nomura posted its first for your loss on the year that was just completed.plementing cost cuts to turn around the business. tolly this action by the fsa get time for -- he came into the office in the wake of the trading scandal seven years ago, vowing to restore trust. now he has to do it all over again. shery: japanese banks faced a perennial issue of low rates. we see bond yields continuing to fall out of the moment. what is the picture looking like a cross the sector in japan? russell: it is not good right now. the low rates are persistent. the boj is not budging on its policy. it looks like it is here to stay. it is fine for the brokerages, but for the commercial banks, the persistent low rate interest environment is very tough. the economy is slowing. the government has just downgraded the assessment of the economy. we have the lingering u.s./china trade war in the background. it is not a good time to be banking in tokyo. the financialre, technology and banks are also trying to revamp. shery: thank you so much, russell ward. the latest on japan's bankin

we will be joined by nomura's chief economist.ave the market open in australia, japan, and korea, coming up next. this is bloomberg. ♪ >> good morning, i'm paul allen in sydney. asia's major markets are about to open. kathleen: good evening from bloomberg's global headquarters in new york, i'm kathleen hays. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top stories this friday. asian markets set to extend wall street declines as trade tensions rise again. future signal losses in tokyo, hong kong, and a sydney. president trump is the catalyst. he says huawei is dangerous and may have to impart on future talks with china. kathleen: kathleen: japan's latest inflation reading comes in the forecast. we are less than halfway of the boj's target. haslinda: slam on -- i'm haslinda amin. the second. of modi led government. the market reaction and rupee, asns for the well as the challenges ahead with mark mobius. the open mumbai will be closely watched. inhoria waned in the markets the latter half of the

russell: this is quite a blow for nomura. here is a researcher who was sitting on a stock exchange panel that was considering changes to the stock exchange and properly shared that information with analyst and employees at numerous security unit, who gave that to clients, potentially market sensitive information. so the fsa is looking at this and preparing to issue what's called a business improvement order very soon that doesn't involve financial penalties, but it's very embarrassing for the company. that got one of these seven years ago when there was a trading scandal, and the ceo ended up resigning. the stakes are potentially high. very early days, but we'll see how this plays out. nejra: thank you so much to russell ward for keeping and i on that story. that is it for daybreak europe. the market is up next. we could see stabilizing in equity markets after the big risk off day yesterday. we are also seeing steadiness and bond markets. when you're traveling to work, tune into bloomberg radio on your mobile device and dab d

nomura has conducted an internal investigation following reports it faces penalties linked to its domesticities unit. the agency plans to issue a business improvement order oninst nomura after a leak changes to the composition of the tokyo stock exchange. the bank admitted the information was "handled improperly." yvonne: losing faith and deutsche bank. some urging the chairman to step down early. shares hit a low for the meeting began. for the ceo dropped to 75% from unanimous support last year. he wants tough cuts following the breakdown of takeover talks with commerzbank. david: let's get you a sense of where we are fx wise. the dollar paring back strength. a line from bank of america merrill lynch, the yuan might if the talks at the g20 fail. in the absence of that or leading up to that, they expect the currency to trade on the stronger side. plenty more ahead. this is bloomberg. ♪ let's have a look at what is going on at cape canaveral air force base. spacex falcon nine rocket launch. the third attempt trying to get this. communications satellites into space. >> we are seeing this as

let us talk a little bit about nomura right now.capital markets globally so far? >> not very well. the number is probably the poster child, i suppose, to be itnk, for not really making overseas. the problem is well documented. several times in the past have had the biggest ambitions in trying to make it overseas. they bought up others. now revenue and factors are back to where it was even before that acquisition. last year they posted their first annual loss in a decade since that lehman deal was done. . it is no surprise they are now going on another round of cost-cutting. that is being poorly received by investors. down for a 10th straight day since they announced their annual loss. the outlook is not looking so bright for nomura. partf the former traders of the latest round of cost cuts cited the bank's risk-averse culture is one major impediment. nomura has a lot of issues to work through. paul: bloomberg asia finance editor russell from tokyo. thank you for joining us. next, a business view of the australian election. we will d

