tv Bloomberg Daybreak Asia Bloomberg July 6, 2017 7:00pm-9:00pm EDT
♪ sety: asia-pacific markets to extend declines after wall street dropped the most since may. the u.s. dollar weakening, ahead of payroll numbers. yvonne: those numbers may disappoint. a private report said the pace of hiring has slowed, and that will influence the fed's thinking. betty: the apple-qualcomm's back turned nastier. they won a partial ban on iphones imported into the u.s. yvonne: violence or reps ahead of the g20 in hamburg.
protesters tell leaders, welcome to hell. we have world coverage. some harsh words coming out of germany. in seoul, second quarter profits should be coming up. betty: we are watching the g20 meeting in hamburg. we have will have insights for washington and across asia, what to expect from those talks and that meeting between putin and trump. this is "daybreak asia," live from bloomberg's usn asian headquarters. i am betty liu in new york, just after 7:00 p.m. after 7:00is just a.m. here in hong kong. i am yvonne man. for markets, the stress has been in fixed income. hawkish talk has brought stocks lower. check out this bloomberg. you can see the tally what we saw overnight. classes sold off,
in tandem, for the first time in 10 days. this is the s&p 500 etf and the treasury bond etf. last time we saw these moves was 2013. which has some wondering, is this the start of a taper tantrum? betty: which is exactly what the fed wants to avoid. have been so careful to say the right things to the market to prevent this. i want to bring up a chart, as well. it shows you the results of that tantrum. we now have the s&p below its 50 day moving average, which is technically very important. it could result in further declines in the market that authority been quite volatile the past several weeks. tomorrow's jobs report seems even more important here in the u.s. yvonne: especially that weaker
adp report. how that will be reflected in numbers tomorrow. -- a happy day and friday not a happy friday in asia, either. let's see how things are playing out in new zealand. we're down about one third of 1% on the nzx 50. the kiwi, .7275. we do see these underperforming the complex. the aussie, also lower overnight, weighed by the 2% drop in iron ore. we see a drop in the wti prices. $45.35 a barrel right now. japan, futures in the red. lookingown 20 points, to see and 80% drop at the open after we saw that fallout of 0.4% on the nikkei 225. dollar-yen, $113.12.
looks like this can be continuing negative sentiment, this drought in bonds and stocks. week out offtened france. betty: that triggered it. markets were looking for some reason to start a selloff. that triggered over here, or 'dther soon amin -- tsunami over here. as we mentioned, long-term treasuries selling off. breaking out in germany and france. ramy inocencio has more on the fallout. >> you talk about the 50 day moving average, key for the s&p. but this is the breach we saw on the dow industrials. -- excuse me, the nasdaq. the dow, we are 200 points away from reaching that. not close, but you can see the downward trend headed toward
that direction. we can imagine what happens if we reach that. breach was thee first in seven weeks. we have to talk about treasuries in the u.s.. those of been on the move, up by four basis points to 2.73%. that had been higher when it spiked up to seven basis points. that is just shy of 2.42%. it has crossed-- its 50 day, 100 day, 200 day moving average. they are saying we have only just begun, and the potential to see something even toward a 3% by the end of this year. he is calling that a definitive bear market, if we get to that number. also, taking a look at the 30 day treasury, hop into the bloomberg terminal. we do not look at the 30 year too much.
andtalking about dma's breaching that, we have already breached the blue line. we're just -- we are just about to breach the blue line, the 200 day moving average. and the green line, the 100 day dma. open interest in september, long bond futures are falling on the order of 3.7 million dollars. that indicates the bulls are starting to liquidate. the takeaway, we could see these treasury yields go further. maybe even to 3%. yvonne: some liquidation in the tech spaces. tech stocks among the big laggards again. ramy: we saw the fall on the nasdaq. and that technology shares down, also. take a look at what is happening, your today. it looks like a rosier picture.
looking up to june 9, the nasdaq had already increased i about 18%. if you are an investor, you're probably about -- very happy. they are taking some of their chips off the table. you really can't blame them. who wouldn't like 18%? some are saying, maybe it is too good to be true. apple, microsoft, facebook, intel, were the biggest weights on the nasdaq. microsoft cutting thousands of jobs overseas. intel settling a lawsuit about using the mcafee security name. we are also gearing toward another lawsuit. apple in focus, but also to suem, saying it wants apple for patent infringement on its iphone. on iphone limited and imports into the u.s. can you imagine if that was stopped in the u.s.? they are trying to do that.
even see the reaction with apple shares, not doing too bad in after hours, but it'd been down 0.2%. years, we haveng been talking about tesla over the past three days because it came in at 22,000 shipments in terms of second quarter. that was less than 25,000 for the second quarter. this is a market cap. ever since may come of the white line, is tesla, the yellow line is gm. back in late may it crossed the market cap of general motors and was the king in terms of the automakers. in the past day, this has lost its crown. -- $8.7 billion lost to gm. yvonne: first word news with
courtney collins in new york. >> u.s. prosecutors are attempting to seize millions of dollars into north korea from eight to global banks, saying jpmorgan, bank of america, and city. -- citi. but there is no evidence of misconduct with pyongyang. japan and the e.u. have endorsed a pulmonary free trade pact in what is a rejection of president trump's protectionists leanings. e.u. president and john called -- jean-claude juncker and a shinzo abe signed an accord to eliminate most tariffs between the partners. it follows more than four years of talks. the e.u.'s top brexit negotiator is warning even a partial withdrawal from the block will have consequences for the u.k.'s
ability to interact. the frictionless trade relationship is not feasible, and a blow to members of theresa may's conservative party. they say it is not possible. qualcomm is suing apple for patent infringement, the latest shot in an increasingly bitter legal battle over technology used in the iphone. the chipmaker claiming apple infringes on six patents and wants a u.s. a.m. on iphones. apple has previously cut off license payments to qualcomm and filed its own lawsuit to accuse the chipmaker of trying to monopolize industry. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. yvonne: coming up, protests at the g20 as leaders meet in
yvonne: this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty liu in new york. leaders at the g20 in hamburg. changing alliances, talks on protectionism. there is violence on the streets. matt miller has the latest. matt: standing here in hamburg meeting.0 there are protests on the streets, thousands and thousands being pushed back by police with water cannons. however, all eyes are on the meeting between the biggest leaders, including u.s. president donald trump and russian president vladimir putin. we will be looking to see what comes out of that meeting. other important bilateral's will
happen, including president trump meeting with chinese president xi and trying to diffuse the situation in north korea. president erdogan is here and wants to speak at his own demonstrations on the sidelines of the g20 summit. however, germany has forbidden him from doing that. he says if germany holds them back from that, they will be committing suicide. the europeanime, parliament has agreed to freeze the application of turkey to the e.u. there are a lot of geopolitical tensions simmering here as this group tries to work together to changeings like climate and to promote trade and deal with immigration. so many issues to deal with as -- angelalds the g20 merkel plans to push forward the german agenda and the european agenda. matt miller, bloomberg, hamburg. yvonne: to talk more about this is max bergman, senior fellow.
