paul: good morning. allen in sydney. you 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, mario draghi sends his longest stimulus signal yet. amazon may not deliver. short ofre expectations amid concerns of more big spending.

more bumps in the road for nissan. planned job losses after profits fell 99%. shery: let's get you started with a quick check on how markets closed in thursday's session in the u.s. the dow falling to the lowest level in two weeks. tesla and for taking a hit on weak results and earnings. the nasdaq falling the most in a month. has stellar earnings, but because of the ftc probe, market sentiment was not too positive stock. we have the s&p 500 losing .5%. investors did not like the president of the ecb. was not as dovish as they expected and that weight on sentiment as well. u.s. futures at the moment unchanged. let's see how things are shaping up in asia. sophie: we are setting up for a risk-off session. kiwi shares resuming losses. cost they could come under

pressure. earnings in focus. in southing's data korea sliding further in july. in sydney, the asx 200 may snap a gain. switching the board to check in on bonds that rally in aussie debt -- -- how much upside may be left as we are getting more global economic indicators that are not too hot. today's factory output from singapore on the data agenda this morning, flipping the board to check in on that, that indicator may reinforce bets that they will ease policy in october. the dollar headed for its steepest weekly drop ahead of those numbers. the boj may downgrade its inflation forecast and next week's meeting. paul. for a check of our first jessica summers in new

-- new york. jessica: lower interest rates and renewed asset purchases on the agenda. eurozone inflation remains far goal.he bank's the governor of the bank of turkey delivered the country's biggest rate cut in 17 years, shing borrowing cuts. mike pompeo says he would be willing to fly to tehran to explain how the iranian leadership has harmed its own country. the trump administration withdrew from the nuclear deal. the president said he is open to direct talks for a new deal that would strengthen curbs on iran's ability to make nuclear weapons. >> i talked about this before. around in the most wonderful city in america and he

speaks to the media. he talks to the american public and gets to put iranian propaganda out into the american airwaves. i would like a chance to speak the truth to the iranian people about what it is their leadership has done and how it has harmed iran. jessica: japan is weighing a new trade weapon against south korea, as their neighborly spot -- worsenspat worsens -- worsens.y spat such a move could curb the shipment of hundreds of new products. the u.s. has urged both sides to cool down. the house of representatives passed a two-year extension to the debt ceiling and the byartisan budget golf backed president trump. it allows an increase in discretionary spending. most republicans voted no despite the merging their support.

of aevents any risk federal default until after the next election. 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. shery: thank you. the earnings parade was a big driver in the rate of u.s. trading as well as after hours. corporate reports continued to be mixed and volatility range. su keenan -- reign. seeking them. su: we saw all of the sectors lowered. the dow lowest in two weeks. let's take a look at the big movers. it was an earnings dominated day. tesla down after its big mix after hours yesterday. boeing falling the most since may. southwest said it would remove the 737 max from its lineup.

american saying that would let the age around on contacts and earnings. you have facebook continuing to be weighed down by means of an antitrust review. let's take a look at the bloomberg. volatility was the underlying factor here. call volume has surged. in the last two days, we have seen this happen. one trader in the wednesday session could not have time bit better according to bloomberg research. he had a 1.7 million one-day .ain on the trade volatility buyers continue to come out in force and many will say that signals perhaps more downside, if not volatility ahead. let's take a look at some of the after hours. we have three big stops moving higher. also that, the parent of google, starbucks, and intel. that sets up for the friday trade. paul. paul: su keenan, thank you very

much for joining us. inzon so in extended -- fell extended trading after extending its forecast. it says it will continue a cycle of improving delivery times and boosting topline growth. let's cross to seattle and matt. they told us last quarter they were going to be spending some $800 million. they are trying to turn their plan delivery pledge into a one-day pledge and it is more expensive than they thought it would be. they indicated that would continue for the next few quarters. they rolled that program out to try to increase the speed up delivery and reinvigorate growth in their core retail business. were a bit of a bright spot for amazon.

applicant will that be the outlook? matt: it is growing in importance. in thehe third biggest united states behind google and facebook. they are higher-margin businesses compared to amazon's areretail and investors increasingly focused on those metrics. both the advertising and the cloud computing. shery: regulation is a big issue these days for tech companies. did they mention anything about regulators? matt: they were asked by her byrnalists specifically -- journalists, did you receive inquiries from u.s. regulators after the spate of maintenance of inquiries coming from d.c.? that has been a stance all along here. it will get tougher for them to continue to say not a lot about that. the european union opened an antitrust investigation. they are said to be a target in

d.c., so those questions could continue regardless. shery: big interest in whole foods as well. matt: by some measures, whole foods looks flat. their physicals sales segment, which is almost entirely whole foods, has been pretty much flat in a couple of years, but amazon says, if you account for online sales, which they have increasingly been rolling out, they are growing 5% or 6% year on year, so they say on my benefits are increasing sales from whole foods. shery: thank you so much for joining us from seattle on amazon. still ahead, apple is buying intel's modem unit. will this provide relief from third-party supply issues? held up next, the ecb steady but laid the groundwork for a rate cut in the near future. we will ask what that means for other central bank decisions. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen allen in sydney. the march to lower global ra tes continues. inove to cut its key rate september. the federal reserve appears ready to drop its rate next week. turkey's central bank made the biggest policy rate cut on record. kathleen hays is here. let's get started with the ecb. it is worried enough to cut the rate but not just yet. kathleen: not just yet but something very strong signal that it is getting ready to do so. it is studying the landscape, trying to figure out what it will need to do before it does it. when you hear the head of the european central bank come out of this meeting were so much is --

the manufacturing sector across europe and particularly in germany, europe's biggest economy, our weakening not just a lot -- are weakening not just a lot but quickly, it is worrying to hear him say things are getting worse and worse. >> generally speaking, you have resilience in the service sector . at the same time, this outlook is getting worse and worse. getting worse and worse in manufacturing especially, and it is getting worse and worse in this countries where manufacturing is very important, but because of value changes, this propagates all over the eurozone. kathleen: europe's economy was weakening. the purchasing managers were coming off of that before the trade war even got heated up, and in fact, after draghi said that, he went on to say pretty clearly that they are getting ready not just to cut rates, but to potentially start on

purchases again, maybe even intensify their forward guidance. let's listen. environment, inflationary pressures remain muted, and indicators of inflation expectations have declined. a significant degree of monetary stimulus continues to be necessary to ensure that financial conditions remain very favorable and support the euro area expansion. kathleen: hard to imagine what would stop mario draghi now. perhaps signs that these numbers are starting to pick up in germany and across europe. shery: we have numbers picking up in the u.s. as well. traders pricing in the rate cut next week. kathleen: first, it was consumer spending. today, we see the u.s. business equipment orders jumped by the most in 2018. our corporations somehow -- are

corporations investing more? not if you look at world interest-rate projections on your bloomberg. let's just see. another strong number. no one is shrugging this off. rate cut probability is still 100%. can be verys volatile. they can go up and down quickly. one good month is not a complete make change in the trend. it does not mean businesses are suddenly getting ready to it on their pocketbooks. another reason why nobody is taking it too seriously is because key fed officials have made it clear they are looking at insurance rate cuts. in other words, the former fed chair said yesterday if the economy is so weak now, you take out insurance against something that might happen. if it starts weakening a lot, you want to have the rate cut already in place and ready to do more. that is the strategy from those were looking to cut rates even if the economy on the surface is still looking ok.

