paul: good morning pan i am at the summit. we are under -- good morning. i am at the summit. shery: i am shery ahn. kamaruddinm sophie in hong kong. welcome to "daybreak: asia." paul: our top stories this hour, asian stocks are facing a muted start. apple downgraded. chipmakers will be in the

spotlight later. the japan and korea spat rambling on. they may be forced to retaliate. -- the latest plan fails to impress. started withget us a quick check of the markets. health care tech are some of the biggest decliners. individual movers like apple being downgraded. falling after they cut their outlook. we have lingering effects from the data that we saw last week. had one sector that gained ground, the energy sector. also rising with geopolitical tensions. up's see how we are shaping

for the markets. sophie: this tuesday, kiwi stocks are up about .4%. this after monday's broad selloff from a two month high from mumbai to shanghai. drop since may. likely crossing their fingers that they can resolve the trade spat. in sydney might rebound a .ouch with commodity moves oil is under pressure. rising volatility. we are watching the jump in iron or prices. , we have the today policy decision and india earnings season kicks off.

thank you very much. let's check on the first word news. u.s. state department has approved a possible arms sales to taiwan worth more than $2 billion. the deal is not confirmed yet. prime contractors including general dynamics and oshkosh. they were concerned about the move and firmly against it. an independent think tank said there is a significant risk that the u.s. will meet its debt ceiling in september. bringing that forward due to falling corporate tax revenue. they have been using extraordinary measures since march 2, when u.s. hit it $22 trillion limit on borrowing.

iran said it has already enriched uranium to levels beyond. atomic inspection agency confirms the enrichment. european powers need to find ways to offset sanctions. enricheduch -- must be for nuclear weapons. showing signs of recovery. multipurpose vehicles rose in june from a year earlier, reaching a 1.8 million. that is the first increase in sales. the demand has been hit by the trade war, domestic slowdown. signs of a recovery in taiwan.

overseas shipments climbed half of 1%. demand from the u.s. more than made up for falling deliveries to china. fours for a decline of point 8% and only one of the 12 economists actually forecasting a rise. 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. this is bloomberg. it appears that u.s. investors are taking a cautious approach. su keenan joins me with the latest. exacerbated by the fact that we are coming off of a holiday weekend. su: we have the second day of the s&p falling. waiting to hear from fed chair

powell. let's take a look at the market snapshot. the dollar is slightly higher. financial, one of the areas where we saw financial selloff. it has a lot to do with rate cut story. look at futures, barely flat going into the tuesday session. we mentioned the big german chemical company. that affected the chemical company and it is in the bull's-eye of the u.s. trade conflict with china and the levees there. the fifth analyst has put a reading up. we have not seen that the 1990's. it is surprising. concern about the chip industry. gainers and it

has a lot to do with the ability to work around the hallway restrictions -- huawei restrictions. sustain boost could not the negative sentiment and concerned about banks in general. down on a morgan stanley downgrade on banks. there are multiple concerns on that front. one of the feud to benefit from deutsche bank cut. that theircided stocks were down as well. a two-year high after the surprise data. take a look at the chart. we could take a look at the gold price chart. they are the biggest we have seen. quickly to oil, it has seen a lot of swings lately has to do

with the gyration going forward. we saw all of the early gains stories. shery: thank you for that. let's delve deeper into deutsche bank, shares tumbling, following similar losses in frankfurt. radical restructuring plan fell flat from me, to london and here in new york. many employees leaving with their personal belongings and a wide envelope. idea where the cuts would be deepest? >> is a brutal day on wall street. we do know that the biggest cuts right now will come in the equity sales and trading division. that is where they said they would initially exit.

there are 18,000 jobs that could be cut. for thousandsts within that bigger number. it is not clear where the rest of the cuts will come from. a lot of employees out there in the jobs market. where could they end up? roomere is not a lot of for new employees in the banking sector. hundreds of thousands of jobs has been cut in this sector and it is interesting. desks, whate equity used to be a 500 person team is now a three-person team. with the rise of automation and the huge amount of technological change, there are not as many jobs for humans on wall street anymore. perhaps some will be able to

transition to fintech, where their banking experience will be helpful, but it is difficult to see where all these people will land. shery: let's talk about asia. we saw employees packing up their bags. to be had any idea how the region would be affected? away from the epicenter of where the decisions are being made. asia areat staff in little bit upset and worried about the lack of nation from headquarters. there has been a decline in attendance in the asian offices. the real estate agents in hong kong i thinking about who to fill the space. staff,e bank reduces the who will take that place? reporter, thank

you very much for joining us on the deutsche bank story. plenty more to come on daybreak asia. exclusively about the business strategy in the region. usry: senior economist joins to discuss the biggest data stories this week. this is bloomberg. ♪

paul: we will soon get an update on the state of the chinese economy and how it is weathering the trade war. the latest gdp measurement coming over the weekend. capital investors senior analyst joins us now. numberse have trade later in the week. what are you looking out for? >> good morning.

thank you for having me. ultimately, we still think the economic data, specifically in china will be disappointing. things like industrial production, retail sales -- they have been soft in china. pmi's are below 50 on average. of a great signal manufacturing activity. that is why we think the chinese data will be quite soft. that leaves room for more policy , which is a more important's toy for the second part of this year. pmi. we do have that soft they are optimistic as well. what sort of stimulus do you see coming down the line? in china we think we are

likely to get more targeted interest rate cuts. the more important story will be about what happens on the fiscal side of things. things like infrastructure spending. more of that is likely to continue, if we see this weakness in activity, which we think is likely. we will see more of those infrastructure spending measures around bond issuance. that should boost activity and maybe some moves towards the housing sector. there has been weakness in housing construction. key points youhe mentioned is that they will be pretty targeted. form of theape and stimulus package out of china, -- expect itou it to have an impact on their economy?

