paul: good morning. i am paul allen in sydney, where we are an hour away from industrial in market opening. shery: good evening from new york, i am shery ahn forget sophie: i am and hong kong. welcome to daybreak asia. ♪ our paul: top paul: stories this tuesday come up next session i had for asia as investors weigh trade war headlines. oil holds near a three-day close on fears of recession. president trump is ramping up the rhetoric on china, threatening here -- higher

tariffs of president xi doesn't meet them at the g20. the governor of japan says he is confident of japan, but is ready to act at any moment. shery: let's get a quick check of how the markets closed. we saw the s&p 500 gain ground for the fifth consecutive the 28th 92t shy of level, the high for the month of may. we saw carmakers and chipmakers leading the gains. we had president trump indefinitely postponing tariffs on mexico. time, he claimed we would see some more agriculture for pushes from mexico. some questions for investors that are now focusing on what happens at the g20. session, there were a few takeover deals. the s&p 500 saw the biggest five-day jump since january. u.s. futures not doing much.

let's see how we are setting up for asia. sophie: australian markets are back in line. city features are heading gains. come on nextably session with kiwi stocks adding .6%. in tokyo, these advances may stall after the nikkei and the topix closed 1% higher on monday. local media reports that the u.s. is seeking to expand the definition for auto parts in chinese tariff talks. higher earnings are due plus alibaba's home investor listing, may stoke some excitement. a quick check on oil. holding near three-month lows. oil still holding below $54 avail -- a barrel. calling into a fresh coming 19 low on friday as the seven handle is on the radar. aussie bonds are playing

catch-up. not far off from record lows. strategists are guessing the aussie body are -- bond yield curve is flattening. vocis has an offer after a swedish firm walked away from its takeover bid which sent shares plunging. premium tos a 27% the last close, valuing vocus at 3 billion aussie dollars. let's get the first word news with jessica summers. jessica? >> thanks, paul. grave concerns about a new bill in hong kong that stops the addition of china from april. damaged business environments. hundreds of thousands of people rallied on sunday against the proposal.

>> iran is stepping up the rhetoric by warning the u.s. to quote, not expect to stay safe after its diplomatic actions against iran. there were threats over president trump's rejection of the 2015 nuclear deal and the recent sanctions against the iranian oil industry. they've launched an "economic war that it will not be able to finish." they say. it hask of japan says the tools to deliver more stimulus as necessary. policymakers must be aware of the side effects of the financial system. kuroda said he would consider further easing if the momentum toward 2% is lost. he emphasized the bank did not need to ask -- act now because of the health of the japanese economy. moment, it is quite

sustainable. we have to carefully monitor the situation. continue our control. expand or strengthen the monetary easing further. >> global news, --global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. paul: president trump --shery: president trump is revving up the heat on china, threatening to raise tariffs again if xi jinping declines to meet at the g20 summit. that also suggested trade deal could include a provision about chinese tech giant huawei. let's get the latest. when can we get some more

certainty about this summit? these are not formally announced typically. just before the summit can i want to get the details out of the way. there has been expectation that they would meet while there. there has not been any indication from other side that such a meeting was imperiled. there are some more wrangling to go on here. it could be that trump is trying to step up the pressure in the absence of any progress of negotiations with china on the trade disputes. they are continuing to haggle, but getting know there -- nowhere. the present -- the meeting with president xi has been anticipated and washington. it's a chance for the two leaders to put their stamp of approval at least on some aspect of it. also as a sign of progress. threatening to put

tariffs even higher than 25% on chinese goods if that meeting does not go through. it is also part of his negotiating style to create such pressure before he is going into any sort of meeting. huawei issubject of again casting a long shadow over this. the president might threats over that company to a trade deal. what is there in? -- what is the aim now? joe: they are trying to create the impression that huawei is part of any deal that they could negotiate. right now, there plans are for the u.s. to severely restrict u.s. companies from doing business with huawei and not having them do any business in the u.s. it's all part of the big battle over 5g between the two economies. suggestedadjusted -- are the huawei restrictions

an attempt to prevent china from overtaking the u.s.. dosaid he wants china to well, but not as well as the u.s.. that puts it in a higher category with the trade deal and with the u.s. trying to compete with china for dominance in this technology. shery: president trump again attacking the fed, it seems to be very much focused on having the fed resemble the pboc. joe: he did express some envy that president xi has more control over the fed. they are a central bank in terms of monetary policy and in terms of currency. repeatedlylained about the u.s. fed not cutting interest rates. he has said that he has theested that the people on

fed are not his people who he appointed for the five governors on the fed at this time. he is really trying to put pressure on the fed to cut rates going forward. ratesd has adjusted that could be cut as the economy cools a bit with a variety of factors, including the trade war. paul: checks and balances can be terribly inconvenient. thanks for joining us. still to come, our extensive interview with the boj governor, kuroda. why he says the government has no need to act right now. shery: we looked at the latest deals on wall street. joined next. this is bloomberg. ♪

paul: this is "daybreak: asia,"

i am paul allen in sydney. shery: i'm shery ahn in new york. diving into the close. it was a day filled with multibillion-dollar megamergers with chip stocks back in the driver seat. bring the s&p 500 higher for a fifth straight session. su keenan is here with me. many different forces in the markets today. su: we saw oil under pressure, but they are bouncing back after hours. we did not see stocks power higher. index coming on strong, up 2.5%. they were in the lead here. that is a sector that got caught in the crossfire of the trade wars. let's go into some of the big movers. large movers, particularly beyond meat. zoom video also -- both recent ipos. beyond meet blew it out of the water on friday with their first earnings report as a new company.

