tv Bloomberg Daybreak Asia Bloomberg June 4, 2018 7:00pm-9:00pm EDT
>> it's 7:00 a.m. in hong kong. i am yvonne man. welcome to daybreak asia. this tuesday, asia-pacific markets signal a as traders but protectionism aside in favor of optimism. that move may not last as g7 leaders prepare to meet in quebec. ramy: from bloomberg's global headquarters, i am ramy inocencio in new york, where it is past 7:00 p.m. on a monday. apple takes a swipe at big tex rivals -- tech rivals saying data privacy is important.
howard schultz is stepping down at starbucks and some say he is thinking of running for president. all right, yvonne. good morning to you and our asia-pacific viewers. i have to say that looking at the markets, the word of the day is strength for the u.s. economy outweighing all the fears and concerns that we had over the past few weeks or so. about trade tensions and tariff tensions with allies. where thisstion is is going to go in the future, but at least for now, those markets we have definitely strongly in the green, yvonne. yvonne: the kind of wonder. they do have a short-term memory when it comes to trade spats. right.hat's
the nasdaq closed at a record high. up .7%. up e most ever since mid-march. we are seeing good gains. just on ashow you graphic basis how good the s&p 500 is performing right now. that, 27.46ose aresome change, so we seeing this breakout away from this downward trend we are seeing in the green ever since the start of the year. he can see blue in case you're interested in that, bit of a downturn due to what was happening in italy and the populist government there. we are pushing ahead again. how long will it last, yvonne? the ringe are me and some time. it's interesting to see some upside when it comes to asia stocks in the most in months. areeems like the futures
signaling a moderate gains at best. take a look at what we are looking at in new zealand. we are up .7% on the index 50 -- ndx 50. reflecting on what we are seeing in the china pmi numbers, a bit of an event risk. taking a look at japan, futures with modest gains. taking a look at currencies. we are touching close to the 110 mark. strong data including retail sales ahead of the rba decision. also, when it comes to the euro, we hit 117 overnight. hasre holding onto gains seemed to be fading a bit as well. weakening past 20 per dollar when it looks like nafta is
going to be pushed back to possibly next year. the trade tension with some of these em currencies as well. we are looking at the 10 year. we are still below the 3% technical, but we are seeing yields picking up in australia and the u.s. as well as germany overnight and italy. 15 basis points down on that for them. in the meantime, first word news. first word with jessica summers. the white house has announced the first details of president's historic summit with kim jong-un next week. they will meet on june 12. it is not clear exactly where three of the agenda is also unclear. both sides want the nuclear reservation, but that -- denuclearization, but that means different things. the northwest american forces to leave the peninsula. senate majority whip john has
announced the talks have missed a key deadline and congress probably will not have time to approve a new deal this year. paul ryan said the u.s. legislators who would need notice of a deal by may 17. they can vote before the current congress ends. there might beouple weeks of wiggle room placing the deadline around early june. boostingpreme leader the country's nuclear program, remaining within the framework of a 2013 international agreement. ayatollah did not collaborate. the atomic industry is under restrictions. thatucks fell on news howard schultz is stepping down. he to the company from just 11 outlets to 28,077 countries.
his departure comes as u.s. sales growth slows and starbucks is criticized for the arrest of two black man in a philadelphia cafe. he will take the title of chairman emeritus. there is speculation he may run for president. global news, 24 hours a day on air and at tictoc on twitter in more than 100 20 countries. i am jessica summers. this is bloomberg. ramy: thank you very much. taking a closer look at the rally on wall street, stocks rose to their highest and's mid-march. treasuries fell. billiont announced $7.5 deal. su keenan is here. trade war, what trade war? rally.ery big deal, big a lot of that lifted the spirits on top of the new jobs number on friday to result in a very good snapshot of the market, at least
as far as the stocks are concerned. let's go to the chart. s&p 500 did well. nasdaq hit a-- record. the dollar store it has been part of what we will see in commodities in a minute, but we saw treasuries pushing yields up for a fourth straight trading session. as go right to the stocks in focus. we are going to put microsoft year the top. they are involved in a major $7.5 billion buyout of a coding site called github. apple, speaking of record, all-time high for the sox. it's within striking distance of the valuation. it's ed $50 billion right now. add canadian solar in. can anyone say china withdrawing subsidies? that has a lot to do with it.
