why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. paul good morning, i am allen in sydney. under one hour away from the austria market open. shery: good evening, in new york i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: top stories this wednesday, asia tracking wall street's optimism about the trade war. president trump will start with desktop with xi jinping at the g20. oil also on the rise. they will discuss supply and

demand in vienna next month. lower interest rates remain on the cards. mario draghi remains proactive to support the eurozone economy. shery: let's get you started with a quick check of the markets. close the tuesday session in the u.s.. there was wide optimism that the u.s./china trade tensions would be deescalate it. we saw major indexes gaining 1%. the s&p 500 was led higher by industrials in tech. energy was one of the big gainers as well. we saw wti gaining the most in five months. there was optimism that opec and its allies would meet and extend those supply cut deals. at the same time, we have some demand optimism as the ecb signal is ready to cut or rates. is oncus this week central banks. the fomc has now started its today policy meeting. decision tomorrow.

and investors on focused on what the boj and boe will do. u.s. futures are unchanged at the moment. let's see how we are shaping up for the asian market. sophie: risk on in asia with futures at 1%. that's after the benchmark snapped a four-day drop in aussie shares. japanese stocks could join the reasonable -- regional of trade. ad the stocks are rising for second session with data on tap. showing the deficit in the first quarter. let's check in on kiwi bonds, which are rallying for a seventh straight session. the yen is looking changed after a two-day rise. the bond futures are just hinting at further gains. the aussie dollar holding steady after recovering from a move lower, sparked by the rba, indicating easing on tuesday. it will be cut to 50 basis points and forecasting a drop to as low as 65 for the currency.

offshore yuan trading below 690 for the first time in five weeks. that's the most since april on .rospect of a trump/ xi summit we have had too many false starts to include any certainty. for that.k you but check in on the first word news with jessica summers. leader saysg kong her extradition bill is unlikely to progress. she apologized for her part in the controversy that triggered mass protest over the past two weeks. she says she shoulders much of the responsibility, but insisted she would not resign as chief executive. she has been under mounting pressure since the demonstrator -- drug -- since the demonstration that grew 2 million people. >> i will not proceed again with this legislative exercise. cannot adequately address the situations.

jessica: boris johnson has increased in lead in the race to be the next prime minister. has 126 votes, that is almost three times as many as the runner up. he did a tv debate on sunday, drawing accusations that he is not prepared to answer questions. he did appear in a later bbc debate on tuesday. opec and its allies are close to agreeing on a date for their next meeting. drawing a bill over a dispute that has raised uncertainty in the oil market. expected are now together in indiana on july 1 and second to produce -- to discuss production plans. saudi arabia wants to remain outlook curve as global demand is weakening as the world economy slows. russia is said to be less keen. boeing has been told its analysis of the 737 max will need to be revised before the

grounded playing tim returned to service. the faa says a draft of the expected upgrade will have to be changed. that is according to congressional staff memo. they ordered 200 737 max jets were $24 billion before the customary discount. global news, 20 for hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. washington and beijing say that president trump and xi will meet at the g20 next week for what they call extended talks. this comes after the two had "a very good phone conversation." joining us is our white house editor and selina wang. president trump is calling this a very good conversation. what does that mean? >> that is a great question.

i think that is what everyone wants to know. it sounds like it is very preliminary. trump said it was a rather long conversation, but we don't know how long, or how in depth, but it was really about making that connection and ensuring there would be some kind of meeting at the g20 coming up at the end of this month. he had just threat into raise did not meet if xi with him at the g20. obviously markets were very pleased to see that they had reconnected. that their teams would be talking before they go in hopes of striking some kind of deal. but, again, based on what happened last month when talks broke down, they still seem to be rather far apart on certain issues like intellectual property theft. we really don't know what kind of agreement to expect, or if any out of the meeting of the

g20. the: let's talk about chinese side of things. what are we hearing from the state media in china about these talks? selina: the chinese state media has frame this a little bit differently. the framing is that trump had asked for the phone call in the beginning, and that trump is me looking forward to meeting with has expressed he is looking forward to meeting with trump. the chinese side believes that the power of ballots may have shifted. statements from the chinese state media that he is looking for a consensus that they had reached before to advance cooperation and stability of a repeated phrase. mutual respect and mutual benefits and that these talk should be on equal footing. another interesting point i want journalis that the recently published a series of essays, which really expressed that there could be a win-win deal. the chinese side is also willing to struggle to the end if

necessary. the broader sentiment is that is these issues as a zero sum game and that these are efforts to contain china's rise, and that china occupies a moral high ground in this and they don't quite understand the motivations on the u.s. fight. josh, at least the two are going to meet at the g20. what is the best case scenario were outcome for that meeting? the best case and arielle is that their reach some kind of deal, or that they are able to deescalate the tariff situation. the likelihood of that appears rather low. trump is under pressure domestically to get something done, but, at the same time, he really -- his support has not really declined based on this. he has a lot of support in rural

areas where there are farmers that have been hit hard by the terrorists. agricultural products are not being sold. but if you look at the polling. among those voters, there is increase during his first term. it is unclear. he is certainly under pressure. markets want him to resolve this. thoseters do as well, but key supporters seem to be sticking with him. the degree to which he feels rushed to get some kind of agreement here is up in the air. shery: the u.s./china talks have been stalled since last month. that china has reneged on a previous commitment. china saying that the u.s. is too greedy. what are the main concerns from beijing? you will remember that another one of the concerns from the china side was concerned that they were frustrated that the u.s. continue to add unreasonable demands are the end

of the negotiation, and that these are demand that would have fundamentally impacted china's economic and political stability. overve heard a few points and over from the china side on some of their key concerns. one being the removal of tariffs, and a mutual in a fishery agreement. secondly, reaching an agreement that is not one-sided, which debuted the previous agreement as, but a two-sided agreement, and thirdly, making the agricultural purchase agreement a little bit more reasonable. in addition to that in the broader sense, there has been a lot of concerns about the enforcement mechanisms that the united states was hoping to put as unreasonable and unfair. there are concerns about intellectual property theft and export controls that we have seen really start to hit huawei. something else that is worth driving home is what we saw the u.s. do with mexico. it is an example that even if you do strike a deal with the united states, it is possible for trump to turn around and

decide to bring up a totally different issue and tie that to the previous trade deal. paul: white house editor josh and our china correspondent selina wang. still to come, tesla is revamping its business in asia with a focus on china. more on elon musk's plans. managing director joins us with his outlook for markets and global central banks. he is live with us here in new york, next. this is bloomberg. ♪

paul: this is "daybreak asia."

