>> good morning. we are counting it down to asia's major market opening. our top stories, the u.s. senate back to build punish china for tightening the grip on hong kong. american banks may be hit if they continue doing business officials there. virus cases globally approached 10 million with almost 500,000 dead.

worldwide trade has been slashed. post-nba future, we will hear from lebron james. feeling more risk as we head into the last trading session of the week for asia. lasttrading flat after the half-hour of frenzied gains, s&p 500 up 20% loss in the previous session. nikkei futures at the moment looking flat. dollar-yen holding at 107. gainingg dollar index with the exception of the kiwi and aussie dollar. it feels like we will see modest over in spite of concerns

increased virus numbers, particularly in the u.s. and globally we are averaging 150,000 new cases per day. the underscores uncertainty. the senate in the u.s. approving a bipartisan bill that would limit banks doing business with chinese officials involved in hong kong. tom mackenzie is in beijing. it still has to be signed into law. given unanimous consent, how likely is it this will be enacted? tom: very likely at this stage. it has bipartisan support in the house and it has been signed off in the senate. it will end up on trump's desk and he will be compelled to sign. the staterequire department to address congress anry year and discuss

outline whether any chinese officials are undermining the one country to systems model that currently applies to hong kong, whether it is undermining the city of metonymy. then it will give the president the power to seize assets of officials, block them from entering the united states, and it would also sanction institutions from doing business with those chinese officials. it has to be signed by the president but it continues the when iton of congress comes to the issues of china. had an act passed recently to sanction chinese officials. do we have any indication

of when the timeline of this law will be enacted? tom: they could be as early as next tuesday. the group of officials that have the power to write the law and enshrine it in hong kong are meeting starting sunday for three days. it is not officially on their agenda yet but there is the view it could end up on the agenda and they could sign off on it and enacted as soon as tuesday of next week. anniversary of hong kong's handover from the british to the chinese so it is a symbolic week and speculation there might be protests next week. bill isern among the that it give -- it gives overriding powell -- of writing power. officials in the city could like secession,

collusion, terrorism, and carrie lam would be able to appoint judges to rule on the cases. reflecteds concern from the u.s., the europeans, and the japanese. china says if the u.s. goes down the route of sanctions, they will respond with countermeasures. we will get more on u.s.-china tensions ahead. mary lovely joins us in the next hour. still ahead, president trump has paid little heed to the resurgence of virus cases in the u.s.. we will examine if this is likely to damage his standing in the polls. the s&p 500 near term momentum is looking bearish. bloomberg. ♪

daybreake watching asia. the pandemic continues to search across parts of the u.s.. texas is halting the reopening of their economy and infections are rising in arizona, florida, and california. there are predictions covid-19 will kill at least 180,000 americans by october. passed 9.5lly have million with 500,000 deaths. infection surge in southeast asia with indonesian cases topping 15,000. more than 1100 cases were reported on thursday with more than 200 deaths. believes 80% of migrant workers should be clear by the end of next month. volume.s have decreased

new research says shipments have fallen by 16% but the world trade organization says that for worst-case scenario can probably be avoided. they see a trade decline of 13%. india is said to be planning quality control measures on tariffs from china to maintain military standoff in the himalayas. we are told officials are finalizing the removal of .undreds of products the move comes within df facing a sharp economic contraction, the first in more than four decades. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: in the markets u.s. futures trading flat after a volatile day of trading thursday

. investors continue to try to decipher eco-data and the timeline for recovery but as stocks rally, there might be a warning sign. this chart shows you the disconnect between profits and shares we last saw happened during the dot-com bubble. andy ka cuss this with pyrin. are we setting up for more volatility? hard is going to be really strong market to deliver fundamentals in the second quarter. everyone knows it will be ugly. nike's if you look at report after hours today it illustrates. no one is better positioned for this environment than nike. it is an iconic brand that sells at a premium.

but it is also selling goods that are more popular. people are not buying fancy dresses but they need comfortable clothing that can do double duty for working out and working from home. should investors take shelter again and those big balance sheet growth companies like the tech sector? those is theyth have already grown. if you think of the top five companies, they are up 25% on the year but the market overall slightly down 10% or more. their success has already been priced in and probably amazon, no short of one is likely to experience a 25% surge in turnover sale.

a lack of guidance uncertainty, what are the , if you get some --itive news flow and uprise upward surprise, that it will be taken well by the market? not to writerned off the upside potential stocks. and itons are stretched is hard to imagine the market going further but i feel like investors are eager to hear good news. in terms of this much held in rotation and value, when will we start seeing it? time and time we see the incremental being led by stocks. , it you look at valuations

is hard to find value. see aelieve we will rotation back into value when we are confident we have seen the worst for the economy. atay we are looking anecdotal evidence and individual data points that suggest unemployment has peaked and people are getting back to work on the lockdown is ending. this is all good news for more cyclical companies that really took it on the chin in the downturn. normally with fiscal recovery you see very strong performance in the first few months of a andy for smaller companies industrials. not so much this time around because people lack confidence. if that confidence becomes available in the data, it could reinvigorate and laid us out --

light a fire under undervalued stocks. what do you make of an easy of -- the easing of restrictions? >> i have mixed feelings. on one, the volcker rule was a blunt instrument that required regulatory requirements that were not necessarily optimal for the long-term health of the banking segment. the details they came out today were technical but the bottom line is they increase flexibility for banks that the risk that they may maintain less capital. the flip of the volcker rule is what happened after hour with the fed. no dividend hikes and no resumption of buybacks this year. that's not good news.