let's go into the bloomberg. we have heard a lot about howard schultz. let's take a closer look at his company he leaves behind. we going to the bloomberg. here you can find his charts. he is a very successful billionaire. this chart shows the struggle may have had in recent years to maintain same-store sales. they are in the blue. this white is a number of store additions, coming down. sales coming down. big challenge for his successor. yvonne: really becoming more of a maturing market it seems. different trading story when it comes to commodities. it seems like they have been weighed down by the trade tensions. wti breaking below $65 per barrel. focus --really is the a few weeks ago we were talking
to maybe $100 outlook. outlook cuts are looking more and more like the reality. in terms of output, there is strong numbers. it's in terms of crude production. it's a 2018 high. we are seeing open interest i gold for now plummet. that is the latest trading statistics on the gold futures. su keenan joining us from new york. let's bring in avenue brown, director of asset allocation. new york.s from it seems like markets focusing on fed policy, the u.s. economy doing well.
are we in the sweet spot where we can't ignore this trade -- can ignore the traits that for spat for now? evan: president trump announced implementingg on trade tariffs on china, but at least we have a few days where we can sit back and enjoy what was some really good growth data. the employment data, pmi's globally, which are pretty strong, and retail sales in germany and japan bouncing back. yvonne: at whnt are these trade tensions actionable? are you saying we have to wait until these tariffs come into effect for traders and markets to respond? evan: i think some people are of the view that these are all threats and president trump is not going to actually come through with any of these. that's possible.
outertainly would not rule the imposition of these tariffs. the language in that statement from the white house said they will, as opposed to are considering implementing the tariffs, so there was strong language. a certaintruto extent, thinks he needs to be incredible with these threats, so we may see an imposition of these tariffs, but i think it's important to put them in context. $50 billion, 25% tariff on that. it sounds like a big number, but in the context of two very large economies, u.s. and china, this .1% offock a 10th -- gdp. it's nothing to get too concerned about. yvonne: that is something more retaliatory from the likes of it, tit-for-tat traits that -- trade that. it seems like text became the
place to take shelter. cap dominance is going to leave the market? -- is tech dominance going to lead the market? evan: broadly, the u.s.arket should do pretty well in this environmt. we have seen yields come down. you don't have inflation breaking out. a lo saw before are not so much there. you'll to our higher, so that should support financials. we still think that energy should do ok even with oil prices coming off a little bit. to be a lot of this -- good environment for your shale u.s. shale-- producers, we think there is a lot to like across the market and with cyclicals in particular. looking ahead to nextof course, we have the fed coming out. we pretty much know what is going to happen. looking ahead, the r.b.i. saying do not hike. please don't hike. don't hike.
that,, they can ignore let's be honest, and move ahead here. ofre is the risk of course inversion, yield curve inversion. how many fed hikes to we have to look forward to? three more this year. one more next week and two more for the rest of the year, and then we will see how the data play out over the course of 2019. is morethe market conceris than the fed is. the fed has repeatedly pointed to the long end of the yield curve where the rates are being held down because the ecb has not embarked on quantitative easing. bank of japan putting downward pressure on the u.s. market, said to be honest, i don't think the fed is more to be particularly concerned. some regional president have raised concerns about the yield curve flattening. when you think of the core decision-makers of the fed, the i think, the chair,
they will respond to the economic outlook before they responded turning the market. ramy: he is not a voting member but he is the most dovish with everyone out there right now. evan: we did talk about yield curve inversion with him. one thing that gave me pause in your note is the copy sure where we are in the cycle until the recession hits. that gave me positive because it sounds like there is a bit of certainty when you say until. talk to me about this. , fortunately,nd and we have been lucky to have a very long cycle. u.s.econd-longest expansion in the postwar period. ultimately, all good things come to an end and this cycle -- we don't know exactly what will cause it. typically, it's due to the fed tightening a little too much. to engineer a soft landing. fed
there are other potential issues that could spring up. we have to be humble about the how that could be. le, late cycle, it's hard to define. itwon't know for sure until ends, and we have be humble about that. that number the cycle goes on, you have to be cognizant that certain imbalances will grow and ultimately the cycle will end. about creditock exposure. pop into the bloomberg terminal. we have this chart titled heading for the exit. money is pouring out of etf's tracking investment-grade credit. you guys are under waiting high yields. let's talk about this risk reward view you have got. evan: sure. we have seen spreads compress a tremendous amount. corporate leverage is near historical highs. so this makes sense when you look at how well the economy is
doing. corporate earnings are healthy. a lot of these companies are locked into low rates. we think the risk reward here is not that attractive, especially, like to use it as a hedge. you mentioned our point about we don't know when this cycle is going to end. because of that uncertainty, we want to be hedged. we are overweight equities, but we want to hedge that against another risky asset. ramy: thanks very much for your analysis. thank you. coming up on "daybreak asia," tech stocks in the u.s. as we have been talking about are on a market 18 rally, but how long can that last? we get the outlook from gbh insight chief strategy officer, dan ives. yvonne: donald trump and kim jong-un have nailed down a time for their meeting.