paul: 25 basis points. call that a rate cut. , massivecentral bank 425 basis points. is this political pressure or did that really need to happen? kathleen: let's remember, you were at your key rate 5% and you cut it by 425 basis points, you would be almost obliterating it. when your key rate is at 24 and you cut it, 425 basis points percentagewise is not so much. for the a huge visit new head of the turkish central bank. let's take a look at just how big it was. but also see why the door has really opened. their key rate got up to 24%. and then got up to 28%, very high level of rates has helped drive inflation back down. it is still high by most measures. it is almost half of what it

was. in terms of the president of turkey pressuring them, a lot of people beforehand said if they do a big rate cut, it will get smashed because everyone will think you are bowing to political pressure. the leader actually rallied because of looking at yield differentials. take a look at the chart. the inflation rate has come down a lot. that is one justification for it. in fact, if nomura can maintain its strength in the face of this kind of aggressive easing, that is another thing that can keep the door open. the delicate dance because if you are the central bank chief, you don't want to look like you are doing what the president says to do latest health, just like if you are the fed dealing with president trump. shery: kathleen hays, thank you so much for that. global economics and policy editor. joining us now is the deputy cio. great to have you with us. we continue to see this race to the bottom by central banks

around the world. when we are in this environment, it is no wonder we saw this in in global equity markets. so how much room is there now for error given we have seen such a rally? >> i think there is a lot of room for error and a lot of nervousness among investors and a lot of nervousness among portfolio managers and people like that. the valuations are not really stretched. have rebounded. markets are up 20% or so off the bottom in december of late last year. and as you mentioned, rates are coming down. liquidity is flooding the globe, looking for someplace to be invest in. it is tough to find a place that has an overtly compelling economic underpinning. shery: liquidity, how important will this be given that we are heading into the summer? what drive markets after earnings season is done? carol: i think that is a great

point. and we are looking for an expectation of increased volatility, particularly going into this august month in here. you willou do have -- be done with earnings. you have the central bank decision from the u.s. by next week. you have congress on recess. what will be driving the news flow is social media feeds and geopolitics around the globe and data points here and there. you also have the potential for a lot of people to be on vacation. it has been an exhausting last six months to 12 months. people taking time off. unexpectednt that an news hits, you run that chance of later volume. not thoroughly having the first tier traders or portfolio managers in the office and easily accessible. some of that could lead to choppy trading in here. irrespective of fundamentals. your point of volatility, we did see it rise today.

as you say, you expect to see it return. do you think the fed has been keeping a lid on that somewhat out of easily? -- artificially? carol: there is so much cash looking around the world for someplace to be invested. you have also had a lot of m&a thatity and share buybacks has been supporting equities. when you look at the actual numbers, it has been a very long time since the average investor has been buying stocks as opposed to other asset classes so it really is corporate purchases. to the extent they go on vacation in august, you lose them of that support potentially for market. -- markets. paul: in terms of money looking for a home, i want to bring up this chart on the bloomberg terminal. regular viewers would have seen this a lot. this is the negative yielding debt. a quarter of the world investment grade debt now pays

no interest. what causes money to go there and does that look a little bit crazy to you? carol: it does look little bit crazy to us from a variety of aspects. it is actually -- that chart is a similar one we used in our strategy report, scratching our heads. the factor of a big chunk of the debt being in negative territory has escalated recently. a big piece of that is the risk off trade and people needing some sort of fixed income and are portfolios and it is one of the reason why the u.s. market are more attractive even to us, the yield seeing low. but they are still high relative to global and. shery: given all of the worries around the world, whether it is demand concerns, where are you seeing this business caution being reflected by companies? carol: companies are starting to scale back. theanies have not done

capital expenditure as we had expected to see a particularly after the tax cut ac in -- tax cut act in 2017. you are hearing anecdotal evidence of companies scaling back. marketing plans and repositioning. you are seeing companies divest themselves and by other divisions -- buy other divisions rather than doing a buy versus make decision. it is just a lot of cautiousness all the way through, and i think that is what we and other investors are looking at as these earnings reports come in. we are listening really closely for that kind of information. paul: carol, thanks for joining us. you can get around up of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings

so you only get the news on industries and assets 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. boeing fell the most in more than two months as the 737 max hangover worsened. southwest airlines have now itspped the plane from schedule until at least the early part of next year. meanwhile, boeing's defense unit withdrew from a lucrative -- amid a dispute over bidding rules. may rekindle some investor interest in its scrapped asia unit ipo after the very same unit fueled a 10% jump

in overall earnings. shares popped on the result. it was powered by 23% gains in aipac revenue. reach 56%d the stalk gains for the year as the company -- shery: toyota is betting on car hiring in china, injecting $600 million in two a company to help the chinese company set up a not an adventure to provide services such as car rentals and maintenance. will bankroll plans. the company has not turned a profit and has been struggling with government curbs on car supply. paul: alibaba has developed its first-ever artificial intelligence chips, delving deeper into semiconductors just as washington targets china's tech industry. it is based on an open source design that competes with the global standard developed by softbank. of big joins a series

chinese corporations that are creating alternatives to foreign software and hardware. let's get a check of our asian markets now. not much to write home about, really. we have new zealand currently off by .5%, heading south since it opened. futures in sydney fairly lackluster, lower by .5%. those numbers reset in about 20 minutes time. you would not expect a great deal of change. nikkei and cost be futures both by .6%. .6 -- mixed to disappointing results from a big day of earnings in the u.s. we saw all major indexes in the united states closing lower. still to come, nissan's woes are not going away. the automaker revealed new production cuts this week and are reporting a 99% plunge in fiscal first-order operating profit. should the company focus on

tackling its bigger issue of production in japan? we will discuss that question in a moment. stay with us. this is bloomberg. ♪ omberg. ♪ i don't know why i didn't get screened a long time ago.

