savings - but only for a limited time. just go to leesa.com today. you need this bed. paul: welcome to "daybreak australia." i'm paul allen in sydney. selina: we are counting down to asia's major market opens. ♪ paul: here are the top stories we're covering in the next hour. trade tensions rise again. the white house pauses there decision on loosening restrictions on huawei. uber hits the brakes as second-quarter earnings take a

turn. oil gains for the first time this week after saudi arabia signals export curbs -- curbs stabilize prices. shery: let's get a quick check on how markets performed. we see u.s. futures under pressure right now, down .3%. we just got the news that the white house has halted temporary licenses to sell to huawei. that is putting pressure on the market, dampening investor sentiment after a strong day on the markets here on thursday. we saw the s&p 500 gain the most in two months. was in the green actually managing to erase the losses we saw earlier in the week. we saw tech and energy leading the gains. the nasdaq up for a third consecutive session, up 2.25 percent. energy was also up in the session as we had oil gained ground.

we heard saudi arabia was contacting other producers in order to find a solution to stem declining prices as trade tensions continue between the u.s. and china. we are seeing u.s. futures rapidly declining at the open on the latest news on wally -- huawei. let's see how things are shaping up in asia. selina: it looks like futures are pointing to a mixed open in asia. we are seeing qe almost .2% up. we did see the nikkei gain yesterday after four consecutive days of losses. that was after china fixed the yen, stronger than expected, afterhough it did come some fears about worsening trade conflict. as you mentioned earlier, this could be short-lived with bloomberg reporting the u.s. is planning to publish that final list of $300 billion in chinese imports it plans to hit with tariffs this week or early next.

i also want to look at what is on tap today in terms of economics reporting. china's producer prices are coming in. bloomberg intelligence reporting the l .1% last month, signaling potential reemergence factoring deflation. china's consumer price deflation may have edged up and we will be watching for japan's second-quarter gdp, expecting growth probably slowed, expanding point or percent -- .4% quarter on quarter. paul: thanks very much. let's check in on first word news now with jessica summers. jessica: increasing worries of a international economies. a new survey suggests the probability of recession in the u.s. in the next 12 months has from 20% at the end of the last year. that's the highest among the

developed group of 20 nations and is matched only by japan. president trump is taking fresh aim at the u.s. currency, moving scrappingser to long-standing white house support for a strong dollar. he tweeted that he is not thrilled by the currency strength and again at attacked the fed for making life hard for the currency to compete. this is days after he branded china a currency manipulator while saying he may intervene to weaken the dollar. the philippines cut its interest rate resuming policy easing after economic growth and inflation slowed. it was predicted by almost all economists surveyed by bloomberg. the governor said there's room for further easing as weak global prospects are tempering inflation. minister boris johnson is calling on european union leaders to show some common sense and rewrite the

brexit divorce deal, but with just 84 days to go before the u.k. is scheduled to leave the eu, johnson says there is still plenty of time for the withdrawal agreement to be changed. he has repeatedly said he will leave the country out of the bloc with or without a deal at the end of october. global news 24 hours a day on the air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 100 20 countries. i'm jessica summers. this is bloomberg. paul: thanks, jessica. the white house said to be holding off on its decision to grant huawei licenses in retaliation for the chinese decision to halt u.s. agricultural purchases. the latest salvo comes as the trump administration works on a list of chinese imports of plans to hit with fresh tariffs next month. behind this latest salvo from the u.s., and what will it

mean for the prospect of talks next month? >> that's right. the u.s. is cooling off on a decision to grant licenses for companies looking to do business with huawei. the move comes after china said it would help purchases with the u.s.. secretary of commerce wilbur for reviewed these requests licenses. companies need these requests because the u.s. blacklisted huawei in may over national security concerns. this move comes after aging productioncultural -- agriculture purchases from the u.s., but it is amidst an already tense week in trade. we have seen the yuan we can. we have seen president trump threatened a next round of tariffs. this is another escalation that further complicates these countries trying to negotiate some way out of their trade war right now. a lot more adding to tension from this latest move. shery: where are we on those extra 10% tariffs on $300 billion of chinese goods? heard president

