paul: good morning. i am paul allen in sydney. we are under one hour away from the market open. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this tuesday, huawei wins a reprieve in the u.s. but says it is being treated unfairly by washington. the waiver extension will run for 90 days. trump demands aggressive easing.

we hear exclusively from eric rosengren. china is accused of using social media to undermine the protest in hong kong. twitter and facebook delete a string of fake accounts. shery: how markets closed. it was another day of strong rally with the s&p 500 gaining more than 1%. every sector was in the green. energy amtech led the gains. lead the- and tech gains. a positive sentiment with trade. that was reflected with the u.s. dollar. it rallied to this year's high. gain 250 points. the nasdaq up 1.4%. doing much butt let's see how things will be shaping up in asia. conviction investors will be tested with futures looking at a mixed session.

kiwi stops adding .6%. we have the strong dollar to contend with which may put a damper on risk appetite for emerging markets today. we are on tech watch. we have xiaomi's earnings on the lineup after baidu's results came out overnight. onay, we're keeping an eye the rba meeting minutes. trade data from taiwan and today rate the pboc's loan prime . a key milestone indeed, paul. paul: definitely watching out for that, sophie. let's get to first word news. >> president trump has resumed his assault on the fed, calling for a full percentage rate current and complaining the strong dollar is hurting other economies. key rates should come down at least 100 basis points along with additional easing. the fed cut rates last month for the first time in a

decade and some policymakers are not been for the need for more. -- convinced for the need for more. low but ites are think it is reflective of global conditions and global conditions are week. i am not saying there are not circumstances under which i would be willing to ease. i want to see evidence that we are going into something that is more of a slowdown. if i am growing at to present, i am not as worried about that. >> boris johnson is planning a nationwide pr campaign to prepare voters for a no-deal brexit. previous briefings have been highly technical. government sources say the new drive will be more user-friendly. ministers have been warned small companies are not ready for a hard brexit. people are vulnerable because of the extra paperwork. >> after fighting to negotiate a brexit deal that would protect jobs, boris johnson's tories are driving the country towards a edge.al -- no-deal cliff

we will do everything necessary to stop a disastrous know deal no-deal, for which this government has no mandate. >> they found and deleted hundreds of accounts allegedly used by china to undermine the protest movement in hong kong. twitter has taken down more than nine hundred and 10 that originated on the mainland and which were trying to manipulate opinion in hong kong. facebook says it found a similar chinese government-backed faketion with five accounts, seven pages, and three groups. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am renita young. this is bloomberg. shery: back to the action in u.s. markets. chip stocks led major indices to a third straight game. banks and financial stocks fell as president trump pushed for an

aggressive rate cut. su keenan has more and takes us deeper into the market action. president trump talking about a 100 basis point rate cut. not surprising given he has been calling for more cuts. >> we did not see the bond market react dramatically to you that. -- do that. the interest rate situation. this chart is called the taylor rate and it points to much higher rates. this white line shows where interest rates might be if economists followed the taylor rule, which is a mathematical equation that balances out real interest rates, inflation levels, the output gap. here is where the interest rate is right now and trump is

talking about cutting even deeper. that gives you some perspective. take a look at some of the big movers. a lot of it has to do with nvidia having a deal with that stockhat pumped up. the chip stocks were the strong area. notice the two internet companies from china, baidu and of, rallying strong ahead their earnings, when also rallying on very strong results from a new could know in a boston area. but let's look at the after our. both internet companies reported. with videoing to do streaming. that was an area of strength. ige missing the lowest estimate in terms of its revenue forecast. those of various big moves -- are various big moves there. paul: oil prices got a boost for a couple of reasons. of few hints that there is some progress in the trade war. signs of a new conflict possibly brewing in the middle east. we did have been drone at

pack. let's take a look at the one-week chart for oil. you can see it did get a bit of a pause. analyst said it is interesting that the oil market "implies"wei decision trump has had enough and he realizes this is capable of drilling the global economy into the gutter. he said speculators are jumping into all risk asset. oil was one of those. gold moved in the other direction, edging lower in the latest session. there is talk about cutting interest rates further. most strategists continue to say the bull run in gold has a long way to go. shery: su keenan, thank you so much for that. twitter and facebook say they discovered accounts that claimed china used to undermine the hong kong protest movement. we will assess the implications. up next, u.s. stocks rose

on the latest trade headlines and speculation that central banks will shore up their economies. our next guest warns of the rotating trade. this is bloomberg. ♪

shery: "daybreak asia this is." i am shery ahn in new york. paul: i am paul allen in sydney. huawei has won temporary retrieve in the u.s.. there is a ban on doing business with the company for another 90 days. it is being treated unfairly by washington, so for more on all of this, let's get to derek wallbank. 90 days for u.s. businesses to disentangle themselves from huawei. will this be enough? derek: very early good morning to you from singapore. as we wake up, the news that

people should take here and in china where they are just waking somew is that this is not solution. this is not some finale. punt.s an absolute you have another 90 day extension for some of these companies. where the white house was making pretty clear is this is for american companies who are really, really reliant on huawei . if you go back to president trump's comments where he was saying they are going to make , someecisions on huawei of the big decision to make, they are being kicked out. the president have been saying earlier that the huawei issue is going to be one of the last they came to in terms of a trade deal. the trade talks have not really progressed in any meaningful way in the last couple of -- several

weeks. way --final issue why huawei, of how all this is going to work out is very much till on table despite all of these actions. shery: what was really interesting was secretary ross saying some telecom companies in the u.s. are dependent on huawei. this seems to be targeted at helping those companies out. we have seen larry kudlow going to meet with business leaders this week. already, we had peter navarro over the weekend making appearances in talk shows, talking about the u.s. economy and china. how concerned is the trump administration that these trade talks will have an impact on the u.s. economy? i think that the trump administration is very, very focused on what the economy looks like. by the economy, i do not just mean jobs, but i actually really mean equity markets. i am talking about what is the

dow, what is the s&p? with this administration, trump is a bit of a 401(k) president. what i mean by that, 401(k), for those not in america, is the sort of standard retirement savings vehicle, the market base. trump has told people at rallies multiple times, you know, if you want to see how the economy is .oing, check your 401(k) you like that, vote for me again. if you have a downturn in equity markets that is expressed through downturns in people's 401(k)s, the trump administration is sensitive to that and that has cropped up and there has been some thought that the president and the white house might be a little bit more acceptable to a u.s.-china trade deal if it showed it was going to do wonders for equity markets or that it was possibly going to save them, so i think you cannot rule that out as we go forward. shery: we heard market analysts

talk about a potential trump put here given the focus on the markets. derek wallbank in singapore, thank you so much for that. let's head to hong kong for what to watch in markets this morning. as trade and growth worries abound, we are seeing fromtors pull cash emerging markets without. in $11 billion in the past weeks. when it comes to last week, china and hong kong saw the biggest outflow. taking a bigger picture of the etf flows in asia using the terminal, you have the function to depict this. kong focusingng on etf's losing $1.4 billion over the past three months. during that time, mainland buyers were piling in the hong kong stock via the stock connect, including august 16, a day after the clashes at the hong kong airport. this enthusiasm has helped the hang seng cap a four-day gain.