the stock was up 40%. it continued to go higher. it has been up 87%. this is a meatless food company that is becoming the rage in the u.s.. tilray also up. its merger monday. stakeate firm owns 77% decided not to sell. they will become a subsidiary. thevegas sands continuing story of macau resort casinos doing extraordinary well. -- extraordinarily well. let's look at some of the movers. salesforce down a bit as it bets big on tableau. after hours, apollo buying shutterfly/ . another big move. the stock has been down. it was immediately downgraded. interesting analysis on the deal. online cameraan

related site. it is still reacting to the latest news. if we look at some of the other deals in the market, they did add a lift. mergers indicate the momentum in the market. have a lot of deals to pick up the week, it is always an extra boost. deals,n the subject of let's talk about the mother of them all. the markets first chance to trade that blockbuster events tie up. raytheon and united technologies. su: some are saying this would be a game changer because it combines the civil aerospace with the fence. look at the way the bonds reacted. debt reallyologies took off after it announced it would by raytheon. the bond yield across the credit curve, they say that is a

positive. the stockk at how performed, not as big of a reaction. in,ident trump weighed questioning this active competition on united technologies' proposed purpose. he says, does that take away more competition? he is throwing some cool water on the deal. many an industry are pleased. the fed stocks not moving in a big way, but they clearly believe there will be some major ramifications. the combined company will be number two to boeing in terms of size and sales. shery: thank you so much for that. let's continue discussing the markets. eb.ning us now is cal su just talked about the latest megamergers. we saw corporate activity being active on this megamerger monday. how sustainable is this if we continue to see uncertainty at

corporate profits taking a hit? caleb: it is fairly sustainable because rates have come down so much. credit rates are extreme a tight. with rates coming down, it incentivizes large leveraged buyout. the raytheon deal, that is .argely about the balance sheet you just mentioned credit spreads just credit threads there. you can buy back stock and immediately created. shery: how much is it about the headlines we continue to see with mexico and china and how much of this is a story of sulfur's central bet -- selfish central banks? caleb: i think it's about trade. the markets have been projecting the fed would cut rates. the data we got on friday confirms that. very likely that happens. central banks have been dovish all year long. trade has gone back and forth.

what has happened recently is trump has given china a blueprint. he says, here is your path to resolution. tariffs on was raise mexico -- or threatened to raise tariffs on mexico, then mexico came back with largely the same agreement they had proposed before. trump said, we got a deal done and claimed victory. that is the path of resolution for china. we are seeing the potential to your delay on the band for huawei. that gives china the roadmap trump wants. he wants resolution. he does not need all the answers today. the two-year ban happened two years after the election. there is the blueprint. mexicoaid it out with and he helps china will follow. paul: in terms of that mexico deal, it is a bit of an odd one. a couple of weeks ago, there was

a problem we did not know we had. now it has got away and stocks rallied off the back of it. china will be a different proposition what it? su: it is, but the timing -- caleb: it is, but the timing of the mexican tariffs was timing. ahead of the g20, he said, look, i will threaten. as long as you give me something i will report back on as a win, we will be able to come to terms. it is very different. i think it is also very similar in terms of the way that trump is setting it up. paul: i just want to take a look at this chart on the bloomberg. it makes some interesting observations. we are stocks continuing to approach record highs. the yield curve is continuing to flash warnings. how do you square that circle? which one of those lines is right? su: ifit was a closed caleb: --

it was a closed economy, this would be extremely puzzling, but it is a global, integrated economy. the fact that rates -- the fact that rates have come down largely given by what is and so, youerseas, are seeing rates that are negative across most of the eurozone, which allows for u.s. rates to come down and a down. that means the risk-free rate for the u.s. is much lower. with a lower discount rate, you get higher asset values. you are seeing that with borrowing. if you can borrow cheaper and leverage of the balance sheet, your equity will be worth more over time. shery: where are we when it comes to volatility? this chart on the bloomberg showing that it was a volatile month of may. it was still not as pronounced as it was back in the fourth quarter of last year. we are also still now seeing it

plunge again. what is going on here? will he continue to be range bound until the g20 is over? iteb: i think you will see back and forth. the market will be volatile going into the g20. you hear whispers about how trade negotiations are likely to unfold. down in theas come last six days. it leads you back to the thought that the market has priced in a fairly decent resolution on trade. any disruption there would lead to increased volatility. thank you for --shery: thank you for being with us. whittiertrust chief portfiolio manager caleb silsby. you can get the information you to know to get your day going. today's edition of daybreak. it's available on mobile and the bloomberg terminal. you can customize your settings to make sure you get information

on the industries and assets you care about. this is bloomberg. ♪ ♪ shery: this is "daybreak: asia

," i am shery ahn in new york. paul: i am paul allen in sydney. group is in focus after receiving an offer from atl energy. the bid would be a 27% premium that comes a week after a swedish firm walked away from an earlier proposal. for more on this asia energy report, we are joined by jim. what is the rationale for them getting into telecoms? >> it is really about access to data. what we find in australia is that consumers are taking an active role of managing their energy needs, through rooftop solar, or batters he systems. they are managing smart phone systems. is creating a treasure

trove of data in terms of how they tailor their retail offer. they also see opportunity in uses of marketing energy to on their broadband networks and also offering broadband to their own energy users. they have these huge data centers that could provide some synergy in terms of how agl manages their efforts. shery: this is the second time they have made a play for this company. what are the chances of success this time around? i would say there is a better chance this time around. they have four weeks of due diligence to figure out how they can tease those synergies out. noted the swedish firm pulled out. the bid now stands at 485. that is quite a bit of a step down.

i'm not sure shareholders will be hugely happy about that. just depends who else is out there. private equity has showed an interest in the past. they are probably still sniffing around. it be interesting to see, i'm sure the other telecom providers might be looking at them as well. deal,dn't say it's a done but also they are in the driving seat. shery: thank you so much for that. we will get back quick check of the business flash headlines. uber is two-faced will he and london. face competition in london. bolt, the estonian firm is licensed and backed by chrysler and valued at $1 billion. they claim 10,000 drivers are signed up in london are about to challenge uber by offering lower fares and taking a smaller slice of driver earnings. thomas cook took off after

un unit.ng bids from fos analysts at citigroup think they are worthless. the stock recently broke above the level it saw for -- after they say the shares were worth nothing. that prompted a 40% selloff in one day. shery: audi is recalling its first electric car in the u.s. over fears of a battery fire. they issued a voluntary recall of 540 suvs because of the risks the moisture in a battery cell could cause problems. audi said it has no knowledge of fires or injuries due to the flop. in april amid a wave of new contenders seeking to challenge tesla. paul: alibaba is said to have picked cicc and credit suisse to

lead it share sale in hong kong. there talking to other banks about the offering and aims to file for the listing application in a few weeks. sources say the offering could raise $20 billion. alibaba has not set a target. it would be hong kong's biggest share sale since 2010. still to come, we will have the latest on huawei as one of its executives faced a grilling at a u.k. parliament hearing. more on that a moment. this is bloomberg. ♪ i don't know why i didn't get screened a long time ago.