trump catching many offguard, the trade office is rushing to complete their list of products that will go under these tariffs. there was a list released in may which included virtually all chinese imports into the u.s. that list included things like laptops, cell phones, and children's toys. this will be a revised list of that one after companies have tried to lobby to keep their products off the list. this latest list is likely to -- consumers are likely to feel more pain from this round of tariffs, and this is could likely feel a little more of a pinch this time around as well. paul: to that point, how is the business community reacting to these increased tensions? >> the business community has resisted tariffs. they have opposed them rather vocally. arenesses have said tariffs

basically a tax on their businesses and will increase prices. some previously had lobbied to keep their products off the tariff list. that might be the case this time is the list hits virtually all products. there is also a question of timing. productstariffs hit leaving china or products just arriving in america might matter for some companies that have already inked contracts and have products on route -- in route -- en route. shery: u.s. stocks posted their biggest advance in two months. tech helped lead the way, boosting the nasdaq and more than 2%, but after hours, uber is plunging. su keenan has more on this. completely different story than what we saw through it -- saw with lyfts. usu: let's get right to the

scoreboard. as far as volatility, the worst is over. china doing what they can. 100 techat the nasdaq came back in a strong way. we are seeing big changes in future which are slightly lower going into the friday session. .et's get the movers amd coming out with what is called a game changing shift. the stock in the stratosphere. uber rallying ahead of the results basically on a strong report lyft had given. on a down in a big way disappointing earnings report. she tv is where you can find our library of charts. gtv is where you can find our library of charts. the debate rests and where the next leg of the s&p is headed.

always lot of action as in the oil futures market. they rebounded from a seven-month low. saudi's signaling they will take steps to stabilize things. what is the latest? : we saw oil rising for the first time in a week. if we go to the big picture, the story is that the saudis will do what they can according to new york-based analysts, and limit.ll it has certainly given a lot of oil traders a sigh of relief. paul: thanks for joining us there. still to come, fancy making $1 million for hacking an iphone? we will tell you how you can without getting into any trouble. shery: coming up, we will tell you where opportunities exist in the fixed income space as bond bears go missing.

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shery: the trump administration is holding off on granting licenses that would allow tech companies to resume business with huawei. this is the latest tryst -- latest twist in the trade war. our next guest says it is eroding confidence. she's the chief executive of a wealth management firm. great to have you with us. we continue to see these trade tensions linger. is it justified investors seem to be running for cover? >> absolutely. it has been an interesting time watching these trade issues continue to be exacerbated. it is our view that we are in a bit of a quagmire at this point. it seems neither trump nor china has any real incentive to come to the table at this point.

they both are digging in their heels, even though it appears the current policies are not very effective. business investment is left to the landscape will look like, and that is directly choking off business investment, business confidence, to a much greater degree than i think we had expected when we first saw this trade issue crop up. that has become a real issue. i think at the top of your program, you had talked about how recession probabilities were starting to increase, and i think this is a direct impact from that. if businesses are not confident enough in the future market outlook to invest, that directly impacts economic growth. the other thing i would say is it appears this administration really took the wrong lesson from the fed cutting. i think the lesson they took was the fed is going to underwrite this trade war and that was never the intention. fedhe press releases the

put out said it straight uncertainties that forced us to have to cut this time, i think the administration is thinking why not create more to force them to cut more? that is kind of where we are right now and it is a real tight rope. shery: it is interesting that the fed is backing the -- is .nderwriting the trade war is there a comfortable place for you as an investor? >> it is a tough place to be right now. outcomeshe range of from this trade discussion -- i think we're looking at anywhere % to 2.5%, which is a very wide range. we do not think there is any really super comfortable place, but we do think the fed will be in a position to continue to ease, to lower rates.

as those front and rates come down, we think the intermediate part of the curve will be the place to position through the end of the year. although, if we continue to start to see trade tensions continue and not dial down, i think you could actually see an inversion -- this is the other side of it, if we do not get an curves coulde invert and both of those taken together are pretty strong recession indicators, which is not our base case yet, but we are really moving in that direction absent some type of agreement. paul: i just want to show you one of our favorite charts on the bloomberg terminal at the moment and that is the amount of negative yielding debt in the world. that line just keeps on climbing. at what point are we going to see u.s. treasuries added to that pile? few bolde seen a

strategists out there calling for negative yields in the u.s. we are not in that camp as of yet, but this is a global market -- this is a global economy facing deflation, it facing slowing growth, and no market is immune. you have investors from these other sovereign yielding markets that are yielding negative rates at this point. the u.s. is the largest, most liquid market in the world, so why would they not come over here and by u.s. treasuries and get some yield. we are not in that camp as of yet. i think a lot of things have to go really wrong for that to occur, but i think there's a reason why we see long treasuries in the region they are in and they have not budged for a long time. paul: in terms of the search for yield, you do like corporate bonds and you are getting exposure through a couple of etf's. can you tell us about that?

