could be a trigger to the cut rate. >> we are attuned to the potential risks. if we saw a downside risk to the outlook, then that would be a factor that could call for a more accommodative policy. that is something in the risk-management area that we would think about. reporter: u.s. economic growth last quarter was revised down by less than expected. consumption was stronger than originally reported and so were exports. gdp expanded at an annual rate to 3.1%, down 110 from the original report. bloomberg intelligence says growth is dependent increasingly on consumer spending with business rattled by volatile markets and trade concerns. arab and muslim leaders are gathering in saudi arabia for a summit in the city of mecca. the organization of the islamic corporation will hold meetings

as tensions rise between saudi arabia and iran. the saudi's accuse iran of arming who the rebels in yemen and attacking oil tankers and a pipeline. iranian officials are in attendance, but the countries -- not the country's foreign minister. jp morgan has agreed to the biggest of the first settlement in an anti-dad via's case -- biased case. they will pay million to a male employee who says their policy was biased against fathers. he unsuccessfully applied to a 16 week leave being the primary caregiver of a new board -- newborn. 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 ed ludlow. this is bloomberg. shery: let's get back to hong kong and get a check of the markets. with ouret's check in market appetite for bonds.

gains.tes today resuming put the 10 year yield on course for a month of decline. markets seeing a chance for a in -- a november meeting to novemberelds 2016 yields this week. ofd speculation the bank korea might ease policy. paul: thank you. let's get more on what we should be watching as trading gets underway in asia. adam haigh is here. final day of what has been a pretty tough month for investors. what are you hearing from some of the market veterans? reporter: it feels like we are kind of reaching the inflection point for stocks, because we have obviously had that really big draw down in may, although you have had some outperformance for u.s. equities. it has been nice trouble -- it

has been a struggle for global equities. there has been some performance in the u.s. in the tech space and some people have spoken about the fact that that might be a broader indicator of some of the worries in the economy. for folks like laszlo birinyi who has been in the market for a long time, very notable for his call on the market bottom in 2009, we were speaking to him earlier in the week and he was suggesting that this time around with the trade war as the last piece of the puzzle, the inflation quandary, and the lack of that being a sticky factor in the economy, quite a few things are piling up to make the environment quite uncertain. people are finding it difficult to trade around some of the things that are going on, despite the fact that earnings broadly speaking are expected to grow.ue to

it has been a tough month and clearly the move is massive in the bond market, the repricing of growth and using expectations, but i think from here, what you will have to see in the next quarter of earnings is some kind of stability that the trade war isn't falling through to corporate fundamentals as much as some people expect. shery: and of course, we have seen those very forceful moves in the bond markets recently, so there seems to be a lot of disagreement of where this is headed. what are analysts saying? reporter: i think more than ever, and after such a huge move, the disagreement is still rife. are starting to look at a rebound in yields at this point. bond is a camp that this market rally has gone too far in two short a space of time. they are looking at selling two-year treasuries and five-year treasuries at the end of the curve -- shorter end of curve.

there are technical here that are pretty clear in this g tv library chart. some people are expecting the technicals to suggest that things have gone too far and you might get some kind of pickup. of course, what we heard from clara do overnight and the fact that he's opening the door for the first fed rate cut, that puts back on the table that this economic environment is still very cloudy, yet growth is continuing to struggle. it puts the onus back on the bond market, leading the way. there is a suggestion from prices today that the fed indeed does need to cut and probably more than once over the next 12 months. shery: adam haigh, thank you so much for that. you can find adams charts on the g tv library on your bloomberg. oil and gas producer seeing both opportunities and risks in the war.

santos says they can grab a bigger share of the asian market if it stays focused on cutting costs. weak lng prices remain a risk. kevin gallagher spoke to bloomberg, telling us where he sees prices heading over the next few years and how that will impact his business. you are notusiness, in it unless you accept that it is cyclical. supply, we strong also see under supply. we see really strong lng spot prices. everyone was talking about potentially lng prices increasing. i think most of the market will agree that we expect to see that to mid address itself next decade. we would think we would start to see the prices climbing up as we go towards that. reporter: one interesting thing that was mentioned earlier in the week is that some of the large lng projects are actually going forward with fid despite not having fully contracted all the gas, anticipating the

shortfall coming up in 2023, 2024. he was concerned that if that goes too far, it might never merge. is that something on your radar? >> i think you see a combination. some of the larger companies on the balance side risk and some that still require smaller -- smaller players require far out. i think for a company like santos, one of the benefits is most of the projects, the economics are competitive because most of the major infrastructure spent has already occurred. have healthier margins on some of the projects then you would for another project. that makes me feel more comfortable for the projects we are bringing to market. reporter: on the u.s.-china trade war, there is a huge issue for business leaders everywhere. how are you thinking about that as a company? in australian terms, is it an

opportunity or a risk? >> the reality is it is both depending on how it falls. it could feel -- fall one way where it is advantageous and there is a potential to go the other way. i tend to focus more on what we can control. our focus is on cost of supply. at the end of the day, the lower the cost of supply we can the moreng into asia, bulletproof the projects will be against however those things affect us in the future. paul: that was our exclusive conversation with santos ceo kevin gallagher. coming up, we take a look at how the trade war is remaking the world and could lead to a new alignment of global powers. this is bloomberg. ♪

paul: just want to get you across and alert on the bloomberg terminal right now.