a former state department senior adviser. great to have you here on the program. we talk about the protests and what happened at g7. willo you think g20 welcome a president trump? will it be 19 versus the one? beenthe welcome has not warm, with the mass protests in hamburg. i think a lot of the leaders are going to try to make nice with president trump. everyone is waiting for his meeting with vladimir putin, and to see what comes out of that. that has everyone on the edge of their seat. what, ifno one knows anything will come out of that. willexpected that not much happen, it will be their first initial meeting, they will talk about various issues, the president says he is going in with no agenda. but we do not really know if there is something more, if
there will be a deal that comes out of that. betty: i am not trying to make light of this, but these are two big egos meeting tomorrow. who will own who, do you think? max: putin is going to own a president trump. putin is a seasoned, veteran president, who has been around the block a long time, a former kgb official. he prepares for these meetings extensively, and he will have an agenda. the fact that president trump is going without an agenda means they will talk about the issues president putin wants to talk about. that will be about lifting sanctions, may some agreement or deal about syria. the question is whether trump bites on those offers. i think it could have a seismic impact on the u.s.-european relationship. betty: i believe the tillerson
will also be at this meeting, they will have two translators. it is a big deal for the white house. here in the u.s. it will be as closely watched as the comey hearings. it is made for television. if you think putin will own a, how can trump deflect that? kenny fight back? max: the russians do not offer the united states very much right now. there is nothing to make a deal about. situation with a normal american administration, this would be a very confrontational conversation, similar to the one president obama had with putin over the putinew years, where would be confronted about interference, not just in the u.s. election, but the french and dutch election. and some of their actions in syria and the ukraine.
the fact that is not going to come up is rather troubling. one thing about the roster of who is attending, is it is really surprising the national security advisor, h.r. mcmaster, who will be there, is not going to be in the meeting. instead, the person with the most government experience on the u.s. side, not the president , but the translator, is really troubling. yvonne: a lot of this could be overshadowed by what is going on in pyongyang an issue of north korea. there is a consensus or opinion, view of the world, the world should accept north korea has nuclear weapons than to stop them from proliferating. do think that is a feasible approach at the moment? max: in some ways, the recent test of an icbm changes everything.
on the other hand, a changes nothing. it is a matter of how far the trump administration is willing to go. the u.s. has not implemented sanctions with iran. it introduced secondary sanctions, which could have an impact on secondary chinese companies. congress may step up and do what it did on iran. whethera big question, trump and xi, in their bilateral meeting, can come to some understanding. we are trying to manage the and-china relationship, putting extensive pressure on north korea. betty: i want to read two statements from james mattis and donald trump. mattis saying he does not believe it brings us closer to war.
then, trump said, it is a shame they are behaving this way, a very dangerous matter. something will have to be done about it. he said that in warsaw. who do we believe? max: i would tend to believe james mattis. but the president is commander in chief. if he gives in order, mattis is a duty-bound to honor it or resign. it is a total incoherence within the administration over how to conduct foreign policy. one message comes from one secretary or cabinet official, and then the president says something else. what is clear is that the u.s. has very few options on the military front. there is a limited amount we can do. escalating militarily would be catastrophic, not just for south korea, but potentially for the entire region. this is about containing north korea and potentially engaging in talks down the road. betty: thank you so much for
the assets by the end of the month. santander will manage the holdings with of the winner. betty: trying to reassure investors after a sudden rout in shares related to the company. shareholder says he is fine, they tried to blame the selloff on rumors about his whereabouts. pared losses after operations were normal. appeared briefly in 2015 to assist with a corruption inquiry. yvonne: sound cloud cutting some of its staff to help compete with spotify and apple. they were at risk of running out of money. offices in san francisco and london will be shut with operations consolidated in berlin and new york.
-- soundcloud has many regular listeners. asking to ban of imports of iphones. an increasingly bitter fight over patents and technology. matt larson joins us now from san francisco. what has prompted these latest lawsuits? matt: what looks like is going on, apple and qualcomm has been in licensing discussions. there is an escalating legal title that is brought in manufacturers, the ones that build the devices before apple sells them. these talks have gone nowhere. qualcomm is making an effort to get more leverage in those discussions. they did that by filing a lawsuit in the international trade commission, which could threaten to block certain imports and sales of iphone devices in about 21 months. it is basically an aggressive litigation tactic to try to bring in some leverage and
licensing talks. yvonne: we have seen this further escalate. is a surprise to see these lawsuits filed? matt: it is not a surprise, it is a common litigation tactic in these large-scale disputes. we have seen similar tactics used by ericsson against apple a couple years ago. we saw nokia file similar lawsuits when it was battling apple. both litigations resolved before in ultimate block of any products. it is a common event in patent litigation among tech the giants. the balance being, apple is not going to come to the table and agree to pay a higher loyalty because that affects margins. qualcomm does not want to give away any dollars or leave dollars on the table because it contributes greatly to their bottom line. it is high-margin revenue and qualcomm was to get as much as it can.