>> sure. we are always looking for safe yields at this point in the cycle. the relative risk premiums you are getting and all these different riskier asset classes have just been so compressed that we really like the idea of adding quality. quality, high yield -- i'm sorry, quality investment grade bonds, very liquid. it is intended to replicate the bloomberg corporate part of that index. another place we are finding some opportunities is in mortgage-backed securities. when we have had such a big rally in rates, there has been increasing financial activity and kind of a flood of new mortgage-backed securities on the market. actually wideare investment-grade corporate's for the first time in about five years. we have added to that as well through mbb, which is another etf we like to use. shery: we have seen concerns

about perhaps china dumping u.s. currencies, given how the yuan has broken above seven. does that matter at this point, given how high long demand is? >> in years past, there was always the fear the chinese were going to dump all their holdings. that is not the case today. even if they were to do that or sell, and i know they are busy depreciating at this moment, there's just too much demand for equityelds, if it's investors trying to hedge volatility or all these sovereign investors searching for -- again, the safest haven in the entire world, i think there are too many forces pushing back against that, so we are not as concerned about that at this point. thank you so much for joining us. of course, you can get a roundup of the stories that you need to know to get your day going in today's edition of "daybreak."

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a quicket's get you check of the latest business flash headlines. hsbc said to have an internal candidate in position to become the new ceo. the current chief financial officer joined the bank in january. sources say he has quickly established himself as a leading force and forged a strong chairmanip with tucker. hsbc has been shrinking its international footprint to cut costs, but the strategy has yet to pay off for investors. a bank is looking to raise $270 million from a share sale to institutional investors. discount.ng a 6%

investors have said no to yes bank. shares down more than 50% on concerns about capital levels. : sales, bookings, and monthly users missed estimates of the stock is down to its low as levels since may. here now to go through the numbers with us is wedbush securities indeed director of research. thanks for joining us. we were expecting -- the market was, rather, to be disappointed, but maybe not that disappointed. compensationed related to the ipo weighed down, but going forward, what will overdue -- uber do?

a bighink that is question for investors. where can profitability go from here? i think right now, this is a penalty box stock in terms of the eyes of investors. later on, wecall did get a little bit of guidance. it's a bit better, at least, but the ceo saying he plans to lean eatsthe gates -- the business, even though it has been a really competitive. to what degree is that a drag? investingow, they are in the future. we think it is worth a good $17 billion to $20 billion in terms valuation. ultimately, second quarter out of the box, you need a better quarter, and that is going to be an issue with the stock seeing

pressure today. also saw pressure after hours but during the regular session surge. investors took results really well. how did it compare to bloomberg -- two uber? >> lyft had what i would call an a minus quarter, and uber was more of a d-. ridesharingdomestic versus global. nonetheless, this is a quarter that is definitely disappointing to the bulls. the long-term story still there, but they have their work cut out for them. tory: you are lifting lyft outperform from neutral. what do you like about it and how it will compete, especially when it comes to discounts and price? >> thomistic rideshare i think is the opportunity for them.

rideshare. they are starting to get more rides at peak hours. that continues to be the focus. we continue to be bullish on ridesharing, but i think it needs to gain some incremental share and that is really what is driving investors. paul: there was good news for inhaps both lyft and uber terms of the price war easing. will that be a rising tide that lists both their boots? >> yes, you are starting to see less pressure. this continues to be a factor the street is skeptical on. you need good results coming out. long-termer is a story, but i think rideshare is a proven sector for investors. , if you are an

investor and can stomach these ups and downs and early losses, have both these companies saying they are the future of transport. still bullishis on long-term ridesharing. it is going to be volatile for the next few quarters, maybe even the next 12 to 18 months. i viewedent than how amazon a decade ago. there was a lot of ups and downs. that's why transportation is viewed as a sector that will play out over the next couple of years. i think both these stocks go material higher -- materially higher, though it is definitely choppy coming out of the box. shery: thank you for joining us. , our interview with rio tinto's ceo is next. this is bloomberg. ♪