. -- of nomura. do you agree? jordan: i do.entially, a bunch of folks think that the data is taking a turn for the worse. i look at how china feeds into this, too. we saw a big slowdown in china and a recent bounce back. indicates that the pmi was correct. it should go lower, and perhaps the ism as well should continue its slide. isin, u.s. treasury 10 year just much more attractive than buying the bund where liquidity is pretty bad, the carry is dreadful. that is where the world is going , slow down in the u.s., china and europe. in every g10 economy, i am struggling to find a positive story. if we the trade wars, expect quite a negative situation, which is tariffs across the board for most imports from china into the u.s., that is going to drag on growth. it is going to have a short term inflation impact to the high side. long-term, that means it is much harder for the fed to raise rates. the market is pricing fed cuts. we don't think they cut anywhere near as much as the market prices, but things aren't looking good. it is p

tom: jordan rochester, he writes for nomura.ersation, he absolutely nailed that. richard declared a, every word larida, every word matters. ♪ ♪ tom: this morning, confusion reigns as mr. lighthizer and vance's the president's tweet -- advances the president's tweet. china arrives tomorrow. chevron hass, yes, a response and more cash with occidental. brexit. maybe they will name the baby ian or jeremy. who knows what they will name the baby. it is all about brexit. we are live from our world headquarters in new york. francine lacqua, what will they named the baby? we should actually make a bet on it, we do offline, and then you buy me dinner. it was quite exciting yesterday. everybody loves the royal baby and it is the root of the nation. not translating into brexit talks. break from thece idiocy. we go into the week, it is a side story but it is not. it is a boy. we cannot name the baby emma. francine: no, we can't. tom: let's go to first word news. kailey: shaping up to be a crucial week in the trade war between u.s. and china.

goldman says gdp could take a 50-basis point hit nomura, 30 points. morgan stanley says inflation can go up by 25 inflation points nomura says we expect most of the impact on gdp growth to come from lower business investment the new york fed says, this is interesting, importers are indupsed to shift to ever more expensive sources of supply as the tariffs rise let me give you a translation of that according to the new york fed, the biggest hit comes from the deadweight loss of consumers and producers shifting out of chinese goods. they may find a cheaper price that's cheaper than the one with the tariffs, but they're unlucky to find a price as cheap as what they were paying before. that is, as debbie harry saying, "one way or another" prices are going up >> while they make the expanded tariffs case which hasn't happened yesterday they have to do that in order for the impact to show up impacts on gdp are not do you think, 0.3 or 0.5. one of the estimates i saw may 0.5 over three years >> no, i've not seen that. >> the worst possible scenario, which we'r

-china trade tensions. -- nomura seems to be expecting a full-blown trade war. your base case? ben: the trade tensions were a surprise to us two weeks ago when we had the tweet from trump. i think the tensions are not going away. it does look like we are in some more of a trade war, but also increasingly this cold tech war as well. we have to remember that trade is still a relatively small part of global equity markets, certainly when it comes to the u.s. most of u.s. earnings are still domestically earned. over in the u k and europe, there is a lot more overseas, so it does have the potential for more material impact. i think you've got to look at where the impact's come from. if trump puts tariffs on auto manufacturers, most european cars bought in the u.s. are manufactured in the u.s. there are not that many cars that are exported from europe to the u.s. that would be flagged by those tariffs. i think the actual material economic impact of the trade war is a little bit less. the problem is that it does potentially have a big impact on sentiment more broadly.

that seems to be the consensus from goldman and nomura. has had a number of outcomes but nomura getting ready area do your we go, bank of america, they are losing the faith. they are marking their misery. they are cutting their year-end forecast from 3%. you look at the other side on citigroup, what do they say? it will be time to bail on this long run that we have had on treasuries. this is stunning. 20 and 30 year paper in the u.s., new lows for this year as we see bids for their auction ramping up. this is incredible. this tells me something much more malevolent is going on. if you are paying up in quantity for negative yield. how are your futures? nejra: futures are moving to the downside not only in europe but the u.s. all firmly in the red down by .6 of 1%. after we closed flat in the equity session. we did some -- see some weakness. futures indicated lower in the s&p 500. down .7 of 1%. trading dominating the equity markets. the one place we are seeing it not dominate is equity markets in india. juliette saly can take us through the

our analysis of around amd has been the market share they are try to take from intel and a nomura analyst had a note this morning, that they are looking to make market share from nvidia with some of those graphic processors. certainly, all the chipmakers back in focus, like you said. amanda: absolutely. in focus in part because of the phone they supply four. apple gaining 6% after reporting second-quarter numbers. the iphone posted better-than-expected sales after that bruising holiday season. many analysts are still cautious on the stock. an analyst at piper jaffray with a buy rating is with us now from minneapolis. in terms of what we heard, clearly some relief on iphone sales, they were not more damaging. what do you see by weakness in terms of the numbers? >> it was a great quarter across the board. iphone was better on units. doing some price reductions in emerging markets. every other segment beat except for mac, and the only reason that did not beat was because of a processor shortage. mac was a little light, but temporary issue as a result of a processor shortage. we feel good abo

