paul: good morning, i am paul allen in sydney. we are under an hour from the australian open. shery: i am shery ahn. kamaruddinm sophie in kuala lumpur. welcome to daybreak asia. ♪ paul: top stories, new sanctions on iran after the downing of the navy drone. president trump insists he is not looking to go to war. he also says he never threatened to fire jerome powell after

being unhappy with policy. the drum beats louder for rate cuts. and people working closely together to protect interests in the escalating trade war, we are live in bangkok. you a check oft the markets at the close. it was a turbulent day with not only iran-u.s. tensions but futures and options expiring together on quadruple witching day. there was a record intraday high only to close lower by .1%, industrials and real estate stocks leading the declines. we have one sector gaining ground, the energy sector. the biggest winner of the session. wti rally 10% last week on heightening middle east tensions. u.s. futures up .2%. let's see how we are setting up. sophie: with the event risks

sex g20, we could see asian -- asian stocks set for a softer open. look at kiwi shares continuing to climb while flipping the board, checking the kiwi dollar, it is slightly higher for a succession as funds go bearish the currency ahead of the rbnz decision. the kiwi could be limited if central bank stays dovish. and not far off from a five-month high for the yen. the aussie dollar inching higher. they kept a two-week drop to fresh all-time lows. the rba looking to see cuts in july and august. paul: let's check in on first word news now. su: we start with president trump and the fed. he denies ever threatening to demote fed chairman jay powell but insists he has the right to

do so. he repeated his long-running criticism on nbc and said he is not happy with the way interest rate policy has been handled. trump picked powell to replace janet yellen but has a repeatedly -- has repeatedly attacked him for raising rates too far and faster the turkish lira jumped after the president suffered a defeat in istanbul. the vote was a rerun are march after the president contested a narrow loss for his party in the race for mayor. wonthe opposition candidate again by and even bigger margin. months of political uncertainty have dragged on the lira. it has lost 10% of its value against the dollar this year. the u.s. has outlined a potential peace plan for the middle east. president trump's son-in-law jared kushner released a $15 billionblueprint -- $50

blueprint. the plan comes ahead of a seminar in bahrain. the palestinians are boycotting the event and codecs say question or's plan -- jared kushner's plan could flop and says nothing to resolve political troubles. north korea released a photo of what it says is kim jong-un reading a letter from president trump. state media describes the tone of the message as excellent and that kim would take the content seriously. mike pompeo confirmed the letter was sent and said the administration is ready to restart talks. there has been little contact between the two since they met in hanoi in february. 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. president trump says the u.s. will impose major new sanctions on iran on monday

after he called off air strikes against the country. despite sanctions, mike pompeo says they are preparing to negotiate. we are prepared to negotiate, they know how to find us and i am confident that the very moment they are ready to engage with us, we will begin the conversations. joining us for the latest is ros krasny, entering a new phase. what we know? it is true that the messaging was all over the place although a retaliatory strike was called off thursday night, both president trump and saidop lieutenants military options are never off the table. there was talk of the ability to talk without preconditions, then we hear from trump and secretary of state pompeo that significant

new economic sanctions are going to come on monday. we haven't found out more since sobut we think many sectors of iran's economy have been targeted from oil to statues,banking, the there is not much left to target. there could be certain individuals targeted. maybe that is the next shoe to targeted. maybe that is the next shoe to drop possibly on monday. paul: you mentioned a laundry list of iranian sanctions already in place. why did president decide not to retaliate with an airstrike? coming straight from his mouth, he talked about sort of afterlentce and decided talking with his generals since iran shot down a drone -- they shot down a drone and he got

kind of word from his generals that if there had been retaliatory strikes, something might have been killed. trump said it wasn't worth it, that is not an eye for an eye, to go after that many people. he had a discussion at the white house yesterday and said people think i am a warmonger, it is common sense. the idea if iran would just come to the table, we could make iran great again and sort of the same kind of rhetoric he often uses about north area. be just a decision from the white house is to go at iran economically rather than with military strikes. and vice president mike pence today didn't back weak.he u.s. is

anything is possible should iran antagonized the u.s. more. paul: washington editor ros krasny. the trade war was a hot topic in southeast asian leaders met for the 34th asean summit. the group is adopting a -- regionaltrategy strategy for the geopolitical tensions. correspondent haslinda amin joins us. what are the key takeaways? takinga: the leaders are steps to make sure the nation -- collapse fromsn't the trade tensions. after months and months of negotiations they finally agreed on a strategy to bring the regional grouping forward. they will continue to integrate policies that would ensure their strength among member countries unlike what is happening around the world following u.s.-trade

policies. that regional grouping that was pushed through by china, led by china to counter the tpp which the u.s. pulled out of, and the prime minister of thailand, the this year, asean says they are confident this new pact will be pushed through. it was delayed because of differences because of china and india, also australia and new zealand. this deal would be important to help attract investment to the region and also promote growth within asean nations. when you look at the membership of this, it will account for 30% of global trade and it will be an important tool and vehicle so to speak to help grow the region growing forward just going forward.