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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. >> this is daybreak asia. former pakistani president has been arrested after losing a legal bid for a bail extension in an investigation into money laundering. he denies any wrongdoing. the the co-head of pakistanis people's party and the latest politician to be arrested since the prime minister came to power pledging a hard line against corruption. to become the next u.k. prime minister has open and a record ten british

conservatives are fighting for the chance to lead the country could over the next two tory politicians were narrow down the field to two. boris johnson is leading the pack with a pledge to push through brexit with or without a deal. and president trump is ramping up the heat on china. he's threatening to raise tesla again -- tariffs again is president xi declines to meet at the g-20 summit. $320 billion of chinese imports would be imposed immediately should the two leaders not talk. he adds the chinese side will have to make a deal. and the world's most expensive work of art is said to have resurfaced after a swear oitt whereabouts was unknown for 18 months. yacht ownedper

by mohammad bin salman. art experts question its provenance,a virtue meetings -- pitcher beating it to it toattributing davinci's workshop rather than the artist alone. global news 24 hours a day on air, at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> subkey currency moves early in the session. the yen holding around the mid- 108 levels. policy meetings in japan and the u.s. and the u.k.. plus, we are waiting to see if the trump-xi meeting takes place at the g-20. goldman has raised its three 110. target to

on the other hands traders may be looking at bearish bets on the offshore yuan. the line in white made off t direction ofh, heading towards the 800 area. as the central bank is not expected to defend that line indefinitely, paul. paul: thanks very much for that. british lawmakers have quizzed huawei's cybersecurity officer .k. allows whether to have let the chinese government have a role the next broadband network. what were the highlights of this hearing? >> as you mentioned earlier, this is about the ongoing debate about the role that huawei should be playing in the u.k.'s next generation infrastructure.

there were some very tense moments during the hearing. grilled the p.m. executive and accused him of being a moral vacuum when he explained it is not huawei's role to understand what laws are right and wrong. take a listen to this particular exchange. inwe don't make judgments terms of right or wrong. >> you do not have a view as to whether or not china -- >> china is a one-party state. >> do you have a view as to whether or not that one-party state has requested -- >> i don't have a view on the, no. >> you are a moral vacuum. >> i don't believe so, no. >> the mp's were pretty astonished by this huawei's executive answers and there were several like stations where they were quite frustrated he would not provide a clear answer to a simple question. now, the u.k. former prime

minister theresa may had decided that huawei should be allowed to provide at least some parts of 5g network but their other candidates taking a stronger negative stance towards it. it's going to be up to the next week to decide what role huawei 's going to play. shery: not surprising given that the trump administration has been pressing all of its allies to ban huawei. what is at stake for the u.k.? >> right. they certainly face increasing pressure as trump is escalating his call for the country's allie tos to ban huawei. if the u.k. lets huawei be banned. however, if it does have an all-out ban on huawei this. could be costly for the uk's companies huawei's already entrenched and parts of the uk's existing 4g infrastructure and cutting it out means that these companies are going to have to have costly

delays and will have to rework their 5g plans. the catalyst for money is that technologically advanced than his competitors and is a cheaper option. this is a difficult decision for them to make but we have seen some british carriers, including bt group and vodafone decide to ditch huawei's phones for their next rollout because they are concerned about this ban that will cause her to be some software operating issues on huawei's latest phones. paul: how have other countries been responding? >> we've just learned from canada that their discussions are still ongoing or they have not made a decision about how they will be treating huawei, but they are considering and this is a big deal, they are considering actually changing huawei from their existing 4g infrastructure which would be costly. won the other hand we heard recently from russian leaders that they are i strong support of -- in strong support of huawei.

against the united states and one of russia's largest carriers toed a deal with huawei rollout pilot zones in russia. australia has excluded huawei. germany decided it can operate within some tightened scrutiny. and france has an informal ban on huawei right now. shery: thank you so much for that. our china correspondent in beijing. s ceo says the company is still winning contract to supply 5g networks despite delays with delivery. in an exclusive interview, he said it's too early to tell whether america's blacklisting up huawei is a net positive or negative for nokia. >> too early to call it anyway. i just say that yes, there is some uncertainty and some on particularly as to how this will unfold. we have been very thoughtful about if you are a customer that wants to swap out your existing

4g player, how are you going to deal with it? we have four alternatives whereby you do not have to delay your rollout. we're focused on being there for our customers when they need us. >> so, the argument made by german player deutsche telekom that they have embezzling huawei , and it would delay the rollout of 5g, you think is not correct. >> i don't think and a european level there will be any delays based on the situation with regard to security concerns. if any, there might be delays on the count of -- not being available the economics not making sense. technicale four solutions should you want to swap out your existing space. and they are all doable. have paidout cons, lip service to that through the u.s.-china trade sessions will see two different technology focuses ending up being built. two ways of delivering 5g that

would be compatible. do you think that is a risk? >> no. >> what is the key risk when it comes to security, when it comes to providing -- is really a relevant realistic risk to have huawei as a provider? >> the concern the people are expressing is that camino, it is critical infrastructure so the focus of security will be there no matter what. it has to be there and the second is that where is the intelligence in the network. in the core, is it at the edge? throughoutou will be the network, because, you know, there is no one particular place where intelligence sits. anl: the nokia's ceo in exclusive interview with caroline hyde. the governor of the bank of japan tells bloomberg he has plenty of options on monetary stimulus if needed. our exclusive interview with koroda is next. this is bloomberg. ♪

shery: we have breaking news out of japan. japan's has decided not to hold a double election. -- japan's prime minister has decided not to hold a double election. there was speculation he would dissolve the lower house this summer and this would become a snap election. with the election for half of the upper house. this has come less than two years after winning a landslide election but news reporting that the prime minister has decided not to hold double elections. let's now stay in japan because the bank of japan governor theda is ready to hit japanese economy with all of the policy tools at his disposal if the downside risks from the ongoing trade war push it off its steady growth track. however he will do this cautiously knowing the

negative side effects are taking a toll on banks. kathleen hays joins us from tokyo. is governor kuroda worried about the banks? why even consider more stimulus? first of all, as you know, when we sat down for this interview, governor kuroda made it very clear from the outset that he thinks that the japanese economy is still on a solid check. he does acknowledge that, if downside risk from the trade war materializes, then the economy could slow. that is when he will consider more stimulus. also, though, we know that when you keep the negative rate at the short end and you anchor the 10 year note at zero, you are making it hard for banks to boost profits. governor kuroda still sees the banks on solid grounds, there will capitalize. world banks are suffering from -- a a lot of people. -- the population is shrinking in the rural areas.

