paul: good morning. we are under one hour away from the australian market open. shery: good evening from global headquarters in new york. sophie: and i am sophie kamaruddin hong kong. welcome to daybreak asia. paul: wall street closes at another new high. facebook grows advertising and users but adds a new investigation. the ftc inquiry will look at antitrust issues.

testifiesller finally but his long-awaited appearance falls somewhat short of democrat hopes. shery: we have breaking south korea gdp numbers for the second quarter. the preliminary numbers year on year are seeing growth of 2.1%, which is better than the expected 1.9% growth. it is also an acceleration from 1.7% in the first quarter. quarter on quarter, those numbers also avoiding a technical recession after contracting 0.4% in the first quarter. we are now seeing quarter on quarter growth of 1.1%, which is better than expected. it seems that we have seen more government spending and south korea. the contraction that we saw in deceleration in the first quarter came from local governments not spending as much. now we have government spending kicking and again. also consumption being relatively resilient despite the fact we have been getting

contracting freddie lacks -- exports contracting the last seven months. this has been a difficult environment for south korea. investments have been falling. contracting for the first two months of the second quarter. and really tons of challenges for the bok. it is not cut rates for the first time in three years earlier this month. paul: that rate cut was something of a surprise. as were these gdp numbers coming in significantly that are than expected at the higher end of the range. could be that government spending might have saved the day and got the be ok off the hook, but we shall see. standard --e have head of economic research. thank you for joining us. what is your initial reaction to those numbers? bit of an upside surprise. alignedt is pretty much

with what the market expected. hintedek our governor going to 1.9 in the first half. 2.1 in the first half. expecting around 1.1% today. --l: but could really carrillo -- but korea really dodging a bullet in terms of recession. spending, is that what saved the day, or fundamentally are things more sound in korea than we thought? >> as you said, it is government spending. government budget was saving the second quarter. if you look at the first quarter, even though government executed the budget, it was not implemented in local government. i think it was implemented in second-half.

that was expected for the second half. shery: what can we expect in terms of recovery in semi conductors given how much this peaked in the growth of south korea? we keep saying we are going to see a bottom for semi conductors, yet that bottom is not coming. guest: yeah. month'slook at last semi conductor data, price went down 30%. price has been the leading indicator for semiconductors. which means the semi conductor will not bottom out in the second half. should expect the amount probably next year. will --ductor slowdown can driveors investment in the second half. it has been negative growth for the second half. in the second half probably because of the basic factor i think investment will pick up.

shery: and of course we are still not seeing the impact the japan export curves that happened earlier this month. these are second-quarter numbers. how big of an impact will this have compared to other trade tensions around the world like china, u.s. and so forth? guest: i think actually the impact will be much bigger than the trade tension between the u.s. and china. example, would have semiconductor exports decreased by 10% because of a dispute with japan? 10% of exports could easily cause -- then korea would grow below the 2% level. economic impact will not be too huge. it is charged -- it's hard to pin it down .. it will be much bigger than

trade tensions between u.s. and china. paul: are we seeing some of the impact being inflected and earnings? we have a chart that reflects that. at thees are being cut fastest pace since the financial crisis. so, in terms of leading indicators, what does that tell us about the health of south korea's economy going forward in this difficult trading environment? guest: i think right now it is hard because of the uncertainty. the market we hesitant to price. looking at the macro number, headwinds look much stronger than the tailwind. shery: let's talk about some external random factors, especially on geopolitics.

this morning we have seen japan confirming that short range ballistic missiles were launched by north korea. of course we know this is always an ongoing issue. will it make that much of a difference to the south korean economy, or at least to the markets in terms of sentiment perhaps? guest: usually the north korean action is more impact buy. that is more important than what north korea actually saw. some of the market has been lukewarm. so it will not impact the sentiment because there is nothing much between us and north korea economically. shery: and this was just a short range missile, not an intercontinental missile would were the u.s. thank you for joining us. let's turn now to sophie for a check of the markets. sophie: we are looking at a

muted start and asia potentially would little change to nikkei futures in chicago. ditto for asx 200 futures. the kospi will be tested today as we adjust the latest gdp numbers. economy returning to growth. the worst retraction since 2008. there are few signs of relief. we will see earnings later today during an already busy week which has seen mixed numbers from korea. nice unconfirmed reports for a 90% profit plunge. ansie bonds, bets rising on october rate cut setting the 10 year yield to a record level. haidi: let's check in -- paul: let's check in on the first word news. >> north korea has launched projectiles from the eastern part of the peninsula. japan confirmed two missiles were fired.

chiefs of staff say they flew for about 430 kilometers. lee launches come weeks after kim jong-un president trump in the demilitarized zone and agreed to restart stalled talks on the north's nuclear program. boris johnson promoted a string of brexit enthusiasts to his first u.k. cabinet, shaking the government to drive the country out of the eu. 19 of theresa may's leaders left the team. johnson will set out his priorities later thursday. he says it is time to take action to move the country forward. >> i have every confidence that in 99 days time we will have cracked it. but you know what? we are not going to wait and 99 days. because the british people have had enough of waiting. , totime has come to act make decisions, to give strong

leadership and to change this country for the better. >> former special counsel robert mueller finally testified on capitol hill, but democrats largely failed to achieve the goals they hoped for. some hope to refresh details on possible obstruction of justice from president trump robert mueller did not offer any clues. the president later said he had a very good day. the infamous three mile island number two reactor is set to be dissolved and dismantled. 1979s been shut down since when it was the scene of the worst ever nuclear accident in the u.s. pump failures triggered an emergency shutdown that resulted in partial meltdown and a radiation leak. now a salt lake city company is in talks to buy the site and tear down the facility. the all-male board of directors has finally been consigned to history by the s&p 500. they were the last company on the index without a female board member. appointed a new cso.

progress has been slow. in 2000 86% of s&p 500 companies and at least one female director. almostt 14% have taken 20 years to close the gap. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: still ahead, congressional hearings with former u.s. special counsel robert mueller. they lasted for several hours. did we learn anything new? earnings season is in full swing with mixed results. we will wrap some of the biggest hits and misses. this is bloomberg. ♪ this is bloomberg. ♪

paul: we are counting down to

asia's first major market open this morning. korean futures pointing modestly higher. this, after we got some upside surprise on the gdp numbers. korea avoiding a technical recession. 1.1%. 2.1% on year. this is daybreak: asia. i am paul allen in sydney. shery: i am shery ahn in new york. stocks helpedp offset weak economic data and mixed earnings. tesla plunged after hours and facebook rose. su keenan has more on this. let's talk about the big moves. su: these will very much impact the friday trade. let's start with how the big numbers are moving. let's look at the three key stocks. for, tesla, and facebook. two misses and a hit. facebook really coming in strong. let's start with tesla.

