paul: good morning. i am paul allen in sydney. we are under one hour with from the australian market open. shery: good evening. i am shery ahn. welcome to "daybreak asia." paul: our top stories this friday, no agreement yet at the u.s.-mexico talks. washington says migrant discussions continue but still intends to impose tariffs on monday. president trump keeps up the pressure on china, saying he will decide on any additional

duties after meeting xi jinping at the g20. global central banks watching this closely and will react as necessary. john williams admits risks are rising. >> i am kathleen hays. finance ministers and central bankers are meeting this weekend. we will look at how trade tensions are affecting global policy, later in the show. shery: we will be asking the of china governor about the monetary policy direction in our exclusive interview later today. it is his first international media interviews since becoming governor. you do not want to miss the conversation. a quick check of how markets closed in the u.s.. we saw stocks fluctuating in the session but they managed to end higher with the s&p -- the u.s. was considering delaying tariffs on mexico, so every sector on the s&p 500 was in the green and it was the best three-day gain since january.

we are seeing pressure on u.s. futures, down .25%. we have heard from vice president pence that the tariffs will go ahead as planned if there is no agreement. paul. weigh ont did tend to those s&p futures and it heads of knock on effects in asia. the case which is treating weaker out of chicago by .2%. coffee future film .1%. another stock, .1%. that may well change in the course of this hour. let's get the first word news with jessica summers. latest: the wto is the one about the dangers of the global economy. robert friedman says escalating

tensions between the u.s. and china over technology threatened to strangle innovation and splinter traditional links. he says growth will suffer if the world becomes split between those who follow america's technological lead, those who follow china, and others who stick to europe. canada has set the date for extradition hearings concerning the huawei cfo. proceedings will open on january 20 and are expected to wrap up by october. he remains under house arrest in vancouver. the defense team says the u.s. case against her is lyrically motivated and canada abused her rights when she was detained and interrogated. global central banks say they are monitoring issues affecting the world's economy and will react as necessary. john williams says the outlook for the u.s. remains solid but andowledged risks arising

there are expectations that rates will come down. he stopped short of endorsing a cut but reinforced the openness and flexibility that jerome powell signaled this week. ,> in the pre-2000 era inflation was a major concern for the public. will always be vigilant about inflation after too high, it is inflation that is too low that is the more pleasant problem today. jessica: as the euro outperformed most major peers after the ecb expressed optimism in the economy and said it would act as necessary to support growth, mario draghi extended the bank's pledge to keep interest rates at record lows while exploring how to offer being smart cheap cash. highest --uched its 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 jessica summers. this is bloomberg. --

>> -- are going to be imposed on monday. we made that very clear to the mexican delegation. but discussions are going to continue in the days ahead. shery: joining us now from washington is bloomberg what has reporter josh wingrove. we just have the foreign minister of mexico leaving the state department, just in very isrt comments saying he always optimistic about these negotiations, although i got to ask, should he start worrying now given there was no agreement again? josh: i mean, no one was really expecting a deal today, but it before what im think would be a storm.

we're running out of time for the u.s. either to apply these tariffs or decide not to apply these tariffs either permanently or with some kind of delay to allow talk to take more time. the bottom line is we still do not know. it has been to offers today -- two offers today. pence and others have said they are encouraged by what they call progress. president trump said it is not enough yet. we will hear more from the president either tonight or very early in the morning. he of course remains in ireland. maytime difference i think play a factor and what we hear from the president ultimately, it is up to him. inl: we heard from the hill the past hour or so that the president drafted an emergency order to implement mexico tariffs. what does that mean for the talks? josh: we were looking for that.

there was a question into whether he could piggyback off a previous emergency declaration because the power he is trying to use here is to apply tariffs across the board. it relies on there being an emergency. i guess you could argue both that this is a sign that they are leaving the option open to proceed with his tariffs. they say they are planning to proceed with them until they get a deal that would show otherwise, but it could on the flipside be sort of daunting i's, crossing t's, and preparing paperwork. not grown more hawkish in tone, they are saying there is progress and things are moving. like they areund ruling out a deal that could stop any tariffs from coming in on monday, the 10th. they are not ruling out more tariffs on china. the president saying he will

decide on those tariffs after the g20. what do we know? josh: absolutely. if there was not enough attention on the g20 later this month in japan, we can add even a little more intrigue. president trump saying he will wait to see what happens. we will speak with president xi's and then afterwards, he will make some kind of decision. not a timeline. the president has a habit of saying things that he might make a decision in a couple of weeks and those things have a habit of sliding occasionally. there is no firm timeline other than investors and people watching this closely can look like they can safely say nothing will happen until that meeting in japan and then after that, anyone's guess. and: josh wingrove washington, d.c., thanks for joining us. g20 finance ministers and thinkers are in japan this weekend -- central bankers are in japan this weekend. the slowing global economy,

deadlocked trade talks among those issues. for the hays is there talks. kathleen, policymakers have got a couple of days together. can they make a dent in all these problems? at the veryguess least, they have come together. when you look at the issues, it is out the top of their -- at the top of their list of troubles. makess.-china trade war more troubles. the g20 nations meet, and he talks that can progress will be closely watched, and who knows what it will mean moving forward. , aknow that at the hilton very lovely coastal city in japan, steve mnuchin, the u.s. treasury secretary, and the head of the people's bank of china, are going to be meeting in a bilateral talk. we'll see if they can pave the way for two presidents in osaka to come together and get used trade talks back on track.

meanwhile, the other 18 of course of the g20 are hoping to please get this over in an efficient, amicable way. the damagednt to be goods from this trade war when all is said and done. christine lagarde speaking in tokyo yesterday, talking of damaged economies, said next year, the current and threatened tariffs between u.s. and china could take 0.5% off of global gdp. that is a lot of gdp. i would like to add that it is not all doom and gloom. a big topic tomorrow during the saturday session to end on globalas well, taxation, taxation, particularly of the digital economy. i think they feel like so many of them are not getting taxed uniformly around the world and there's some revenues many governments can pick up so that will be a hot topic as well. the tradeking about tensions, the foreign minister of mexico saying the u.s.-mexico talks are advancing, but again,

there is no agreement, so really no certainty that. this g20 meeting also getting underway with central banks around the world, either cutting rates or wishing they could. will the s&p be able to come up with any new solutions to boost growth? uphleen: they better come with it fast because as you mentioned, the u.s.-mexico tariffs will at least battle and it is something people fear. it is not just what it does to individual countries so much at financial markets, the contagion, the volatility and this is adding to that as well. i am sure we will have representatives from both countries. mexico as well, here at the g20. in terms of what the central bank's are doing, what they will be talking about, it will be a lot. what do you do when you run out of ammunition and you have a negative rates that you will have to make more negative? the european central bank mario draghi met today and he made it very your we are watching the

global risks. if anything, our next move will be more aggressive stimulus. the new financing. rate cuts may be -- renewed financing. rate cuts may be on the table. >> several members raise the possibility of further rate cuts. other members raised the possibility of restarting the asset purchase program. extensions in the forward guidance. the has to be a lot of discussions about what the federal reserve is doing. jay powell opening the door to rate cuts. they can see the downside risks are growing but they are not ready to commit to rate cuts. others are not waiting. we saw the reserve bank of australia this week. reserve bank of india making its third cut in a row. the question will be was next?