however, if any of these more aggressive steps would be taken, cut the negative rate, it would be done with all these potential negative impacts on banks in mind. let's listen to governor kuroda now. >> at this moment, we do not think it is necessary to policies,ome of the current policies. but when trump risks -- and if the japanese economy is affected the momentum towards 2% inflation target is lost, then of course, we would swiftly respond by changing our policy. >> could currency causes and trade deals can in the way of the central banks abilities pursue, push the inflation rate higher? >> basically, i don't think so, majore i mentioned

central banks in the world. and ecb, bank of england, bank of japan. unlike central banks and smaller economies, they are -- subject to continuous and strong influence by capital movement and the financial markets. these four central-banks, they can, and they can pursue and they can decide their monetary policy on the basis of price stability targets. rateurrency or exchange target. there's bank of japan, federal reserve and the european central bank. if one of the big three starts reviewing the -- because they

know we have to change the framework, does that mean the bank of japan also says we are going to review our framework and look at targeting 2%? we're going to say as the fed president said in new york looking at a range around 2%. is that something that doj would do, too? n -- if the fedthe is likely to maintain a 2% inflation target, the only thing they are discussing is how to maintain the inflation target and how to communicate to the people and so on and so forth. has just started [indiscernible] but well before the completion and inflation rate is stil less than the target. i understand 1% or something.

one to 1.5%. as far as the bank of japan is concerned, the inflation rate is only 1%. halfway or something to the 2%. so, the situation among the three central banks -- should: that give the bank is a japan some comfort that governor kuroda does not see any need to change anything, not even the fact that fed could start changing makes a difference. he was very clear that if they have to do anything, cut, taking any steps that could hurt banks, the mix of tools they use will be specifically designed to mitigate those potentially negative impacts on the big banks. if you want to hear the interview in its entirety, we have a posted on bloomberg.com. we'll hear more from governor kuroda about what he sees next

for japan and next for the boj. paul: global economics and policy editor kathleen hays. joining us right now from washington is the deputy director for geo economics. thanks so much for joining us there. we were just hearing from governor kuroda. he's saying the bank of japan has got enough ammunition left to do something big if required, but be that going further into negative rates, lowering the 10 year target or more asset ischases, the, the barrel starting to look quite empty. >> yes. and in the bigger scheme of things, japan does have a lot of uncertainties to grapple with. first of all, on the trade front, it does have to deal with the growing uncertainties on not just between united states and china, but the united states and the world. and its own relationship with the united states.

it also has a lot of domestic, economic concerns. especially at the moment about financing retirement funds. f the light one o aspects, the bright spot and japan is on the political front, especially on the diplomatic front where japan can punch above its weight and reach out to iran. on the economic front, the downside risks to continue to plague japan. paul: yeah, let's return to the international trade front at the moment but domestically, i just want to have a look at this chart on the bloomberg. as eckley how low japan's interest rates have got over 20 years. we are well into negative territory with no sign of popping our heads above it. but more to the point, the bank of japan's entire balance sheet

is bigger than all of the japanese economy. how do you unwind a position like that? great difficulty. the good news is that this is nothing new. so, japan has been grappling with this reality for quite some time. the only problem is that the issue has only escalated in its scale. a limit asere is to what the bank of japan can do. perhaps a better thing to say about the bank of japan's policy at the moment is less about its confidence in what it can do or perhaps -- it is more a question tied, and it are has a very limited toolkit to work with at the moment. shery: let's talk about the diplomacy and the international standing up to 10, because you mentioned -- standing up japan because you mentioned that was the bright spot. president trump's visit to japan hemay showed how ad t odds was with officials on a trade

deal or north korea. what a relations like between the two countries right now? >> very testy. on the surface is disposed to be a strong relationship and certainly, when we saw the summit meeting, there had been plenty of optical opportunities to show unity between the two countries. but, of course, the trade issue really drives a big wedge between the two, and there is continued uncertainty not least about the possibility of imposing section 252 on the japanese auto sector and pursuing a bilateral trade deal that would not be to japan's advantage and certainly the possibility of going beyond the tpp agreement. but that said, when it comes to the political front i do point out this iran issue because, one, it does provide an opportunity for abe himself to really shine in the global stage. but, also, it does provide a new

outlet for japan to really punch above its weight. japan, yes, it does depend heavily on oil from iran. but, at the same time, it can be seen as an honest broker because it is politically neutral and it does not have the religious issues that some of the other issues may be concerned with. and, at the same time, it does have that pipeline, that communication pipeline with the trump administration. shery: thank you so much for joining us. wilson center deputy program director for geo economic -- these are some headlines we are on.ping an eye oan when it comes to south korea -- the 10 days of june, exports fell 16.6% year on year. when it came to the chip sector, exports falling 30.8%. of course, we have seen south korean exports really take a hit on trade tensions, dampening the

outlook for their products. exports falling 9.4% year on year in may, as compared to only a 2% decline in april. may was also the fifth consecutive month we saw south korean exports fall. first are seeing in the 10 days of june, exports have plunged another 16.6% year on year. chip exports are also down 30.8%. this, of course, just highlighting that downturn in the semi conductor cycle in south korea. and, of course, if you missed out on any of the interviews that we had throughout the day, tv is your fountain. you can catch past interviews and dive into any of the securities or function s talk about to become part of the conversation. by sending us instant messages. this is for bloomberg subscribers only. check it out. this is bloomberg. ♪

paul: let's get a quick check of the latest business flash headlines. salesforce slumped after announcing -- software in an all stock deal valued at $15 billion. th takeover will be salesforcee's biggest acquisition to date. can annual revenue of $28 billion. shery: shutterfly jumped on news that they are offering a bio. -- buyout. it valued shutterfly at $1.74 billion. apollo will assume more than $1 billion of debt. to merge shutterfly with snappish. korea ands in south japan and australia get underway. let's find out what we should be watching.