so they escalate the legal battle and try to up the stakes before a deal is reached. betty: what happens next? matt: next in this lawsuit, qualcomm iron two suits. the district court action will be put on hold. the international trade commission will solicit public comments about what would happen if apple's products were blocked from the u.s. other companies may weigh in on how it would affect licensing companies and entities that rely on collecting royalties. c will decide to begin an investigation in august. --rial will not happen in a another year or so, with an ultimate decision in 18 months. yvonne: the saga continues. thank you for your perspective. asia braces for a possible bond selloff after central-bank
tobacco -- debacl e with the phones catching fire. there is been a lot of talk when it comes to the super cycle in shifts for samsung, whether it can knock off intel as being one of the most top global manufacturers of chips. for the first time when it comes to revenue, it looks like these numbers are supporting that case. a sizable beat when it comes to operating profit. you can see how this is benefiting the diversification of samsung's assets. take a look at the bloomberg terminal, you can see however thing breaks down. this recent set of numbers are just the luminary. we are not going to get too much of the units and how they fare. you can see how the growing reliance on chips is slowly growing pace in the orange bars. the green bars or where the smart phone sales go.
we have a revival of the smartphone business. s8 launches happening during this set of numbers. it is the first time we're getting a glimpse of that. things have been pretty positive, going through what we in sales. will this be a turnaround after the note 7 debacle? iphoneand you have the 8. they keep ratcheting it up. the numbers for samsung. yvonne: we will see the market reaction later. let's get first word news with courtney collins. forces -- sources of the u.n. said russia blocked a condemnation from north korea's latest missile test, despite china agreeing to the test. discussions are continuing to find wording that all team members can approve. one said russia objected because the statement described the
launch of an intercontinental ballistic missile, saying it requires more clarification. the u.s. defense secretary said north korea's icbm tested this week does not mean the two sides are closer to war. james mattis said he was not surprised, but added washington's self-restraint was preventing open conflict. president trump had promised a nuclear -- north korea would not have a nuclear weapon, and as promised harsh things in response. macau casino operators have been dealt a better hand with morgan stanley raising its forecast for the year. to rise expects revenue 15% in 2017, up from an earlier figure of 12%. continued to get market shares. in march, morgan stanley analysts said wynn stock a double.
speculation that large investors may be building stakes. the stock closed more than 36% higher, rebounding from an intraday low on june 6 of 28.5 cents. noble is searching for a strategic investor to restore confidence. last month, managed to extend a credit facility for 120 days. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. yvonne: we will find out what we should be watching as trading gets underway in asia this friday morning. adam haigh joining us live from sydney. have charts looking ominous when it comes to equity investors. talk us through them. it looks like a pretty tricky end to the week for market. that spill over from what we have seen in the u.s. session,
going to impact us here in asia. the first chart was interesting. this is the s&p 500 and the 50 day moving average. you can see how we have been through that key level. not always give us a predictive value of what is going to happen next. us anhey do is give indication of where momentum is in the market. selling is gathering momentum in the u.s. equity market. we will see that it is still over to asia. and this is sitting on that 50 day moving average. pretty tricky times. one upbeat thing we will see today will be those samsung numbers. that is been a very good performing stock in south korean equities. generally doing very well. may be the bright spot in among
some a gloomy trading during the week. betty: we know that where samsung goes, so goes the south korean markets, right? moving to australia, one stock doing well is not giving any leeway to the short seller. what is going on here? their shares of a great week, they were boosted this week by an increase in their net profit forecast. they have been gathering in this stock, big-time. slightly more than 30% of its free flow. bears have descended on this stock a number of times over the years. it has been a tricky trade to get right on the short side. it is still well down from its all-time high. there is been some money to be made. but it is on a real tear this year, up 40%.
that is more and more paying into the short side. more strength to the short thesis, around the slowing australian economic picture in the way consumers may be spending less coming back on discretionary spending, taking less holidays. that may put more pressure on flights into shares. they seem to be going from strength to strength. much, adamks so haigh in sydney talking about bears. a lot of that in the bond markets. hawkish rhetoric from central bankers reverberating threat the global bond market. monetary convinced policy drawing to a close. kathleen hays here with more. tell us what happened here. why are we suddenly on this hawkish stance? kathleen: it has been gradually building.
it kicked off when mario draghi spoke at the ecb forum last week. i want to start off what happened -- with what happened in the european bond market today. the fundamental did not change much. but there is a weak french and spanish bond option. german bund yields jumped. not as far as when mario draghi spoke last week. look at it, you will see the 10-year german bund, the benchmark germany has broken out of a range held since beginning of 2016. pointing reporters out, to really signal there is a new bear market that will go and go, they yields have to double from where it is. still, an interesting move, maybe it portends something else. draghi spoke at the conference, the ecb forum. he said deflation is over, we're looking ahead to reflation.
said, they will move sooner or later to start removing bonds. buying bonds, remove the stimulus. the ecb minutes were out earlier. they suggested they discussed easing bias, but they were not ready to move. the chief economist for the ecb was speaking after the minutes came out. he talked about patients on policy. that is what mario draghi also said, saying we have to be patient to make sure policy is working, which does not suggest removing the stimulus or changing the bias. they say the exit doors opening and they are concerned the ecb has to move. they do not want to jeopardize price stability. let's look at what he said against where they are on inflation in europe right now.