about what does it say choosing between the u.s. and china? haslinda: asean is stuck between a rock and a hard place. 10 countries with the differing interests when it comes to their relations with the u.s. and china, the u.s. is a friend. the u.s. is a friend, a counterbalance to the growing influence of china in this part of the world. china is an important trading partner. it is the biggest for many of the nations. it also provides funding for infrastructure and so on and so forth. at some point in some of the leaders including the prime minister of singapore say the member nations may have to choose between the giants. let's take a listen to what the prime minister said when i posed this question to him. we are friendly with all the

countries in this world, but we also believe in free speech. when we feel a need to see something that is sounds critical of others, we should exercise our free speech. we criticize when necessary and support -- it was a wide-ranging conversation lasting for 30 minutes. i took the opportunity to ask him about developments in the 1mdb scandal, the role goldman played, given a pretrial is being held in kl today. goldman tried to settle with three brokers, offered one billion ringgit in compensation which they said was too small compared to what goldman benefited from when it came to the 1mdb deal.

he is looking for something -- $6 six billion dollars billion u.s. whether they will file a suit remains to be seen. thank you so much for that. haslinda amin in bangkok. still ahead, we will check the outlook for oil amid rising tensions with iran. commodities veteran stephen short will join us later this hour. paul: he spring investment strategist mary nicola joins us to talk about g10 fx and rates. this is bloomberg. ♪ ♪

paul: this is daybreak asia. i am paul allen. shery: i'm shery ahn. counting down to the u.s. open week ahead will focus on a fresh round of comments from fed members and meetings between

president trump and xi jinping in osaka. we are coming off a very volatile friday's session. su: into another week of volatility. there was the expiration of contracts. ono cold water being thrown the week rally because of iran tensions. let's go in to the snapshot. oil stocks, s&p energy index, one of the big gainers because of oil. let's go in to the bloomberg. the dollar breaking below support read it was lower for a fourth day on -- support. it was lower for a fourth day and that had to do with the fed action. let's take a look at stocks in the spotlight. earnings continued. the big stock in focus is fedex because this is a proxy for the economy in terms of shipping that takes place. nike is in the spotlight. the homebuilding stocks,

blackberry, all of these set the stage for another round of headlines and ceo comments on the current economic terrain. there is likely to be a big focus on commodities, gold at the highest levels, oil surging, what are traders watching? su: the past week and gave both the commodities a big push for different reasons. gold fever is back, for good reasons. if you look at the last five days, huge spike because of oil -- all that is going on, dovish central banks, technical indicators, fears of military strike between the u.s. and iran here that has got gold off to the races above $1400. -- bestit was the huge week since 2016, had to do with trump calling on and then off iran strikes. it was a confusing message for the market but what is not

confusing is the big jump in hedge fund bets, a reversal from the prior seven weeks which were declining in terms of bullishness. they were almost bearish in terms of direction and now you have a surge in bullish bets. short-term oil will be volatile and higher. thanks for joining us. let's look at what will be driving currency markets in the days ahead. joining us is mary nicola, g10 fixed income strategist. thanks for joining us area i want to start with the u.s. dollar if i can. we have a chart here on the bloomberg terminal showing the tilt.dovish we have pimco saying close to -- they say the dollar faces a moment of truth. where do you see it finishing? view has been we expected

the dollar to perform well against g10 currencies because if you look at interest rate differential it is quite supportive for the u.s. dollar. it is hard to see the u.s. dollar would lose momentum against the g10. 's dovish tilt, carry trade should be doing well. among the strong supporters of that, things with strong fundamentals. idr,s like the ruble and those currencies should perform well in this environment but it is hard to see the dollar using -- losing strength against g10 counterparts. paul: does that includepaul:? does that include the yen? saveere is a move towards haven in general. gold reaching where it is now and how the yen is forming, so i think in that sense, you still

have safe haven in times of volatility and uncertainty, the yen and the swiss and gold will perform well. we prefer -- sorry, we prefer the yen against the euro rather than against the dollar. shery: when you say it is hard to see the dollar underperforming or being weaker than g10 currencies is that is because the dollar and u.s. economy is the better of the bunch? yes. the u.s. economy in general is still performing relatively well. the consumer is holding up well. if you look at europe, the strength of the eurozone economy has been declining for the past year. it has been the much stronger one in a big group. i think in that sense we are going to see the dollar gaining strength from that perspective but also the yield differentials. we have in japan and eurozone