sophie: a story is back online. a fifth day of gains. looking like it could be a subdued session with pressure on u.s. stock futures this morning. we have another batch of poor korean day awaits exports streaking 70% and shipments almmost 31%. no surprise we are watching semiconductor stocks and samsung has reportedly placed in order from qualcomm to manufacture snapdragon 855 chips that will be involved on 5g smartphones. watching auto players in tokyo thatnewsppaer reporting negotiators are pushing for widening of the destination around auto-parts that wouldn't include parts used in aerospace. fter aglching vocus a energy offered to buy the

company, a 27% premium to the last close. a quick check. looking upon yields, we are seeing them nudge higher in australia in a looks like treasuries may open -- lower. ♪ the latest innovation from xfinity

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good morning. major markets are about to open for trade. >> good morning from new york, i'm shery ahn. >> and i'm sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: asia" -- "bloomberg daybreak: asia." ♪ >> our top stories this tuesday, a mixed section ahead for asia. oil holds near a three-month lows. president is ramping up the rhetoric on china threatening higher tariffs if xi jinping

does not meet him at g20 -- the g20. >> tensions from lawn. will ask -- tensions rumble on. we will ask what is under pressure. >> the major markets are opening at the moment, sophie, what are you seeing? sophie: we are seeing pressure for the naked two to five after a close over 1% higher on monday. the topic similar on the retreat, once at the percent while the yen is on firmer 108nd holding in the early handle while we are seeing yields whole study this morning. when you take a look at the outlook for japanese stocks earlier in the show, aberdeen standards told us small caps off really good fundamentals in japan. in seoul, the costly is under pressure as well up 2/10 of a percent. -- kospi is under pressure as well, up 2/10 of a percent.

let's legit back to the mood in a stream mesh -- let's switch it back to the mood in australia. energy is off about 4% so far this morning on the back of its steel to take over -- it's deal to take over -- its deal to take over vocus group. on the mood inow wellington, if we could, after we got first order manufacturing data showing volumes increased on meat and dairy products. the kiwi dollar is holding steady. >> thanks very much, sophie. let's check in with first world news with jessica summers. --former pakistani president the former pakistani president has been arrested after an

investigation into alleged money-laundering. he denies any wrongdoing. he is the cohead of the pakistani people's party, the nation's second largest opposition group. he is the latest politician to be arrested after the prime minister came to car, -- came to power. the united states says it has grave concerns after a new bill in hong kong that would be the extradition of people to mainland china. it could undermine the city's freedom and business environments. people rallied on sunday against the proposal. it was hong kong's biggest protest since his return to china in 1997. iran is stepping up rhetoric warning the u.s. cannot expect the same fate after a diplomatic and diplomatic actions against iran. the foreign minister urged a series of threats if donald

trump rejects the new deal and threatens more sanctions against the iranian oil industry. the u.s. has launched economic wars that they will not be able to finish, a state. -- they state. the bank of japan says they have the tools to deliver more stimulus as necessary. policymakers must be aware of the side effects on the financial system. they said they would employ further easing of momentum towards 2% inflation is lost, but they emphasized the bank does not need to act now because of the general health of japan's economy. , we have tooment carefully monitor the situation. continue our control, even strengthend or

further. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. ♪ >> thank you. president is ramping up the heat on china threatening to raise tariffs again if xi jinping declines to meet at the upcoming g20 summit in osaka. he also suggested an eventual trade deal could include a provision concerning tech giant huawei. let's discuss this with our senior international editor, jodi schneider. there were high hopes there could be some sort of break or thawing of relations at the g20, but this is not certain. >> that's right. a deal said they would meet on the sidelines, there's no real , butule diplomatic meeting

president trump now seems to be almost threatening or is threatening that if the meeting does not occur, and it is unclear what sort of meeting he wants, that he would raise the tariff against china on these $300 million worth of goods. be a bit ofpear to fun other strategic move by president trump. he likes to threaten and then try to get something he wants. if he gets somewhat there, he can't take that threat off or delay the threat as we just saw with the mexican tariffs, where he came up with the threat and when mexico said they would do what they already agreed to do, he went back and said ok, he would not impose the tariffs. this appears to be a move that he would like to be more of a

meeting that has already been scheduled. at this point, it looks strategic. looks like he is trying to push on those tariffs. again, there has already been a hike in the tariffs, and we are starting to see economic effects from the. we saw at the -- from that. we saw at the meeting in japan, a concern about slowdowns towards global growth as a result of these increased tariffs and tensions. >> are we seeing any indications at all of a potential war with china? thist necessarily come at point, there really are no talks scheduled and haven't been any talks. in weeks. it doesn't look like either side is moving at this point. president trump continues to make the case that china once a deal. he says nice things about xi jinping. he said he is a great guy.

a great country, but the u.s. is better. those were essentially his words when he made these latest rounds of threats. -- there does not appear to be any serious move, no trade talks are scheduled moving. -- moving forward. >> when it comes to tension between the u.s. and mexico, that seems to be easing after avoiding the deal on mexican goods. agricultural purchases seem to remain a sticking point, what do we know? >> after president trump said he would remove that threat of tariffs that would have taken effect yesterday, the peso responded and rebounded entirely, he also indicated that mexico had agreed to make significant agricultural purchases. mexico said it would not and did no such thing, they did not

agree to do anything other than what it already said it would do about the border. at this point, it is unclear that president trump said, you will see, there will be a big deal, but we really haven't seen any deal. on the mexican side, they say that agricultural purchases were not part of the discussions at the white house last week. at this point, what they have agreed to do is to really ramp at the border security u.s.-mexico border and also to keep people in mexico while they are awaiting their hearings to see if they can go to the u.s. when they come from other countries. this is really straining the situation. there might be as many as 100,000 people awaiting those kinds of hearings. obviously, with more pressure from the u.s., that will put further pressure on the enforcement actions at the border. at this point, there doesn't appear to be any agricultural