you can see that the turquoise line, that is headline inflation, it is well below 2%. 's target as well below 2%. the core rate is a steady. 1.1%, a long way from 2%. bottom line, this selloff in the german bond market has been going on for about a week. it has opened the door for the u.s. bond markets, and even more pressure on the jobs report tomorrow. and on the bank of japan. betty: on a day like today, that is when everyone pays attention. people pay attention to him anyway. but even more today when he is saying, the bond bull market is over. there is a selloff coming. what is interesting, he is not the only one who has said this. there have been many calls like
that. they just do not get as much attention. -- i want toid play for you what he said a month ago. the most attractive of the developed markets in comparison 25the 10 year bond -- bund, basis points. 190 basis points. [indiscernible] 205 basis points. they are march active on a yield basis. but still, i would suggest that they are overvalued, price-wise. investors should be cautious in terms of how much they want to hone, relative to the cash. betty: the longer way of saying
what was said today. adam: he said we will see 3% on the 10 year treasury. bill gross said a couple months ago that once you get above 2.6 you are entering -- territory. seen.ains to be one thing i think about, we have a selloff. you go to the top of your range. again, the jobs report, what if it came in weak? that monetary report that will be presented as that big thing they do twice the year, she will testify next week. at that is coming out tomorrow, as well. that report will be so scrutinized. are they going to be more hawkish? in the context of this bond market selloff kamala harris
focused and more drama, perhaps. yvonne: that drama feeding in japan. 10 year yieldhat at a critical level for the boj? kathleen: it could, the bank of japan is now being watched. will they come in and buy some to bring the yield down? what you're going to see here in this chart, is right over here on the far right, you can see how the 10 year yield has poked its head above 0.1. sinceas not happened february. a look how things were back then. what happened, the bank of japan came in and bought some bonds. the bottom line is very important. not just for the bond market, but for the bank of japan itself. yield curve control is one of the most important part of the bank of japan's policy, keeping that 10 year at zero. the more we have a global bonds market selloff, the more major
banks signal, we are going to move higher with our policy, the more we see pressure on the bank of japan. the pressure to step up and buy more bonds and explain to the public what they are doing. july 20, 21ing on will be an interesting one, maybe even more interesting than the fed. kathleen hays, joining us from new york. be focusing on this reason rout in the global bonds. 12:00 p.m. eastern time tomorrow. lb midnight tonight. -- that will be midnight tonight. a lot of coverage of their on a very important topic. another important topic, the jobs report.
yvonne: we're counting you down to asia's major market open this morning. japan futures it down 0.6%. against the$113.14 dollar. betty: we're talking about the jobs report. we are all counting down to the latest payroll numbers. the decision about future rate hikes, the pace of hiring has slowed in recent months and there is a lot of talk about companies's inabilities to find workers with the right skills. that is pressuring wages. let's discuss this with a chief
economist. first off, the numbers. what do you expect tomorrow? >> they kept solid momentum. it was at 4.3%. they are taking a breather after having dropped a lot in the last couple months. betty: so we are in line with consensus. if there was going to be a surprise, where you think it would go? >> i am below consensus, but just marginally. important -- i think we have to the knowledge that gains have been slowing. that is a slower than what we have seen over the past several years. there is just not enough qualified people in the labor market. that, we are
wondering where the wage pressure is. i am assuming that will be an important number for us to look at tomorrow. is it going to be enough, if we do not see that wage pressure? for thebe enough naysayers to say, look, there is no evidence. harm: i think the fed can raise rates further. it is all a debate about the phillips curve. the lower unemployment rate puts pressure on wage gains and inflation. my response is, we can look at all core inflation measures and they have all picked up a little bit. not as much as they would have in the past. the phillips curve is slower than it has been carried but the negative correlation is still there. linear.t you see a sharp rise in inflation and wage gains. that is something to worry about. they do not want to hit that point. they want to keep normalizing
interest rates as the unemployment rate is going down. 4.3% is already a low rate. betty: that acceleration. been talkere has about financial stability. should we expect to the fed to continue to tighten even if the data does not suggest it? harm: it is not tightening, but removing accommodation. i think they are right to do so. suggests that even this inflation rate, below 2%, it should be at least 75 basis points higher than it is right now. financial stability is one of the two major mandates of the two-- is not one of them major mandates of the fed, but
it is one of them. eased,al conditions have even if the fed starts to raise rates a bit. there was no impact on the financial conditions. there is interest rates on the one side, and the economy on the other. the fed is unhappy about it. they would like to see some tightening and financial conditions. yvonne: everyone says the fed is in the driver's seat when it comes to alleviating accommodation. the we have seen a dramatic rise in yields. i will bring up a chart. some are saying it is more technical and fundamental. ecb, boj, is still far from raising rates. why do we see this dramatic rise in yields? you see it is a game changer? harm: it is tough to talk about the technical component. but i think there is momentum behind it.
game changer is a strong word, but it is key. been startinghas to withdraw accommodations, several other central banks are talking about it. as you correctly pointed out, they are still far away from pulling the trigger. maybe after the experience the u.s. had in 2013, they just want to be sure they are preparing markets early and sending ,ignals early and stepping back two steps forward and one step back. i would emphasize they want to send the signal very early. betty: i want to pull up a chart, as well. it shows you the correlation between jobless claims and gdp. when it is going up it is showing the job market is improving. what is so interesting is that
in the early 1990's it was so closely correlated. now, gdp and jobs growth is so widening on the spread. it happens after 20. do you think it will continue? harm: it is another way of showing the low productivity puzzle. we always hope there is a little pickup and productivity, which means job growth and gdp growth will be more aligned. it is not much more than a hope. it would be important for the economy if it picks up. betty: thank you so much. chief u.s. economist on the jobs report. you can get a roundup of that story and more to get your day going in today's edition of daybreak. subscribers can go to dayb on their terminal. you can customize your settings so you only get the news on the
betty: a quick check of the latest business flash headlines. warren buffett said to be trying texas,ties takeover in where arab energy have already failed. the berkshire hathaway unit nearing a deal to buy energy future holdings, encore, the largest transmission operator. some of the third to face texas regulators are utilities. -- utilities they have highly guarded. equity partners nearing a deal to split up health and education consultants advisory board. would -- vista would buy the education business.