all of these places in negative yield territories where the u.s. is still on the positive side. shery: we see more signals of a dovish fed. the gtv chart showing perhaps because of that we continue to see the total returning indices debt&p 500, high-yield, ig at record levels. expectations of more support for central banks. are you expecting this trend to continue or has the dovishness in price in? >> at the end of the day it is about what the fed actually does. the marketview, could be a really optimistic -- could be overly optimistic. we could get one or two cuts but it is hard to see the fed going into a cutting cycle when the u.s. consumer is holding up

relatively well and the u.s. consumers make up two thirds of the economy. there is some room for disappointment by the markets but in the meantime the global dovishness you see and the dovish wave we have got a from global central banks are going to keep asset markets pretty well supported. you mentioned the u.s. dollar holding out against g10 currencies. i assume one of those is the aussie dollar. we see that edging lower even though iron or is high. where do you see it finishing up? >> it stays around current levels probably in the 70's, even falling lower. at the end of the day the aussie dollar is going to take its cue from the rba. if it will continue to cut, which we think will happen, then the aussie dollar will weaken against the dollar. it is losing interest rate

differential and more in support of the dollar than the aussie in that sense. are looking for bond yields, do the asian denominated bonds provide a good place to go? we see this chart returned 9% this year which is not bad. is that a trade that looks appealing? like,e of the traits we like asian high-yield. that has room to run. we like local currency debt. the likes of indonesia, for example. especially since, during when the fed was hiking there were a few central banks that had to hike and follow suit even though their economy didn't warrant a hike. one of them is indonesia. we think indonesian bonds could perform well. we like that. we continue to like asian high yields. have banks of

thailand and asia going to cut this week. who else will be deciding? >> we think indonesia is the next one to cut, potentially philippines. those would be the main ones on our radar, given how much inflation has fallen and how much especially for indonesia how much they had to hike when the fed was hiking as well. benign.n so far remains there is no reason why some of these banks can't cut. shery: thank you so much. g10 affects and asian fixed income strategist. and of course you can get a roundup of stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb , 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. ♪

this is daybreak asia. i am paul allen. shery: i am shery ahn. let's get a quick check of business flash headlines. daimler cutting its four-year profit forecast because of costs with regulatory scrutiny of diesel powered vehicles. the mercedes-benz parent faces extra fees of a three digit million euro amount. they targeted higher earnings but said the additional burden will hit the second quarter. the full-year profit is progress -- forecast to similar last year. retailing planning to raise wages next year according to nikkei news. the owner will boost salaries for management track employees to encourage top workers. any will pay will be raised to $180,000 for workers in the u.s. and europe and $90,000 for those in japan. the average retailing salary was

$80,000 last year area shery: the softbank group founder wants to read list british ship maker arm holdings in a few years. he bought it in 2016. it was the largest listed tech company at the time and products are found in almost every smart on and tablet. son hasn't decided where will be held. suning.com is planning to buy an 80% stake in car for. they are paying $700 million in cash for the deal which is awaiting regulatory approval but expected to close by the end of the year. the growing number of european retailers are scaling back their chinese presence amid a shift to online shopping that favors local operators. coming up next the drumbeat for a fed rate cut getting ever louder. we will see what officials are saying next and look at the markets. this is bloomberg. ♪

♪ we're the slowskys.

we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. sue: the u.s. is to impose major

new sanctions on iran. republic will never be allowed to make nuclear weapons, president trump tweeted. senior advisers also that washington's measured responses should not be mistaken for weakness. >> there will be obliteration like you have never seen. you want to talk, good.

>> no preconditions? >> not as far as i am concerned. >> on monday, there will be a significant set of new sanctions. resourcesny iran the to build up their nuclear weapons. militaries are ready to go. they are the best in the world. more sanctions were added last night. iran can never have nuclear weapons, not against the usa and the world. the grouping of southeast asian nations have adopted a regional strategy to protect interests over increasingly strange geopolitical tensions.

this comes after months of discussion in which asean leaders were reportedly divided right up to the beginning of the summit on sunday. johnson has repeated his insistence the u.k. must leave the european union by the end of october. he said the split will be happen -- will happen if he becomes conservative leader and prime minister. police were called his london him amid reports of a heated row with his partner. he refused to comment. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. bloomberg. >> thank you. let's get a check of the markets with sophie.