it would provide a pretty solid boost, more so for the equity market because equity positivelypond quite . the boost to equity would be quite positive. veal gdp, it will assist at the margin, but i think what is more important for the long run is, he would need to see resolution on trade talks. that will probably not happen over the next fix months. it might be a story for early next year, what should drive the economy into a more solid footing. we need to see global indicators becoming more solid and resolution on things like brexit as well to get investor confidence back to where it was.

shery: we seem to be looking at the patchy numbers when it comes to credit expansion within china. what are we expecting for the month of june? we still think that there will be further weakness in the credit numbers in china. ultimately, the government has been on a mission to try to get those credit numbers under more control. if we think about that in a holistic sense, that is positive for financial stability, but investors might see that as a sign that credit growth in china is not growing fast enough to generate gdp growth above that 60% level. that is another reason for why we do things.

with china, it is a bit opaque for when that will come through. investorsthing that should keep in mind. chinese stocks have not been doing too great over the past few months. they probably have more upside compared to other global equities. yuan where do you see the heading in all of this? fed might do something. that would serve to weaken the greenback. dcf becoming a theme? we do -- do you see it becoming a team? >> we do. it is hard to see significant downside for the dollar because global growth is still pretty

soft. we need to see those pmi's strengthen if we are to see other currencies becoming stronger. even though the federal reserve is likely to cut interest rates, we do not think the race cut is likely in july. probably thisut year. that will not be enough to drive u.s. dollar significantly lower in this environment where you still have global growth disappointing. put too much emphasis on the downside until those numbers become stronger. we need to see a stronger euro. do not only have trade tensions between the u.s. and china, but now between japan and south korea. will this boost rationale for

the bank of korea to start using? there is definitely pressure on the bank of korea to do more policy stimulus. there is also a lot of political uncertainty in korea at the moment. add to thatnsions uncertainty. we can see that here in australia, cutting interest rates back to back by 50 basis points or lower. it is the global environment where banks are under pressure to ease policy. the bank of malaysia easing interest rates. cut outnot put a rate of question for the bank of korea. shery: thank you for that. you can get a roundup of the

stories that you need to know to get your day going. mobile.so available on you can customize your settings to get the news on the industry and assets that you care about. this is bloomberg. ♪

paul: this is "daybreak: asia." shery: i'm shery ahn new york. south korea hinting at potential overtime nation against japan. the vicious cycle of measures and countermeasures would not be ideal for both countries. south korean companies began experiencing damage, the government would have no choice but to respond as necessary. to withdraw its

measures. reinvigoratedve decades as bilateral tensions, and it could have far-reaching implications for the tech supply chain. tom joins us from tokyo. explain to us what this is. it is more like a license. is this similar to what we are seeing in the u.s. when it comes to huawei? >> there are similarities. now betweenening japan and south korea, if you are a company in japan that tells key material to south korean retailers, you had to get a license approval for that license could take 90 days. those are the two types of products that would be most affected. they are major south caribbean

specializehat really in these products, particularly memory chips. those are some of the products that would be affected. that would really disrupt the global supply chain of things like smartphones and other computing devices that rely on displays. audibled phone is just one example. there are a lot of ways that companies throughout the supply chain could be affected by this. paul: it is not really in the interest of japan or south korea to see this ethically too much further. analysts andto they said we are already seeing

the impact on south korea's largest companies losing billions of dollars in capitalization. this could backfire and hurt some of the smaller japanese companies that specialize in the materials. those are some of the most immediate. , if youemiconductor have a situation where the buyers of these products have to look elsewhere. a taiwanese company, a u.s. company -- those are potential beneficiaries. remember, south korea accounts .or about 60% of the supplies anybody who relies on those, china, the u.s., major smartphone manufacturers could be affected. what we are seeing that some of the companies looking for

alternatives, looking for different places that they can source the material, but also procure the chips and blaze. of contingency plans being put into play. much. thank you so let's get a quick check of the latest is this lash headlines. cutting full-year sales and profit forecast on the slowdown of the weakening market. the company knows a disappointing second quarter and earnings will be as much as 30% lower. the chemical sector has been hard-hit are the trade war. raising about 1.2 billion dollars by selling its remaining 18% take in the bank. the sale began after the markets closed in milan and comes to

months after the 17%. performance head of a new, three-year year strategic plan. this is bloomberg. ♪

>> this is "daybreak: asia." tumbled as the latest turnaround plan fell flat with market. analysts say the ceo profit goals are too ambitious, opposing concerns that they are focusing on a contested home market. the irish prime minister says eu leaders would feel a great deal of reluctance about giving the u.k. and other brexit delay.