shares plummeting after the worseic carmaker posted a than expected loss and backtracked from a returned to profit. you can see the rough ride they have had throughout the year. now down in a big way year to date. f $1.12 a share, missing excitations of only $0.31. they are going to focus on delivering more cars, expanding capacity, and generating cash. facebook meanwhile be sales estimates. also confirming the $5 billion settlement the ftc on the privacy issues were drafted it week and confirming there is also a new antitrust probe into some of the bigger social media giants. continue to add users as scrutiny intensifies. revenue jumping 28%, showing

resilience in advertising. ford, the strategic push for suv's has proved to be a short-term negative in terms of the rent up and attempts to turn things around. aging -- asian models result with a 32% drop in deliveries. really weighing down on the company. adjusted earnings range from $1.25, well below excitations. a negative for ford. that will probably weigh heavily on stocks. paul: in the regular session we saw a similar mixed earnings. weak from boeing and caterpillar. that was a drag on the dow. su: it was. raise the s&plp and nasdaq to record levels. let's look at the nasdaq. a record high intraday and a

closing high for the nasdaq on the strength of tech, specifically the chip stocks which continued to show momentum. that was offsetting some of the weaker manufacturing and home sales economic data. to the big movers, caterpillar and boeing topped the list. boeing a surprise quarterly loss. i slow down and manufacturing, a key theme. big losses for those. snap up in a big way, better than 18%. one analyst said it validated their turnaround view. the stock has tripled since december. ups gaining. revenue beating. let's look at year to date for caterpillar. they see annual profit at the lower end of outlook. machine sales for the company were at the lowest in two years in june. the stock is offered -- often

considered an economic bellwether. concerns and trade conflict in the u.s. and china. continue tos rivals put pain on the company. way as apart in a big rival came and took market share. paul: su keenan, thank you for that wrap-up. a mixed set of earnings from wall street there. sophie, what reaction can we see in asia? sophie: we are going to be watching heavy equipment makers in asia after caterpillar's earnings at the low end because of declining sales in asia because of competitive prices. particularly in china where the market is expected to be flat. japanese makers have also been on the losing end of chinese manufacturer's grabbing more market share. toy now only account to 3%

4% compared to the 7% to 11% they had in 2011 in china. this week the korean producer said it is looking to trim its reliance on china growth after dismal numbers we saw for the second quarter when it came to sales on the mainland. it is looking to the u.s. and europe to make up a bigger part of its total revenue. it is hoping to see its revenue from china come down to about 16% in the years to come. shery: thank you so much for that. of course you can get a roundup of the stories you need to know to get your day going in today's addition of daybreak. bloomberg subscribers go to dayb on your terminal. also available on the mobile app. you can customize settings so you only get the news that you care about. this is bloomberg. ♪

paul: this is daybreak asia.

i am paul allen in sydney. shery: i am shery ahn in new york. former special counsel robert mueller finally testified on capitol hill, but democrats hoping for a jumpstart on their case against president trump were largely disappointed. >> as we say in the report and as i said at the opening, we did not reach a determination as to whether the president committed a crime. >> and they say this was a devastating day for the democrats. and you know what and everybody else knows it. this was a devastating day for the democrats. let's cross to washington. did we get any more clarity on the obstruction of justice part of this investigation, which the report did not conclude on? guest: robert mueller never went beyond the report. he declined to even read from the report which would have given the democrats the soundbite probably they were looking for.

so, there was no new news here. it probably did not change many minds. there were no republicans suddenly coming out saying they are going to take a closer look. and his answers were very sore -- short and terse, often just yes or no. severaliven opportunities to read sections of the work and he declined. so, there was not anything that was not already in the public sphere. and it is likely the battle lines that existed before he arrived in the capital are still there. shery: that probably did not make them happy. what was the reaction around washington? guest: as we saw, president trump called it a devastating day for democrats. he said again he had been totally exonerated, even though mueller in his testimony made

that clear that was not the case. republicans also in congress came out looking for additional investigations into the origin. answer anyused to questions about the so-called are nowossier, and they pushing for their own investigations into the democrats and their use of dossier andm that whether the trump campaign was spied on. thosenot clear if investigations will go anywhere. but no mines were changed. courseome democrats of pushing for impeachment. robert mueller's performance today does not give them much momentum, does it? guest: no it does not. anwas at least somewhat of indication for nancy pelosi, who has been urging democrats at a go-slow approach. that has irritated some

progressives and other democrats. there are probably about 80 democrats in the house which would support going ahead with impeachment. she came out afterwards and said they would continue their investigations through several committees. they are pursuing several court cases, including trying to force the testimony of trump administration officials, and access to the president's financial records, including his tax returns. she said if the evidence leads to impeachment, so be it. but she wants to build a strong a case as she can that if they go down that path, they have something nice -- the senate would be forced to look at. and republicans in the senate at this point are nowhere near the idea that they would vote to convict trump on impeachment articles from the house. paul: thank you very much for joining us.

let's get a quick check now of the latest business flash headlines. they are writing out global economic uncertainties as extreme protests in hong kong. revamps helped fuel growth. overall sales grew 12%. almost 50%, making the second-best stock on the encz mark this year -- shery: jelly be tumbled on expectations it would record another profit drop in the second quarter. net income in the first three months fell 15% and analysts say is things are unlikely to improve. the main drag -- but results are not slowing their expansion plans. it is targeting 500 new outlets by the end of the year. paul: nissan and mitsubishi

reports seeing operating profits collapsed 90% last quarter are broadly accurate. the company issued a statement saying earnings venues are roughly correct. they will not be able to release official results until the board gives its approval later thursday. shery: let's get a quick check of the asian markets. we are seeing futures in the % aftere nikkei up .4 closing at the highest level in almost three weeks. kospi flute -- futures unchanged. keep an eye on chipmakers. texas also posted strong earnings. we could see chipmakers moving in asia. sydney features not moving much. kiwi stocks up .25%. next, with at least one settlement in his rearview mirror, facebook posts

second-quarter earnings and adds features. this is bloomberg. ♪ his is bloomberg. ♪