yvonne: this is "daybreak asia." i am yvonne man in hong kong. ramy: i am ramy inocencio in new york. details being revealed about the trump/kim summit in singapore. the leaders will meet at 9:00 a.m. local time on tuesday, jim paulsen, but it's not known exactly where. the u.s. strategy of isolating north korea will continue in that lead up. for all of this, let's bring in joe softek. does the president really have to offer kim in terms of a deal here? joe: there's a lot you could offer. it's how much he is willing to give. numerous,been some -- different statement out of the white house. while not contradictory, somewhat inconsistent. they have said in the past that
their maximum pressure campaign will continue, but the p himself has suggested that while there could be incrementalism here with kim giving a little bit and the u.s. possibly giving a little as well. but they have not set out a clear sort of set of goals for this meeting. and we have been whipsawed with expectations for what could take place from the initial euphoria out of the white house about the fact that it was happening at all with being canceled, and now it is being back on again. , and thata day so far does not leave a whole lot of time to give back and foon su a complicated issue. ramy: senate democrats want to weigh in and have a voice on what is happening with that summit. they are askg for complete dismantlement, demanding it. really, what kind of leverage do they have? joe: they do have a little bit,
and that is if the administration wants to lift sanctions. that would require congressional approval because some of these were congressionally imposed. and democrats, with a narrowly divided u.s. senate, have got leverage to block that from happening. be needed ifl there is anything approaching a treaty down the road for their votes. what they are basically doing is raising the stakes for trump. it's a bit of a political move given that u.s. midterm elections are coming up in less than six months, so they want to step in and say, you know, we are not to be ignored, and this is setting a higher standard for trump to meet. asnne: and the president well, joe, heading into a contentious g7 meeting just before the summit with kim. is the u.s. bringing anything to assuage allies at the summit? joe: there seems to be exasperation from a statement of other g7 members, including the
host for the summit, justin trudeau of canada. to beis -- it seems everybody is holding out for trump to switch course again. you have to remember that there were going to be tariffs on aluminum and steel, and then there were exceptions, and new deadlines, and treasury secretary mnuchin said the trade on, and china was not suddenly, itas on again. so i think a lot of this is going to be what trump and his aides actually bring to the table, setting some conditions, saying what it is that they want exactly from the e.u., canada, and mexico on this. and they will have to go from there. right now, what they are bringing is a lot of angst on the part of our trading partners. especially after the g7 with stephen mnuchin. it seems like there is a unanimous rebuke against the u.s., which we really have not seen before.