many eu nations are frustrated and would only consider postponing for a good reason, such as a general election. euy say they would leave the with or without a deal. many are ready to walk. and you prime minister has been sworn into the role. the finance ministers received minute -- millions and commitment loans. she won the election on pledges to cut taxes and negotiate better terms. isd manager jeffrey epstein being held at a correctional center in new york at the away bail hearing on charges of sex trafficking. they carry a minimum of 10 years

in prison if he is convicted. he pleaded not guilty in court on monday. the charges are very serious and carry a maximum sentence of 45 years in jail. that is basically a life sentence for someone his age. when you have two planes and live much of the year abroad, we think flight is a real risk. 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. shery: let's get a quick check on how markets are trading. .4%.stocks i down second consecutive session. as we continue to see, weakness

in the aussie dollar for a fourth consecutive session. futures .3%. this could be in relation to the japanese yen falling for a third consecutive session and being at the weakest level against the u.s. dollar. this after falling more than 1%. we continue to watch those south korean companies that could be influenced by japanese restrictions on some exports to the country. global spending on food delivery may rise by double-digit to $300 to the by 2022 according monitor. that rapid expansion is helping uber diversify beyond its core business. ridesharing is banned in japan. the service is -- is within reach of the population. i discussed all of this with

great eats. he joins us now from hong kong. great to have you with us. give us a sense of how important asia is uber and uber eats. overall, if we look at uber eats, the way that you mentioned, what we are seeing is is the largest food delivery business in the world outside of china. continents.n six asia-pacific is one of the fastest-growing markets. our three top global markets are here. we had indiana, australia and japan. there,seeing huge growth working with restaurant partners. seen the number of restaurant partners double just within a year, as well as

on our platform. we have tripled the number of consumers in that same timeframe. it is aof our strategy, massive part of our growth globally. eatsost amount of uber orders happen on a weekly basis and asia-pacific. shery: you mentioned india earlier. how much are you investing in operations there? how are you doing in india? great growth market for us. we are in 38 cities. citiesot just the big that are growing. it is what we are seeing in smaller cities as well. we worked with over 20,000 restaurant partners, so we work with big name brands like mcdonald's and subway. a lot of local favorites.

we are investing in innovation. we have our largest virtual partnership there with cafe coffee day with over 1700 locations. they are partnering with us exclusively with brands that are only available on uber eats. in terms of deception, india is a pretty big case. they have been delivering lunchboxes around the city. to what extent will they put this very old business out of business? is definitely an institution, but what we are seeing is the overall delivery landscape in markets like india and japan is being pulled forward. have seen a huge behavioral

change with new customers coming online. inis still early days markets like japan, india and across the asia-pacific. marketng like 7% of the is actually doing online through delivery on a weekly or regular basis. a huge opportunity for growth there. we heavily focused on moving beyond food delivery and helping the ecosystem as they evolve. that is an exciting chapter in our future growth. , you need it to fit in with regulation there. do you expect you will have to with regulators there? >> yes. what we have seen with uber eats

across the asia-pacific is that we work very closely with all stakeholders. we are interested in working with restaurants. we work very close to the safety board and regulators. all of our markets were operating very well and working in a collaborative relationship with all of the regulators, as well as with the restaurant partners. is a a quality partner core part of what we are looking to do. even as we are doing delivery, they are looking at us and saying, how can you help us with marketing? how can you help us integrate with tech through point-of-sale integration to make it more seamless? across all sides, regulators, restaurants -- it has been a productive relationship so far. about grocery delivery?

will that be part of your strategy going forward? >> from a customer standpoint, there is a blending of wanting food that is available seamlessly. some of that might be restaurant delivery, grocery or alcohol. we have grocery stores on our platform across the market. we had convenience stores and alcohol. we are launching services getting great traction like pickup. you can pick it up at your favorite restaurant. we are seeing an extension across the spectrum and we further expect to push into that in the asia-pacific. shery: let's talk about the macro picture. of course, that could mean cutting back on discretionary bending like hell. do you worry about that for your business? >> we have seen positive trends

on that. the larger portion of consumers spend on food that is not cooked at home. what we are seeing is that as long as there is good quality just as affordable and convenient, you are seeing a trend, whether it is doing delivery, that you can get the same price, health benefits, same quality and selection. we are not seeing negative trends on that. outside of food delivery, whether groceries or pickup or other things, i think that we are seeing great traction because consumers want a one-stop shop where they can have all of their food needs served. is such an innate quality

that people need to experience on a regular basis. you very much for joining us this morning on daybreak asia. speakingcome, we are to singapore-based ai company. this is bloomberg. ♪

paul: i'm paul allen. shery: i am shery ahn. tiger has clients including bank of america. they have raised funny $5 million to fund expansion. sophie kamaruddin is with the

ceo of the company. i am here with the ceo of tiger. they just completed their fundraiser. congratulations. let's get right into it. what are the next steps for tiger? >> now is the fun part. we are embarking on an expansion plan. adding two more, including japan and korea. we are strengthening our capital and we will higher a lot more space.in the tech also looking into south america, where we have strong customers. we are going to continue to invest there as well. finde: how hard is it to the right talent? >> it is a competitive

landscape, but it is strong. done.k it can be sophie: thanks i a key client for you. allocating a lot of money for tech in this year alone. allocating 13 billion euros by 2022. how are you taking advantage of this? >> is good news for us. there are some portions where they have to work with providers. generally, it is good news. will continue to expand and grow the business. will they be able to reduce their cost? >> yes, by all means. it is all about operation and

doing things cheaper. five new licenses are to be issued. >> i think it is good news. technology is the core of the business. i think it is very good news for us. sophie: a private capital market. how do you see the challenges in this market? >> in this part of the world, i think it is an interesting environment. toare seeing more companies get it is a trend that is up-and-coming. i think we will see a lot more coming from singapore. there is plenty of funding opportunities. this would be a little bit harder to find solid investors.