that could potentially hit further declines as you can see on this chart right here, so we do have some varying views on the outlook for hong kong equities. the markets have already priced in much of the negatives linked to the protests. paul. tribecaining us now is investment partners portfolio manager, jim. thank you for joining us. equity markets are continuing to grind higher, notwithstanding all the excitement of last week. what is going to drive that? the past few weeks have shown us that there is no shortage of wild cut area -- of cuts. maintains that equity markets should do better. really mainly underpinned by the lower interest rates around the world. lower interest rates support the asset prices in the equity market. it should gain one of the most.

the globalis, we see growth. although it has been downgraded. it still is at reasonable levels and major market such as the , underlying economic activity looks strong. few issuesthere's a that arise. more recently, one is that the valuations seem incredibly high. we do need to see this earnings season to see some of the expectations to come back. in august, the equity market could pull back. it is healthy for investors to generate better returns on the longer-term basis. trade conflict is another uncertainty at this point. it is now impacting growth and especially --

paul: how did you like this earnings season for example? jum: everyone was tracking it quite closely. we are heading into the earnings season, and expectations were quite low in the u.s., however, the company's range was in line with this. it is a little bit disappointing. i think, especially from sectors that are exposed to the trade, conflict or the tariffs have had a big downgrade. so on that basis, it is somewhat disappointing. ,he australian equity season earnings season, seems to have started more reasonably, given materialmies rely on prices as well as domestically focused. so it is somewhat in line with expectations. shery: when it comes to u.s. earnings, how much impact will

we see if we continue to experience -- jun: disappointing, but because expectations were so low and the companies sort of somewhat meet, they have commented on higher cost. going forward in seeing more downgrades in terms of outlook as well as uncertainties for what will happen with high tariffs and the tech companies, sort of more warning about potential disruptions with more political impact. talking about earnings commentary, it has been a little bit more mixed when it comes to the aussie reports, right? or more according to bloomberg data missing earnings estimates. when it comes to the

-- 60% or more missing earnings estimates. when it comes to the understanding of the macro environment and the domestic environment, it seemed a bit of a mixed picture. jun bei: we have reported weaker earnings. however, the outlook pointed to positive sentiment. positive signs of consumer picking up. government taxhe stimulus that is coming through in the business quarter. however, when we look at the housing focus, the company's top -- companies talked about possible improvements that have yet to be on the cards. it is very weak numbers. they are benefiting from an

improved housing market which will take 12 months to 18 months. a slight positive sign but very early stage. paul: in terms of australia, we have been paying a lot more attention than we normally do to the aussie 10 year as it continues to sink ever lower. what will sustainably turn that around? jun bei: it is actually quite interesting. markets inthe aussie terms of economic environments. it looks reasonably benign in the next year or so. tax benefits and potentially more stimulus if iron ore holds at where it is. we have potentially more fiscal spend. --sumer

it is very dovish. we do feel they will hold off in terms of the next cuts to reserve some firepower should the global volatility affect our economy. shery: great to have you with us. thank you. jun bei liu, tribeca investment partners portfolio manager. you can get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. i am shery ahn in new york. china may be waiting a social

media campaign against the pro-democracy protests in hong kong. twitter found and deleted nearly 1000 accounts. facebook says it also found evidence of similar operations. let's cross to sarah frier, who covers twitter and facebook. let me ask, how would this chinese campaign compared to russia's efforts back in 2016? a lot ofere are similarities. in both campaigns, what you see is a government creating accounts that masquerade as real all in sort of insert themselves into culture, and today today day-to-day news and insert political messages. it is not obvious that accounts are political at first. we saw messages from these accounts trying to discredit the ow discord ino s

hong kong, to make it seem like they were more violent than they were, comparing them to cockroaches, so there was a lot of messages that came across that twitter and facebook have both said very emphatically that these are from the chinese government. paul: have we had any reaction from china, a denial or otherwise? sarah: so far, we have not heard any clear reaction from china, but it is still early. i hope we do here soon -- hear soon. the companies are reevaluating their policies for state run media. tortoise as today it will no longer allow any state run media to pay to promote their tweets further. facebook said it is currently reevaluating that policy. appliess change worldwide. any state run media and you are will not be able to pay to promote their stores more broadly. we have heard from facebook saying that it acted on

a tip from twitter, so does it mean that we are seeing more coordinated action coming from social media sites in order to go against this disinformation campaign? sarah: i think that was a very important lesson from the 2016 election and russia's influence on the u.s., which is that none of these companies were talking to each other. talking withe not the u.s. federal government, and now that they are getting a little bit more sophisticated, they can very quickly work in tandem. i have something coming from this ip address. perhaps you have the same. that is how they are able to do these big announcement together. frier in san francisco, thank you very much for joining us. let's get a quick check now of the latest business flash headlines. baidu beat estimates, reassuring investors it is still in moving force. second-quarter revenue rose to $4 billion, sending shares

soaring in extended trade. despite increasing competition from rivals come baidu held on to had sales and bounced back -- from rivals, baidu held onto ad sales. shery: sony is to buy insomniac the studio behind last year's model spider-man. insomniac created several titles for sony including sci-fi shooting game -- and spider-man, which sold more than 13 million copies. it is facing intense competition from fortnight. facebook's digital currency project has a new china inspired rival. cryptoexchange, there is exchange finance which plans to create an independent regional version of libra. they will develop new digital currencies.

malta, but it is the brainchild of justin king -- plenty more to come on "daybreak asia." this is bloomberg. ♪

