paul: sophie: i'm sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: asia." ♪ paul: our top stories, the fed says today's rate cut does not mean the start of a new easing cycle. traded talks go back on hold until september after little progress in shanghai.

washington says the meeting was constructive. joe biden is the front runner of the democrats second night of debates. breaking news out of south korea. we are getting cpi inflation numbers missing expectations for the month to month. it is contracting 0.3%. the second month seen cpi inflation in south korea track in the negatives. in expectation of prices to stay flat, but we are seeing deceleration month-to-month. year on year, it is also a miss. 0.6%tion accelerating instead of the expected 0.8. also deceleration from the previous month of june. year on year growth of 1% acceleration of core cpi year on year. that is a little above

expectations, but the numbers that matter, month-to-month and year on year are missing estimates. month-to-month deceleration and deflation for a second consecutive month. we have seen pressure given oil 14%es, brent crude was down on average. this could put pressure on prices. we still have to say, very well below that target of 2%. lowerven after the ok their inflation forecast to 0.7% back in april and adding that the be ok can continue to ease policy if they want. ahead withbusy day more earnings. let's turn to sophie for a check of the market. sophie: busy day indeed. the red.ly in that looks set to continue on a

fresh trade month. it has triggered further flattening in the treasury yield curve, plus more earnings to wade through from across the region including hong kong, retail sales on the city's economy. the cost may extend wednesday's decline. jumping into the terminal, in one hour, we will get korean trade numbers. exports and imports expected to have shrunk in july, with exports dropping 11.5% on a yearly basis. that would be the eighth monthly decline in the semiconductor sector. up, monthly sales data from korean carmakers will further push up the picture. paul: let's check in on the first word news. >> data compiled by bloomberg indicates bad news for earnings in china. more than 1600 companies

offering guidance, 40% predict a fall in earnings from the year ago. that is the most since 2016 in terms of firms having larger profits. economy come across the after domestic output expanded at the slowest pace on record in the second quarter. street protests of the trade war and the slowdown in china are all blamed for growth in hong kong, declining in the last quarter. gdp shrank 1/10 -- three tens of 1% compared to forecasts of 1% growth. taiwan grew faster than even the most bullish forecast as domestic demand helped overcome the hit to exports from the trade war and weakening will growth. japan says it aims to remove south korea from a list of trusted export destinations, rejecting u.s. efforts to calm tensions between the two countries. the government says the move is necessary for national security

although no date has been set for korea's removal from the white list. u.s. secretary of state mike pompeo is to meet with both sides in bangkok this week. china is raising the pressure on taiwan, suspending a program that allows tourists to travel to the island. the ministry of culture and tourism says that is effective from the start of august. that means chinese nationals can only go to taiwan in tour groups. the move comes as china attempts to isolate taiwan and its independent leaning president. exxon mobil's u.s. refining and chemicals operation faces disruption after a major complex in houston erected in flames. 37 people were injured. most suffered minor burns and the city briefly ordered residents to seek shelter. analysts say the shelter could cripple u.s. chemical business as half its operation is based at the site. global news 24 hours a day on

the air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ shery: thank you for that. news, beyond meet secondary offering is set at $160 per share. this is the vegetarian bigger company that has seen a rise since its ipo may 1. it surged nearly 800%. ons coming as shares plunged plans to offer shares. new price targets also showing analysts see further declines for the stock after the rise in its ipo. we are getting the headline that beyond meet secondary offering is set at $160 per share. after hours, seeing the stock sink almost 6%.

beyond meet, lots of expectations for the company when it comes to the alternative meet market that many see as being as big as $10 billion in the next decade. story, as expected, the federal reserve made its first rate cut since the death of the financial crisis. why did markets and president trump react so badly? kathleen hays is here with what many see as a mixed message. give us the details. basis point, the 25 rate cut seems pretty well telegraphed. seems like the markets have set themselves up for a more aggressive message, even though they didn't cut 50 basis points. something signaling more rates to come, we be setting the stage for a rate cut in december. the fed talked about this as insurance against downside risk.

not necessarily the start of a long easing cycle. they did not say it would not be more rate cuts, but not a long easing cycle. powell said i am not saying one and done. this is important. >> let me be clear. it is not the beginning of a long series of rate cuts. i didn't say it is just one. i said, when you think about rate cutting cycles, they go on for a long time. the committee is not seeing that. shery: -- >> i think this is important. you can't look at the past and see what the fed is going to do, because the fed is at the point with a trade war which has slowed down the global economy, hit manufacturing. the u.s., jobs are still growing and consumer spending has bounced back. this is reflected in a key statement from the fed policy ometement, five paragraph t

which gives you a sense of what they want to communicate. in global development of economic outlook and deflation pressers, the committee decided to lower the target range to 2.5%. fed said she was not interested in insurance rate cuts. people will reach for yield. there will be overarching excesses. the boston fed dissented as we move on to look at the story against what the fed decided to do. one thing everyone was in agreement with was ending the balance sheet runoff. they ended early, because the inmer new york fed said january, what happens if you need to cut rates, can you keep running off the balance sheet? he said, of course not. we will not have tightening and

easing at the same time. it is not a surprise, but it is significant. paul: let's talk about some of the reaction. president trump complained about the fed, calling for a big rate cut. obviously, this doesn't qualify. there was pushback from seasoned wall street fed watchers as well. why was that? >> sometimes you can't please anybody. that is what happened to jay powell today. the president did tweet, not as emphatically as in the past, the fed let us down. economyhikes more, the is growing, helping with the trade war. ago, a richmond fed bank economist, someone who has been watching the fed said the action wasn't warranted and paul had a tough time defending it. we did see stocks plummeting. is not clearlyon warranted. powell struggled to provide a defense of the action and is

clearly suffering anxiety of downside risk. the press conference provided a compelling case that the rate cuts will cut these issues in a significant fashion. he said it will not help the economy and will just help markets and the white house. one more thing i would like to throw in, we just had the bank of japan meeting saying they could ease more if they had to. everyone worried about the fed. maybe governor caretta got it right. the fed made its rate cut, but did not signal in aggressive move to more cuts. this will have more input asian's to other central banks around the world. -- this will have more impact on other central banks around the world. paul: the hong kong cutting base rates to 2.5%. this move was widely expected. yesterday, we saw gdp numbers coming in week, retracting in

the second quarter, .6% on year. hong kong facing economic headwinds and social unrest. ratekma cutting that base to 2.5%. retail sales out of hong kong for june a little later on. u.s. and chinese trade negotiators will meet in early september after talks yielded little in the little -- in the way of concrete progress. washington will host the next round and describe the shanghai talks as constructive. let's bring in sarah mcgregor. nice words, but not really any concrete progress. >> absolutely. the big take away is that there does not seem to be a deal insight in the immediate future. they will speak again in washington, but that is weeks away. if we look at the previou were g

fast, trying to get a deal. sides areikeoth willing to give this more time. it could have to do with august being a holiday month, but it really shows that this big push to get a deal, they have taken a step back from that. shery: there was also concern among u.s. delegates that the participation of the minister in the stocks could lead to a more hard-line stance from china. what did we see? view, as wellhis as the idea that a could show that china was more serious about getting things done. and reads you can try the tea leaves by who is involved, we have tried to do this from the white house, whether the hawks or the more market minded were in charge, it just seems like above all, getting a deal is going to be the hardest thing to do.

