paul: good morning. i am saikawa in sydney. we are under one hour away from the australian market open. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday, cannot wait to cut. senior fedom two officials suggest policymakers are ready to move at the end of the month. tradingop in equity revenue.

tensions rise even further in the gulf. iranian forces seize an oil tanker. shery: let's get you started with a quick check on how markets closed on thursday's session in the u.s. equity indices mostly lower for most of the session before they saw a rebound after the dovish comments coming out of fed officials. , being led up .4% higher by financials and consumer stocks, not to mention the fact that chipmakers gained ground. we had a positive outlook from an apple supplier. we had some geopolitical news being felt across the market. we had u.s. equities gain a little bit of ground after we heard the report that iran offered is attentive deal --a so antative deal to the u.s. --

substantive deal to the u.s. are paring back earlier gains at the moment unchanged. let's see how we are setting up for the asian market. with that being said, is just off look set to track the event we saw on wall street. kospi may find support after a two-day drop. calls for fiscal stimulus from the government after the rate cuts. emerginghas been -- assets as they consider if central banks have enough ammo. back some ofawing the losses with the aussie dollar clocking the biggest drop in the g10 space. the dollar-yen not too far off from a three-week low. continue, that could

test the 2019 lows. shery: thank you. number's number two and three appeared to have come back swinging on the need for rate cuts this month just a week after jay powell signaled action is needed. kathleen hays is here with remarks from john williams and richard clarida. that theto be narrative stays the same. we want those rate cuts. kathleen: let's start with john williams. a three-dayg off conference at columbia university. he was talking about living life zero lower bound. when rates are so close to zero, how should you conduct policy? one thing he said is the fed should cut rates quickly when you see the stimulus need arising. he also said there's no advantage in keeping your powder

dry. the markets here that. this is the number three guy at the fed. they move. justhort end of the curve, five days ago, we were up nearly to 1.9% on the 2-year note. going down, yield the price going up. so it seems to most people that you do not give a speech like that if you are not trying to tell people something. i think because the market move was so dynamic and so many people jump to the conclusion that he meant to signal something, maybe he is setting this range. maybe not. the new york fed put out the following statement. this was an academic speech on 20 years of research. it was not about potential policy actions. theranos. mr. williams is probably not signaling that he wants to cut rates, but it does seem that he is painting a picture of low inflation, low inflation

expectations, and how it could be important. maybe that means rate cuts. they're enough. it sure moved the markets and it leaves people with a sense that john williams will be pushing for a rate cut at that meeting. paul: context, very important, kathleen. the sense of a clear message from the fed did get amplified after richard clarida also talked about the danger of waiting too long to cut rates. it does kind of look like a team effort. kathleen: hard to escape that conclusion. the head of the federal reserve just sent the same messages. saying you cannot wait to cut rates and see that the economy is clearly on the rocks, clearly faltering. you need to move and keep it on an even keel. you do not need to wait until things get so bad. we need to make decisions on where the economy is heading and where the risks to the economy are lined up. interesting after these two

speeches. basis pointf a 50 rate cut at the july meeting has been entire. it is not 100% yet. maybe 40 basis points. this has moved the needle. michelldman sachs, mr. e saying he thinks the 10 year treasury yield is heading to zero because central banks around the world will keep cutting rates. he has been right on the rally in risk assets. maybe he is right on this. shery: the key question is how much they will cut. these very dovish comments coming out of time when the beige book says growth is solid. kathleen: we saw the retail sales report looking good. the philly fed index looks at manufacturing in the southeast manufacturing area. it just surged. on june 25, when i spoke to jim bullard of the st. louis fed, he said a 50 basis point rate would

be overdone. she does not think a rate that is needed. one thing for sure. we did see the two big rate cuts from the bank of career. think indonesia, not a surprise. the go-ahead be green light to asian central banks, emerging markets, central banks, that feel they need to make this move. this is not the fed's message. it is hard to understand what it is. economics and policy, kathleen hays. thanks for joining us. check in on the first word news with jessica summers in new york. u.k. is being warned it faces rigorous assessment and regulations for financial firms will be allowed indo business with the e.u. the event of brexit. the equivalent system allows foreign financial companies to operate only if their domestic regulations are deemed tough enough. the e.u. draft will be presented

in brussels. bank indonesia cut its key rate for the first time in almost two years. they said there is more to come as it moves to support southeast asia's biggest economy. the seven-day reverse of purchase rate was reversed. that is in line with most forecasts in a bloomberg survey. it came hours after a similar move on south korea and ahead of the fed decision at the end of the month. is bracing for the arrival of the first major storm of the season. the typhoon is expected to hit the northeast coast. domestic flights have been canceled. some schools and offices have been closed. has issued bureau warnings. they do play the military to provide assistance to anyone in difficulty in more remote regions. groups coal industry said the government will restrict imports from the second

half, keeping shipments at similar levels to 2018. the colonists -- mccaul association said imports have exceeded quotas in the first six months of the year. it also said overseas orders will decline because domestic demand for coal is faltering. japan's deadliest fire into decades has killed 30 -- in two decades has killed 33 people. 36 are being treated for injuries in the hospital. police say a man burst into the building, hurling flammable liquid. he tried to escape that collapsed on the street and was captured by staff. he was detained and taken to a hospital with injuries. 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 jessica summers. this is bloomberg. all right. thanks very much. tensions between washington and

tehran continue to rise. the latest sign of military conflict in the gulf. president trump said a u.s. warship distrained a drone in the state of formulas -- strait of hormuz. let's cross to derek wallbank. have we seen any fallout from the latest tension reflected in the oil crisis? derek: right now, what we are sort of waiting to see is whether or not this escalates any further. the last couple of times you have seen u.s. ships deal with iranian incursions in various different ways, you have gotten really close to problems, but it has kind of eased off. the u.s. shooting down a drone, i want to make really clear, is a bit of an escalation of strategy from the united states

here. while you are not seeing the biggest move in the history of the world here, you are a think now going to start to see a little bit more attention paid to the idea that the u.s. is not going to be fully restrained in any of these sort of things. you have seen these issues before. i am thinking the last month where the u.s. will be responding to some and he will see iranian speedboats, and the u.s. does not necessarily -- you will see iranian speedboats move up. it comes a little bit after a u.s. drone was shot down over, you know, disputed territory. the u.s. says it was international. was over iran. this comes a little bit after that. it is clearly an escalation in tensions between the two powers. shery: we're the report from the guardian that iran might have offered the u.s. a substantial deal. we have any idea what that could