-- who is next? they are a country that would like to cut their keep rates. they have a lot of currency considerations as well. meetings, and go and it is interesting to communicate, there is a lot of focus on this one because the issues are so big. a lot of the meetings in the next couple of days could produce some significant results. the chelsea. shery: thank you so much, kathleen hays. we have the foreign minister of mexico making comments about the offer they put on the table in negotiations with the u.s., saying he is confirming the offer of 6000 troops for the mexico-guatemala border. sources told bloomberg them at -- that mexico has proposed sending 6000 national guard troops to its southern blood a with automall in order to help halt -- guatemala in order to

halt the flow of migrants into the u.s. the foreman minister concerning maximus a talks are advancing but there is still no agreement. richard noda, his take on trade tensions and geopolitical risk. up next, whyhy -- we should push pause on overly panicked -- this is bloomberg. ♪

paul: we are counting down to asia's first major market opens this morning. we have futures trading out of chicago for japan, higher now, by .6%. they were weaker earlier. this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new

york. china has unveiled a stimulus plan to boost demand for electronics as it looks to curb the economic fallout from a trade war. anypolicies don't include central government spending but encourage local authorities to offer support to business. beijing is constrained in how much you can offer after announcing tax cuts earlier this year. that may be why the stimulus is less -- let's discuss all this with the database but president who joins president,-beige book who joins me. it is telling these local governments to do more if they can. first of all, can they do more? they have their own issues with debt levels being so high. what does this do? >> i know that investors like to react to a headline that says the stimulus coming, but what we have been seeing in our the essence the beginning of the year is remarkable levels of any of that are being pumped to typically disadvantaged firms.

you see it everywhere. i think the point here is that china is preparing for worst-case scenario. if the talks go poorly and they end of the sending into their nightmare scenario of 25% on $500 billion in imports, then they are ready to just unleash the firepower which is unraveling all the things they have done for the last couple of years, whether it has to do with deleveraging -- that is already gone. local governments are just the pairing the firepower. shery: does that make sense given the latest economic it at we have seen? how much importance should we give the official manufacturing pmi? leland: not much yet. we have got a lot of panicked questions. when the official pmi came out. and then a few days later, it came out and it was a little bit stronger because there is a big difference between what is happening right now with state firms and with private firms and with larger firms and small firms. there's some differences right now in terms of how much they are being supported.

the point is, there is not severe weakness. there have been this idea that every little negative piece of data is the first shoe to drop. what you are seeing right now is before things will go in one direction or another based on trade based on talks. the chinese will ramp up their stimulus, but the data are not telling a story that is something that people should be worrying about yet. you did: -- paul: mention smaller firms. let's take a look at this chart on the bloomberg. it shows chinese small caps entering a bear market. in terms of shoes dropping, is this a shoe dropping or nothing to panic about? leland: nothing to panic about yet. what the chinese have been doing in terms of providing credit to small and medium-sized firms have an remarkable since the beginning of the year. the stocknot mean market is want to do well if people think the trade talks are not going well or they are going

to fall off a cliff at the end of the month, but it means chinese are doing more and more and more, and i think that they are waiting to see how this month ends. a lot of the gloom you are seeing, the calm before the storm. there either will be used on or you will see a lot of relief and things turn upwards. of the potential for relief, how closely are you watching a couple of key meetings coming up? first off, steve mnuchin meeting next-- in fukuoka in the couple of days. and then president trump meeting xi jinping. could these events we're potential for things to turn around or maybe get worse? leland: absolutely. the idea that the treasury secretary is meeting with him is not surprising at all. he has been a strong advocate of coming to a china trade deal. soccer is a big deal -- the soccer is a big -- osaka is a big deal. commentary for the last couple of weeks has been that trade tensions have gotten worse and the two are descending into a

period where a deal is off the table or nearly off the table. china has been relatively restrained. their use of patriotic songs notwithstanding. on the u.s. side, there's been moved toward technology companies. all of these are reversible, being used as trailer bridge. all this stuff could be fixed, reset, and you could have a totally different scenario come osaka. they have to come up and make the first move and then you can get some of this stuff back on track. shery: even when it comes to the export controls and trying to reign in huawei, are those that easily reversible? leland: there are broad export controls that are part of what the commerce department is doing and they will go into play regardless. in terms of huawei, a lot of this is reversible and it will drive congress crazy on both sides of the aisle if a lot of the stuff is reversed, but a lot of the things being done -- and huawei is the most obvious -- can be reversed by the president

if he thinks he's getting a comprehensive trade deal. shery: if we do not get a trade deal, will china let go of the threshold? leland: a couple things that happen. you could have a situation where there is a big punt at osaka. you can have the united states put less than 25% tariffs, say 10%. the administration is tossing around certain numbers depending on what the run-up to soccer looks like -- osaka looks like. if you have a medium option and the chinese think there is a deal, it is very unlikely that they actually moved to allow the currency to push past seven. if they think a trade deal is off the table, they are moving to plan b, that is when you see the currency blow past seven. but they do not want to do that. even so, they will have to do that. it is one of the weapons they have in their arsenal. it will hurt them. they cannot top the current the on a dime. they will have to experiment.

unless things get that bad, i do not think they will at the currency do that. were youwhat degree encouraged by this story we have had on the bloomberg this week that china is negotiating with going on a 100 plane deal? does that suggest to you that some things are bigger in terms of mutual interest them some -- than firing a few shots and barbs on trade? leland: i think this is a big your that will fall through if there is not a comprehensive trade deal. so i think china is doing what makes sense for it to do, which , gettingg the leverage ready for a big deal, putting everything they have on the table, having boeing push for this deal, and then hope that the presidents can get along in osaka and reset this thing. paul: that was china beige book president leland miller. later on bloomberg, we will have that exclusive interview with

people's bank of china governor, ahead of his expected meeting with treasury secretary mnuchin at the g20. this is his first international media interview since becoming governor, so you do not want to miss that one. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. let's get a quick check of the latest business/headlines. bloomberg is mine cloud data to help client -- buying cloud data. it comes as it struggled to compete with amazon and microsoft in the area. look are help -- looker helps. the acquisition may face extra scrutiny with them under an antitrust investigation. shery: the chance of a tie up between struggling commerce bank

and ing. finance ministers discussed the idea last month with one issue being berlin since his is that any new lender be headquartered in germany. the story.ublished neither was prepared to comment on the possible deal. is onthe new head of -- the hunt for acquisitions abroad. the president says he is looking and assetss that develop stable returns. he says japan's second biggest lender can keep hitting a target and it will have almost $15 billion available over the next four years. shery: coming up next, find out which currencies goldman sachs sees benefiting from the trade were between the u.s. and china. this is bloomberg. ♪

jessica: this is "daybreak asia ." i am jessica summers. reports from washington state is no agreement on how to stem the flow of migrants heading through towards the u.s. border. mexican officials want more negotiations, saying there may not be enough time before monday's care of deadline. -- tariff deadline. the administration says it remains most likely that punitive action will happen on monday. >> at this point, the tariffs are going to be imposed on monday. we made that very clear to the mexican delegation. but discussions are going to continue in the days ahead.