a north korean envoy has been executed over the failed trump -kim summit in february. the envoy led the negotiation summit and has been executed, along with four other north korean foreign officials. this apparently happened back in march. meanwhilen's top aide is reportedly doing hard labor. the ongoing turn to trade tensions between the u.s. and china. president trump saying that by the u.s. are having a devastating impact on china. he spoke to reporters as he left the white house. >> china would love to make a deal with us. we had a deal and they broke the deal. i think if they had to do it again, they would not have done what they did. we are taking and billions of dollars in tariffs.

china is subsidizing products. the united states taxpayer is paying for very little of it. if you look at inflation and if you look at pricing, it has gone up very little. shery: meanwhile, bloomberg has learned beijing is putting purchases of american soybeans on hold. we are speaking with our bloomberg opinion columnist and senior fellow dr. karl smith. agojust heard paul a while talking about these executions in north korea due to the failure of the summit. you have ongoing tensions between china and the u.s. on with thegoing tensions iran nuclear deal and that not really working for the u.s. as the president trying to fight too many battles at the same time? >> i think he does have a little bit of a problem with that. the thing that i have noticed though is that china i think is a different issue for him. we have seen that he likes to be

tough, he likes to project a tough image to whomever he's dealing with, but his willingness to break down relations on a big level with said, chinae he surprised him, i think he was right about that, how they back. rather with north korea like attempting to look forward to something, he was happy to break out a deal with china. i think you are seeing the tension between trump, who wants a hawkish stance on china, i think he fundamentally wants a conflict, and some of his economic advisers are trying to push them towards a trade deal. shery: of course, the whole point here is that the president these tradeing that negotiations will actually lead to better deals for americans. has that been the case, whether eus fta or the negotiations over the iran nuclear deal, pulling out of that deal, and the transpacific

partnership and so forth? >> i don't think so. in particular when we look at the u.s. mta, that is one of the pieces i look at to see that trump has a different take on china, he was willing to brand extremely small concessions on the part of the canadians and mexicans as a huge victory. there is that part of trump that wants to claim victory and wants to say he has been successful and showed the american people that he's fighting for them. there is that part. i think on some issues, if you look to his first statements about japan in the 1980's, he has this view that the rising rising asianally a power, is a fundamental threat to america and needs to be contained. just is this trade dispute symptomatic of something much bigger, particularly of some of the rhetoric china has been using -- the chinese saying

don't say i didn't warn you. that has been used a couple times before proceeding wars between china and india and china and vietnam. political,bigger geopolitical game being played here? >> i think so. when i speak to people in national security, what is not fully appreciated is that there are a lot of people, even u.s. national security, who themselves take a much more hawkish line on china who think that we are closer to at least a cold war then we would have thought. that was true even through the end of the obama years. there is that element. u.s. national security has always thought that chinese-american tensions would rise. essentially, publicly insulting the chinese government, putting them in that position, makes it almost inevitable they have to respond this way. they can't be seen to be week --

weak in the face of trump. then making a personal the way he did lead to them almost inevitably down this path. i think china would probably prefer to keep it from escalating, but if it is a matter of national pride or embarrassment for the government versus escalation, i think it is a hair and a box. paul:paul: we see inflation remaining consistently flat, but it might be time for a conversation about inflation. reagan in the 1980's, he would say deficits don't matter, the gold standard is gone. inflation, has it become a relic of the past? relicon't know if it is a forever, but we do have to have a conversation. it is not as sensitive to low unemployment rates. when it gets too low, inflation will not just rise, but it will saying.te, is the old

we have not seen that in a while. we haven't seen anyone pushing to revisit that. everybody i know at the fed, they are very unlikely to do anything that moves them away from the dedication or emphasis on a 2% inflation target. i think they can change have the -- how they respond. they can change the perception of willing to go above 2%. i think that is the most likely thing to happen going forward. shery: of course, a strong economy is the best argument the president has for his reelection campaign. will that hold until 2020? >> i don't think so. the last column i did was looking at how the economy performed under obama's second term. at this point, if you look at 2015 versus 2019, the economy under obama was doing just as well as it is doing now. most of the political science model say not just the incumbent