the what are they doing on president's assertion that he can actually pardon himself? joe: he's trying to they out a case. part of this is a political move. he has been slowly moving his opposition inard all forms and fashions to the special counsel investigation. this is a question that is very much pt of a background debate in law schools. askedican senators today about it almost unanimously and backed away from speculating whether this is even possible. there is some question about whether a person conserve as the judge of his own case, and if it certainly isd, it going to spend quite a few months in the court. insists he does
not really need to because he has done nothing wrong. this is raising both a political and legal argument for the president. like itdoes not seem could be resolved anytime soon. joe joining us from d.c. don't forget, tv . you can catch up on the past interviews as well as look at the security some bloomberg functions we talk about. you can become part of the conversation. feel free to send us a message. this is for bloomberg subscribers only. be sure to check it out at bloomberg go. this is bloomberg. ♪
reported sharp would buy the unit for 46 million dollars. it said the acquisition would be gned this week and concluded sometime this year with toshiba to remain a minority investor. on friday, toshiba completed the $18 billion sale of its chip unit to a consortium. yvonne: they are under investigation in china after macron said it had also been visited by regulators. the chinese sales office was checked on may 31, cooperating with the authorities. none of the three chipmakers have said why they are being questioned. china accuses them of colluding to fixed prices. ofy: microsoft's purchase github will give it access to a community of 28 million programmers as it extends -- trying tos been convince them it's ready to embrace the open source "a cancerdescribed as
yvonne: 7:30 a.m. tuesday in hong kong. looking like it could get pretty wet at this morning. ramy: 7:30 p.m. monday here in new york. about .5%,se up by and gaining a bump from the jobs pushingack onriday, back against those fears about tariffs with the u.s. -- allies as well as with a possible trade war with china. i am remy innocence you in new york -- i am remy innocence you yvonne: in new york. first word news with jessica summers. thanks, yvonne. aider white house economic
withheld the monthly payroll numbers from trump. held onto thehe information out of concern the president might comment on them. that indicated they would be favorable. president trump is stoking the debate about his powers and we did he has the right to pardon himself even though he insists he has done nothing wrong. this comes as the white house sharpens its defenses against the claim against russian meddling in the election. rudy giuliani says declaring a pardon was possible but would lead to impeachment. apple is making its strongest statement yet on privacy and also the inclination of companies like facebook to track users. software engineering head said it would make it more difficult for the data to monitor individuals. the news came as apple announced
new software including features to help mobile users between themselves off the screen addictions. of people killed by guatemala's so-called volcano of fire as risen to 62 and is expected to go higher. happened with barely any warning. the volcano registered a number of minor eruptions over the years, yet you graduation's were in order as experts reported activity was decreasing. news, 24 hours a day come on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 100 20 countries. i am jessica summers. this is bloomberg. yvonne: jessica, thank you. we are counting down to them open. market it seems like we are set to extend this risk on mood. we can put the trade tensions on the back burner. sophie: investors can focus on
the optimism of growth and the data line up we have today, and head of that, if you just pointing mostly higher, although there are concerns of pullback on mondaybest jump for asian stocks. when you take a look at the futures, tokyo, seoul, we are pointing higher. some weakness coming through down under after the asx 200 closed above 6000 on monday. when it comes to highlights on the agenda on the central bank front, we have japanese household spending. middayn trade due at local time. the pressures are mounting. past the five-year average to the aussie on -- asean inflation problem child. it is expected to push inflation forward. in at 4.5%, the fastest
since at least early 2013. this picture has implications for companies as inflation catches up with economic growth. ramy: trade woes clearly are in the background and middle ground. emerging-market angst remains. we have talking about this. india centric bank governor adding to that caution ahead of the rbi's policy decision on wednesday. >> financial times piece, he made a plea to the such a slowdown to help emerging s grapplth this turmoil. as you can see on the chart on the terminal, emc have seen capital flight over the past six weeks,em stocks, bonds, currencies, have been unloved. they have erased more than $2 trillion. for a fourth month.
this week, along with the r.b.i., we have turkey's rate decision as well. ramy: interesting to see that white line falling to its lowest since november of 2017. to become a written, thank you very much. a bill banning equipment from company set to hit the senate floor this wednesday, meeting resistance from trade groups representing some of the u.s.'s leading broadband as well as its wireless providers. let's cross to san francisco and bloomberg technology reporter selina wang. why are companies like at&t and verizon against this ban? selina: have been concerns are many years that these u.s. telecommunications companies should not be buying equipment from these companies that may pose a national security risk. the concern is that it is the sec weighing this proposal to ban the use of federal subsidies
in buying this sort of gear. many trade groups argue it's not within the legal authority of fcc to make this decision and it should be left up to the experts to make that decision. in addition to that, there are business concerns. it's not really in the benefit of at&t and verizon to not be able to access that type of gear since they may want to use it for some of their future projects like becoming the which in 5g and huawei, has reacted negatively to this, saying that this is blacklisting a handful of suppliers, calling it both improper and imprudent, unverifiedrelies on allegations. regards to the talks, the trade talks, over the weekend, what if any progress was made with regard to the key zte?egards tozte
we still have chinese officials really wanting the u.s. to soften the blow. trump has said he wants the company to continue operations as long as it pays the fine and shakes up its management fee structure, but the problem here is that trump will face huge domestic opposition if he does soften the blow. the argument among u.s. lawmakers is trump should not be using a national security issue as a bargaining chip in the greater economic concerns. zte clearly violated u. sanctions and softening the blow could hurt the u.s. that ability down the road. -- credibility down the road. yvonne: they face $3 billion in losses from the span. do you think they can survive and come back with this -- from this? selina: they have $3 billion in losses. they have all but halted
operations. they have thousands of employees that are sitting idle. there are still spending millions of yuan a day on these daily operations. the issue is not losing key customers in the u.s.. the issue here is they don't key components they need to build equipment. china is becoming a leader in but technological areas, when it comes to issues like chips and semiconductors, the u.s. is still the global leader, so they are going to have a billingard time their equipment. they can get some of those equipment from other countries like taiwan, but for some of the theyy radical designs, will have trouble doing that, so the likely outcome is they will probably lose market share in telecoms and smartphones sector. they may still survive. we have reported they have a sort of emergency plan in place to put their factories into work hours after the ban is hopefully removed from their perspective. yvonne: selena, thanks.