president trump will decide on new tariffs against china after the g20 in japan. he will meet president xi before waiting additional duties on -- duties. additional the administration is prepared to step up the trade war despite growing opposition from business , advisory, and political figures. it isf, among others, say an increasing threat to the world economy. pres. trump: right after the g20. one way or the other, i will make that decision after the g20. i will be meeting with president xi, and we will see what happens, but i am probably planning it sometime after g20. is offeringna stimulus to spur demand for cars and electronics as the trade war threatens the economy. the policies do not include any new central government spending, but do encourage local authorities to offer support to businesses. an leaked draft

suggested more generous stimulus, but the government is thought to be constrained after offering large tax cuts. the reserve bank of india cut its key rate and indicated more to come as policymakers try to boost the slowing economy. weakened -- momento momentum weekend significantly. upon yields fell to their lowest in 18 months, but it was not enough to boost investor confidence, with the sensex dropping the most this year. >> so far as we're concerned, our decision at the moment is driven by the growth concerns, act as wellthe rba as the inflation concerns. inflation and growth, i mean. in that order. jessica: 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 jessica summers. this is bloomberg. thank you.

we are half an hour away from the major market open in asia. we are seeing nikkei futures unchanged at the moment after they fell in the last session. we had a slightly stronger japanese yen on haven demand. right now falling about 108.45 level. kospi futures under pressure, down .1%. cost becomes back from memorial day holiday and the fact that we have seen a lot of pressure for the south korean economy. of currentear run account surpluses just coming to an end. sydney futures up .4%. sessions of three gains for the asx 200 after the rba cut rates and signaled the potential for another rate cut. kiwi stocks unchanged at the moment. investors may be increasingly concerned about a prolonged trade spat between the u.s. and china, but in an exclusive interview, goldman sachs international ahead, richard, told bloomberg a deal is not dead yet.

trade is the biggest story right now. if you look at the speed in which sentiment shifted, if you were sitting here for to six weeks ago, the expectation would be a trade deal between the u.s. and china was going to happen. sentiment has shifted. i would not say that is dead yet. the two presidents will be meeting at the g20 meetings. let's see what happens. as quickly as sentiment kinship one way, it can shift the other. canimpact on markets -- shift one way, it can shift the other. the fed is still on a rating. we are in a very different position. the geopolitics, obviously, import markets in a significant way, -- impact markets in a significant way. a do you worry about recessionary environment coupled with central banks that do not have the tools to deal with it? that is the big talk right now. the yield curve has inverted. in time, whenback

the yield curve inverts, more often than not, you get a recession. but not always. in fact,ally get -- you'll pretty much always get rapid action from the fed, and shortly after, rate cuts. that is what the market is starting to forecast. room to move is limited in the u.s. there's obviously some -- it had a corner from that perspective. paul: that was goldman sachs international ceo. has a call onalso how investors should be trading currently amid the rise in trade tensions. for more on that, let's bring in adam haigh. why are strategist recommending the yen and the swiss franc? is about how cross-border inflows of money is affected under the trade war environment. and what they point out is that japan and switzerland, you know, the largest global sources of foreign direct investment, they

would expect their currencies to appreciate and the well supported during this time of a period. i think you'll are already seeing in the sense that the yen safe haven flow has not been as strong as some people would have expected. hold upthe yen did not as well as some people thought, but you are starting to see that now as cherry pointed out with dollar-yen now around 108. it is starting to strengthen somewhat. in this chart energy to the library come -- in this gtv library, they are starting to unwind. largely the speculative community starting to bring down those bets on the fact that the en, andht we can -- weak may be the yen start to contribute to some sense a little bit more. essentially a forecast on just how the trade plays out, but specifically, the cross-border flows and how the yen and the swiss franc might benefit in those environments.

shery: jpmorgan advising to boost hedges. what traits do they recommend? -- trades do they recommend? the: the position is of worth listening to what the moment because they have gone to a fairly defensive posture a few months ago and that served them quite wealthy the month of may, when of course, remember, 4 trillion or so was wiped off the value of local equity. sayingey are essentially is to double down on that forecast, so to increase your exposure to government bonds and to bring down your exposure broadly speaking to commodities. the background to that is what is highlighted in this chart here in the gtv library. that white line of course, the spread between short and long dated treasury yields, and the blue line showing you that is an equity market close to equity highs, which is not where you want to much of your portfolio and theow defensive

amount of uncertainty around the trade situation. you need to continue to add to government bond exposure. there are plenty of people out there who say treasuries are too riskily priced. but for a lot of people, especially for investors, outside of the u.s., the u.s. treasury market so those offer quite some protection, given that of course inflations like germany and japan, you are continuing to see pressure on even increasingly negative yields. paul: we have to talk about oil. slips into a bear market. the rally extending overnight. we have morgan stanley so concerned about the demand outlook. adam: and ultimately, a large part of that remains the trade situation, doesn't it, paul? that global demand remains in somewhat of a tricky, tricky spot. you have had the supply side of things as well lately, with the weather concerns around the u.s. great plains and places like

that. so there is a bit of a double-edged sword. at the moment, a bit of pressure coming back, and of course, brent still sitting around 61 or so. wti and crude around that kind of -- not too far off that 50 mark. a lot of pressure on the oil price given the global concessions -- positions. paul: adam haigh, thank you very much. and you can check out our gtv library for some of the charts we have been talking about on the terminal. we will talk about what matters to u.s. business at the meeting. sean'sl talk to the u.s.-a michael. he is up next. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery on in new york. paul: -- shery ahn in new york. paul: i am paul allen in sydney. trade, monetary policy, sure to cap the agenda. -- top the agenda. the meeting happens in osaka at the end of the month. a one-on-one between presidents trump and xi. let's look ahead with the u.s.-asean council, michael. thank you very much for joining us. i just want to play for you, if i can, some sound that we heard a formerelieve it was commerce secretary for china. let's have a listen to what he had to say. u.s. does not want to go to the wto, and they talk with china with a kind attitude, things will drag on.