i am paul allen in sydney. shery: i am shery ahn in new york. the march towards global rates is alive and well as the european central bank says it's ready to take steps to boost the euro zone economy and the federal reserve is expected to send a dovish message when it's meeting wraps up wednesday. our global economics and policy editor kathleen hays is here with mario draghi's market moving comments earlier, and president trump's renewed attacks on jay powell. bloomberg breaking this story. really, the president is taking some exploratory action in getting rid of powell. kathleen: hats off to our fed , especiallyington chris, who is lead reporter on the story. and what sources told him in a white house. teamdonald trump, the working for him actually spoke to lawyers about, could they legally demote, get rid of jay powell.

larry kudlow, the chief economic advisor to the president would not confirm whether or not this was said. he just called it old news. nevertheless, when reporters asked president trump about this jay in the afternoon about powell, he said, well, let's see what he does what the policy announcement. i think he too is ready to see if he will signal rate cuts because that is what he wants. the fed is expected to hold the key rate steady. this is the consensus view. they are waiting for more data, more evidence of how badly the trade tensions and the trade war is hurting the economy. retail sales came in stronger than forecast. it is how well the consumer is holding up. the fed isr hand, watching inflation expectations very closely. the bloombergo bribery, you will see a chart that they have to be saying, this is not exactly what we want to see. we are looking up a market-based measures of inflation.

are seeing is that they have had it steadily lower than breakeven. how does the fed respond to that? also, if you have been reading your bloomberg news feed very closely, our bond team also compiled remarks from people were more in more people are talking about a 50 basis point cut with the final move. some people say it might not happen until september. but the policy statement says how jay powell answers questions after the meeting will be so important to where the markets move next. draghie have heard mario talking about the stimulus messages. will that influence the fed's thinking. least, i at the very think it will show the fed that global central banks are acknowledge and the trade war is hurting their economies, and that inflation is a problem right now, and that it not moving higher and getting up to target and they anger. certainly the way the fed wanted to.

mario draghi made it clear that they stand ready to add stimulus if needed. that could be more negative on the kiwi rates. it could be more bond purchases. he actually said, additional stimulus will be required if the downside risk from trade tensions and more materialize. this is what he said. mario: we have our mandate. our mandate is for our stability defined at the rate of inflation, which is close, but below 2% over the medium term. i just said a moment ago that we are ready to use all the instruments that are necessary for this mandate. and, we don't target the exchange rate. the first thing i want to look at is inflation. i don't care which measure you look at, they shows euro area inflation is not getting any closer to just below 2%. that is the target. this is the headline. this is the core inflation. look at that. this is the problem for the ecb.

trade tensions could hurt it even more. assident trump tweeted out soon as mario draghi said those words, that this is making it up fairly easier for the euro area to compete against the u.s., followed by marks from the former chief economist who says, he is surprised that president trump would between eating out on normal think that the ecb would say, and he kind of pointed out to donald trump, look, you are one of the reasons we are having issues in the economy. trade war and trade tensions. he did not say that to president trump, but let's listen to what he did say. uncertainty on the external side. you should not put the blame on ecb. it is also related to uncertainties related to trade. kathleen: very interesting.

the german, the 10 year benchmark at a record low -0.29, and the french 10 year benchmark hit zero for the first time. just saying,rs are we don't know what will happen. we don't know if the ecb will have to cut its key rate or what jay powell will do. but for now we are buying bonds because the central banks are signaling and they are ready to move. shery: our global economics and policy editor here with us. theing us here with us is global advisor managing director. great to have you back. let's get started with that report from bloomberg that the white house was really looking into the legality of demoting fed chair powell. happen, but still, we had heard from other people, such as former vice chairman sally fisher saying that if president trump gets reelected, he will probably not renominate powell. is that an uncertainty that investors have to think about now? >> i don't think right now.

he is doing the press conference tomorrow. he is just the chair. i don't think it will be really effective to what is said by the next election. and even then it would take some time before the whole process unfolds if he actually not becomes nominated. the markets are focused on what will the message be tomorrow, and will it be acknowledgment of the downside of the global outlook. moreover, thed other central banks you are seeing are taking more proactive steps. growth expectation sending these global yields lower. treasury seems to be the most crowded trade at the moment. even replacing the fan trade. does that set us up for a yields rebounding if uncertainty dissipates a little bit? ben: i think that is a classy behavior of the uncertainty about trade. then you can force the stimulus

of what central banks put in the system. they respond to uncertainty so yields fall further. you cannot include you'll -- low yields, but it could at some point rebound. we saw this two years ago where we hit record low rates in the summer of 2016. tothe fall, thing started rebound again. it is a scenario that could happen in the future. paul: we have this chart on the bloomberg that shows the negative yielding debts of the investment grade. it makes up about 22% of the market total. do you think this is getting a little overcrowded? who is holding all of this? ben: you are excepting low yields for a long time. , for france,ned for 10 years, no wheeled -- low