they were closing at their highest since december, 2015. harm: betty: plenty more to come -- betty: plenty more to come, asia's first market open moments away. yvonne: a busy, busy day in the markets. earnings reflected here in a samsung, as well. >> markets looking skittish. a central banks amp up the hawkish rhetoric. futures looking slightly lower across the region. for the global lot -- global bonds selloff. samsung, after reporting a record quarterly profit of $12 billion for the quarter, topping analyst estimates. we watching for reaction to the latest results, missing estimates, a 22% drop in income. after news itca,
yvonne: asia pacific market set to extend decline since wall street fell. betty: semiconductors help samsung beat estimates. operating profit is up 72% from a year ago. yvonne: world leaders prepare for the g-20. trade, migration, and north korea top the agenda in hamburg. betty: france predicting another revolution in the electric car
drive that is speeding up. yvonne: this is the second hour of "daybreak asia." we are live from bloomberg's u.s. and asian headquarters. betty: it is just after 8:00 p.m. in new york. we have been talking about the reselling seeing of the korean markets in the states of the north korean crisis. if you wanted to find out why, look no further than samsung. it really seems like business as usual among the big conglomerates there. areung reporting that they beating many of the estimates. yvonne: he really was a record high operating profit. the market open look to be a little bit of a bloodbath on wall street. we do see the stress in fixed income. let's get the latest now from sophie kamaruddin. sophie: it looks like the record profit from samsung not doing
much to help the kospi stay afloat. it is joining the rest of the region in the red. we are seeing significant losses, nikkei 225 down .6%. stocks in sydney down .2%. asia stocks taking their cues from wall street where we saw the s&p 500 suffered their worst drop in two months. we had euro cents the shares showing front and center's as investors are dumping debt. odds in asia today are under pressure. take a look at aussie 30 year yields, up six basis points there. thursday session also had energy shares come for losses in asia. comeuld see tech shares for losses given that selloff in tech equity in new york. take a look at what is going on with oil.
we have crude falling over 1%. on the back foot once more, gold falling .2%. based metals looking to make some. a key thing to watch today in yearbond space, we had 10 yields climbing to .1% for the first time in four months. you can see that with #1158. this will bring attention to the boj whether they will intervene to cap gains like they did back in february. falling sending the 30 year yields above key levels. surging as much as seven basis points on thursday. it breached both the 50 day moving average and the 200 day moving average. you can see that #1448 under terminal. regulators that were bullish are
now getting flushed out. 10 year yields, they jump to as high as 2.39% for a two month high. that is low -- below the peak we saw back in may and in march. they are warning of more damage ahead. they're calling for europe to push toward the 3% line. going his liness in the sand at 2.60%. that is the red line at this chart. #1454. we will see how that will feed into this type of market move. i want to end on samsung shares. let's see how that is faring at the open. despite the record operating profit, we are seeing shares declined down .3%. thank you so much. sophie kamaruddin there. let's get to the first word news with paul allen in sydney.
stanley fischer says the uncertainty concerning the trump administration is tampering with investment and could hold back growth. some large companies have cut down on capital spending because of a lack of clarity on government policy. he also says the decline in government funding research and development is disturbing. u.s. prosecutors are attempting to seize millions of dollars linked to north korea from a global banks. that includes jpmorgan, bank of america, and city, there's no indication they knowingly violated sanctions against pyongyang. just apartment filing said they have process $700 million in transactions is 2009 on the half of -- behalf of entities linked to a korea. japan and the eu have endorsed a free trade pact in what is seen as a ejection of president trump's protectionist leanings. the eu president, the eu commission chief, and the japanese prime minister gave
their blessing to an accord that would eliminate 99% of tariffs between the partners. the agreement follows more than four years of talks. the eu's top brexit negotiated is warning that even a partial withdrawal from the lot will have consequences for the uk's ability to interact. friction in the trade relationship is not feasible. that is a blow to members of theresa may conservative party who are consisting -- visiting -- distancing themselves from the hard-line test. qualcomm is suing apple for patent infringement. the latest shot in a bitter legal battle over technology used in the iphone. they're saying apple infringes on six patents. offe has previously cut license payments to talk on -- qualcomm and accused of all
trying to monopolize the industry. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. takata --this is bloomberg. ♪ world leaders are in hamburg for the g-20. they're facing shipping global alliances. protestingso violent on the streets of germany. but go to our chief north asia correspondent. where do we start? david: you think we were -- there were fireworks on the fourth of july, go to hamburg. the number of different bilateral's, a number of different competing views on how the world should be shaping up -- free trade, climate change, immigration, russian sanctions, of -- ande backdrop
the common threat is donald trump. angela merkel said the discord is obvious. it was pretty much six against one. she said it would be dishonest to paper over the conflict. donald trump is not want to build bridges. position thatve he has, especially issues like globalization, protectionism, climate change. the chinese president could be the one who prefers the g-20, it is more inclusive of developing economies and not just the u.s. and western europe. he could have a stronger voice, especially on climate change. angela merkel seem to be seeing either eye on climate change. as will also be on merkel is ahead of the g-20. she has the presidency of that this year. she seems to be the voice of reason among the kindergarten there.