that will not be a year or two. that could be even longer. we will see you can take it on the chin. china will have to endure that. the u.s. will have to endure that. and the whole world will have to endure that. ; economy will go backwards. economy and the whole will go backwards. paul: that is some of the rhetoric we have been hearing over the last few days. how optimistic are you that the out --hat will be sorted anytime soon will be sortedspat -- spat will be sorted out anytime soon? >> what you heard from some of the other chinese government officials recently, particularly is ae shangri-la dialogue ,ot of nationalistic slogans and it was very interesting that there's even a song now in china, which is to the music from resisting japan during the second world war, and it is called resisting the united

states, so i think we are hearing a lot of that rhetoric which indicates to me that the gloves are beginning to come off, if not dropped on the floor. paul: there are definitely mixed use on this. our last -- views on this. leland miller saying forget all of this stuff. patriotic songs, all of these things can be easily walked back. so in that regard, is there a little cause for optimism, particularly with these meetings at the g20 in japan this month? michael: well, yeah. you know, i think that we did have some cause of optimism maybe before the may 10 tariffs went into effect, but i think that now, the situation has gotten a little bit more pessimistic because of the increase in rhetoric, because of what is going on with mexico, because inan -- general, the whole atmosphere

has kind of soured. thefact that you saw president and others in the administration in the run-up to the imposition of those tariffs saying we are making progress, we're making progress, everything is fine, and then all of a sudden, no. everything is not fine. robert lighthizer was forecast to miss, because every time people talked to him, he was very careful saying we are still not there yet. the fact that it came out with their white paper, the fact that they have now really taken the u.s. to task on the huawei sanctions, indicate to me that is a big campaign going on which could come in many ways, the for domestic consumption, but i asnk it does signify that china has been, right from the start, they are not going to move past a certain redline, which is the kind of state run policies that are at the core of their industrial policy. and without that, the united states, at this point, i think

also cannot come back from its hardline, saying, look, those are the things that are bothering our industries, that are slanting the playing field against foreign companies, and we have to have some kind of a deal on those. without back under the deal, i do not think that we can sign anything yet, and i think we are going to be going on with this kind of trade tension for some time to come. shery: we have seen the u.s.-china trade negotiations now go on for 2.5 years. what have we learned about the trump administration's negotiating strategies? is there anything that mexico can take away from here? while, ioh my gosh, suppose -- well, i suppose that there is. the president said we are not going to put the tariffs on on friday. let's wait and so monday. so some people are saying that there are reports we're going to delay those tariffs, and then pence says we are not. one thing we have learned that

if the president does not say it, it is not going to happen. so i think that the mexicans, at least, can take away that they have got to be cap for, because he has consistently said he will put the tariffs on. we are again hearing everything is fine, everything is going well, things are looking good. those kind of statements do not have a very good track record. i think right now, everything is up in the air, on the table, and we will have to wait and how it comes out. the tariffs, it is interesting. the president did say, in london, that he is going to the meeting with president xi at the g20, so i thought that that was a positive sign. that can have two sort of outcomes. noter they come out with coming out a deal, which i think would be, maybe that would look like they are losing faith.

and the other thing they could come out with is yet another moratorium. and other words, the tariffs are in place. we can put them in place in a second, but we are still going to hold off and have our negotiators get together for another try at trying to come to a resolution. i guess i would have to come out, because i am a batch optimist, even though i am not overly long-term optimistic about this situation. that may be the likely outcome of the g20. shery: can you be more optimistic about this asean countries? we continue to hear more rhetoric that countries could benefit as they switched their supply chains away from china. well, i can be a lot asean,timistic about absolutely. if anybody is coming out looking better in this trade war in the short-term, it is asean. and vietnam, not only are we hearing stories, but over the first quarter, the pledged

foreign investment went up 81%. their export to the united dates up 45%,-- states went and those kind of moves are related to products that have the tariffs imposed on them in the u.s.-china context. vietnam has really stepped up, and is taking full advantage of this. we are also hearing from indonesia. they have a body there that looks at analyzing the indochina area and doing some work on that , and they have said that they feel like asean does not have to make a choice. you know, everybody talks about people having to make a choice between china and the united states, and they they we do not need a choice. they have to come to us because we have the pie, and it is the geostrategic location of asean, the excellent growth that the region overall is making with

inr 5% growth annually, and many cases, the attractive investment environment. many of the asean's are benefiting from what we call the china plus one strategy, which has been in place for some time, but which the trade war has accentuated, in which people are looking for alternate supply chains and other ways to try to on chinaeir dependence in terms of the u.s.-china trade. so i think asean is doing a great job and will continue to do so. paul: notwithstanding their optimism coming out of those indonesia claiming ownership of the pie.you have china claiming ownership of large chunks of the south. countries in asean face a stark choice between the u.s. and china. that remains a truism. think you're, i right. i think you're right, but i think that some of the -- what

the asean's are hoping for is say.the united in asean and continue to act as a balance on china. we have done that for the past -- the united rates has done -- states has done that and will continue to do that. the new free and open in the pacific strategy is beginning -- indo-pacific strategy is getting some meat on the bones. some energy programs with asean. there is a whole digital program, digital connectivity and communications program that is going on with asean, the new american development bank, the opec version 2 if you will is coming on stream. the have been mou's between the united states and japan, working on asean, so i think you are beginning to see this foip strategy start to move, and i

think this is another thing that will help out the asean's. shery: great having you with us. michael michalak, senior vp and regional md at the us young business council. we will have extensive coverage of the g20 summit throughout the day, including interviews with the deputy governor, the secretary-general, and treasurer. this is bloomberg. ♪

shery: welcome back. the u.k. continues to struggle with exit and the implication -- brexit and the implications of leaving the e.u., but one thing that appears not to be at risk is its standing in the united nations. i spoke to the ambassador and started by asking about the role of a post-brexit u.k. would play in the u.n. the u.n.k in the u.n., will be a more visible, more active stage for the u.k. once we leave a big organization like

the european union, but we like to think of ourselves as multi-nationalists, as really interested in the rule of law, as free traders, as believing in working with others to enhance security and prosperity. we are a leading funder of the u.n. we're number three. america's number one. we spend some $13 billion a year on overseas development assistance. those things will continue. we will still be here. we will still be very active. your: how will decision-making 1020 break away from the european union, and do you sometimes worry about the value it can provide to the security council? >> i do not worry about the security council at all because britain is not on the security inncil by virtue of being europe. we were one of the permanent five members and that came about

in 1945. the big difference is in trade, as a member of the european union at the moment, we negotiate on trade deals through the european union. when we leave, of course, we will be independent, and we will be negotiating deals with the european union, but also with other countries. hopefully with the united states. shery: president trump talked about their always being a chance of a conflict -- there always being a chance of a conflict with iran. can they save the iran nuclear deal? >> we hope so. we want to encourage the stay in the nuclear deal to we believe that is the best thing for our security and so that we do not have proliferation of nuclear weapons. he will be encouraging iran to stay in. -- we will be encouraging iran to stay in. not passing u.s. sanctions, but trying to find a channel for humanitarian goods to get to iran.

