paul: welcome to daybreak australia. shery: i am shery ahn in new york. sophie: i am sophie kamaruddin in hong kong. we are counting down to asia's major market open. ♪ paul: here are the top stories, people power, demonstrators flooded the streets of hong kong against. the government shelves if the bill and the governor says she is sorry. but trade breakthrough of the g20. wilbur ross only expects talks

about talks. when the chips are down, intel is reviewing its global supply chain and we have an interview with the ceo. we saw tech stocks really weighing on the market as chipmakers tumbled the most in almost a month. the s&p 500 paired back earlier declines but finished lower .2%. radcom weighing on the index trailed.y we also have positive u.s. retail sales and manufacturing data query that undermined the case for a more dovish fed. we are seeing u.s. futures up .1%. let's see how we are shaping up. sophie: asia markets facing headwinds kicking off a big week for central-bank policy. the boj and boe. .ecisions from taiwan

futures looking mixed ahead, but .ower for soul you may stocks slipping after a four-day game. on the central bank runs no changes expected from the boj but economists see a ramp-up in easing measures as the next step of yen strengthening. it is holding steady while the kiwi dollar looking to tap a trend line with down pressure building amid slowing concerns. obsessivelysess -- -- the hans saying did manage to -- hang seng got an ok week that saw the highborn and dollar jump up. hong kong's leader made a rare apology over her proposed extradition bill after hundreds of thousands of protesters took to the streets for a second sunday in a row.

the government suspended the bill but it didn't stop more mass protests, demanding a complete withdrawal of the bill that would allow some suspects to be sent to china. 2 million people took part. thousand. 338 scene now? we are one of the major arteries here on the central business district. you can see this area is closed this morning after 16 hours after the protest started. we can see a lot of protesters, mostly young students camped out. they spent the night here, some sleeping here. they are saying they will not back down until we see carrie lam step down. they were saying her suspension

of this bill was not enough. it was a half measure, and they are calling for a retraction of that and for her to retract her stance on what happened last wednesday when violence broke out and she called this a riot. it was a stunning show of defiance. yesterday you mentioned the numbers. you can see the pictures sunday up to 2 million organizers. the people that showed up according to organizers. it is interesting to see how it breaks down because the government made it around 328,000. this is what they were estimating for the main arteries which were closed off. we see there was an overwhelming amount of people that showed up, but it was outside, so there was plenty of action and police had to close off some of those areas as well. we are still seeing the crowds have died down but still a group

of protesters here this morning. shery: you mentioned carrie lam resigning that we have seen her ignore questions during the pressers. what does it mean? it could mean a lot of things politically speaking because we haven't seen a full withdrawal but we have heard some members over the weekend -- which you spoke to last week, and she said a suspension is equivalent to a withdrawal because in a way they don't have enough time to get this through in the current session. it ends in 2020. usually takes months if not years to go through the public location and we are getting closer to those elections. this could be a face-saving option for kerry.

she could back down from this die a naturalaw death which is like what we saw with article 23 in 2023. shery: thank you for that update. now a closer look at political implications, let's bring in andrew bishop, partner and advisor. but -- thank you for being with us. in heard from yvonne man central hong kong. she was talking about the suspension of this bill. does this essentially mean a withdrawal, and would hong kong people be able to accept that? >> that is my interpretation that this equates to a withdrawal, and it will be sufficient for the people of hong kong, not sort of up to their hopes which would be to see carrie lam step down, but

having her step down is another bar. mind important to keep in protests like these are only able to gather that amount of people because they are angry around a specific demand and aspiration. carrie lam's withdrawal, her stepping down is another point altogether. i am not sure we are going to get there. shery: we are getting the latest lines that hong kong headquarters will be closed. they have been closed since last week as they -- protesters take to the streets. will beijing continue to back carrie, or will they have to let her go? if it comes to that i would not be surprised for beijing to allow her to go. the logic is similar to what you see at a regional level which is beijing always tries to have the