>> this is daybreak: asia. more signs of weakness in the u.s.. sales of new homes rose last month less than forecast. sales climbedhome theo a pace of 646,000, first gain in months. they are still struggling to gain momentum despite low unemployment and low mortgage rates. reports from tokyo suggested bank of japan is divided on the needs to ease policy. on thursday'snd decision from the european

central bank. boj board says many members did not see an immediate need for stimulus as demand is waking up -- making up for weak export. amazon is being lauded as a success but also a -- steven mnuchin and said although the company has certain benefits it has destroyed retail across the country. there is no question they have restricted competition and he welcomes the justice department investigating into big tech and its practices. boeing is warning it may slow or temporarily halt production of the 737 max. if the global grounding drags on longer than it anticipated. boeing hopes to win approval to fly the max in the following few weeks. but the ceo says one cannot foot the cost of building and storing planes indefinitely.

there is one year to go until the tokyo olympics and organizers marked the dead by on veal -- unveiling the meadls. made from recycled electronic devices. they are meant to resemble rough bones that have been polished. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: let's get a check of the markets. checking on the bond space, aussie 10 year yields going to an on -- all time low. we wait on the rba governor later today. checking in on the aussie dollar looking study.

limit the downside for the currency from the record 2019 given expected cuts this year and australia trade. were affectedents by the cyclone in northwest australia. they do see shipments rising this year. also average revenue came in higher at $65 a ton. up 50% year on year. up to a five-year high. shery: thank you so much. we had surprise on korea's growth numbers after worrisome contraction. let's look at what korea's gdp numbers mean. we also have germany's latest manufacturer reading ahead of -- kathleen hays is here with all the details. let's get started with south korea's surprising upside. kathleen: absolutely. first quarter the number was down 0.4%.

the first contraction they have had in more than a decade. not with swings up 1.1%. alsoear-over-year rate is comforting. i do not think it absolves they are worries that there may be more rate cuts because exports are still looking grim. jump into the bloomberg library with me and you can see this latest move back up. year-over-year in the first quarter was down to 1.7% up from 2.2. back here, there was nothing to see a gain of 6.6. now you're getting closer to 4%. gdp has held up well considering there is a trade war going on but i think they will still be worried about this. in fact the bank of korea when they met last week opened the doors to another rate cut in august. so people are still betting on that. if you go back into the bloomberg library you can see as he came into this that the

numbers are suggesting, the white line coming down here to 1.3, that is a three year bond yield. he seven-day repo rate for the bank of korea is still up 1.5%. that is seen as an expectation among investors if they are going to push that three year bond yield low that seven-day repo rate that they must be betting on rate cuts. tension in so much the air in between south korea and japan, what that means for exports, the trade war, maybe talks will continue but we are a long way from a deal. this is the world's 11th largest economy and the fourth largest exporter. if exports are under pressure the bank of korea it will still be looking to see if they need to cut again. shery: it doesn't help that we are not seeing the bottom for the semiconductor cycle. we have's -- breaking news from south korea. this is a big miss.

the estimate was for more than 700 billion yuan. second-quarter net is a miss. illiontimate was for 585 b yuan. sales numbers still beat. sk saying they will adjust chip production and reduce production capacity from the fourth quarter. sk just today was upgraded to a buy at goldman sachs. goldman upgraded micron as well. we have seen positive news out of the chipmaker front with also texas instruments today showing strong earnings. mixedms that sk hynix has -- missed. paul: an interesting result. we will have more analysis on that and a few minutes. let's get back to kathleen and europe.

ecb getting a strong rate cut signal today from the euro zone. any chance they are going to move? kathleen: that is a bit more of a debate than you would have thought before this number on germany's manufacturing pmi coming out this morning. let's go to the bloomberg library. it was weaker than expected. if you look at this turco's blue tne, -- this turco is b -- urquoise blue line. this is more export dependent than china. you can see how deeply it hits them. the number is down to 43.1. anything below 50 means contraction. you can see the number for france is at 50. could it fall below? spain'shave manufacturing pmi also falling below 50. --y strong negative singles

signals heading directly to the ecb on this. there has been debate heating up among watchers. a very strong rally in the jew man -- the german market. in my last chart, world interest rate ejections for the euro zone. suddenly you can see not that suddenly people -- vc that 38.7 probability of a cut on july 25? not that they are really betting on. however, they are definitely watching it as a possibility. some are saying after this number, will mario draghi feel he can wait to september to get more data before he decides to cut that negative rate more negative, before he starts bond purchases again? there is a lot more excitement going into this meeting then there was. about the bankng of japan wondering if they should be doing something. again, most people say it has not been signaled. the ecb will not do this in that meeting hours from now.

but much more closely watched in the market than central bankers around the world then it would have been before that very weak german purchasing management index. paul: kathleen hays, thank you very much for joining us. facebook was also out with second-quarter outings today. despited it can grow, feeling the heat from regulators worldwide. hours after it was announced a settlement with the ftc, facebook confirmed it is being investigated also for antitrust issues. joining us now is our bloomberg tech social media reporter. how is this latest inquiry affecting facebook? guest: it did not really send the stock down. they announced it when they announced a positive earnings. i think it helped balance things out. it was about eight hours after facebook said we finally settled this investigation with the ftc over privacy practices.

now all of a sudden they are going to be investigating us for antitrust issues. it is a never ending cycle it feels with facebook and regulators that there is always something else to be digging into. shery: those positive numbers, how good did they look? guest: it did look good. there was some fear that given the distractions around regulation and the talked a potential new guidelines or rules for privacy, especially with the settlement, that may be facebook which shows of weakness in the business. but that was not the case. they beat revenue, they were in line with animist -- analyst estimates on user growth. the core facebook social network. there were a lot of people who felt this was a pretty good showing, all things considered, with all the distractions they have had going. paul: you mentioned that facebook announced they finalized their ftc privacy settlement. that is something mark zuckerberg discussed. >> i want to talk about the

recent news we reached a settlement with the ftc over privacy concerns. as part of this we have agreed to pay a $5 billion fine. even more importantly, we are making major changes to how we build our services and run this country -- company. this will require investing and building tools to review our products and the way we use data. it will also increase our accountability by bringing the process for auditing our privacy controls more in line with how financial controls work at publicly -- public companies. paul: so, change is on the way at facebook. what more do we know about them? guest: i think both facebook and the ftc are sort of overselling this. i think that is kind of a popular opinion. they are describing it as sweeping changes, it can make serious impact on facebook's business. if you really look at it, these rules do not actually change the way facebook collects data, the

way it uses that data for targeted advertising. i think maybe the biggest issue for facebook going forward is mark zuckerberg might actually be held personally liable for the company if they were to break some of these privacy fictions they are setting up. i think it kinda cements some of these ideas that facebook has been talking about and i am not sure it dramatically changes the way they have done business in the past like maybe people had hoped, or felt they had deserved to be punished and that way. paul: kurt, thank you for joining us. still to come, we will bring down the sk hynix's result and see how korea's trade war japan is affecting the company with an analyst. this is bloomberg. ♪

shery: this is daybreak asia. i am shery ahn in new york. paul: i am paul allen in sydney.