news is they i am large past the stress test with flying colors as they approach this conservatively. and that is good news for value. whether it is the federal reserve or other central banks around the world, with all the action they have taken in recent years, have they basically stifled the private governing of the markets? what does it mean long-term? are we setting up for deeper problems down the line? >> i am not sure the central banks have changed on a relative basis. i would make a strong argument that they have created asset , we feel ition first and financial markets. the stock market is easier to point to. you can point to the credit market. snapback in investment

grade bonds around the world. what lessons can investors take from the pace and type of recovery, particularly when it comes to the behavior of investors around the world? china despite battling with their own new ways is on the tracks to opening. the window aents future for the world. when the recovery takes shape, what will it look like? china is telling us this is not a normal recovery and it doesn't look like anything else. require fast is when they fall the least but in this case were not seeing that. in china there are categories that areel and tourism

still not experiencing a swing back. meanwhile what is more inditional is the big surge shopping for cars, buying homes, investing in upgrades to your existing home. that has surged back. this says to me the recovery --und the world will led by will be led by industrials. it will not be led by surge. haidi: really interesting. glad to have you. we will have more market analysis ahead in the next hour. withll be speaking franklin templeton's emerging markets equity cio. next, nike's growth margin is at its lowest level in the

century after the pandemic hit sales harder than expected. a detailed analysis is next. this is bloomberg. ♪

haidi: nike has spent weeks touting their ability to navigate the coronavirus but it athletic brandst has brought disappointing sales in the last quarter. let's take a closer look. brand,s no way any including nike, could get away unscathed. but it was surprising how badly they were affected and how punishing the pandemic is for apparel. surprisek the biggest is how long the stores stayed closed. they were closed for eight weeks of the quarter.

results,hat retracted and wholesale orders were canceled and scaled inventory to get rid of. it drove the quarter. but i think all of that is behind us now and i think the worst is behind us. i believe nike will be on track to show up -- to show improvement going forward. heavily on invest the online platforms. what do we know about their digital strategy and what could stick when it comes to behavioral changes? >> they have added fuel to the file -- fire. today they said digital can be up to 50% sales, that is half the sales coming from digital loan by 2023 and in the corner -- quarter they showed 30%. comes toen it

inventory, it seems they still have hide inventory. what does this mean and are we seeing any improvement on the trends in consumption this month? inventory isnk high in the corner of 31%, so high relative to the sales drop. that said, what they said on the mights that digital sales enter triple digits and that trend continued to june so on the digital side we see them clearing inventory. downink they took a lot already and there is hopefully less pressure in the upcoming quarter. there will be pressure in the fiscal one q as they do not expect inventory to be realized in sales until the second quarter. what about overall brand momentum?

to be able to recover quickly? >> i believe nike is one of the best retailers i cover and in the retail space, their brand is popular and they strike the right balance of their customers across digital and stores. they are positioned to come out of kobani 19 -- covid-19 strong. youy: it is great having with us from bloomberg intelligence. the nba is gearing up to resume their season july 22 after losing games due to coronavirus. james abouth lebron the return of professional sports. generalieve sports in has done so many great things for communities, for households, bringing people together, and more importantly, our commissioner and our league have

alwaysbeen able -- allowed us to spread what is going on in our lives so to be together as a league again gives us another opportunity to talk about what is going on with social injustice and police brutality and black lives model -- black lives matter. sports has always galvanized and brought people together and made people feel uplifted. , unfortunately a wastiful 18-year-old girl gone down in ohio last week a week after graduating from high school. -- i'm not saying to forget about certain situations, but just to have a breath of fresh air, a sense of love is what sports can bring.

i know what i do on the basketball court brings a lot of happiness to a lot of households, including my own and my community and my kids. so i am looking forward to getting restarted and getting back into the laker uniform and continuing to push the envelope on and off the court. like i tell a lot of my colleagues and friends, i will not stop until i see change, as a black, community both on and off the court. my mission stays the same. that was just a little bit of that special conversation with lebron james. the full conversation will air saturday at 7:00 a.m. in hong kong. -- verizon says it is pulling support from facebook because of better control of

reports -- posts that spread disinformation. instagram has been called to make action -- take action on misleading content. surging coronavirus cases mean apple is preparing to close more stores in the u.s.. at least 14 outlets have shut down in florida. 34,000 cases were reported in on wednesday. local authorities are reassessing plans to reopen the state economy amid pressure to reboot from the white house. macy's is cutting thousands of back office jobs, meaning retail will not recover anytime soon. it will eliminate almost 4000 corporate and management commissions -- positions. the ceo admits macy's will be a

smaller company from now on. u.s. futures are up 2/10 of 1% and nikkei is gaining grounds up 7/10 of 1%. steady. yen holding fluctuation in the u.s. session before jumping late trade. s&p 500 rose more than it went in a week and we might have positive sentiment translating into the asian session. wti continuing to gain ground after russia smashed exports to the lowest in at least 10 years. up next, the number of new coronavirus cases are soaring in the u.s., and we will have details, next. this is bloomberg. ♪

shery: the japanese yen trading around 107 level after falling to the weakest level in more than a week. this as we get breaking news out of japan. rising asyear on year expected. a gain of 0.2% in line with estimates. same level in the previous month. inexcludes energy as well line with estimates. cpi always giving us a sense of where japanese prices

go this month. when it comes to the smaller drop in oil prices, it might have tempered the decline we saw in prices when it comes to travel given the pandemic. we had seen the imf saying japan's economy will shrink more than during the global financial crisis so you expect the negative output will put downward pressure on inflation going forward. not much changed with the japanese yen. in the u.s., the pandemic surges across part of the united states with the cdc warning more than 20 million might have already been infected. texas is halting the reopening of the economy with the intensive care wards swamped. cases are rising rapidly in arizona, florida, and california. joel joins us in washington. what have we seen from the president so far? had the outbreak started we

daily coronavirus task force press briefings but we have not heard from the president about the surgeon cases. in cases.e >> the briefings have been gone for a while. administrative officials are and theyng the surge say that deaths have not climbed. rally ind his first tulsa and he continues to travel and schedule morales. mask despitear a recommendations from health officials. his economic advisor larry says there will not be the shutdown restrictions that collapsed the u.s. economy in march. haidi: what if anything a

rehearing from the white house in response to the surge? is the task force gathering? is the president saying anything? bute had to address it mostly focused on a couple things, repeatedly blaming china and the worldak health organization for failing to protect and stop the spread. he also continues to highlight the expansion of 10 sting -- testing saying the u.s. will have more cases, even though the spite exceeds the additional testing. he also points to the death count being down from what it had been at the peak but as much to tryible, he appears to attempt it is business as usual. mike pence remains the head of the coronavirus task force and says the federal government is