the u.s. is stuck in its position of changing china's economy. china wants tariffs removed. it is hard to imagine where either side is going to budge. they can't seem to agree whether china has agreed to buy more u.s. agricultural goods. u.s. seems to think that they have and china seems to be more of a background issue for them. much for theyou so latest on trade. still ahead, joe biden takes the debate stage along with nine other presidential hopefuls for another night of debates. we will go live to detroit. next, the u.s. stocks fell the most in six months as jay powell dented hopes of more easing to come. this is bloomberg. bloomberg.

♪ paul: this is "bloomberg daybreak: asia."

i am paul allen in sydney. shery: returning to the latest u.s. market action, qualcomm and fitbit are tumbling. in the regular session, apple was a bright spot and ge got mixed reception. sue has more on this. it was a roller coaster ride not only because of the fed, but because you got so many results. the results are all over the map and you have the fed throwing cool water on any rally you had. , because we did have the dollar rising, oil dropping hard on the fed comments. interesting as we go into the bonds. the two, looks inter-'s -- looks sensitive to interest rates. let's take a look at the big movers. the story stocks include general electric. the market ase

they boosted their forecast. the cfo talked about stepping up the company. despite headwinds from the grounding of the boeing 737, jp morgan -- they are not liking what they are hearing. they said sell. apparently the turnaround taking longer than some are comfortable with. nordstrom adding it out of the ballpark, coming in with strong results. that has to do with the nordstrom family members feeling they are in early stages of talks. one possibility would be for the family to buy back shares at a premium. macron and microsoft, part of the tech downturn. microsoft taking a tumble on the latest news and let's look at the big movers, which i call the day after earnings story. with up big on its results advanced micro down in a big way

on its week results. let's go to the bloomberg, as apple approaches the trillion dollar mark again and that is something many are watching. extended's get to hours. qualcomm falling after missing estimates. sales to get a boost from the apple settlement. >> it looks like investors looking at the outlook, let's go to the number of stocks reporting. you see the various moves. qualcomm down after missing software and internet-based company also down. you have metlife and insurance doing well. qualcomm, fourth-quarter revenue is the lowest estimate and they are saying the technology licenses are continuing to pay. that was a right spot gearing up for the 5g debut. hurting near-term. 51%,t sales surged accounting for more than half

the revenue, but weaker than expected sales so they are hurting big time. back to you. paul: thanks very much. joining us now is the chairman and cio of cumberland advisors. thanks for joining us. let's get to the fed decision. facedid the fed would be with a challenging communications effort. considering the profound reaction we saw across all asset classes, equities, the bond market, did jay powell fail that challenge? could havejay powell had greater clarity. he used three different metrics to try to justify the quarter-point cut. he did it on the heels of williams comments, which are seen as a gaffe before the blackout.

he painted a picture or attempted to paint a picture of the last eight or nine months in a sequence, but when you look at the explanations, you come away confusionzle, and the is introduced into market prices. i think bloomberg's mike mckee had a profound question in the q and a. about how much of a change in cost of capital does this cut really make and how do you justify that? powell himself said to mike, that is a great question. he attempted to answer it and we come away with the results of clearwhere we are not about a future path. kathleen just summed it up very well in her summary of the day's activity. i would say we are back to where

we were nine months ago and when it comes to markets, markets a lot more than we can reasonably expect. paul: let's talk about that more. if we take a look at the interest rate rob ability after this decision, markets are already doing as you have described. 61.4% chance of another cut at the next meeting. are they getting ahead of themselves? are, butt know if they you have an interesting question about a rate cut now. mortgages will get refinanced because of this? not very much. what is going to happen to the cost of financing a car? not very much. how many borrowers are borrowing , if we had bank borrowing that was robust, we wouldn't have

excess reserves being parked at the fed at 2.10. therein lies another thing. you notice the excess reserve rate was not adjusted lower. 2.25, 2.1 isge is the floor. correctthe fed has to to get to a corridor. at least they stopped shrinking the balance sheet. they were trying to do two things at months -- at once and they were opposite at each other. let's focus on the interest rate. hind the scenes, there is one other thing. the boeing adjustment because of this prolonged 737 max 8 shoe takes 3/10 out of gdp growth rates. it has as exports, major impact. it is a big deal.

while it was not in the second quarter gdp numbers, that may have been in the thinking of some people who voted for the cut. shery: we are seeing already the impact on ge numbers, with aviation. staying with the fed and the economy, we have seen consumer spending be pretty strong. this chart showing that consumer spending has seen the strongest performance since the fourth quarter of 2017. how much of a tailwind will this be if it is one cut or more or two more cuts, anything other than just reinforcing positive feedback that we have already seen happen because the american consumer remains strong? >> the american consumer remains strong and we are still creating jobs. we will find out more coming up in a few days, but we are

creating 2 million new jobs in the united states every year and we do have slowly rising labor income. the flipside is if you lower the capital cost and don't have a multiplier coming from it, at the same time you cut this interest rate, you cut the interest rate on everybody's savings. therefore, you give less money to the consumer household to spend. there is a lot of focus on the capital side. the president likes to slam the fed and wants them to cut the capital cost side. what the president doesn't say is, by me advocating for that, i have cut the savings account -- 30n 30 american million american households. i have grandchildren with savings accounts. are say to trump, you taking money away from me. there are two sides to this.

staying on the point that the flow of economic data has been stronger than expected, when we look at that, how should the fed take advantage of this positive economic data to recalibrate? >> that is the question that came from the dissenting votes, which said, why are we doing this? a reason with this unemployment rate. aroundon rates somewhere two or headed there. why cut the interest rate? what makes us so sure of our forecast? is a fair debate. at least going forward, it is going to go forward from a more level playing field.

warn,k powell wanted to we are not in a long cutting cycle, although we may have another in september. shery: always great to have you. thank you. of the latestheck british flash headlines. aston martin is facing questions about its future. the company's one a lost and slashed sales forecasts more than 10%. seen sharesve tumbling in the last week that prompted questions about aston raising more funds. shares have struggled since lifting in october. apple is posed to rejoin the trillion dollar club and take ac alongside the world's most valuable company. shares briefly topped $1 trillion in market value after the giant reported earnings cheered by wall street.