south korea's economy rebounded in the second corner -- quarter but earnings have been mixed as exports continue to face headwinds. sophie kamaruddin has more. what signals are we getting from korea? taking cues from earnings we have had so far it has been a mixed bag across industries as more surprises to the downside. external factors not making for the most favorable conditions for korean companies. this morning we got sk hynix's result. a miss on operating profit. salsees were just beating estimates. if you look at what sk hynix said they will adjust chip production and investment. that does not bode well for growth. they will cut 2020 estimates. that exacerbates pressure. central investment has been slowing since about 2010 in south korea.

not looking good for growth. as for hiring, investment facilities and construction remain in contractionary territory -- boost less motivated to hiring. the government is trying to spur job creation. tohynix, we will be waiting see what they have to say regarding japanese export curbs and results. shery: for more on the numbers, let's bring in susquehanna financial senior analyst for semi conductors. great to have you with us. they are going to significantly cut 2020 investment against 2019 investment. does it make sense at this point to reduce, reduce inventories

given the headwinds they are facing? guest: yes. it does make sense. we had been anticipating the capex cut. when we are with the cyclone, memory manufacturers like sk hynix are now trying to cut gain so that they can pricing power. weakously demand in q2 was primarily from enterprise server. customers are not willing to pay higher prices. so what the memory industry are doing are they are going on capacity toreducing regain pricing power. actually a positive sign and has been anticipated. it is just that we do not know when the pricing power is going to come back to sk hynix and

that is what is keeping us on the sideline. shery: what is interesting is we have seen positive flow coming out as a whole. texas instruments was strong. goldman sachs upgrading sk hynix to a buy. they also upgraded micron this week. today a company specific story or a reflection of the industry? guest: it is a reflection of where we are with the cycle. as a whole has been mixed. the ability to shift to huawei has been a factor driving upside for some companies like texas instruments and micron a month ago. expectation has been brought down due to the ban on huawei. but some companies have been able to get around. what sk hynix is saying today is that we are going to go on offense and cut production.

this typically happens at the bottom of the cycle as manufacturers try to regain pricing power. it does take two to three quarters, and perhaps some have upgraded sk hynix are now anticipating a pricing environment into 2020. say, a number of analysts like that. goldman sachs now changed it to buy. there are 34 buyers on it. long-term will it be sustainable, just cutting production to got up the price? guest: not really. this reflects our neutral rating . unlike prior cycles where demand markets,n by consumer in the past 10 years we have had new smartphones driving demand on an annual basis. cycle was healthy

with -- looking forward, it will be a bigger factor. they are dear -- driven by different economics. sk hynix is doing the right thing. visibility as any to when they will regain pricing power, and that keeps us on the sideline. paul: what is the most critical thing here for sk hynix going forward? is that the resolution of the trade disputes? it is not just the issue with huawei, but the growing spat between japan and south korea. guest: the issue with japan and south korea is more cosmetic and not really having an impact. similar to the huawei situation, there are ways to get around a ban. you can get the material to a distributor. that having see a material impact. i think it is having a

psychological impact. if you look at the market, the stock prices have gone up, but it has not really lead to any dramatic change in contract price. reducinghy hynix is investment into next year. viableix, to be a more investment opportunity, they need to get into more value segments like ssd's, and this is product depend on their or folio -- portfolio. paul: all right. mehdi joining us on the phone from san francisco. thank you very much. there is more ahead. this is bloomberg. ♪

paul: this is daybreak asia.

i am paul allen in sydney. shery: i am shery ahn in new york. shares of tesla are tumbling after hours. down 11%. the electric car maker reported a larger second-quarter loss than expected and is cutting its four-year forecast for capital expenditures. the company still aggressively pushing ahead with expansion in china. our auto reporter joins me more on this. a busy day for you. at least they kept their forecast for deliveries. guest: yeah. they also sort of, kind of walked back from this idea of making off its in the third-quarter and later this year. they did so at least in the shareholder letter. they talked about prioritizing growth and expansion, including in china. then elon musk got on the call and contradicted that. so, we will see what plays out in that regard. in any case, what we do see from these results is that the model three, just as we suspected, but

sells for less than a model asset and model x. the makeup of the company is where it is selling three to four times more model three's than those other vehicles. the margins are really under pressure. have any update on the shanghai factory? that has become increasingly important in the context of tariffs and trade disputes. guest: they are talking getting reduction started before the end of the year. maybe a little bit of slippage in time that they have always said this was going to be a late 2019 event. i would not be surprised to see it slip into 2020, not because anything is wrong, per se, but really it is just remarkably they how much, how fast have been trying to get this plant open. they only just had the groundbreaking as we are seeing from these images earlier this year. and it is not unusual for a

company in the car business to announce study factory is going to be built and for it to take two to three years before it is actually making cars. paul: all right. craig, thank you for joining us on those tesla results. let's count down to the open of the australia and south korea. sophie: futures pointing to modest gains while the yen is study. korea very much in focus after gdp report. earnings from sk hynix. korean yuan, not moving much in the wake of those numbers. well up, despite continued weakness for exports indicating a signal the yuan could firm up against the dollar. we are expecting further declines. markets pricing in another rate cut from the be ok given the sluggishness anticipated. given how crowded the street has become, potential gains are not as rewarding. some expect yields the drop

towards 1.2% by the end of the year, falling as much as 50 basis points, making for the widest gap on record. shery: coming up in the next on the impact of the earnings deluge on the markets. and nissan is bracing for pain when it resorts -- reports on results littered today. janet lewis gives us her outlook. markets open is next. take a look at what stockmarkets are doing at the moment. futures pointed higher but of course we are waiting for the open of korea, japan and australia after we got korea's gdp numbers, surprisingly up. keep an eye on chipmakers. sk hynix missing estimates. texas instruments has a strong earnings reports. nikkei futures up .5%. plenty more to come.