the is her talking about repositioning of the united states on the global stage. it is the strongest power, they should want to be even stronger. this power must lead the world. only america will remain the strongest power. stephen: i talked about the fireworks, let's go to the streets of hamburg where there was water cannons and pepper spray used on protesters. there were planned marches and an estimated 1000 mask infiltrators -- yvonne: what were they protesting specifically? were chanting, all of hamburg hates the police. they are against the police. they are against some of the policies of global leaders. the police took a hard line. armored vehicles are patrolling
the streets. larger protests are planted and tomorrow. welcome to hell was the slogan, by the way. betty: anti-capitalists, they are. whether at the forefront or the talks, northhese korea will be on the minds of global leaders. will there be progress made on north korea? stephen: we have video we can and donald trump standing in line. they had dinner late last night. trump thattelling dialogue for the sake of dialogue over north korea is meaningless. it is essential at this juncture to put pressure -- even angela merkel's call north korea a great danger to world peace. efforts on the security council to get a statement from those five permanent members condemning with korea has broken
down. russia and china have objections to the draft statement. russia actually said they objected to the term icbm, not agreeing it was in intercontinental ballistic missile. in my just the technicalities here. the u.s. was hoping the security council statement on north korea would lead to harsher sanctions, including restricting oil flows, cutting off hard currency, bolstering already in place restrictions on trade. it looks as though russia and china, as to keep permanent members of the yuan security counsel for that time being, taking a different view of what the un security council should put out on north korea. a bit of a defeat for the trump administration as trump heads to g-20 today. betty: indeed. thank you so much. we will have more on the g-20 throughout the day. bloomberg markets formal eu trade commissioner is joining us i 9:40 hong kong time, 11:40
yvonne: this is "daybreak asia." betty: we are getting some headlines crossing the bloomberg. according to officials, this is preliminary, russians are said to be expected in packs on u.s. power plants. the power to disrupt supply here in the u.s. apparently the department of homeland security and the fbi sent warnings about the
cyberattacks on the utilities on june 28. sometime last week. again, russians are said to be expected in packs on u.s. -- hacks on u.s. power plants. the headlines are still coming across. they are attacks that could happen, not ones that have happened. the agencies are warning about the cyberattacks on the utilities on june 28. we will try to get more details on this. i wanted to get these headlines to you now on this news. for the meantime, we are focused on samsung. yvonne: that's right, samsung topping analysts estimates. global demand for semiconductors remains strong. the new galaxy s8 smartphone one over customers. the next guest said it outperforms. great to have you. what did you make of this? did it come down to chips or
also the smartphone business for samsung? >> samsung posted record high sales and record high profits in q2. in our estimate, their operating 60% fromeakdown is semiconductors, another 25% came from there handheld division. yvonne: so we are seeing more growing presence in chips. much of that excitement has been in the super cycle when it came to these chip prices. , we dortage of supply see plenty of demand. how sustainable is this right now? ,e see potential this ructions maybe consolidation when it comes to toshiba selling its chips unit. a little disruption in the memory sector overall, could prices go the other way? let me highlight two things,
first, there will be no new supply until to 19. price to remain very strong until 2018 at least. secondly, unlike the past, demand is coming from very different sectors. in the past, demand came from pcs. demand is coming ,rom not only pc mobile computer graphic chips, and crypto currency mining areas. that makes the industry healthier than before. i'm pretty optimistic. i would say the best is yet to come. tell youhat does it about the company's long-term growth than? with apany still dealing
leadership vacuum. the try with the leader is ongoing. can they keep continuing double-digit growth? although the vice chairman has been in prison for several months, i do believe samsung electronics run by the team of professional management, i don't their potential will be hurt by his imprisonment. let's talk about the product. we don't have the breakdown, but it seems like the samsung eight has done well. is that consistent with what you are hearing in some of your research and surveys? >> yes, definitely. company has a comprehensive
product line. at the moment, memory and semiconductors are getting stronger. product, the panel, major u.s.pping to smart phone companies. that will be a strong growth driver. the company has done lots of m&a of last couple of years. they purchased and ai company and a premium appliance company. now comes down to execution. how samsung electronics can integrate this new company and translate it into topline growth in the coming years. betty: you think they have put their samsung seven troubles behind them with this? >> i definitely think so. the seven was an unfortunate samsung remains the
leader in the high end android smartphone companies. quite a fiasco. what about the intelligent assistant? siri,ntroduced bixby, alexa, what about the home assistant? i we going to see the samsung version? you imagine all of their engineers and product developers are working night and day on something, right? sense -- in that they are behind a global leader like amazon. but it is an important aspect to samsung electronics. the issue is how soon they will integrate the intelligent power into their smart phone.
before we let you go, let's talk about the stock. korea, as samsung go so that the kospi. #857. this chart, you see this remarkable rise in the samsung stock this year. it has helped the kospi move forward. given how these earnings have asia stock rally has been choppy from tech stocks like tencent recently. koreandifference between tech, samsung electronics, and other internet stock are evaluations. samsung is trading at nine times price to earnings ratio. considering their growth potential, that is substantial.
i don't think any cutback in samsung will be significant. they will provide a good buying opportunity. betty: thank you so much. i have more context here on these headlines. this is on russian hacking. the power plants in the u.s.. it looks like according to hackerss that there was powerreached a dozen plants, including a nuclear facility in kansas. this is according to u.s. officials. that prompted agencies and also the fbi to warned that this might be the beginning of a possible larger attack on the u.s.'s power supply and that the chief suspect is russia in these hacks. it looks to be a story on the
betty: this is "daybreak asia." yvonne: a quick check of the headlines. and company set to 15 $.7 billion for a majority stake in $34 billion of real estate inherited when it bought banco popular. they assembled a group of companies to bid for 51% of the assets by the end of the month. they will manage the holdings with the winner. betty: a chinese company has tried to reassure investors after a rout in shares of the
companies. on -- a pair companies slumped in hong kong after said operations were normal. . is cuttingsoundcloud 40% of staff. it will help it compete with spotify and apple. in january, the digital service warned it was at risk of running out of money. offices in san francisco and london will be shut. operations will be consolidated in berlin and new york. 75ndcloud claims one of million -- 175 million regular listeners. betty: an airline scrapped orders. it had 80 orders before the cancellation. it failed to meet its exacting standards.
