nissan has had a lot of voice from the customer. anchor: a very good morning, and welcome to "daybreak: australia..' shery: from bloomberg world headquarters, welcome to "bloomberg markets: daybreak australia." we are looking at u.s.-china tensions increasing, one man pleading guilty in the

u.s. to helping chinese intelligence. claims to there are the south china sea. coronavirus cases topping millions, and florida surpasses new york as the second most affected state behind california. a daily record for deaths. pause as they debate new stimulus. republicans would like to extend the jobless payments to cover 70% of lost wages as the economic outlook dims. shery: let's look at how markets are trading at the moment. we see u.s. futures to the upside after stocks fell last week with escalating china tensions, not to mention the wrangling in washington. for thegold sent above first time since 2011, and the

, the nasdaq composite finishing at a two-week low. take a look at what we'll is doing. is doing, brent above 43 dollars a barrel. this, of course, after we saw some pressure last week on signs of weakness in the u.s. labor market. prices dids -- oil manage a gain. the dollar index fell to a six-month low, the week dollar overshadowing concerns. yes, let's take a look at asia, a pretty muted start to the asia week. onhave what you mentioned friday over concerns we may see the global economic recovery faltering somewhat. this is what we are looking at when it comes to trading here in asia, a pretty mixed picture. at this point, future showing

just a bit of upside. 1% when itke 2/10 of comes to the aussie futures at the moment, or a downside, i should say. and we have the japan jobless rate and inflation gauges out of australia to look forward to, but it is really the focus when it comes to the earnings and big with oil financial names reporting this week. now,: and our top story still all about the coronavirus. endemic cases globally passing the 16 million mark over the weekend. you are signs the virus is slowing in the u.s., but a second wave in spain is fueling concern in europe, and our colleague, yvonne man, has more. we are seeing some relief in the hot spots here. there is an

increase of 1.6 percent, about 56,000 or so, still below the average of the last several days. the deaths have fallen below that streak of more than 1000 deaths per day. especially the states that have been hit the mostar, florida, california, texas, and new york also seeing signs of slowing. we heard from a commissioner saying there are unmistakable signs the pandemic is slowing in texas and arizona. he says though the california and florida friends are still looking mixed, but they are telling other states to follow using a maskdid, mandate, shutting bars and movie theaters, and limiting the people at restaurants working. countyaid that l.a. should reissue stay-at-home orders.

it is believed they reopened too early. the l.a. mayor, aaron garza, he talked about that option. and, shery: and, yvonne, how bad is the second wave? spain was one of the hardest hit countries back when the virus began. there was the start of the summer tourism season that caused a spike in cases, reporting more than nine hundred 20 cases on thursday and friday, the highest numbers we have seen 920 new cases in may. the of them are in catalonia region. there is the 14-day quarantine for anyone returning. it was just weeks ago that they added spain to the list of countries. here we are now. big blow to a

tourism-dependent economy, and norway announcing a quarantine, and also a travel warning for the catalonia region. barcelona and some of the possible beaches in the country affected. with a seen barcelona curfew at midnight on bars and a partial lockdown that is affecting about 200,000 people in one district. at this point though, this nationwide lockdown, it is still a nuclear option. haidi: and they are talking about a recovery as we continue to see elevated cases there. yvonne: yes, they said the economy may take longer than expected to recover because of the fluidity of this third wave and the global economic uncertainties out there.

we have seen more than 100 cases every day for the past four, half of which are of unknown origin. seeing the recovery hit by a fresh wave of the virus, the economic situation in the second quarter is still very unclear. to have slowed down slightly, and once again, they are urging concessions on rent. numbers outthe gdp on wednesday. economists are still expecting a 7.7% contraction. meanwhile, talking about southeast asia, virus cases elevated, indonesia still ranking number one with 99,000 cases. the philippines surpassed 80,000 over the weekend, the government now weighing the situation as cases in manila could hit 85,000 by the end of the month.

singapore, more cases. and it had been a success story before its first local case in months. coming up next, u.s.-china tensions continuing to simmer. shutting the consulate in houston is said to have followed years of criminal activity. plus, a guest tells us when these geopolitical tensions are going to weigh on sentiments. this is bloomberg. ♪