shery: had challenging would it be if the trump administration does go ahead? difficultt would be and we would really earth them not to do so. the administration, u.s. administration, have been kept fully in the loop. for humanitarian goods primarily, and it is there to encourage them to stay in the deal. where we do agree with president trump is exactly as your picture showed with president macron. we agree that we need to work together about iran's destabilizing influence in the middle east region, and that is some thing -- paul: that was u.k. ambassador to the united nations, karen. . coming up next, we will be joined by sean taylor, dws chief investment officer for opec and head of the inequities. we will have the market open in

australia and japan, coming up shortly and coming up next, in fact. this is bloomberg. ♪

paul: good morning. asia's major markets are about to open for trade. shery: good evening from new york. welcome to daybreak asia. ♪ paul: our top stories this friday. no agreement in the u.s. mexico talks. migrant discussions continue but it still intends to impose tariffs on monday. president trump keeps up the pressure on china, saying he will decide on duties after meeting at the g20.

shery: india cuts rates and opens the door to further action. the governor says the bank will do whatever is required to ensure financial stability. coming up later on bloomberg, an exclusive interview with the people's bank of china governor. don't miss his first international media interview since taking the job. let's get straight to the market action. we are seeing japan opening higher. this reversing yesterday's losses. the japanese yen holding steady. the topics is up 2/10 of 1%. let's take a look at the coffee which is holding ground. this is after memorial day holidays. the economy and south korea has taken a hit lately. this seven year round of surplus is ending in april.

paul: thanks. let's take a look at how things are trading in my part of the world. at the moment. we have a staggered open in australia so it's hard to tell how we are going. we have the aussie dollar holding surprisingly well. the rbaafter we had cutting interest rates as expected on tuesday. also some pretty disappointing gdp numbers this week is well. the aussie dollar holding its ground there. let's check out new zealand as well. after a bright start, losses. the index is looking flat. all right. let's get more on what investors should be watching today. we are joined by the mliv team leader here in sydney. one of the big stories of the

morning has been the talks between the u.s. and mexico. , iseems to have stalled guess it could turn on a tweet from president trump, couldn't it? >> a very much could. the fact that that is hanging over us throughout the asian day is likely to make some there he choppy and ultimately flat trading. new zealand assets dropping back down. we see a lot of startup, drop-down. then they went flat. it's a very unclear picture. we are still in the american evening at the moment. the result prospect for a few more tweets before everything shuts down over there. even then, we will not get a relive -- resolution in our day. the temptation has to be for those traders who are around to sit on their hands, not take many moves. spend some time watching the interview with the pboc governor

and pondering what he has to tell us all. shery: any cues on where the chinese economy is going? given all the uncertainty we have seen, investors losing faith in the u.s. market. this chart on the bloomberg showing that when it comes to retail traders, they might also be running for cover. this is the american association for individual investors. retail traders are the least bullish on u.s. equities since december, when s&p 500 sank low. whether or not this is the u.s. stock market or the global stock market, there's a lot of hope being pinned on the fact that we could perhaps see more dovish subtropics around the world. if we fail to see that, will the markets take a hit? >> yeah. to central bankers need deliver on some of the dovish words they have

put out there. you can see, the risks with that -- paul was mentioning how the australian dollar has been holding up surprisingly well after the rba cut interest rates for the first time in three years. because, they are going to cut rates again at some stage. they are going to do so in a measured basis. buy now, you are in a situation where central bankers are delivering what the market is forecasting, that is the minimum you need in order to get assets holding where they were. as far as stocks go, it's no wonder if investors are bailing. we had a hard december and a fantastic first quarter of 2019 for equities. for one thing, there are profits on the table that could be taken off. for another, as we have this fresh downturn, people start to worry, i'll be going to go back down to where we were in december?

investors got badly bruised at the end of last year keep -- year. those are still bothering them. they want to avoid fresh ones. paul: we have hard data coming up later on. the u.s. jobs report. pretty ugly preview from the adp. that doesn't always mean we are in for a bad number on the jobs report. it sets the market up for potential volatility on the bonsai. that end up with a report meets lowered expectations. you are going into this meeting with bonds on many measures looking very pricey. if the employment report wants to shoot the lights out, you could get a fresh breakout in bonn volatility which recently reached the highest since 2017. suddenly, people have to adjust those positions. they might start to think the fed isn't going to get the economic data trigger that it is still meeting. how will has made it clear, they

are open to rate cuts. they would need to see the data to back that up. at the moment, it hasn't been there. paul: that will be closely watched number for a data dependent fed. bloomberg mliv team leader in sydney, thank you for joining us. let's check in on the first word news with jessica summers. jessica: thanks. decide ontrump will new tariffs against china after the g20 in japan. he will meet the president of china before weighing additional duties on $300 billion of extra chinese imports. the administration is prepared to step up the trade war, that's despite growing opposition from business of i three and political figures. the imf says the spot poses increasing threats to the world economy. >> i will decide after the g20. one may or the other -- way or the other. i will be meeting with the chinese president.

we will see what happens there. probably planning for some time after g20. jessica: china is offering stimulus for cars and electronics as the trade war threatens the economy. the policies don't include any new central government spending. it encourages local authorities to offer support to businesses. in earlier drafts of the policies, it suggested more generous stimulus. the government is constrained after announcing large tax cuts. latest to warn about the dangers facing the global economy. sayshief economist escalating tensions between the u.s. and china over technology threaten to strangle innovation and splinter traditional links. he says growth will suffer if the world become split between those who follow america's technological lead, those who follow china, and others who stick era. -- to europe.

the reserve bank of india cut its key rate and indicated more to come as policymakers try to boost slowing economies. the r.b.i. said momentum has weakened significantly as it lowered the repurchase rate. bond yields fell to their lowest bond yields fell to their lowest in 18 months. it wasn't enough to boost investor confidence. >> our decision at the moment is driven by the growth concerns which is there in the r.b.i. and the inflation concerns. inflation and growth. in that order. jessica: global news 24 hours a day on air and at tictoc. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. still ahead, the former china minister of commerce speaks in an exclusive interview with bloomberg. he will tell us why he is not

too optimistic about u.s. china talks. g20 summit in japan. an exclusive interview. this is bloomberg. ♪

shery: this is daybreak asia. top financial policymakers from the g20 are gathering this weekend in japan as a protracted trade war goes on. our editor is there for the discussions. deputy governor will join me now from the bank of indonesia. we will talk about trade and rates, the currency. welcome.