amazon is not far behind. thanks very much. more to come in a moment. qualcomm offers a downbeat sales forecast. details next. this is bloomberg. ♪

>> trade talks will resume in september after meetings in shanghai ended with no progress. the two sides discussed purchases of u.s. farm produce, ip rights and nontariff barriers. the white house said the talks were constructive and washington will host the next round. the people's daily newspaper rejected president trump's description of ripoff china. president trump tweeted that sharon powell has let the country down. he posted after the fed lowered

by one quarter-point despite the president demanding a bigger cut. reduction is the first in more than a decade. there were two dissenters on the board. out against making any cuts. >> is intended to ensure against to help offset the effects these factors are having on the economy and to promote faster return of inflation on our 2% objective. >> a survey says u.s. hiring accelerated in july for a second month, undermining a strong job market that is driving the longest growth on record. data suggests private payroll decreased by 160,000 after a revised 112,000 in june. a bloomberg survey forecast a rise of 150,000. gains were led by large businesses while hiring at small firms was moderate. the trump administration is turning up the heat on iran

posing sanctions on the foreign minister. washington says he is iran's leading diplomat who acts on the half of the ayatollah, who is under u.s. sanctions. the move is seen as reducing the chance of a solution in the persian gulf has seen warships sent to the region and tankers seized. global news 24 hours a day on the air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ shery: we are half hour away from the opening of tokyo, sydney and seoul. sophie, what are you watching? the yen,hecking in on looking steady after hitting a low against the greenback. 109 if a move above markets confirm no september cut. fed still on for a chance of another round. watching the radar

this agency after results missed the lowest estimate. it is in bids to buy 85% of australia's qualcomm. cutting for your earnings forecast on sales for the high-tech devices and mazda may move on a news report of a 7% drop in operating profit the first quarter as u.s. sales fall. hoursqualcomm fell after after a downbeat forecast. this indicates lingering weakness in demand while consumers wait for next generation wireless technology. let's bring in our reporter. what are the implications for slowing demand? said, for the rest of the year, things are not going to look good. particular, they have the dynamics going on in that

market, which is the largest smartphone market. they said things will not get better until that is up and running and those funds are on sale to get consumers excited again. shery: this was supposed to be a quarter of strong background and momentum. what did the numbers actually look like? >> the numbers were pretty horrible is the best way to describe it. the top end of the sales forecast. million south700 of what analysts were expecting. this is the time of year when things get better. qualcomm is saying, things are unusual. we have got the huawei situation. we haven't totally given up on 4g head of 5g. shery: qualcomm in a licensing dispute. any updates? >> that has been going on for some time and it is less than

ideal, because that is where the majority of its profit comes from. they said we are still negotiating with huawei. in term payments are going to stop as we try to push the deal. what exactly that means, whether they are closer or further away wasn't made clear. what the ceo told me is we are pushing to wrap up an agreement. paul: thanks for joining us. coming up next, now that the fed has delivered cuts, businesses are asking, what happens now? our next guest tells us what to watch for in the weeks ahead. this is bloomberg. ♪

shery: i am shery ahn in new york. another string of presidential

candidates takes the stage at the top of the hour in detroit in the second night of debates. front-runner joe biden will be among those competing. our chief washington correspondent is there. in the first debate, we saw, harris taking on joe biden on school desegregation. how high are the stakes this time around? >> incredibly high. i literally just spoke with a staffer and said, how is joe biden going to do tonight? is he going to get back on offense? they said, i hope so. just contrastot themselves from, harris, but cory booker, the democrat from new jersey and also the progressive candidates from last night who are casting in ideological shadow over the biden campaign, virtually forcing every other candidate to respond on issues like medicare for all, wall street regulation,

trade negotiation. general motors is headquartered here in detroit. and the fight for union workers, offer auto workers, for refinery workers, for the 70,000 voters who flipped from obama to trump, this is what they will face for night two. to what degree is this an ideological struggle in the democratic party? is it a progressive or a moderate being placed to defeat donald trump? foremost, you almost expect either political party to air their grievances during a primary process. we are seeing that on display. the tension between centrists and progressives in the democratic party, but the second point i would make is it is rare

to have candidates openly saying that some of the policies being espoused by the more democratic-socialist candidates would hand president donald trump a second term election. this all comes down to the voters they are looking to reach. it is the working class voters that the biden campaign says they will be able to win back from president trump. there are other candidates on the stage tonight. i have got my eye on the secretary who lian castro, who had a breakout moment in the first debate in miami when he talked about immigration. how will those policies play on a broader scale in terms of winning back working-class voters? can he positioned himself outside of being a one issue candidate? stakes are high for some of these candidates. the threshold for qualifying in the next round in the fall is

more difficult. i asked the dnc committee chairman earlier about that and he says they have got to make their case and ultimately, this field is going to dwindle. shery: the president will be making his case that the economy is strong. is there anybody who can actually give a counter argument to that and be able to beat president trump? that,ck points on sometimes it feels at the president is not just running against the democratic candidates, but against jay powell. those tweets today were brutal. on the issue of trade negotiation, there is the streak that runs in the sense of populism on the right and the left. that perhaps is why the president has foreshadowed that he might not get the china deal ahead of the election, because he is banking on the usmca with democratic support. case fornot least, the

democrats is that the economy is growing but not as fast as it should. wage growth is not growing as fast as it could and income inequality runs rampant. how will joe biden push for a policy of his own? obama,icies of president not differentiating himself from sinners and warren, but what will his case be about a biden platform unique to his campaign? chief washington correspondent, thanks for joining us from detroit. let's get over to sophie in hong kong for what to watch in the markets. tokyo very much a focus after mixed results. numeral returning to profits with lower profits from lending operations and large gains from treasuries in the rally we saw.

i want to jump quickly into my terminal to check on the treasury, how you saw markets reacting to the fed adjustment. we saw a flattening of the yield curve and a spread touching the flattest level since march after the curveball from jay powell. that spread reversed course after moving toward positive levels ahead of the announcement. indicators that traders see slower economic growth. the market was how interpreted powell's comments. how are economists reacting? let's bring in the chief u.s. economist at citigroup level markets. great to have you. we have seen statements about a midterm policy adjustment, chair powell not ruling out cuts. be ais is always going to press -- a difficult press

conference. you have 100 basis points of cuts priced in, now the fed is unlikely to follow through and i think in the fed's view, if you pushed back too hard with the market is pricing, that will tie in financial conditions and could lower equity prices. walk.is a fine line to i think chair powell is doing his best to preserve the options that this could be a cycle adjustment where we have 50 basis points or so and that is our expectation. i think we also have to be aware of the possibility that when the fed starts cutting rates, they could follow through. that is what the market is trying to come to terms with. is this going to be insurance cuts? shery: that statement of closely monitoring -- monitoring, without be slightly hawkish?