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to understand your best plan of action. so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. paul: we are waiting on some breaking numbers out of japan right now. it is tokyo cpi for the month of july. thanis coming in weaker expected. inflation continues to be missing in action in japan. .9% for the month the expectation have been from 1%. food, .9 percent again, and that is slightly better than expected. the yen at not even really blinking. it has been weakening a little over the past few days. the's get a check now of first word news. get over to jessica summers in new york. jessica: jessica: -- jessica: the european central bank sent its strongest signal that

stimulus will be stepped up with renewed asset purchases on the agenda. inflation remains far from the bank's goal. the new governor of the bank of turkey delivered the country's biggest rate cut in 17 years, ng borrowing cuts. boris johnson's claim that he will seek a new deal from the european union has been rejected out of hand by brussels. the chief negotiator, michel barnier, said it is impossible to reopen discussions. he added that johnson's demands about the irish backstop be scrapped is "unacceptable." new prime minister said brexit will happen with or without a new deal. the house of representatives passed a two-year extension to the debt ceiling in a bipartisan budget bill backed by president trump. it allows the $324 billion increase in discretionary spending.

most republicans voted no despite trump urging their support. the legislation lowers the chance of a government shutdown and prevents any risk of a federal default until after the next election. trade tensions are threatening to drag export reliant singapore into recession. the economic data has gone from bad to worse this month. exports have slumped to their second-worst since the financial crisis. at the same time, the purchasing managers index fell into contraction for the worst time in three years. dramaticallyhrank in the second quarter. hong kong exports plunged more than expected last month, marking an eighth straight month of declines. aere are warnings there is relief in sight. overseas shipments declined 9% to the equivalent of 39 billion u.s. dollars. that is the worst result since i-16 and well below the median estimate of a 2.2% all. hong kong -- fall.

hong kong is struggling with the global slowdown. 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. shery: thank you. we are half an hour away from the open in tokyo, sydney, and seoul. let's turn to sophie for a check on what we're watching. to be: we are going taking stock of the japanese earnings season before things get really hectic next week. topics, 91 have posted a negative sales surprise, including nissan. it may be harder for the topix to shake off its already sluggish year. pulling up the board for a quick look at the latest results, hitachi construction posted a decline in first-quarter profit. demand in china is dropping.

and industrial machinery maker missed forecasts for the second quarter and said its current order inquiries are looking weak. service revenue grew, plus a registered operating profit growth for its mobile business. with some of the themes that drove intel's earnings. shery: talking about intel, it beat analyst predictions, signaling it is weathering disruption from the trade war. mark gurman joins us. tell us what drove the gains. intel is seeing a higher profit margin because they are shedding some of their core businesses like a modem unit. it is also an uptick in pc's. tablets and smartphones are supposed to be the next thing. you are seeing strong pc sales windows side.

that is leading some of the higher performance for intel. paul: intel has got rid of its struggling cellular modem unit. apple bought it. why did they make a purchase? build theirwants to own modem business and the best way to do that is to suck in a ton of patches, engineering talent, -- patents, engineering , and more. i guess you can make an argument that it is pretty much close to nothing in terms of how much money, over $225 billion apple has on hand in terms of cash. it is a no-brainer for them. we knew this was coming for weeks when they put up for auction and then a private mystery buyer emerged. it was pretty clear the apple. we are here today with the official announcement. how does this affect the dynamics for apple's relationship with suppliers going forward? goingintel is no longer

to be a customer, but that is a moot point. it is like crying over spilled milk because intel said it was getting out of the game. apple is their only customer so it does not matter to them. samsung is one modem builder. apple does not use them anyway so that is not an important part of the equation, but there is qualcomm. this sort of licensing agreement and product sourcing agreement earlier this year, which truth be told, apple was forced to do because intel's product was not that great. the only impact will be that apple likely will not need to re-up their six-year agreement with qualcomm 5.5 years from now. paul: mark gurman in los angeles. thanks for joining us. he's on troubles are far from over. the carmaker -- nissan troubles are far from over. new production cuts after reporting a 99% plunge in first quarter profit. the moveon team says

will do little to help fix the main problems under the hood. let's bring in columnist david . horrible numbers. david: clearly, the courts needed to happen. one legacy of the carlos ghosn europe, when nissan and -- era, when they were pushing more volumes out, is nissan is producing too many cars and we can see that from the way sales plummeted and if hundreds were being used to move cards. so i think some sort of scale of job cuts are necessary. the problem is where the job cuts are located. if you look at where they have been cutting jobs so far, north america, europe, indonesia. to some extent, a little in japan. they need to think much harder about the role of their japanese exports operation, which is about half of the revenue for the japanese operation in their global mix. paul: japan does not exactly

have a reputation for being a low cost producer when it comes to cars. what might they be doing to protect cars in japan? year: it is 900,000 cars a , 400,000 for the global market. 300,000 of that goes straight to the u.s.. if you look at the employment numbers of the different divisions, the japanese division is not particularly productive. per employees relative to 40 roughly in the u.s. and europe. it is not a very productive operation, but it is the home market. the headquarters of nissan is in the constituency of the cabinet secretary of japan, who is a very influential figure. there is a political imperative which i think you see in the situation we have seen with carlos ghosn as well to protect the home market. shery: what can nissan realistically do if they are trying to protect the home market in these very

nationalistic times? david: sure. i mean, i think, to give them some credit, they have been cutting, you know, putting jobs. they are cutting jobs on the export side in japan, so they are doing that to some extent, but i think they need to accelerate it. cutting jobs in places like mexico and india is probably not the best idea at a time like this. they should be moving production to those markets and should we know little bit more -- it seems improbable now -- on the structure, the alliance. in southeast asia, that is a strong region for mitsubishi. one of the reasons this whole thing was set up was to combine manufacturing costs to improve productivity. it seems like a distant euro when that was an objective of the alliance, but the logic of that still holds true. david, thank you very much for that. coming up next, the trade spat

shows no signs of a solution. our next guest says this could backfire for both countries. this is bloomberg. ♪

shery: mrs. "daybreak asia." i am shery -- this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. wednesday at the deadline of whether to remove

seoul as a trusted location. let's talk with the senior associate professor at the international christian university. thank you for joining us. this dispute between japan and south korea, it is about trade. but underlying it all is the decades-old injectable argument about japan's behavior during the colonial era pre-world war ii. all this nationalism is politically popular for both shinzo abe and president moon. given that, what hopes are there of resulting this? >> for the short-term, what we are going to see is the tainted remain between south korea and japan. nationalism and the politicize isan -- politicization happening. they are not going to remain and bilateralo abide by

agreements that have been agreed and by their president prime minister. this makes negotiating at a bilateral level difficult. there japanese side, is real apology fatigue. most conservatives feel that they have done enough. the conservatives deny comfort women and the forced labor issues in the japanese context. they are looking at this issue in very different ways. what we have seen is the japanese use the rubric of national security to restrict the import of some very sensitive substances used in etching chips in south korea. industry the signature for samsung and it hits them hard in terms of their profitability and potential to produce these products for global export. numbers have seen our

coming through from south korea that support exactly what you are saying. the is trickling through to real economy. if it drags on and the supply chain becomes diversified, what will this mean for the long-term relationship between south korea and japan in terms of technology? if thisf this -- >> does drive on, it means one of betweenportant bridges the two countries, that interaction of businesses, you know, businesses are interested in profit him and not politics. if this bridge those breakdown, them move in fundamentally different directions. south korea will most likely look for other supply chains to supply these substances so they can produce high-quality chips, so that means may be moved to china, maybe to the united states. -- look to the united states. the this does in terms of end problem is it could result in supply chains shortening and increasing the cost of chips.