names seeing many strong in the region. thate, it is the landscape is only positive going forward. sophie: what does that mean for the earlier stage? >> yes. that is healthy as well for both sides. get mores it going to difficult overall to raise money? it is a good start up, it will not be more difficult. singapore, there are the likes of tpg looking to expand in the tech space. of someaving the likes looking more critically at their portfolio. d.c. big players looking more critically at the start of space? >> i think so.

i think we all feel the trend that they are putting a lot of weight in the deep tech space. startups where everything starts. many other funds are deploying capital and so on. investing instart later stages. all of the big names start to have a solid footprint in this part of the world. that is for good reason. the economy is growing. the tech space is growing rapidly as well. sophie: south korea is one of the areas you are interested in. we work with financial titian. they have a need to increase

efficiency. the economy is only good because they need more of a solution. it is also good for us because they need to do more, faster. sophie: congratulations again. paul: thank you very much for that. lindsey moore to come on "daybreak: asia." have another big guest coming up tomorrow with an exclusive interview. the world's largest supplier thes us to discuss how trade war is affecting the global supply chain. this is bloomberg. ♪

paul: this is "daybreak: asia." the u.s. and china

preparing to resume trade talks. there is one topic on everyone's mind. huawei. will they uses as a bug -- will they use this as a bargaining chip? asking if he thinks that huawei is a security threat. is a securitywei threat to any country in which they placed their devices. that includes u.s. defense bill, our be put into law a prohibition that any part of the federal government cannot do business with huawei. peopleink that as more here and around the world are focused on the 5g potential, and also dangers, that there is a

greater awareness about the security of routers and other devices that help to implement 5g than ever before. if the president tries to scale back those restrictions, will congress respond? >> there will be a lot of bipartisan resistance. shery: what can congress do? .> we put into law it has happened. we can take additional steps. congress can limit the use of funds and use other tools at our disposal, but i think the president is aware of the danger of the threat huawei poses. he is trying to figure out a way to get the negotiations on lock. i think he also understands that inh republicans and pratt

congress would have real concerns about any meaningful easing of the restrictions on doing business with huawei. about it is not just espionage and hacking. it is about increased maneuvers in the south china he and so forth. and so forth. how are they handling the competition? .> we need greater presence in the case of the pacific, that means more ships, planes and military presence helps. we need to compete with china in the areas where they are really competing with us militarily. feels like official intelligence, hypersonic, capability. -- space capability. doing inat china is

that critical domain of warfare. we need to compete with them militarily and economically. if it were up to me, i would have joined the tpp because i think that is important part of this economic competition, especially in the asian region. more trade deals is good, as well as military competition and being present in other places in the world. it is not just the pacific. we see the chinese influence and attempts to build bases, wield influence in africa and the middle east and south america, all sorts of places around the world. shery: congressman thornberry on the armed forces committee. let's get a check of the headlines. the executiveys director has resigned. he was detained by chinese

police last week. he was disqualified as a member of the advisory body future land appointed a new cofounder in his place. than $5 out more billion of market value. startedgrocery delivery . it is seeking new funds and looking to fetch a valuation of $3 billion. they plan to raise up to $500 million and add some high-profile macros, including tencent. they have managed to reach positive cash flow at the end of last year. let's preview the market open. let's go over to sophie kamaruddin in hong kong. sophie: futures are hinting at a

cash trade with a pencil -- potential for recovery. they could extend losses after the worst drop in five weeks. a 2% decline. they have lost more than $30 million in value. has wiped out $13 billion in market cap this month. making up almost a quarter. japaneset boycott products and south korea. it could disrupt the supply chain and increase the cost of doing business. there in mind that south korea and japan are the third are just export market. price swings are climbing. 10 day volatility soaring on monday as they endure the ups

and downs of the korean share market. there is a worry of a spillover effect. ahead at thek start of cash trade. this is bloomberg. ♪

paul: good morning i'm paul allen. from bloomberg's global headquarters, i am shery ahn. and i'm sophie kamaruddin. welcome to daybreak asia. ♪ paul: our top stories, asian , asks face, muted's docs the bears get tough. chipmakers are in the spotlight as the japan korea components of

battle rolls on. and energy giant that might be a bargain, petro tron is trading at its lowest since 2005, and is a peep -- cheapest among global peers. let's get straight to the market action. tokyo with stocks on the nikkei adding a third of 1%. for the topics, with the trade of the spat with south korea. news from the japanese ministry this morning. a one month low, as we count down to fed chair powell's testimony. and we will be watching for the five-year option, which is it affected go smoothly. a fifthwages fell for straight month, adding to concern over consumer spending, as a sales tax hike loans in october.

now to seoul, adding 4/10 of a percent. , as well aslimbed the yuan, which is gaining 1/10 of 1% against the u.s. dollar. chipmakers in focus gaining ground. samsung 1% this morning, as investors hope japan and south korea can resolve save -- trade tensions. sydney, the 200 is opening little changed, after the biggest fall in five weeks for the benchmark. are watching aussie banks after regulators proposed a smaller capital requirement that initially called for. the aussie dollar holding onto a three-day drop. the kiwi dollar higher for the first session. paul: let's check in for the first word news with radical group. radhikay can -

a deal is not confirmed yet, but could feature u.s. military tanks and singer ms. kyles, -- missiles with general dynamics or other firms. werepokesperson said they against the move. a significant risk that the u.s. will breach its debt ceiling in september. the bipartisan policy center had said october and november as a likely date. it is bringing that forward, due to falling corporate tax revenues. the treasury department has been using so-called, extra ordinary measures since march 2, when the u.s. hit its $22 trillion limit on borrowing. enriched it is already uranium beyond levels agreed in the 2015 d.l., and may push the processes highs 20%. inspectionomic

agency confirmed the enrichment. iran says they will scale back compliance with the nuclear deal every 60 days, unless european powers find ways to offset u.s. sanctions. uranium must be built -- enriched 90% to build weapons. car sales in china show signs of recovering as dealers offer discounts to clear inventory. and all tovans, purpose vehicles, rose almost 5% in june from a year earlier, reaching 1.8 million cars. that is the first increase since may last year. demand for cars has been hit by the trade war, the mystic slowdown, and stricter emissions rules. deutsche bank tumbled in frankfurt and new york as the latest turnaround plan fell flat with the market. shares in germany closed down more than 5%. .rasing initial gains 18,000 global job losses.