>> i have the first word headlines. outstripping the u.s. with starkly if it responses to the coronavirus, a sustainable

recovery based on confidence come the virus longer out of control, with the european relative success encouraging businesses to invest. europe also seems to be doing a better job on continuing employment and income. meanwhile, violence and several u.s. cities over the president sending troops to the streets, with riots declared in portland, which is the center of the new wave of protests, and in seattle, there were projectiles. thousands were shouting, "fence, response -- "feds, go after the feds sent troops. one candidate was asked to explain why he made a recent trip to the united states from china, calling on washington to

impose sanctions. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. shery? shery: breaking news at the moment, gold trading at a record high after it went over 1900 for a long timeme since ago. this would be the highest on records since recordkeeping began back in the 1920's. right now, we are seeing gold futures rallying as we continue only this low rate environment but a weakening u.s. all of thiseally macroeconomic fundamentals really driving precious metals with gold futures now topping $

1930 an ounce. haidi? haidi: yes, no stopping this gold rally, there are tensions overlaying the macro side of the story with the trump administration decision last week to shutter the chinese consulate in houston with frustration of what it said criminal activity directed by beijing to steal trade secrets and carry out operations across the united states. it comes as the u.s. is forced to close a consulate there. tom mackenzie joins us from beijing with the latest. so what exactly are in these allegations by the u.s.? has been in two cases in the last year of chinese who have been arrested and charged over espionage allegations in the u.s. in houston. they were based out of the houston consulate, but based of what official said, including from the fbi, this is just the

tip of the iceberg, and the fbi cases,nterintelligence two thousand, against chinese operations in the u.s., so it is an enormous challenge for the services in the u.s., and they say houston and other consulates in the u.s. are being used as launch pads for everything from these of fraud to spying and intellectual property theft and to influence campaigns against local officials and business leaders, and also in operation where chinese counterintelligence or intelligence officers try to round up people in the u.s. and try to convince them to return to china. this is what the chinese and u.s. officials are dealing with when it comes to what they say are these influence campaigns from chinese officials operating out of these consulates, and they really tried to frame this as separate from some of the other issues. they say they have now lost

patience with china over issues of id theft and spying, and they are not going to deal with these cases and treat these cases as individual criminal cases. they will now look at them in terms of the broad spectrum of the beijing push of their influence campaigns and broader spying allegations. now, china has come out denying these allegations, and it did tally eight late last week on friday by ordering the closure of the u.s. consulate in shem do -- in one area, so a lot playing out. anger over thee consulate closure. tom: well, we saw these images on friday in houston of u.s. officials trying to force their way in to the consulate. they gave them 72 hours to close the building, and then you sought members of the department of state and other officials, it seems, trying to force their way

into the building, and that was a lot of anger. in beijing, officials said this thein contravention of conventions on diplomacy and said they would take appropriate retaliatory measures. as i said, they have already ordered the closure in china, which would oversee several areas, including tibet, where for a long time, of course, the chinese communist party officials have tried to deal with uprising and discontent among the tibetan population. it was a consulate that gave the u.s. ties into that, so they closed that off. they have until monday morning beijing time to close that consulate, and then diplomats will be asked to leave within 30 days. there were some signs of de-escalation. china could have chosen a consulate, like the one in hong kong, which would have been more aggressive. there was the san

francisco consulate, items being turned over to u.s. officials, but it seems that the allegations of diplomacy and spying, this will likely all continue, and we will look towards the election in november in the u.s. mackenzie on the latest on the u.s.-china tit for tat. you can get more on the tension between the two stories and what on your to go terminals. you can also customize your settings, so you only get the news on the industries and assets that you care about. next guest says markets will not get rattled by tensions until action is taken on tariffs. we get the market outlook from andrew graham next. this is bloomberg. ♪

let's get back to those u.s.-china tensions as investors continue to weigh the fallout. a mixed start following what beijing calls the forced entry into the houston consulate, bound to respond as necessary. joining us is a portfolio manager, andrew graham. great to have you with us. markets kind of resilient than it comes to the latest round of u.s.-china tensions, with the trade negotiations and headlines not really affecting any markets. why? i think it was the decision to close consulates, the decision to put sanctions on chinese officials. i think those were deliberately chosen to limit the economic fallout or the financial impacts, so headlines with little to no financial consequence. if you were to see increased