yield your it at some point they will face losses. if not, the yields go up. in long-term you get losses. people are uncertain. they are not sure what will happen with the economy. it is a very flat yield curve. d of time perio between now and fighters if we will have a stronger global economy or weaker. that is why you see these negative yields continue to appear. there are expectations that central banks will have to move lower with their policy rates, including the ecb, which is more negative interest rates. those negative interest rates had an incentive on asset classes. we have seen a significant amount of returns on equity. there is a positive side of negative rates that leads to the markets. paul: in terms of the safety trades, how do you like the look at gold? hitting 1700 and

the next four months. ben: i think gold is linked to what real interest rates are doing -- rural interest rates are doing. what that typically does is, gold gets a boost from that development. real yields are falling because inflation rates are falling but normal rates are falling faster. you had an environment that boost the value of gold. gold. find safety in itry: it is just not gold, is also government bonds, but also defensive stocks. i wonder how good of a signed is it for equity markets if you have more defensive positioning, than if you see some down word shock, couldward you see a buffer in the markets? ben: the positioning in utilities are more defensive.

it speaks to this environment where people are ready to take some equity risks with a cautious view on the economy. if we do see change, than that will be your buffer. equity markets have done well. if you do get a return of economic growth, the other sectors can pick up. the tip sector has been good because of the trade war. whereas the sectors who have not done well in this global rate rally, that will be the chip sector once the traders resolved. shery: always great having you with us. medley global advisor and managing her. you can get a roundup of the stories that you need to know in today's edition of daybreak. bloomberg subscribers go to dayb on the bloomberg terminal. also available on the bloomberg anywhere app. you can customize your settings

so you only get news on the indices and assets that you care about. this is bloomberg. ♪

paul: let's get a quick check of flashtest business headlines. korean airlines has signed in your $10 billion mo you, -- mou, agreeing to buy 2707 dreamliner's. they are replacing aging jets following a trance pacific joint venture with delta airlines. there is a boost to boeing playing catch-up with airbus. dish network is $6 billion in assets. t-mobile and sprint are unloading. the assets include wireless spectrum and sprint boost mobile brand. winning approval for the team -- t-mobile/sprint mobile. the deal has not been finalized yet, but dish could announce

completion this week. facebook is switching to a new cryptocurrency that it wants to be seen alongside the dollar. we will have more on the big crypto project next great this is bloomberg. -- next. this is bloomberg. ♪

asia." is "daybreak: the white house explored the legality of promoting fed chairman jerome powell back in february. sources say legal officials in the administration weighed the implications of removing powell from the chair and leaving him nearly as the governor. we are told the white house came to a conclusion that has yet to be made public, but powell remains in the job. hit back at has criticism from washington, denying he is weakening the euro to gain an economic advantage over the dollar.

draghi says the ecb is almost ready to add more stimulus. his comments weakened the euro. president trump says stimulations of the euro make it easier for companies to compete with the u.s. however, draghi has said he has no plans to weaponize the exchange rate. price mandate is stability defined as a rate of inflation which is close, but below 2% over the medium-term. i just said a moment ago that we are ready to use all the instruments that are ready to proceed with this mandate, and we don't target the exchange rate. >> washington and beijing say president strong band xi -- president trump and xi will meet next week in osaka to discuss reviving stalled trade talks. two sides should

stay in contact and try to resolve their differences. t and threatened additional tariffs on chinese imports that -- if xi declined to meet. and the former head of european football has been arrested in france as part of the investigation into the decision to award the 2022 world cup to qatar. he was europe's most senior figure on the body when he made the controversial decision. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 27 hundred journalists and analysts in more than 120 countries. this is bloomberg. sophie forkong with a check of what stocks to watch. japan display is on watch, and the company says it will continue talks, after it said it

is backing out of the j.d. i bailout. also japan's talks are ongoing with harvest takeover partnership in oled. plus, the japanese company said it had yet to receive a proposal for a -- with oasis, which has opposed investing $150 million in j.d.i. watching -- after the group announced it will buy back 8.6 percent of shares for up to 150 billion yen using proceeds from trimming at stake in a research institute which has a rating of negative on s&p. to boostis looking government, reducing the chairman's role. it is said the buyback is nomuraerm positive, and may have put the worst behind

it. we will be watching companies that may move after the earthquake that struck off the northwest coast of japan. no major damage expected from the tsunami warning. local banks will be in focus today. paul: bloomberg sources say tesla is revamping its asian business structure to put more focus on china as it prepares to start making cars. dana, exactly what is tesla's plan here? >> tesla has historically had a division that was the asian region that included china, japan, korea. now they have revamped the focus so it is a greater china business unit, and they are putting more emphasis on china as a region, the second largest market for tesla outside the united states. and this gige factory they are building outside of shanghai is coming online quickly. it is an effort to align the business unit more closely with

china. >> the latest quarterly results missed analyst estimates. how much do they need this? dana: it is huge. because of the trade war in tariffs that car companies pay, it is kind of cost prohibitive to enter china. the factory itself seems to be going up quite rapidly. at the shareholder meeting last equipment said that is being installed and they hope they can begin producing model threes in china by the end of this year. a divisive stock, one of the most heavily shorted. is this going to change the opinion of the tesla bears at all? dana: i don't think the reorganization in and of itself is going to change anything. if tesla can start producing cars by the end of the year, that will be a positive catalyst. their goal is to make local cars for local markets with local

production. >> dana hull, thank you for joining us. facebook is pushing ahead with a new cryptocurrency that it wants to be seen alongside the dollar, but that can be used globally. it is known as a stable coin, a digital currency with government support to avoid large price swings. could this be what takes crypto mainstream? kurt wagoner joins us. great to have you with us. even before, right after facebook announced this project, we had a couple of congressmen coming out and talking about the need to regulate facebook more, so what are the chances that this will take off smoothly? kurt: probably not very high. of u.s.seen a lot politicians already say we need to immediately look into this, this is something facebook needs to be running through regulators. the company said, we are already having those conversations.