ceo profit goals are too ambitious. now focusing on a competitive market and low-margin financing. andl news 25 hours a day @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: the global markets to lower rates bond market balls that the federal reserve will move at the end of month. thanks from malaysia to canada prepare their own this week. kathleen, let's start with the fed. we had a strong u.s. jobs report last week. why are the bulls thinking we could see a move? >> they say a lot of reasons that could happen. what that strong jobs report did was take a 50 basis point rate hike off the table. a lot of people think there is 25ll a reason to make a

basis point cut. among them, kkr. let's listen to what one analyst said on liver television earlier today. >> the market got to dovish on us. the idea that they would do 50 basis points, in terms of easing in july, is too optimistic. ultimately, the fed sees low inflation, and i think they sleaze slowing growth. the prudent thing to do is 25 basis points. kathleen: a bloomberg bond team did a research roundup. misra says go along treasuries. let's look what is on her list. from global growth forces. we are not just talking of trade war. think of braggs that.

how -- brexit. iran, and then back to the trade war. terrace are having an impact. -- tariffs are having an impact. uncertain tearing. manufacturing weakness, low inflation expectation, wage growth that is tepid. no sign of a boost from inflation there. on the other, you have citigroup. payroll,after surging de-escalation in trade tensions between the u.s. and china, that fed rate cut at the end of july is not a done deal. our own bloomberg economics team says the fed will wait till september to cut the key rate. there is solid enough growth for now that they can wait for a while. and it may be a good idea. by then, the fed wind down of its balance sheet, the quantitative chitin, will be

over. and it is a clear path to make that move. debate over how much and if the fed will cut rates in july. will any of this have an effect on what malaysia is going to do, to decide whether or not to cut rates today? kathleen: there are a lot of cutons for bank nagara to rates. with a consensus as they will not cut rates today. here you can see the turquoise toe, that is inflation down 0.2%. the one rate hike, to boost currency. now it is faded. let's see what has happened to inflation. let's let look at gdp. slowed, weaker than in the past. exports, 70% of malaysia's gdp

-- gdp slowed, weaker than in the past. exports, 70% of malaysia's gdp . . twice this year. cutting demand for their exports and slowing china's economy. oil, crude oil, and national gas, will straighten their export receipts. consumer spending is supposed to slow, as they have had taxed fades,nd is that impacts most economists say they will stand pat. reasons they say they will stand pat, bringing it back to the fed, maybe they want to wait and see how much the fed cuts rates. what will they single for the future. -- signal for the future. they may be worried about the currency. you can connect the dots, in one way, back to the fed. paul: global economics and polity editor, kathleen hays.

the two cutst is in camp, and sees a 25 basis point move this month. singapore and ig asian strategist. , is this cutting in july addenda -- a done deal? what are you expecting? morning, paul. thank you for having me. with regard to the fed, the fed preempted, dovishness coming through. i think they will go through with a 25 basis point kind in the july meeting. we might be seeing, from the congress by powell,

is first his economy outlook. what we are seeing from last week, the surprise in the jobs report may undermine a little bit in terms of how much he could allude to. a mixed picture. cut, he of insurance might still position that we could be seeing risk coming through, so there may be a need .o react to these changes coming through in july, but perhaps a little less positioning for further cuts thereafter. perhaps just watching the economy. paul: the fed, data-driven, we hear that all the time. political pressure has been building up. this week tweeting, the fed does -- a clue.cleo

are you concerned the independence of the central bank may be called into question? extent, the market was concerned, when this came through at first. i think the market looks to the fact that the interference from the political and is something that is a bit of a change in this current administration. if we look back into the historical aspect of it, unlike the likes of invoking national security, it is unclear whether trump and his administration could come into effect, to amending the positions in the fed, or interfering. to that extent, i'm not too concerned at this point about political interference. tohink they will be able hold onto the kind of mandates that they champion. heard when it comes to president trump talking about currencies, hitting back at the chinese yuan and european

euro, when it comes to these fed moves, what can we expect in the u.s. dollar? is it going to pick now, if you're expecting an insurance cut very soon? with regard to interference in some of the views on currency, that did come as a bit of a surprise at this point, ,ecause we do see more progress amenable comments coming through in trade. in terms of how the u.s. dollar itself is moving, what the , as kathleen mentioned, they see that the market is pricing in a 50 point basis -- 50 basis point cut. at this point, there is a paring back in terms of expectations. i do not think that 25 basis points will create a readjustment in the market.