working with the states across the southwest where the surge is most convenient -- surge is most acute. florida andled to the three states with the biggest spikes, which also happened to be states with republicans. shery: we keep hearing from officials that they will not shut down the economy again and yet things are starting to act. texas and north carolina are pausing their reopening. >> right. and florida is inching that way as well. , they had been among the first state to reopen and now they are saying there might be a rollback of that and pause of further reopening, and you are seeing local officials

requiring masks in public places. something a lot of people in those areas have resisted so far. so it will largely fall to the states to figure out how much they want these dial back on reopening. nobody so far is talking about a complete shutdown as they did because they are concerned about keeping the economies going. the search in u.s. cases can be tied to a number of factors according to johns hopkins. a professor spoke with bloomberg surveillance earlier. >> when you look at the states experiencing the large increase in cases, the first thing that is clear is there was some nonpharmaceutical intervention that was rolled back quickly and what we are seeing is cases in

states that remained closed for longer have now continued to decline and cases -- places that opened earlier are seeing increases. what are some of the risk mitigation strategies we should be thinking about now for politicians and also individuals? >> everyone needs to understand no risk absolutely no except staying at home and avoiding contact with others. transmission two to three days before symptom onset someone can transmit the virus individual is in routine contact with others like politicians, they must be exceptionally diligent when wearing masks in contact with others.

the staffers preempting the tulsa campaign rally were all infected, six of them, it is critical politicians understand contact of the staff and individuals around them because they are are at great risk because of the amount of contact they have with others. it is the same for every citizen. if you have lots of contact with people whose exposure status you do not know, you are placing yourself that greater risk. outside,ple wear masks or only inside in public places? >> it depends. if you are out in a large crowd , you absolutely need to wear a mask. it is protecting others. it is an act of altruism. it's not to protect yourself. this is an altruistic mask. i wear masks outside because i

am trying to protect you, not me. if everyone does that there is a community sense of altruism and it ultimately leads us to greater protection until a point where we have a vaccine or a greater level of herd immunity, if that is possible. what percentage of the population do you need to have herd immunity and do we know how many people have contracted it so far? hopkins has a national report on how to do these resurgence. the are quite violent and data is convenient for investigators trying to obtain the data. when it means is let's have anyone who has internet access come by on a certain day and have an evaluation but we need a

more robust population level estimates. that data is often missing. we have trickling in data. it is few and far between. estimates range variably depending on the state -- but -- depending on the sample. larger population so far show us that it changes largely from each time point. so we need greater than 50% of the population to have a level of herd immunity, problem the even higher to effectively stop transmission. johns hopkins court is supported by bloomberg. direct prooft,

that companies do better when they employ more women into leadership position. us about theoins findings of a six year study. this is bloomberg. ♪

>> lawmakers from washington have approved a bill that would penalize banks from doing business with china over beijing's new national security

legislation from hong kong. the senatemeasure in has support in the house and needs to pass before reaching trump. it condemns china for breaking obligations under the deal. reserve is telling banks they cannot increase dividends or resume buybacks in the coming weeks amid growing uncertainty over the pandemic. the fed latest says the lending sector has performed well but as separate view of the virus effect has uncovered potential threat. the chairman says banks must be prudent and conserve capital. russia has begun voting on constitutional change that would let putin stay in power until 2036. it was initially scheduled for a vote in april but was pushed back by coronavirus. prudent has run russia for two decades and the chain -- vladimir putin has run russia for two decades.

changes have already been approved by parliament. liverpool has ended a 30 year wait to be -- when manchester city lodged in chelsea. it is the first championship since 1990. club's dominance this year makes it the first ever to clinch the title with seven games remaining and the first to win the crown in june. as businesses look at a post pandemic recovery, they should not overlook the findings of our next guest. direct prooflished that companies do better when they appoint more women into leadership positions. libby lyons joins us. we have been talking about this for so long. what does your evidence show? a research institute we have

had a relationship with for over five years, and over that time they have taken our set of data we collect from organizations in the private sector in australia the asx have looked at companies and for the first time ever they have found a causal increasingp between the share of women in leadership position and increased performance, productivity, and profitability. when it comes to australia's performance, really excellent pressure applied by organizations or groups like the 30% club. are we still behind? it is enough progress being

made? behind,anies being left particularly with how investors feel? werethink in australia we one of the first countries to adopt mandatory requirements around gender equality and we have collected the data and we process ofthe on sixing broad data gender quality indicators and on almost all of them we have seen progress. love to see people how we are comparing across the globe, we need to be very becauseon those tables we are comparing apples and oranges. countries measure the gender pay gap in the same way and we look at the tables, they

are using different data sets from different countries. so comparing what we do with other countries is problematic. i think we need to focus on what we are doing in this country. we are doing well. in the seen an increase number of women in management roles. today, 39.4 percent of all managers in australia in our data set are women. 41% gotr over promotions into management went to women and if we take that trajectory, we will see equity at most management levels by 2030. so we are doing well. of course we can do better. of course things are not going as quickly as i would like. but we are making progress and we need to ensure that we keep

on the road toward gender equality, particularly into economic recovery. shery: what are the performance and profitability metrics were having women made a difference? do you have a market value? the report we released last recovery in the asx had a 5% increase in market management which equated to nearly 80 million australian dollars. so it is something we had suspected for a long time but we now have the hard evidence and causal link. with so manyrk

different organizations. how difficult it hasn't been to achieve this cultural change? especially when talking about smaller organizations that don't necessarily have the luxury to go looking for women to participate in their businesses? >> i think the issue here is we all have an obligation to ensure that we are providing workplaces and opportunities for women and are talking about half the population of the world here. us it'sevidence tells not just the right thing to do, it's the smart thing to do. it is difficult and we understand that. but it just requires that little bit of extra effort to ensure that your friend's daughter gets the same opportunity as your son.d son -- friends we are starting to see cultural change. it is easier for bigger undercurrent -- bigger

organizations, i understand that but that doesn't mean do nothing. i think there is a time we are seeing far more women coming towards than men and we must ensure that we provide everybody with equal opportunity to reengage in the workforce. in australia today, our female workforce participation rate has dropped 3% in as many months. we have to move that figure back up. we have to keep the foot on the pedal and remain focused and we can do this. shery: libby lyons, great having you with us. thank you for being with us. oilext, a closer look at and russia's export over the slow recovery of demand. this is bloomberg. ♪