be the u.s. could do about that? it is really difficult to say right now because president trump has said that he is willing to talk with iran, but he is not willing to go with ofthing near the contours the previous deal. you have iran's foreign minister out earlier today, tweeting things like a map of the world and how close iran was to the region versus the united states. the public posturing is very much like we will talk to you but we are not release serious about talking. so it is a little bit difficult to say if there's meaningful differences in private. we have had a lot of this sort of talk from both sides before. we are definitely interested in talking around the framework of insert something that is considered unserious by the other side here. right? so there is a lot of this noise that both sides are trying to

appear that they are the reasonable party and the other one is some outlier without actually anything concrete on the table. the last thing that i saw that really sort of hit at that was iran basically saying you do not buy a horse twice. they say they were following the deal that went, that was signed between the u.s. and iran, and the u.s. backed out of it. they are not really interested in coming to the table for the same thing to happen again, so i think there is quite a big difference between the u.s. and iran right at this point. there is a lot of distance between the two sides. even as you start to hear this sort of noise, you really have to take seriously are they actually talking to each other or are they just trying to sound like they are the reasonable party and the other one is not? paul: sticking with national security, a bit closer to home, president trump says he has a few concerns about the path

ability of the pentagon doing a multibillion-dollar deal with amazon. the possibility of the pentagon doing a multi- billion dollars deal with amazon. derek: they are looking at this cloud contractor for cloud information. it want to put something together. amazon set for a long time it is the best provider for a single source cloud contract, and his contract could be, i mean, we are talking about a $10 billion contract or something. this is a big deal. amazon has been considered by far the wide front runner to the point that when the pentagon said it wanted to do a single source deal and not a multisource deal, everybody in washington went that is great for amazon. amazon has probably got that. but it has been a lot of concern from basically everyone else in the cloud space that something like that would not necessarily oracle, folks like

microsoft, are playing on the president's well-known distaste washington post and saying are you really sure, mr. president, that you want to give this deal to just raises -- jeff bezos's company? paul: interesting question for sure. still to come, boeing will pick up the charge when it report earnings next week. we will look at the whitening fallout from the rounding. theook at the fallout from 737 max 8 grounding. shery: this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. microsoft rallied after profit beat estimates. boeing reports bad news as the fallout from the grounding of the 737 max worsens.

su keenan joins us with the day's action. what were the highlights? on -- youte a rebound could call it optimism about rate cuts. but that a look at the snapshot. will notice is bonds were in focus. the 10 year yield dropped, positive outlook from apple suppliers. taiwan semiconductor gave a big list of chipmakers. and if we take a look, you will notice the dollar was down and oil was down, which we will get you in a bit. take a look at the bloomberg if you can. we're going to go into the bloomberg. gtv is where you can find our library of charts. even the tech has been a play, they have seen outflows into the past 12 months. we're coming on a big one here. that is interesting as you take a look at some of the big movers. netflix was at the top of the

pack. one analyst was saying the story is coming to an end in terms of growth for netflix. he be at a rate his call -- reiterates his call that netflix decline. a significant backlog many investors to bail. that caused many investors to bail. boeing taking a $4.98 billion write-down. the stock off after hours on that news. it is making provisions for the possibility that the maps jet ax jetbe grounded -- m could be grounded. hitting it out of the ballpark with some of the numbers. shery: cloud power coming from microsoft. su: it was the story of the cloud. many people showing optimism. let's take a look at how the stock has performed here today. it has been -- year to date. it has been such a great story.

about $1.37 a share. many people finding that is continuing to bring more customers into the fold. shery: c keenan, thank you so much. let's bring in state street global macro strategist marvin lowe. great to have you in new york. very early in the season, but still, we continue to see analysts trimming their forecast. is that just commonplace, given that analysts start optimistic and then trim their targets? or is there something different this time around? usually, that mentality go throughout the quarter. the fact that they are trimming now on numbers that are pretty low i think is an indication of just how much slowing we might start to expect as are looking

into 2020, which is really where the equity markets are looking at at this point. it is not that unusual at this point. shery: the bond market seems to think the global economy is slowing. we continue to see this lower and lower rate. who will end up being right, stocks or bonds? marvin: that is the big debates about us or so. stocks hit all-time highs. bonds certainly get to loans we have not seen in several years. there is the case that they both can be right, particularly if the discount rate that stock lower.s use those it is adjusting its way into the market. i do not expect stopped to to come -- stocks off a lot. jpmorgan' reaction to but michael'ss observation that u.s. treasuries might get down to zero.

what do you think about that? marvin: the growth profile for the u.s. is not anywhere near, in my view, talking about a zero type of rate. you're talking about a japan type scenario. the u.s. is still looking at growth numbers that are close to 2%. this year, we are above trend. i am not there yet. the u.s. economy is different than a lot of the other economies where we have seen the amount of negative yields really increase. there are differences here. in terms of just getting back into equities, in terms of what we have been seeing on equities markets, the s&p 500 pushing 3000 even though this earnings season looks to be a little tepid, how much do you see this being fed inspired, and don't you think that mr. broader weakness underlying -- that speaks to broader weakness underlying it? marvin: earnings of latest this year have been flat to negative. there is not a lot of expectations for 2019 to the

gangbusters the way we have seen in the past. there are adjustments going on to 2020 already, which is a bit early. there is weakness there. the fed and lower interest rates and kind of a coordinated move towards liquidity and lower yields is a very strong tonic for investors. shery: we are seeing less stocks is 17he most expensive years. if we see the fed easing, will we see more upside to risk assets in emerging markets? would that be where we go? marvin: i think we have got an environment that is really good for emerging markets. is low.atility overall interest rates are low. we can see the volatility with comments from said officials that they could even go lower. if you get this volatility and reach for yield, emerging markets benefits, there are macro issues associated with emerging markets. it is not that we should be

papering every single emerging market. in a reach for yield, the carry trade is a strong movement in the market now. shery: marvin loh, thank you. and of course, plenty more to come on "daybreak asia." this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. one of the world's most famous casinos may be up for grabs. mgm resorts is exploring the sale and lease back of some of its iconic properties, including the bellagio, a favorite of frank sinatra. is the largest casino operator in las vegas and it is working with an advisor to solicit interest from potential buyers. u.s. shares rose in extended trade following the news.

paul: national australia bank named ross mcewan as its next ceo. he announced his resignation as of royal bank of scotland and will start his new job no later than it. he has plenty of experience in the australian industry, having been executive general manager of commonwealth bank. shery: boeing will take a $4.9 billion charge when it reports earnings next week as the fallout from the 737 max grounding widened. it includes compensation for airlines who had to cancel flight. -- flights. moreotal cost will eclipse than $5 billion from revenue and pretax earnings in the quarter. still to come, japan is still chasing its 2% inflation dream. we will bring you the latest figures for june at seen as we come back. this is bloomberg. -- as soon as we come back.