it shows what little trust people-facebook right now, that the minute they announce anything, regulators and politicians are too excited to say, this is something we need to take a closer look at. i have been following the story all morning. one question keeps recurring on my mind -- why do we need this? kurt: i think there is a feeling of those in the financial industry, facebook in particular, that the way people currently do business cross-border is not very great. if you are sending money to family or friends in another country with another currency, it is going to take a long time, there will be heavy fees, and the whole process is not that smooth. if this were to work, you can imagine a world in which you are not all able -- not only able to buy things from other countries, but send money to friends and family, and all that would be lightning fast and with very little fees associated with

them. this is where they think they can make a big difference in personal-finance. >> how is facebook's track record look so far when it comes to payments and commerce? kurt: it has not been great. the company has tried to get people inside the service to start buying virtual goods, sending digital gifts to friends on the network, and that has never really taken off. they have worked with other payment processors, like paypal, on partnerships. part of the issue is this cross-border thing is tough, and a lot of facebook users are overseas, in different countries , so they really think that they can lower that barrier and eliminate a lot of the issues that they have a global cryptocurrency. paul: bloomberg's kurt wagoner in san francisco, thank you for joining us. coming up next, the latest on protests in hong kong and the impact the situation could have on trade talks. we will speak to a former fed --

former deputy assistant u.s. trade representative. ♪

>> hong kong's leader carrie lam remains defiant invasive threats of escalating protest. she has apologized, but will not withdraw the extradition bill. stephen engle has been following the developments. did anything change after the last press briefing late yesterday? stephen: that is a good question. she had the opportunity to withdraw the bill, to resign. however unlikely that might be.

but it seems every time she opens her mouth, it angers the protest organizers. it was described as the riots. they got a win. they also want accountability for the police violence that they saw on june 12. half checked, you could say, because the police commissioner did say they would launch an investigation, but the other three main demands have not been met. the main one is carrie lam resigning. she gave absolutely no indication that is in her plans at all. she said she wants another chance to prove to the hong kong people that she can help the economy and help the people's lives over the next three years while her term expires in 2022.

withdrawing the bill, she is not going to do that. and drop charges against those detained, no indication that she if there were a criminal proceeding. let's hear from carrie lam, her personal apology for the handling of this crisis. shoulderonally have to much of the responsibility. there are controversies and anxieties in society. for this, i offer my most sincere apology to all people of hong kong. stephen: the protest organizers held a press conference right after this, and they dismissed it as a so-called apology. they are vowing to ramp up protesters if their demands are not met. >> -- ,aul: in terms of those demands

keeping score, 1.5 out of five. are they going to protest again? stephen: it seems that way. they are deciding what to do, but some of the demands have been met, but the big ones have not. they say of their demands are not necessarily met by the end of their business day tomorrow, they could escalate this kurt -- escalate the street protests on friday. to resign, but protesters hope she will retract the bill. this is perhaps what angered protesters more than anything, she was asked repeatedly -- i lost count how many times reporters yesterday asked her -- why would you not retract the bill if what you say is the fact that it is unlikely to be passed or even debated by the end of the legislative session next july? here is her answer. >> i will not proceed again with

this legislative exercise. if these fears and anxieties cannot be adequately addressed. stephen: that was the most committal she could be on that issue. .aul: thanks for that, stephen let's dig deeper into the story. our next guest has advised both the state and defense departments as a former deputy assistant u.s. trade representative. , let's start with one of those demands from the protesters, that carrie lam resign. even if she did so, though, it would just be a clone of lam. would anything really change? anything wouldk change as a consequence of her resignation, except her successor would know how that person's predecessor lost her job and would more careful about

imposing those kind of reforms. but i do think china needs to be were concerned at this point -- needs to be less concerned at this point with exporting this type of civil restriction to hong kong. i think china needs to be more concerned at this point with hong kong exporting its type of civil protests to china. perhaps didotests not get the same coverage in china that they did in the rest of the world, but in terms of that extradition bill, it still has not been withdrawn, was that a trial balloon from china to tighten its grip on hong kong? matt: it sounds to me like you have to sort of read between the lines, but it sounds to me like the extradition bill is not coming back. it might be a matter of face-saving that they do not want to withdraw it permanently so they temporarily suspended it, but it is the kind of move where they temporarily suspended it and let it fade away. it sounds like they have no

intention of bringing it back, and the president herself said it will not come back unless they can appease the masses in hong kong, and that's not going to happen unless it were significantly revised. >> there is a face-saving solution for beijing, how big of a hit will xi jinping take himself from these protests? matt: i think it does make him a little less stable, but he has very strong and consolidated power as of a year ago. and he was in a very strong position to dig in his heels on the trade war with the united states. this makes him less stable. it is a mistake, a blender, but this does not destabilize him to the point where it would affect the u.s.-china trade war. it is a mistake, but he had enough strength and consolidated power that he could make this kind of mistake and still be stable. >> we do now have confirmation that president xi will meet

president trump at the g20. wilbur ross making a point this weekend to downplay what could come out of that summit. what are you expecting? matt: i am expecting nothing to come out of that summit. before the last g20, i was asked the same question the day before xi and president trump had dinner. i said nothing would come out of it, they would not have an agreement. president trump might pretend they have an agreement, but he would not have an agreement. on saturday, they had dinner, and on sunday trump said they had an agreement. on monday, andd tuesday everyone figured out that trump had made that up and things had crashed for several days and it was an ugly fiasco for markets. it is important to understand that when two leaders get together to talk trade, they usually don't talk trade. they sign agreements that

staffers have spent months, if not years, banging out the details of. if that happens ahead of time, nothing is really going to happen at the face-to-face between leaders. anyone isn't think expecting a grant signing ceremony or anything like that, but surely this still has some symbolic value, right? matt: oh, yeah, and it's one of the reasons why markets in the u.s. are relatively stable right now, because the trump administration has done a good , since the last market fiasco, of sending out positive-sounding messages when the actual news is grim. the news has been particularly grim in the last two months, but they keep sending positive messages so markets don't react badly. the idea that they are meeting is a positive message, but it is not something that will lead to any imminent agreement.