this is definitely the big question, the cloud hanging over these g20 meetings this weekend. how is the trade war affecting indonesia's economy? what are you thinking about policy? it is a significant impact to us. fortunately, indonesia is facing a negative impact. nonoil at the data, export growth is declining from 9% in 2017 down to 6% in 2019. -2% infirst quarter, terms of growth. many factors are behind the performance of our exports. mostly coming from the trade tensions.

basically, we are very serious in addressing the impact to us. looking positively, let's see the positive. that is some possibility exports from the u.s. and china come to indonesia, steel, aluminum, soybeans. price of thee the competitors domestically. potentially, [inaudible] some imported goods coming from u.s. manufacturing [inaudible] like footwear, textiles. to thea from our exports u.s. already increased from 2% to 6% in may data.

jessica: -- >> you have this big net negative, a lot of countries have it hanging over you. it's not a good thing. i want to look at bank indonesia and your current policy stance. it was so notable in 2018 ahead of the curve. started hiking rates, protecting the currency ahead of the emerging market rout. now, the trade war is hurting your economy. the federal reserve opened the door to rate cuts this week. does that open the door for bank indonesia to cut rates as well? >> one of the policies that we want to address is to maintain stability. external stability. we are facing the stability from the internal.

i think that there are things that will be implement it. [inaudible] since we assume that the independent market is still there, we have to be more conscience. [inaudible] saying that it's not a question of if you cut the rate again, it's a question of when you cut bank indonesia's key rate again? >> yes. the point here, the policy rate is defined not only by how we are able to address the interest rates within our target, but also how we address the stability. there are many factors.

we are still looking, we are still operating. we are still seeing the possibilities of cutting rates. >> would you cut rates in the next meeting? >> it depends. data dependent. >> what data are you watching most closely? >> all the data on the global side. we have a target on the inflation and rupiah. we are dependent on stability. >> would you say that the next meeting, a rate cut will be on the table for discussion? >> i will say it like this. we have to combine. by somet just addressed countries. [inaudible] we will do it for this year. policy with the

coronation. portul: -- >> some of the -- fourth quarter gains were given up recently. we have seen foreign investor selling equities. i you concern that the rupiah could we been further -- we can further -- weaken further? updated ourust [inaudible] we are not in the investment-grade. sentiment that considers to the market. [inaudible] we are still waiting for the final say from the government. the income will be there. [inaudible]

like this. we want to be focused and the policy rates. but then we are accommodative in other things. coronation with the government. >> ok. so financial stability, what is the risk there? what is your biggest concern? what you have to do about it? >> for the time being, the risk is limited. .he rupiah is depreciating of the financial system is very solid. [inaudible]

the one that we still see some improvethe banks should . we want to see the bank getting a little more. we want to mainstay in -- maintain the stability of the group. >> thank you very much for joining us. i hope you have productive chocks here at the g20 meeting. so good to meet you. from bank governor indonesia joining us here at the g20 to kickoff here in japan. shery: looking forward to all of those conversations. thank you so much. bloomberg, wer on will have an exclusive interview with people's bank of china governor ahead of his expected meeting with the treasury secretary mnuchin at the g20.

this will be his first international media interview since becoming governor. this is bloomberg. ♪

paul: in the us central bank is paving the way for even more policy easing ahead. it cut the benchmark interest rate for the third time this year, now at a nine-year low. arguesnions columnist the r.b.i. policy is quickly becoming the gold standard for the rest of asia if not the world. there was a time when the r.b.i. put out 12,000 word statements. why is it now the model central-bank? >> these statements are still pretty long. here's how it frames the question yesterday. for all the talk about the shift in the federal reserve language and how all of a sudden there's a rate cut party going on in asia, we've lost sight of the

fact that one central bank in asia has been extremely consistent in its communications and actions since the start of the year. that is the reserve bank of india. februaryexpectedly in when people were still saying, we think the fed is just pausing before increasing again. that was a bold move, they called it right. it has paid off. their communications have been remarkably consistent in the following period. paul: central banks are supposed to be independent. team,ms to be on modi's unlike previous governors. is that healthy? >> to an extent, the manner by which governor -- the governor arrived at the job has overshadowed what he has done since he has been in the job. he was a career bureaucrat.

he was not from the rinks of academia or from the central bank. that set him apart from his two immediate predecessors who did clash with the government. since he has been in that job, the job he has done has been a good one. they called the data right. they have been consistent. there has been a mixed message. again, that doesn't mean everything that the modi government has done regarding the central bank has been awe-inspiring, to put it mildly. what has he done himself since he has been in the job? i would argue, he hasn't put a foot wrong. shery: we just heard from the bank of indonesia's deputy governor about rate cuts not being a matter of if, but when. do they have the space to do this? >> shery, they sure do. i heard some new language there in kathleen's interview with the

bank indonesia in -- deputy governor. this central bank has been among the least dovish of asian central banks. we heard that official talk about the word stability. this has been their mantra. that is code for indonesia's rising current account deficit. as the interview war on, i detected which there. if idea that it is when, not seems to be a new signal from bank indonesia. shery: thank you so much for your insight. that was our bloomberg opinions columnist. let's get a quick check of the latest business just -- check headlines. steady on his first day of trading in new york. the ceo rushed off worries of an intensifying trade war, saying that demand for education would prevail over any economic or political issues. he raised more than $200 million in his ipo and reported a $2.6 million profit in the first

quarter. head of matsui is on the heads for -- on for acquisitions abroad. he is looking to buy banks emerging in asia. he says that if japan's second-biggest lender can keep hitting its income targets, it will have $15 billion available for deals and share buybacks over the next five years. shery: the german government is investigating the chance of a tie up between struggling commerzbank and dutch bank ing. we're told the finance minister discussed the idea last month. the two banks rose after bloomberg published the story. neither was prepared to comment on the possible deal. paul: coming up next, some emerging markets investment advice from the dws chief investment officer.