tariffs or the u.s. to put sanctions on financial institutions inside hong kong or china, i think there would be a greater impact. there is some limited impact. we saw it in u.s. equity markets, nothing really to cause any alarm or for anybody to sort of change the way they view at least u.s. equities. shery: the latest bout of pressure we saw on the equity side of things, this story really taking a pitch. we saw a lack of the highflying tech stocks. what is happening right now? and is this trend going to continue? so the economic momentum in the u.s. has stalled out here in the last few weeks. you saw the high-frequency indicators and then some traditional indicators, like consumer confidence and last confirmingess claims the momentum, it was interesting thursday and friday that the

downside was led by tech, and i thing that brings a lot of people to think that maybe there is sort of over positioning or maybe a valuation problem, and we will have something that looks like the aftermath of the 2000 tech bubble. but you need leverage, i think, within the group to have a bubble burst, or you need some sort of systemic catalyst, some sort of fed tightening or over tightening, or you need it to be the beginning of a recession rather than the beginning of a recovery, so the group has no profitability issues. it is early in the second quarter earnings season, and they are all beating estimates, maybe not by the same magnitude that other groups are, because expectations are very high in tech broadly and i think towards the secular growth names within software, so we have a week coming up where there is going to be more data to watch, and we have the weekly jobless claims on thursday but also earnings

from tech stocks, one on tuesday may be drawing a little attention, and service now on wednesday, and then thursday a lot of people will be watching apple. yes, there has been a clear preference for tech. the group is a little crowded, and there is a slight disappointment, it will probably be heavy through the reporting season, but we look at that as an opportunity to add the better names. is there any upside possibility towards the stimulus, given they are focused on employment insurance, or have they priced in so much perfection that you do not expect to see any kind of impetus to the upside and perhaps more disappointment after this week? andrew: yes, that makes more sense to me, the later -- latter, because we are something at like a $1.5 trillion number ultimately, and democrats in the

house came up with $3.5 trillion, and they will likely meet somewhere in the middle, and i think that $1.5 trillion of stimulus is probably baked into the market, so i think it would be more important, and something to watch, i think, but i suspect there are needs there and more pushback on fiscal stimulus, and they can argue over numbers, but i suppose they will come to a conclusion relatively soon. is this being worked out at the moment with the profit-taking? andrew: great question. served as a function for two years or what have you, sort of an adoption of a lot of these products, forced adoption. i think the issue is once we are

allowed to move about freely about the country and so forth, and once the pandemic hopefully eases, what is the economy going to look like, and are the stocks or these names like maybe zoom or i would put in some data security into there, are these companies going to accelerate, or are they going to -- is the money, i guess, is the incremental investment dollar, going to turn towards insurance, towards cyclical or valued stocks and sectors? i think both. i think the initial move would be towards some of these cyclical groups, but i would that wehe companies broadly call work from home, a lot of the cloud software names, i suppose, are going to have -- at least it is our opinion that they're going to have a much, much better time, as a lot of

these companies have subscription-based revenue models, and i think there is in a couplef upside of names, in particular. we are focused in on the chinese. the downside we think we will see in tech to add to a few names, and we are keeping a close eye on some, trying to add positions there, so -- i am sorry. go ahead. -- shery: andrew, quickly, are you going to be adding, given what we have been seeing, gold? andrew: gold is a tough one. we are not broadly invested in gold. we prefer cash flow and to work with a cash flow model, some sort of terminal price or value on a company, because the cash flow, we do not use gold in any big way.

all right, the portfolio manager andrew graham. that's get a check of the latest business headlines. u.k. telegraph reported one company is in talks to sell a unit to a private equity buyer, and the carlyle group in discussions. the potential cell came from after rolls-royce said they cut 9000 jobs. byouth korean company backed bill gates could be capable of producing 200 million covid-19 vaccines next june, according to the microsoft founder who made the claim in a letter to the south korean president. are reportedly seeking to list on the korean stock exchange with a valuation of around 2.5 billion dollars. coming up next, australia has

aligned itself with the u.s., rejecting chinese claims in the south china sea. we talked to rich mcgregor, who sees increasing chances of conflict. this is bloomberg. ♪