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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. breaking news out of japan. we are seeing the national out ofe cpi year on year japan coming in at 0.7% growth. this would be exactly as expected and also the same amount of growth as we saw in the previous month of may. when it comes to core cpi excluding fresh food prices, you're on your prices rose 0.6%. again, in line with estimates. still, a bit slower than the previous month of may. we are talking about a second month of deceleration for the

core cpi. when it comes to core core cpi, excluding not only fresh food but also energy prices, again, in line with estimates. deal .5%.th of we have seen the cpi june mobile show pressure in phone service charges and durable goods and gasoline. is anthe tokyo june cpi indicator of where national numbers will go, it is coming in line with estimates. deceleration for a second month growth,core cpi, 0.6% quite far away from that 2% boj inflation target. paul. paul: things, shery. thank you, shery. joining us is our guest. thank you very much for joining us. no surprise at all on those cpi numbers.

the idea of a 2% inflation target just seems to be more and more ridiculous. is anything ever going to get japan? >> japan's lower inflation is very structural and i do not see any possibility for the bank of in the near 2% future. it is structurally very weak demand. paul: i was looking at cpi numbers earlier. cpi in japan, over the past 30 .5%., averages is it time for the bank of japan to try something really out-of-the-box here, and what might that? -- that be? marvin: to achieve target? the monetary policy issue. it is a big structurally weak demand. people concerned about aging society and they are concerned about the very low public

pension benefits. so it is very difficult to change people's minds that by doing monetary easing. shery: we have the upper house elections coming up on sunday. this will be a test of how voters perceive abenomics to have worked. what are your thoughts? sayuri: this time, i think there are two issues. one is how we make assessments about abenomics. the ruling party emphasizes this continuous expansionary economic growth. and the employment growth. and corporate profits more or less remaining at a high-level and a very high tax revenue. they tried to emphasize that. on the other hand, the opposition party emphasized that employment is growing mainly because of the shortage of the labor force, which is coming from declining populations. wages remain very weak, both nominal and real, and most of

the employment comes from part-time workers. and their wages are very low. i think both are correct. abenomics, it is according to impact, but it is very mixed. another issue is the security system. go ahead. shery: pension and social security issues are very important in an aging society. so is the government expected to tackle these issues at some point? sayuri: yes. so japan's national pension as you gobased on pay system. that will not work in japan because, increasingly, the number of elderly and pensioners are growing, but the working age population, the pay-as-you-go system does not work. eventually, i think the government has to really discuss how we are going to do this system, either by increasing tax fees, increasing contribution

from tax fees, or whether we should shift to the completely different pension system like -- the ruling party does not want to talk about it mainly because is traditional costs expensive. the opposition party says we should shift to the new system. and then a new system of funding increasinged by corporate and income taxes are you the ruling party does not want to do tax hikes anymore -- , but the ruling party does not want to the tax hikes anymore. paul: it can seem almost certain to win. is it really not a major issue for voters? sayuri: yes. is very different from 2014. in 2014, the government did not measures toy

mitigate the impact. this time, the government did lots of various mitigating measures. each completely offset the other ones impact on the consumption tax hike. ,or example, this tax hike there is an exemption for the food and beverage. that is very important, which accounts for 30% of cpi. and also government introduced this free education for food. there is lots given for pensioners. time is totally different. it is very interesting to see this adverse impact is more or less offset by countervailing measures. doesat is why the public not pay enough attention to the consumption tax hike. people are still not very happy with a consumption tax hike it but it is not a major issue.

the major issue is what we are going to do for the security system, pension system, and economic policies. shery: always great talking to you. sayuri shirai, university professor of economics and former boj board member. of course, we are half an hour away from the open in tokyo. let's turn to sophie to see what she is watching. sophie: with nikkei futures hinting at gains, we are going to be looking at signs of a rebound in tokyo markets. one indicator could be signaling a turning point. that is key shortselling ratio on the tokyo stock exchange, which hit a record high on thursday, rising to 51.2% at the topix is on course for its worst week since may. checking in on the yen, not giving into the revival this morning in the u.s. dollar that was sparked by the remarks by john williams. the yen could test the years low. shifting attention to korean assets, ing opines that the

worst may be over for the korean won this year. markets are pricing in rate cuts with the easing cycle just do to tradeted concerns. it last month and 5% to be the biggest laggard in emerging in cheyenne -- in emerging asia. bond yields are sliding further on easing that's. bets. it is well below the key rate, falling from a high of 1.84% that was hit in march. a three year yield falling to as low as one point 25%. the economy is in bad shape. we will learn of korea's parliament will join the bok in shoring up the economy by providing an extra budget so in light of the trade spat with japan. hade is a bright spot to be as korean suppliers to chipmakers have surged 19% collectively and since it took affect on july 4. they are among 11 stocks that added $1.5 billion to their

combined market cap during the export curbs concerns. paul. in on thes check first word news now with jessica summers. just. jessica: -- jessica. jessica: relations between the u.s. and iran have been further strained. tehran says it was halted north of the strait of hormuz. it happened on sunday but pictures have just been released. washington is demanding its release and says it destroyed and iranian drone that was threatening a u.s. warship. pres. trump: we took defensive action against an iranian drone. it had closed into a very near distance, approximately 1000 yards, ignoring multiple calls to stand down, and was threatening the safety of the .hip and the ships crew

the drone was immediately destroyed. jessica: the fed is sending more signals that it will cut rates this month. top officials calling for action sooner rather than later. and richards clarida says policymakers must not wait until it is too late. they are expected to cut 25 basis points at the end of the month. opinion is still divided with some cause for a 50 point reduction and others for no cut at all. china's coal industry grew since the government is going to restrict imports, keeping shipments at similar levels in 2018. the china national coal association says the halt at mainland ports is because imports have exceeded quotas in the first six months of the year. it also says overseas orders will decline because domestic demand for coal is faltering. throughrts of gold switzerland have fallen to a record low. that is as major global buyers

for thehigh prices major refiners slumped last month to the lowest level since at least 2011 due to smaller orders from india and china. the rally in bullion lifted local prices to a new high in india. demand is slowing after gold hit a six year high. 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 jessica summers. this is bloomberg. thank you so much. we have breaking news at the moment. we are seeing a new york times report that president trump has decided to name eugene scalia at his next secretary of labor according to two people with knowledge of the matter, talking to the new york times, saying that eugene scalia has been secretary.labor he is a former lawyer for the

labor department in the george w. bush administration. this of course coming after mr. alexander -- after the former labor secretary was dismissed. he resigned because of scrutiny of his handling of sex crimes cases against jeffrey epstein. hearing from the new york times that president trump plans to nominate eugene scalia for labor secretary. in other news, of course, we are wrapping up bank earnings in the u.s. morgan stanley rounding out the week on something of a negative note. our finance reporter is here with more. treating has been weak for all of the major -- trading has been week for all of the major banks. morgan stanley took the biggest hit. >> there with all this guidance about trading being weak. we got the confirmation. the morgan stanley ended the week as the weakest of all the traders, so that was really interesting. 14% decline in equities.