president, but the incumbent parties benefit from good economic times. we saw the economy slow down in 2016. now.w the same pressures . by the time we get to the 2020 election, there's a good chance trump won't have any better economy than the democrats and hillary clinton did in 2016. shery: of course, we have will have special interests into play negotiations.rade i wonder, how effective are bilateral deals against multilateral ones? >> that is a question of open debate. scholar makes a big argument that they are more effective, past, andbeen in the that essentially when you have multilateral deals, because any interest group within a country can potentially wreck a huge deal, the countries are more likely to give in to interest groups. these sort of concessions become like habit. for example, in the u.s. and the european union, even japan,

agricultural concessions are made again and again. when countries come to the table to do a multilateral deal, there is the expectation of, if we want to get across the finish line, we have to concede on agriculture. as you can see, even with the trade war with china, when it is bilateral, everything is on the table and china's more than willing to shut off american agricultural imports to get their way. that makes agriculture more vulnerable than it would have been in a multilateral agreement. bloomberg smith, our opinion columnist, thank you for joining us. still to come here on bloomberg, we will check in on the markets and keep you updated on the news as well here on "bloomberg daybreak: australia." this is bloomberg. ♪

paul: setting the stage for its global expansion with a $1.2 billion deal to take a $.20

steak and australia's crown resorts. shares listed in new york fell almost 6% on the news. for more, let's go to dave mccombs in tokyo. what do we know about this deal so far? wasrter: we know that this --ing full circle for milk and crowne. this is a reuniting of the two of them in that sense. it also follows the failed deal with wynn. that didn't work out. melcoas passed over, so is picking up the slack. it makes them more of a global player in casino businesses.

there's not that much consolidation to be had in this industry. it is difficult to buy into a franchise like this, so it is a pretty good opportunity for them. shery: one thing it is telling us about the industry is that there are no opportunities outside of vegas and macau . reporter: yes, it is difficult to compete with the entrenched players. the casino industry is very tightly regulated once you have a license, a casino that is established and up and running. that makes you a competitor in the industry. it is hard for people to go along. the barrier to entry is high. these assets become very valuable. it is hard to get into the game, especially at the global level that these integrated resorts are playing with. they are not just opening up a casino for gambling, they are also massive resorts that are pulling in money for entertainment and the rest of it, and getting licenses for massive projects. one of the things that this does for melco is sets them up,

increases the prospects for them to bid for a license here in japan. paul: here in australia, we are very used to referring to crown crown, butcker's that is becoming less and less the case, isn't it? reporter: it certainly is. he has been seeking to diminish his role, and it certainly does that as well. he has had a pretty tough time of it over the last few years. that tie up that we mentioned earlier between melco and crown did not end well. there was a huge scandal that ended with the arrest of some crown employees in china. they were accused of improperly promoting gambling. on a badthe company course and ended up destroying that alliance. it has been a tough time for then -- them since then. he has had personal troubles as well this marks a partial exit for him. he does say he will still be

involved with the company, but this does mark an exit for him from the industry. shery: dave mccombs, thank you so much. bloomberg's dave mccombs in tokyo. we will talk to melco's chairman and ceo later today just after time.a.m. sydney let's get to hong kong with sophie who is watching casino stocks. sophie: we are watching casino stocks indeed. investors are likely to take a wait and see stance. melco shares, we saw them nudge lower in u.s. trading. seeing andeal setting the stage, city has maintained a buy rating on melco with $32. we are also watching sands stocks cut to neutral on an anticipated drop and macau given delay.

sands may emerge a winner from increased spending on gaming businesses. shery: thank you for that. we have breaking news at the moment. we are hearing amazon is interested in buying boost from t-mobile and sprint. that is according to reuters. we know boost is a prepaid brand, and t-mobile and sprint have been trying to offload it as they seek a merger. now saying amazon is interested in buying boost from t-mobile and sprint, as t-mobile and sprint try to offload this prepaid wireless brand as they seek to merge. they have gotten fcc approval, but we are still awaiting for the doj to approve this deal as well. the nextre ahead in hour on "daybreak: asia." blackrock's institution group deputy head is with us from hong

kong. paul: that is it from "bloomberg daybreak: australia." stay with us. all the action and "daybreak: asia" next. this is bloomberg. ♪

paul: good morning. i am paul allen in sydney. we are under an hour with from the australian market open. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin and hong kong. welcome to "daybreak asia." in hong kong. welcome to "daybreak asia." paul: our top stories this friday, asian stocks look set for modest gains after wall street got a rebound despite the treasury's rally rolling on. a 20% stake in crowne