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new lin paul: 8:30 a.m. you can see flags on the harbor bridge. futures up after we saw u.s. equities markets erased the week's losses. in new york it is 6:30 p.m. you are watching "daybreak australia." jessica: the trump administration is said to be pausing a decision about licenses for u.s. companies to resume work with huawei after china said it is halting purchases of u.s. farm produce. in june, the president said some restrictions will be loosened,

but his promise was contingent withchina easing orders american farmers, which -- upon china beefing up orders with american farmers, which he said beijing has failed to do. a report -- asked issues directly calling china a thuggish regime, she said, "yeah ." singapore says it is ready to stimulate its economy in the face of weakening global demand and the u.s.-china trade war. and also warned the threat posed by the insurgency could be long-lasting. the prime minister used his national day message to reassure his audience that singapore has experienced slowdowns before and that the government will launch stimulus as necessary.

indian prime minister narendra modi is promising a new era in disputed jammu and kashmir, saying he is reading the state of what he called dynastic allah takes an entrenched corruption. this after neighbor pakistan cut diplomatic and trade ties and said it would take the issue to the u.s. secured council. modi added that kashmir's economy offered only separatism and terror. italy may face a snap election after one of the leaders of the coalition government admitted it no longer has a majority in parliament. league leader and deputy prime minister matteo savini said he is ready to terminate the fractious relationship. he said he will call a vote of confidence next week. the prime minister says solving does not have the power to make such a call.

i'm jessica summers. this is bloomberg. jessica.nks very much, for what to watch with markets this morning, let's get over to selina in beijing. hardy will be reporting earnings and ubs says to watch out for the fiscal 2020 forecast. a week june quarter for u.s. housing starts are also expected to make demand for the quarter difficult for the company. another stop to watch for australia is bhp group. -- bernsteinexpect expects stocks to drop overall. bloomberg also reporting bhp has hired mcquarrie and jpmorgan for plans to exit its thermal coal business. the third australian stop to drop today, rio tinto. plummeting iron ore prices have been weighing on the company's stock and the ceo told bloomberg

it it is defending the minor is a cash machine that will keep rewarding shareholders. another hurdle for the company is slowing growth in china, which is by far the world's biggest steel producer. we will be hearing much more from the ceo in his bloomberg interview very shortly. thanks. swiss bank ubs is working on a potential shakeup at its investment bank a year after appointing new leadership. the new strategy could lead to hundreds of job cuts. the finance editor for " bloomberg news" joins us from san francisco. what have we learned about this potential investment bank overhaul. bloomberg is reporting that ubs is considering a revamp of thatnvestment bank, and these moves might involve job cuts to the tune of hundreds of jobs. what ubs is hoping to do is to smooth out the results from this

unit to try to make the results a little less variable, a little more consistent. to improve efficiency. the investment bank's return on equity is is about 10%, and that does not compare very well at bank'sh the rest of the operations. we should say that this move to remake the investment bank is according to people familiar, who stressed to us that this is not a done deal. this is being considered, and no decision has yet been made. : can you give us a bit more context around this move? investment bank coming in for such scrutiny? >> results have then inconsistent. if you look at the first quarter, for example, advising on m&a deals and bond and stock issuance was a real sore spot.

revenue fell almost by half. in the second quarter, it was one of the highlights of the quarter, and it looks like the new leadership at ubs may be interested in trying to get a little more consistency out of the unit. we are talking about these huge job cuts at ubs. tell us about that and the fact that it's not the only bank, right? we are talking job cuts across the industry. that's right. if you work in banking, it might be the biggest story you are worried about for all of this year so far. citigroup, we reported, is considering hundreds of job cuts. everybody knows deutsche bank is getting out of the equities trading business altogether. an 18,000 job production. other banks in europe have made as well.ents of cuts for ubs specifically, as they