>> here's a quick check of the headlines. latest figures shows u.s. airlines is struggling to get back in the air. passenger numbers just under half a million down 80% from a year ago when 2.5 million people were flying each day. it is better than last week when daily passenger numbers are even smaller. carriers are operating at 40% capacity. the blame game has begun in

germany over the demise of wirecard with calls for a comprehensive inquiry and leadership changes. former fintech star has filed -- insolvency after there is after saying he cannot locate $2 billion missing from the balance sheet. he has been arrested and is told there are questions to answer. in japan, thes second-biggest utility told the shareholder they will separate management over time from here on. they are accused of paying local officials for contracts and need 13 new directors to the board. extending ons thursdays oil gains. offsetting growing concerns about a second wave of

coronavirus. su keenan is watching this. we are seeing the demand side of the worries at bay. >> at least for now. data is showing russia is slashing exports for export crude product to the lowest in a decade. that is assigned to many that moscow is determined to work with opec-plus partner to eliminate the oil glut. a boosted futures in new york trading by almost 2% thursday. we are seeing almost an additional 1% gain in electronic gaining. a limit of decline. it is still on track for a second weekly decline. we are seeing brent crude under pressure. a lot of it has to do with the supply glut limiting the rally we saw back from the lows in april. there is concern about the second wave of the virus.

there is a decline in asian demand. signs that the lockdowns have decimated oil demand in india is starting to get a lot of attention and that is a big deal. 20the u.s., nine of the top gas guzzling states are showing upward takes and coronavirus cases. that is a concern and china save the dip in pmi suggest they will not have a v-shaped recovery in oil demand. two popular etf's in oil and gold are seeing big changes. >> let's start with the largest bullish oil exchange, etf will be selling holdings in september, that is why you see a flattening in the price curve. and purchases comprise 10% of the market for any contract.

etf'sres products show were reshaping activity. they were usually popular and intensele but after the recent volatility where prices crashed below zero in april, a lot of scrutiny has been placed on etf's and changes the way they buy contracts. if we go into the bloomberg and noticee charts, you can the hunger for gold. investors have been piling into gold etf's and that makes these some of the biggest buyers of gold. holdings are at a record. we saw gold down in the last session because there has been thesure to the gyrations in dollar but it has certainly been one of the most popular etfs out there. piling in the gold. back to you. shery: su keenan with the

latest. asian markets, we are seeing kiwi stocks gained ground up 7/10 of 1% after falling the most in over a week. nikkei futures gaining ground. 200 inosses for the asx the last section. worst performance in two weeks. sidney futures headed back in a struggle to regain the 6000 level. -- we have the japanese yen right now, falling the weakest in more than a week and that could give a boost to the equity markets. nikkei futures up 1%. the imf says japan's economy will be shrinking more this year than during the global financial crisis. more to come on the next

hour of daybreak asia. this is bloomberg. ♪

♪ shery: good evening from bloomberg global headquarters in new york. i'm shery ahn. haidi: i'm haidi stroud-watts in sydney. welcome to "daybreak asia." top stories, the u.s. senate backing it bill to punish china for tightening its grip on hong kong. american banks maybe hit. 10bal virus cases approach million, with almost 500,000 people now dead. shows worldwide

trade has been sliced at denny recovery is increasingly weak. and an nba star plans of post-nba future with a $100 million media company focused on black opportunity. we hear from lebron james this hour. shery: japan, south korea and australia coming online, nikkei up .8%. every sector on the japanese stock exchange in the green, led higher by materials and financials. we saw the japanese yen fault of the weakest in more than a week. right now holding about 107 level. look at what the kospi is doing, also seeing strong gains, rising more than 1% after it saw the most in over a week -- after it fell the most in a week. is gainingyean against the dollar. -- june confidence

numbers coming out of south korea rising. we are hearing from bank of japan's governor right now, talking about the japanese economy being in an extremely severe situation. recoveryinks economic in the second half of 2020 is not so unlikely. and you and you know, pretty extraordinary to see risk asset prices creep up ever higher. trade,uple of minutes of .4%. we while -- we will watch for qantas, it completed an international placement after restructuring plans yesterday and job cuts. the bloomberg dollar overnight, the kiwi, 6889. the kiwi creeping up this

morning, expectations it seems for markets that more stimulus will be offered. ye setn to the kiwi resume trend on the back of stronger milk prices, up .8%. let's get insight when it comes to state of play, jeffries chief global equity strategist sean darby joins us. at this point, what assets are still sensitive to the worsening of the pandemic situation? sean: that is a very good question. i guess two things. areainly, when countries failing to control covid-19, currencies take by and large the biggest hit. we certainly saw that through latin america and parts of the emerging markets. to reflectes tend the strains of covid-19 because of such an economic impact. the second one i think is much

more longer term, the sovereign ratings, because the level of expenditure governments are doing to control the virus, while they may be able to keep in terms of new covid-19 cases, the worry is that the fiscal position will continue to deteriorate through the majority of this year. sometime in 2021, we think the markets will have one of those moments of despair as they find out a lot of economies just couldn't sustain the level of fiscal indebtedness. i think that is more of a long-term issue. so in the short-term, currencies, long-term, sovereign rating. equities, we keep expecting this great rotation story in terms of value. it seems like a head fake at the moment. where do you find opportunity, if we continue to see worsening when it comes to the pandemic situation? do you expect more dips?