it is grappling with the demand imposedel and airspace by the saudi led alliance. checks let's do market of markets in the asia-pacific. we are seeing a gloomy town in the region. take a look at the asx 200, down nearly 1% right now. the big move in the asian session has been in crude. we are seeing the price down 1% right now. we did see these inventories in the u.s. the drop. that did move the sentiment a little bit. the negativity is continuing in the asian session. also watching samsung shares selling on the news that it be expected profit. that's right. maybe a little bit of cell on the news for samsung or it
yvonne: take a look at this live shot. 8:30 in singapore right now. reminiscent of what we are seeing in the markets. stocks selling off. and spanishfrench bond auction during the european session triggering this selloff across the board. betty: pretty gloomy and the markets. you are watching "daybreak asia." let's get to the first word news with paul allen in sydney. say: sources at the u.n. russia block they security council condemnation of north
korea's latest missile test despite china agreeing to the text. diplomats tell us the discussions are continuing to find a wording all 15 members can approve. one said russia objected because it described the launch of an icbm and they said that need more clarification. u.s. defense secretary says north korea's test this week is not mean the two sides are closer to war. james mattis said he was not surprised but the july 4 launch, but added washington's self restraint was can that's preventing open conflict. trump has promised north korea will never have a nuclear weapon. he is weighing pretty severe things in response. former senior audi executive has been charged with conspiracy and directing staff to cheap emissions test. the justice department says he led a team of how the engineers in germany who designed emissions control software. they have admitted to cheating
point $8g a two billion penalty. six other employees have been charged in the case as well. the french government says it will and the sale of gasoline and diesel powered cars by 2040. the energy minister said france on coal-basedown power production by 2022. thatld a news conference the targets are tough, but that france wants to be the number one green energy economy in the world. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: take a look at how things are trading in the asia-pacific. sophie kamaruddin has the latest. a read day for
asian stocks and bonds across the region. gold also falling for a second day, lower by .3%. the yen is also looking weaker at 113.29. that is not doing much for the trade in tokyo. the nikkei is losing set for a second weekly drop. it is sydney that is leading the regional the climb. the asx 200 falling 1.2% and looking at its biggest weekly slide in over one month. the aussie dollar is down .1%. that is weaker for a this day, even after encouraging trade data we got on thursday. take a look at korean assets, in focus even the geopolitical backdrop of the g 20 summit in hamburg. .3%.ospi down samsung is the biggest drag, losing .5% despite that they beat the operating profit this morning. up .2%.an yuan is
but it is set for a fifth weekly loss against the dollar. this as investors are hedging against the fall in the yuan indicating that the indifference that we have in late when it comes to provocations from pyongyang. a test of the next resistance level at moment 62.98, the march 10 high on the chart. that seems to be imminent. if geopolitics does ratchet up a notch, that could top the year to date high. 1155.50 for the yuan. treasuries at 2.37%. this is extending their global run we have seen on bonds following the poor option we had on first day -- france debt overnight. betty: thank you.
we have seen a bond slide around the world. hawkish rhetoric has been coming from bankers. kathleen hays is here with more on this. we might be talking about something else with the jobs report tomorrow. the tide might turn if we see these numbers. kathleen: it could turn and the tide could come back. it could just keep going around and take those bowls with it. the bears will say you the. we're talking about the fact that there has been another like in the european bond market selloff which has reverberated over to the u.s. and could be hitting asia. let's start by talking about what happened in the past several hours in europe. the selloff, commentators saying it was more technical, nothing fundamental change that much. sophie just mentioned it, there auction.k french bond
also a spanish bond auction. the german booming deal hit an 18 month high. they broke above where they have been since early 2016. what is going on? mario draghi last week spoke at the ecb for him and was talking from turning the economy deflation to growth into a more reflationary trend. it was taken as a very hawkish comments suggesting the ecb is getting ready to purchase fewer bonds and getting ready to ease buys. we did get the meeting notes and we found that it was discussed a possible exit from this easy policy. nothing was decided. there was a lot of caution which was expressed again today by the chief economist of that european central bank trade he says we have to be patient with this policy. no surprise, the president of germanyhist bank from
says he see's the exit door because monetary policy has to maintain its credibility. it has to stop being more expensive and get more concerned about spread -- price stability. #--nt to show you a chart, this is what i want to show you. this is the inflation went. thank you gentlemen helping me call it out. #3221. you can see, the most important line is the turquoise line. that is the main inflation gauge of the ecb. it has moved further away from 2%. that is the perspective. some will have to withdraw stimulus, but they are not there yet. i thought it was
interesting in these ecb minutes that they did also stressed that they were concerned that small communication changes could be misperceive in the market. that is debatable what we are seeing in the market today as well. it came to another persons call about this yields reaching 3%. could this intensify on friday? kathleen: that is the big question. it gets to the back of its own range. since the bull market is over, the 10-year is headed to 3%. it is a double whammy. the federal reserve is going to release its monetary policy report to congress. it releases twice a year. it will be a lot to digest let's take a look at what happened today from adp, a measure of private job growth. in june. 8,000 the month before,
so that is a reseller is asian. -- de-escalation. wages moving to 2.6%. here's the heart of the jobs debate. wages are not rising yet. the chief economist in the united states for unicredit says the phillips curve might be flatter, but it will still come home to roost. the feds determination to raise rate, here's what he said. >> the phillips curve has this steeper area. we will see a sharp rise in inflation and wage gains. that is something for tech stocks to worry about. you do not want to hit that point. they want to keep normalizing interest rates as the unemployment rate keeps going down. kathleen: all the more reason that the jobs report and
monetary report will be scrutinized. janet yellen will testify and take a lot of question from senators and people from the house of representatives. bottom line, we will see the boj results being tested keeping yield curve control at zero. it is got to 0.1 with the global bond market. they want to come in and buy bonds. that will be a big focus in asian bonds trading. yvonne: whether the boj will have to intervene, thanks. let's move on and talk about cars. the electric vehicle revolution is said to be accelerating faster than expected. and you report says more than half of new cars sold in 2040 will be electric powered. head of asia-pacific research joins us now from singapore. great to have you. you saw the news yesterday with the ambitious plan to go electric in a couple of years. why the exhilaration there?