it might lead to a slight shift in the positions of one or the other and might even get negotiating teams back together, but these sites are very far apart. thatoomberg now hearing the president actually delayed a speech by his vice president on june 4, which was the anniversary of the tiananmen square massacre. that could have been an opening signal to beijing, but let me just hold a second here, because i'm getting breaking news on trade from japan. i'm getting that the trade deficit has now come in at 906 967.1 billionn -- yen. not as big as expected, but when itantly big enough comes to the adjusted numbers. also, a deficit of --

when it comes to the exports, year on year growth contracting 7.8%, a much bigger contraction than the previous months of april. not as big as expected in imports year on year, falling 1.5%. we also have some big dynamics at play, including the japanese yen strengthening almost 3% at the end of may. that was negative for exports, but at the same time seem cheaper oil, which may have cut the import bill, which has now contracted 1.5%. let me go back to you, matt, talk about trade. we continue to see trade negotiations between the u.s. and japan and china. now we are hearing that there could be a currency quality in the japan-u.s. negotiations. president trump attacking you are -- attacking europe and japan over what he considers intentional beginning of their

currencies. is there a risk that this trade war could evolve into a currency war? matt: i don't think so. the treasury department is not backing up trump's rhetoric, nor are the numbers that anybody else is seeing. the reality is currencies are always moving and devaluing, but the real question is, are the governments deliberately manipulating the currency's downward? there is no indication of them doing that. there are reasons why currencies are going downward, legitimate economic reasons why the currencies are moving downward. it is not about creating trade advantage. president trump likes to get mileage out of that, but no one, not even his own trade department, seems to think government is diving currency down to get trade advantage. that's what matters in trade relationships. matt gold, thanks for

joining us. don't forget our interactive function, tv . you can catch up on past interviews and dive into any of and bloomberg functions we talk about. this is for bloomberg subscribers only. you can check it out at tv . ♪

paul: when carlos tavarez took the top job, the company had racked up billions in losses. shares were an all town -- were at an all-time low. ♪ most is among the profitable carmakers in the

world, yet in 2013, this french carmaker was facing bankruptcy. chiefthen, its new executive has achieved a remarkable turnaround and then done it again across the border in germany. >> this was a surprise for the nation. the manufacturing business in france is not over. >> i met the man who is one of europe's most influential car executives at his paris headquarters. facing a near death experience, so we need to keep on. we understand how important it is to move around the roadblocks . the more chaotic the world around us is, the more ingenuity as an asset for a company like ours. get more at 8:00 p.m. in sydney.

we will preview the market opens in japan and australia. >> it is looking risk on in asia this wednesday, with nikkei futures hitting a gain of over one porsche sent -- 1%. the asx 500e continue to extend gains. 10 year yields could slip further towards -.15% when cash trading begins with aussie and kiwi yields already paving the way this morning at record lows, tracking overnight moves in treasuries. nissan -- the nhk reporting there were no hats indicated and will accept mesons proposals for the upcoming agm. enault said it would abstain from voting, but they made a compromise.

as -- havemes quietly cut their business joint operations in areas such as that is a snap at what we are watching. this is bloomberg. ♪ the latest innovation from xfinity

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paul: good morning. i am paul allen in sydney. shery: good evening. i am shery ahn. sophie: and i am sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top story, investors welcome confirmation that president trump president xi jinping will meet next week. the legality of pushing

jay powell out of the chair. backing.eing wins big plane's issues are unsolved yet. sophie, what are you saying? jumpingthe nikkei 225 at the start of cash trade while the is holding steady. trade figures to digest. 10 year yields, we are seeing them study, but we could see them drop after they fell to an august 2016 low. the kospi is gaining ground as well. the korean won also gaining ground against the dollar.

goldman does see a delayed recovery in the chip markets. prompted goldman to trade it gdp forecast. the s&p 500 gaining. just about 4% shy of hitting an all-time high while the aussie dollar is looking steady. take a look at wellington shares. we have the stocks adding about 1%, climb to another high while the kiwi dollar is looking for a little reaction. lower year yield pushing with gdp data due on thursday. focus extending to tuesday's drop.

oil is edging higher. the traders may not be buying this optimism. checking on shares that are on the move in tokyo. we do have the stock gaining. it will accept a proposal for the upcoming. paul: thank you very much. that's to first word news with jessica summers. hitting back i criticism from washington. he is denying that he is weakening the euro to gain an advantage over the dollar. he says they are almost ready to add more stimulus and his comments weekend the euro. weaken the euro.

he denied he has any plans to weaponize the exchange rate. >> we have our mandate. is defined as the rate of inflation. i just said a moment ago that we are ready to use all instruments that are necessary to compete. we do not target the exchange rate. >> i will not proceed again with this legislative exercise. and boris johnson has increased his lead in the race, dominating the latest valid. he now has 100 26 votes, almost three times as many as the runner-up, jeremy hunt.