this is bloomberg. ♪

paul: i am paul allen in sydney. asia's major markets are about to open for trade. : good morning. i'm shery ahn. sophie and i'm kamaruddin from hong kong. paul: our top stories this thursday, south korea dodges technical recession with a -- last quarter. rising external risks. shares will be under pressure as operating costs missed expectations by millions of dollars. shery: nissan is feeling the

drag. it reports on operating profits collapsing 90% last quarter are accurate. we will discuss the market action in japan with sophie. sophie: japanese stocks are opening marginally higher this morning while the yen is looking steady. we have earnings in focus. waited as the carmaker reformed reports of a plunge in profits and plans for a broad restructuring. now to check in on soul, up 1/10 of a percent. jumping 2.6% on the back of its results after it missed estimates for the second quarter. we do have adding to the clouds here. cut investment for 2020 and increased chip production. that is adding to the cloudy future for gdp. we did see a rebound for the

june quarter after the worst contraction since 2008. the outlook is not yet clear as risks look higher for the expert oriented economy. on the back of that, seeing the korean won holding steady for the three year yield. checking in on australia this morning, sidney stocks looking little changed. a focus on resource companies more alpha data remains like new crest out this morning. plus credit suisse downgrading and the aussie dollar holding a drop. assets, --ck on qe kiwi assets. of kiwi dollar with a target 65. paul: thanks very much. let's check in on the first word news. >> boris has promoted a string

of brexit enthusiasts to his first u.k. cabinet, shaking up the government to drive the country out of the eu. he has named a new lineup, with 19 of theresa may's minister is leaving the team. of commonsouse statement says it is time to take action to move the country forward. thathave every confidence in 1990's time, we will have cracked it, but we are not going to wait 99 days, because the british people have had enough of waiting. , totime has come to act give strong leadership and to change this country for the better. robert mueller finally testified on capitol hill but democrats largely failed to achieve the goals they had hoped for. others hoped for fresh details

on possible obstruction of justice by president trump, but mueller did not offer any clues. the president said he had a good day. therts from tokyo suggest bank of japan is divided on the need to ease policy or remain on hold when officials meet next week. sources say much will depend on thursday's decision. boj board says many members do not see an -- an immediate need to boost stimulus. day onnews 24 hours a air and at tictoc, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: south korea's economy returned to growth, dodging technical recessions and rebounding from the worst since 2008. dark clouds still hang over the country. our north asia correspondent is

watching. how worrisome is it that it economict every expansion that we get out of south korea seems to come from government spending? ofthere has been a tsunami news out of the korean peninsula today that highlights the challenges we are facing. gdp numbers were better than expected, but some of the export prospects are dim. we also have the hynek's numbers coming out, which were disappointing. that reflects the trade tension with japan. north korea firing a couple of projectiles, rattling sabers geopolitically as john bolton has just left. gdp in the second quarter was better than expected quarter over quarter, 1.1% expansion. we were expecting .9% expansion. , we were-year, 2.1%

expecting 1.9%. better than expected and rebounding from the worst contraction since 2008. the numbers for exports are not looking good. exports set for the eighth straight monthly decline in july. we had trade tension globally, slumping tech sector exacerbated by those japanese export restrictions on key technology is also weighing on sentiment. this is what an sk securities analyst says sums up what i have been talking about. the second quarter rebound does not mean the economy is doing well, and the bank of korea seems to be representing that. last week, it cut its 2009 forecast from 2.5% and governor lee has said, if the south korean economy shows further signs of not doing well, they could act further. back ifst want to get

we can for a moment, shares are performing reasonably well in early going, currently up 3%. chipusly, cutting reduction is going to mop up some of the excess supply. for korea's chipmakers, that is not a long-term strategy. >> not necessarily. there is that cloud, the japanese attack restrictions hanging over the entire space in korea, particularly the bulk of the economy that is the chip space. second quarter operating profit, we got some significant guidance. perhaps that is where investors are really sinking their teeth into. they say they will cut 2020 investment versus this current year. they will reduce production capacity from the fourth quarter , what you just set about mopping up the express -- excess capacity.

some of these numbers are suggesting, the six quarter selling price, down 24%. says ram capacity will continue to decrease until next year. shery: you mentioned it tensions with north korea. again, they are firing missiles. what do we know? >> we know there were a couple missiles fired off the east coast of north korea this morning. according to the military, flying 430 kilometers, they were unidentified objects, but they asm to be similar in range the short range ballistic missiles launched by the north in early may. at that time, donald trump downplayed the significance, even though the move was in violation of international sanctions. donald trump said i don't consider that a breach of trust

in this latest launch -- these latest lunches occurred less than a month after trump met kim jong-un in a third summit on the dmz. shery: thank you so much. joining us from hong kong. let's check in on big moves in the japanese market. sophie: i want to highlight nissan, which is falling 4.3%, as the company races for painful earnings, confirming reports of a 19% drop in profit that will see operating profit around several billion yen for the first quarter. it also confirmed reports for a restructuring which will cut thousands more jobs. , weking in on mitsubishi have the stock under pressure, off 5% after first quarter onrating income fell sluggish sales, missing the lowest analyst estimate. movements are weighing on

mitsubishi. paul: thank you. behind the march to lower rates have picked up after the rate cut tilt. german bond traders wondering if the ecb will wait to act. kathleen hays is here with the numbers. will bring a ecb decision in the next few hours. what is the plan? hold steady or time to cut? >> that is a question the whole world is asking. mario draghi is going to end his term in october, and the whole focus has been, let's watch the data. they are getting weaker. nine months ago, he was looking to get a rate hike in september. the expectation has been that he will do a rate cut. and even weakened -- weaker number on german manufacturing.