sophie: let's get a pulse check on risk appetite. we are checking in on aussie bonds. yields are climbing. ten-year yields are inching higher in kiwi for a ninth straight session. treasury futures are pointing at gains. this is the longest rally since 2012. the yen is trading near a five month high. this chart you can find on the terminal, the dollar-yen is closing in at a technical support level. yen.strength for the

shery: the drum beats for rate cuts are beating louder. the fed's number two says the move is growing. our global economics and policy editor is here. what did they say? kathleen: they are moving toward rate cuts. two regional bank presidents are ready to do that now. the vice chair of the federal reserve is not ready to move yet. let's hear what he told bloomberg television friday. there is a broad agreement that the case for providing more accommodation has increased. andre going to be looking

paying attention to the incoming data flow. he said there is more uncertainty about the outlook in the past 6-8 weeks. he says there are rising crosscurrents. in the bloomberg terminal, look at the last meeting. forconsensus that was here -- holding 2.5 for the fed funds rate is now a long line. eight fomc members want to see one cut. or eight basis points. moves to theid

theside have caused breaking down of rate cuts. butd he also see rate cuts, maybe not quite ready to pull the trigger? presidentst. louis has argued for a 25 point cut last week. fed president is asking for 50 basis points. he is putting so much emphasis on inflation expectations. they are falling. that is east -- a signal he thinks requires more aggressive action. you can see how the trend has been lower since march. it looks like there is a little bit of a shift with the fed meeting.

michigan --ty of consumer inflation expectations are the lowest on record. also looking at inflation, the economic outlook is not as robust. look at the blog post he put up on friday at the st. louis fed. it doesn't even matter if you don't even get that slowdown in the economy. risk of the inflation is strong enough that he needs to do something like this to boost inflation. there are those who say the insurance cut is not a good idea. trumpt wait until xi and

meet and will get a sense of where the trade deal is going? think they will be putting more pressure on everyone else in july to do it then. paul: thanks. to have an going exclusive interview with the federal reserve president on tuesday at 12:30 p.m. new york time. the u.s. has put five more chinese technology firms on a blacklist days ahead of the meeting between trump and xi. correspondent has the story. includedse entities for chinese companies, as a involved intitution the supercomputing efforts for china. --s is of a national lucas

national security concern because they are involved with the chinese military. this follows a similar blacklisting of huawei last month. getting a license from the u.s. government will not be approved for these companies. this is another example of the trade war moving closer to cutting off chinese companies, and requiring u.s. companies to move their supply chains out of china. the timing is interesting. it is coming right as the government is for the second looking at a speech that is supposed to give a critical statement on china's human rights cases. people want a deal with china as , proceedingible

with a multifaceted approach to cracking down. huawei has been in conflict with the u.s. government for months. due to the seizure of some equipment, what do we know? this is the latest in a string of disputes between the u.s. and huawei. hadei alleges in 2017 it shipped a piece of equipment from china to the u.s. for testing in a lb. -- in a lab. when it tried to ship it that to china, officials stopped it in alaska, making sure it was adhering to export license rules. huawei said it supplied all of

the necessary information. this lawsuit points to the fact that huawei is digging in for a long battle, weather over larger issues, for this issue we have been waiting for for two years. up, we will check oil and the impact of tensions with iran. this is bloomberg. ♪

paul: this is daybreak asia. rise: oil has been on the as relations between the u.s. and iran take a turn for the worse. the united states will impose additional sanctions on the islamic republic in retaliation for the shooting down of a navy drone.

let's consider the outlook for oil. let's get started with hedge fund bets. given all the rising geopolitical tensions, crude prices are jumping by 13%. the president called off those airstrikes against iran. are the latest geopolitical tensions sending to the market in the price of oil? the price of oil? thehe major headlines were mining and the two takers. have incredible geopolitical headlines out there.

we wrote about this a week ago in the daily short report. has reduced its bullish bets over the past two months. wall street is locked and loaded for higher oil prices. wall street is able to take on more risk at this point. there is a lot of money in wall street that could push this market higher based on geopolitical headlines. shery: we have seen the fire at the largest refinery on the u.s. east coast, sending gas prices soaring. how will this impact the market? stephen: this trumps the iranian headline. friday is the first official day of summer, the first to start to this peak gasoline demand

season. we will see the highest demand for gasoline of the year. philadelphia is at the largest oil refinery on the east coast. you take the refinery that is a significant contributor to the gasoline pool at the start of the summer, it is scary as far as how high prices could go. there is a mature cross atlantic trade. suppliers come in from refineries in northern europe. we will see increased supply from the gulf of mexico. you take one of the largest refineries in the u.s. and have a fire at the start of the season, that is a bullish headline. the timing of the opec plus meeting could not come at a

better moment. i imagine russia is not too enthusiastic about continuing? tephen: we had a nice 10% rise in the u.s. dollar off of these 2018 lows. a strong dollar is an enticement for commodity producers who get paid in dollars. we will certainly help to generate some dovish talks coming out. you are going to get a lot of pushback on both those fronts. i am expecting the obligatory nod to extending production

cuts. i don't put a lot of favor behind that, especially with that strong dollar. with the significant rally in oil prices, the narrative has changed. we are worried about demand, not supply. high, put oil prices too you run the risk of putting the global economy into a recession. we will have the obligatory nod. faith that in much people will abide by it. paul: you are bullish on the oil price. how about the outlook for gas stocks? stocks is in a perpetual bear market.