johnson drawing accusations that he is not repaired to answer questions, but he appeared in a debate on tuesday evening. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. summers and this is bloomberg. washington and beijing say that president trump and president xi jinping will meet at the g20 for what they call extended talks. a verymes after they had good conversation. joining us now is derek. i do not suppose that we know the contents of that conversation, but at least it is a positive development. >> absolutely. move on whatarkets i call happy talk. they will be meeting next week

in osaka. that is big because there has been a little bit of doubt that they might actually have the meeting. donald trump had threatened to put tariffs on everything that china exports to the u.s. if that meeting did not happen. goes dormant as they prepare for the meeting. they will have some conversations before that at a staff level. i think that this will be the event of the year in terms of geopolitics. so much in terms of global trade is riding on these conversations that will happen in osaka. do i expect it to be done after that? probably not, but i expect a good signal on where we are headed. shery: the reading that we are getting that this phone

conversation started by the white house. i did note that the yen made a big deal to say that the white house requested this conversation. thing ishat the key where we are going next. donald trump said it was a very good conversation. i think that we are still hoping for more details. the proof is in the pudding. we will see where this is going next week. the president has a history of a followedugh rhetoric by a concession or a deal. we can remember the last time that he had a big, major summit meeting in asia. that did not end very well. paul: it seems like an

extraordinary coincidence, president trump launching his reelection campaign. that is due to begin any minute. vice president mike pence is warming up the crowd. state and is my home orlando is the key swing district. it is a state that president trump won, but it is also a state that president obama won. there is no question that orlando is a sensible place to be. this is a president, who if you have not seen his campaign each is in a while, he likes to disregard the teleprompter and he will say whatever is on his mind. we'll watch where he goes. there is a fired up crowd, but

there is a little bit of unease in the state of florida, especially democrats who have not been able to win team many elections recently. the orlando sentinel out with an editorial saying they are endorsing anybody but trump. there is resistance, but he has a lot of fans in the great state of florida and she will be talking today. again, this is a state that he won last time. thank you so much. our senior editor there. the federal reserve faces a crucial decision, how aggressively it should signal rate cuts. our global economics and policy editor is here with us.

is it his desire to demote jay powell? >> i do not think jay powell is expecting this to be crowded by the story, hats off to our newest team in washington, finding out that six months ago, according to sources inside the white house, they looked at the legality of demoting jay powell. asked about this today, larry kudlow said it is not happening here today. he wanted to brush it off. when donald trump was asked about this later in the day , couldemoting jay powell he let it go back to being just governor, not fed chair?

this is what president trump said. watchent trump: we will what he does. differenta much stance than our people do. we did something today that was very dramatic. it helped that part of the world. we will see what happens. they will be making an announcement very soon. i want to give him a level playing field. so far, i have not been. >> he is missed -- referring to the story that jessica summers just reported on. riskhis downside materializing and he is trying to say, jay powell, why don't you do the same thing? you should do what the people's bank of china has done.

that is why he is saying that he will wait to see what the fed actually announces. untilks like he is secure the fall of 2020. let's get to the business at hand. the top of the list signal. >> we all wondered. andtarted meeting today tuesday at it finishes up on tuesday in the u.s. because they have opened the door to a rate cut. they are not talking about rate hikes right now, but there has been mixed news on the economy. 3% year-over-year. will be a little tougher to say we are getting ready to cut rates.

inflation and uncertainty growing. meeting that to percent target that it has not met any wild. this has to be on the radar. expectations. they have certainly dropped off pretty abruptly. when the policy statement comes out, when jay powell talks to reporters, how does he respond? how does he show that caution? some of that uncertainty goes away and bottom line is that our more people are saying that the fed will move. it could likely be a 50 basis point move.

it will be interesting to see what jay powell said tomorrow. kathleen hays, thank you for that. we are looking forward to the fed decision. markets across asia are rallying at the moment. focusing on stocks right now, jumping as much as 16.4% as they will continue talks on an alliance. they had yet to receive a proposal. is to be decided by june 27. jumping as much as 8% -- 8.7%. a buyback, which analysts see as a positive.

more research institute. over in sydney, climbing as much as 4.2%. offer.ter making an deal andis a sweeter was made in april. shery: next on "daybreak: asia." -- more onhe coming the coming fed decision. andrew sullivan joins us. paul: later this hour, samsung has gone public in tokyo with shares a little higher. we will speak to one of the shareholders. this is bloomberg. ♪

paul: asian stocks let -- looks set to follow gains. indications of more stimulus from the ecb. investors are still cautious. let's discuss that with andrew sullivan, who joins us from hong kong. what are your expectations from the fed meeting? >> i think powell will keep talking to the market, telling them to prepare to do what is necessary. no change this time around. he does not want them to be bowing to trump to reduce pressure. a lot of the slowdown is due to the trade war. if we want talks to continue and a deal at some point in the future, he will want to keep as much ammunition dry, in case he

needs to use it later in the year. paul: the fed is getting low on ammo. do you think he might look the other tools aside from rate cuts? >> that is certainly true. it means that qe could come back. they are facing this recurring issue that people keep bringing up about the inverted yield curve. before, it did not really work the first time around. qe .2 is one of the talks to be had. into 2020, a presidential election is coming in 2020. is this putting pressure on the fed? >> it is certainly possible and possible andng

it is something that donald trump does not want. it is possible, but a lot of this hinges on the u.s. china trade talks. donald trump is under more pressure to come to a compromise. he has opened battles on many autos, threatening globally. he needs to get something on the scoreboard in the short-term. it relieves a lot of anxiety about the global growth going forward. concerns of a the recession, we are seeing dollar performing well. where is the dollar headed, given that recessions concerns are not only from the u.s., but globally. >> i think the dollar is in a difficult position. the threat of interest rate cut it, but it is the

reserve currency of the world. benchmark foraven a lot of people. it will be be acting to the news as it comes. deal, that trade sets one environment up. paul: wondering what your outlook for asian equities are. we can see that analysts are much more aggressive about estimates. how do you see the picture going forward? >> a lot of the asian stocks will be hit if this tariff dispute continues. it will have a huge impact on company earnings, going forward. we are seeing sectors that perform well. in china, we are seeing the consumer sector doing well because it is seen as a defensive area.