germany's fourth weakest economy. the trade war is hurting them. jump into the bloomberg library and let's take a look at this line. the purchasing managers index is far below the line, which signals contraction for german manufacturing. it was already down to 45. this yellow line is france. they are on the verge of going into negative contractionary territory and spain is already there. certainly, this is something that has the ecb worried and bond traders wondering what happens next. today, a big rally in european bonds, you can move onto this chart to get a sense of the next thing. oh, you are on the right one. sorry. they are starting to wonder if there is a chance, you could round it off to 40% chance that the ecb could cut its key rate hours from now. many people might find that surprising, but the other side is, if things are getting weaker

faster, maybe mario draghi will say he does not need more information, he can cut that rate and start buying bonds again and get the stimulus flowing now. much more interest and focus on this meeting now. shery: of course, this comes ahead of the meeting next week. even alan greenspan seems to want a cut. >> former fed chairs do not comment on current fed chairs. it is highly unusual. , he greenspan has been gone was interviewed by bloomberg television and asked specifically about this and he case foroes back the this insurance rate cut from the feds. it is not that the data is screaming you got to cut, it is that the fed is looking at the risk of global slowdown. the trade war impact spreading even more into the u.s. and weakening things. at worldst, let's look

interest rate projections for the u.s.. there is no doubt in traders ahead,100% on a week 100% chance that the fed will cut its key rate. drama at that meeting will be, what do the signal about future rate cuts, because this is priced in and the big surprise would be if it is 50 basis points versus 25. it is interesting what we are hearing about the bank of japan, that summer thinking they should be sending a more dovish signal. tokyo has a story where one third of economists do see the boj next week bolstering its pledge to keep monetary stimulus in place, keep rates lower for longer, no sign that they might be ready to cut that negative rate into further negative territory. watching everybody

else as they decide if they are going to hike -- hop on the rate cut train. our global andu. economics policy editor. still ahead, the auto sector is in the headlines. 40 and tesla sank after hours in new york. to be she is expecting its own earnings issues. it will expect -- we will discuss the state of the industry. paul: first, with all the economic challenges facing the eu, seeing some interesting returns on the region. this is bloomberg. ♪

paul: this is "bloomberg daybreak: asia". i am paul allen in sydney. shery: let's get a quick check of the markets. we are seeing australia not doing much. green,ctors in the health care industrials leading

the gains. three sessions of gains there. the nikkei up 3/10 of 1%. had a big move with mitsubishi motors, falling more than 5% after operating income missed the lowest analyst estimate. nissan is also down. losing one quarter percent. second-quarter gdp, surprising on the upside, but hynek, a big miss in earnings. not to mention the south korean defense ministry has confirmed that north korea fired -- paul: usually based in london, joining us today from singapore. thanks for joining us. in terms of emerging markets, we want to consider europe to begin

with. we had kathleen hays a few moments ago breaking down some dismal manufacturing numbers from western europe. we are seeing some encouraging signs in emerging europe. there are interesting opportunities in many areas of the global equity universe. for our part, and given the investment process that we run, we are seeing a number of behavioral inefficiencies creep in across the broader european region as a whole, and certainly the areas that we invest in, the returns we are seeing and outying are more positive of the european region as a whole. paul: to what extent is trade casting a long shadow over things? not just between u.s. and china, but the truce between the u.s.

and europe may be coming to a head. does that feature into your thinking? >> it is absolutely one of the key issues that are informing markets. the direction of central bank policy. these are the drivers that have been occupying the markets for many months. obviously, in the context of thepe, we do have perspective trade dispute extending into areas like autos. that has been well highlighted recently, but we have the ever present exit challenge that is still with us. many geopolitical and economic issues informing price movement, and opening up not only challenges, but perspective opportunities. shery: will they be opportunity if the ecb goes ahead and moves this week instead of waiting for the fed to act?

areaat is an interesting at the moment. there is all manner of speculation, all manner of soundbites around this issue. i think one of the areas that could be interesting, depending on which course the ecb take and when they take it, is the impact that might have on currencies. we have already seen some concerns raised on the part of the u.s., that if the euro were to begin, they may take a dim view in that regard. that opens up a whole host of potential questions and obviously, more uncertainty. shery: let's talk about sectors. you mentioned the auto sector and we are already seeing nissan, mitsubishi taking a earnings, oneir forecasts for earnings. another sector that is moving is semiconductors. these sectors are very impacted by trade.

this chart on the bloomberg is ang you that sk hynix inground, despite the fact that they missed big time on the latest report. is this something you would touch, given how imposed they are, or do you just stay away? >> it is an interesting question. we have been seeing that the are taking around certain industries or certain sectors has been coming down. it has been reducing. the two areas that you alluded to are clearly particularly sensitive when it comes to some of the rotations that we have been experiencing in markets over the past few quarters. andt of the activity outsize priced movement in these areas, it is very much invalidates what

is really in the body of that storm more generally. be onerade is going to of the big stories last week. we have robert lighthizer and company getting to meet him. for quite somea time. how close they are? you watching that are you expecting a smiling photo opportunity? it is certainly an issue that markets and investors are preoccupied with that the moment. must the backdrop, there remain issues among market access. we understand enforcement of any agreement. if therechallenge is is that photo opportunity you have alluded to, it dulls -- does the problem pause or is it simply transposed to another area? that is something that markets

perhaps haven't yet fully is aed on, and there tendency to focus on the near-term and to react to short-term news, rather than looking into the details around where this is likely to take place. shery: thank you so much for joining us. of course, you can get a round up of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to db go to dayb on your terminals, also available on mobile. you can customize your settings so you only get the news on industries and assets that you care about. this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." i am shery ahn in new york. paul: i am paul allen in sydney.

let's get a quick check of the latest business flash headlines. media reports say operating profits collapsed 90% in last quarter are broadly accurate. the company issued a statement saying the news is roughly correct, but it won't be able to release official results until the board has given approval. estimates compiled by bloomberg have projected a 66% decline in profit. shery: tesla slumped in late trade after cutting its four-year forecast for capital expenditure. the company sees spending at between 1.5. -- $1.5 billion and $2 billion. tesla remains broadly optimistic, saying it is on track to open a shanghai production plant by the end of the year and a new model by late 2020. bellwethertry capital slumped on a bleak outlook for the rest of the year. rising costs, declining sales in asia and a slowdown in gas

spending have put a dent in the forecast. it is also losing market share to cheaper rivals in china. revenue for the second quarter rose 3%, but missed analyst estimates. shery: commonwealth bank of australia has cut about 20 of the 95 positions in its singapore office. saw -- sources tell us cuts affect the institutional banking and market division as it looks to make hong kong its regional center in asia. it is planning to add more staff there and find alternatives for the employees in singapore whose jobs have been eliminated. check on's get a quick how the markets are going right now. the asx in sydney flat. , hynek'sy 1/10 of 1% earnings out early today, they stopped climbing missing estimates. the nikkei meanwhile higher by

one third of 1%. still to come, former federal reserve chairman almond -- alan greenspan weighs in on the impact of the trade war as u.s. officials had to shanghai next week. this is bloomberg. ♪ ♪ hey! i'm bill slowsky jr.,