lowest level of officials take the paul does the fall for currency missteps. withve seen that environmental and labor issues. i am not sure we are going to see that kind of pressure. i expect easing of tensions following the bill's withdrawal. paul: should carrie lam go, isn't she just going to be replaced with carrie lam 2.0? >> that is the problem for beijing. they don't want to open a can of worms. according to what rules will the next leader be selected? beijing the test doesn't necessarily have a problem with, but they don't want to have a debate how her successor would be selected. more probably have we just seen a sneak preview of what is

going to happen as we approach the dates or the year of 24/7, windows oss china made about hong kong's special status expire? >> there is no doubt that the special status in the chinese might and sort of the reality on nee ground is going to wa long before 2040. larges a small or victory, and one might applaud that but analytically it is an inevitable trend towards essentially one system for both entities long before 24/7. paid littlenping price for ignoring protesters in 2014. is this time different because of the trade war? kong willtest in hong

put pressure on president xi to cut a deal with donald trump as quickly as possible. a lengthy trade war will worsen the chinese mainland economy and it could lead to economic inspired protests, similar to hong kong but driven by economic factors. the people on the mainland are far more conservative and have taken a conservative twist over the past several years that will give them a degree of rallying around she -- president xi. that will outweigh the pressures for the economically driven market. xi jinping has become president for life in china. how big is the pressure on him now we continue to have these tensions with the u.s. and see economy numbers underperformed? we got factory data not looking

great. is the data it not looking great in q1 by all accounts but abnormality -- i think the chinese economy is going to worsen throughout the year, and action on the fiscal and monetary side that might occur will probably be limited and, little too late to have a balancing affect. if you list tariffs somewhere, i expect the chinese economy will really deteriorate. that said i am not convinced it puts pressure on president xi for the reason we discussed, which is there is consumption -- concession in china that china would rather react. global advisors in

washington, thank you. we will have more ahead on the hong kong protests and before that we will speak to guests across the day with a range of views on the extradition bill. let's get to first word news with su keenan. su: we start with the trump administration which is playing down the prospect of a trade breakthrough at the g20 in japan. wilbur ross told the wall street inrnal the most he expects osaka is an agreement to talk about talks. the white house is keen that president trump meet xi jinping, but there has been no official response from beijing. in india, they are raising tariffs on a range of u.s. imports in response to earlier measures imposed by washington. it is mainly agricultural products. this follows president trump's t

ariffs on india. there is deepening defense and energy ties. iran is expected to further retreat from its obligations under the 2015 nuclear deal monday amid rising tensions of -- across the mideast. they already increased the rate of enriching low-grade uranium but not beyond the limit agreed to in the deal. the international atomic energy agency said iran is meeting it nuclear obligations. and saudi arabia has joined the u.s. in accusing iran of attacking oil tankers in the street of poor man's -- the strait ofalk h -- hormuz. iran denies any involvement after there has been no clear

evidence over who was behind the attacks. 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 su keenan. this is bloomberg. worldthe ceo of the number one chipmaker weighs in on the trade war. our interview later this hour. shery: and a big week for policy with the federal reserve and the bank of japan among central banks making decisions. j.p. morgan's rate strategist gives us her forecast. this is bloomberg. ♪ is bloomberg. ♪

allen in sydney. shery: i am shery ahn. the week ahead on wall street will likely see investors focus on the fed, latest round of earnings and oil. there is a view that wti oil prices will fall to $40 and

rebound to $60. su keenan, really the focus on the fed and whether they will turn more dovish. goldman sachs says the market may not get what it expects, that the fed could be away from moving bias. thenumbers of the top of hour reduce the need for a cut. notice the red on the screen. semi-conductors remain the most exposed group in tech and in , trade to the u.s. trade dispute and continue to take a hit. let's look at the earnings stories ahead, oracle, a lot of software companies with numbers. carmax, beaten up used car company, interesting to see this. look at the others, kroger, what

they have to say about amazon.com. big move into groceries and in focus asl be they try to make the merger work. others lining up. the bloomberg. oil is sliding. this despite mideast tensions it is going lower for a third week down. the right has moved relatively 13 to a 14bed above month high on geopolitical risks but the oil story is continually about supply. thank you. let's look at australia. bond yield curve will continue to flatten. securities senior interest-rate strategist sally.