purchases that have been enhanced, certainly not that we have seen announced on the mexican side. seniormberg's international editor, jodi schneider, thank you for joining us. let's get it back to sophie kamaruddin. sophie: let's take a look at some big movers in sydney this morning, agl biting the most since july 2018 to a december 19th low -- december 2019 low. rising the most since may 27th after agl made a new offer for the aussie voice and data network for 3 billion australian dollars in an all cash deal to represent a 27% premium to focus group -- focus group on friday -- focus group -- vocus group on friday. >> thank you so much. still ahead chemical-- still ahead, could the yuan test the current levels? what does it mean for the trade war? >> up next, the global downturn

with aberdeen asset management. this is bloomberg. ♪

>> this is bloomberg. "bloomberg daybreak: asia." i'm shery ahn in new york -- i'm shery ahn in new york. >> the downturn we are seeing is a direct result of the u.s. trade war with china at aberdeen. let's bring in the global fixed income director at aberdeen asset management, jasmin argyrou. she manages 380 billion, that is quite a lot. a 53% chance of recession being priced in. is the bond market --? >> the moves we have seen since march have been fully justified given the deterioration

globally, which is a direct result of the global trade war that really began as early as the first quarter of 2018 when the tariffs were announced for washing machines and solar panels. ever since then, global policy on certainty -- uncertainty has risen and has damaged the sector. the trade war has been escalating since then. i think bond yields are current level our fully justified -- are fully justified. >> i just want to show you this chart on the bloomberg showing australia 10 year yield slumping to the lowest since 1981. where is the bottom? >> where is the bottom? i think the answer to that question lies in the future of the trade tensions and the trade war, which look like they will not go away soon.

it does look like the global economy has entered into a synchronized slowdown, meaning that no economy can escape. it looked like australia was hit by the uncertainty associated with the global trade war last year. we have now seen three consecutive quarters of reasonably weak gdp growth. synchronizedlized, level downturn, of course, all of these different countries are starting from a different point, right? where the u.s. is coming with a very strong labor market, as opposed to australia for example, with some slack in its labor market. how do you than a levy of -- evaluate -- how do you then evaluate which market can outperform? >> i think it is going to be a close contest as to which bond in a riskperforms scenario when the trade war continues to escalate.

in the u.s., the starting point is one of economic resilience, but the federal reserve has acted aggressively. on the other hand in the eurozone, you are in the negative, but the eurozone is a surplus region, so it can attract n sustain negative yields and can go further. in australia, we have high levels of household investors, with that -- investments, that means monetary easing. the cycle will be less effective than it ever has been before, so it makes sense for the rba's to move early, but they were probably -- they would probably move more slowly. i think it will be a close competition as to which bond market outperforms. >> if you are taking the stance we are seeing a global slowdown, can that fit together with a positive outlook for some corporate bonds? >> it can, and the reason is

central banks are being proactive. you have had an effect on risk appetite. when central-bank spas for monetary tightening, less christmas -- when central banks paused for monetary tightening last christmas, i think the strength of financial markets has been tested and it has been quite resilient. or the risk is at some point -- point, risk is that some it will take a look -- it will take a lot. i think risk appetite for a while will be resilient, and that means it is prudent to say that corporate bonds are in the but onquality spectrum, the track, we have to be mindful the exit will become crowded. >> we often talk about reaching

the limits of what can be achieved not just with ultralow rates, but some sort of illusion and connection between low rates and infringing -- low rates and inflation. >> the limitations of monetary not widely appreciated, we have been talking about it for years, but over decades, central banks have responded more so when credit cycles have turned. it means yields have been led lower and lower over the decades. debt has accumulated, but has not driven productive capacity or economic growth or inflation much higher. i think that shows that monetary policy has limits, not just because yields are low, but limits in the animal spirits it can unleash. it can unleash speculative spirits, but not intrapreneurial spirits.

when that is appreciated and financial markets, central banks will not be able to come and risk appetite what is effectively as they did in december of last year, that is what we should be worried about in the future. >> hearing from the boj governor, he says he is sticking to that 2% inflation target. would you advise him to quietly walked back or adopt some sort of a range? >> not necessarily, i think central banks need to rethink how they incorporate financial stability in their framework. the inflation target will form an important part of that, but it is about looking at the whole framework. i think that will be important. they have been talking about this and writing about this for quite some time. some have the european parliamentary election, and now we are seeing horsetrading in order to get those top leadership positions in the european union.

what will be the implications of mario draghi's exit? >> think that is one of the short-term risks the financial market will face, because from day one, mario draghi stepped into a very difficult position, and he had the market vision. he is one of the more formidable bankers we have seen in decades. his successor will step into a difficult situation. eurozone dealt with the currency crisis by turning itself into a surplus region. so, we are going back to the days where we had big global investments, financial fertility's help in forming, and will continue to form in the years ahead, leading to a crisis. the crisis will involve the eurozone and possibly parts of the emerging-market complex. saw a dress

rehearsal for that last year when turkey had a crisis. and then suddenly, it was revealed there were links between turkey and the eurozone, reflecting the surpluses. >i think that is a risk for the years ahead rather than the months ahead. >> thank you so much for your views. you can get a roundup what you need to know in today's version in youreak on tv terminal available on your mobile and the bloomberg app. you can customize your settings to get the news and the assets that you care about. this is bloomberg. ♪