> slightly hawkish. i think it shows divisions in the community. some officials are more focused on global outlook, which is soft and creating risks of the downside. other officials are watching domestic data, strengthened recently. that is why you have crosscurrents there in the committee. paul: you initially made and then later changed at of consensus calls for a rate cut. you have a bit in common with those dissenters. did the data warrant this move? >> i think you could not have shown this slate of data to any andomist six months ago have them thinking that the fed would be cutting. i do think this is a cut that is not premised on domestic data. it is premised on downside risks. that domestic data

would stay strong. i think we were right on the data. i think what we got wrong and what the market is trying to come to terms with is how much are they looking at domestic factors which are relatively strong versus global factors which are week? paul: one of the risks of this easy policy that the fed is artificially propping up week earnings. >> we had the former fed president speaking about this that we think about the trade-off for the fed being between growth and inflation. when you don't have much inflation, you have to think more seriously about the trade-off. at lower rates are going to help growth but also boost asset prices. we have valuation close to all-time highs. it comes towhen domestic economy, is it concerning that when it comes to

his this investment, we have seen downside? this chart shows that we have seen when it comes to business investment the first drop since 2016. >> that is concerning. thehere is one weak spot in economy, it is not the consumer, it is his and manufacturing and the industrial sector. that is looking at downside risk. strong,umer has been so job growth has been strong. i don't see much risk of a near-term recession or downturn, but if you want to look for softness in the u.s. economy, i think is this investment is a big part of that. shery: when are we going to see ongoing trade tensions and tariff impact flowing to consumers? >> it is interesting. we haven't seen it that clearly in the data. some categories of goods have seen higher prices. for the most part, tariffs with china have been focused not on

consumer goods, but production. if we were to get an expansion on those, a broader range of goods, we would be more concerned about the effects of consumption. right now, it is having a minimal effect according to our estimates. paul: given that there will be no talks until september, do you see both sides running down the clock toward the election? >> it certainly seems that these negotiations are getting further drawn out and you have to think about the election as a fixed point. we get closer to that election, it becomes less likely that we get resolution. we are still hopeful that something positive can happen, but as we get into 2020, we are talking about negotiations continuing until 2020, we get more concerned about that outcome. do we have to consider

that there is trump in all of this. we have seen the president tweet about how the fed has led us down. i think the market is watching those tweets. it is hard not to pay attention. data,d is looking at the trying to figure out the best policy to maneuver through the data, and it is a complicated outlook that is pretty positive for the domestic economy. i think it is the fed reacting to that and not the trump tweets. citigroup level markets chief u.s. economist, thanks for joining us. just a reminder that on friday, we will speak live with mike pompeo at the summit in bangkok. don't miss that exclusive session hosted by bloomberg at

10:00 a.m. hong kong time, 10:00 p.m. thursday night in new york. don't forget our tv function where you can watch any of theve into securities or bloomberg functions and become part of the conversation during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia" i am shery ahn in your. paul: i am paul allen in sydney. regulators face criticism amid -- improving the 737 max. officials are citing reports of lax oversight. updatedware was later

after complaints they could crash in -- after a crash in indonesia. they said they would welcome an external review of the systems. >> this was a complex plane. it did a lot of different things with the software system that was not mentioned in the manual. faa agreed pilots only needed one hour of ipad training to get up to speed. that is in copper hence a bull to me to be in that position. shery: shares fell the most in a most five months after the reported lower subscriber growth. -- 108 million subscribers to its premium service. the ceo says they failed to market a special subscription plan for students that it plans to make up the lost ground by the end of the year. more criticismg

over age discrimination in the on growing lawsuits. the vice president said ibm fired up to 100,000 employees in the past few years, a strategy that targeted older workers to try to make the company see cooler to younger applicants. the company said its strategy is based on value for its clients. shery: turkish airlines said to be interested in the struggling minority stake in australia. we are told the decision is in its early stages and hma has been open to offers for 20% stake for almost one year. the chinese conglomerate is selling assets after raking up one of the country's biggest asset debt loads. market opened in tokyo, sydney and seoul. what are you watching, sophie? board: futures across the ahead of a busy day of earnings.

we have already had inflation from south korea and in a few minutes, export numbers are expected to show a continued drop in korea's semiconductor space. nikki futures in osaka pointing to a drop of 1% due to the likes of yamaha. going into a fresh trading month, japanese stock investors bracing for a typical august. the stock has seen foreigners turn net sellers. that is set for a market facing downside risk, including the impending sales tax hike adding to incentive to sell japanese equities. foreign plans shifting from stock to cash if corporate earnings are dented by a slowing china. stock wasf note, the downgraded to sell after a second quarter operating profit missed estimates and operating

profitability is declining for the fourth straight year. 44%sonic in focus after a drop in operating income due to lower sales in china, higher development costs in automotive's and sluggish tv sales. takeda pulled through with a lower operating cost and expected. shery: thank you so much. a quick check on the asian markets, kiwi stocks falling for a second consecutive session. widespread downside pressure after the fed cut rates, but it was more of a hawkish cut and markets are still trying to figure out the magnitude of these rate cuts with fed chair powell's press conference seeming to cement the idea that this could be a one and done. u.s. stocks falling the most in two months. seeing futures across asia under pressure with sydney futures

down one half percent. asx 200ing after the fell yesterday after record highs we saw earlier. 67 aussie dollar holding at after the climbed for the first time in nine sessions. 1% and downs down seven tents of 1%. cpi data earlier missing to the downside. export numbers at the top of the hour. paul: let's have a look at currency is. decision,er the fed we see japanese yen weakening against the dollar. the aussie continues to weaken and as you mentioned, we will keep an eye out as we await more

eight of from korea. asia at thee, more and of the hour. caribbean exports will be released. a senior emerging major economist will join us for reaction. this is bloomberg. ♪

paul: asia's major markets are just about to open for trade. haidi: good evening from new york. >> welcome to "daybreak asia." paul: the fed delivers insurance cuts and a mixed message about further easing. talks go back on hold until september after little progress in shanghai.