♪ "daybreakwatching australia." global coronavirus cases have now has 16 million. the u.s. continues to lead the account with more than 4 million cases. florida has now overtaken new york as the state with the second-highest number of cases behind california. both cases and deaths fell and all three states over the weekend as well as in texas and arizona. spain is scrambling to stay ahead of a new outbreak that is dealing in new blow to its tourism defendant economy.

now is making people undertake 14 days of quarantine when returning from spain. in theave spiked catalonian region around barcelona. norway and france have also issued travel warnings for spain. ordered a city near the south korean border into lockdown. kim jong-un made a decision at the university -- emergency meeting and what he called a preemptive meeting. the north is yet to confirm a single case. isy suspect the infection from a defector returning from south korea. another 128ported new cases, making it the fifth day in a row were new infections top 100. mostly transmitted in a community of unknown origin. indonesia is close to having 100,000 cases and singapore has

passed 50,000. scientists are due to start human trials this week. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. haidi: australia has joined the u.s. in rejecting beijing's claims to key parts of the south china sea. china has accused australia of reckless provocation. let's get some more analysis. one of the things said was that there was reconciliation.

the motivation for australia to stick his neck out at this point? the recovery here in australia is strong. has taken aanberra bedrock decision against china. the australian decision on the happened at the are when australians meeting with their counterparts. there is a big call for australia. it does not happen in a

diplomatic vacuum. we will see how china responds. haidi: is beijing under -- overextending itself? aggression?f what is going on in beijing? >> that is a very good question. china isssue is fighting with other more powerful countries. a very big one. australia mentioned. hong kong is something else.

the taiwan issue is heating up. obviously this is of china's doing. other big swing states are in play like germany and france. they are reconsidering their relationships with china. they were wondering why china has no friends on these issues. sign of ao fundamental recalibration within china. that is pretty difficult. unless we see a change in policy on long-term objective. is this the only way to go about it against a more assertive china?

is there a nicer way to go about it? we have seen more diplomatic ways of dealing with beijing. i think it is a good question. my answer is there is no nice way to do it. have a substantial change in policy. the issue with china is there are questions on will they change their behavior. or will they increase the cost ?f chinese behavior i think that is the calibration. this is a contest with some conflicts along the way. now is the time to change.

we are planting all of the trees today. shery: president jie zheng paying continues to say that china is on the right side of history. how well does this play domestically with chinese people and also on the world stage, given that people are pushing back? it is a fascinating phrase, the right side of history. that phrase has residence. we know what the u.s. wants.

look at the chaos of covid-19. do people really want to take on china? two they want to expend money and perhaps lives in asia pacific. grow?na will continue to trump was elected on a more isolationist platform. there is little evidence in the want aat many americans more active policy. haidi: to paraphrase what we have heard from the secretary of state, we have this bipartisan support. do you find this conflict rising now? >> absolutely. you have to-term

say with the change of u.s. u.s. patrols with in the south china sea in this there is limited conflict rising. the answer is yes. thank you very much for your insights today. a second wave of virus in the stalling economy.

this is bloomberg. ♪

haidi: hong kong is paving the way for more mega listings for the hang seng tech index. what do we know about this new benchmark and what it sets out to achieve? this is very much a shift

that has been long awaited here in hong kong. this has moved to attract more chinese tech giants. about half are waiting on the flagship hang seng index. that is about one third of hong kong's total market cap. this new index will capture that rising growth. alibaba and tencent are making of this.41%

that could foreshadow how on contact indexes will perform. tech stocks have far outperformed the hans saying. the new tech index would have delivered more return. they are set to benefit from the beneficial etf and derivative trading. let's not forget that there is this rising shanghai star market. what is the potential threat to hong kong from that? techat offers china companies a chance to list at home. it is proving to be very popular. as we saw last week with the new smic. we do have more high-profile listings in the pipeline. the last listing will make it more attractive.

it drew 130 tech firms of the last 12 months. -- mostia's morris valuable stock. if you look at what is effective of the stone board, it might not be strong enough. they are holding stocks and may transfer them to mainland shares. we will be speaking exclusively to the ceo of the hang seng index about the hong kong tech index.