>> agl and focus -- vocus shares

have bids with a 27% premium after the swedish firm walked away from an earlier proposal. james has the story. what is the rationale? >> think what it is is an acknowledgment going forward, -- it will be tech driven. this is giving them more access to controlling their own energy needs. with that, we have the applications and smart home systems and the treasure trove of data that is really valuable for agl in terms of tailoring their retail offer. it would get a broadband-based provider that would carry that data. the synergy is there for them. >> this is the second time they

made a plan for vocus group. the success this time around? firm withdrew their bid pitched at 525 last week, a little bit higher than can make5, but if they the numbers stack up of 5.25, the question is is this a cool deal -- a good deal? it is perhaps a bit expensive, because agl shares took a work at the open. open.k a whack at the we are noticing private equity has been a focus in the past. there may be some bidding tension if they are still sniffing around. we don't know that. other domestic telecoms companies in australia might have an interest. i wouldn't say it is completely closed on agl getting this, but they have four weeks in which to

work out whether they can make the number up at this price. they are at the driving seat, but it's not a done deal yet. shery: let's not get a check of the latest business flash headlines. thomas cook took off after for aming a bit -- a bid store operator unit. shares of rallied as much as 24%, but analysts think they are worth less. the stock recently broke below the level. the shares were effectively more -- worth nothing on may 17th. at the time, that from today 40% selloff in one day. [indiscernible] the takeover will be the biggest acquisition today.

they turn run data into more understandable charts with almost more than 90,000 customers. >> online retailer shutterfly jumped offering a buyout of $51 a share. this is based on the outstanding shares at the end of march. apollo will also assume more than $1 million of debt as they move to merge shutterfly with rival flatfish. -- with rival snap fish. the deals are expected to close in the coming quarter. up, hong kong braces for more protests as lawmakers get ready to debate a controversial extradition bill happening on wednesday. we will look at why some say the proposal raises grave concerns. that is next. this is bloomberg. ♪

>> this is "bloomberg daybreak: asia." president trump is ramping up the heat on china threatening to raise tariffs again if president she declines -- president xi declines to meet at the g20 summit at the end of the month. ofbillions of dollars tariffs would be imposed if the president does not meet in osaka. he says -- president trump says they have to make a deal. the ceo dismissed concerns to analysts his company is falling behind in the next generation

wireless raise to 5g. >> we can we -- we compete quite favorably with why way with or without the current security concerns. contractsken some 23 from them in the last couple of years. we win quite handsomely. >> the race to become the next u.k. prime minister has formally -- and a a record record 10 british conservatives are fighting for the chance to lead the country. 300 tory politicians will narrow down the skills to two, than party members will vote for the next -- then party members will vote for the next leader. world's most expensive work

of art is said to have resurfaced after its whereabouts were unknown for 18. leonardo da vinci's salvador monday is on a super yacht owned by saudi crown prince mohammad bin salman. millionting sets $450 -- is set at $450 million. it is attributed to da vinci's workshop rather than just him alone. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. ♪ thanks very much, jessica. let's check in on the markets with sophie kamaruddin in hong kong. mixed: stocks are trading while regional bonds are steady in oil. the dollar has resumed gains after a three-day drop while the

aussie dollar is ahead of business. equities are playing catch-up after the long weekend attempting a push above 6500 points. there is room to keep going with the possibility of another rate cut and approved attitudes towards the housing market. the kospi set to halt a three-day gain. samsung, amongst the biggest drags. let's check in on stock movers in sydney. health care is leading the advanced. cus is the best performer. i see no change in international vip trends.

leo fighting as much as six and a half percent at the end of may. the machine tools carmaker, climbing in a better forecast at 22.6% heavily beating jeffries estimate by 3.9% and above the company's target. >> thank you so much for that. in japan, they held a widely held be of boj has no ammunition left to boost growth and inflation. the downside risks from the u.s. -china trade were materialized. in an excessive interview with bloomberg -- exclusive interview with bloomberg, he sees extraordinary stimulus and expense when he will have to see to take the policy path. kathleen hays joins us from tokyo. those like mario draghi will do whatever is necessary here. reporter: those are the exact words he used.

with this sense of the g20 acknowledging that there are downside risks from the global trade were even though they do see stabilization in the second half and are not too worried about a global turnout -- turndown, i want to ask kuroda this question, because yes, that economy is on a decently solid track, but what do you have to do more to boost the economy? what can you possibly do? here is what he said. stillse options, we can utilize if necessary. these, combined, that depends on the economic price and the financial conditions. draghi, ilike mario

think we can do these things if necessary. list, theon his negative rate could be cut deeper. it could be deepened in other ways. the bottom level for the tenure -- the 10 year be even lower than -.2? everything is on the table. not now, only if needed. but it is an important statement from kuroda and the boj. >> what is the governor watching now? what would trigger an aggressive move from the boj? reporter: the answer you have to get is, if he says this could happen, what could make it happen? when i asked him, his answer was it is all about what happens with inflation. let's listen to that part of our exclusive interview. , if the target is

lost, of course we have to strengthen our monetary easing further through various measures. thing forst important inflationl bank is expectation, loss, but of course, although unlike the fed, the fed had the mandate, stability, and maximum employment. while the bank of england, ecb, bank of japan, they have not a all of, but still close, us are carefully watching growth. affect theeventually inflation rate.

yes, we carefully monitor particularlyyment, labor market indicators, and if you can change showing the downtown of the economy, we may act. reporter: we know about the inflation rates and the core rate which takes up fresh food dresses from the consumer index which has been able to get over 1% year after year, still about halfway there is 0.9, a number everyone has been watching. otherally as we see economic indicators which are pretty solid now, starting to soft and.

-- soften. we will continue to talk about this in the next hour. we will be talking about the negative spillover for banks, too. >> kathleen hays in tokyo. of its biggeste ever protests on sunday, hong kong is now bracing for another showdown over a country or shall extradition -- over a controversial extradition bill that comes on wednesday. karen, what happens next? reporter: what you are really seeing is finally a challenge from residents of hong kong. what they see as years of influence in the city. reading ofexpected the bill in the hong kong legislature, there are three readings needed, and we are hearing people are planning to gather possibly tonight. demonstrators have called for an assembly tomorrow at the legislative building. we are not expecting quite as

many people as we did on sunday when more than one million who came out onto the streets of hong kong, but we are expecting people to gather. it could be bigger. >> the government successfully resisted the demonstrations back in 2014. what of the chances the government will retreat this time around? >> the government has been defiant all along and said it once to get this bill passed -- wants to get this bill passed by mid next month. karen came out and said they would continue to push this through and extending the debate about it was not going to help matters. the legislature said it is going to be debating a number of amendments tomorrow. that is why people want to,. -- that is why people want to come out. it is unlikely that the latter would happen. >> it is an extradition bill. can you tell us some of the

details and why it is wiring people so much? >> this is the first time that citizens of hong kong, people here would be eligible to be extradited to mainland china. for a lot of people, this represents the final erosion of hong kong's autonomy and independence, what the identity of the city is a stone -- the city is based on. there has been a campaign in the recent months to increase this hearing. we have seen unprecedented moves like the expelling of a foreign journalist and the abolishing of a small opposition party. this represents the eradication of the firewall between here in china. >> thank you so much for joining us, our editor in hong kong. next, what is next for the yuan? we will hear from the senior asian fx strategist at mizuho bank. ken cheung. this is bloomberg. ♪