washington says the brief meeting was constructive. haidi: and we will dig into the prospects for rio tinto with iron ore prices riding high. we are joined by an analyst from bloomberg metrics. paul: some breaking news on the terminal, we have exports from south korea, as promised, for the month of july, and it is not as bad as we were expecting, although still bad, 11% decline in exports for the month. the market had been expecting a decline of 11.5%. imports much improved, a decline of 8.1% expected. it is only down 2.7%. the trade balance coming in at 2.4 billion dollars, a significant miss. the market was expecting $4.6 billion. somewhat of a mixed bag, though i suppose it could have been worse in terms of korean export numbers. we do have the bank of korea

signaling today that more easing may be required. let's get straight to the market action with sophie in hong kong. sophie: taking a look at the reaction to the data in seoul, the cosby opening lower by 6/10 of 1%, while korean won is on the back foot. whichalso got inflation, came in weaker than anticipated. a lot for investors to digest as the downside risks are building, reinforcing the case for the be ok to continue its easing cycle. to continue its easing cycle. with tokyo stocks, the topix and the nikkei 225 on the back foot, the nikkei off 1/10 of 8%. looking steady after a two month low. it is a busy day for earnings with names like yamaha do to report. plus we are watching japan's

megabanks after their results. to check up the board in on the antiquities, the asx 200, we have an opening lower by a third of 1%, while the aussie dollar just holding on to the advanced that was part by inflation. the kiwi dollar is set for a sixth day of losses. more policy divergence between the rbnz and the fed. qe stocks are headed for a second day of losses. haidi: for more to watch on the region -- for more on what to watch in the region, we have mark cranfield. let's start in china, because last batch of the terrace increases now that the trade talks are stalling. see thenk you will markets start to push for a slightly weaker yuan now. one of the interesting things people talked about a lot last year was how the dollar yuan rate eventually rose to

close to 6.98 last year. a lot of people assumed that was partly to offset the tariffs imposed on china, so a weaker yuan almost totally there to offset the increase in the cost of china for doing business with the united states. one of the things that just happened this year is the yuan is slightly stronger. the united states have increased tariffs on $200 billion worth of chinese goods, but that is not reflected in the exchange rate. the fact that the trade talks between the u.s. and china have been pushed back further, it does not look as though they will restart all september, so obviously there is some disappointment, plus we have had increase ofad an people taking away how far the fed will lower rates, so that's positive for the u.s. dollar. when you look at the rate where it is today, it does not really reflect all the information which has since happened. there does seem to be room for

the yuan to weaken in the near term. the pboc has been strict about keeping a narrow range in the currency with these daily fixing's, but if we see the spread between the offshore and the onshore yuan start to widen, people will start to believe the pboc has room to move a bit. it would not be surprising if we see the yuan creep a bit weaker from here. haidi: especially if we get a stronger dollar, despite the fact that the fed just cut rates, right? mark: the big part of this is really expectations for the future. what the dollar strength is responding to is the fact that just 24 hours ago, people cuttingthe fed may be as much as 100 basis points worth of cuts in the year ahead. obviously they are having to reassess that, so that helps support the u.s. dollar, because short-term rates in the u.s. are still around 2%, which is a lot higher than you have in any other major country.

you've got rate cuts going through in australia and new zealand. the bank of japan may ease policy as well. the spread between short-term rates in the u.s. and those countries is wide enough to help support the dollar, plus you have enough uncertainty on where trade is going. the future direction of the economies in the world, all those things are coming together to help sustain a bid for the u.s. dollar. you also get compensated for holding it. you throw those factors together and it is not surprising the dollar is managing to hold onto a bit of strength. that is how it is probably going to play out over the next few weeks as people reassess the direction for interest rates and they realize that it is better just to stay in the u.s. dollar. paul: we have seen the south korean data out just a few minutes ago, cpi contracting more than expected, exports contracting not as much as expected in july.

is this going to change the picture for the bank of korea? mark: not really. they have already been speaking again today, saying they are leading toward further rate cuts in korea. if you look at the series of data which we have had for the last six months or so from korea, it has been pretty poor. the export picture is no good, growth is no good, inflation is very soft as well. there is nothing much going right for the korean economy so far this year. the bank of korea has already moved once. they have plenty of room to move again. i would not be surprised at all of korea lowers interest rates again before the end of the year, and that is reflected in the bond market in korea, which is looking for that. and the weakness we are seeing in korean stocks obviously adds to the picture. there is not much confidence in the direction of the korean economy right now.

they could do with some help from the bank of korea. paul: thanks for joining us. from the market's reaction to the fed to exactly what jay powell did and said, let's get to our global economics and policy editor kathleen hays, who continues the conversation. the big moves across markets really same to hinge on a couple of things. trade is expected to send a stronger signal on future cuts. can we start with what the fed actually said? --hleen: another tough j tough day for jay powell. you don't want to start your press conference seeing stocks plummet, but as mark just said, the markets were expecting an aggressive fed statement. but we got from jay powell is out,they are ready to take or have taken out a rate cut that is an insurance against downside risk. a lot of the recent data on

spending in the u.s. with consumers and jobs has still held up. he did not say it was the start of a long easing cycle. he made it pretty definite to say that this is not necessarily one and done. let's listen to jay powell at the press conference earlier. chair powell: it is not the beginning of a long series of rate cuts. i did not say it was just one or anything like that. when you think about rate cutting cycles, they go on for a long time, and the committee is not seeing that. the fed, in some ways, is in uncharted territory. how often have banks like the federal reserve had to have policy impacted by a global trade war that the united states is one of the two big parties in ? this is putting a shadow over u.s. growth, over global growth. let's listen to one of the things that came at the top of the statement. in light of global to elements

and muted inflation pressures, the committee decided to lower 2.25%.e to 2% to they are really worried about the trade war and the global slowdown. another thing that happened dissents high-profile because they don't want to cut rates now. they don't see the need for the insurance cut. end the balance sheet run off a little bit early. the quantitative tightening is over. it does not make sense to cut rates when you are running out the balance sheet, said that is consistent. not surprising, but significant. haidi: not surprising we president trump complain about the fed. we also had seasoned wall street fed watchers complaining, too. mark: it would not -- kathleen: it would not be a fed meeting without donald trump complaining, but trump feels the

fed should have made a bigger rate cut. he wants more help from the fed when it comes to fighting off the impact of this trade war. it shows no signs of ending. yes, let's move on to mccarthy, the chief financial economist at jefferies in new york. he was an economist at the richmond fed, a season fed watcher. he says he thanked the fed is taking an action that is not defensible, and that jay had a tough time giving a defense of it at the fomc. the fomc is clearly suffering from anxiety, but neither the policy statement are the powell press conference provided a compelling case the rate price stability rest these issues. when michael mckee estimate -- asked him about this, jay was may be struggling a bit to answer. let me share you with something jim bullard told me last month when i asked him how about what a rate cut would do for inflation. he said at least it will show with the fed is serious about

moving inflation higher. he was in the camp that wanted to cut. in terms of future rate cuts, september rate hike not ruled -- not ruled in, not ruled out. intrade talks will resume september after meetings and shanghai ended with no progress. forced sides discussed technology transfer, ip rights, and nontariff carriers. the white house issued a statement saying the talks were constructive, and that washington will host the next round. the people's daily newspaper rejected president trump's early description of "ripoff china." data compiled by bloomberg indicates bad earnings in china, with more than 1600 companies offering guidance, 40% for the fallen earnings from every year ago, the most since 2016 in terms of firms reporting smaller lot profit, deeper losses, or a swing into a loss.