tried to make their investment bank people work more closely with their wealth management group, they may be considering these job cuts and may be using them as a way to get a little more revenue out of their richest customers, their most wealthy clients. paul: thanks for joining us. says despiteeo seeing a slowdown in china, he is not worried about demand for steel and iron or. he spoke to bloomberg in new york. >> i think srs china is concerned, it is very important for us. what we see in practical terms a veryt of all, in selfish way, we do not have an issue with all the books, so all the books in relation to china are good at this point. what we are experiencing is the

following, very strong demand for steel on the back of infrastructure investment and the back of building properties and so forth. for the first time ever in the first six months of this year that it crossed the line. we fully acknowledge that china expected, butn as china is managing the slowdown pretty well. i will give you a few examples. one thing people do not always see clearly is china is launching a program to construction because of the quality wars. they will have to rebuild those parts of the city. concernedwe are today, we do recognize china is slowing down, but in a pretty selfish way, we know they will continue to introduce stimulus as required.

for us, it is pretty good. >> you're not worried about peaking demand in iron ore at all? >> at some point in time, there is an indication the demand will slowdown. for -- high-quality -- the demand will be there. inare supplying the people china, which is a reference product. we are not concerned today. >> let's talk about the perspective of shareholders. massive run-up in iron ore for the first half of the year, than july happened and we roll over into august. pretty much everyone you speak to right now who is looking at iron ore on the strategist side of wall street expects prices to run over even more. this is what underpinned prices

in a big way in the first half. >> we had a good first half. >> fantastic first cap. we have the highest in the industry for the company. contributes a lot, but let's not forget we have an iron ore business which has earned more than 50% margins no matter where the market is. emma overly concerned? i overly concerned? no. next, aoming up grilling in parliament with all sides looking to lay blame for the state of the economy. a preview coming up. this is bloomberg. ♪

shery ahn in new york. inl: and i'm tall allen sydney. you are watching "daybreak australia." looks like risk is back on the table after we saw u.s. raise losses on the week. nikkei futures traded out of chicago currently weaker, but let's see what happens when things are switched. around the rest of the region, things are looking positive. in australia, futures pointing higher, but we will have to watch out for today earnings from japan. the cardata later and account, japanese gdp while in australia, we will have the reserve bank governor testifying to parliament and we will get

the statement for monetary policy as well, so plenty to look out for their as well. for now, let's get more on what we should be watching in trading in asia. adam: let's talk about this latest development on huawei. has that threatened to dampen some of the latest sentiment we have seen? >> i think it has forced them again to think of where we are at in terms of the trade war. positive,really good sentiment-driven session. asia had a good run yesterday with the stronger-than-expected axing of the yuan. that will again be key today on those, if some of depreciation moves we have seen are getting any further or if authorities are doing anymore to shore up and stabilize the currency moves. i think the huawei news has thrown a thorn in the side of

people wanting to get incrementally bullish this week. we have had a couple of days where risk assets have performed well, but the senate for asia on friday is looking for kerry is at this point. as you noted, s&p 500 futures are off materially this morning and the yen starting to strengthen. if the yen gets through that move level, you can see it even further, sorry think we have a fairly risk off tone as we start in asia this morning. shery: all of this coming at a time as we expect the rba governor to give his semiannual testimony today. what will markets be looking to hear from him? >> i think the key thing for markets is the tone of what he says during the testimony. if he leans further to the dovish side of things, given, of course, that his colleagues in the central bank in new zealand earlier on in the week, when they cut interest rates by that

surprise 50 basis points, there was a lot more about the talk of potential unconventional monetary policy, and that has put further pressure on the aussie or certainly did in the earlier part of the week. what we're looking for is if he kind of plays things a little bit more balanced or takes a little bit more of a dovish stance. you could see the aussie dollar appreciate somewhat if he does stay away from that kind of tilt from some of his compatriots in other parts of the world that have perhaps gotten a little more dovish. we're looking for those key insights and around the tone of just what we are feeling from the australian central bank at this point, given we have had those rate cuts, the market priced pretty fully for another cut at some point, though september, october, according to the swap market at least, still hang in the balance pretty finely around the coin toss as to if they go another 25 basis