so much of this comes down to if we get a deal between the u.s. and china, and the removal of tariffs. if we do not get back, we are looking at a whole new playing field for people, having to via -- having to move reduction. that could be beneficial in the long-term. paul: andrew sullivan, thank you for joining us. plenty more to come on "daybreak: asia." stay with us. ♪

paul: bowling edits troubled 737 max 8 jet caught a new window at the paris air show. a deal valued at 24 billion, but the problems do still linger.

how significant is this deal? >> it is an incredible deal, well-timed. this is one of the biggest ones ever. it comes at a time where it has been approved. it is great endorsement from a key airline brand for boeing. it is a great time to buy a plane. will negotiate a good discount. shery: there is one other deal that we are being coming out of paris.

day on monday was dominated by airbus. boeing bounced back on tuesday. this max deal.h right now, the scores rp much even. this was for a show that did not expect bowing to compete to this degree. the chief executive of boeing said that he was approaching the show with humility and learning. for hugeayed the scope airline deals. this came out of nowhere. airbus did not know that they had this requirement. boeing did not know it was going to sign the deal until late in the afternoon.

it really shows the significance of this contract. shery: thank you so much for that. pictures ofu live the make america great again rally in orlando, florida. breaking news. president trump asked white house lawyers directly earlier this year to explore options for removing jerome powell. that is according to people familiar with the matter. this would be an precedent in matter. we were uncertain if it was the president directly asking his white house lawyers to look into the option. bloomberg has confirmed that it was president trump who asked his lawyers to explore options chair.ve powell as

donald trump's team completed the analysis and said it would be questionable to fire him. you are looking at a great american again -- make america great again rally. ♪

>> this is "daybreak: asia." washington and beijing say president trump and xi jinping will meet at the g20 next week. phonead a very good conversation and will hold a meeting in osaka to talk about reviving trade talks. sides should try to stay in contact and resolve their differences. boeing has been told the software fix will need to be revised before the plane can return to service. upgrade willthe

have to be changed according to a memo. there was ans as order of the jets. of europeanead football has been arrested in france as part of an investigation. he denies any wrongdoing. he was europe's most in your figure and made the controversial decision. japan's exports fell for a consecutive month in may. concern about a prolonged trade war. slightly less than forecast, leaving a trade deficit. dataeconomists leave that

will continue to show weakness. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. are a half-hour into cash trading in tokyo. sophie, what is moving? sophie: japanese stocks are rallying this morning. they are gaining ground, even after that data that we got this morning. all industry groups are rising on the nikkei 225. take a look at some stock movers that are in focus. surging by the most after announcing its buyback and plans to reduce the chairman's role.

highlight these companies that are thinking after calling off merger talks. falling by the most since it ipo. companye management priced its ipo at the top of its range, valuing the start up at $1.2 billion. our next guest says samsung's listing is a big deal. venture capital confirmed is the largest shareholder in samsung after its founder. joining us now in tokyo. let me start with you. you do not see too many of these in japan these days. so far, the market is reacting

pretty normally. at four 820.ading you must be satisfied with this. >> yes, we are. as aabout the software service industry and it is a phenomenon. it came into fruition around 2012 or 2013. samsung is one of the companies that started from there. testament is a great that the market is really starting to hit its stride. a little bit earlier than china. ipo in is the largest japan, if not asia. we are excited about what is happening in asia right now. need technology -- dominated by these large

players. what is it about the management team or business model that sets it apart? traditionally, the software industry has been dominated by larger people. fact that it was dominated and run a lot by the system integrators. the startups are starting to emerge. this makes it more accessible. the whole practice itself is relatively new, but it is starting to kick in. mindset ofine -- deploying software at an enterprise level. by software market itself, 2012, it will be about a $20 billion market.

governed.t will be it is very promising. the fact like companies like samsung are emerging is very promising for the market. it is the biggest venture back ipo in japan in terms of service. in the u.s., in addition to the giants, there has been a ton of ipo. what is it about the japanese and chinese market that is causing them to come to the scene now? up until five or six years , software was sold as a thing, likey selling hardware. it was not necessarily the software itself. that mentality has changed.

the growing elderly population have always been an issue in japan. .utomation in the workforce one key factor is the fact that you have this great solution. focused ona company contact management. great management tool. it really hit the nail on the head in terms of the enterprising needs. paul: who are your biggest customers? where are you seeing growth opportunities? for samsung, biggest companies are household names. , these are all top-notch brands that everybody knows in japan.

companies,h these you know that it is an enterprise, but once they get in , they are fully committed to the relationship. it is a huge opportunity, but if of look at the return rate these clients, over the past 12 months, the average rate has been about .7%. if you take that into consideration, the .7% is a phenomenal number. they are committed and they use it long term. hasy: linkedin business been criticized for not fitting into the culture. appdoes samsung's consumer fit into the landscape in japan? has struggled in

japan. the only people who use it in japan are those who have studied abroad, lived abroad or worked for international companies. the demographic that linkedin once to get to our the big companies. you do not want your boss to see yuan linkedin because it is considered a website where you go to look for other opportunities. the challenge is, how do you get these people to create a digital resume on their platform. rather than saying, here is a platform, create your own resume, they said, why don't you create your own business cards? as a result of that, what they did was they created a bunch of digital resumes for the people that they were not able to reach. in terms of the user base, it is the largest business social

network in japan. convert this into a social network. today, it is by far the largest business social network in japan. that covers people that linkedin was not able to penetrate. paul: general partner and one of the larger shareholders in japan. think you for joining us today. concentrating above the ipo price in japan. you can get a roundup of the stories you need on daybreak. bloomberg's subscribers can go to dayb on their terminals. it is available on mobile or the bloomberg anywhere app. this is bloomberg. ♪

shery: let's get back to the breaking news we had a few moments ago. president white house lawyers on options on removing jay powell as chair. we had the details. alex, bloomberg has learned that the president has looked into the legality of demoting chair powell. now he know that it was at the direction of president trump himself. >> that is right. she discussed it with his advisers. he has repeatedly expressed his frustration. today that in february, he drafted his lawyers to look at ways to remove jay powell from leadership without outright power -- firing him.