this is after domestic output extended in the slowest pace on record in the second quarter. street protests, the trade war, and the slowdown in china are blamed for growth in hong kong declining in the last quarter. in strike three tents of 1% june. meanwhile, taiwan grew faster than even the most bullish forecasts of the period, as domestic demand helped overcome the hit to exports from the trade war and weakening global growth. japan says it still aims to remove south korea from the list of trusted export destinations, rejecting u.s. efforts to calm tensions between the two countries. the government said the move is necessary for national security, although no date has been set for korea's removal from the so-called white list. u.s. secretary of state mike pompeo is set to meet both sides in bangkok this week. china is raising the pressure on taiwan, suspending the program

from 47owed tourists cities to travel to the island. the ban is effective from the start of august. that means chinese nationals can only go to taiwan as part of tour groups. the move comes as china tends to isolate taiwan and its independence-leaning president. global news 24 hours on a day, on air and on tictoc, powered by more than when he 700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thanks. let's check in on stock movers in asia. sophie tomorrow, posting some big games, yeah? ashie: yeah, jumping as much 9.4 percent, after the lender posted a recovery in profit for the first quarter, the rebound coming for the first time in six quarters after trading revenue made up for a persistent slump in its domestic retail business. switching the board, i want to

check in on to keita, rising as its as 5%, the most after raised its full-year, forecasting a narrow operating loss. checking on mazda, on the other cited the spectrum, that stock under pressure after the nikkei reported the call maker -- carmaker will likely report a 70% drop in operating profit as u.s. sales slow. seoul, the stocks leading as much as 7.4% after its subsidiary was downgraded amid potential tariff risks. still to come, we will have rio tinto reporting earnings later on thursday. we will speak to bloomberg's top analyst on the mine, coming up. thursday, we just

had south korea inflation and export. up, china manufacturing. we will run through it all. this is bloomberg. ♪

paul: this is "daybreak: asia." haidi: south korean -- shery: inflation down in july. let's discuss. great to have you with us. of course, we have also seen south korean expert numbers plunging 11% again, so this is all just -- does this all to strengthen the case for more be ok rate cuts? >> i think that is the case. faceda similar situation by most asian economies.

right now you are facing a double whammy that global growth -- they are facing the collateral damage from the u.s. and china trade tensions. domestically, economic conditions are not picking up fast enough. athink that is the making of strong case for asian central banks to continue to use the policy. the fed officially engaging in policy easing, that is opening the door for more policy support as well. shery: bill bc morrison more sinker and is asian and monetary policy cycles between the u.s. and asia -- will we see more centralization in monetary policy cycles between the u.s. and asia? >> exactly. they have a general momentum over the past 15 years or so. we have recently conducted research looking at the policy easing cycles of the fed. on average, the fed eased policy

asia5 basis points, and generally followed the same step, using -- using banks slightly less. clearly there is a synchronization of the policy cycle. the easing in the u.s. is opening the door for more monetary support in asia. paul: that's something you would expect to see coming out of the pboc as well. manufacturing pmi's a bit lower than expected in july, i guess to be expected as the trade war deepens, but when are the policymakers going to move? aidan: china, we are seeing slightly different easing of monetary policy in china compared to other central banks. monetary policy easing has been a lot more prudent this time around, compared to past easing. clearly from the meeting that took place early this week, the

signals are clear that the direction of policy is easing towards a more proactive support . having said that, i do think the policy package going forward is going to tread more towards physical supporting instead of monetary support, given that aggressive easing is going to sum.erbate the monetary easing is going to continue, but taking place in a more prudent manner. paul: we will have tyson pmi's later today, some of these smaller and more vulnerable private exporters. would you expect to see there? aidan: in general terms, you look at the pmi numbers, they beat market expectation

moderately, still below 50. if you look at the breakdowns of different size of enterprises, generally speaking, the improvement is coming more from the large corporate, where is this index trends more towards fme's, and you would imagine these guys are still suffering from a wakening of global demand -- a weakening of global demand because of the u.s.-china trade war and domestic problems like high funding costs. i imagine the pmi will still be below 50, potentially showing more of a negative number compared to the official pmi. shery: to your point on large me's, the versus the s official manufacturing pmi numbers showing that yes, the large companies have stayed above 50, but the small and medium-size companies continue to trend down.

how do you fix this two-track economy, and can you do it with more targeted measures? the key reason we think going forward that there is policy easing that is going to be more targeted as opposed to more universal. i think on the fiscal policy, they will have to design it to be more supportive of private sector companies and more targeted attacks and the fee cuts are going to help in that regard. , thee monetary side malaise facing the smaller corporates is the higher funding costs. because of the repricing of a --dit risk, the mining is the money is not going to places authorities want. i think more targeting is going

to help, and we will see this implemented in a more aggressive fashion going forward. aidan yao, thank you for joining us. you can get a roundup of the stories you need to get your day going in today's edition of "daybreak." subscribers can go there on their terminals. it is also available on the app. this is bloomberg. ♪

this is "daybreak: asia." aviation regulators faced criticism in the senate over allegations they let boeing call the shots and approving the 737 max > -- 737 max.

there are citations of >> oversight as the engine was developed -- lacks oversight as the plane was developed. there will be an external review of the systems. paul: turkish airlines is said to be interested in acquiring a minority stake in version australia. it is in its early stages and may not result in a deal. hna has been open to offers in its 20% stake for almost a year. the conglomerate is selling assets after racking up one of the country's biggest corporate debt lows following an acquisition spree. company's one to a loss in the first half and slashed its sales forecast by more than 10%. the news scared investors with shares tumbling by more than half in the past week, prompting speculation about aston martin raising more funds were becoming

a takeover target. next, south korea's economic growth continues with the latest data painting another gram picture in july, but some investors see gems amid the grime. ♪

trump has dismissed the fed's rate cut, tweeting that jerome powell has led the country down. fed loweringer the borrowing costs by a quarter-point, despite the president demanding a bigger cut. reduction is the most in over a decade. there were two dissenters on the fed board, against making any cut. >> it is intended to ensure against downside risks amid global growth and trade policy uncertainty to offset the factors these are having on the economy and to promote a faster return of inflation to our symmetric 2% objective.