when we increase the cost of chips, that goes to the businesses, and they generally the cost of products they are producing. it has the fundamental consequence of actually bifurcating production networks, supplied chains, and increasing the cost for consumers. consumers for increases, they decrease consumption. that is not good for economies, employment, or businesses. shery: japan seems to be adopting the playbook seen by china in 2010 when it came to rare earth exports are to just -- curbs to japan. are we in this new environment where anything and everything goes when it comes to trade in relation to trying to solve other domestic medical issues? -- political issues? >> there are subtle differences. in 2010, the chinese government unofficially limited where earth , using variousn

different kinds of rubrics. they talked about environmental improving environmental standards, but they did not use the idea of national security, so i think there is a bit of a difference between the two. if japan is taking this approach, the united states, they tacked on steel tariffs and aluminum tariffs to canada, japan, and other countries, using this idea of national security. strategy is infectious, what could happen is we see the breakdown of that rules-based order of trade that we have engaged in over the past seven years. this is fundamental consequence on,o help trade goes production networks, supply chains, and how businesses look at doing business in other countries. to doill not want business in countries that are unpredictable. shery: we had south korean lawmakers in the u.s. trying to

get the trump administration involved, but we have heard in the past from president trump seeing a little bit reluctant to get involved in this issue. can this get resolved without the united states? does the united states view this as a positive force in their bilateral trade dispute with china? japanesesee the tactics to put pressure on high-tech firms in south korea as potentially, you know, another strike at huawei. samsung does deliver chips to huawei. the united states is engaged in a process of trying to limit huawei's global expansion and its potential to be one of the world leaders in five g technology, if not the world leader. in some ways, we can understand japan, whether it is officially or unofficially, as applying pressure on those industries that are supplying to huawei. if we look at reports in the past week, huawei has been

accused of helping north korea set up its telecommunications system. on the american point of view, with the japanese putting pressure on south korean businesses, essentially affecting north korea and chinese redshifts like huawei, this is not necessarily a bad thing. maybe mr. trump, engage in trying to bring these alliance partners together. shery: senior associate professor at the christian university department of politics and international studies. mike pompeo says he would be willing to travel to tehran to address the iranian people about u.s. foreign policy and explain how the iranian leadership have harmed the islamic republic. he spoke to bloomberg in washington. it is always important to remember the history. it seems like escalation because there's been stories in the news, but this is 40 years. 40 years of online behavior. whether it was seizing a british

tanker that was in international waters or shooting down an american uab that was in international airspace, or assassination campaigns in europe or trying to kill an ambassador in the united states, iran has a long history of malign behavior. our mission was to create as much stability in the middle east as he could. terrible deal about the previous administration had entered into that had as one of its major side effects creating enormous wealth for the leadership inside of the islamic republic of iran, and they were using that wealth in my ways. we put pressure on the iranian regime and we are forcing them to make tough decisions about how they are going to behave. we want change in behavior from the iranian leadership so the people can get what it is they deserve. >> how do you get that trade in behavior? they are saying the sanctions are going to "backfire."

how do you get that change in behavior? >> the foreign minister is no more in charge than the man the moon -- in the moon. this is driven by the ayatollah. has the capacity to do all this activity, all the seizure of ships and the bad behavior, and the malay activity, all driven by this activity, all driven by this irgc. those are the people upon whom we are trying to apply efficient pressure to show them the cost is north it and to convince them that if they behave, the iranian people can live normal lives. >> would you go to tehran? >> sure. >> would you appear on tehran television? >> i would welcome the chance to speak directly to iranian people. i talked about this before.

he drives around in the most wonderful city in america and he speaks to the media, talks to the american public, gets to put iranian propaganda out into the american airwaves. i would like a chance to speak the truth to the iranian people about what it is their leadership has done and how it have harmed iran. i think the reason they will not permit that to happen is because they know the truth as well. >> in terms of the economics of this situation, especially as it pertains to oil, in particular, the u.s. sanctioned the state run energy company for violating and doing business with iran. are you concerned about other nations, even potentially u.s. allies, still doing business with iran in the oil market? place sanctions we put in of applied to everyone. we are equal opportunity with respect to our command, which is not create wealth for the ayatollah. this happened to be a chinese

vessel. we have a pretty goo bead on where they -- a pretty good be on where they are. violations, wed will do our level best to enforce them completely and thoroughly. secretary of state mike pompeo speaking to bloomberg's kevin cirilli. more ahead on "daybreak asia." stay with us. this is bloomberg. ♪

shery: this is "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. alibaba has developed its first ever artificial intelligence chips, delving deeper into semiconductors as washington target china's tech industry. it was based on an open source design which competes with the global standard. shery: a french luxury group is

seeing sales growth slow after three years of breakneck gains. it rose 12.7% in the second quarter compared with forecast of 14.5%. malaysia restarted work on the east coast rail project after cutting building costs by one third to lighten the government that burden. betweenk has a tie up malaysia rail link and china to medications construction and it was canceled a year ago by the malaysian prime minister after he balked at the cost. shery: market opens at the top of the hour. sophie, what are you watching? sophie: futures are pointing lower with some gloom defending as we get more signals that the global economy is not doing too hot,m including --

including the slump. ahead of that, the seeing dollar in -- the dollar in focus. from the rbaments governor. traders assess if draghi was dovish enough. the turkish lira giving back some gains after rising on the rate cut with traders focusing on the currency's yield appeal. nissan in the spotlight as pay worsens and plans to cut 12,500 jobs. it is set to cut production by 10% as well. rut,n staying stuck in a as leadership is in question eight months after carlos ghosn's exit. selena ling, head of treasury research and strategy, gives us her outlook as global central banks march towards lower rates. the market open, next. this is bloomberg. ♪ i don't know why i didn't get screened a long time ago.