>> this is "daybreak asia." bloomberg economics has been crunching the numbers on the trade war and says the growing uncertainty could lower world in 2021.% compared to a scenario where there is no trade war. that would be double the direct impact of the tariffs themselves. money off the global gdp of $97 trillion in two years time. the number of people migrating from hong kong to taiwan is surging as protests continue with no end in sight. it is up by almost one third

this year compared to last with ofg kongers making up to 10% all new residence in taiwan to the president has been a focal her support for hong kong's protest movement. there are more demonstrations to come, after a peaceful mass march over the weekend. >> our message is very clear. if protesters do not use violence, the police will not use force. the protesters -- protests that's a place on sunday show that if they are peaceful, rational, and orderly, the police will not and have no reason to intervene. violence only begets violence. it is never a solution. >> jeffrey epstein wrote a will today's before his suicide, creating a trust with more than $.5 billion that could complicate efforts by his accusers to claim damages. prosecutors in manhattan say they will close the sex trafficking case against epstein following his death. the investigation into his alleged co-conspirators will

continue. the trump administration is extending exemptions for another 90 days that protects rural networks and other customers from a ban on doing business with huawei. wilbur ross sense some telcos are defended with huawei so the additional waiver is deemed appropriate. even so, the administration is adding more than the huawei affiliate to its -- 40 huawei affiliates to its blacklist. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am renita young, and this is bloomberg. shery: thank you. we're half an hour with from the open in tokyo, sydney, and seoul. let's turn to sophie in hong kong for what the check in the markets. sophie: we are keeping an eye on tech players. 90% on eight year on year basis for july but on a monthly

basis, we did the an improvement, so keep an eye on players like tokyo electron. we are watching samsung and suppliers. japan has given the nod for a local manufacturer to ship products to samsung. the latest batch would be six months worth of supplies for samsung. tech is are much in focus today. paul. paul: thank you -- is very much in focus today. paul. paul: thank you. in a of hours, the pboc will announce a new primary to do just that. brings china's central bank closer to strategies by other major central banks. dan joins us now from kuala lumpur. month, nine:very 30 a.m., that is a new date on the calendar are you how important is this new benchmark rate? closely will we be watching it? >> pretty closely.

you know, for the past couple of weeks, it seems like financial markets around the world have fixing.based on won once a month, hang around for another thing in minutes and to your screens. china will announce its new prime loan rate. one of the more significant things from the package of structural information that the pboc released over the weekend was this diary entry that this would be announced at this time on the 20th of every month. one of the things people have been wondering about is the pboc has grown more influential. when will they achieve a degree of transparency that approaches that of its peers in the developed world? this is one step that could end up being quite significant. shery: what does this mean? could this become the new benchmark rate? look, it is entirely

possible. the other thing that might happen is, you know, we have done this ourselves in the u.s. it is the countdown to 2:00 on a wednesday afternoon every six weeks. boe go through a similar process. there was a lot of mania in the policy watching community and markets. one of the tricks with china has been that you almost never quite knew when something would come out. wideningld be one band on christmas day, things creeping out on a saturday night, and then it is china, so you never know. you better be prepared. this injects a note of regularity and predictability into things that can only be good. shery: dan moss and kuala lumpur, thank you so much -- in kuala lumpur, thank you so much for that perspective. u.s. now talk about the and said policy -- fed policy.

president trump pounding the table for more rate cuts. an official says the u.s. economy is doing fine and another reduction is not needed. kathleen hays joins us from our boston bureau. let's get started with the president's comments. kathleen: we know the president has been tweeting loud and long for months now that the fed should cut rates. it should help him fight the trade war. the stock market will be higher, the economy stronger. let's put that in perspective. he is mentioning global growth in the tweet today. he has got to be looking at the fact that one of the reasons we have seen so much market turmoil is not because the u.s. economy looks like it is sink ing. without germany. the gdp is contracting by 0.1%. that is in the second quarter. they have the weakest

july exports in three years. industrial production, retail sales, also showing the trade war is biting. maybe focusing on global growth because that is the markets now. he tweeted out the fed rate should be reduced by 100 basis points. perhaps quantitative easing as well. if that happened, our economy would be even better in the world economy would be greatly and quickly and hands. good for -- enhanced. good for everyone. the jackson hole conference kicks off friday morning. we see jay powell walking with the president of the kansas city fed. everyponsored this event year. john williams, president of the to york fed walking next him. he will give a speech that everyone is waiting to hear. we cut the key rate in july and we are ready to cut it again in september. we are watching signals from the yield curve, 30 year bond yields, etc., and we are ready to move. our interview today with the

boston fed president says there is a bit of a debate. not everyone may be on board with a rate cut in a few weeks. paul: to that point, kathleen, you have been speaking to the boston fed president, eric rosengren. he defended against a rate cut. why did he do that? it is getting a bit dangerous to have that opinion these days. rosengreni asked eric , please, this is your first public opportunity to do so. explain to us why did you dissent? here is what he said. >> it was tied to the fact that economic conditions are still pretty good. 3.7% unemployment is still a very low rate. inflation is a little bit low, so if you look at the core measures, 1.6%. if you take out some of the this, it isng

closer to 2%. exactly 2%. my own view was that we have to be careful not to ease too much when it come -- when they do not have significant problems. the focus is not to do something that affects the exchange rate or something that necessarily takes care of the world economy. we are supposed to focus on and inflation in the united states, so i think we are in a pretty good spot right now. there are costs to easing. one of the ways monetary policy works is you cause people to buy houses and cars earlier than they otherwise would. to make an investment now because interest rates you think are going to be temporary really know, so you make expenditures you might not otherwise make. the second is when we lower interest rates, we make the cost of it lower. that means households and firms

are more likely to be leveraged. if they get leveraged right before we have significant in much, they are worse shape. we have to think about the financial stability characteristics. it is thinking of how much do we want household and firms to be leveraged when we actually do have a significant downturn? kathleen: how concerned are you about a significant downturn? besides from the global economy? the signs from the bond market in particular? even sense from wall street banks that have cut their gdp forecast? recession indicators suggest risk is rising. is it rising in your eyes? those indicators are ties to financial markets. let's start with what most economists think is the likely outcome. look at the blue-chip forecast. we just came off real gdp being at 2.1%. the blue-chip forecaster honest has growth of the third quarter and fourth quarter, both at exactly 2%. roughly exactly the same as the

second quarter. that is clearly not a recession. it is continued growth at a moderate pace. they have the unemployment rate at exactly basically where we are right now. it is 1/10 less in the blue chip forecast. ofy are not seeing a lot weakness in the data. what have people focused on whether we're going to have a recession is the combination of volatility in stock market. we had a very big movement one week ago when we lost 800 points on the dow. in subsequent days, we have moved back up. if you look at the long bond, it is in reno, around 1.6%. one of the reasons for that is the global weakness, but that your for global weakness -- cure for global weakness is to expand with fiscal and monetary policy in their own countries rather than just the united they to be -- states to be doing the easing. kathleen: i asked him several questions. he said the yield curve is an important signal.