do expect more drop-down risk, but mainly due to the fact that asset correlations are actually very high right now. essentially, everything is trading on the same side, which is equity, credit, risky assets are very, very sensitive to changes in covid-19 cases, and therefore growth. once we do get a bad set of covid cases, yes, a draw down for all asset classes increases. however, in the background, the fundamental picture for equities has been improving significantly over two months. one is that we have had programs buyingecb and fed toward corporate credit come through, and that has meant a massive compression in credit spreads and the riskiness of credit. and the second one is that we think, in july, global earnings

revisions will actually turn positive for the first time since covid-19 passed through the global economy. and i think that really means that we go back to looking at equity markets in the normal fashion of just valuations, growth metrics, rather than what we have been doing over the last quarter, which has been determining equity markets on solvency, credit scores, and the ability of companies to generate positive working capital. seachange insee a the way equity markets are trading, because we go back to old rules rather than rare occurrences of markets being determined by credit conditions. shery: during this very uncertain time, what would be interesting is to see how the chinese equity markets have traded as safe havens. we have seen them trade more in line with developed markets and emerging markets. are there still pockets of opportunity there? sean: the interesting thing on

the china markets has been that, in contrast to a lot of the rest of the world, particularly their g7 and g20 peers, the reality has been that the dividend cover of many chinese companies has been far higher than the western ones. so there has been much more room for dividend support in the asian market and then what you have seen in the u.s. at u.k. in europe, where there has been quite significant dividend cutting. and fears overes sustained currency weakness in proved unfounded, partly because you have had decent inflows into fixed income in china, asset rates heads -- asset rates of come down to unprecedented levels in the west. in the last thing to say is that the tailwind for chinese equities has been helped not only by the fed's dramatic qe policy, which allowed much greater room for the pboc to

relax monetary policy, you will also at very low energy prices. -- you have had very low energy prices. lastly, we did get the phase-one trade deal signed at the end of last year, and weakness in the u.s. dollar generally means that a drop of one dollar trade-weighted generally means an uptick in global trade by an%, so there should be embryonic story appearing on global trade going into the third quarter. shery: we have been talking about this disconnect between financial markets and economic fundamentals. does that analogy also apply to china? stabilizingto see economic numbers, with china emerging from the covid rises faster than anybody else. sean: that is a really good question, because the answer is yes. what has been interesting in the

last fortnight is that china's government bond yields have been rising, and the yield curve has been trying to shift upwards. that has been a sign of better sustained growth looking forward, and the fact that they lack of the policy measures you were just mentioning are starting to pass through the chinese economy. so the pboc did not do any of andtype of qe programs direct intervention that their western peers have done. so actually, the reading from the chinese government bond markets are much more transparent in reflecting some of the fundamentals. so yes, the tone confidence or texture of growth expectations in china are actually a lot at her than perhaps has been seen or reflected in bond markets elsewhere. jeffries chief global sean darbyrategist

joining us, we appreciate your time. qantas stock resuming trading after the cold yesterday. we had an announcement of 6000 jobs to be cut from pre-covid levels, as well as the renewed forecast when domestic and international travel will return. we also had news of that institutional share placement that was completed, $1.36 billion institutional placement completed. they were saying there are high levels of interest from both existing shareholders as well as thatnvestors, about 94% of basement allocated to existing shareholders. we are seeing it down side at the moment on the stock, despite analysts saying capital raising plans, staff cuts and the reset as well as ceo alan joyce signing up for another three happen your turnaround plan in the top job, we will likely see qantas recover and returned to profit quicker than many of its peers. still ahead, the latest on

southeast asia as the coronavirus continues to ravage economies in that part of the world. the philippines central bank, delivering a surprise half point rate cut amid the crisis. ♪ we see -- we speak with peter's institute fellow mary lovely about chinese officials overhaul plans. what lies ahead for trade tensions. this is bloomberg. ♪

♪ karina: you are watching "daybreak asia." i'm karina mitchell. lawmakers in washington have passed l that would penalize bill thatassed a would penalize china. it needs to pass in the house before reaching president trump. it condemns china for breaking obligations and the deal that returns hong kong to mainland rules.

uncertainty over the coronavirus pandemic, the fed's latest stress test shows the lending sector has performed well, but a separate review of the virus says it has threats and vice chairman randy quarles says banks must be prudent and preserve capital. russia has begin -- has begun voting on a constitutional change that would let president putin stay in power until 2036. amendments scheduled by the kremlin were put by the virus. putin has run pressure for two decades. the change would get him to more six-euro terms. all potential changes have been approved by parliament. and india is set to be planning quality control measures and tariffs on imports from china. the two sides maintain their villa standoff in the himalayas. we are told officials are finalizing rules for hundreds of products including chemicals, steel, electronics and arm of goods. amid india'ss

sharp economic extraction, the first in four decades. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. ♪ haidi. haidi: southeast asia is a region that continues to struggle with coronavirus. cases in indonesia have top 50,000, while the philippines is bracing for its deepest economic contraction in more than three decades, which spurred the central bank to deliver a bigger than expected rate cut yesterday. reporter joins us from hong kong. michelle, what measures have indonesia and the philippines taken? asia,n within southeast there is huge variance in tactics and success in fighting the virus. and that depends on what types of restrictions, how long, data and testing and treatment. in indonesia, where they had restrictions for april and may,

those are easing this month and unfortunately, we are seeing a surge of cases, the balkan jakarta answer abaya, very -- the bulk in jakarta and another location. surabaya, there are 40 million people. this is a country of 17,000 islands. when you pack that many people in these locations, there is a risk to spread the virus more quickly. so indonesia is trying to get control of that outbreak and finding a struggle right now. we have seen singapore struggling with the coronavirus pandemic because of migrant workers living in tight quarters. what is the latest on that? is on thein singapore other end in terms of massive testing with migrant dorms. the goal is to get everyone tested in the dorms, about 300,000 people. no small task. they have said they will reach