thank you for coming in. we saw the aussie 10-year yield steadily falling. it has a way to go. we forecast government bond yields in australia and think the 10 year will go down to 1% in the first half of 2020. we will see the three year yield -- it is based on a cash trade call where we think the rba will continue to deliver easing. sense that the cash trade is half a percent, three year bond yields around 30 or -- basis points. paul: before it eased earlier this month we saw a cash trade above the bond yields. when you get down to these low levels, half a percent, you reach the end for monetary policy. is qe next? sure they have an

opinion on that. they are cutting two 1%. thereafter, they will do more, but they are in the bet -- the dark. sort of unchartered waters for the banking system. they are having conversations with banks at the moment to sort of explorer what could happen if the cash trade goes below 1%. for us at the moment half percent is a working assessment on where the lower bound might be, but there is no theoretical reason why it can't go lower. policylike qe is a option. the rba has done the work on that. thinking about conventional monetary first, fiscal stimulus from the government and we know there is plenty to expand the government balance sheet here in australia. all of that has happened and

we still need more the rba turns to qe. i am not concerned that whether they think the effective lower bound is, the next is -- they will want to push hard and see the government delivered. ? ery: how about the fed we got data on friday. how have they overdone the pricing? fomcen we think of the meeting this week, we think the fed will move to an easing bias and jerome powell will retain optionality. he wants to signal to the market theoretically a rate cut could be positive -- possible in july but doesn't want to get to the committee basis cut next month. there could be disappointing for the front end of the treasury curve. we are recommending investors statements, taking

that recommendation off now because they would pull buyers towards disappointment rather than encourage to stick in the curve and fronts -- pricing in more from the fed. shery: given how much expectation is out there. we know the meetings are live but how important will this one be with data and inflation at the best tepid inflation and you have to block this tight rope with market expectations? sally: we get the updated economic forecast and press conference and statements and there will be a lot for the market to judge. it will have a dovish tone, growth inflation after the forecasts come down. dots forsee the median 2019, there will be some fomc members whose forecast is easing for this year. the overall time will be dovish but it is fairly priced in at

the moment, and it will be hard for the fed to exceed what it has priced in. paul: what do you like and treasuries now? sally: it is tough because the lot priced in.a we are broadly neutral on duration. we think we liked statements last week but the market moved to reflect that. we have taken those off. if anything we are biased towards the short side from a technical perspective just around the fed. paul: do you see more easing across the tasman? >> we do. they will follow up with another cut in november, cash trade growth iswe know that slow. we have a central bank governor who is dovish and willing to cut rates. also very sensitive to the global backdrop, and that has shifted a lot in the last month. it will be significant. paul: we will leave it there.

senior interest rate strategist. you can get a roundup of stories we need to know what to get your day going in today's edition of daybreak. bloomberg subscribers can no to dayb on terminals. this is also available on mobile in the anywhere app. you can customize settings so you only get news on industries and assets you care about. this is bloomberg. ♪ out. this is bloomberg. ♪

paul: i am paul allen in sydney. shery: i am shery in any let's get a look at business flash headlines. huawei bracing for a 40% to 60% drop in smartphone shipments following its blacklisting by the u.s. sources say it is considering pulling its latest model off international shelves. it was going to start selling in europe on friday but they may cut shipments if it receives

poorly. last year international orders made up half of the 200 million phone sales. the boeing ceo says the company made a mistake in how it handled the cockpit warning system before the fatal 737 max crashes. he also said boeing's communication with regulators, customers and the public was on acceptable he inconsistent. he promised more transparency and is confident the plane will be cleared to fly again later this year. salman saysmad bin aramco will go through with long anticipated ipo as soon as next year. exporter aims to offer stock on the saudi exchange and at least one international board or the prince projects the value at $2 trillion. one indicated closer to $1.2 trillion.

paul: coming up next, the ceo of the world's largest chipmaker opens up about the trade war. our interview with this man is next. this is bloomberg. ♪ ♪

morning, thenday market opened minutes away. futures pointing higher, .1%. i am paul allen in sydney. shery: i am shery ahn in new york. let's get to first word news with su keenan. we start with hong kong. the government headquarters are closed after hundreds of thousands of people flooded the streets in protest of the controversial extradition bill. organizers claim almost 2 million people marched while once again officials underestimate this, saying it was around 340,000.