he is wanted in the u.s. economy. there is no fed rate cuts needed if it stays on track. it is interesting. i asked him if the fed could do quantitative easing again and what it would entail, he said he ks that with the 10 year note yield stuck around 1.6%, you make that bond purchase work by pushing long-term yields down. thing, agrees with one all trump would like to see qe. i asked him about the impact of trump's tweeting, does it make it harder to do what they do? haveys the fence job is to low unemployment, not to fight trade wars, not to set an exchange rate, not to worry about gold prices. they are going to do what they think the right path is to do. who knows. maybe the economy will slow by

september when they meet for a different answer, but it does not look like that now. paul: global economics and policy editor, kathleen hays. coming up next, baidu bounces back with a beat. how it is improving. amid still in the game increased competition. this is bloomberg. ♪ is is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. let's look at chinese tech earnings in the spotlight this week with xiaomi due to report later on this day. overnight, baidu posted sales of revenue that beat estimates, so let's get over to sophie kamaruddin for more on this. baidu's results -- have results soothed worries?

sophie: the latest set of results demonstrate that baidu is managing the shift from desktop to mobile with stronger user in you demand and traffic on it that -- its app, and it has been able to hold onto advertising sales. downsideare moving risks to the market. there is a backdrop of a company no longer being one of the top five most valuable in china. given a downturn in the share price, it has fallen more than 30% since hitting a peak in april. the shares have struck a 2013 low as analysts remain unconvinced of a turnaround given months of weakness in the share price. analysts remain bullish on the stock was 22 columns. the morgan stanley noted it could be too early given lingering structural concerns for baidu. shery. now from hong us kong is the senior credit investornd moody's

service. great to have you with us. we had better than expected results out of i do. -- baidu. is this a credit positive for the company? actually, we do think this set of results is a marginal stabilization from the first quarter results. it was a loss in a long time. although we still do think that 2019 would be a kind of investment year for the company. think thatd, we do the investment that the company is carrying out, whether it is on content or artificial intelligence, ai initiatives, are strategically important, and on the long term, it will hold the company gain more organic user traffic and enhances market position. shery: it is not only about baidu, right? alibaba trying to boost its intelligence in the were tier cities as well. will this eventually pressure the margins of the chinese tech

companies? very good question. i think baidu is not alone in seeing this kind of investment need. although large chinese internet companies try to reach and better service the consumers in lower tier cities. what we are seeing is although both of revenue and cash flow are still growing, more investment is needed in order to reach the lower tier cities and consumers. that might mean some product exchanges or new differentiated services. all the internet large company is trying to make such investment. in the near term, these t profitnts may well den margins, which is what we are seeing baidu is going through right now, but again, in the longer-term, we do believe that this would enhance all the company's market decisions and leadership.

paul: to your point, i want to bring up the chart on the bloomberg terminal that shows that china tech stocks have been taking something of a beating. now, how much of this is due to that progress you mentioned? penetrating consumers and some of those smaller cities. how much of this can you park at the trade war for this? um, you know, for movies, we try to -- moody's, we try to focus on the long-term credit fundamentals of the company. so stock valuations, we are not in a position to comment on what we can say is from a long-term credit trend perspective. all of these large internet platforms including baidu. the market position, which is the very strong

financial profile, including pretty solid cash flow generation ability and also strong cash positions over the years. they have not seen a fundamental change lately. and also, from a trade tension perspective, really, because of most of the revenues of these large internet platforms, and they are generated within china, so direct impact from trade tensions are actually quite limited for these companies. the only thing we have seen so far is they may have more trouble if they are interested in acquiring some of these smaller technology developments in the u.s. but from a financial performance perspective, we have not seen much impact yet for the internet companies in china. just hitting a question on the bloomberg terminal from a viewer, will baidu get any near-term ai results, and will that be significant in the

consumer market? lina: aia has been a direction of investment for baidu for a couple of years already. this is not something that we are forecasting will generate a lot of cash flow or revenue yet in the near term. near term, we do not mean the next three to six months, we mean more. but again, these are strategically important long-term initiatives that we think the company, strategically, takes the right direction to invest in. over time, it will enhance the core business, making the product that baidu offers more betteriendly, produce a user experience overall, and over time, they will be in a position to monetize on these investments. shery: how big is china's advertising pie? we saw baidu welding on to ads

despite aggressive efforts. tencent actually lost out on some of its gains as well. is there enough to go around? lina: china's online advertising pie is still growing although it is growing at a slower rate than maybe five to seven years ago. it is growing at a slower rate. that i usually get asked a lot about the slowdown in growth in whatever subsectors of chinese online services. compared to five to 10 years ago, we are sitting on a much bigger base so it is only fair to say that the rate of growth is going to decelerate. thereuarter to quarter, will be some volatility among different tiers -- different peers.

of onlineis in favor players because of the migration of consumer cash it. -- consumer traffic is still continuing. paul: lina choi, senior credit officer. thank you for joining us. do not forget our interactive tv function. tv . there you can watch us live, , catch up on past interviews, as well as dive into any of the securities or bloomberg functions we talk about. you can also become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. let's get a quick check of the latest business flash headlines.

former disney accountant is accusing the company of overstating revenue for years. they worked as a senior financial analyst at disney for 18 years. they claim employees systematically overstated revenue by billions of dollars. disney denied allegations in a statement to marketwatch. california and utility pg&e slumped after a judge set a jury could hear $18 billion worth in claims from the deadly 2017 wildfire. the judge said the claims can go forward after being tossed since chapter 11 process began in january. state investigators cleared pg&e from responsibility. the gums and insurers say they have evidence that its equipment started the blaze. shery: -- indicating its financial woes are deepening. we are told the group failed to

repay the principal interest on a bond worth about $213 million that was due on july 28 and still have not been paid as of monday morning, beijing time. hna has been struggling to cut debt. it aims to sell more than $25 billion of assets. markets kick off in tokyo, sydney, and seoul at the top of the hour. let's go to sophie. sophie: there may be a lack of conviction in tokyo and sydney. we could see pressure come through on the coffee. checking in on bonds, you have aussie notes tracking the overnight moving treasuries with yields rising about three basis points. -- under pressure ahead of the 20 year debt sale. are trading at 2016 lows and iron ore futures this morning in singapore just nudging slightly higher but not too far off the april low given the rout we have seen in the month of august. bhp in the limelight.

earnings jumped to a five-year high. it is set to increase shareholder return. that is a snapshot. this is bloomberg. ♪

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paul: asia's major markets are about to open for trade. shery: good evening from bloomberg's global headquarters in new york. sophie: welcome to "daybreak asia." paul: our top stories this tuesday. huawei wins a reprieve in the u.s. but says it still being treated unfairly by washington. a waiver extension for 90 days. move up borrowing costs. the pboc prepares to announce

reforms. shery: china is accused of using social media to undermine the protests in hong kong. twitter and facebook delete the string to fake accounts. kicking off in japan, south korea and australia. let's get to the market action. sophie: in tokyo we are seeing the nikkei 225 adding a quarter of 1%, ditto for the topix. mid 106rading around levels against the dollar. the dollar trading around 2019 highs. that may dampen some of that risk on move when it comes to a emerging market assets. we are keeping a close eye on jgb markets ahead of the 20 year bond due out this tuesday. checking in on the mood in seoul. kospi is gaining ground a 10th of 1% while the korean won is on the back foot. this has prompted more job owning from the south korean government with the minister saying the country will take preemptive steps if needed.