250,000 by the end of july and hopefully clear the dorms by august. so as they are doing that, they have achieved among the lowest death rates in the world. so very high testing, confirmed cases look bad on their face, rate,th the low fatality they seem to have it into control -- under control in that sense, and cases outside the dorms remain low, even though we are in week two of the reopening so mildly good news there, probably leading them to take an optimistic attack -- optimistic electionsrms of soon, restrictions goodies and make people comfortable about returning to some semblance of normal. you mentioned the philippines, they are struggling to flatten at the curve. cases accelerated in late may and they are trying to maintain control of regional guidance, in terms of how to keep

restrictions in some places and maybe ease them in others to facilitate economic recovery, and as you mentioned, yesterday the psp pointing out they need significant help, and they used the interest rate to do that. shery: there is a virtual summit today. what are we watching for? michelle: lots of talk and it will be interesting to see what comes of it. lee -- theng late big thing lately for asean leaders has been trade and keeping channels open. that leads to discussion about the big trade agreement that they are hoping, for another year, to close out. we will see if there is any promise there. but also, a lot of discussions around test practices. they might be sensitive discussions in terms of which economies are doing better or worse, or what they can do better in terms of controlling the outbreak, but there is going to be real talk about how they aboutogether on ideas

testing, travel, all these sticky issues they will get into as economies reopen and connect again. shery: senior asia economics .eporter michelle this is bloomberg. ♪ ♪

♪ reserve saysderal the biggest u.s. financial institutions performed well in annual stress tests. at uncertainty over the pandemic let regulators to limit what banks can do with dividends and stock buybacks. bloomberg global economics and policy editor kathleen hays's been busy. what did the fed to and what? surprising, is not

the pandemic is coloring everything in the economy, everything the fed looks at. when it comes to annual bank stress tests, it has brought the endemic into the equation of how you assess the united states' biggest banks. so yes, they capped the payment dividends at the level of the second quarter and are not going to let anybody do share buybacks at the end of the third quarter. vice chairman supervision randy quarles says the fed wants next to be resilient in the face of covid-19 uncertainty. is assessinged banks more intensively and want to make sure they take steps to preserve capital. here is what the fed is requiring banks do now. again, share repurchases suspended the third quarter. dividend payments are capped and limited by the income of the banks, that is a new wrinkle. it is going to be bad for wells 89%o, because they had an

drop in profits in the first quarter, so their income is going to play into that. they have to reassess capital plant -- banks have to reassess capital plans over the rest of the year, and additional stress analysis may be required this year. even so, randy quarles says the banking system remains well capitalized, even under the harshest scenarios which he says are harsh indeed. institute did something called sensitivity analysis to capture how financial firms are positioned to handle all the stresses that may be caused by the pandemic. these findings were released in aggregate form, they did not do readings on individual banks that they did with capital ratios. and they found that capital ratios in the aggregate declined from 12% to around 8% to 9.5% if you apply this analysis. and even firms that remains

capitalized, several would approach a minimum capital levels. that is why they are being so cautious. but a member of the board of governors interestingly dissented. she said this is a time for large banks to preserve capital so they can be a source of strength in a robust economy. i do not support giving a green light for large banks to play capital, which raises the risk they will need to tighten credit or rebuild capital during the recovery. that is why she does not want them to be allowed to continue to pay dividends. this has already been debated as the pandemic rises. and remember all that liquidity in the fed was letting the system with? this is the thing people have been talking about. thank should be very conservative. we do not want a repeat of 2008, when banks went belly up and money had to be spent to bail them out. i think that is a voice that is being brought to this decision by lael brainard.

haidi: banks were celebrating after the regulars -- after the regulations were rolled back, the financial constraints in the volcker rule. does that dohat for banks? choices: it brings back in what they would trade and invest in. easing the vocal rule, venture capital funds also, they are allowing them to not have such strict requirements for what they do when they trade derivatives in their swap trades. -- volkervolker 2./0 going tow much you're pull back from the dodd-frank reforms. last year, regulators drop some requirements on proprietary trading and made it easier for banks to put their own capital into the ring and trade that. paul voelker was legendary fed chair that put in this rule, and

people have been pushing against it for a while. again, banks will be able to invest again in venture capital funds. that would have to hold margin on those derivative trades. that is going to bring in about $40 billion, people estimate. this was approved across the board, federal reserve, fdic, occ, etc. another thing to consider is that there has been a question about liquidity, and this easing of the rules may make more liquidity available to banks at a time when the pandemic can cause stress is in credit markets, as it did earlier this year. bloomberg global economics and policy editor kathleen hays with the update. let's check latest business flash is. searching coronavirus numbers mean apple is preparing to close more stores in the u.s., with at least 14 outlets set to shut in florida. 34,000 cases were reported in the u.s. wednesday, with spikes

in north carolina, oklahoma, north carolina -- texas and california. under pressure to reboot from the white house. struggling macy's is cutting thousands of office jobs, admitting retail won't recover to pre-virus levels anytime soon. the people will eliminate 4000 corporate and management positions, with the aim of thisng 360 $5 million year, and six under $30 million annually in the future. the ceo says macy's will be a smaller company from now on. workplace communication company's lack is letting employees work remotely even after virus curbs are lifted. ceo stewart butterfield told bloomberg they are not putting definite date on a return to the office. the san francisco-based slack has 16 offices around the world,

including london, tokyo, paris. coming up next, the u.s. approving a bill told sanctions on china over their new national security law. this is bloomberg. ♪

♪ take it to the u.s. congress, the house of representatives passed a vote for a police reform -- has a vote for police reform bill. the vote is ongoing. this comes a day after democrats blocked a repeating republican billing the senate, so this bill has little chance of becoming law. it does prohibit racial blow probably -- racial profiling and is named in honor of george floyd, whose death sparked a nationwide call to address police tally p let's get to first word headlines with karina mitchell. karina: the pandemic continues to surge across parts of the

u.s., texas halting the reopening of its economy while inflection -- while infection arizona,ise rapidly in and california. pastl virus cases half nine .5 million with almost 500,000 that -- 500,000 deaths. the virus continues to surge in southeast asia, indonesian cases topping 50,000 is the government eases restrictions. more than 1100 cases were reported on thursday, more than 200 deaths. optimism,has some about 80% of migrant worker dormitories expected to be cleared of covid-19 by the end of next month. the coronavirus hit global trade hard, lockdowns decreasing volume by at least 12% at the height of the pandemic in april. new research says shipment's this year have fallen 16%, although the wto says it worst-case scenario, a plunge of more than 30%, will probably be