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asia." north korea has launched gentiles into the eastern part of the peninsula. japan confirms two missiles were fired and the south korean joint chiefs of staff say they flew for 430 kilometers. the early-morning launch comes just weeks after kim jong-un met president trump in the demilitarized zone and agreed to restart talks on the nuclear program. the hong kong government will remain the new chief executive of the hong kong monetary authority according to the china post. the decision is expected to be announced thursday. it is currently one of the three chief executives and would succeed norman chan, due to

retire on october 1 at the end of a second five-year term. amazon is being lauded as a success but a problem for traditional sales in the u.s.. steven mnuchin told cnbc that although the company has certain benefits, it has destroyed retail across the country. he also said there is no question amazon has restricted competition and he welcomes the justice depart's investigation. boeing's warning that may slow or halt production of the 737 max if the bubble routing of the plane drags on. software updates are expected to be submitted to the faa by september and boeing hopes to win approval to fly the max in the following few weeks. the ceo says boeing cannot foot the cost of building and storing planes indefinitely. sk hynix says it will make a significant cut to investments next year after its second-quarter operating profits

missed estimates. net profit plunged 90% on last year. andr semiconductor prices sluggish demand are blamed. global news tweety four hours per day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. equity picture across markets. let's see what's moving. sophie: taking a look at the equity space, stocks are trading mixed. seeing moves in bonds for australia, fighting to a record low, holding onto gains in currencies and a holding pattern. gains, we are seeing costs lower by 1/10 of 1% as investors consider the latest report and what clues can be gleaned about the health of the korean economy. sk hynix earnings were out this morning. that stock rising as much as 3.6% with plans to manage

headwinds that saw estimates for the second quarter that will cut investment and chip capacity output. , despite itses profit miss, the company saying it is seeking shareholder approval for a spin up plan. should they move it rising after earnings, -- hand, kim sliding after reporting and 83% drop in profits for june, with energysolutions reflecting a one-off loss. shifting gears to check in on movers in tokyo. chemicals jumping after profit growth and a higher than forecast full-year dividend. surging nearly 16% after net profits thanks to better than expected increases. the company has maintained its profit forecast, but cautions of

growing in certainty due to the u.s. china trade war. lastly, line jumping the most in five months, operating loss wider than forecast. analysts expect the losses have dented. thanks very much. the chinese government has given the go-ahead for five companies to buy up to 3 million tons of u.s. soybeans. china correspondent has the story. what do we know and what does this mean for the trade talks? >> this is seen as a gesture of goodwill ahead of the trade talks and what we know is that private and state-owned companies have been given these exemptions. this comes on the heels of trump complaining that china had not kept its promise of increasing agricultural imports after the g20 truce between president xi and trump. i want to bring up this chart, because it shows you the time range of agricultural imports,

soybean imports from china have been plummeting, especially after china placed tariffs on soybeans in 2018. demand has been slightly picking up, but still down from historical averages. bloomberg is reporting that it is unclear if these deals have been concluded. there has been skepticism from traders about how much these transactions can go on for, given that there has been dampened demand because of african swine fever and there are other options for chinese buyers, including south america, where prices are quite similar. in addition to the agricultural front, i want to bring up some other reforms that have been happening that have been seen as a positive signal ahead of trade talks. a long-standing issue of the u.s. is the opening of china and china recently announced reform measures to scrap ownership limits in areas of the financial sector, including ownership of securities and insurance.

a direct link has not been tied, is has been seen as a positive signal ahead of trade talks. more: we are seeing a positive environment going into new negotiations. yes, very few people seem to expect any break through anytime soon. u.s. has certainly downside -- downplayed the prospect of a trade deal. wilbur ross said it is impossible to know how long it is going to take. it is also coming at a politically sensitive moment. president xi is about to convene leaders at the annual policy retreat and this time, the u.s. is coming to china with a different sentiment toward the united states. criticism has been increasing, the government is growing impatient with u.s. meddling in internal affairs, the foreign ministry accusing the u.s. of being a black hand in the hong kong unrest. china recently released a defense power -- paper calling out the u.s. for undermining

global stability. sources are telling us that these talks that are about to happen with the backdrop of this uncertainty is more of a form to hash out where things stand instead of being a chance for them to make structural changes and to make true passages in terms of key issues here in debate. shery: thank you so much. our china correspondent in beijing. the former federal reserve chairman is not mincing his words on president trump's trade strategy ahead of new negotiations next week. in an exclusive interview, greenspan told us tariffs will hurt the u.s. the most. tax, not onre a your opponent, but on your own people. they pay the tax. been,estion has always

,axes are inflationary, and so it was never true that somebody won a trade war. ,here is a winner and a loser how muchding to economic activity changed, they both lost. it is the one who lost the least that was declared the winner. >> we have tariffs now on china. china has proposed retaliatory tariffs. are we seeing the economies of the united states and china slowing down? >> you can see it in certain industries. we do not have enough overall data on china to make much of a judgment, but it has to be. something, that -- these are statistics you don't need to calculate.

you just know by the nature of the product. china is drifting off. we are basically -- we had mao originally. change,re was a major and every president after was more liberal. would like a qualification of where we got here, he said i wish we were the united states and that was an extra dinner a comment for chinese to italian american. it is not that way anymore. that president xi was having difficulty finding a replacement. i said, yeah. >> let's talk about monetary policy. something you know well.

we are anytime with low interest rates and they seem to be going -- we have $13 trillion in negative yielding debt. we are having growth challenges. our lower interest rates a way to address lack of growth? is, more important question how in the world do we end up with negative interest rates? --ave been in economist interest rates are a major component of what is called time preference. discounting human beings make about values today versus values tomorrow. exclusive was our conversation with alan greenspan. want to get you an alert on the

bloomberg terminal from sk hynix, which had results out today. is saying it is going to continue monitoring the possible impact of the japan import curves of those materials required for chip production and production of other products. saying it is going to focus on not having output impacts, and will actively secure materials that are restricted by japan. it will also continue monitoring the possible impact of the export curve. just some lines they are, currently trading 2% higher, despite missing estimates. still to come, nissan tumbling ahead of its earning reports, after admitting to a 90% drop in operating profit. we will assess the damage. this is bloomberg. ♪

shery: this is "bloomberg

daybreak: asia" i am shery ahn in york. paul: i am paul allen in sydney. shares slumping ahead of quarterly results later thursday. this is after local media reported a significant drop in operating profit. chief multi-asia correspondent is following the development. how bad is it getting? >> it is getting pretty bad. last november, carlos ghosn was ousted and we saw a string of bad news, including job cuts back in may, when the ceo said, nissan has hit rock bottom. with its latest results, if it is confirmed, which it likely will later today, the nikkei report, it looks like a bottom has not necessarily hit yet. that stone keeps on falling. basically, nissan broadly called the report accurate, that operating profit in the fiscal first quarter would drop 90%.