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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. paul: good morning, i am paul allen in sydney. asia's major markets are about to open for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ paul: our top stories this friday, mario draghi sends a strong signal new stimulus is coming as clouds gather over the eurozone economy. forecast short of expectations over concerns of big spending. mike pompeo speaks to

bloomberg and says there will be consequences if turkey buys russian missiles. straight to the market action with sophie. sophie: stocks in tokyo are opening lower by a third of 1%. the yen is near a two week low. we much budge from the data got that held steady in july. the boj meeting is next week and it is expected to cut the growth and inflation forecast. earnings a focus as well. the mode in seoul, the kospi is up half a percent. looking at neighbor -- waiting on names to report. we have the korean won on the back foot trading 11.83 against the dollar. looking at antiquities, the asx 200 opening slightly lower than a three-day gain, a few days off

a record high. qb stocks under pressure, off anz 50.the anx -- nissan shares at on the move at the start of cash trade in tokyo, the stock falling as much as 1% after the dismal set of results from the carmaker, 99% plunge in the first quarter profit. have breaking news at the moment. we are hearing from the softbank group that they are planning to fund. second vision they have now raised $108 areaon for vision fund two they will get investment from apple and microsoft. we are hearing the group intends billion in its second vision fund against -- --in southbank group softbank group will fund another vision fund.

during investments from apple and microsoft. they are going to invest $38 billion in this second vision fund. seeing the stock up .6%. let's check in on first word news with jessica summers. reporter: u.s. secretary of state mike pompeo says he would be willing to talk to iran on foreign policy and explain how the leadership has harmed its own leadership -- has harmed its own country. they ramped up sanctions on iran and withdrew from the nuclear deal. the president is open to direct talks for a new deal that would strengthen curbs on iran's ability to make nuclear weapons. >> we welcome the chance to speak directly with the people. i have talked about this before. this guy comes, drives around in the most wonderful city of america and speaks to the media, talks to the american public,

gets to put iranian propaganda into american airwaves. i would like to go not do propaganda but speaking the truth to the people about what it is their leadership has done and how it has harmed iran. reporter: boris johnson's claim he will seek a new deal for the brexit has been rejected. michel barnier says it is impossible to open discussions on the agreement signed by theresa may. he also said demands on the irish backstop are unacceptable. the new prime minister said brexit will happen with or without a deal. japan is waiting a new trade weapon against -- waiting a new a new trade weapon against south korea. there is a deadline for a decision whether to remove seoul of exportight list destinations. this could damage korea's tech sector. the u.s. has urged both sides to cool down.

hong kong exports plunged more than expected last month, marking an eighth straight month of decline and they wore nothing inside. the equivalent of $39 billion u.s. that was the worst results in 2016 and below the median estimate of a 2.3% fall. hong kong is struggling with the trade war, public unrest and global slowdowns. 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. one big central bank down, two more to go. strongest signal about new stimulus. the global economics policy editor kathleen hays is here. mario draghi holding steady, but he didn't hold back, that is

action itself. , sincen: central banks the great financial crisis, even before hand but forward guidance say now consider a polity tool. -- policy tool. mario draghi talked of the euro area economy that is weakening, especially in manufacturing, led by its biggest, germany. they need to be looking at how they are going to add more .timulus, not when let's listen to what he said that made so many people sit up and listen. >> generally speaking you have resilience in the service sector and [indiscernible] sector. at the same time this is getting worse and worse. and it is getting worse and worse in manufacturing especially, and getting worse and worse in those countries where manufacturing is very important.

of value change, this propagates all over the eurozone. going into this meeting people were not looking for the ecb to cut. on thursday they figured they auld wait until september but purchasing index from germany made people think they would do something, send a stronger signal. people say the signal he went on to send about stimulus coming was strong enough. but listen. -- let's listen. pressuresonary remained muted and indicators of expectations have declined. therefore a significant degree of monetary stimulus continues to be necessary to ensure financial conditions remain very favorable and support the euro area expansion. kathleen: this made it clear from the ecb they are considering cutting their negative,ate more to

renewing bond purchases and being more aggressive on forward guidance. m or business sentiment david by germany's institute -- let's remember business sentiment measured by a german institute is at the lowest since 2009. there was concern about recession. shery: in the u.s. we had .nother strong economic report tomorrow we get gdp numbers. what will all of this mean? kathleen: gdp is important because it shows the economy's growth rate. willhey say we know it slow down. over 3% in the first quarter but now expected to slow to 1.8%. the fed think that is trend growth. they are not going to be worried about that yet. we did see the strong business equipment orders, maybe a sign in the third-quarter business will pick up. we don't expect to see that very we expect to see the consumer

carrying the economy on its shoulders. what is interesting is to go you this, and got to show again, what the market is expecting even with stronger numbers on retail, decent gdp, everyone is convinced the fed will cut because they need to take it out as an insurance rate cut. that will be the big question, who is left? bank of japan? there is a lot of speculation as i get ready to go back to tokyo to cover that meeting monday and tuesday that there might be some tweaking here. there might the some extension how long they will keep monetary stimulus. they could have to cut the gdp forecast but some people are possibility ofhe losing etf purchases to make sure they get dovish very the yen will get a lot stronger -- dovish. the yen will get a lot stronger. thank you so much.

joining us from singapore, selena ling, head of research and strategy at ocbc bank area great to have you with us. we have seen the ecb, we have the fed next week. who will be more dovish? markets are really trying to prove which one will be more dovish great we have seen overnight draghi setting the stage for september move. the big question if you think in terms of timing, the fed will be the first because next week they are expected to cut by as earliest try five basis points. and given the insurance cut they are likely to signal they will move again in september. the fed will be first in line as far as the major central banks are concerned. shery: we have seen already major asian central banks following suit and preempting the fed policy meeting. we have heard from the rba ready to cuts

again. do they have leeway to do so? forna: what we recognize is the asian central banks, barring the bank of indonesia and possibly r.b.i. which moved last year, for most of the other asian central banks, they didn't tighten much last year. i think in terms of the flow, more dovish moves to come, they are fairly limited. we did see from the rba suggestion the policy will go to zero point 5%, so we are looking at one or two more moves. similar story for the bank of korea and for the bank of indonesia, although they did .ike 175 basis points last year they are only down 25 and could do another 25 this year as long as the itr remains a stable. they have to take a cue from the federal reserve. if the fed cuts 75 basis point this year, maybe the window will

not remain open for that long. we are coming into possibly the end of summer. if we get indications the insurance cuts are the fed will be done by december, the story will change in the fourth quarter as well. paul: insurance cuts. language is quite intriguing because the fed is meant to be data dependent and the u.s. economy is looking good so is it insurance cuts against global pressures, trade issues, brexit risk, other central banks easing? at what point do central banks become a slippery slope where the market expects more and more? i am agreeing with you because we saw pullback. member market reaction after clear it up and williams spoke earlier. there was a little bit of backtracking. they don't want to be on call at the whim and fancy of the markets, having to deliver a cut

every time there is a bubble. u.s. economic data is strong. unless we get a big undershoot of gdp growth below 1.8%, already discounted by markets, essentially there will be a limit to how much insurance will be forthcoming and that is why i think the current risks on sentiment, we could have more momentum to run across summer, but we have to be careful because if it is insurance cuts, and barring another slowdown in u.s. economic data, we don't see the fed moving or starting on rate cutting cycle beyond the 75 basis points. i want to get your thoughts on the observation of the mizuho chief economist for he said the cuts insight risk-taking which will deepen the eventual next recession. are we allowed to have a recession anymore? are we risking asset bubbles and lazy zombie companies continuing down this path?