it is scary how week that market is right now. weak that market is right now. there is a chance we will see two dollars by the end of the summer. we don't have enough weather out there. we are producing natural gas in record amounts. inare looking at a situation the market that as well supplied. ry: how much of a breakthrough has the g20 been priced in? stephen: this goes back to the main there live. narrative.

the economic headlines out of the u.s. and china are ugly. you don't get any resolution. oil got a boost at the end of last week. we did get a four dollar rally. those don't see , we couldal headlines be looking at prices well below $50 a barrel. shery: what is the situation like for the physical supply-side? stephen: oil is sitting in tanks offshore. this does not have a home to go to.

there is close to a two-year high at that point. we are looking at the term structure in oil prices. we have seen a move in the spread that suggests the market is concerned with regard to supply, relative to demand. america, we are looking at oil supplied well above -- supply well above seasonal norms. you do not get any sort of resolution with china and the u.s.. there is some for their pullback to keep theullback market well supplied. shery: thank you for that. interactive tvr go. catch us live or watch past

interviews. dive into any of the securities or bloomberg functions and become part of the conversation. this is for bloomberg subscribers only. this is bloomberg. ♪

x how did you come up with that figure? $600 million were made. >> goldman sachs took 10% , a hefty interest rate of 6%. governments normally get less than 3%. we get 90% of the money raised. means. what it goldman sachs made a huge killing.

said you are waiting for a response to goldman sachs. query?s the it seems they are not willing to offer a reasonable sum of money. >> is it still 6.9? when will you take legal action? >> as soon as possible. >> how long are you willing to wait? >> we are very patient. [laughter] we can say, please expedite this matter. will you be filing a civil

suit on top of the criminal suit ? >> that depends. paul: that was the malaysian prime minister speaking at the bloomberg business summit in bangkok. the bank will not be commenting on any negotiations. we want to get you to live pictures in australia. the bank of australia governor is speaking at the australian leadership forum. he is making a few remarks about the economy and talked about great cuts in major economies. -- rate cuts in major economies. the rate in australia was cut to a record low in june. he says there are limits to what further monetary easing can

achieve. you can watch this on your bloomberg, go to live go. shery: the vanguard asia chief economist joins us to talk about the outlook for the region. this is bloomberg. ♪ paul: good morning.

good from bloomberg's headquarters in new york. sophie: welcome to "daybreak asia." ♪ sanctions on iran, after the downing of the navy drone. leaders will work to protect their interests in the

trade war. shery: three years after the brexit vote. boris johnson says the u.k. must leave the european union this year. let's get to some market action. capped thean stocks best week since january. kiwi stocks under pressure. 200, little changed to the downside. potential iran sanctions in view. an upside for the kospi. japanese policymakers are strengthver the yen ahead of the g20 summit.

there could be another soft u.s. inflation beating expected on friday. the best week for oil in more than two years. higher, theinuing best week for billion in three buillion in three years. paul: sue? deniesesident trump threatening to demote jerome powell, but says he has the right to do so. press,e on meet the saying he is not happy with the way interest rates has been have been handled. to turkey. the lira jumped after the turkish president suffered a dramatic election defeat. marchte was a rerun from

after the president contested a narrow loss. the opposition candidate won again by an even bigger margin. lira has lost about 10% of its value against the dollar. has adopted a regional strategy to protect interests amid increasingly strained geopolitical tensions. they are siding with neither the u.s. or china in the asia-pacific and indian ocean regions. reportedly divided right up to the beginning of sunday's summit. lead a $50er will billion blueprint for a peace

east.n the middle this comes ahead of a u.s. lead a seminar in bahrain. sayscs say the plan nothing about how to resolve the region's political troubles. repeated the has u.k. must leave the european union by the end of october. he said the split will happen if he becomes prime minister. his campaign is suffered a setback on friday after police were called to his home amid reports of a heated argument with his partner. johnson has so far refused to comment. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. paul: president trump says the

u.s. will impose new sanctions days after heday, abruptly called off airstrikes as a retaliation for the downing of a navy drowned -- drone. mike pompeo says washington is ready to talk. i am confident that this moment they are ready to truly engage. let's go to hong kong. jodi, how would these sanctions against iran work? know a great deal more about them. president trump foreshadowed them in a tweet where he said there would be these major new sanctions. we heard from mike pompeo. there would be a