the bloomberg tech reporter joining us from san francisco. another story we have been talking about in the last couple hours, starbucks losing its share. chairman, howard schultz. take a look at after hours mull theas investors coffee giant's future without its longtime leader. a lot of questions about what is to come. we talked about a range of options as a next step for him. bring in care and rise, who s us from seattle this morning. so much for joining us on the program. i think the speculation is somewhere along the lines of philanthropy to a presidential run possibly. karen: he has not shied off from either possibility. he has a foundation that has been growing and doing a lot of work around homelessness and veterans, unemployment, and things like that. he has flirted with running for president in the past them and we have a president now who came from the business world, so the thought of making a jump from no
political office to presidency, there is a clear history for that being possible at least. [laughter] karen: whether or not he will do it is a lot of polling and consultants ahead. yvonne: talk about what kind of future starbucks has now without howard schultz. i mean, what is the legacy he leaves behind, and what has he been doing recently there? karen: yes, he built starbucks into the behemoth that it is an made coffee culture in the u.s. and around the world in many ways as expensive and a daily part of life as it is right now, but he has not been day running the company that much. he left before and came back for several years, and about a year ago, stepped back from being ceo. kevin johnson took over. howard schultz is really focusing on a couple kind of -- i don't want to say pet projects, but specific focused
projects. one was polio. another was an italian bakery he was really into. also expanding what is called the grocery, they're kind of their kind of- superpremium willy wonka experience. there is one in shanghai, one in seattle, and they are expanding. ramy: it's a quite cool thing to see it all. willy wonka-like. it will be strange to not say tz, to identify that was someone else. another will take over as head of the board. what do we know about him? from a longmes history in that retail industry, been involved with jcpenney, and things like that. he has been on the board as well, so it's more of a continuation of what has already been there, but unless public name. howard schultz has made a really big -- he has been the face of the company for so long and the
face of a socially responsible company for so long. he's been very public and his persona. and both on the board and with the ceo, kevin johnson, he's also someone who is a much less public presence. he does not seek out the press or does not engage in the same way that howard schultz seems to really like to do and thrive on doing. ramy: i guess we will have to get used to saying his name. with regards to what he has to do for a strategy, of course, we know that one of the biggest growth areas, possibly the biggest, is china. in the united states, the rates of growth definitely are plateauing. what does he have to address to series?investor we saw sha prices dip. karen: they have been trying to do a lot of different things to expand their growth in the u.s. there are only so many stores you can build, so how do you get more out of those stores? they have had success with their mobile ordering app, so much
success that it caused operational jams in the stores. you have tons of people clicking a 38 minute window in the morning. they have been trying to operationalize different ways to that are meet that demand and get more throughput on the coffee. a tried to get better food -- and they wanted to try getting better food in the store. so you could not heat up food that might create other odors and things like that, so they would try new coffee -- sorry, new food offerings that are fresher, because that is what people are looking for now. they are trying to adding to the existing of the structure they have now. ramy: they have been trying to diversify so to speak. karen weise, thank you very much for that. ext, there is no bubble here. that is what goldman sachs has to say about the tremendous surge in america's biggest tech firms. we are going to get more on that, next.