points. paul: thanks for joining us. to preview what we can expect testimony,owe's let's bring in cristina clifton. thanks very much for joining us. adam was talking about how in ats beginning to price potential rate cuts in september or october. we have some very aggressive calls. what sort of clues are we looking out for today? mentioned the tone of the rba statement and the tone of phil low's speech will be very important. we're also looking at the key forecast changes from the rba. we did get some insight into the direction the forecasts are heading in the statement tuesday. the company now saying rates will only head down to around 5%

over the next couple of years. previously, they had been saying they seek it hitting below 5%. that is a downgrade for the labor market. that is also flowing through to their inflation forecasts. they now do not expect inflation until 2021, target so that is lighter than they had been expecting previously. definitely a downgrade on the forecast looks likely in today's news. lowe i remember when phil got the job, he said he was not an inflation not are -- nutter. it is obviously becoming a problem for him. but what we're seeing is that low rates and a strong job market does not equal inflation anymore. >> it is a difficult situation for the rba. they do have a mandate to keep inflation between 2% and 3%.

it is becoming clear that lower interest rates do not really have the power to push inflation of anymore. it was appropriate is more of a response from the government, so it looks like we will have a .unch of surplus there's clearly room for fiscal policy, perhaps more tax cuts which are in the legislation. they could be brought forward. there is also room for just measures to enhance productivity in the economy, maybe some structural changes are now overdue. factor in those fiscal policies and tax cuts, how many more cuts are we expecting this year? we have one more 25 basis point rate cut in our forecast taking the cash rate down to .75%. we think the risk is toward more rate cuts.

they have also talked a lot about the labor market this year . they now say they see full employment in the economy at an unemployment rate at around 4.5%. we are currently five .2%, so they would like to see the unemployment rate move quite a lot lower, so we ink it will take more monetary policy stimulus to get the unemployment rate down to where they would like to see it and get inflation up. we think they will like to wait a few months just to assess the impact of the rate cuts we have had so far and also to assess the impact of the personal income tax without eating up bank accounts. that: we are hearing ,overnor adrian or is speaking saying new zealand is in a great position as headwinds mount. inflation target

remains appropriate, this coming after that shocking is the basis point cut this week. were you expecting that, and what will be the broader implication for asia, especially when it comes to the australian economy? >> we were not expecting a 50 basis point rate cut. we had been expecting a 25 basis point rate cut. , notrms of what it means much. the -- it does have implications for the currency. we did see the australian dollar company pressure. with people perhaps expecting the rba to follow suit. welcome that lower australian dollar, though. that does help boost export competitiveness. paul: that new zealand one was interesting, i thought. inflation is above the midpoint

of the target range, but they still cut by 50 basis points. there is a broader concern that central banks are not leaving themselves with a lot of ammunition if things really do turn south. that's right. i think there is concern that while labor markets are in good shape, we still have pretty low wage growth for many economies. there's also a lot of concern just around the global backdrop, and i think many central banks just want to take out insurance by cutting interest rates now, just insurance against a further slowdown in global growth. paul: one thing we did not see in australia during the global financial crisis that we saw elsewhere was unconventional financial talks. >> we think that is definitely beething phil lowe could questioned on quite extensively today. it will be interesting to see if

the rba would tell us more about where they see the lower bound for the cash rate. .75? is it .5? or is it perhaps even lower? there also might be questions on the types of policies they could do in addition to cutting interest rates. if that is putting more money into operations or purchasing bonds like we saw in many other economies. >> i'm sure you remember the days when glenn stevens used to job on the currency lower. going to soon turn to the other direction? things obviously looking pretty weak now. >> i think the rba would be welcoming a lower currency. it definitely does give our economy a boost. i do not think they will be having any problems with the currency sitting -- with where

the currency is sitting at the moment. paul: thanks very much for joining us. 'su can follow phil low testimony today on the bloomberg terminal. you can see bloomberg's expert editors providing commentary and .atch the full event live don't miss bloomberg's exclusive on what the philippines central bank governor. that's at 9:00 a.m. in hong kong, 11:00 a.m. in sydney. ♪

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the next hour on "daybreak asia asia." e -- "daybreak come in a moment. this is bloomberg. ♪ ♪

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paul: i'm tell allen in sydney and we are under an hour away -- paul allen in sydney and we are under an hour ole from the australian open. >> welcome to "daybreak: asia." paul: our top stories this friday, trade tensions rising again. uber hits the brakes after the bell.