significant set of new sanctions against iran. the economy and iran already has sanctions on it. it is unclear how this would work. clearly the goal in trying to get iran to end all of the tests, anything with nuclear weapons. it will start ramping up that program again if it does not hear from european countries, which are still in the accord the united states left one year ago. all this is happening at the same time. says president trump would be willing to talk. it is unclear how this would happen with the new sanctions. shery: the trump administration

has said military action is on the table. why did president trump back off from the airstrikes? because ofit was concerns about who and how many people it would have hit. he said he has a fondness for the iranian people, and that he has known some in new york. he made the determination it would have been worse for him in terms of ratcheting up the tensions. he says he made the decision minutes before it would happen. there is a lot of questions around how that decision was decision forthe the airstrikes was made as well. there is a lot of questions. we will be hearing a lot more about those remarks. president trump has not wanted military action in the region.

his more hawkish advisers have been pushing for that. backed off, gone that way, then backed off. paul: what is the reaction from iran? jodi: we have not heard much in recent days. they have not been sounding like they were willing to discuss these things. they said they were not willing to talk. trump is saying iran wants to make a deal. so far, they have not sent a signal at all. shery: thank you. asian equities are mixed after wall street closed slightly lower amid tensions with iran. here is a look at the week ahead. garfield, great to have you. we have the big g20 meeting coming up. are we going to see any big move ahead of that? garfield: it is a tough call to

make. markets have shown a willingness to make extraordinary moves on the basis of not much more than a little bit of hope and a lot of expectations when it comes to rate cuts. look at the mixed sort of backdrop. friday, data showed leverage investors had gone on the long end for the first time since 2018. then, that is accompanied by a ramp-up from the chart. that is an unusual positioning set up.

hand, people are going long. there are traditional haven place. the u.s. dollar haven did not come off long relative to the aussie. the currency market is telling you to be afraid. rate cuts are coming. but will these rate cuts be enough? aul: the aussie dollar has been gaining recently. garfield: maybe there seems to

be an easier feel with the aussie dollar because trump decided not to bomb iran. marybe the -- maybe the perkishness of the lira has helped. lowe could cast doubt over whether he will cut rates next week. this is to some extent a response to what other people on the panel are saying. this is in mine with what he said in recent speeches -- in line with what he said in recent speeches. he understands there are concerns. you have the tool and space to use it because unemployment is not low enough to drive inflation, you should probably use it.

-- 76%s probably an 80% chance for rate cuts next week. chance, it to that would be in unusual scenario to have a confidence in rate cuts, not followed by a policy move. shery: the turkish lira is gaining against the u.s. dollar. how long will this move last? could there be more uncertainty? lira has the turkish been one of the more volatile currencies. erdogan might not have everything his own way could provide encouragement to more

orthodox economic policies. this could just as well be reversed by the time the actual turkish market comes in. erdogan may not let this setback in istanbul stop them from doing what he wants -- him from doing what he wants. paul: thank you. forest johnson -- boris johnson's bid to become u.k. prime minister met a speed bump, still to come. shery: first, we will preview the big events in the week ahead. this is bloomberg. ♪

shery: this is "daybreak asia." paul: i am paul allen. the g20 summit will be the focus this week between trump and xi. our correspondent joins us. what are economists hoping for from this meeting? this is a crucial opportunity to get these trade talks back on track. xi and are hoping for trump agreeing to extend a trade truce. all of these expectations for a near dealer somewhat low. -- near term deal are somewhat low.

the worst-case scenario is that the meeting does not go well. expectations would be for the tariffson of new trade between the two biggest economies in the world. >> we have bank decisions in thailand and new zealand this week. we see the dovish shift among central banks continuing in asia? and thailand -- in thailand, we have seen pretty weak export numbers, perhaps hinting at an interest rate cut. new zealand cut recently. their growth story is holding up ok. even if neither are expected to

there remains downward pressure on the global growth story. i think the signals from both -- shery: thank you. chiefg us now is the asia-pacific economist at vanguard. there seems to be consensus we are going to see growth start to moderate this year. what will the degree be like for this moderation? our call is for the global economy to continue to slow.

in the u.s., we are calling for growth to slow to 1.7% this year. for a slowdowng in economic growth in china as while. -- as well. growth could still be above 6% this year. terms oftting lower in growth, but we are not out of the woods. shery: if we see the economy down,d down, -- slow perhaps the fed could aim for preemptive rate cuts? >> that is right. we are not calling for a recession. inverted,ield curve remain.e tensions will

we will have to be preemptive. will have to take an insurance cut. cuts may have to be bolder than what the market is pricing in. we were hoping this would be done at the june meeting, but they were patient. need to take a 50 point cut in july to reverse the yield curve inversion quickly. that could be a mid cycle pivot. they may have to reverse that cut sometime later. paul: asean leaders have been gathering. in their concern about the fallout from the trade were spreading. we have a chart that exemplifies

this. how concerned are you the trade war is exporting its problems to other parts of the world? qian: the emerging asia economy will continue to suffer. see. normal to this has been exacerbated by the trade war between the u.s. and china, which disrupted the global supply chain. asia will continue to suffer. emergent asian policymakers in this region still have policy space, a cushion against an external catalyst.