yvonne: "daybreak asia this is." i am yvonne man in hong kong. ramy: i am ramy inocencio in new york. a roll,ave been on outpacing the s&p 500 by a huge margin. look at that. 3.8 trillion dollars, a combined value of facebook, amazon, apple, microsoft, and alphabet, top the annual growth domestic -- gross domestic product of germany. ,oldman sachs remains calm saying this domination will not end anytime soon. let's discuss that as well as much more with dan ives. it out of california. your topline thoughts on that? it was all software. what is the strategy behind this? revenue.billion
that will be the second sort of growth for apple. the fastest-growing growth in the company. theevelopy about community. when you look at microsoft, it's about courting developers for apple. the software service is, ar. , ar.rvices when you get to a more mature smartphone product cycle, even though you have three phones theng out, it crosses market cap and pushes it. not there wasas hardware, and that speaks volumes. ramy: so for investors, and you know, they announced a slew of things for san jose, what do you think they should be looking at in terms of development for added value? dan: when you look at amazon,
, they are miles ahead of the competition. it feeds into the homepod. the smart speaker marks the $20 can they start to gain some share? havetalked about trying to it. overall, he would call it a step in the right direction, but it comes down to the developer community. it seems like we saw some bold moves when it comes to digital privacy. we heard from the software engineer saying they will start sending out alerts to anyone that would send your data to companies like facebook or google. we heard from craig federici. we believe your private
data should remain private, not because you've done something wrong or that you have something can be abut because it lot of sensitive data on your devices, and we think you should be in control of who sees it. yvonne: it seems like users can on whetherpt out they actually do look at some sort of site when it comes to the safari web browser. how big of a low do you think that is for mark zuckerberg?is this a move for apple to shield itself? the whole managing team, it's part of the culture, from a privacy perspective. this is something that we are expecting. also, they are getting more and more pressure. in terms of addiction with children on the funds. they have things they talk about in terms of steps that are going to focus on that area and into they built
devices, but ultimately, when you look at privacy, cook has been very clear about this. being ally about apple data privacy hub. we have seen what happened this is going to continue to be a fork in the road situation. you're starting to see facebook and others significantly change post-cambridge, but apple will be on the privacy side. that has always been the dna of cupertino, and you have seen it with cook starting to beat his chest to put apple in a different category. what wethis count is saw with the new york times article where facebook was reportedly giving companies like apple and some some access -- samsung access to the user data on its own app. does this overshadow the report? an: look, we are going to see litany of things come out.
i think facebook and zuckerberg are starting to get ahead of this command and instead of on cambridge, where they are behind , even that report, it comes down to apple, you have to give them credit for the data privacy side. really still more treacherous on the regulatory side. modestch more flight to in terms of the worry of investor, and that's why facebook had a v-shaped recovery, more in the background. comparing alcohol to its competitors, samsung, google, to what degree does this through down any kind of gauntlet to their faces? is there a challenge here? dan: smartphones are going
through a massive maturation phase. more asp driven rather than demand-driven. all of these companies -- especially samsung or apple -- i have seen more maturity on the smartphone side. at where it has been so to really start to put a fence around their installed base. the costs were different. apple, specifically software, were the key. it does not happen. $300 billion. yvonne: real quickly, i want to talk more about the tech in this sector performance we have seen. you on the sidelines of where goldman sachs is at the moment? are in the sixth-inning of this growth cycle playing out.
it's a new paradigm. what happened on amazon. profitability, you look at the next three years to four years, and the margin is significantly expanding. they will join the club in 2019. you look at microsoft, just a massive transformation in the cloud, and what they have done today, even on the acquisition, showing what happened on the open-source side. we had some scares of the last few months. we think they make new highs over the next three to six months. strong fundamentals, so to 2000,y, going back we could not agree more. we think we are in the sixth-inning of this. it is a green light. thank you. then i asked, the chief strategy officer. breaking lines coming through from toshiba. confirming from the company in talks with sharp on its pc business. this is confirming the report we
got for the nikkei news, reporting that sharp would buy the unit for $46 million. the dollarion on amount. toshiba saying the board will be discussing the pc operations at a meeting today according to a spokesperson on the latest reports here. will be fined this week according to the nikkei. we will continue to watch this to see the price reaction in a couple minutes time when japan opens. more ahead. this is bloomberg. ♪
exuberance with that u.s. jobs report. we could be seeing leftover optimism. take a look at the nikkei a fifth of .5% -- 1%. we are weighed down by these energy prices with wti barrel. below $65 per energy shares will be in focus today. also, counting down to china numbers coming through during the china open. take a look at the guests today. the citigroup chief economic economist talking more about global markets. of course, the rba decision as well as r.b.i. happening on wednesday. could be pretty interesting. we will talk to the emirates president, tim clark. we will talk about the airline' s expansion plan and competition from its regional and american rivals.