we are expecting an average of a 66% drop in profit from the average consensus from analysts. basically, nissan hasn't delivered such week back to back earnings since the global financial crisis in 2008. that rock keeps on falling. we had that report from kyoto to cut atnissan plans least 5200 jobs on top of the 4800 cuts announced in may. that is 10,000 global jobs out of nissan's workforce. that is 7% of the workforce, quite considerable. that report saying that they will be launching, if they are not already in the midst of, what they call a broad restructuring. yesterday, a board member told reporters any restructuring won't be simple. for people familiar with this situation, among the restriction

ring moves, those job cuts, they could possibly see cost reductions and production cuts in south east asia as well as latin america. let me leave you with a cut from a securities analyst who will be on bloomberg later this hour -- short in the eleven o'clock hour. he says once chasing nothing but volume, nissan is now scrapping that strategy and shifting focus more on profitability. to achieve this, nissan is reducing the size of the company, including the number of employees. tune in later to hear from koji endo. he says, diets are not easy and that is what nissan is undergoing. shery: they are definitely not easy. steve engle in hong kong, great analogy there. let's talk to janet lewis in tokyo. she is a capital securities head of show other research. we are talking about dieting for

nissan, but other points steve made earlier, talking about rock bottom as well for nissan, are we there yet? >> possibly not. nissan isoblem for its product cycle. it has got a very aging model mix. it is launching new models, but they are primarily sedans. sedans don't do the same volumes that they used to and it needs some suv like truck products. that does not come until the next year. a could be another tough year as they adjust production levels to make them more appropriate to market demand. shery: when it comes to the different regions where nissan is seeing challenges, where are the worst areas, and where they performing better? >> the key problem is the u.s.

market, where the back of a truck in the market which is 70% light trucks is a problem. the u.s. is probably the biggest market where they were pursuing volume using high incentives relative to competitors and high sales. those are the areas they are trying to pull back on. as they cut incentives and try to reduce fleet sales, they have to be prepared to take a cut to volume. are doing relatively well remains china. honda,well as toyota and but they have been taking a share of the market. the top-selling model will have a full change later this year, so they should be able to sustain further growth. you mentioned a couple of key problems. an aging product causes problems in the u.s., but the problem is there in the boardroom. there is the continuing arm

wrestle over the nissan alliance. until that clears up, do you see other problems being cleared up? >> frankly, a lot of the current problems were created several years ago, when they were not focusing on the issues of profitability and getting the right product mix. it would be unrealistic to expect a turnaround in the short term. that said, the problems in the boardroom are a distraction and it would be much more helpful if clearerere going in a direction than they appear to be. as has been mentioned, the investments needed for connected, autonomous and electric vehicle technology are extreme and best done working with partners. extent that they do not ofus on the efficient use resources toward long-term

goals, it is not so much this year's earnings you are impacting, but earnings in the future. paul: we worked hard there to sift through the dust of what is coming from nissan to look for the good about mitsubishi. it was an impressive -- unimpressive result from them. >> it was. in a way, because it is a smaller business model, it is easier to fix. in mitsubishi's case, the key issue was inventory adjustment in the u.s., where they are backing off from volume. they did achieve a significant cut to incentive and to their inventory over the first quarter. they are better positioned, although they do not have a strong model mix in terms of new models. the market continues to do very well. all of their profit is coming out, they are about to launch a

new vehicle. they will add an suv variant to the popular expander that is made in indonesia and the pickup truck is just starting to pick up momentum. is a light ate the end of the tunnel sooner for mitsubishi than nissan. shery: how exposed are national -- japanese automakers when it comes to the tariffs between the fortunately,a >> they are less impacted by the u.s. china. for instance, lexus is benefiting, because some competing products that were exported from the u.s. have become much more expensive, so products like the rx and the nx out of japan are doing well, along with the ef. are todest extent, some

be impacted, but this is true across the board for their assembly in the u.s.. in relative terms, they are doing well, and particularly honda and toyota are doing extremely well in terms of sales. are they getting shares from buick? possibly. has not been and overt push to avoid american products, but certainly, the made in japan label is doing well in the china market. auto head of asian research, thanks so much for joining us. like steve mentioned, we will have more analysis on the auto sector when we are joined by sbi securities head of research at 11:30 a.m. hong kong. , they arev you can watch us live, catch up on past interviews, and dive into any of the securities or functions that we talk about. you can become part of the conversation by sending us instant messages during our

shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

paul: this is "bloomberg daybreak: asia." i am paul allen in sydney. shery: i am shery ahn in new york. tumbled in manila under expectations of another drop in the quarter.

net income in the first three months fell 15% and analysts say things are unlikely to improve. the main drag is the u.s. smash burger chain, which is struggling against cheaper rivals. results are not slowing expansion plans, targeting 500 new outlets by the end of the year. writing out the global economic uncertainty as well as protest in hong kong. sales crews past estimates as fuelive revamps helped to growth. overall sales grew 12%. year, making% this it the second best stock on the encz mark, after airbus. shery: if you like making money and eating dessert, the world's best performing restaurant stock this year according to bloomberg data on operators with market values of at least $300 million

is a small chain called after you. it sells honey toast and brownies. shares have tripled this year, beating gains in every other cuisine from a chinese hot pot chain to tripoli mexican grill. let's turn to sophie in hong kong for a check of what we should expect later in the market. of focus onots asian chick spot -- chick -- chip stocks. to slowces expected considerably after boasting week results from the second quarter. hynek's expects upside demand for chinese smartphone companies. also watching heavy machinery makers after caterpillar reported declining sales because of competitive pricing pressure

especially in china, where the cfo said growth is expected to be flat. companies flagging they will likely support -- report slower profit growth. flashing drug prices fell by 96%. radar, a cut in price targets for shares to reflect lower earnings potential. shery: thank you so much. that is it from "bloomberg daybreak: asia." our markets coverage continues as we look ahead to the start of trading. bloombergdby for markets, the china open. this is bloomberg. ♪

changed? has humor our people laughing at the same things or are there certain things you can make fun of no? lorne: there is nothing i did in the 1970's i could do now. david: are you ever worried there is a guest post not up to the task? how do you coach them to be ready? lorne: you can get almost anyone through it. david: what does it take to be a leader? lorne: if you are in power, everyone knows, so you don't have to explain. >> would you fix your tie, please? david: people wouldn't recognize me, but ok. just leave it this way? all right.