as long as u.s. and china don't get into a recession, mainland asia will remain the fastest-growing region in the world. outy: the boj has carried huge stimulus measures. expecting their retail and unemployment numbers this week. nowhere near been where the boj wanted. where are we on the health of the japanese consumer? data ise near-term going to be wonky.

with the head of the scheduled hike, you are going to see some frontloading of the consumption. retail data will probably look better. i think there will be paid back -- pay back during the hike. you will see consumption domestic demand to tumble during the economy. there is a lot to be made in japan. there is a chance this hike may be delayed. there could be more fiscal stimulus coming up. the bank of japan is in a dilemma as of this moment. they have no reason to withdraw from their easing policy. aboutis a lot of concern the monetary easing.

the bank of japan is really in a dilemma as of this moment. pualaul: thank you. get a roundup of the stories you need to know to get your day going. customize your setup so you only get news on the industries you care about. this is bloomberg. ♪ ♪

let's get a check of the business flash headlines. the full-year profit forecast for this company will be cut. fees.es-benz faces extra it earned higher earnings this but its profit is now

forecast to be similar to last year. is planningompany to raise wages by early next year. this is to encourage top workers. raised will pay will be pay than $180,000 -- annual will be raised more than one hundred $80,000 for workers in the u.s. and japan. founder wantsbank to relist armholdings in five years. it was the uk's largest tech company at the time. he has not says decided where the new public offering will be held. the malaysian prime minister talks to bloomberg about his views on the trade war and more.

this is bloomberg. ♪

governor of the reserve bank of australia says there are limits to how much further monetary easing efforts can achieve. the markets are already pricing in rate cuts and major economies. the governments should consider fiscal and infrastructure spending. the u.s. is to impose major new sanctions on iran, days after the downing of a navy drone. president trump tweeted the islamic republic would never be

allowed to make nuclear weapons. senior advisers also warned that washington's measured response was not a weakness. >> there will be an obliteration like you have never seen before. you want to talk? otherwise, you will have a bad economy. no preconditions. >> north korea has released a photo of kim jong own reading a un reading a johnng letter from president trump. mike pompeo confirms the letter was sent and says the administration is ready to start talks. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

this is bloomberg. paul: thanks. let's get a market check. hie: it is looking like a mixed bag early in the asian session. sx 200 is extending friday's decline. we are potentially heading for a second day of losses, especially in yen strength. modestlys noting a bearish feel -- view. a quick check on currencies. the yuan is jumping to a april high. the aussie dollar is rising for a fifth straight session. funds or refraining from turning -- are refraining from turning

bearish ahead of the policy decision -- aussie policy decision. let's look at stock movers. avao, jumping after acknowledging some talks could lead to a potential takeover. seoul, korean auto stocks are gaining ground. shery: thank you. the trade war is the top of the agenda -- at the top of the agenda for asean. they want to adopt a regional strategy to protect their interests amid geopolitical tensions.

our reporter is in bangkok. shery, asean leaderss ensured the rules based tweeting system -- there was a lot of division among asean member states. they were not sure how to position the organization amid the u.s.-china trade war. the trade war has impacted asean nations. singapore has seen its growth projections cut to 2%.

braceill have to themselves for the fallout from that. singapore is equipping its people, with the skills needed for the fourth industrial revolution. these trade war tensions could be a saving grace. this could help boost trade and attract investment to the region. asean is confident talks will materialize. will this boil down to a binary choice between asean nations?

haslinda: hopefully it will not come to that. each country has various comes tohips when it the u.s., as well as china. listen. >> we are friendly with all the countries. when we feel a need to say we should exercise are free speech. >> there has been some concern over the rise of china. minister saidime countries in southeast asia in particular will have to take sides in the u.s.-china trade

war. do you see a day come when that will happen? >> we will not take sides. under what circumstances do think countries will have to make that option? >> there has to be a consensus. if trump loses the next election, we might have a solution. [laughter] [applause] >> what role do you see china playing? the roles between china and the u.s. being swapped? >> not quite. i don't know whether china has the ambition to be number one in the world.

china is growing. washington comes up with all kinds of ideas. china should be more democratic. one bell, one road. they invited everyone to go to beijing. i don't like the idea of cooking something up in the west and asking us to accept that. not surprising that china is the biggest trading partner. the u.s. is a close ally.