upon trading did not do well either. that is really telling, because morgan stanley is this huge trading powerhouse. the fact that they have not been able to do very well this quarter, not a great sign. they do not have as much of a diversified business as other wall street banks so they were not able to lean on other sides of the house. why were results so bad when it comes to trading divisions of all of these other banks? is it the uncertainty in the macro environment right now? lananh: is totally is. investors were on the sidelines saying people were just not doing anything because there is uncertainty about how much the fed is going to cut, when the fed is going to cut. there is uncertainty about the macro environment in terms of whether global growth is slowing. obviously, we have got this trade war that keeps running in the background. investors and plans have not a

good out how to reposition themselves in that environment, so that kind of stayed off the trading desk. paul: how about the outlook for the rest of the year? is it all dependent on the fed? dependent onally the fed. we heard a lot of the banks talking about the fed rate environment and we heard a little bit more granularity in terms of guidance if the fed cuts 25 basis points, how much they will use in revenue. there is starting to be more discussion and clarity around how fed rate cuts would affect them. they were asked multiple times on the earnings calls about this so this is a huge focus for the banking markets going toward. we also have the outlook for the u.s. consumer, which is really key. main street banks have really played that up on their cause as well and we are pretty bullish on the american consumer. it is an offset to some of the macro uncertainties they are facing. paul: lananh nguyen bloomberg finance reporter lananh nguyen,

think very much for joining us. the cost of the 737 max keeps on rising for boeing. we will look at the latest blow to the bottom line. this is bloomberg. ♪

paul: we are counting down to asia's first major market opens this morning. japan futures right now looking higher by a little more than .5%. this is following the positive close on u.s. equity markets. this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. the fallout in the boeing 737 max grounding is widening. they are planning to book a $5 billion charge when it reports quarterly earnings next week. let's cross to our editor, dave mccombs. how significant is this right now? the waysre's a couple

you can measure it. of course, you would compare it nethat their estimated income if that will year. it comes to more than half of that. $4.9 billion is just a lot of money to come out of the bottom line. it comes straight off that as a one-time charge. a very big hit to their earnings and investors will respond to that. at the same time, this is to some extent priced in. we knew that customers were going to demand reimbursement for their costs related to this problem, so they were aware that this was going to be a large amount. now that that is out of the way, some investors are actually buying the shares. they went up 1.3% in after-hours trading in this small reaction to this. another measure is how serious boeing is taking this and how it intends to support its customers. that is what this charge is for, making their customers whole.

the ceo was saying this is a defining moment for boeing. it shows that they are willing to get this solved as quickly as possible. as possible isy obviously the key. how long will it drag on for? dave: su: they say it should -- dave: they say it should be early in the fourth quarter and that it is essential they do not let the deadline slip. problems have been piling on top of problems. even as they were getting at narrowing down what was the original cause of this, other problems have emerged with that software on the 737 max. so there's a lot of ways to go and we are still not certain when we will see those planes fly again. they reported their full earnings next week. investors will be looking at that very closely not just present discharge but because they'll be looking at what sort of hit they will expect coming to sale and other parts of the company's earnings.

shery: we have seen the faa identify new potential flaws. do we have any idea what they are doing to ensure training of pilots and fix all of these issues? dave: right, well that was part of what boeing hoped to dubai and optimist one-time charge, is committed -- boeing hoped to do by offering this one-time charge. and before they do get them back in the year, that they are spending the money and taking the time that is necessary to ensure that the pilots have full training. it is not just the software itself. what is coming under scrutiny is how pilots are trained to use that software, so the company said we are taking our time. they said this is a defining moment for us. they did try to project this idea that they are very serious about making sure not only that it happens as quickly as possible, but the training and changes to the software are complete and effective. paul: all right.

bloomberg's dave mccombs in tokyo. we still have plenty more to come on bloomberg. and do not forget our interactive tv function tv . , you can watch us live and dive into any of the securities or bloomberg functions we talk about. you can become part of the conversation. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. morgan stanley is losing ground on wall street. the biggest stock trading -- a drop in equities trading revenue, blaming lower client balances. that was the steepest decline

among major u.s. banks and even surprise jump in what management fees was not enough to over set an overall all in revenue. shery: microsoft gained an extended trade. estimates topped estimates -- the cloud computing business racked up more clients for it azure web services. commercial cloud revenue jumped by more than one third. the profit margins widened to 55%. shares surged on optimism over the cloud business. paul: the outlook is bright for the world's largest contract chipmaker. projected quarterly revenue that was better than estimates and shoved off concerns about a downturn in the mid-the smartphone slump in the ongoing trade war. income in the previous quarter fell to just over 2 billion u.s. dollars. they -- it was better than analysts expected. businesses are set to rebound. shery: nvidia is considering

asset sales. after the failed listing of its asian unit in hong kong. the budweiser brewing off or was cast at the last minute and dow jones reports the company wants to raise $10 billion to cut debt. left,ds of brands have leaving more than $100 billion while global the your consumption is slowing. paul: china's top importer of petroleum gas is weighing an ipo of its trading and majestic unit in singapore. aiental energy is discussing share sale for the unit. other exchanges are being considered including hong kong. china's imports have risen more than fourfold. want to turn the fuel into the building blocks of plastic. shery: the markets in japan, south korea, and australia, online at the top of the hour. sophie: taking a look at

futures, they are higher in sydney, tokyo, and seoul. s&p minis gaining ground. lots to consider. we have earnings in focus. in japan, hundreds of companies due to report. that has seen some anxiety around investor sentiment. taking a look at a game to risk assets. the yen gaining ground -- losing ground, rather. treasury futures falling earlier as the new york fed clarified the remarks, saying they were academic in nature. that forining .7%, but the biggest decline amid demand worries. gold under pressure this morning in the face of that former greenback. prices have been supercharged. 2% when it comes to bullion

prices so far. shery: let's get a quick check about currencies and how they are trading around the region. we are seeing the japanese yen holding at 107.41. a little bit of weakness after a two-week high. we have seen safe haven demand, concerns over global trade tensions weighing on local japanese docs. the aussie dollar trading at .7066. we had speculation that the rba could hold off on a third rate cut after the latest jobs data shows some resilience. the korean won, 11.78. paul. paul: let's check in on commodities briefly as well. sophie mentioned the oil price gaining, as we see renewed ofsion in the strait

hormuz. silver closing the gap with gold. coming up in the next hour of "daybreak asia," brian gibson joins us to offer his outlook on global rates. the market open, next. this is bloomberg. ♪ his is bloomberg. ♪ paul: good morning.