we are ticking -- keeping a close eye on the tech space. samsung gaining ground. for ones given the nod local japanese manufacturer to provide a shipment to samsung. let's check in on the activities. gaining nearly 15%. asx 200 on the up of the start of cash trade. is alreadyroup trading. this as we digest the latest earnings, which did jump to a five-year high, which helps with dividends to ats record $21 billion, adding this latest dividend update that the minor provided. we are seeing investor enthusiasm deflate. paul: let's check in on the first word news. has resumed trump to default on the fed, falling -- calling for a full percentage

point rate cut and complaining the strong dollar is hurting other economies. shouldted the key rate come down by 100 basis points, along with additional easing. if that cut rates of last month for the first time in a decade and some policymakers are not convinced of the need for more. forecaster still expect we will get reasonable growth over the second half of the year. but ittes are low, is reflective of global conditions, which are week. there are not circumstances in which i would not be able to ease, i want to see evidence we are going into something that is more of a slowdown. if i am growing at 2% i am not worried. peoplenumber of migrating from hong kong to tie one is surging as protests continue. it is up by almost one third this year compared to last. up 10% of all new residence in taiwan.

the president has been vocal in her support for hong kong's protest movement. there are more demonstrations to come after a peaceful mass march over the weekend. minister, boris johnson, is planning a nationwide pr campaign to prepare voters for a no deal brexit. they have been highly technical, but government sources say the new drive will be more user-friendly. ministers have been warned that small companies are not ready for a hard brexit. but they are vulnerable because of the extra paperwork. >> after failing to negotiate borisexit deal, johnson stories are driving the country towards a no deal cliff edge. clear.e very we will do everything necessary to stop a disastrous no deal from which this government has no mandate. news, 20 for hours a

day, on air and at tictoc on twitter, powered by more than 27 hundred journalists and analysts in over 120 countries. this is bloomberg. has a temporary reprieve with the trump administration extending a waiver from a ban on doing business with the company for another 90 days. more than 40 affiliates are being added to a trade blacklist here it -- blacklist. huawei says it is still being treated unfairly by the u.s. this 90 day extension mean in real terms? derek: in real terms, it is a pun. it is not this positive, it is not the end of the line. it's kicking the can down the road until mid-december, or mid-november, i should say. there was action taken in tandem. not only was there a 90 day punt, but there were another 40

some odd entities added to this entity list. huawei affiliates and similar added to this blacklist. what you are talking about here is a chance for the u.s. to give suppliers in the u.s., give companies in the u.s. that are may be exposed, or maybe are ort of huawei's lines, whatever, a chance to break out there. it also gives u.s. and chinese negotiators an additional period of time before some big/no go bid. huawei has been a giant sticking point for the china side. it has been something that president donald trump and the u.s. has said that they will not deal with until the end of the trade negotiations. i don't need to tell you and i probably don't need to tell most of your viewers that those trade talks have not been particularly fruitful over the last couple of weeks.

ist you are looking at here an extension. you are looking at taking it down the road a little bit, putting this into november, and dealing with it later. pretty much. are we going to be an a different situation in november than we are now? i don't know. it's too early to say. right now there has not been a ton of progress. this is not as bad as it possibly could have been for huawei, considering some of the presidents more bellicose rhetoric over the weekend. it's sort of takes where we are and puts it down the road a couple months. paul: senior editor derek wallbank in singapore. thank you for joining us. breaking news now on the bloomberg terminal. we do have results from oil five cents per share, that's an improvement on the past year. revenue, 776.9l million. that's up 39%. take a look at first-half net

profits. very strong performance. 159.9 million. that's up 105%. it is a narrow miss on estimates. but the market was expecting something better than that. in terms of its talks with the png government on its interests of their, it sees a resolution coming sometimes in august, and talks are continuing. just to recap the headline for you, first-half net income, $162 million for oil surge. -- oil search. we will have an interview with the oil search managing director on tomorrow's show. shery: let's talk about the oil industry. we saw oil rising in the previous session. wti is falling .5%. we have some progress in the trade war, or optimism about withess on the trade war more attention in the gulf. supply is a key concern amid

weak outlook for global growth. that's crossed asia energy reporter in singapore. we saw some gains in the last two sessions. we continue to see the downside pressure. it is all about what happens to supply, isn't it? especially given the growth outlook seems to be slowing down. >> yes. it is looking at what is happening with the supply, and over the weekend there was a drone attack. saudi arabia and folks from yemen, it caused a bit every worry. that area that was attacked in saudi arabia produces one million barrels a day. a the supply side there was little bit of bullish news providing support for the market. the trade war has really been the driver for the market over the last few months. the price of oil in the united states and in london, brent 20%.er has said it dropped

lack ofof the resolution with the trade war between the united states and china. the more that the trade war deepens, the more there is the idea that demand could slow because it could add to a global recession, or a global slowdown in terms of demand. up demand there and leads to a drop in prices. news from yesterday provided upside to oil, that is why we saw prices jump up a little bit. paul: i just wonder if you could provide us with an update on the saga, the ship formally known as race one" swan" -- "g being re-named. they are issuing a warning about the ship.

put out a warning about the ship. i think this plays into a larger market outlook. everyone in the market is looking to see what will happen with iranian vessels and u.s. vessels. this iranian tension with the united states and other nations is being watched by the markets. the reason for this is because iran could do something in the strait of hormuz and stop a lot of oil from going through. that would lead to supply shock, and potentially lead to an enormous increase in the price of oil. everyone is watching what is happening with the ships, but at the moment we are still waiting to hear what will happen and hear what the updates are. that being said, it is something that is being keenly watched a traders alike. reporter asia energy in singapore. thank you for joining us.

big stepmaking a towards reforming its interest rate system. the pboc will release a new loan of prime rate. it will happen on the 20th of every month. asia and line -- our asia mliv editor is here. month, is0th of every this expected to make loans cheaper? garfield: a bit cheaper and clearer. because the pboc has these napital controls on the yua and other things. because it is a micromanager and a macro manager, it can get confusing as to what actual rates you should be watching. the one-dayer that repo rate has jumped above the seven-day repo rate? or that they are doing something weird? perhaps you should be watching foreign points. businesses can look at this lending rate and say, ok, that is the one that manage -- matters for businesses.