the demonstration of people power in the last week has seen the government suspend the bill indefinitely. this forced the chief executive to apologize. president trump said the u.s. would face an epic stock market crash if he is not reelected. he launches his 2020 campaign on tuesday with a rally in florida and appears to be road testing themes he is touching on over the next 18 months. the dow performance at this point trailing the gains under president obama and clinton over the same timeframe. the vice president of the european central bank said policymakers will add stimulus if inflation expectations worsened. the executive says the bank doesn't believe that is the case despite investor expectations for future expectations with a record low this month. he told italy that the important

thatof the ecb strategy is it is 100% ready to react. a power blackout left tens of millions of people without electricity in america. the unidentified issue had a shared power grid shutdown much of argentina, uruguay and paraguay with transport halted holland -- hundreds with emergency generators. they are investigating the cause and have not ruled out a cyberattack. the uk's the front runner to be the next -- in the u.k., the front runner to be the next prime minister was absent as the race formerly began. -- formally began. widespreadon had criticism as he declined to be in a debate with other candidates. forsecond vote is scheduled tuesday to further reduce the

field. 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 su keenan. this is bloomberg. shery: waiting for the major markets to get trading in asia. let's get a check on where we are heading with sophie. more tech headlines could spark blues. huawei preparing for a glut -- a drop in smart on output. tokyo electric was one of those that said it would honor the u.s. blacklisting of huawei. the stock has been cut to from perform to buy. considering an independent review remains necessary in light of regulators request for an external audit. the stock jumped last week after the request. we are watching gold miners after bullion rose to a 14 month high.

1350trading back below waiting on central bank decisions. let's get more on what we should be watching us trading gets underway in asia. we have the global markets editor adam haigh. big week for central-bank policy. is there a risk the bond market does decide this is going to far? if you think about where bond pricing has got over this very global rally in sovereign yields, sovereign bonds, it suggests the fed is going to have to come up with language, whether in the press conference this week, on the back of the policy decision or in the subsequent weeks, around the fact the markets are very much positioned for significantly looser policy. if you hit gtv , you can get access to this chart which shows you how much of a move there has been in the last three or four

months. it is baked in to the idea that without easing from the fed, you are going to have a serious back up in yields. at the start of the week, which is not just going to be defined by the federal reserve but bank of japan, it is very much in play with their meeting this week as well. it does speak to a sense with global investors, having used the bond rally to really get in to a little bit more safe haven kind of exposure that if central banks don't come out with a dovish feel as much as some people are expecting you could see some fairly pronounced moves in bonds. shery: in the u.s. it is interesting to see strategists cutting the forecast for profits despite not lowering the prediction on crisis. why is this and what does this tell us about the recent rally?

adam: it is interesting because you would expect amongst the turmoil and trade tensions going on and the worries about the u.s. economy that you might expect strategists to be bringing down expectations for sittinguities might be this time of the year or next year. it really speaks to more of the idea between what the relative valuation is with equities and bonds given how much bonds have rallied and given how much stocks have rallied. there is the fact of the s&p 500 violations at this point if you attract the yield relative to yield, it isn't really a screaming kind of expensive level for equities. there is a lot of investors in the market, if you believe rates are coming down and will continue to be low over the for seeable future, you are in an environment where you are willing to pay more for equity

exposure, this goes on and gets and and more, there is more were of a push for that because there is very few places to find yield in this global growth environment. it is very under pressure. it is interesting to see strategists keeping the targets pretty much in line. wheregests an idea valuations are going to go up and people will be prepared to buy stocks at higher levels than you are seeing today. thanks for joining a spirit you can check out gtv library for the charts you saw. that is on gtv on the terminal. shery: we are getting lines on facebook. this person will be released from hong kong jail. the activist had been jailed and

now he is going to be released this monday coming at a time of prime protest in hong kong. he was a student leader who led the umbrella movement in 2014 at the age of 17. he is now 22 and he had been jailed earlier. he will be released on this monday as we continue to see the protest against china's extradition bill. jail but only for a few days. that was renewed. he had been in jail and now his facebook saying he will be released on this monday. we will get you updates after we get you -- get them and more on the protest ongoing in hong kong. let's turn to the u.s.. president trump continuing to push for a meeting with xi jinping at the g20 later this month, but a senior official downplaying the aspect of any breakthrough. they said the best they expect