ages maker -- major markets are about to open for trade. shery: good morning. sophie: i'm sophie kamaruddin. welcome to daybreak asia. ♪ paul: our top stories this friday, shinzo abe hopes victory is on the menu in the elections. korean companies say they can handle japan's restrictions for now but are looking to diversify the global supply chain. shery: 50 years since the

historic giant leap. how much has changed since apollo 11 took mankind to the moon. let's get straight to the market action with sophie in hong kong. what are you seeing? sophie: green shoots in tokyo %ith the nikkei opening 0.5 higher. it's the worst week since may for japanese stocks and earnings. signs of a rebound. we have the yen slipping from a three-week high coming that's expected to see shinzo abe expected to win the election. since the lowest reading july 2017, adding pressure on the doj director. picking up ads are touch this morning. and so, we are seeing the kospi game. 1173orean won is firmer at

against the dollar. the government is being looked to for fiscal stimulus. we will learn if the next a budget bill will be passed. with bond traders betting on further easing, bond yields holding steady with a 10 year below that 1.5% mark. the three year yield is looking steady. in sydney, the asx 200 opening to little change. the aussie dollar is slipping. the kiwi also losing ground. kiwi stocks are slightly under pressure this morning. shery: thank you so much for that. treasuries gained after the fed's number two and three officials commented on the need for a rate cut this month. john williams said central-bank should act quickly when there are signs of trouble. the new york fed clarified his comments, saying they were made

on the -- on an academic basis. still, the sense of a clear message after the fed vice chairman also mention the danger of waiting too long to cut rates. is brad gibson. right to have you with us. , trying toe sense clarify those comments? has it changed anything? the direction seems to be down. the only question seems to be, by how much? >> that's right. whether they go 25 or 50, we will get short-term volatility in markets as investors rebalance. the longer term trend is for the fed policy rates to head lower. of market has applications an additional 1% over the next 12 months. we would agree with that.

if we think about a u.s. 10 year bond, that's a must fully price for that entire 100 basis points of easing. shery: not even waiting for the fed, we have already seen the bank of korea, bank indonesia cut rates. our they being too aggressive given that you don't know how the fx markets will react? >> i think they did drop some confidence from comments from powell and the reaction from the u.s. bond market. the fed will be cutting rates. it was not a significant step to move in advance of the fed. their policy meetings were already scheduled for this week. it was not too much of a surprise. with bank indonesia and various other central banks, there will likely be easing policy this year whether the fed is aggressive or not. we think there is more room for central banks in asia cut rates. the key theme in our global fund

, in anticipation of further easing. the: are we seeing competition emerging among central banks? is this part of a start to a race to the bottom? >> you are right. rates 24 hourst ago as well. race to the bottom, yes. we are headed that way, especially markets like korea. there are opportunities to position for further rate cuts in asia. roomand is a market with for the bond market to rally if the bank was also to engage in this easing policy. let's not forget the new bond market in asia being china. we have 10 year bond yields in china yielding around 3.2%. there he low inflation. it's not apparent that the pboc will directly act after the fed. there's room for chinese policy

which will be supportive of the chinese bond market. paul: we have been talking about zero yields, negative yields quite a lot over the past few weeks. chart,ake a look at this you can still get some yield. particularly in dollars. returning 9% so far. when you look around the em bond market, what you like? -- do you like? sticking to the asian theme, high yield is in the local currency bond market. high issuers that have a credit spread in the dollar market like indonesia. those markets are fairly valued already. the credit spread you get on those markets is fully reflecting strong fundamentals. we agree with those fundamentals. anterms of getting additional 9% of gains from investing and emerging-market high currencies, we would need

to see another rebalancing and further credit upgrades from these markets. that's not our base case. shery: how important is it that you hedge that rate exposure in places like china? to.e would advise not fx exposure would be worth hedging. for investors that are looking for duration and a nonnegative yield, markets like china would be worth taking. ifh risk around the renminbi we saw a deterioration in trade talks, it could come into play. cost tooment, it's zero hedge the renminbi. there's no advantage -- disadvantage. we recommend taking out the currency exposure but embracing the interest rate exposure. last time we spoke, you did say one of the biggest risks you see to the global outlook is the trade war. there were signs that the two sides might be talking again. is that the case for you still? >> that is.

china, even u.s. or if u.s. and china trade tensions subside, it appears to us that it's very likely that the u.s. will be looking at markets like europe to go for them as well. it's politically popular for trump to embark on this route. support theartisan go against markets like china. yes, trade tensions remain very high. thanks for joining us. let's check in on the first word now with jessica summers. relations between the u.s. and iran have been further strained by the seizure of a tanker in the gulf. shipment washe halted north of the strait of hormuz because of a suspected

smuggling of oil. pictures have only just been released. washington is demanding its release and says it destroyed in iranian drone that was threatening a u.s. warship. >> it took defensive action against an iranian drone which had closed into a very near distance, approximately 1000 yards. ignoring multiple calls to stand down and was threatening the safety of the ship and the ship's crew. the drone was immediately destroyed. jessica: the u.k. is being warned that it will face -- the european commission will lay system new equivalents which allows foreign financial companies to operate within the block only if their domestic regulations are deemed tough enough. the eu draft will be presented

in brussels later this month. bank indonesia cut its key rate for the first time in almost two years. it said there's more to come as it looks were support -- looks to support south asia's biggest economy. that's in line with most forecasts in a bloomberg survey. it came hours after a similar move from south korea and ahead of the fed decision at the end of the month. is bracing for the arrival of the first major storm of the season. the typhoon is expected to hit the northeast coast. domestic flights have been canceled. some schools and offices have been close. the weather bureau has issued sea and land warnings. japan's deadliest fire in two decades has killed 33 people at an animation studio in key odo.