paul: alright, haslinda amin, thank you. you can see the interview in full on our special program coming up on july 3. years sinced three the u.k. voted to leave the european union. since that day, the pound sterling has weekend -- weakened against the dollar. the u.k. is choosing a new prime minister. the country is still a part of the european union. the countryt what will prepare itself for in the coming months, let's go to david. racee down to a two-horse

in terms of the leadership. says it is all over for the u.k. in europe if he wins. how do you position for this if that is the scenario? there could always be developments. he has said he will try to negotiate. if it comes down to a no deal brexit, it will not be positive for the u.k. economy. you will see a grind lower if the market starts to believe a no deal brexit is that outcome.

shery: there is some time until the runoff. ree holes are mixed -- polls a mixed. police were called because boris johnson had an argument with his partner. anything is possible at the moment. david: definitely. they key poll is on the conservatives. they will determine who wins this race. the police turning up at his , but in not positive terms of politics, things can be forgotten very quickly. you never know quite how it will play out.

hunt will negotiate, but he says key things are not up for negotiation. in october, the e.u. can go, we don't want another extension. no matter who wins, there is more pressure, more probability of a no deal brexit. shery: thank you for your perspective. coming up, verizon and its media group are preparing for a 5g world. we talked to the ceo of the verizon media group. this is bloomberg. ♪

verizon has realigned its media group strategy around b2b advertising. now is the verizon media ceo. thank you for joining us. how much business does verizon have in asia? >> asia has been a big part of our business. have almost 5 billion monthly active users in the asia region. when we start thinking about future revenue growth, that is one reason hong kong is a big base for us. where do you see the best

opportunities in terms of revenue-driven growth? we want to go deeper into a member-centric strategy. yahoo!, finance, entertainment, one of the things we are doing is going deeper. we are starting to build trusted content on that. we have studios to start producing deeper content. moved to subscription-based transactions and an ad-based model. this is what we are focused on, going deeper, and expanding our revenue base.

tell us a little bit about your strategy? we have launched a lot of member central products. we have done a lot of the same things with sports. the tech crunch has much more deep, except those of content. this is one reason we are expanding the revenue base. measure,r part of the you see programs for consumers. there is also engagement across our ecosystem. then you can get more member benefits. horizon,think about that enablesder,

the media when you think of all the use cases. >> tell us more about the opportunities you see in 5g. 5g having about currencies. there is a lot of these things, when you start taking advantage. standpoint, you are going to have much more deep, much more experimental content. we are expanding this across the market. i start talking about trusted content, you will see much more deeper, a experiences from consumers.

experiences can go much deeper. there will be a transition to commerce as well. 17% of our content has commercial intent. that is why there is this horizontal layering as well. a re-organization update can be given to analysts last week. find there is a bit of a challenge around you at the moment? >> we went through a lot of issues. that integration got done. one of the issues, we were seeing some declines.

we were seeing a lot of growth in mobile and video. i don't think this is more about getting to the reset pace. where and video which was we were focused on. we did most of the work through the end of last year. the business group went through most of the changes. there was not a lot of mention around this. >> verizon media was about 6% of total sales last year. what is your target for this year? >> we have not talked about targets for us. focused on making sure our core business is stable.

we have found some good foundation elements. we are seeing massive double-digit growth. happenede things that early on is we have 13 different platforms across the supply side. we have finally integrated that. our focus is to get that going. talk about the targets for our business right now. >> thank you for joining us. we have plenty more ahead. this is bloomberg. ♪

>> here is a quick check of the latest business flash headlines. one chinese retailer is planning to buy a stake in a chinese unit, paying $700 million in cash for the deal. a growing number of european retailers are scaling back their presence in china . paul: an australian uranium company is selling an 85% stake in one compnany. the state will be acquired by another company.

of millionsdvance of dollars given to the mining project based on performance. sophie? sophie: credit suisse has lowered its targets on its trading benchmarks due to recent downgrades. we are keeping an eye on boc aviation. to sell 17 plans aircraft in 2019. yields are seen under overure for cafe due to capacity. maintained its buy rating on the stock.

paul: before we go over the -- to the bloomberg asia team, lets look at trading. a mixed bag right now. is flat. new zealand is nudging into positive territory. that is it for "daybreak asia." this is bloomberg. ♪ hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass.

>> it is 9:00 a.m. in beijing. welcome to bloomberg markets china open. yvonne: we are counting down to the open. david: let's get to your top stories this week as we get underway. iran braces for new u.s. sanctions after the downing of a navy drone. but president trump insists he is not looking to go to war. yvonne: the president also says he never threatened to fire jerome powell. and it is selling most of its chinese plants as online retailing takes off.