selena: [laughter] in the case of the u.s. there is pressure to keep the growth story going. it was quite clear to jay powell, he is under pressure from the trump administration to unwind some of the rate hikes from last year. for central banks it is a balancing act. on one hand they want to keep growth from succumbing under the brexit, u.s.essy trade talks. seems that will drag on, the tech or ongoing. looks like the china-south korea trade tensions will escalate as well. lots of things on the plate for central banks to consider. growth for now seems to be taking a little bit of the coming to the fore for decision-making. insurance cuts can go either way. especially onts

the equity front continue to run even though guidance from earnings is softening. a fairly tricky path. some cuts are not promising it will be back to zero interest rate environment. we are in a transition time now. shery: to that point we are seeing emergent debt rallying. how much of a concern is it we could see countries and companies, given the low rate environment, trying to get access to funding they may not be able to repay in the future? selena: we see the fund flows coming back into asia and em markets, but i suspect some of these are opportunistic. euro, it seems to be back in again. we get some reprieve, asian currency and i mentioned the asian central bank that had the opportunity to also heed monetary policy settings.

i suspect the window will be brief because if you look at institutional demand, they have been careful with selection. i don't think it is a feasible situation like two years ago. we do see some credit dispersion in terms of how new issues are priced and how they perform after they come to market. levels,t given very low presumably there is a bit of risk-taking but we are not in risk on territory yet. according to the ocbc and -- indicators we are in risk neutral, something on the risk-taking side but not full on risk-taking mode yet. paul: all right, thank you so much. still to come, the house could

be winning but not as much as expected. we will look at the latest consumer numbers from macau. hits and misses, the winners and losers from a week of earnings reports. this is bloomberg. ♪ this is bloomberg. ♪

paul: this is daybreak asia. i am paul allen in sydney. shery: i am shery ahn. markets across asia under pressure. let's look at the stock movers. sophie is in hong kong. sophie: this one is jumping to a november 2017 high after delivering a surprise boost in profits. first quarter sales did fall but for sales got a boost from sale -- services business in japan and pc buying helped and numeral has upgraded them to buy. m3 is rising as much as 10% after beating estimates. the aggressive up front

investments are featuring in growing sales on its platform. look at the research institute gaining ground after its earnings beat thanks to higher sales of financial i.t. solutions. of note, thisers one's fighting and took your cutting the four-year operating profit 12%, citing sales of the vehicle units. that oh manufacturing makes lighting for autos falling 8.3 percent after posting an earnings miss for the first quarter. the company is trying to evolve to self driving cars, putting ships -- chips and sensors to be introduced by 20 to 25 customers. paul: it is earnings galore in asia at the moment and we have plenty more to come. our stocks reporter joins us from tokyo. a lot to react to. how is the market dealing with

it all. -- with it all? we are kicking off the earnings season. asia-pacifict msci index, 130 companies have reported so far out of a total of 1000 companies. if you look at how the results have been like, you can see this through the function here, earnings have been a disappointment so far overall with numbers falling short of expectations by 4.7%, but we are just starting this season off, so we have a lot more earnings reports to check out. informantso far the has been up this month, comparing with 5% advance we saw last month. you can kind of see we have not seen a huge earnings boost so far, so we will have to see how the market takes in all the earnings going forward.

what are some of the key results to look out for next week? iporter: a lot of earnings would say, samsung electronics, the world's largest chipmaker -- memory chip maker reports next week. its smaller rival sk hynix reported disappointing earnings this week and cut investment and output plans. we will have to see how that lays out for samsung, whether it disappoints or does better than others because the stock is bellwether for the whole industry. for the region if not globally. we have companies like sony, nintendo and honda and toyota, so a lot to look out for. shery: thank you so much for that. the earnings rate was a big driver in u.s. trading as well. corporate reports continued to be mixed and volatility reigned supreme. su keenan has all of the action. after hours, it was three hits

and a miss. well, thanks doing to china. intel doing well, the strong chip growth and google, the parent company alphabet, coming in with strong earnings. amazon, we will get to that in a moment. .et's get to alphabet if we can get that chart up, you will notice sales beat estimates as it was mentioned, the brood a $25 board approved million stock buyback that helped boost of the stock. the ads for global -- google but a16% overall, slower relief from the first quarter. let's look at what we have next. that is starbucks seeing sales soaring in the markets of china and the u.s., the fastest in three years and then to intel, which also had a positive report , sales and outlook beating estimates very they confirmed

apple will buy their smartphone chip unit, most of the business for $1 billion. they intended strong pc demand, helping their results. a strong, positive that will play in likely in the friday trade. let's talk about amazon. the company has pushed same time -- the same day or other delivery. how do investors react? su: they are used to getting strong profits, so this is a halt. this clearly gave pause to investors. what amazon is saying is this was short-term pay, it will pay off in the long term, but they reported profit $5.20 per share, missing the average estimate. that is a shock to investors who have been writing this with strong results. amazon says it does create a shock but they promise there will be return on this investment.

su keenan, thank you for that. 20 more to come on daybreak asia. stay with us. this is bloomberg. ♪ this is bloomberg. ♪

paul: a quick check of the latestpaul: business flash headlines, alibaba has its first artificial intelligence chip, going deeper into some i conductors just as part -- washington targets china's tech agency. it was developed by softbank group. car hire intting on china. it is involving -- injecting into didi to help companies provide services like carmen to -- rental and maintenance per they will bankroll didi's expansion plans. shery: the u.s. dismisses north latest launches as a

negotiating tactic we will hear from mike pompeo next. this is bloomberg. ♪ is bloomberg. ♪ we're the slowskys.