36 more are being treated for injuries in the hospital. screamed, die,n as he burst into the building, hurling flammable liquid. the 41-year-old man tried to escape but collapsed on the screamedstreet and was capturey staff. he was detained and taken to a hospital with injuries. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers, this is bloomberg. shery: thank you. we are seeing upside across major markets in asia. let's see what's moving. let's focus on a stock in the move in sydney. not shares gaining 2.5% after naming a new chief executive. he will start his new job no later than april 2020. he had resigned from rbs in april. he will be charged with restoring trust after a series of scandals. thanks very much.

still to come, japan and south korea have been locked in a trade dispute for two weeks. there have been losers and winners on the stock market. we will bring you the list. shery: first, japan's shinzo abe speak -- seeks to extend the majority. forprime minister's plan the weakens election, next. ♪

shery: this is daybreak asia. japan's inflation puzzle with elections on sunday, putting pressure on the boj. still, shinzo abe is on course to become japan's longest-serving prime minister. the vote is seen as crucial for his plan to change the nation's pacifist constitution. shery: 124 seats are up for

grabs. abe's coalition needs to add 53 secure ao its kurds -- majority. liberal reinforce the democratic party's status as japan's undefeated ruling political force. it would cement his legacy as well. sunday's vote is seen as a verdict on his economic policies with the opposition claiming he has failed to deliver widespread prosperity. surveys show the electorate is divided over the sales tax hike in october while social security reform has been cited as the most important electoral issue. constitutional change is among the hotly contested issues as tweaking and antiwar provision has been one of abe's central policy goals. asia bloomberg daybreak: brian fowler joins us now from tokyo. ago, japan's hour

inflation holding a two-year yellow. well below the boj target. how much of an issue is the state of the economy in the election? data will not cpi be a big factor. on the one hand, it is good news for a lot of voters. you have a lot of older people in japan who are earning zero income interest on their savings. they are not unhappy to see prices stable. on the other hand, the cpi, a lot of the factors were domestic. -- cheapereople mobile phone charges, free preschool education. that helps a lot of the younger families. i don't think voters will be concerned about that unless you see companies start to put a cap on wage hikes because they are concerned about prices. paul: would voters be concerned about the sales tax hike?

a promisedl to take tax into a election. is that a key issue on their minds? it has not gone to well for them. case ins definitely the past instances when they hiked the sales tax. in this case, it's not looking to be such a big problem. first of all, we haven't seen a mad rush to buy big-ticket items ahead of the sales tax increase. we saw that in previous years. this year seeing it which indicates maybe consumers will not change their habits and are not worried about the impact. the other big concern on people's minds is social welfare , especially pensions but also the national health scheme. the sales tax hike actually helps mitigate those concerns by putting money into the public coffers. on balance, a large part of the

are not that concerned about the sales tax hike. shery: as you said, the social security reform agenda really is a top concern for most japanese people. does the prime minister have a plan for that? >> yeah. it's interesting. shinzo abe, a big pillar of his policy in recent years has been boosting employment. he wants to get a higher labor participation rate. if there's a spouse that hasn't been working, returning to the working force. there's also stealth immigration. we had interesting data earlier this week. japan's population last year, number of japanese nationals fell by a net 430,000. the number of foreign registered nationals living in japan

increased by 170,000. that doesn't quite offset the decrease in the population. you can bet that most of those 170,000 additional foreign worker people -- four and people are workers. they are taxpayers. mr. abe will continue to try to quietly keep employment rising so that there will be more taxpayers and potential consumers and less reason to worry about the added two percentage points to the sales point. does he enjoy a natural advantage that the opposition seems to be in relative disarray? >> that's absolutely the case. on askingsurveys people what parties they support. the latest survey i saw had roughly support of 33%. the next one, the opposition party, the cdp, had only 9%.

no other party was in the double digits. the lbp or no other party at this point. that's not necessarily a good thing for democracy, if you think about it. for shinzo abe, it's great. he has no real rivals. shery: how important is foreign policy or trade issues for japanese people as we continue to see this spat with south korea? >> that's a huge concern. geopolitical tensions are on the rise. it's japan and south korea. it's always a concern about japan's relationship with the u.s. which has seen ups and downs in recent years. it's concerns about china and china's trade relationship with the u.s. which has an indirect it impact -- impact on japanese exporters. on that point, that's another factor that feeds into support for shinzo abe. by virtue of the fact he's been in office along, he's set to

become japan's longest-serving per minister in november. there's a whole group of the population that only knows him and thinks he's the only person who can we japan in times like this -- lead japan in times like this. it's a concern but it fuels more support. fowler in tokyo. thank you for joining us. you can get around of -- a roundup of the stories you need to know in today's edition of daybreak. blue marks of drivers -- bloomberg subscribers, go to your terminal. only get the news on industries and assets you care about. this is bloomberg. ♪

paul: this is daybreak asia. i'm paul allen in sydney. check let's get a quick

of the latest business flash headlines. one of the world's most famous casinos may be up for grabs. mgm resort is exploring the sale and -- of some of its iconic properties including the bellagio, a favorite. casinothe largest operator in vegas and it's working with an invasion -- advisor. u.s. shares rose following the news. paul: microsoft gains in extended trading as well as quarterly sales and profit topped estimates. it is thanks to the strength of its cloud computing business. commercial cloud revenue jumped by more than one third as profit margins widened to 65%. shares surged over the cloud business. shery: morgan stanley is losing ground to wall street. the biggest stock trading shop in the u.s. posted a 14% drop in equities trading revenue,

blaming lower client balances. it was the steepest decline among major u.s. banks. paul: boeing will take a $4.9 billion charge when it reports earnings next week as a follow-up from the 737 max rounding widens. the charge covers concessions for airlines who had to cancel flights and find replacement planes. total costs will be more than $5 billion from revenue. relations between the united states and iran have been further strained and the seizure of a tanker in the gulf in the shooting down of an iranian drone. let's get the details from bloomberg asia energy reporter. what's the latest? >> yesterday, u.s. president donald trump announced the u.s.

shot down an iranian drone near the strait of hormuz. they said they shot it down because it came within 1000 yards of the uss boxer, and invidious -- amphibious vehicle. they said it threatened a vessel and its crew. like you said, this is the latest episode in this tit-for-tat and rising tensions we are seeing between the u.s. and iran around the strait of hormuz. earlier this year, six merchant vessels have been attacked. iran has denied responsibility for those. they did say they shot down a u.s. drone that entered iranian airspace earlier this year. this is the latest episode. the reason why this is important for energy markets is because the strait of hormuz is a crucial chokepoint, about one third of seaborne oil passes through it.