nomura has been committed from the japan post share sale underwriting role.ot more information on that right now but we have seen the challenges pile up for nomura, penalized after market information leaked and it has sunk to crisis level valuations as bad news keeps coming. it has been emitted from japan -- omitted from underwriting role. andit flags at pimco metlife are sounding alarms about companies ballooning debt loans after more than a decade of cheap money and deteriorating lending standards. more on this next. this is bloomberg. ♪ >> our first obligation and highest loyalty is to the american citizen. >> more than ever come our way of thinking and actions have to be multilateral rather than unilateral. >> we need to deter any aggression or and threshing a foe. oure don't always act on first impulses, even when there is pressure to make a snap decision. longer will we sacrifice americans interests to any foreign power. you don't do that anymore. >> protectionism and>> trade conflict jeopardize free international trade and the foundations of our prospe

also looking at what we have in terms of the rupee, divergent positioningigroup for a weaker rupee, nomura, overseas flows. nifty futures moving slightly to the downside, showing it is better to travel than to arrive. >> our guest is with us out of mumbai to give us a preview of today's trade, lower on the contract in singapore. likely some weakness at the start. we could see weakness at the remainsut overall it more bullish than anticipated. there was reversal that happened with the end of the trading session but there was a lot of , friday's session said there was a big move on the tally weekly closing about 3.6% in terms of the equity market move. when we are talking about the rupee, obviously the major impact will be what can support the currency, however the fair valuation of the currency is around $71 to $72. that is something you need to watch out for, and you have the bond market soft and friday's session. other than that you have the monetary policy that will have to play out within the money markets,d the equity whether after 50 basis points we see another cuts coming in. mid-cap

isber a is -- nomura recommending going short.atest polls ahead of saturday's vote put labor opposition marginally ahead of the national coalition. australia's longest-serving labor prime minister has died at the age of 89. he overhauled the economy in the 1980's through deregulation of trade in the financial sector and is widely credited with initiating the economic changes that paved the way for decades of growth. environmental, social, and governance -- hawke defeated malcolm fraser and went on to win for elections. he was described as, "our greatest son." byresa may has been forced her party to set a timetable for her departure. she will try one last time to push her brexit bill through parliament next month and then leave office under a deal struck with conservative mps. it is unlikely her bill will pass, as she needs the backing of the opposition labor party who says her departure deal make some increasingly wary of supporting her. twa'sn aviation name back, at least on the ground in jfk airport in new york. the twa hotel is

. >> when trading kicks off, nomura very much in view broker was hit regulators.e company around from its first loss decade. the executives will also be taking pay cuts including chairman and president in response to inspections. also, malaysia's khazanah and denko may on news it's to buy. e're watch woodside and other energy players as they see investment risks, going head without having pre-sold all their production and coles also in iew after the stock was upgraded by credit suisse. in favor over woolworth's. london climb above the average for the price target. shares surge. heads up, mirvac has been suspended in sydney. reporting that the company is planning a $750 million aussie dollar be restructured as an institutional placement. much.anks very let's get a little more on what we should be watching under way ints asia. adam, as we've been talking sliding, nd yields a further aversion of the key curve. is this a trend or has all priced in s been and out? >> essentially, paul, there is nothing stopping this bond rally. focus over he the last 24 hours has been

it's not generally very good and the most widely passed around note on the street today from nomu nomura they said we think domestic pressures and constraints will drive both sides to escalation 55%. a fourth of tariffs, $300 billion. 25% will happen later, after the t-20 summit meeting and we've talked about the damage, already done, look at this for the month here intel. and everything is down double digits in the trade-related names and everybody keeps messaging me saying, all the names up, pfizer, and it's global growth coming down because of the trade wars and this is a permanent part of the landscape for 2019 forget it. these stocks are coming down because they have global exposure as well and don't import from china, doesn't mean they're not going to be the next potential shoe that could drop kelly, back to you >> i'll pick it up there, bob. thank you. the bond pick in chicago hi, rick >> reporter: hi, tyler they're fleeing everything that is equities, moving in a lot of u.s. treasuries, but a lot look at a two day chart of 10 year note yield haven't settled at that level since oc