we will be speaking with him in a moment. plus, checking in on the markets. this is bloomberg. ♪

shery: this is daybreak asia. -- jessica: this is daybreak asia. there is no agreement yet on how to stem the flow of migrants headed through towards the u.s. border. mexican officials want more negotiations. there may not be enough time before monday's tariff deadline. the u.s. does except mexico is taking the talks seriously but the administration says it is likely that five's and will come into effect on monday. totomorrow, we are going advance in order to reach an agreement. canada has set the date

for extradition hearings concerning the huawei cfo. proceedings will open on january 20 and are expected to wrap up by october. she remains under house it -- house arrest in vancouver, accused of fraud. her defense team says the case is politically motivated and that canada abused her rights when she was detained and interrogated. say theyntral banks are monitoring issues affecting the world's economy and will react as necessary. the new york fed president says the outlook for the u.s. remains solid but it knowledge that risks are rising and that there are expectations that rates will comes down -- come down. he reinforced the openness and flexibility that jerome powell signaled this week. era, the pre-2000 inflation was a major concern for the public. i will always be vigilant

about inflation that gets too high, it's inflation that is too low that is the more pressing problem today. jessica: the euro outperformed most major peers after the ecb expressed optimism in the economy and said it would access necessary to growth. the extended the pledge to keep interest rates at record lows while exploring how to offer banks more cheap cash. the euro touched its highest level against the dollar since mid-april on his comment. global news 24 hours a day on air and at tictoc. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. president trump says he will decide on his next china tariff plan after meeting the chinese president at the g20 summit. one top chinese official told us he sees little hope of progress. the former commerce minister told our greater china executive

editor what he is expecting now. >> actually, we had a few opportunities. one was in windows areas -- windows areas. they reach an agreement. at the time, people saw hope. that window is closing. people are watching for opportunities of osaka in late june. the probability is low. the temperature has risen. has two main policies it is pursuing right now in terms of trade. one is limiting what equipment and goods american companies can supply to chinese companies. it is also raising tariffs. which of those using will have a bigger impact on china's economy? from the short-term view, the impact on china will be greater by limiting our tech suppliers. what about two or three years later? china will make its own things then. don't think that general

commercial technologies are owned by one country and others can't learn. china has 900 million workers now. 170 million of them are college graduates. they graduated from u.s., european, australian, japanese, and is really colleges. they were carted will catch up in a few years. we will thank president trump because it was his policies that led us to be able to make for ourselves all the things we used to purchase from around the world. that's thempanies, biggest domestic market. we will thrive in the long run. that is bad for u.s. companies. they have seen that. core, is not willing to do this. they didn't want to lose the market. about how you thought the possibility of reaching agreement at the g20 at the end of june was fairly low. how long do you think it will take for the u.s. and china to be able to agree on trade and this relationship? >> that's a good question.

if the u.s. doesn't want to go to the wto and talk of china with a kind attitude, things will drag on. that will be a year or two. that could be longer. we will see who can take it on the chin. china will have to endure that. the u.s. will have to endure that. the whole world will have to endure it. the global economy will go backwards. said --ma thinks he says he think that will take 20 years to resolve this problem. do you think it could happen? >> i know him. he used to work at the ministry of commerce. he is pessimistic. the world would not allow us to endure it for 20 years. the u.s. will probably constantly seek china -- see china as a strategic level since it is developing. the u.s. will no longer use measures like tariffs to play. they will find it harmful for themselves. maybe china will develop and the u.s. will not.

the u.s. will see president after president and the congress will debate. they will still see china as a competitor. i believe that measures will change. it will be shorter. 3-5 years. both sides will be in a lot of pain by then and change course. there will be time to wake up and sit down. paul: that was china's former commerce minister. let's get a quick check of the markets now. japan's nikkei, currently higher by zero point -- 0.5%. u.s. markets at it in the green but we have disappointing headlines coming out of the u.s. mexico trade talks. the cost be exposed to trade to south korea is off. australia,er in 0.5%. shery: we are reversing those earlier declines. u.s. futures bouncing back. at the moment, unchanged.

let's discuss all this. joining us now is the dws chief investment officer. always great to have you with us. in your notes, you said that you like treasuries, you are reducing equities when it comes to emerging markets. you like cash and defensive stocks. you seem to be playing it pretty safe. is this all about trade uncertainty? >> yes it is. we've had a very good run up until the beginning of may. we had a lot of our target prices at a cross asset level. also in an emerging market level. it was prudent to be more defensive. markets at the moment, particularly emerging markets, seem to have bottomed 10 days ago. -- newstickets words gets worse. we have to really see what happens over the next couple of months with trade, the earnings.

i think that is the real key. assume thatt, if we we have a meeting of trump and and don'tshe -- xi have any more escalation of trade over the next six months, i expect markets will be range bounced. if we have further escalation, i expect we will have to take our risk down even further. shery: what about central banks coming to the rescue? this is what investors seem to have been banking on to see the recent rally. >> yeah. the fed fund rates now already are factoring in the number of rate cuts in the third quarter. central banks will not act as quickly as people think. i think they will wait, especially in the u.s.. they will wait for the data come through and see the real impact. they will keep their ammunition for later in the year, to see if

things get worse on the trade side. they have more ammunition to act. in asia, there are certain central banks that probably should have cut rates like india , like australia has. i wouldn't be surprised now to see further rate cuts in a few of the asian markets over the next 3-6 months. a lot of it is depending on inflation drivers like food prices and oil. with oil down a bit, that is good news from a perspective of the indian side. paul: when you look around asia for potential candidates to get on the easing bandwagon, surely the bank of korea has to be a candidate. >> yeah, i would've thought so. probably less sensitive for the stock market actually. cutbank of korea can of months ago and probably needs

to. at some stage, indonesia could do some more cutting. when you look around the region, you see korea as one of those economies most exposed to the trade tension. if you have a look at the cost , it has put on reasonable gains. what you put that to? the trade tariffs were starting to be talked about again. it will bounce off from the bottom. i think that outlook for korea is quite weak on equities side. we have been underweight for quite a while. in korea, there are three drivers of the equity market. , whichi conductor cycle is weak. people were hoping we would have

better news in the second half of the year in terms of earnings and stocks. it will be unlikely now. because of the socialist government, there a lot of risk in the domestic sector. particularly the banking sector. we have not seen that much progress in terms of the holding companies. they have been more effective and friendly to minority shareholders. that is dragging back korea at the moment. taiwan is the same. you had a big falloff in taiwan and a bounceback. the key is driven by what will be happening with the supply chain. there is no certainty there. it's difficult for investors to really have confidence. our message really, what we are doing has been domestically oriented. looking at those markets which are safe at the moment. that really needs going back into markets or keeping positions in markets like india and thailand which are defensive, they should hold up in this environment. opportunities as the

bigger, more open economies get cheaper. and looking in the next couple of months. shery: given the huge weighting market,ng in the korean if we see more problems for huawei, could that boost samsung ospi?he kp >> it could do. the overall environment will not just be driven by that news. it is still very tight. what happens on the cyclical basis. ; cycle is not looking good. trades atgenerally quite a discount to the market. one of the issues we always talk aout in asia, we don't have basic premium pricing for brands