what are you seeing in the trends so far? >> we expect that electric cars will become cost competitive between 2025-2030 and a member -- number of major on the markets around the world without subsidies. by 2030, we think a quarter of the cars to be sold in that year to be electric. i 2040, we expect the number to be over half. the announcement is a reflection of that. it is driven by these factors. are you getting more bullish on electric vehicles this year, why? >> absolutely, for three major regions. thet, batteries comprise major cost of an electric cars. the cost is fallen by 72% in last six years. we expect them to be a quarter of today's price levels by 2040. consumers will have access to
cheaper cars. only sevens year electric car models are available globally. 200 plus ramp up to cars by 2020. consumers will have more choices. the third region is that basically new trends like autonomous driving as well as ridesharing and ride hailing will actually accelerate the change of electric cars used globally. so that is why you should be more bullish this year. betty: where these lithium ion batteries going to come from? is there enough mining capacity for the materials they going to these batteries? or will we see-- a shortage? theurrently china dominates market for the batteries. we expect production to triple and the next fee is led by china but also the u.s. and korea. with regard to the metals,
another of things going to making a lithium mind factory. production capacity has to ramp up for the next 5-10 years. overall in the long-term, there are enough proven reserves for each of these minerals and metals to support an electric car boom. betty: thank you so much for joining us. head of asia-pacific research. up next, we get back to talking about the g 20. looking at how closer ties between china and europe might influence trump's agenda. and of course the meeting between trump and putin. this is bloomberg. ♪
when a crisis happened, then they upgraded the g-20. it has been delivering ever since. it has to continue to deliver with the u.s. as an integral part. >> internationally, america first does not play well. you not have trump for the first time will be sitting around this big table with 19 other leaders from the world's most important economies, and most of them don't trust and don't like the leader of the world's only superpower. that is a serious problem. there onome thoughts the u.s. role at the g-20 as president trump joins the meeting for the first time. we also have to focus in on this meeting with president trump and vladimir putin, but also the chinese president as well. joining us for moore is the asia program senior consulting fellow at chatham house. great to see you. we were talking about how trump and the chinese president will
have a big battle of egos. it will come to a different line with trump and prudent. , ands an impulsive tweeter negotiator that is off the cup. the chinese president is very reserved and keeps his cards close to his chest. what are you looking for in terms of optics and how it will be different than mar-a-lago? >> one of the differences will be they had the meeting at mar-a-lago with this into get along. they were both upbeat about that first summit together. things have changed since then. particularly, on north korea. trump is saying, i have given the chinese chance to sort this out and they haven't managed to solve the problem, surprise, surprise. i don't think we were expecting they would be able to. there is more attention in the atmosphere between trump and the chinese president. yvonne: there's been a lot of talk about what is the red line
when it comes to president trump and north korea? you could say the missile death and the usd death could contribute. the chinese have a conflicting set of objectives. they say they don't want a nuclear agreement. by what they want that. they also don't want a north korean regime that will be destabilizing the region more widely. set ofve a difficult contradictory objectives to achieve. the end is, they have not done a lot. a bit more economic pressure went on over after the mar-a-lago summit, but it has not changed north korea's calculations substantially. china and north korea do not have a political relationship at the moment, but they have a long-standing alliance. the relationship is in a bad state. the chinese presidents leverages limited. betty: it begs the question, the chinese president looks so strong outside of china.
he is a very strong leader except when it comes to dealing with this thirtysomething leader next door. does he end up looking week? that is something he does not want to jeopardize. imageis not great for his that he can control, he can influence this young leader right on his doorstep. that is not a good story. treading carefully when it comes to the u.s. the mar-a-lago summit put north korea at the top of the agenda. china is under more pressure than it has been on the north korea issue from the united states for some time. we know will be different for the -- difficult for the chinese president to deliver on that. cause because him he is not able to set the agenda
with donald trump at the moment. maybe that is just donald trump's unpredictable personality. is that something that can be fixed with another mar-a-lago meeting. it seems like their relationship was on the skid, and that it took one meeting and one dinner, and they were best buddies again. is it going to take something like that again, or watch? thing isncouraging that they had the meeting and a number of telephone conversations over the last few months. up theem to be keeping communication channels, which is positive for the relationship. it gives them a chance to understand what the other is thinking in real time, and not have to wait for big set piece summits. the fundamental problem of north korea is going to create difficulties for the u.s., china dynamics for some time. yvonne: what will be the original approach now? persuadeu.s. have to
china to talk face-to-face with north korea? what will they gain? >> china has suggested that maybe the u.s. could take a different tack. the chinese are realistic. isy realize u.s. politics constraining trump on this. there is no way he will be able to enter into direct talks with north korea. the chinese will be realistic what they push for. they want to know the temperature. they want to make sure that the u.s. does not do anything military or rash. somehow this was just carry on as a bit of a problem, but it won't move to the next level. that is the short-term chinese objective. yvonne: always good to have you. whetherlook ahead at president trump will between about anything that happens at the g-20. betty: you can venture dollar on that. least, twitter will
be in a firestorm over anything that happened at the g-20 that even resembles a meme, is awkward, or anything like that. about trump twitter followers, i thought it would be fun to call up them of the social media influence of these two big leaders. the trump pugin meeting is going to be huge of the g-20. it will be funny to take a look at trump. he has 33.4 million followers. putin is also on twitter with 669k twitter only. when it comes to who owns two, trump owns putin on twitter. yvonne: i can't imagine vladimir putin tweeting. betty: apparently he does. #vp are his tweets personally.
trump follows media personalities. he also follows himself in the form of things like the trump golf course. sarkozy,lows nicolas more like ahat are leader should be doing on twitter. on tv: not so much personalities, but more so on global leaders and what they can influence on the twitter sphere. we will watch what is going on on twitter. you can check out on the interactive tv function. you can watch us live and see previous interviews. you can dive into securities or bloomberg functions that we talk about great can say charts to your library. you can become part of the conversation area you can send us an instant message and ask a question to that desk. check it out at tv . this is bloomberg. ♪
that would make them the third company to face texas regulators. bloomberg has been told that united health rubin does the equity partners are nearing a deal to split up the health and education consultant advisory board. united health health-care division and feast that with by the -- vista with by the education business. shares closed at their highest since december 2015. that does it for us on "daybreak asia." let's take a look at what is coming up. we were talking about the tweets from trump we are expecting. i am wondering about the optics and the body language? will he be shaking hands are pushing anybody? rishad: will he let go of the hands? yvonne: how long will the handshakes go? rishad: we will look at that. also the trade they'll between -- deal between the eu and
japan. the school of public policy dean joining us. qatars going to be about and tensions on the korean peninsula. a lot to get through. could be one of the most fiery g-20 meetings we have had in recent times. areung preliminary earnings upbeat. author caine is an looking at samsung. we will get his views on what is going on with that as well. there we go. betty: looking forward to it. that is it for "daybreak asia." this is bloomberg. ♪
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♪ haidi: it is 9:00 a.m. in hong kong. i am haidi lun. rishaad: i am rishaad salamat coming to you from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: asian markets extending the global selloff as central bankers talk of tighter policy and bonds being rounded. rishaad: samsung arming up the new numbers with the samsung