other things may come through in the july meeting when we have more data on the economy. the market will see more to guide the perspective. for the shorter-term, given the current ambiguity of the market, the market may have overpriced in the sense, or in relation to the cut in july itself. maybe in the shorter-term. a lot of this is also due to the u.s.-china trade conflict, which may be prolonged for some time. and we may see adjustments once again. shery: if we are expecting long-term u.s. dollar weakness, what is the likelihood of that if we do not have euro strength, if we see the ecb coming out with another stimulus package? >> in terms of the longer-term iskness in the dollar, there a sense from the perspective of

the euro, with respect to the on, thata trade going balances other world trading partners. i would not rule out the possibility, though it is not clear cut at this time, the euro zone, - bank of japan. they themselves have also been caught between a rock and a hard place, in terms of how much they can move their rates. in that sense, definitely we have to see what the fed may have to do to really make a conclusion thereafter. thank you for joining us. market strategist. kicking off today with ceos and

founders of the world's biggest companies and promising startups and influential investors. at the hong kong exhibition center. david, i remember going to that event a few years back. it is pretty dynamic. what is on the agenda for this time around? david: they dynamic, a lot of heavy hitters, big names coming through. we are getting warmed up. to give you an indication of the price to get in here. as sense of how much importance people to information networking. have a look at the website. ,e are done with ticket prices where $1500 gets you basic access. that goes up to 26,000 u.s. dollars to give you a sense of how important, how willing some people are to spend. of cashbox, we will

talk to her about where she plans to take the business. some people call her the netflix of podcasting. ton virtual banking, challenging the monopoly of traditional digital messaging apps. a lot coming up to the course of this morning. keep it here, this is bloomberg. ♪

♪ this is daybreak asia. i am paul allen and brisbane. shery: and i'm shery in new york. we are seeing a muted start to the asian session. us, seeing near-term risk and assets. i have to ask you why, if we are expecting center blanks -- banks to come back to the rescue,

including not only the fed with insurance cuts, but perhaps also whypboc starting to act, would you bet on safe haven? >> i think the reason we are seeing the rally come through, when the central banks, partners isthe fed, there overpricing, for further cuts after july. you look at the u.s.-china trade conflict, there is quite a bit through.oming that is not shaping too much. this strong rally that you have since the start of this year. in that sense, the market may still have repricing to do. i think that can get clear. the market may see consolidation msci you look at the

asia-pacific index. it is different thing at this time they could see bit of this pairing. and then we have a season coming - yuan may one undermine. shery: given that these stocks are not only stuck in the middle of china-u.s. tensions with huawei , but also now the japan-south korea trade spat. i think that in the cycle, we may be more cautious, and with the fact that maybe >> welcome text companies, and trajectories in terms of goals, the u.s.-china tension, altogether not shaping up to put a confident outlook.

sense,ink in that cautiousness, particularly for tech stocks, one to be aware of. paul: you say that markets welcome the trade truths. but how long will markets tolerate atrios without a resolution? i think in this particularly as the u.s. presidential election moves on the horizon. and china bashing may become a policy essential? think withul, i regard to the patients of the the market will once again see the kind of thing we had in the first half of 2019 so far. or the time we got to march april there were deep-seated expectations of a announcement of a meeting.

the 3-6 month timeline will again apply here. by six months time we are coming to the end of the air, and as you're going to the 2020 elections, there will be expectations for president trump to secure a deal, to at least .oost expectations we will see positive progress that way. the markets patients will have ce will havetien to wait. even in the happy trade talks we are seeing. with china delegates. these are the kinds of things we will have to see to keep optimism going. and not the rhetoric going of who is going to get the bigger part of the deal coming through and china. you can get around up of the stories you need to get your

day going in today's edition of daybreak. bloomberg's the private -- yb go yours go to dab can customize your settings so you only get information on the assets you care about. this is bloomberg. ut. this is bloomberg.

paul: this is daybreak asia. i am paul allen and brisbane. shery: and i'm shery ahn in new york. f isng chemical maker bas cutting on the deepening slow down and weakening auto market from the u.s. china trade war. the company notes a disappointing quarter and says earnings will be as much as 30% lower this year than last. the chemical sector has been hard-hit by the trade war which has affected a wide range of industries. has raised money selling is

80% stake in can echo bank. ceo john pierre risque is reviewing unicredit's performance. china's biggest sportswear maker anmped in hong kong, after analyst showed concerns over financial reporting and relationship distributors. countering that the allegations are incorrect and misleading. may the company was forced to defend itself after its accounting and corporate governance were questioned. professore eye on it being held at the trade ministry of japan. we are now hearing from the trade minister, saying they are not thinking of withdrawing

export restrictions, when it comes to three key technologies to south korea. earlier- we had heard that the u.s. is stressing cooperation between south korea and japan. more to come, this is limerick. -- this is bloomberg. ♪ xfinity mobile is a wireless network

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>> this is daybreak asia. the irish prime minister says e.u. leaders were still felt a great deal of reluctance about giving u.k. another brexit delay. considerd only postponing for good reasons, such as a u.k. general election. boris johnson and jeremy hunt both say they would lead the e.u. -- would lead the e.u. with or without a deal. new prime minister increase has , his appeal to ease strict budget targets has

failed. euro group finance targets says they have received billions in rescue loans and commitment our commitments. he won the election in greece on his commitment to cut taxes. fund manager jeffrey epstein is being held at the correctional center in new york, as he awaits a bail hearing on charges of sex trafficking and conspiracy. the charges include sex acts with girls as young as 14, carrying minimum of 10 years in prison if he is convicted. keep pled not guilty in court on monday. prosecutors asked the judge to hold him in jail until the trial. andhe charges are serious carry a maximum sentence of 45 years in jail, which to someone of his age is a life sentence. we think he has every incentive to flee. when you have to planes and you live much of the year abroad, we think that is a real risk. news, 24 hours a day