we can worry about the banks when it comes to the rest of it, but the business is what matters. this is what is being said cheaper. so far, yesterday there were some other reasons for optimism for the rally in china. we had a very strong rally across chinese equities. there is some optimism that that will continue. it is definitely being accepted positively for now. shery: let's talk a little bit about the trading session in the u.s. where we saw the dollar rallied to this year's high. what does this mean for trading in the asian markets today? mean, thewell, i dollar strength is not necessarily a bad thing, especially with the drivers that are occurring. it has come amid a risk on tone. lots of countries prefer their currencies to be a bit weaker.

for example, one of the things that had concerned the reserve bank of australia was that the aussie dollar was staying relatively strong, even after a couple of rate cuts. now it's weakening again this morning. as long as that is being driven by the perception of things like trade, yields tracking a bit higher in the u.s., restoring that premium that the u.s. enjoys when it comes to yields. for example, mr. rosing graham is less inclined to cut rates. those other sort of drivers that it strengthens the dollar that is not a direct concern for the asian trading session. shery: thank you for that. our mliv asia editor joining us from sydney. still ahead, twitter said they took down hundreds of accounts that originated in china for the goal of undermining hong kong protests. we will discuss the fallout later this hour. beijing isxt, it

taking a step to lower borrowing costs. we will speak with standard charter as we count down to the pboc's announcement. this is bloomberg. ♪

paul: this is "daybreak asia." step: china takes a major towards reforming its interest rate system by unifying markets and official rates. the pboc seems to bring down the high cost of borrowing for households and companies. becky joins us. drum roll to 9:30 this morning. what are you expecting the lpr to look like? looking at the number, which is the first rate of the lpr of this reform.

we are expecting this rate to have a decline of around 15 to 20 basis points on the lpr quotation. which would make it around 4.1%. markets are looking for it a more realistic site of this stage. we see that this rate would be between the 90% of the previous benchmark lending rate, which would make it 3.915. and the previous rate which is 4.31. we are looking for a decline around 4.1%. shery: now that we will be looking so closely at the one-time rate, can we expect this to become the de facto benchmark rate in china? will link to the de facto policy rate in the future. the transition is making the lpr rates much more relative to the long rates with the benchmarks open market operation rates.

the purpose for this is really to strengthen the transmission and to end the double track interest rate system. moreboc would have a lot long rates based on the adjustment of the rates in the future. paul: i just want to bring up a charger on the bloomberg which illustrates the existing system, or the system that has been in place up until now. if this chart gives you a headache or makes you feel ill in some way, that is the point. it is messy and complicated. the idea is between getting the green line lower and making it the benchmark. does carrying out the reforms carry some risks that may be have not thought of or considered? >> yes, it definitely carry some risks. this is one of the obvious ones. because of the economic downturns, the banks are under

all of these policy initiatives to extend. at the same time, at a lower rate. also, as we look at the previous charge, that we also view that the pricing has not only to do with the rates. where we see2018 the overall internet rates indicated either rates has been thetantly declining, but on other hand, the average long rates in china has been rising almost every single quarter. that tells you there are other factors that would contribute to the loans. paul: is there another risk here? because it follows the libel model. that ended up getting fixed. in a bad way. so a risk that this rate could be rigged. i don't don't -- becky:

think that is impossible. beenis why it china has promoting the next benchmark for a lot of the liability pricing in china and using the rate. clearly the chinese regulator would want to avoid what happened in the pricing. guidelines,t pboc they had some specific language. the interest rate is more on the downside. aey mentioned there was defect oh the long pricing in china, which is 90% of the benchmark rate. it remains to be seen how it is set. it is worth mentioning that the way the banks that, it is being the macro assessment framework, which means that the regulator would be closely

monitoring how the banks are doing the rate, and how the lpr rate has a long pricing for top-tier clients. shery: there must be a reason the pboc is doing this at the moment. terms ofwe seeing in liquidity positions in the financial markets in china? becky: the liquidity is pretty mixed. the liquidity condition had actually been relatively tight. it had been in a relatively high range between 275 to 290 in the past few sessions. we think it is actually possible for the pboc to descend the dollar or by maintaining relatively wide interest rate gaps between china and the u.s. we do feel it is a good strategy. this would make chinese bonds

staying very attractive to international investors. globally we have a record on top of negative yielding bonds and have about 140 basis points between china and u.s. 10 year treasury bond yields. that is maintaining the interest rate gap that cannot only prevent for china, but would help china to attract inflows. on the back of that, we are not expecting any open market operation rate cuts in the foreseeable future. paul: the bloomberg estimate of what this rate will be is at 9:30 local time. it should be set at around 4.2 .4%. it means lending gets cheaper. what is the impact of this going to be on chinese bank stocks? will they see their margins getting squeezed? marginshinese banks a should get squeezed a little bit. but the rpi reform is more likely to have a greater impact to the top-tier bank loan, that

the bank loans to the chinese corporate. which would be largely attributable to the credit conditions. on the other hand, it is interesting to look at what the policy purpose would be. if we look at the fortune 500 the, that china exceeded u.s. to have the most number of companies on the list this year. if we look at the proper -- profitability ranking, the big five chinese banks have always been ranked top of all chinese companies. in china, banks are so much more profitable than any corporate. that makes it a potential policy goal to transfer the banks profits to the corporate. by easing -- using the lpr comments it could be forcing some of the banks to reprise some of the top-tier loans to a lower level. if we compare the bank loan rates versus the bond market pricing, the debt remains extremely wide.

even after the lpr reform, the double interest rate check system is not ending yet. just to give you the number, the one your de facto flock is three 3.915.- versus the domestic chinese corporate, which is only about 3%. paul: we will have to leave it there. thank you for joining us, standard chartered ahead of china microstrategy. play more to come on "daybreak asia." this is bloomberg. ♪

shery: this is "daybreak asia." paul: i am paul allen in sydney. let's get a quick check on a markets today. nikkei is higher by 4/10 of 1%. the kospi slept. reasonable gains in australia.

performanceest dutch performers at the moment. shery: not a lot of movement when it comes to the currency markets. the japanese yen is holding at 106. plenty more to come. this is bloomberg. ♪

>> this is "daybreak asia." the trump administration is extending exemptions for another 90 days. that puts networks on a ban on doing business with huawei. wilbur ross said summit u.s. households are dependent on huawei so it is deemed appropriate. the administration is adding more than 40 huawei affiliates to its trade blacklist. bloomberg economics has been crunching the numbers on a trade war and said the growing uncertainty could lower world gdp by 6/10 of 1% in 2021. that is compared to a scenario where there is no trade war.