nomura a 65% probability if tariffs are put on the additional $300 billion in imports at a 25% rate. wouldn't be imposed at the g20 meeting in june, it would be put on afterwards and what a lot of people are starting to try to >>ob, when you look at the markets, do you see the pressure mostly in the tech sector today, when there's all the headlines about this being a tech war with china? do you see it in manufacturing after the market number this morning or is it a little bit everywhere >> tech and industrials are the two sectors hit most because they have the biggest exposure forget about hiding out in defensive names. if you go on for months and months on end into the end of 2019 with tariffs on another $300 billion, procter & gamble, doesn't matter, your defensive names, all the global names will come down because global earnings will come down. your numbers have to come down at some point. >> bob, thanks very much bob pisani >>> the bond market buckling in for the trade battle the yields on the 10 and 30-year fresh requires hitting their lowest level at the couple of years. rick

nomura cut their price target on the stock. a lot going on. a lot to break down.ecide which do we pay more attention to? should it be trade headlines or earnings news? liz? liz: going with earnings. i'm a business girl. i like going with business. trade is business, obviously. reporter: that's right. connell: gerri, thank you. >> you're welcome. liz: am i only person on planet earth doesn't want "game of thrones"? everyone on team "countdown," producers, production assistants. on and on. we know "game of thrones" is finally coming to an end after eight crazy successful seasons. still anyone left who will rule what is left. whatever. are the markets more typical than westeros leadership. we bring in a portfolio manager manager at federated. i guess you bought the show, linda? >> i do not. liz: yea, i'm not only one. you have to be under a rock to know that it is always winter and dark. do you feel like you're under a rock or looking for sunshine? >> we feel optimistic being second half of 2018. that is predicated on number of different things around the globe. cons

apple also down today on nomura price cut. before i go, i want to mention lyft. the shares went public on nasdaq not too long ago. now a lawsuit from investors claiming that the company misled them about their ride-sharing position, case sell safety issues and labor matters. the lawsuit filed in san francisco federal court. also naming lyft executives, bake underwriters as defendants, in this court filing. of course this is all about the fact that investors lost money when the price fell on this stock. it has fallen pretty handily. down though as you can see about 3% right now. we'll be watching that closely. this is the ipo mania market right now. back to you. ashley: indeed, gerri willis thank you. susan: lyft still down 23% from its debut. let's bring in the market panel. carol roth, former investment banker, jack hough, "barron's" senior editor. start with you, carol. we had lifting of steel and aluminum tariffs off of canada. some say the final third dell getting the usmca through? >> potentially could have. we have a lot of politics, much like with trade, w

nomura says it looks undervalued. earnings still look ok.loomberg has 16 buys, six holds, and zero cells on the function for suzuki. nejra? nejra: thank you so muchnejra:. president trump is back at it on twitter, taking more shots at china. he tweeted that america is right where we want it to be an blame to beijing for breaking the deal -- blamed beijing for breaking the deal. the ongoing uncertainty means more turmoil for financial markets. stocks in asia have fallen, along with the u.s. equity futures, the u.n., and treasury -- yuan, and treasury yields. there is suffering on both sides. >> it's interesting that expected countermeasures have not materialized. we may no more today or even tomorrow. i reckon we'll see what they come up with. so far, we haven't heard on that basis. nejra: joining us is the head of fundamental equities at rebecca. welcome to the show. lots of commentary on what the worst-case scenario could be if the talks break down and with the impacts on markets could be. the worst is a drop of 10-15%. could we see a bear

cuttingseen nomura hundreds across the board. , it is not only an investment bank problem.ng problem in the retail side. we have seen banks like rbs or lloyd's cutting as well. so it is a broader trend in banking. it is also worth mentioning that some u.s. banks, like citigroup, have already sent a warning for the second quarter in terms of performance. so it is probably going to be another tough one. ephania,ephani a -- st thanks so much. let's get our top stock stories. >> this is a day when we have macro stories causing them to move in similar ways. fiat chrysler along with renault, a lot of autos following -- falling. chrysler is prepared to have its worst day since february. already, automakers were headed for the worst may on record, so he did way to head things off. ,hip stocks also under pressure ams falling by more than 2%. the only chip stock that seems immune got an upgrade from bank of america, but the trade concerns are certainly hitting the stocks. commerzbank shares are falling by nearly 3%. the concern is that, even with negative rates, bank needs to pay som

nomura lost a bond underwriting deal following a ditto leak. five issuers dropped the bank.y faced penalties after employees shared stock information. this comes when japan's biggest brokerage is already reeling from its first loss in a decade. five banks are named in a lawsuit seeking damages for alleged forex collusion. the action was filed in australia. it claims they colluded to rig exchange rates, boosting profits at the expense of australian businesses and investors. the banks didn't immediately respond for comment. that your bloomberg business flash. manus: thank you very much. the founder of the ceo of while way -- huawei. they conceded trump's actions will hurt but the firm is in 5ged to keep its edge even without american suppliers. >> the u.s. manages its own companies. the u.s. is not the international police. they can't manage the whole world. the rest of the world decides whether they should work with us based on their own business interests. if companies don't want to work with us, it's like a hole in the airplane. we're working to fix the whole, but the airpl