>> this is "bloomberg daybreak: asia." i'm paul allen in sydney. shery: and i am shery and in new york. the offshore currency hit its lowest level this year on monday after chinese markets returned from a break and pboc governor -- the pboc governor signaled no change in the rate. let's talk about it with senior asian fx strategist at mizuho bank, ken cheung. is there an eventual breach of the seven handle? >> i think he is trying to encourage more movement. stabilizing the balance of the economy, so i think if he expects the trade

war will be more prolonged, more fory will hear the economy and the monetary policy. if they insist they want to keep a one year or two your horizon, it will be quite difficult for them -- two-year horizon, it will be quite difficult for them. [indiscernible] taylor such level. >> what about the speculation that china might use the yuan's depreciation of the tool in their trade? is that a possibility you are considering? >> i think at this stage, they would try to intend to let it depreciate quite a lot. some powerful measure.

i think we need to bear in mind the yuan is still an emerging market currency. there is fear over depreciation happening. rather than using the tariff, they are using depreciation. think it is better to say that the pboc wants to try to keep more to balance the economy amidst a trade or. -- war. iswe have a chart here that reaping towards the red line to the seven level. how far do you think he would be willing to let the you want depreciate before capital

outflows become a problem? summit thishat g20 month, it will be quite important. especially, we heard president trump wants to impose more tariffs if you can't meet up with president xi. moment, we could still see quite a lot of uncertainty in the fx market. letting the relatively break above seven -- letting it break above seven. i think at this moment, we are more likely to see [indiscernible] i think we will see this moment.

we have seen a bit of a resurgence in bitcoin recently. is this symptomatic of a weakening yuan? think the markets are looking for some more safe haven in the market. depreciation, we are talking about because no one how much. saw, important what we quite a significant we saw theal level, -- renminbi, no one

knows if it will reach level seven, so i think at this moment, only if the pboc has , otherwise, if you still try to defend the seven level. >> perhaps more dovish central banks including the fed, not to mention the pboc, they have many tools in their hands if the economy slows more. i will all of those factors affect the direction of the yuan and the dollar? saw thenk last year, we pboc and the fed monetary policy were lower and lower. this year, a scenario has been changing. , the rate trade war cut as well, this year, it is a

very strong stimulus in china. we will see the divergence between the fed and the pboc, the monetary policy stance, they will be narrowing and comparing. depreciation pressure. datar, we saw that china's is still ok, and we still are only at the half-year. going forward for this year, i didn't see a significant need for the china economy to slow down quite sharply. i think at this moment, the pboc will still try to refrain from being aggressive on monetary easing. fiscal stimulus has been quite supportive so far. paul: ken cheung. thank you so much, the senior asian fx strategist at mizuho

bank. you can watch us on tv and catch up on past interviews and dive into anything we talk about. you can also become part of the conversation sending us instant messages during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

>> investors are looking for insight into what china is planning, paying attention to a key source of information. the editor in chief has used his twitter feed to forecast several government moves, including the investigation into fedex and the official warning about travel to the u.s. markets are taking notice. -- one tweet last month said shares to their lowest close in four months. he told us what kind of assets he has with beijing and what china might do next. hu: i have access to some accurate information for the nature of my job, but i can't say that i am authorized by government to release the information. >> it is there to say that officials will be passing you information, passing you tips in the knowledge that you are very likely to tweet about them.

don't know,nest, i the officials and i have an understanding. i think some of them know i would publicize the information if i had the information. >> chinese officials have been talking up the economy, but the data shows pretty clearly we are facing a continuing slow down in the chinese economy. -- our officials exaggerating the potential for china to whether the trade storm? hu: the loss is bearable for china. people believe that it does not matter to have some losses. chinese economy is still growing. we don't have any negative growth. we are still advancing. in addition, the size of our growth is still remarkable in the world. >> if trump goes ahead with additional tariffs on all of china's exports to the u.s., what levers and tools do you

think policymakers here are most likely to reach for in terms of retaliation? hu: china may target the u.s. services sector operating here. trading services is not the same as the trading goods. abouts. has barely talked services, but china knows this is a fast-growing area for the americans. -- american side. >> let's get it quick check of the business flash headlines now. picked sources say the offering could resist much as $20 billion as alibaba picks cicc. promote thesion to foxconn senior decision

body, shows potential successors. but get a preview of what to watch in the markets later this morning. >> foxconn is in focus. ofs comes in the wake foxconn tech boasting a 22% drop. data is showing shipments rose to a record, but total exports fell for a second straight month. the main points at the meeting today was the transition plan and the company strategy to look at the trade war follow. on the ego agenda, we are expecting april trade data from the philippines. exports continue to contract out at a softer pace. industrial output in malaysia is growing at a slower pace. we might get china's latest rate -- read today. trade affshore yuan,

steady after falling to a fresh 2019 low last friday. the seven handle is very much on the radar. sellboc said it planned to in hong kong later this month which could draw some liquidity and make sure -- make the currency more expensive. sophie: thank you so much for that -- shery: thank you so much for that. see thet it -- you can asian stocks up 3/10 of 1% and the nikkei and the cost me -- kospi are three tens of 1%. next -- ispen his next. this is bloomberg. ♪

quick is not talk a.m. in beijing. welcome to bloomberg markets "china open." down to theting open of trade. david: get to your top stories today. president trump is ramping up the rhetoric on china, he's now threatening higher tariffs if president xi does not meet him at the g20. ivanka: a psychologically anortant -- yvonne: important moment. are cicc and credit suisse embarking