we are live from bloomberg's asian headquarters. welcome to "daybreak asia." protectionism, aside from optimism about u.s. growth. that move may not last as leaders prepare to meet in quebec. >> from bloomberg's global headquarters, i am ramy inocencio. is criticized by his counterpart in india. merchant saidef policy is to blame for emerging markets turmoil. schultz is stepping down
from starbucks. some say he is considering a run for president. ♪ yvonne: seems like trade tensions and the political crisis and italy are really on the back burner. the u.s.cusing on markets and economy as well with that jobs report. looking at the s and p, rising about half a percent there. the nasdaq is seeing a bump. it is a bump we are seeing from u.s. economic growth and optimism. not exactly everywhere. yvonne: we saw optimism yesterday.
watching a lot of about the tech stocks in the wall street session. that could get awkward with the president. -- the criticism we have had is on the back burner when it comes to trade tensions. day, health second care and materials leading the gains. in april.g, 1.3% extending the drop we saw in march. checking the dollar yen, could boost exporter trading in japan. we are seeing losses in seoul. --are seeing movies in the moves in the bond space.
australian yields rising with aussie dollar. ten-year yields as the six basis points budget surplus payment bigger than forecasted. we are watching the tech space. at toshiba and sharp after the former confirmed the two are in talks. the acquisition could be signed this week and concluded in the fall. investigates allegedly spreading given the chip price rally. regulators visited the chinese sales office on may 31. ramy: sophie checking the markets right there. let's get the first word news. >> hey, ramy.
the white house has announced the first details of president trump's historic summit with kim jong-un next week. they will meet at 9 a.m. singapore time on june 12. the agenda is also unclear. both sides want denuclearization, but that meets different things. the north wants the american forces to leave the peninsula . says the nafta talks have missed a key deadline. ryan saidker paul would needgislators to give notice of a dealy may 17 if they were to vote before the current congress ends. iran's supreme leader has told officials to remain within the
framework of the 2015 international agreement, while boosting nuclear programs. there can be no expection of iran to tolerate new sections -- new sanctions within the atomic industry. schultz is stepping down from starbucks. from 11the country outlets to more than 28 thousand in 77 countries. his departure comes as u.s. sales growth slows and as the company was criticized for the arest of two black men in philadelphia cafe. he may run for president. global news on air, 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. yvonne: thank you.
a mixed bag when it comes to equities. australia is heading the opposite direction. then stocks are heading in grain with the nikkei 225, up about half of 1%. u.s. stocks heading their highest since mid-march. not seeing a lot more optimism coming through in asia. the citigroup global markets asia chief economist. how long can we ignore these trade spats? : there has always been uncertainty and drama. on and off. the talks are not very encouraging with wilbur ross and hood. the announcement of june 15 was a surprise, given they said they
would put off the trade truce. : if you look at the china threats of retaliation, it seems like the u.s. is becoming more of an outsider. will that forced the president too soft in his approach? -- too soften ishis approach? >> it is hard to tell the president is going to do. no one wants a full-blown trade war, but there could be more trade skirmishes. do anything, but they have to do something, to respond. you are going to get a proportional response from china. we have to watch to what extent this continues. ramy: we don't know where this is going. donald trump treating his closest allies as heis, some folks areing
is trying to gain leverage with china in those talks. what are your thoughts and do you think that is an endgame? johanna: the fact that the u.s. is now going after its allies is risky. launchinghat it is section investigations in auto imports, which will hit other trading partners. the logical reaction from china is to try and build its own alliances, rather than go on a multilateral strategy to go against canada, you are bifurcating the different powers. potential room for china to form alliances with other economies. ramy: a good point. china is looking to europe to try to gain advantage. in terms of the losers and
anners, can you bifurcate little bit on what might happen if china was able to make inroads into gear up at the cost europe at. -- into the cost of the u.s.? whatey need to focus on would happen if u.s. -- if the united states goes ahead with the tariffs. people will focus on that in the short-term. some of the potential losers in lot ofe those with a supply chain links and china related to the tech trade with the united states. singapore have those potential supply links. and we have to watch a potential hit on global trade. states is left open, countries like the european union, japan, asian countries, there will be this divergence of economic momentum,
relative to the other major trading partners, could continue more sensitive toe continuethes dollar strength and global capital flows, like indonesia. and we have to see current account deficit economies, like india. are trade tensions necessarily positive, or more negative? >> there is usually a full-blown risk off. i am not saying we are at that point. evidence look at the in which the u.s. did impose tariffs, the dollar weakened. dollart think the rebound is sustainable, given where we are at the current levels in our forecast. butay be peaking already,