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reporter: this is daybreak asia. i am jessica summers. the european central bank has sent its strongest signal yet that stimulus will be stepped up with lower interest rates and renewed act access -- far from the goal and recession clouds are gathering for the new owner of the bank of turkey delivers the biggest rate cut in 17 years. slashing borrowing costs 425 basis points. trade tensions threatening to drag exports reliant singapore into recession. state's economic data has gone from bad to worse. exports at the second worst pace

since the financial crisis. the purchasing managers index fell into contraction for the first time in three years. the economy also shrank to -- shrank dramatically in the second quarter. spacex has launched its latest mission for nasa, a routine operation that is anything but normal. the falcon nine went to the international space station with with a cargo including a 3-d printer, dozens of experiments and the iconic slime from nickelodeon to teach how fluid behaves in the space. it is the 18th delivery they have done for nasa. china has showed further evidence it is ready to compete with american private enterprise on earth and beyond. the first successful over told rocket launched by a private company. a booster designed by basing interstellar glory lifted off from china's northern province, putting satellites into orbit. it can carry a payload of 260

kilos. 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. paul: time for a market check. asian stocks are falling while regional bonds are on retreat and the dollar looking lower, set for a second weekly gain. look at the kospi, lower for a third session with mixed results amid signs of economic uncertainty and the korean won on the back foot again in the 1183 zone as consumer confidence took another hit in july, falling for a third straight month. the yen is near a two-week low and the nikkei 225 will hold a three-day gain. looking at nissan shares falling as much as 2.7% on results

prospects are getting bleaker which has prompted the carmaker to cut thousands and reduce production capacity as it puts profitability against the global slump in car demand which is pressure on tata motors. looks like pain for the auto sector locally. shery: geopolitical headaches continue to mount for the u.s. rising tensions with turkey over its plans to deploy a russian missile defense system. the secretary of state told us how washington would respond if u.s. demands are not met. >> taylor: everyone is working together -- >> everyone is working together. we made clear that activation of this is unacceptable. we have taken the action of curtailing the f-35 program that was an important part of what turkey was doing. there could be more sanctions to follow but what would like is for this to not become

operational. that is our objective, what we have been talking to them for months and months about. it is incompatible with the f 35. delivery of components today, we are urging them to reconsider. >> so much going on around the world, there is literally like hot pockets all around the world in the last 24 hours. the north koreans testfiring new short range ballistic missiles. how does this impact the denuclearization talks? hot>> everybody tries to get rey for negotiations and create leverage. create risk for the other side. president trump has been consistent. diplomacy should work. we want the chairman to deliver on the promise he made to president trump topresident trun consistent. denuclearize. i was there when they signed the document. i had german kim tell me this less than half a dozen times. we recommend a a solution to this, look forward to the

opportunity but the chairman said he would send his working team to negotiate with ours. >> next week? >> in a couple of weeks. more importantly than the date, if we wait two or three or six weeks, to be sure we have had enough conversations so there can be productive dialogue when the teams get together, that is the real objective. if it takes another two or four weeks, that is it. kong, protests in hong the hong kong authorities ever ducted a request by protesters to take the streets on saturday -- have rejected a request by protesters to take the streets on saturday. are you concerned? >> the president said we need china to do the right thing. we hope they will do that. we hope the protests remain peaceful. we think it is important to avoid violence wherever there are protesters. that is in the world's best

interest. >> whether it is north korea or u.s.-china and just this week with boris johnson assuming power, i saw what you tweeted out about you are hoping he will be able to work with you on u.s. initiatives. i'm curious if you think his government and his policies will be perhaps more in line with the trump administration on something like huawei? >> we will see. i spoke with my counterpart a couple of hours back. he is busy, still getting briefed up and getting ready. we talked about that and the importance of these two democracies working together. we will find there is a good working relationship, but i will say this. we already worked together on most things. we have worked together on segments of the iran file as well.

everyone talks about the differences. we got out of the deal. there are large things against iran the net a kingdom understands. there are a lot of places we have worked together on making sure ships are secure. i am confident we will work together. these are pieces -- places where democracies share overlapping values and interest. i am looking forward to it. i am looking forward to having a chance to talk to the foreign secretary and prime ministers so we can move forward. that is mike pompeo, a wide-ranging conversation with kevin cirilli. let's get over to the senior editor in singapore. covering a lot of territory. one thing that interests me is the difference between the approach to iran and north korea. and maximumnctions pressure. north korea, missile launches are in negotiating tactic.

is there a degree of inconsistency to u.s. foreign-policy? i think there is a big difference in how the trump administration views those actors. they see an opening with north korea that they did not see before in prior administrations. the president has been consistent despite criticism at home and abroad thinking that his play is going to work with kim jong-un. he went actually to north korea, stepped over the borderline on his recent trip to asia. that was a big moment. the president thinks they can make something work there. with iran they don't as much. the white house has signaled it is willing to have talks. that interview he is willing to go to tell ron --

go to iran and talk to the thate in the same way that other man goes in talks to americans when he is in the united states. iran has not been willing to do any of that now. you have got all of these sort of escalating tensions. there is a lack of trust between the u.s. and iran. the us relating tensions i am thinking of shooting down a drone, seizing a ship, thinking of the medium-range ballistic missile launch cnn reported that happened earlier this week, all of it is escalating tensions with iran whereas north korea has been de-escalated for some months now. they: when it comes to trade talks there seems to be de-escalation of talks between china and the u.s. we have seen positive signs but now we are hearing from state media in china beijing says fedex is suspected of holding more of that holding up more

huawei deliveries. what is this about? is a tricky thing going on under the radar. we have talked about it on this program before but it has gone under the radar. there were some saying they while back some fedex packages containing one way things had not gone in the right direction, supposed to go to china and maybe didn't. it went elsewhere. china has been probing this. we have got some information that the chinese think this is not a complete misunderstanding. are just seeing this news recently. there is more to come but certainly this is coming. let's talk about timing, right before the u.s. is scheduled to send a trade delegation over to shanghai to have more talks. that is a really critical thing here. this is coming at a moment in

time when these talks are supposed to be getting back on track, but we have known for a while huawei will be one of the key sticking points. donald trump said it would be one of the last sticking points in any kind of easing between the u.s. and china. another thing worth mentioning from the interview is my pao -- mike pompeo's comments about hong kong. he hopes the chinese do the , and thing with hong kong certainly the tensions have been obvious for the world to see. the u.s. is paying attention. rishaad: a bit of a difference -- shery: a bit of a difference with trump saying xi jinping acted responsibly. coming up next, casino earnings season in full swing, but it looks like the house is not winning as much as expected. this is bloomberg. ♪ ♪