>> a private survey says u.s. hiring accelerated in july for a second month, underlining a strong job market driving the longest period of growth on record. data from adp suggests i the payrolls increased by 150 $6,000 after a revised 112,000 in june. 00 after aed by 156,0 june.d 112,000 in china has called on the u.s. to prove it is not behind the continued protests in hong kong. mike pompeo has said such a claim is "ludicrous." the chinese foreign ministry said it is time for honesty and they have the u.s. really cares about the prosperity of hong kong, it would demand the protesters only stick to peaceful means of demonstration. time for theit is u.s. to make an explanation honestly to the world.

if the u.s. can prove it did not meddle in hong kong affairs and promises it will not do so in any way, we welcome that. >> the trump administration is turning up the heat on iran, imposing sanctions on foreign minister job ansari. to act on behalf of analogy oil -- and i a toya -- yatollah ally under u.s. sanctions. disruption after a major complex in suburban houston erupted into flames. at least already seven people were injured, most suffering minor burns, and the city break the ordered local residents deep shelter indoors. analysts say the fire could cripple exxon's u.s. chemical business, as almost half of its operations is based at the site. global news 24 hours a day, powered by more than 2700

journalists and analysts in more than 120 countries. this is bloomberg. paul: let's check in on what's happening in the markets with sophie in hong kong. sophie: we are starting risk off moves on august 1. asian stocks led lower by the kospi. samsung weighing the most on the benchmark. the korean won has fallen to a may 31 low in the wake of data that may have a case for be ok easing.-for bok early in the asian session, we are seeing trades falling and aussie bonds on the back as we wait on pmi data later this morning. oil prices set to snap a five day game with wti back below $58. pulling up the board to check some stock movers, earlier we highlighted the surge of amora on its profit rebound, and others are gaining ground.

a january jumping to high in tokyo after its earnings beat. co. say sliding as much as 9.7% in seoul. panasonic falling after its first quarter earnings were china sales.owing plus, it's tesla battery business posed a loss. shery: trade wars taking a toll on the stock market. however, there could be opportunity in the wreckage. win joins usely from hong kong. i cannot recall the last time we had good news on the south korean economy. this week, we had export numbers for the economy plunging 11% year on year. we are you seeing the opportunities? >> i think what korea should do is to improve the jobs --

improve the geopolitical risk they have seen in the country. if you look at korea's stock , and bloomberg has foreign and domestic holdings data on all these stocks, despite korea's weak export numbers, samsung electronics and hp hynek's are doing well, still up 15% this year. what happens is the domestic sector is in trouble. if you look at the market holdings, they have been buying into samsung and sk hynix thinking they can be weathered through the trade stall. whereas retail investors have been stalling because they feel like korea has too many macro risks. what i think we will have to do is president moon will have to resolve the trade issue with japan.

and they have to have dialogue with neighbors like north korea or russia, and perhaps investors will feel more comfortable buying back into the market. paul: you make an interesting point in your column, because samsung electronics and hk interesting gains -- and sk hynix put on interesting gains. the mother investors are getting out. why? are withyou're jobs korea, your property is with korea, and then you see north korea throwing missiles and japan cutting off the supply chain to samsung an your wealth portfolio, you want to diversify. koreans have been buying properties in vietnam and vietnamese stocks. i think what they have's -- i think basically what the government needs to do is taper down the risk, make the koreans feel that they don't have to

diversify their wealth portfolio is much. paul: is there a cautionary tale for all of this in hong kong? brad: i think -- shuli: i think so. hong kong's protest has expanded into a second month. unfortunately, the u.s. stock market has recovered well after the g20 osaka meeting. hong kong has not been keeping up. i think there are a lot of local political risks involved, and perhaps hong kong investors are not going to buy into the hang seng right now, for the same reason as the koreans not buying kospi. u.s. secretary of state mike pompeo is in bangkok today for a summit where he is said to hold trilateral talks with japan

and south korea. let's bring in brandon scott. what is the message pompeo was going to carry to these two today? isthe secretary of state going to be carrying the message that he said yesterday, that they need to find some path forward out of their dispute that they have been having over historical issues, over japan's trade restrictions on key exports to south korea. the u.s. does not want to see this deteriorate into a situation that would begin to cause trouble for its efforts to create a network of security alliances and leverage and. we had other negotiations in shanghai when it came to china and u.s. officials trying to achieve some sort of trade progress. we really did not get much, did we? got was anat we

agreement that both sides would keep talking, which is probably enough for the markets for now. there was some agreement or confirmation of agreement by china that they would continue would startat they buying agricultural purchases .gain that has not happened fast enough to satisfy the president, who jumped in in the middle of the talks with a tweet complaining about the rate of bag purchases so far. pail over the meeting with a lot of people wondering if these two sides would be able to get closer together and get it back to where they were back in april, when they were on the verge of a deal. that. brendan, thanks for friday, we will be live with mike pompeo at the aussie and -- summit inasean

bangkok. 10:00 p.m. thursday night in new york. china is raising the pressure on taiwan, suspending a program that allows individual tourists from 47 cities to travel to the island. the ministry of culture tourism says the band is effective from the start of august. chinese nationals can only go to taiwan as part of tour groups. let's get the details from our taipei bureau chief. we know taiwan has an election coming up. how much do these moves have to do with that? they do appear to be timed perfectly to coincide with that election. relations between taiwan and china have been and a deep freeze for the past three years, essentially, when beijing cuts off direct communications with time on after the -- with taiwan after the election in 2016. beijing views taiwan as an inseparable part of its territory.

the president, on the other hand, is from a political party that views taiwan as a separate nation just waiting for international recognition. i on thet see i to question of taiwan's political status. this latest move is just the latest measure from beijing aimed at putting pressure on taiwan, putting pressure on the taiwanese economy from china. we have seen an increase in the number of military patrols around taiwan. we have seen china put pressure on multinational companies, never to refer to taiwan as a country. this ban on tourists looks like it is timed to coincide perfectly with the election in january. paul: i guess the key question is, will it work? the president has been trying to diversify where tourists come from when they visit taiwan. is it going to affect the domestic economy much?