it's a channel that iran has threatened to shut down before. in fact, the iranian foreign minister told bloomberg news earlier this week that iran could shut down the strait of hormuz although it is not something they want to do. clearly, it's important for --rgy markets that tensions folks are watching developments there. shery: have we seen this risk being reflected in oil prices? >> yeah. the response yesterday when this was announced in oil markets was very needed. -- $.34.31st it's up a little bit today. these tensions are being overshadowed by larger economic concerns. concerns of economic weakness. u.s. gasoline and diesel inventories jumped more than expected last week. weakness in fuel

demand from u.s. consumers. shery: thank you so much. our bloomberg asia entity editor. coming up next, we discuss to getnt xi's push chinese startups listed at home. ♪

shery: this is daybreak -- jessica: this is daybreak asia. the fed is spent -- sending more signals that it will cut rates this month. two top officials calling for action sooner rather than later. the new york president and fed vice chairman said policymakers must not wait until it's too late. the fed is expected to cut rates by 25 basis points at the end of the month but opinion is divided with some calls for a 50 point reduction and others for no credit all. at all. bank indonesia cut its key rate for the first time in almost two years. it said there's more to come as it moves to support southeast asia's biggest economy. the seven-day reverse purchase

rate was lowered by 25 basis point. that's in line with most forecasts in a bloomberg survey. it came hours after a similar move from south korea and ahead of the fed decision at the end of the month. warned it willng face rigorous assessment of regulations before financial firms will be able to do business with the eu in the event of brexit. the european commission will lay out its view of the so-called equivalent system which allows foreign financial customer is -- companies to operate in the blood. the draft will be presented in brussels later this month. industry grew so the government will restrict imports in the second half, keeping shipments at a similar level to 2018. an association says the halt is because imports have exceeded quotas in the first six months of the year. it says overseas orders will

decline because domestic demand for coal is faltering. exports of gold from switzerland have fallen to a record low. that's as major global buyers balk at high prices. shipments from europe's major refiners slumped 55% last month to the lowest level since 2011 due to smaller orders from both india and china. the rally has lifted local prices to a new high in india and the swiss lump in the equates -- indicates demand is slowing. global news 24 hours a day on air and on twitter, powered by 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: thank you. willhai's nasdaq board welcome its first batch of debutantes on monday. this will be less than a year after the president first touted the project. applicants, 25 have

been cleared for listing. they've attracted lofty valuations amid strong demand. let's turn to sophie for more on this. what should we expect demand this first day of the launch? sophie: the scene is set for a busy first day amid investor enthusiasm which saw the first 25 ipos raise a combined $5.4 billion. that's 20% more than planned. expect terrifying -- stir frying of stocks. keep in mind, there's no daily limit for the first five days after listing. prices are likely to surge. conservative investors may stay on the sidelines until prices are more reasonable. veterans may consider the lessons learned when the china went through its roller coaster ride. after monday, it may down down -- the friends he may die down.

a key test for the market will be if it can hold tech start -- tech stocks and unicorns. things get going, who are some of the potential first movers? tech are among the known debutantes on monday. it has the distinction of being the first company to price is stock with a multiple of 41 times earning. tv techs pricing values it at 7.5 times. this is indicative of the high valuations of the star market. for the first factor 25, that average ratio is 53, sizable premium when compared to benchmarks in hong kong or the mainland.

in light of these high valuations, analysts expect limited upside. paul: thank you very much for that. let's get more on the shanghai tech board and bring in our china correspondent. one us a bit more context all of this. why is it being so hyped? >> this board takes on added significance amid the trade war with the threat of chinese companies being cut off from the global supply chain. wheres added into this local companies can incubate their technologies hand -- and have easier access to funding. this is china's biggest capital markets reform yet. the goal is that the venue will attract domestic estimates to stay at home, not losing the likes of alibaba or tencent to new york or hong kong. domestic investors have missed out on much of the growth of their homegrown companies. there's no shortage of tech companies in china. what's been missing is a regulatory structure that's comfortable with younger

companies. this will be a faster registration listing process. companies with a dual class shareholder and structure can list as well. these have been some of the main factors that have prevented chinese tech companies from listing out before. shery: this board has its own risks. what have we heard from inside china gekko -- china? >> there's a host of risks associated with this board. there are concerns that there will be a boom and bust after the initial first few days of excitement and frenzy. we've heard from some investor that are choosing to sort it out. they are concerned that the chinese investors aren't as mature, it's more speculative. there is a lot at stake here. this was promoted by president xi. he announced it the year ago. it's promoted by the top levels of the government.

there is actually not a lot of room for criticism here in beijing. bloomberg news reported that an equity analyst was punished. he didn't get his bonus because he was advising clients to not buy into this new tech board with concerns that there's a lot of speculation and concerns that there aren't enough big-name companies that are listing here, considering how many unicorns there are in china. there's a lack of high-profile names with the likes of by dance. thank you so much for that. the forget, our interactive tv function. watch us live and catch up on past interviews as well as dive into any of the securities or bloomberg functions that we talk about. the comfort of the conversation. send us instant messages for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

paul: this is daybreak asia. south korea cut rates for the first time in three years as trade risks grow. the bank of korea is now warning that japan's export curbs are in negative for the economy. the full impact is not yet clear. supply chain worries have endless mapping -- analysts mapping which companies will benefit. selfie, you have been tracking some of these companies since the curves to -- curves. sophie: it has been two weeks since the restrictions kicked in. we have observed a rally in domestic materials companies that supply. check out the 30% jump in that time. it makes hydrogen fluoride one of the three affected products. that company is one of 11 stocks that have added $1.5 billion to their combined market cap since

those kurds to effect. amid concerns that japan may expend those curves to other industries, we saw names like eo.ech miss -- what about the japanese side? any companies that could get caught in the crosshairs? sophie: we've had certain warnings come out for the like of fitch, saying that japanese suppliers have much to lose and are cautioning that the curbs may backfire as companies may speed up development of internal production capacity for affected products. we have been seeing moves in japanese hydrogen fluoride makers as well as gsr. be in a players may tenuous position as they control 90% of the market for screen applications with the majority split between ube industries. thanks very much.

let's get more on this with our next guest who says korean chipmakers have enough inventory to deal with the impact of the curbs in the short-term. they are looking to diversify and localize their supply chain. seting us now is the see a -- the sla senior analyst. we heard sophie give us a bit of a rundown of some korean companies that are doing quite well as a result of this. some.e as casey, who -- we seeing some intended unintended consequences of this trade spat? is this opening the door for competitors? thanks for having me on your program. definitely. this has forced korean companies .o look at their strategy again they are encouraging companies to localize their supply chains,

often funding r&d tax credits, etc.. it is quite possible that in the next three years, we will see localization of this supply chain. some korean's stand to benefit from that. you see that there's enough inventory for the short-term for these companies. how long is it going to take them? how long will that inventory last to nail down new supplies? >> yes. they havert-term, inventories that can last them for two or three months. our understanding is that the restrictions from japan are not banned. companies need to go to an extended approval process that can take as long as 90 days.