that would be doubled a direct impact of the tariffs themselves, and not the offvalent of $585 billion the ims estimated global gdp of 97 trillion in two years time. resumed hisump has assault on the said, calling for a full percentage point rate cut, and complaining that the strong dollar is hurting other economies. he tweeted that the key rates should come down by 100 basis points, along with some additional easing. the fed cut rates last month for the first time in a decade, and some policymakers are not convinced of the need for more. forecast are still expect we will get reasonable growth over the second half of the year. bonn rates are yet low but i think it is reflective of global conditions and global conditions are week. i am not saying there aren't circumstances in which i would be able to ease, i want to see evidence that we are going into something more of a slowdown. if i am at 2% i am not as

worried about that. focuseddent trump has with india and pakistan in a bid to calm tensions over kashmir. the prime minister has kept the region under lockdown for nearly two weeks after scrapping its autonomy. a move described by the pakistani prime minister. territorial disputes in kashmir have triggered several wars between the two nuclear armed nations since the end of the british rule in 1947. financier jeffrey epstein wrote a will two days before his suicide, creating a trust with more than half $1 billion that could complicate efforts by his accusers to claim damages. prosecutors in manhattan say they will close the sex trafficking case against epstein following his death. however, they told the court that the investigation into his alleged it co-conspirators will continue. -- alleged co-conspirators will continue. onbal news, 24 hours a day,

air and at tictoc on twitter, powered by more than 20 700 journalists and analysts in over 120 countries. this is bloomberg. let's check in on what's happening on the markets. are seeing modest gains for asia stocks to put the regional index on court -- on course for a third day of gains. electronic makers on the boost in tokyo on the back of the reprieve for huawei. the currency is under pressure. the aussie dollar falling. going long, 10-year aussie breakevens after levels hit record lows. given some of the outlook for the rba easing. the korean won is on the retreat off a tent of 1% as the ofernment warm -- warns a preemptive step. it is trading against the former dollar as the greenback is trading your 2019 highs. i want to focus on one stock

over in sydney. which rose as, much as 6.9% after a four-year net income met estimates and they rose 32% with chinese sales coming in strong for the company. marginal impact from what we are relatedrom huawei businesses. it is on track for its revenue target of 2020. you are seeing some analysts review their outlook for the stoxx. they are raising their price targets. they have cut their price targets. waging aina may be social media campaign against a pro-democracy protest in hong kong. twitter says they found and the lead in nearly 1000 accounts used by beijing to spread political discourse in hong kong, while facebook says it also found evidence of similar operations. our chief north asian correspondent is looking into this. do we know at this point how big

be's efforts were? when i first read this story it did not surprise me that this kind of perception management, if you want to use that euphemism, is going on. it's going on everywhere in social media. you have to always take a lot of this stuff with a grain of salt and figure out where it probably came from. what is interesting is how twitter and facebook are taking and also the size and scope of this alleged campaign coming from a state backed entity. if you want to call them that. 936ter found and deleted accounts that they say originated in china that attempted to manipulate perspectives on the protest movement here in hong kong. facebook acting on a tip from twitter's say if found a similar chinese government-backed operation on its social network that included five fake accounts, seven pages and three different groups.

ourter said, based on intensive investigations, we have reliable evidence that this is a coordinated state backed operation. it went on to say that deliberately attempting to soda political -- so political discord and the political divisions of the movement on the ground. analysts at bloomberg news have spoken to say the size of this operation potentially could be greater than the alleged disinformation campaign that it waged allegedly on the 2016 u.s. presidential campaign. i might add that in a related announcement twitter said it will stop accepting advertising from state backed media worldwide after finding that chinese propaganda messages from chinese media was paid to promote on its website. it does not affect taxpayer-funded or independently run media, such as the bbc.

paul: that is the move from the electronic front to the economic front. more eco-data. is that backing up what the government is saying, that the economy is suffering? stephen: it looks like it. the jobless rate hit upwards to 2.9% in july. that is not a high number, however, it stayed steady at 2.8% since april of 2018. but a slight tick upwards is an indication that the economy is seeing some pain. it comes a day after they came reporth out with a that office vacancies are up to a three-year high. we know that the financial secretary has revised lowering his full-year gdp forecast a zero to 1%. that's from an air earlier forecast of 2% to 3%. the for the headwinds of the

u.s./china trade war intensified, and these protests intensified. in we have morgan stanley the last hour cutting its hong kong 2019 gdp outlook to -0.3%. a little bit more of a dire prediction from morgan stanley. it comes at the same time that we are seeing numbers from other sources saying, immigration to taiwan is up to a three-year high in the first seven months. there are a number of different indicators pointing towards a weakening of the economy. paul: chief north it -- north asian correspondent, stephen engle. u.k. prime minister boris johnson made his first public attempt to renegotiate the brexit deal. he is telling the european union he wants to explore different ways to prevent hard border in ireland. let's head over to fx reporter david. it is a noble goal. what are divorced johnson's chance of renegotiating the

irish border? david: it seems tough if we are being honest. it is the most contentious part of the agreement, a legally binding commitment not to do any checks between northern ireland and ireland. and the eu perspective, they do not want a hard border. they also have another issue. the eu wants to make sure every agreement is in place that will secure the borders after the u.k. leaves. they do not want groups coming across from northern ireland to southern ireland that have different taxes and import duties. the eu will say, we need something specific to stop this problem. what boris johnson said his vague. eluding alluding to -- to technological solutions. that is why we have the irish backstop. even though boris johnson wants something done, the cuts he could get something through parliament. it looks like the chances is

that they won't agree to what he is alluding to. shery: what does that mean for sterling? will we see further pressure on the pound as these tensions continue? you look at sterling against the dollar, it is trading at 120 to 122 range. thenext question is no-confidence vote. if there is, that could trigger a potential election to form another government. if an election was formed, the has afidence vote potential relief that a no deal is off the table. the catch, even if there was an election, the latest poll puts conservatives ahead of labor 31 point 25 points. boris johnson remains in power, then he would win the election and say this is my mandate. you would do a no deal brexit. and it ism increases

not good for sterling. i think you may see knee-jerk reactions for sterling. but even if there is an election, a no deal brexit is the outcome. shery: thank you for that. our asia rates and fx reporter. plenty more to come. this is bloomberg. ♪

shery: this is "daybreak: asia." i am shery ahn in new york. paul allen in sydney. bloomberg economics says uncertainty over trade could lower world gdp by 6/10 of 1% in 2021. it costs the world economy almost $600 billion. the trade war will also cause more scrutiny of large cross-border m&a in china. deals inl be less mega the second half of the year. joining us from hong kong is david brown.