and it tictoc on twitter, powered by more than 27 journalists in more than 120 countries. this is bloomberg. on a: we have an alert story we've been following. the biggest sportswear in china is now refuting allegations made, saying they are incorrect and misleading, and are urging holders to treat the report with caution. onto -- anta dropping since muddy waters came out with the report. this would be the second short sell for the second time in less than two months. the stock dropped the most since may. sports tocting anta

reserve trading from 9:00 a.m.. but we are now hearing them come out and say that the allegations made by muddy waters is incorrect and misleading, and holders should treat the report with caution, denying the allegation. right, thanks sherry. asian stocks are trading mixed. gainskkei is resuming while the trade spat was south korea's very much in focus now. japanese trade minister said the restrictions will not be withdrawn and are in line with debbie tro's. wto so, -- in line with rules. -- ksbi is re-90

rebounding. let's check the board for stock movers of note. i want to highlight samsung and another stock recovering. both affected by japan's export curves and they are busy sorting alternatives for restricted materials, which may affect the ,utlook for japanese suppliers such as tokyo electron. let's delve into this japan-south korea semiconductor spat. we now seeing the trade minister of japan give me a press conference. and saying japan is required to act in line with international norms. they're also saying that japan's sponsor is in line with wto rules. they are not thinking of withdrawing import restrictions. japan has received a request from bilateral talks with south korea. bloomberg analysts joins us

now. what this spatus is about, and what companies it could impact. disagreement between south korea and japan dating back many decades, to the treatment of south korean workers, people, during japanese occupation, many decades ago, in the years leading up to world war ii. a very long-standing disagreement. it is a question of compensation for those people who were hurt, who were treated unfairly, and worse under japanese occupation. disagreements over how to handle that, south korean courts want it one way, the japanese are saying that this was all dealt with in 1965, many decades ago. so these two sides are at loggerheads. japan is now saying that in response to the demands being made by south korea, they are imposing these restrictions on

highly specialized materials, that are used for making chips and making displays. these are areas of the supply chain that korea really dominates. two korean companies in , sk h- in samsung particular. they have lost value over the last couple of days, on concern about the impact this may have. we know they have about a month .upply stockpiles what happens when they run out? what about their ability to continue cranking out displays? those memory chips that are needed for our smartphones, and other computing devices? elsewhere, but japan is responsible for a great deal of the supply of these very specialized materials. that leaves south korea in the lurch. shery: that is the point though,

right? we are talking about these two companies and the impacts on other south korean companies. but there will be japanese suppliers in the mix who will take a hit as well. when we are speaking about the chipmaking industry bombing out very soon, what will it do to the end -- chip making industry bottoming out, what will it do to the industry? >> you're right. this could hurt japanese suppliers as well. these are not household rains that household names in the way that samsung accounts for so much of the index and south korea. you're talking about potentially disrupting a large and complicated multi-nation, multiproduct supply chain. do people go for these materials? there is not a long list of companies that are capable of supplying things like hydrogenated fluoride, photo

polyamide. not how the materials, they are highly specialized. japan has been the leader. there is talk that what you will do if you need to source these items is you my go to another chip manufacturer or another display maker. two names that stand out are micron in the u.s. and taiwan semiconductor in taiwan. these are companies not affected koreanrictions on south purchasers. you could see them potentially benefit. but any time you stand in the way of the major players, and the major providers of key components in the supply chain, that has a knock on effect across the board. where you get the displays? were you get the chips? will these -- will smartphone makers have everything they

need, in time for the holidays and selling season. that is a big season when a lot of these companies do a lot of their sales for the year. will they have enough? ,hat is an outstanding question one that a lot of investors are asking right now. you described the difficulties in diversifying the supply chain at short notice. are these companies taking any action to avert disaster? is there the risk the consumer will end up paying for this in the near term? the leader of samsung, lee, came to japan over the weekend and is meeting with industry executives. we are trying to break news, and will bring it to you on the bloomberg if and when we get an indication of those conversations he is having. we do know and of spoken to

people close to the situation, he said that these two companies, sk and it samsung, have about a month stockpile. that will get them over the hump in the near term. what happens after that, very much an unknown. bloomberg executive editor , tom giles in tokyo. thank you for joining us. petro china looks cheap on many , and looking at the value of its reserves. china's state run oil and gas company is the cheapest among oil and gas firms. joining us now for details is a bloomberg asia energy reporter. how did the value fall below its proven reserves? >> i think the market, especially investors, begin to

lose trust and confidence in this china's biggest oil company a little bit. a lot of people gave the nickname, china service company, meaning they only serve the nation's interest, they do not serve the shareholders as they should. 's share stock had been low in 2008 and never really recovered. world's firsthole $1 trillion stock in 2007. they had a downturn after 2008. bloomberg then another oil downturn through 2017. decliningd been rick -- declining. had a lot ofagers import losses from lng in

central asian countries. stock, ag their share lot of investors believe the company served the country's interests but not shareholders interests. its price is much lower than the value of its reserves. that is pretty rare for oh companies around the world. hong kong trading at the since 2005. what can the company do to turn that around? oil production and exploration probably can still generate double-digit returns compared to other industries, where the return to be in the single digits. they will try to push natural gas sales. petro china produces more than 60% of china's natural gas.