this is daybreak asia. i am shery ahn in new york. david: i am paul allen -- paul: i am paul allen. in g.m. china's revenue came in at $5.5 billion and they are confident of targets for next year. let's discuss this result and others with angela, a china renaissance equity analyst. thank you for joining us. , narrow beatult there, but looks like chinese revenue once again -- angela: but actually it was in line. there wasn't much surprise, good to see that at least it is ramping up. on the other hand i think i have takeaways from china results, seeing some kind of competition landscape in macau gaming

segment. basically the ultrahigh end business got hammered by macro issues, so all of the players are moving too low -- china is gaining market share in the past quarters but in this quarter basically lost market share in [indiscernible] the other highe players are trying to focus on the lower end the ip business, creating more addition here. been a lot ofs commentary on how the weekend -- weakened data has been waiting. -- weighing. angela: i hear from the market macau gaming might be recovering in the second half because we are entering low rates. but for me we see more concerns then upsides because macau is

expecting a visit from president xi in december. and what happened five years ago, before he came, there were many crackdowns like tightening policies and implementation of a smoking ban. there could be more negatives in , more negatives than positives. i don't expect much recovery this year but might see more recovery in the second -- the first half of next year. angie: shery: we have seen a lot of tourist arrivals especially with the new bridge linking macau and hong kong. how much is this helping? it is driving traffic like all the people from china who want to try this bridge, to see macau and come and eat and hang out. but the issue is all of the traffic is low quality traffic. they come but cannot gamble or bet as much as highrollers in

china. it is driving up the market but not creating like as big as what people have been expecting. how much potential is there for mass-market expansion helping profits? angela: it is helping by now, given the first quarter got hammered, but you see there is no big decline in the macau gaming segment by now compared to like five years ago. more policy, positives on the policy side driving up the traffic should be supported by the policy which means expecting to come later and not this year. paul: we do have a chart that shows that. there are arrivals rising to a record, but the bottom line, gambling revenue growth, it is

not as impressive. is there any policy that is occurring in macau that might turn it around and encourage people to gamble and lose money? the major decline for the past year was mainly because of economy issues. there was like slowdown in chinese economy, so the major reason why highrollers got hammered. on the other hand market is kind of supporting but cannot support much. the major question for macau is -- oflly in terms of's supply. they used to [indiscernible] our fall in every day. it actually means that when highrollers come in they stay in the same room but spend more. now they cannot come. so those casual gamblers like us maybe, we go to macau, stay in the same room but cannot gamble as much as them. that is the reason why traffic

is going up. market is not picking up very much. china renaissance equity research analyst. if you missed any part of the conversation, tv is your function. you can watch past interviews, watch us live and dive into the functions we talk about become part of the conversation by sending us instant messages. tv . this is bloomberg. ♪ ♪

shery: softbank has announced it is launching a second vision fund, worth $108 million. our asia tech reporter has the details very what do we know about this? reporter: we know it will be named sensibly the vision fund 2. softbank will contribute $38 billion which is more than what they put in in the original one of 28 billion dollars. it is in line with what we have son,hearing from masayoshi looking to take a more active role and more controlling stake in the fund. so far only softbank has committed come a but there is a list of companies that have signed a memorandum of understanding. it is all new names. there is a half-dozen financial institutions from japan,

mitsubishi ufj, a couple insurance companies as well as securities brokers. the sovereign wealth fund of kazakhstan will take part in it as well as some other unnamed investors. paul: what about investors in the original fund? how many are coming back? >> that is a good point. the ongoing story of the vision fund transitioning was the vote of confidence from the investors pay we know apple and foxconn have signed up, the we don't know how much they contribute. what is telling is the absence of saudi arabia sovereign wealth fund. said the talks are ongoing but you have to keep in mind these are the two original investors that sealed the deal and launched a vehicle two years ago. it would be interesting to see if they don't come back for

more. paul: the asia tech reporter, thank you for joining us. for years japanese banks tried to make money by fleeing negative rates at home and lending abroad. now rates are falling all over the world, business will get more challenging. our reporter has been tracking this. japanese banks report earnings next week. how challenging is it any for them? reporter: certainly not getting any easier. they have been struggling with negative rates at home for more than three years. to combat that, they are extending aggressively abroad. now rates are falling overseas as well so it will put pressure on loan profitability. it will reduce returns they are trying to upset. spreads,h and lending and it is something global banks are facing as well. we saw the earnings on wall flagging the crunch from

lower rates as well. it is something that affects everywhere. paul: is the outlook all dark? further silver linings? reporter: low rates are not all bad. there are a lot of foreign bonds. some analysts are saying they could be able to book games or -- gains or unrealized gains. low rates can boost the global economy at a time when the trade war pressures are not getting any easier. that will help as well. there are downside pressures with japanese banks this year that have been benefiting from low credit costs and reversing a transitions. they can no longer do that. the provisions are now low again. they are losing that driver. another is gains from sales of cross shareholdings and other companies they have been selling.

the stock market is softening the gains. also going to moderate, can't rely on the technical factors to prop up earnings in this fiscal year. we will have to see how this comes out when the three megabanks report earnings next week. hope of --so we sumitomo reporting -- week of asia finances. thank you so much. there a lot more earnings next week. the tech giants continue to be in focus amid trade tensions with weakness in china a key area to watch. we will get apple earnings tuesday as well as the first post blacklist results out of huawei. on wednesday we have samsung which will give us more insight into the trade impact on bellwether -- with a bellwether chip sector. send events, the u.s. will its top trade negotiators to shanghai monday for the first

high-level face-to-face trade talks with china since may. the boj meets tuesday amid pressure on the governor to boost stimulus. this is a day ahead of what will likely be the first fed interest rate cut since the financial crisis. adding to the chorus of central banks, a rate decision from the boe as a grapples with exit risks and weaker growth at home. let's get a preview of what to watch in markets later this morning. are gauging reaction to the biggest drop in hong kong exports since 2016, shipments sinking for an eighth straight month with no relief in sight. looking at ratings here, credit suisse upgrading china resources to outperform and raising the price target seeing it as less policy risk related. angie of securities cut the stock to hold for a lower target at nine dollars hong kong.

they listld building, of a price target as a potential merger with china state shipbuilding, seen boosting market share. it is limiting competition in similar projects. moveinson telecom could after they were downgraded to equal weight with earnings under pressure amid continued downward trend into financials of hong kong while operators -- shery: that is it from daybreak asia. coverage continues as we look ahead to the start of trade in hong kong, shanghai and shenzhen. stand by for the ♪ china open. this is bloomberg. this is bloomberg.

>> it is 9:00 a.m. in beijing, singapore, and shanghai. we are counting down to the opening of trade on my main -- mainland market. >> central-bank is in focus. the fed and the boj are up next. yvonne: and amazon may not deliver. income forecasters short on expectations. the concerns over heavy spending. number two has support from apple and others.