he is the deal theater for the asia-pacific. to the want to turn report you have done. china m&a has declined by aiding the fed the first half of 2019 to 264 billion. that was the biggest decline in the past decade. is this all the fault of the trade war, or are there other factors at play? david: if you look at that headline number, it's an 18% drop in the m&a overall. if you start to look behind that, you see private equities m&a down by a third. then there is the outbound m&a that you referred to. it has dropped by 50%. there is an extraordinary decrease in the outbound m&a. byhas gone back down domestic m&a activity. there has been a focus on the domestic chinese economy. 8% increase of domestic m&a. falling off with big

cross borders that are a big driver in this. in terms of those big deals, you know that the deal values it down, but the deal volumes are up. what does this mean? there are still some signs of strength in the smaller m&a area? david: the fundamental drivers of m&a activity are still there. they are still present in the market. i think where we've got the difficulty is with these large scale cross-border transactions. where the target company could be described as being strategic in nature. that word strategic is now incredibly broadly defined. this is not a china/u.s. thing. this is a global phenomenon. there is probably particular sensitivity around china. something big in a cross-border.

you have a perception that governments will now take an interest in those transactions and that they will become difficult. in anticipation of that, those transactions are not happening. we saw out of china that there bigger than one billion u.s. dollars, which is the lowest for a long time. shery: what sectors are we seeing those transactions and? -- transactions in? david: it is very broad. we are not seeing the big deals going overseas. the rest of it is more normal under the radar screen. industrials, consumer products. technology, chinese often going overseas to bring the latest know-how brands technology and bring it back and put it into play in the china market. we have seen activity around the inbound m&a. seen thoseave

investments into the u.s. falling already. are there any other regions where these investments outbound m&a's are actually holding up? david: you raise an interesting point. it is often reported. the outbound is down because of fall off from the u.s. open. that has been in the numbers for 2.5 years. what has happened in this of-month period, the rest the world has caught that, particularly in europe. it has become a replacement destination for the u.s. that has come off strongly. i think it is around the cross-border transactions. ae only reason there has been reasonable amount of consistency in asia. we are still seeing a reasonable flow of china outbound in other countries in the asia-pacific region. that is perhaps the one reason it held a little bit. paul: you mention a few times,

political sensitivity around .hese big cross-border deals i am wondering to what extent that is a symptom of the political environment? protectionism rather than globalization seems to be the theme of the day. that given, would you expect this to persist for sometime? david: i do expect it to continue. i do not think that this is a short-term phenomenon. i don't think it is just a china thing. i do believe that there has been an awareness in the world now, in particular, among governments and major economies that assets that are owned in those economies can have strategic implications. i think you see the things that have happened around countries ,ike -- companies like huawei and the implications of that are making people think about the need to be self-sufficient in notical industries, and to

allow foreign acquisitions of anything that is defined as to teach it. -- strategic. that definition is lightly drawn. i think cross-border m&a, generally, we will see that. a few look at the big deals they are having globally, they have been domestic. there have been u.s. companies and chinese companies. i think it will be a trend that persists. paul: with that in mind, your report on the first half was nothing too much to write home about. i'm assuming the second half will not be too much either? david: there is too much uncertainty in many areas. a way of m&a. it makes it difficult to get pricing right, especially when you have these very binary events, brexit, or the trade war. if you don't know the way they

are going to go. expectation.tain buyers will have a different expectation. it will be difficult to bring that together. binary as those major uncertainties are existing, i think that will be bad for m&a. if thosenk that uncertainties start to resolve themselves, we do think that there is some backlog and pent up demand. we do expect a rebound, but only if those things can resolve themselves. whether they will or not is very difficult to see. brown, pwc's deals leader. thank you for joining us. don't forget our interactive tv function, tv go. you can watch us live. you can catch up on past interviews and dive into any of the securities or bloomberg functions we talk about. you can become part of the conversation by sending us instant messages during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: this is "daybreak: asia." i am shery ahn in new york. paul: i am paul allen in sydney. china's biggest search engine beat analyst, despite facing challenges from new rivals. asia tech editor joins us now. a pretty good set of numbers certainly compared

to what we were expecting. where were the bright spots? numbers offered investors reassurance. at least for now. grow its business in the face of a broader macro economic slowdown, but also send off a really aggressive challenge for up-and-coming .ivals but also existing incumbents like tencent. it's really interesting because they managed to hold onto advertisement when tencent was not as lucky. we have seen them launching a general search engine. what does this mean going forward? : the number of challenges 's core businesses and appetizing on surge. they seem to be making the move. it is all about the competition

for the timestamp. there are a lot of rival services out there right now. a lot of the apps that bytedance seems to embody. that is all for users attention. i think what we have seen is baidu has been able to grow its user base in spite of the macroeconomic challenges. appetizing its resilience. growing inxactly leaps in bounds. i think investors want to see that kind of discipline with the user base going forward. acquiring content so that being gauge meant remains high, then we will see if baidu can engineer. baidu used to -- be one of the five most traded internet companies and it started trading off. it could even truly regain its own glory, or is it just more

signs of basically stabilization? in: there used to -- they used to be amongst the top three. nowadays, a lot of investors like to refer to it as bytedance . a tv, alibaba and tencent. we will see what happens. they need to show discipline and sustain their momentum. they need to continue to focus on content to boost user engagement. our asia techhan, editor with the latest on baidu. let's get a quick check of the latest business flash headlines. former disney accountant is accusing the company of overstating revenue for years. and has filed a series of whistleblower tips for the sec. he worked as a senior financial analyst at disney for 18 years and claims employees in the parks division systematically overstated revenue by billions of dollars.

disney denied her allegations in a statement for market watch. trade standoff between japan and korea is taking its toll on tourism. korean air is scaling back when --yet -- many of its to hand japan routes. there are increasing flights to popular southeast asian destinations. korean air is having a rough ride this month after earnings fair share and sales missed analysts estimates. shery: let's get straight to a preview of what to watch in markets later this morning. sophie: we are half an hour away from the pboc's fixing of its new loan prime rate, which some like morgan stanley said it is an effective rate cut. at five to coming in 10 basis points lower than the benchmark lending rate. the pboc is likely to cut the email effort rate. i want to highlight a dour abuse for morgan stanley when it comes to hong kong. the bank cutting a 2019 gdp forecast for 2019 from -.3% from

1% after morgan stanley said the fence positioning is to be had given the hang seng may see more downside and may bottom at 21,000 500 points should an inverse scenario take place. morgan stanley also souring at the property tax. seeing property prices falling 10% into the first quarter of 2020 after hitting a peak in june. have a big interview later today. andrew mackenzie joining us for thexclusive chat to discuss day's results. that will be on "bloomberg markets: asia." don't miss it. ♪ from the couldn't be prouders

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9:00 a.m. inis beijing and singapore. welcome to bloomberg markets: china open. anchor 2: we are counting down to the opening of trade. we focus this morning on china. the pboc will announce the much anticipated rate reform. huawei wins al reprieve from the u.s. anchor 1: china is accused of using social media to undermine the process in hong kong. twitter and facebook