is one.f -- nomura they will sit back and make sure inflation has come down and will stay down. is too early to cut rates so flip a coin and we can tell you who will cut or not cut when it comes to the cuts. they: let's go back to campaign rally that president trump is holding in florida. he was talking about china saying that the vice premier is flying in to continue the trade talks but they broke the deal and they will be paying. that is according to president trump. as soon as we heard those comments, we saw a swift market reaction. we saw not only u.s. futures taking abut also crude hit and falling .6 of 1% which is surprising given we saw in advance in the last session after that supply drop. wti moving toward that $60 a barrel level. this coming aft -- as president trump talks about china breaking the deal. he has threatened tariffs of 25% on $200 billion of goods, not to mention the rest of the $325 billion of chinese imports that come into the u.s. the reaction was swift, the aussie dollar took a hit, not to mention the safe haven, japanese yen started to rally up .2 of

what, just a smattering of some of the -- so, goldman says gdp will come down by 50 basis points nomuraasis point effect, and the new york fed says it will cost households in four different ways see if i can remember what they are -- prices, confidence -- what's the fourth one -- third one? >> energy department -- >> dead weight loss. right. i'll get to the other ones later, but here's some of the commentary we've gotten on this. goldman sachs says "the effects would be large because the experience with the initial 2018 tariff tranches showed quite sizable price effects. nomura writes "there appear to be few readily available alternative sources for the consumer goods included in the new round of tariffs we expect most of the impact on gdp growth to come from lower business investment. this is the most interesting one to me. new york fed says "importers are induced to ship to ever more expensive sources of supply as the tariffs rise." and we do not have an estimate as yet from the administration it doesn't appear it has modelled any of the economic fallout. but, so, let me just talk abo

nomura has made it their base case that there will be a full-blown trade war now.l: trump's comments i think are fascinating. who is really winning the trade war at the moment? important of the most negotiating tools they have is time. 540 billion dollars worth of chinese imports each year and china only imports hundred 20. you got a significant trade imbalance. i had to look back in history and see shenzhen enter the 1980 and the trade deficit in 1985. china imported 3.6 and the u.s. imported 3.6. it is something that has taken 40 years to swell. i don't think you can find the conclusion overnight for an issue that takes 40 years. where it stands at the moment, china will continue to reap around 40 billion of benefit per month with the trade imbalance. i think it is more so in china's favor to continue to delay no negotiation. more from samuel le cornu after the break. we want to bring to your attention our interactive tv function. you can get it at tv and become part of the conversation by sending us instant messages during our show. this is for bloombe

just went away >> most sectors doing pretty well jim i did notice in terms of the trade tensions, nomurang today on the idea that housing demand for older buyers might fade if equities suffer in the long-term because of an enduring trade spat. >> well, how about if they -- equity market does well? are we supposed to buy the stock? that is just-that's a thin read of analysis. that doesn't make sense to me. we should sell home depot. we should sell the stock of lowe's they better come up with a better reason to get rid of ownings corning. i'm much more concerned again, looking back at huawei, zylinx had the best 5g technology that's what you should be talking about. >> this is not a u.s. company, but well known name. sony is up this morning. almost 2%. the company announced a buyback worth about 4.8% of its overall shares 1$1.8 billion worth this is a company that announced the first buyback back in february of this year. the idea that it would follow that up with another announcement of a new buyback program, this one again for 1.bi1.8 billion of stock beginning now, ending the march of t

going to talk about that but the market is taking down and other firms are taking the numbers down nomuraillion in imports at a 25% rate. let's look at what that's going to do. they had tariffs would be unlikely before the g-20 meeting but they think they will be imposed in june or early july. that's what the street is essentially doing right now. it's trying to figure in the likelihood we'll have tariffs impacting third and fourth quarter earnings estimates finally i want to note a couple of high-flying ipos down a bit remember, luckin coffee went public at 17, went to $25 the first day. it is below the ipo price, happened yesterday 17 is the ipo price, you see it at 13.91 finally, beyond meat they went at $25, remember, and they went all the way to $95 25 to 95 you see down here, though, it's $80, well off from the high but still quite a high flier for the year best performer guys, back to you. >> all right, bob, thank you. >>> let's get to the bond pits as well. rick santelli at the cme group in chicago good morning, rick. >> good morning, carl. big day. big day on the technicals and t