with the kind of inventories they have currently, given the time it takes to get the approval, we think that it should not impact production in any meaningful way. there's always a risk. shery: how will that affect japanese suppliers? >> definitely. korea is one of their biggest markets. customers here in the longer term. there's a very high possibility. shery: do we know who will be the winners? some people talked about potentially micron coming in and trying to sell more taiwan semiconductors. will they be able to fill the gap? currently, we are not

expecting any big changes in the market share of the dm and companies. this is simply because these competent in inventory. inventory can last them up to three months. over sixupplies are weeks. think we will see any meaningful changes in market this -- these makers in the near term. term, it depends on how long this trade spat last. if it is resolved in the coming months, i don't think there will be any big issues. paul: in terms of how long it lasts, we can't ignore the heavy political subtext to this dispute between japan and south korea that predates world war ii.

do you have a sense that, once the lexington japan are over and done with, that might provide an opportunity for some talking? politics is not my area of expertise. we certainly hope so. this is in nobody's interest in the long-term. japanese companies suffer. korean companies will see some delays come increase costs because of these restrictions. currently, expectations are that this issue will be resolved in the coming few months. this license requirement in japan reminds me about the huawei blacklist happening in the u.s.. you need some sort of license in order to sell to huawei. have you heard or seen any sort of easing coming on huawei after

president trump said he would provide some relief at the g20? >> yeah. definitely. we have seen that. we have seen that in numbers posted by some u.s. companies such as micron. shipping have been some of the products even before allowed u.s. companies that do notucts have any national security implications. after the u.s. announced this, we are -- we understand that huawei has started restocking inventory again for some companies. all the business disruptions they had in the short-term, i think they will be gone in the very near future. shery: thank you so much for that. cls a senior analyst.

we will have another big guest coming up later. ceoill hear from bmw china on daybreak europe. for now, let's get you a quick check of the latest business flash headlines. considering asset sales in central america after the failed listing of its asian unit in hong kong. the brewing off her was canned at the last minute. dow jones reports the company wants to raise $10 billion to cut debt. acquisitions of hundreds of brands across the world have left him best owing more than $100 billion while global beer consumption is lowing slapdash slowing. the outlook is right for the world's largest contract chipmaker. quarterly revenue was better than estimates and shrugged off concerns about a downturn amidst a start -- smartphone slump. income in the previous quarter fell.

that was better than analysts expected. the ceo says business is set to rebound. shery: national australia bank as itsed ross mcallen next ceo. he announced his resignation as chief executive of rollo -- royal bank of scotland and will start his new job no later than april. he has plenty of experience having been executive general manager and retail banking head of common tank. next, the 50th anniversary of the apollo 11 moon landing. we will explore who's leading the global space race now. this is bloomberg. ♪

let's take a look at some events investors will be watching in the weekend. shanghai's nasdaq style tech wars will welcome its first batch of debutantes on monday in what could be a frenzied day of trading. mayrace to replace theresa ends on tuesday when the next u.k. prime minister will be announced amid the ongoing brexit drama. we have south korean gdp on thursday, giving us insight how -- into how the economy is faring with the trade spat with japan. we look at the ecb decision and turkey's central-bank meeting since the ousting of its former

governor. the real highlight of the week will be u.s. gdp on friday with economists expecting the world's largest economy to slow to the weakest pace in two years. paul: thanks. earnings season is in full swing. the rest of this weekend will mark a remarkable anniversary. 50 years since the apollo 11 landing on the moon. the space race was driven by a rivalry between the u.s. and russia. things have certainly changed in the past five decades. let's take a look. ♪ in the half-century since man first walked on the moon, the space race has fundamentally changed. it used to be a battle between the u.s. and the soviet union but now most new missions are by private companies. the number of objects launched into outer space has also skyrocketed. in 1957 to over

450 last year. while space mining might still sound like science fiction, industry is using satellites incompletely different ways. companies can monitor the parking lots of retail outlets to get data on footfall months before official releases. commodity companies are even getting in on the action. projects that scan minds and factories to gauge output at a much more granular level. it has seen a seismic shift in humanities understanding of space. , unknown,s still vast unreachable, it's now also a resource that businesses can start to utilize. shery: meanwhile, a new space rivalry is brewing between the u.s. and china. bruce einhorn has produced a feature about it and joins us now from hong kong. why are countries now trying to

get back to the moon? >> the united states wants to get back in part because they want to make sure they get there before the chinese do. china has a space program that has been making slow progress in they had a real breakthrough at the beginning of this year when they landed a craft on the far side of the moon, the first time anyone has ever done that. china, are from there some other challenges to the u.s. lead in space? arehere certainly -- there countries that have plans to send probes into space. as far as sending people into moon, particularly to the it's really china which is the main player other than the united states. have anyn't -- doesn't plans to do it within the next three years. most likely, it would be in the

20 30's. they are making steady progress towards that goal. paul: the private sector is getting pretty active in this as well. what's the role there? >> when it comes to the moon in the united states, the private sector companies do have a role. withis going to be working company as well as elon musk's spacex. they will help with various parts of the program. china, for theo moon, it's not private sector enterprises. that's really the government leading the effort. shery: president trump has big plans for the moon, mars as well. what's the timetable looking like? >> that's good question. the timetable originally was supposed to be 2028. the send people back to the moon, americans.

the trump administration wants to accelerate that. they wanted to be 2024. that's very ambitious. is going to cost a lot of money. it's unclear whether they will be able to get the funding and work out all of the logistics to make that happen in that short of a time frame. einhornoomberg's bruce in hong kong. thanks for joining us. let's get you some reports we are seeing at the moment. u.s. china officials apparently talked trade by phone, according to a reuters report. it cites the office of the u.s. trade representative robert lighthizer. lighthizer and stephen mnuchin are set to have spoken with their counterparts on the phone as we wait for potential news of a face-to-face meeting down the track. let's go to over to sophie in hong kong to see what to watch in the markets later on this morning. sophie: i want to highlight goldman sachs is latest call,

cutting the stock to sell from neutral and lowering the price target by 12%. volumes continue to disappoint. the market has overestimated the upside of exchanges through its initiatives. watching ever grand, the developer is to improve the dividend no later than december 21. no surprise that the sec is in focus. that indicates a bottoming out. here's the countdown to the start of the open in taiwan. this is bloomberg. ♪

paul: 9 a.m. in beijing. welcome to "bloomberg markets." thee are counting down to open of trade in hong kong and mainland markets. david: policymakers sound ready to move at the end of the month. yvonne: the fallout from the 737 max 8 grounding orson's. boeing will take a $5 billion charge. tom: 50 years since the historic giant leap. we look at