the federal reserve goes into this week's meeting with an economy that appears to need more help to fight the coronavirus. the central bank is already pushing as hard as i can on monetary policy. at what more they cannot cannot do. what are we expecting this week? >> we are expecting to see a federal reserve in a june meeting. there was a positive sign of the virus. they will have a dovish message, keeping the key rate zero. at that time, the fed's outlook for the third quarter and beyond was pretty grim. now they are seeing a resurgence in some big states, florida, texas, arizona.

they will be ready to say, we accept thresholds and benchmarks for when we will hike rate. unemployment is now well of love the highest level of the great financial crisis. message.end this we talk about it. even though we told them that we are not thinking about thinking about hiking rates. the next thing will be what jay powell says about the fiscal stimulus.

what will he be asked about that and what will he said? -- say? haidi: some big numbers on the u.s. economy expected this week which will be a focus for the recovery. what are they thinking on that the date? have underscores that they to look down the road and think about what if the recovery in the second half really spells? what if things keep getting worth? i will show you a chart. gdp was down 5% all the way back in the first quarter. everyone has been saying you might have a 40% decline. a 35% drop. this chart also shows you the core gdp which will be out on friday. the annual number. it is expected to stay at 1%. in asia, just as the gdp numbers

in the u.s. come out, thursday, the day after the fed meeting, the friday pmi numbers are expected to say well above 50. sitting at the world's second-largest economy. that is another number. haidi: we have a lot more to come. this is bloomberg. ♪

haidi: victoria recorded 10 deaths from the coronavirus on sunday. paul allen joins us more with sydney. do we see the outbreak slowing down? what is the government response? paul: the government did victoria is calling for reinforcements. retired doctors and midwives have been called to service. the premier is saying these are not frontline workers. these people have the last line of defense. onre have been 10 deaths sunday in victoria. that is the worst day since the pandemic began.

becamen his 40's came -- the youngest victorian to die. it is not getting better. we see case numbers in the teens every day. is scarcely believable in this environment. fore is a protest planned sydney on tuesday. the new south wales supreme court has ruled against that. right now is not the time. the organizers of that protest are determined to proceed. shery: the latest on the pandemic from sydney. intel is weighing an idea that once would've seen -- seemed

unthinkable. intel has long held out on moving overseas. the ceo went on the defensive when asked about the plan. world where increasingly everything looks like a computer, our opportunity set is as big as it is ever been. we talked about yesterday was we could push our products. to a slip in the yield. first, we will continue to manufacture this technology. to catch up with our desires to play leadership position in this. leadership is much more

than that. packaging, technologies. different architecture. how we use software to optimize hardware. this is simply where we are on the process note. doing is evaluating the other opportunities we have had to engage deeper with our deepest partners. design methodology, we have the ability to mix and match different products. talked about yesterday was our ability to make trade-offs along the way. to make sure we are delivering their ship products. no one seems happy with the right now.

investors or analysts. we are ramping our 10 nanometer products. we talked yesterday about 20% higher demand for 10 nanometer product than we had anticipated. we are delivering on the products in 2020. we expect delivering 2021 and 2022. we also expect to deliver on 2023. our energies will be on delivering these products. outsource the to taiwan semi, can you do that? do they have the kind of technology you would need to manufacture your chip? havee of the things we been doing over the last couple of years is leveraging

third-party foundries even more than we ever have. we have evaluated when we use our own capabilities versus when we use the industry. this is something we have been going through for the past several years. sohave done it even more that couple years. our ability to engage with the ecosystem is greatly enhanced. i guess what i want to understand is come --, if you are weighing how you make your criteria fors the exiting that manufacturing business? >> it is relatively simple.

leadership products is what matters most. that is an important part of the equation. we will continue to enact that. the primary for us is to make sure we deliver leadership products. haidi: that was the intel ceo. more onp, we will get that data to look out for this week. let's check in on how markets are faring so far in the early part of the training session. you are seeing trading underway in new zealand. printed negative -- pretty negative.

watching for a bit of a situation in the aussie dollar. u.s.holding above 70 cents. this is very. ♪

♪ haidi: good morning. we are covering asia's major market open. shery: welcome. our top stories this hour. u.s.-china tensions continue to simmer amid accusations of spying. a singaporean man pleads guilty to helping chinese intelligence. washingtobacks