avoided. the wto now sees a trade decline of 13%. other news, liverpool ends a 30 year wait to be english football champions, taking the english premier league title when manchester lost to chelsea. it is liverpool's third championship since 1990, amid coronavirus restrictions. they are the first ever to clinch a title with seven games remaining at first wind crown in june. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. ♪ shery: the u.s. senate has approved a bill that would penalize banks doing business with chinese official, over beijing's national security legislation for hong kong. we are joined by mary lovely, peterson institute's senior

fellow at syracuse university professor of economics trade thanks for joining us. this bill seems to go further than a law that penalizes officials. where is the u.s.-china relationship headed over hong kong? kong issue has clearly upset many people in the u.s. we have the congress starting to act. but i don't think about it will go very far -- i don't think that it will go very far. the u.s.-china relationship is heading onto tracks. one seems conciliatory, president trump maintaining the face-one agreement will be met by the chinese, and a second track that is much more inflammatory, with lots of rhetoric heating up as we move into summer. track, when itt comes to u.s.-china trade talks, how in line are all officials in

washington? because we heard earlier this week from peter navarro that the trade deal is over. then you had to have present trump come out and say it is fully intact. navarro is a wildcard, his statement that the deal was toast was quickly walked back by the white house. the president has since reaffirmed his confidence. important fort is the trump administration to continue to express confidence in the deal. there are many out there, especially in farmland, that need the purchases china has promised, and the president is relying on these to be one of his accomplishments related to his confrontational approach to china. so we will continue to see the president expressing confidence in the deal. for the chinese, they also continue to maintain that they are meeting the agreement.

chinese officials as well as their surrogates are also making clear that they expect to reach these ambitious purchasing targets by the end of next year. but at the same time, trumpent tom -- president continues to refer to the chinese virus and play up that angle. a balancee strike between maintaining this relationship, but also playing to his base, given we are headed toward november? and does that play into volatility when it comes to anyone who relies on trade do business? mary: yes, a lot of the inflammatory rhetoric will be directed at china. but the actual actions will focus mainly on the nexus between military and dual use equipment. i don't think we are going to see conciliatory action regarding huawei, or various

, thatots of that confrontation. so we will continue to, for example, see more companies added to the entity list by the united states, a continued push couple supply chains, particularly in tech. i think they will focus on that and not other aspects paid for example, on human rights, which many people were concerned about what is happening in hong kong, the president's political base in the u.s. is not one that has consistently expressed interest in it, whereas they see much more interested in looking at china as much more of a strategic rivalry been military rival. so we will continue to see inflammatory rhetoric and actions, perhaps, or a decoupl buton the dual use sphere, continuing to maintain confidence in the purchasing agreement that underlies phase

one. haidi: we keep going back to and theme of globalization diplomatic dislocation and the markets caught in the middle, like australia. i wonder about your views on the other side of the pandemic, you talk about competition between are there weaknesses exposed for both the u.s. and china? mary: both economies and both governments have been exposed as having very severe weaknesses. unfortunately, for many itntries outside this diad, looks like a g-0 world. many countries don't want to enter into a stronger relationship with china. australia has been particularly retaliatorybject to moves by china.

and yet on the other hand, when they look to the u.s. for leadership, it is not there. and in fact, with the coronavirus response, we are seeing a massive government failure in the united states. so for these other countries, it is a very worrying time. and it is difficult to see where global cooperation, how that will coalesce to solve some of the common problems we all face. see a said that, i don't on supply chains back to the united states. we are seeing important consolidations in asia, however, not only with the continuing , theent in the cptpp follow-on to the transpacific partnership, but also we expect a signing of the regional operation economic partnership by the end of the year, in asia. shery: right now crossing the

bloomberg, beijing reporting 11 local coronavirus cases for june 25. we are seeing the outbreak in beijing starting to stabilize, but in this global crisis, we have to come into your point, turn more inward, more protectionist. severed.s have been this chart on the bloomberg shows how global trade suffered the biggest plunge on record, when it comes to trade in april. we are talking about a drop of more than 12% for viewers watching that chart, a really dramatic drop when it comes to those wto numbers. in a less globalized and more protectionist world, when commercial ties continue to be severed, there is decoupling, what does diplomacy look like? go back to the fact that there isn't u.s. leadership, in terms of trying to solve some of the problems we have at the wto.

disputew, we know the settlement procedure at wto is at a standstill. it is mainly the result of the u.s. being unwilling to appoint judges. so not only do we not have leadership to drive the organization forward, we are seeing the types of action that actually make it difficult to solve problems. within china, we are seeing continuing commitment to subset asianon -- to subsidize that subsidization, something we are seeing in many companies, -- in many countries, seeing countries subsidize their economies, to reshore and build up domestic capacity. so yes, globalization is under fire at the moment. but i think we will see a rebound fairly quickly. trade responds much quicker and more severely than global gdp,

so it is not surprising we are seeing this great, big drop. we could come out of the other side very quickly on trade, particularly trading capital goods, trade in components and parts. the majority of international trade is done by multinational corporations, not only capital equipment, but things they need for production. and those will start to rebound as soon as the local economy starts to rebound. right now, a big concern is that the u.s. simply isn't able to get the coronavirus under control. and that will continue to lead to global weakness and a continuing decline in trade. mary, always appreciate your time with us, senior fellow at peterson institute and professor of economics at syracuse university, mary lovely . how the global pandemic could spell good news for qantas, coming up.

next, this is bloomberg. ♪

♪ shares areas tumbling after plans to limit fallout from the virus. airlines are largely grounded.