where you do in the u.s. and europe. samsung is obviously one of those key brand names, one of the best-known names in asia. premiumt priced at a for what it does. it is still very cyclically driven. i would bear that in mind as well. we stay focused on the domestic side. you have the potential for some markets to cut rates for a little bit more stimulus to be done. i wouldn't ignore the domestic side of china. will have more stimulus in the auto than the consumer sector. exporters, we are beginning to see the market correcting with good value there. shery: we have china and hong kong closed today. we are seeing more margin buying

ratios rising at the moment. would you say that stock sentiment has turned for the chinese market? have you see the equity markets there? marketink the hong kong is wait and see. they have had an incredibly good start to the year. i think most foreign managers were really trying to get risk back on as this market really went up very quickly. it was driven by the asia. a lot of fun sit incredibly well. we got hit by this trait is. that caused the direction. asia is still in double digits on the air. the msci china has pulled back a little bit more, probably because of the adrs. none of it was driven by earnings. it was really driven by expectations in trade and the chinese economy and the potential for lower rates. issue, thethe trade other two are still in place. if we have a coming down of the trade issue, the second half of

the year, we would expect to see less earnings downgrades. a month ago, we were talking about potentially seeing earnings upgrades. in this environment, that's unlikely. we would expect we are at the bottom of the earnings cycle. we would see positive earnings growth going forward. on a one-year basis when we look at our strategic targets, we have upside for emerging markets and asia. we have upside for emerging markets and asia on a tenure basis. 10 year basis. it wizz -- is about when you are buying for the longer term. in the short-term, protect capital into you have certainty. dws chief investment officer for a pack. thank you for joining us. up next, a warning from standard charter on the trade war. that matters because the british bank is heavily exposed to china. our exclusive interview with the

ceo is next. this is bloomberg. ♪

paul: this is daybreak asia. shery: standard charter is warning it sees a prolonged trade were between the u.s. and china. is ceo says the base case that the standoff will not be resolved anytime soon. standardbig deal for charter with stirfry -- which to -- gets its asia from the china region. he spoke exclusively to bloomberg in paris. tradeoss the u.s. china is a relatively small proportion

of our overall in. -- income. the trade has not reduced materially between you -- the u.s. and china. trade in the region is very strong. the more the tensions go up, the more the trade between china and the rest of the region will increase. both because chinese goods will find an outlet but also because of the supply chains being reconfigured. more and more of the investment from international companies who are exporting back to the u.s. is being routed outside of china. chinese companies are rooting their supply chain outside of china in order to avoid the impact overall. given that we operate in every countriestry and 11 in africa, across the middle east and in other countries in the region, these are our markets. as the supply chains reconfigure, this should be a good thing for us in the long term.

in the short-term, we are concerned about how these tensions escalate. >> you are confident that you are able to do growth over the next two years? it doesn't actually impact anything right now? >> we will watch very carefully at the economic impact of these tensions. we feel a sluggishness and overall heaviness in the global economy right now. some of that is cyclical, maybe would happen otherwise. some is on the back of these concerns. the economic impact is real. we are seeing signs of that. in terms of the flow of trade, it's going to change on the back of this escalation. not necessarily in a bad way for us. >> have you see the world economy right now? do you worry about a downturn? >> we are always worried. we are paid to worry. i do worry about the heaviness in the world economy right now. we are seeing downgrades consistently.

assessments around the impact of a further installation -- escalation intentions. below economic growth is potential for the first time in a few years. chinese growth is feeling pressure. u.s. growth is showing signs, the consumer is very strong. let's be clear. the u.s. economy is very strong. there's a pressure, downward pressure that wasn't there two or three months ago. paul: the standard charter ceo at the goldman sachs european financial conference in paris. let's get a round up of the stories you need to know to get your day going. subscribers go to their terminals. it's also available on the app. you can customize your settings so you only get news on the industries you care about. this is bloomberg. ♪

shery: this is daybreak asia. i'm paul allen in sydney. gets -- let's get a quick flash. google is blind lucas for $2.6 billion to help clients manage data. the deal is google's biggest since 2014. it comes as it struggles to compete with amazon and microsoft in the area. it helps companies assist data stored in the cloud.

the acquisition may face extra scrutiny with big tex under a doj trust investigation. shery: shery: evaluating options for its operations in trade. the broadcaster may combine the unit with a parent company and it seeks ways to bulk up in the face of rising petitions. it sees a bigger footprint as a better way to compete with netflix and other companies which are pushing into the european region. paul: there will be no more tall tales in the nba. the league is looking into ways to ensure that all of its players are exactly as tall or short as they claim to be. players often fudge their own height numbers to give themselves an advantage in selective draft. the expansion of betting is putting pressure on major sports leagues to make sure all their data is accurate. the goldman sachs ceo says political risk is harder to navigate compared to macro risk

but it is all part of the game. speaking exclusively with bloomberg on the sidelines of the banks european financial conference in paris earlier. >> we engaged in a fairly exhaustive review of all of our businesses. we did what you would expect a new management team to do, rihanna write our business. we are quite confidence -- confident with our business. there is areas for improvement. we now have a plan that we are executing. >> some people are saying it's been a difficult order for trading in equities. what do you think? >> it has been a difficult market. it is a market that is trading more on political risk than it is on macro risk. that is a difficult market for any trader to trade through. you see it in your preamble in the context of what the ecb and central banks are doing. then there is the overly of tariffs, whether it involves china or mexico.

we are playing with a lot of political risk which is difficult to trade through. >> what does that mean for your business? have you adapt to this ever-changing politics? >> i don't think you need to change the business. the market any good trading business is its ability to be agile. its ability to respond to a different set of circumstances and ultimately be responsive to what clients are looking to do. we are intermediaries of risk. that changes based on political and economic circumstances. we stand ready as we have for a long time. the intermediate risk among our clients. >> talk to me about the credit card tie up with apple. is it going to make money for you? >> it will make money. it is an investment in term of the build. its new product for goldman sachs. we view it as a very profitable business. has had a with apple number of different benefits for us in terms of accelerating our

entry into the business. subjecting ourselves to the rigor of technology build to the company like apple. the ability to face off against hundreds of millions of consumers is a very big move for us. it has already been of benefit to us. shery: the goldman sachs cfo. a reminder, we have a big guest on bloomberg today. an exclusive interview with people's bank of china governor ahead of his expected meeting with stephen mnuchin at the g20. it is his first international media interview after becoming governor. that's it from daybreak asia. bluebird markets is yet -- next. this is bloomberg. ♪

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reporter: welcome to bloomberg markets, china open. i am slid away. that's something awaiting. yvonne: i am yvonne man. thed: mixed messages from talks between the u.s. and mexico, some optimism as talks continue but washington still talking of imposing tariffs on monday. yvonne: president trump will it -- will decide on additional duties after meeting president xi jinping after the g20. reporter: some see the psychologically important seven levels being breached. ♪