paul: do we have clarity on if it is legal? >> no. there is no precedent for this, so it has never been tested in court. we could have a situation where the president tries to demote the fed chair. has been seenhat before. some analysts think that is -- it is more likely that jay powell would step aside rather than pick a fight with the president, which could be damaging to the fed. shery: it is interesting because it is the president himself got rid of one of the mower -- one of the more dovish fed chairs, janet yellen. >> this afternoon, he was asked whether he is considering removing jay powell.

he said, let us what he does. clear that he has no warmth for the chairman that he i think he feels paul: like he made a mistake. have --he feels like he made a mistake. paul: how security think jay powell is in his job right now? >> i think he is pretty safe. i do not think he has to worry about the president demoting him or firing him. i think the president and a lot of people around him are saying that this will be a dangerous thing to do. damage to lot of financial markets. the president considers the hisk market a barometer for success. thank you very much for

joining us on that story. strainre more signs of in the nissan partnerships. this is according to the financial times. sales vehicles and communication. let's get more on this story. what does this signal for the future of the alliance? all of those structures have to be reviewed, considering what has gone on with this alliance. they are going into their shareholder meeting with very controversial things on the agenda. it is kind of a showdown of who is going to control the company. there will be changes in how they are operating day-to-day. those specific

changes, but the terms of the alliance were unlikely to continue unchanged. renaultome heard that was going to doubt to demands, but those demands seem to be changing. >> we are getting reports of the that he will be included on the board on one of those key community -- key committees. supportexpected to get to bring them back in, supporting what the company is proposing. this is very key. they are rebuilding. what they need to show investors is that they can move past their differences and go on rebuilding this alliance. shery: thank you so much for

that. known as the venice of the east because of its intricate waterways and is gaining attention for its network of databases. john has the story. our reporters went to check out this system being rolled out. what did they find? >> they found mostly teething problems. citiesone of a dozen around china that rolled out a credit system on a trial basis. they won a lot of awards. they found a lot of problems, the biggest of which was that most of the students, they did not know that they had rolled out a social credit system. there is about 13 million people tracked by the system.

everybody starts out with a score of 100. eight of the people being tracked have a score higher than 100. 500 than 5000 score below and 11 million people have not had any change in their reading. -- rating. paul: for those who didn't know about it, what do they think about the social credit system? >> that is a little nuanced. china has had issues with behavior. we had the big scandal with milk powder being poisoned. things like jaywalking and littering. this is a way to stop people behaving poorly and people support it, but this is a very invasive way to control how people behave. people worried that errors could

lead to them not being able to get bank accounts and loans. there is worried that this would be used and abused as a way to keep people in check, to change how they behave. western politicians worrying about a dystopia. founded should their worries be, given the teething problems? >> it is hard to tell at the moment because these things are not really solid yet. it has been problems. there are things that the government needs to happen. it is for all agencies involved to have the data to work together. that is not happening because of the simple reason of bureaucracy. the departments are not sharing as they should and they do not want to take on the responsibility. you for telling us

about the social credit system rollout. still more ahead on "daybreak: asia." stay with us. this is bloomberg. ♪

the: taking the top job company had backed up billions in losses. shares were at a all-time low.

speaking to david tweed about getting the company back in the race. >> it is among the most profitable carmakers in the world. in 2013, this french carmaker was facing in quincy. since then, its new chief executive has received a remarkable turnaround. then it did it again across the border in germany. is showing that the manufacturing business in france is not over. man that is one of the most influential car executives at the paris headquarters. need to keep going. world is,haotic the the more agility for a company

like ours. shery: we will hear more from carlos tavares tonight. let's get a quick check of the latest business flash headlines. bolsterction to government ahead of its annual shareholder meeting. it will use the proceeds to buyback 1.4 billion dollars of shares. it has withdrawn a proposal to nominate its chairman to keyboard roles. shares tumbled after its fourth annual loss in a decade. paul: talk of a big shakeup at deutsche bank. they are planning sweeping changes, including potentially replacing the cfo and the banking head.

it will take place in weeks. let's get over to sophie kamaruddin in hong kong. sophie: we are watching the chinese tech sector. completing the registration of two ipos. pricing expected by monday. it will increasingly become more important for companies that cannot seek a nasdaq listing. they anticipate hong kong's role. they may be threatened. we are watching chinese brokers. china galaxy and merchants say that competition will squeeze out medium-sized players. shery: thank you so much for that. let's get you live pictures of

rally,nt trump at a maga kicking off his reelection campaign in a state that he carried in 2016. saying that the u.s. will have a fair deal with china or no deal at all. president trump calling xi jinping a terrific president and a great leader. president trump asking white house lawyers about removing jerome powell as fed chair. facing various challenges across the board, including a tighter fed policy and blaming it on chair powell. bloomberg has learned that the president's team found that the removal would be highly questionable. , findingeen polls president trump trailing democratic hopefuls joe biden and bernie sanders in the sunshine state.

they interesting, given this is a state that he won last time. rememberingo with that we had other news. president trump is due to meet president xi jinping at an extended meeting on the sidelines of that g20 summit in osaka. at least all markets in the west valley -- that really saw markets in the u.s. rally. that is it for "daybreak: asia." our market coverage will continue as we look to the markets in shanghai. this is bloomberg. ♪

tom: "bloomberg markets: china open." yvonne: we are counting down david: to the open of trade. -- counting down to the open trade. david: deal or no deal at all. of pushing legality jerome powell out of the fed chair. late, hongttle, too kong's leader says sorry, but protesters say their ultimatum still stands. ♪