our next guest says this could make qantas stronger. dave, this is the come back did led by alan joyce. dave: indeed. no airline in the world would wish something like covid on itself. but the question people have to ask the next couple of years is, which airlines are placed best to cover what is coming down the pike? there are benefits qantas has. the main thing that has shut down more than anything else is international roots. but australia is one of the biggest domestic aviation markets in the world, i think the seventh biggest in the world. and qantas has a dominant share, 60% share, so it is very strong, and stronger at the moment because its main domestic competitor is virgin australia, which went and corrupt. there is a sale going on at the moment, and it looks like it is going to be sold to bain, one of

the other bidders as far as capital just pulled out overnight and had complaints about the sale price. shery: does this make qantas stronger in its position in the domestic market, perhaps even though it will get smaller in the near term? dave: obviously it will be smaller, about half of its traffic is international roots and those are closed, and not likely to return for a couple of years, at this stage, qantas says. but all those those international roots -- but although those international considerable, they are only about half of its profits. you have to fly long distances, put your crew up in hotels, so it is less profitable. so it has been reduced to the more profitable part of its business. for a long time, i have been writing that qantas should focus more on the domestic end of its

business. and also, it is an opportunity to do other things that should have done for a while. it is grounding its fleet of a380s, huge gas guzzlers, hard to fill up. this is something it should have done a long time ago. so essentially, it is doing a lot of things that are good for the business. it is clearly a terrible situation, but it is giving an opportunity to make changes they should have made for a while. particularly when the costs in this industry are notoriously high. i want to get more views about how you feel about virgin. there is still confusion about what the carrier is going to look like, said to be a midmarket entity at the end of all this? ane: virgin has had interesting history, starting at virgin blue after a collapsed airline into thousand one -- in

2001. it became a full-service airline trunk to compete with qantas, and now it looks to be heading away from that. whoever buys it, and it looks like bain, they're going to have a difficult job with virgin in the future. the strategy made a lot of sense, they needed to take qantas head-on because qantas has a 60% share in the domestic market. a is very hard when you have competitor as dominant does that to hold your own. to breakntially tried that share and failed. anyone taking on virgin now, they are going to have to recognize that they have a limited capacity to compete with qantas. qantas has its own budget airline, jet star, so it is going to be a difficult play. any time any airline in a

two-airline market like australia, you are going to want to try to take that dominant share, a little like in japan. jalhas a dominant share but nipping at their heels. it will be hard for virgin to do that given the scale of dominance qantas has. haidi: our bloomberg opinions columnist in sydney, david for cling -- david fickling. we are live from our studio in hong kong. the radiosten with plus or a bloombergradio.com. this is bloomberg. ♪

♪ haidi: let's check business flash at lines. an electric company is tightening corporate governance after a scandal with its former president. japan's second-biggest utility oversightill separate and business functions from here on. the company is accused of paying local officials for contract. it also named 13 new directors to the board. blame game has begun in germany after the demise of a platform. there are calls for an inquiry

and leadership changes at the regulator. the former fintech star has filed for insolvency after admitting it can't locate $2 billion missing from its balance sheet. the former see io -- the former ceo has been arrested and regulars have question. nike revenue fell 38% in the fourth quarter, missing estimates by more than $1 billion. the loss amounts to $.51 per share, compared to estimates of just $.10. nike says it devised an online strategy during the lockdown, but booming e sales weren't enough to make up for lost revenue out of closed stores. nike's biggest endorsers, lebron james, is on the cover of this week's bloomberg businessweek, alongside business partner maverick carter. it has recruited nba stars to form an activist company focused on preventing suppression,

especially in black communities. we spoke exclusively to lebron and carter about their mission to get people to the polls. >> i think it looks like educating people on the ground in these cities we are tackling. we have had voter suppression people not, understanding how they can vote, where they can go, if their vote really counts. in the black community, you always here, go out and vote. but you don't understand, who in my voting for, where can i vote, how many people in my voting for, what did these votes mean, what do they stand for? so the education side is what we are most proud about. us whenbe a success for we get these communities out to vote if they are more educated about who they are voting for, how and where they can vote. they have that power. there is a lot of people that

believe they can't vote because they had convictions with the law or have been to jail, and they have been told that they cannot vote, that their vote does not get submitted, things of that nature, which is untrue in a lot of states we are tackling. theo educate and make aware people in the ground has a lot to do with the future of our country. that is one success we can have. and we will see what happens in november. speak to theck, to moment where we are, given that your position to do this via springhill, what our conversations in coming to you, whether it is studios, ceo's from companies, are your calls getting returned more? is there interest in what you are doing, given the world seems

to be moving in this moment? you keep calling it a moment. hopefully it is not just a moment. this is what is needed. this is more like what this country should be and what this world should be, so it is not a moment. it doesn't feel like a moment to me at all. i have been black my whole life, and pushing to empower all people, and specifically black people my whole life. our company, if you look at what we made long before this time, we made shut up and ripple on dribble on- showtime, so we have always been about empowering people that come from communities would come from. and the content we have created has always been about that. and at the company come up people already understood and could feel the essence of what we are doing.

it is obviously a bit magnified now, so the conversations internally with all of us and the people who work at our company are pretty much the same. some external calls, if you guys have ideas and want to help, sure. and me personally, i am getting a lot of calls from other ceo's. i serve on the board of live nation so i am spending a lot of time with them. haidi: you can catch bloomberg businessweek's special conversation with lebron james and maverick carter this saturday. before we hand it to "china open," let's look at trading, japanese stocks trading up by about .9%, the kospi up .7% and here in australia, extending the upside, trading higher by 1%. we have downside in qantas,

resuming trading after the trading halt after completion of the institutional share placement and details of the job cuts and the cost of restructuring announced yesterday, as well as the reappointment of the ceo for another three years. new zealand up about .4%, also strength when it comes to the kiwi and aussie dollars against the broader backdrop of u.s. dollar strength. let's take a look at how things are after we had volatile games -- volatile gains in the wall street session overnight. we are seeing a flat picture when it comes to active futures, up just 1/10 of 1%. trading at taiwan looks like it is starting on a downside. marketsave chinese closed for the dragon boat holiday. over the next hour, more market analysis, and another big interview later, rosewood hotels

ceo sonia chang will join us exclusively from hong kong. coverage continues with the start of trading in hong kong. this is bloomberg. ♪

>> not :00 a.m. in beijing and china. welcome to "bloomberg markets: china open." i am tom mackenzie. david: it is friday, i am david ingles. opening of trade. our top story, the u.s. senate backs of bill to punish china for tightening its grip on hong kong. tom: global virus cases approach 10 million with almost