samson: it does not appear it will have an enormous impact on the economy. yes, chinese tourists make up the majority of the foreign businesses that come to taiwan, but tourism and the chinese context is a relatively small part of the economy. overall, tourism makes just over 4% of the economy. the amount foreign visitors spends in the economy makes up just about 2% of the economy. if you then factor in the chinese tourist makeup, only 30% of all to us that come to taiwan, then it is a relatively small -- of all tourists that come to taiwan, then it is a relatively small part of the economy. it is a very loud, visible sector of the economy, so the tourism industry is very good at standing up and shouting when they feel that the government is doing the right thing to make sure they feel they continue doing that business. even though it will have a very

small impact, it will be noticeable and loud when it does happen. paul: thanks for joining us. still to come, rio tinto reports earnings later today. we will get a preview of those results next. ♪

shery: this is "daybreak asia." rio tinto shares have rallied more than 30% this year, largely courtesy of the surgeon iron ore prices. later today ints london. we are joined by peter. bloomberg -- you've got a target price of 110 aussie dollars, so it gets you reasonably optimistic about what we are going to hear this afternoon. >> it is a story that has been

going for about four years. it has certainly accelerated in the last six months with the iron ore schematic behind it. it is about what iron ore delivers. paul: iron ore a really critical commodity for rio. we have a chart on the bloomberg terminal that shows the iron ore price, which is so crucial to rio tinto's outlook. you can also see the blue bars, chinese stockpiles falling. with all this put together, do you see this 120 ton price for iron ore as being sustainable? peter: the way to think about it is it is the longevity of this journey, not so much the price spike. this will last potentially for years, maybe many quarters. journey.e a year's why do i focus on the length? the price at 120, it spiked to

127. the average year to date is just under $100, but these numbers continue to move higher. earnings will be reported today, and it continues to be iron ore story. the iron ore thematic, it will take a long while, maybe years to play out. we may as well be enjoying the benefits from a cash flow and capital management perspective for a while. shery: we have heard from big iners playing a minutes campaign. what do you think the market will look like in the next few months? yvonne: at the of june, we had record shipments. everybody started to take the views responding that the market would be in surplus debt and the prices would start to fall. it did initially, but what is playing out now is two factors, one i call seasonality, but also what you just mentioned. september quarter is definitely a period --

seasonally we see softer quarters in september, december. over the next three quarters, with or without maintenance, seasonally we should expect about 60 million tons last iron ore out of australia than we did in june on an annualized basis. the market will have less material than it expects. prices will reflect that. if chinese demand stays at or near current levels, the markets are going to be tight. i number north of $100 is very likely for at least the next six months. shery: when it comes to copper, with strong production in the first half, how are we expecting rio to perform? peter: the numbers will be down pretty much across the board. higher earnings period on period. aluminum, copper, and other materials will be lower period on period, and copper's price has been softer, very much driven by the trade around trash the trade uncertain -- driven by

the trade uncertainty around chinese and u.s. talks. copper, as a group, likely to be period on period, but the second half unlikely to change either. are expecting encouraging numbers today, possibly even a better number to come. rio is flush with cash at the moment, so is it going to look for some things to buy, or is it going to return cash to shareholders? if it does that, kind of an interesting problem for one of its major shareholders, who is going to breach the ownership imposed by australia regulators. it is a problem. peter: it is. the markets looking for large numbers of cash return, and rio has a history of doing that. over the last couple of years, they have given back $15 million. they are also one of the best allocators of capital in one of the best at m&a.

.hey have had a history generally speaking, they are one of the best acquirers of assets, so yes, they should be looking to pump up their growth. but to your point, they've got special dividends were buybacks. the buyback side starts to be constrained by what they can or cannot do with their major shareholder. that is between the australian government and the chinese shareholder. unless that has changed in the last six months, rio has pre-much kept in terms of a buyback. government the u.k. -- if the pound is weaker, the opportunity to buy back stock cheaper in the u.k. is more compelling today. if they can resolve this with the issuer, rio has a chance to buyback a deeply discounted stock post-brexit in october. at this stage, it does look

constrained by the government. shery: that's interesting -- paul: that's interesting, they have the same opportunity. in mongolia, there are likely to be write-downs today. about some of the minority shareholders in that project? is this an opportunity for rio to buy them out? peter: it is. they have shown they will buy out minorities over time, but they are very patient. do it? absolutely. is it this month, probably not, this quarter, no. they will own that asset, and the time to buy it is now. any ine --cting what any miner with major delays would be. it is the perfect storm for rio to look to mop up the minorities. theink you will see this in

next one or two years, absolutely. paul: peter, thanks for joining us. we will speak to rio tinto's ceo later today. you will hear that conversation at 10:30 thursday night in hong kong. that's get you to some breaking news. we are seeing steep declines at the aussie dollar right now, , now at its8.33 lowest since the january inflation crash. we are seeing the aussie sink ever lower against the greenback at the moment. ♪

this is "daybreak: asia." shery: let's turn to selina wang in hong kong with a preview of what to watch in markets this morning. thena: as we wait for countdown to the open of trade in hong kong and china, i want to bring up the hong kong gdp numbers. the economy was continuing to contract, missing the lowest economist estimates, for the second quarter, so before the protests really started. that suggests it was probably because of the u.s.-china trademark. no surprise given hong kong's trade-dependent economy. switching boards, that does not bode well for retail sales

for the june month, the first month where we will see the impact from the protests. expected to paint a grim picture, fall for a fifth consecutive month. disruptions are expected to put pressure on these retailers from those protests. and in china, we are watching for the private reading, estimated to come in at 49.5, a bit lower than the official reading that came in at 49/.7. it is still in contraction territory, but better than expected. conditions are improving a little bit amid government support, but it is amid these weak global demand factors. paul and shery? paul: thank you. spotify shares fell the most in almost five months after it reported slightly slower subscriber growth than business had hoped. they ended the recent quarter with 108 million subscribers to

its premium service. the ceo said spotify had failed to mark a obstruction plan for students, but it plans to make up lost ground by the end of the year. shery: ibm is facing more criticism over age discrimination in one of many ongoing lawsuits. the vice president of hr says ibm has fired up to 100,000 employees in the last few years in a strategy that targeted all their workers and tried to make the company seem cooler to younger applicants. ibm had earlier said it's hr strategy is based on delivering value for its clients. --l: apple is free poised apple is poised to rejoin the trillion dollar club alongside microsoft. apple shares topped the trillion level in market value after the company reported earnings that were mostly cheered by wall street. hand it over to bloomberg markets: asia, let's take a quick look at how we are

tracking right now. we've got the nikkei off a quarter of 1%, the kospi weaker 1%.a third of all tracking u.s. equities markets lower. shery: we are seeing the japanese yen weaker at this point, trading at the 109 level. that has helped the topix erase their loss. the aussie dollar near the lowest number since the january crash. u.s.-china trade tensions continue. we are seeing the british pound losing ground, now headed toward the january 2017 low. that's it from "daybreak: asia." ♪

♪ david: how has humor changed? are people laughing at the same things, or are there certain things you can make fun of now and couldn't? or vice versa. lorne: there is almost nothing i did in the 1970's i could do now. david: are you ever worried there is a guest host not up to the task? lorne: yeah. david: how do you coach them to maybe do a better job, 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 you're in a power, so don't ever have to explain you're in power. >> would you fix your tie, please? david: oh, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way? all right.