is agreement to resume talks. joining us now is washington editor ros krasny. this given we is haven't seen any talks between the two sides in the past month? i think the trump administration, wilbur ross really the only one we heard from, trying to keep expectations on an even keel as we run up to those meetings in japan. we don't even know if president trump will meet with president xi. it is hopeful but hasn't been nailed down. comments -- wilbur ross' comments keep us on level. it has never been about nailing down the final agreement are going into the nitty-gritty of what the trade deal would look like. so after trade talks fell apart in early may, if they made a commitment to get back to the table and negotiations, it would

be a big thing. one thing wilbur ross said is china started this and china has to give way to get negotiations started again and that is an idea china. -- china rejects. paul: between delaying mike pence's speech on tiananmen square and trump's ambivalence of this meeting with xi jinping, does the u.s. want to meet china halfway? ros: it seems that way. as we have often discussed of the tender of the u.s. response seems to shift. president trump sounded less belligerent the last couple of days about these upcoming talks. what was supposed to be an aggressive speech by mike pence, a big deal, a speech that would upset china and could have what

these trade talks, delayed them for a long, long time. president trump himself stepped in and said let's delay that. that is quite a big deal. president trump starts his reelection campaign with a big rally. he would like to see a buoyant attitude going into this. his polling is slipping and president trump would like to see his supporters happy and buoyant as they could be, making progress on a trade deal with china would be one thing that would help. shery: we are going to see public hearings on the remaining chinese goods tariffs. what are we expecting? ros: seven days of hearings this week and two the following week,

something like 320 companies and entities are going to speak at these hearings. one clear message, the proposed tariffs are bad for business, upsetting to supply chains and really not a good idea for the u.s.. as you know, the next round of andffs should they go ahead hit things like mobile phones, laptops, apparel and consumer goods. the sort of timeframe we have had the price increases in tariffs could be questioned because they were component costs. that would be over. this would be a hit to people's pocket books. we have had these hearings before and companies have spoken. eas have fallen on deaf ears. another thing to watch this week is the u.s. trade representative robert lighthizer speaks to

congress tuesday. that could be interesting about u.s. trade policy. paul: washington editor ros krasny, thank you. intel is reviewing its global supply chain because of escalating trade wars between the u.s. and china. the ceo spoke to bloomberg in tel aviv. he began i discussing operations in china. we have a lot of customers there, assembly and brilliant engineers. it is a big market for us. what we have the on is trying to encourage the government from both sides to engage and construct dialogues. we do not believe tariffs is an effective way to drive global trade. that is where we can have influence. we don't have control. what we tried to do with our customers just try to do it --

try to do with customers and clients is to mitigate. we have been focused on that because our customers need product and our global customers have big assembly operations in china. we need to work constructively with them to mitigate these. i would understand although your peers like google which is starting to shift production out of china, and apple has some kind of plan b in place, intel is in considering for at least in the back of your mind you have some kind of backup plan should something happen to shift production out of china? tariffs, we need to think through how do we mitigate the flow of goods to reduce any impact tariffs could have on our respective businesses?

endbelief is higher tariffs up with higher prices for consumers. we don't think that is an effective vehicle. >> you are not there yet, thinking about shifting anything out or even worried about a backup plan? you are worried about mediating? islor: >> i think there multiple things going on. we are working with the government to encourage them to get to a better resolution for .he global economic trait that is first. we have been working since tariffs started last year with manufacturing and the assembly of our customers, we have been working to mitigate the impact by looking at more effective ways for the movement of goods so that our test products won't be more expensive and point of sale. do you have anything specific

you tell me? >> the first three waves of products terrorists have been -- have been things shipped to the u.s.. mitigate will meet working the global supply so less product is coming directly from china to the u.s. that will be subject to tariffs. mitigate means how do we work together as a global supply chain, plus our customers and partners, to reduce the impact of higher costs reducing -- arriving at consumer shelves? shery: intel ceo bob swan speaking to our reporter in an exclusive interview in tel aviv. we will look at the growing list of issues facing china and how xi jinping will then -- handle