they import 65% of china's gas. they feel like, why don't we use this dominance in the market and gas salesimize our profit, and use that profit to help our upstream exploration. that is the plan right now. but how effectively they can, that plan still depends on how the government feels. a tightlator has control on gas prices, and they have a lot of competition from private gas to traders in different markets. there is a long way to go. be invest more upstream, and try to maximize profit and the downstream gas to tradition. -- in the downstream gas distribution. come herety more to on daybreak asia, including our first interview of the day from

the rise 2019 conference in hong kong. castbox ceo. for her growth plan. ♪

tech: the worlds largest companies and startups are gathering in hong kong for the annual rise conference. the event will see 16,000 attendees over three days. bloomberg's analyst is that the event for us. david? good morning. we are starting to get warmed up here. some of the audio checks you may have heard are done. we have our first guest. with reneeed here castbox. founder of

castbox is now the biggest of pure play podcast apps. we have a most 13 million users. or areusing castbox, listening to castbox. we like to let the users know about cast box. we tried to do more innovation in the podcast industry. >> is it free? >> yes. the majority of content is free and we do have premium content. some are monetized through premium content. used to work at google and

your job was to monetize apps. you are not profitable yet are you? do you have a path to profitable velti. >> -- we are not yet profitable. a some people want to purchase content for money, great quality content and donate to podcasters. they share a small portion from the donations and premium content purchased. >> do you have an idea when you may be able to turn a profit? year, it end of this -- cachedsh flow overflow. also we see a trend of the spoken audio industry, people are willing to pay more and more. especially in china. there are already proven models that people want to pay for this kind of audio. especially for high-quality audio, and for social audio. >> to clarify, you are not in china? >> we have very few chinese

users. >> is that on purpose? have to runt business in china -- we did not [indiscernible] to run business in china. >> you're still spending to acquire use up -- users. focus isjority of the on user growth. about two thirds of our users are from organic, word-of-mouth, , high quality content. one dollar forut paid users, to try and go row quickly -- grow quickly. >> are you trying to raise money? a lot of investors walking around here.

>> we have already gotten certain interest. but we are holding off a little bit because we believe this year we can be cash positive. that is why we did not want to ask for more money than we need. ipo conversation is still far, far, far down the road? >> i think we have not considered that because we want to try to make the company private, to try to be more innovative. to try more new and challenging things. the whole audio will change totally. before that, we try to do our best, before 5g. >> 5g is going to change everything? how are you preparing? >> after 5g, all devices will be able to connect to internet. will bethe population

demanding. all the audio demands and user interface will be changing, totally different from today. that is why i think maybe in around two years, how people consume content and how people connect with information, how people connect with other people , will be totally different through audio. >> thank you for making time. ceo andg, castbox founder. they were speaking on the sidelines of the rise conference in hong kong. we were brain bringing you more exclusive events. this is bloomberg. ♪

shery: this is daybreak asia. i'm shery on any arc. paul: and in paul allen in brisbane. china went through a surge in capital invests meant with a new ,eneration of startups including the parent of tictoc. that boom maybe over. how dramatic is this? >> china's venture capital

industry is so young that there has not been a wide pred -- widespread downturn like this. any venture capitalists i am speaking to say this is the first time there have been signs of stress in the industry. if you look at the bloomberg chart, you will see the value of the investments fell 77% from a year earlier in the quarter. when china's venture boom began is when voll alibaba -- alibaba went public. to show investors how lucrative it can be to back seemingly risky startups in china. along the way, some of the most viable start of some the world were fostered. that hit a peak in 2018, when you saw gigantic rounds, $14 billion, and his dramatically fallen since then. shery: is it just a leveling off after peaking a few years back?

what is driving this downturn. >> a number of simultaneous factors. valuations were reaching unsustainable levels. investors are starting to sour and the sharing economy startups that have been massively unprofitable. then you have the trade war which has put technology front and center. global investors are becoming more concerned about earning money into a country where there are geopolitical and economic uncertainties. even venture capitalists in china are more cautious, willing to sit it out for a few months. they're worried their investments and more sensitive industries may become targets of the trumpet administration. their concern their portfolio companies have a harder come -- harder time expanding abroad. some investors see this as a natural cycle, natural leveling off. i think it is a good thing. the industry could use some cooling off. there is also light at the end of the tunnel. have said that

this shanghai tech board said to loss on july -- launch on july 22, could bring confidence to investors, that there are exit opportunities for investors in the domestic market. shery: lots of expectations for that launch. thank you. chinese developer futureland says the company's billionaire founder was detained by police last week. he was subsequently disqualified as a member of a senior advisory body. leader has been appointed in his place. detention wiped out $5 billion of market value. beingfell 2.9% after downgraded by rosenblatt securities. the move brings the number of bearish analyst up to five, among the 57 ratings tracked by

bloomberg. apple's decline pushed down the s&p 500 information tech index, one of the worst performing sectors of the day. it is airways is facing a fine of 230 million dollars over a hack that compromised personal information of a half-million customers. the penalty is the biggest so far under tough new regulations. it is seen as a test case for how companies secure data. it comes months after being revealed it had been hacked. the rate -- the breach saw customers diverted to a fake website whether credit card details were stolen. that's it for daybreak asia, where market coverage continues. the china open is next. ♪

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km aging. welcome to "bloomberg markets: china open." i'm tom mackenzie. david: i'm coming to you from the conference here in hong kong . >> i'm yvonne man from your asian headquarters here at bloomberg. here are your top stories. againkers -- chipmakers some of their losses, the president said so may have to retaliate. tom: chinese investors are counting down to the new nasdaq style tech wars. there are concerns about its effect on the wider market. yvonne: and car sale shifted gear in