the trade war, and the show of people power in hong kong. this is bloomberg. ♪ this is bloomberg. ♪

paul: to update you on the latest headlines out of hong kong after another weekend for sunday of protest, hong kong police urging protesters not to block one of the major roads leading in to the central part of hong kong. the police say they plan to talk to the protesters and urge them to leave after another day of massive protests in hong kong sunday. some of them have stuck around through the night. police asking them to move on and not block of this road. shery: thank you. we will keep you updated with what happens in hong kong. let's talk about china and its economy, global slowdown being reinforced by china's industrial

production. the weakest pace of growth in 17 years and the mass protests in hong kong ongoing could be another complication in the already tense relationships between china and the u.s. let's discuss this with an expert on china's development. thank you so much for being with us. let's get you started with the china numbers we got recently. very disappointing but this chart on the bloomberg also u.s.ng the other side, the manufacturing data beating expectations. you can see at this point we are outperforming, china underperforming. how does this tell us about who is winning the trade war? >> i don't think it is telling us all that much are you shouldn't focus on short-term numbers. it is not surprising china's

industrial production numbers are taking a hit. we heard nintendo, foxconn, on bloomberg about intel considering relocating out of china to try and find a way around tariffs threats that keep on escalating. in the short term, it is likely to have a bit of a boost in the u.s. economy because it signals things will go badly for china and somehow in contrast that is meant to support the united states' economy. but from so many angles this trade war will be destructive to both economies. shery: the pboc governor saying they have tremendous room to adjust policy. what are we expecting in terms of stimulus measures? we have seen plenty on the monetary side. could we go back to a broader base stimulus measures such as interest rate cuts instead of targeted policy tools we have seen so far?

>> fiscal measures have been introduced in a good way as far as the government in beijing sees its. they start building more railways. on the monetary side not sure about interest rates that there is talk, and everyone is looking closely about what the renminbi is doing. it was in the news they were looking at cracking seven and it gets to one of the many challenges facing -- face in negotiating with the united states. the treasury department has declined to accuse china of manipulating its currency and never in the last decade or more accused china of that and get there are people in washington suggesting with the renminbi dropping, china's failure to intervene, it is in fact a kind of manipulation. lose-lose for is beijing.

so far china has not announced reprisal that can't be walked back. what would represent a serious escalation to the chinese? the biggest story this week with the possibility of the rare earth market and the fact china controls some 80%, 90% of the global market there. this is used in a range of goods, iphones, jet fighters, cancer research. it is an element china really has some bargaining power. that has rattled markets across the globe and got everyone talking about the importance of these global supply chains in which china is a key player. that trickles down in to a bigger problem. we saw this week again a number

of chinese americans who have researchinglives one in particular. one is accused of stealing cancer research and sending it back to china. that would have serious repercussions if xi jinping plan to play that card. it would be a strong tit-for-tat retaliation on what they see the u.s. has done with huawei and then things could get very messy. all right, jane, thank you. more to come on daybreak australia. this is bloomberg. ♪ berg. ♪

shery: i am shery ahn. paul: i am paul allen. you are watching daybreak australia. we have got some pictures of hong kong for you, i believe we

are seeing harcourt road. lisa asked the remaining protesters to please leave, not block harcourt road. this is a major artery leading into central hong kong. police are not planning to clear out the protesters but those who are still there, those people after a very big day of protest, organizers say 2 million turned out and police put a more conservative number. 338,000. some of those estate overnight. you can see them remaining on the scene. hong kong police asking them to leave. shery: we know the government headquarters will be temporarily closed again on this monday. we have heard earlier student protesters in the face of the umbrella movement back in 2014, he will be released on this monday. we will have continued live coverage from hong kong

throughout the day. yvonne man will have an update at the top of the hour and we will speak to the democratic already german 1 -- party chairman on what comes next. this is bloomberg. ♪ ♪ hey! i'm bill slowsky jr.,

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paul: good morning. we have under a narrow life of the australian market open. delayare under an hour from the australian market open. sophie: welcome to "daybreak: asia." paul: our top stories this monday, demonstrators flooding the streets of hong kong. carrie lam says she is sorry. washington dials back