so many new uncertainties have been coming to the markets. yvonne: the synchronized growth story is starting to fade. if you look at the idiosatic nature of what we are seeing in e.m., europe and japan are in a soft patch, and japan seems to be accg in growth. we seem to see rate differentials. -- arecracks forming there cracks forming? was a relative divergence between the united states, where we saw significant disappointments. that was a big factor in driving the dollar. now you have the dollar strength on the fragile e.m. economy. were hit.and turkey a lot of emp economies were not as fragile as they used to be -- e.m. economies are not as fragile as they used to be, but there is this question of the
u.s. continuing to hike faster than other economies. to what extent does that put pressure on capital flows? vonne: if you want to take a look at this chart, it shows the china ppi prices. very contingent on what this means for other economies. will this be a concern for what to come to asian economies still reliant on the chinese economy? hanna: i don't: think china's growth is really slowing down. in april.ent data pmi data was actually quite encouraging. i think the science and signals are signaling a sharp slowdown. but we do see risks and they tightening -- and a tightening funding conditions, which is
why i think there has bene a relaxation. -- been a relaxation. there has been the fine tuning of policies. but the growth in china -- >> will still be an anchor. thank you. we have more, including the preview of the australian rate decision. ramy: later, the emirates president joins the show to discuss the airlines earning outlook, and the gloomy forecast for the industry. this is bloomberg. ♪
criticism from his counterpart at the reserve bank of india. he says fed policy is one of the reasons for the recent turmoil meing markets. kathleen hays is watching and the rate decision in australia. patel and his message to the fed? >> your policies are hurting emerging markets. this is a statement he wanted to have an impact. he said emerging markets face a double dollar whammy. it is the tapering of the balance sheet, reducing liquidity in the bond market, treasury debt, hurting emerging markets, so much supply out there that has to be purchased by somebody.
big capital flows out of emerging markets, and in emerging markets, and in emerging-market bonds andrrenci. you have to calibrate this balance sheets reduction, he pleas. this is counter to what y policy is nothat bad for emerging markets. we will notple say get a rate hike for the next year and a half. some talked about a possible lftening in the stance, let's isten. >> market volatility has been off and we are talking about volatility in e.m. as well. i don't think this is enough to knock the rba's central case, 3% growth. i don't think it will knock it off track, but there are risks that are building.
hear from theg to reserve bank of india 24 hours from now. of pressure for them to start hiking rates as well. kathleen, stay w. we will ack johanna in hong kong. we were talking about this trimming of the balance sheets it was like watching paint dry. has a lot changed? >> there was a lot of global optimism. in an environment where the central bank would taper, people were not worried. risk assets all rallied last year. we are seeing more desensitization of growth -- growth.onization of you were always going to be
seeing more criticism, especially from more vulnerable economies. there is a debate about whether the fed should care about global spillovers. it hitsshould care if domestic conditions in the united states. it is not clear these conditions have been hit. based on indications we are getting from jay powell, etc., it seems like they will keep going. i think the situation is relatively resilient. the shocks have not been asad as they were during the taper tantrum's. markets have been differentiating across asset classes. markets may be better able to absorb some of these volatilities for now. ramy: if we push this ahead, when do you think this might ppen? conditional onis
what we expect in terms of the growth trajectory in the united states. if the fed is hiking and normalizing its balance sheet with a strong economic cycle, that has positives below in terms of trade and export -- trade andin terms of export. asian economies can benefit from the positive growth data. what extent is this positive impetus from the united states sustainable? we are pushing a late cycle fiscal stimulus. arguably at full employment. that's will necessitate a fed policy reaction. hike on the back of that and we start seeing a slowdown, that could be a bigger recipe for global risk off. some capital flows are not just driven by rate differentials, a lot of it is depending on
whether we will see a spillover of positive growth from the united states to the rest of the world that upset -- offset the allenges in other regions. banker,if asian central do i think that i should be stepping ahead of the curve if i look at what is happening within the philippines and asia? or is there a more practical approach? --the philippines hiked fordift not so much because of imbalances. they had to address the imbalance by hiking. asian, a completely different scenario. preemptiveme more to adjust external imbalances because of the nine conditions. -- benign conditions. monetary policy
affecting r.b.i. is more driven by inflation. economies are doing well. there is the discussion of inflation in corn -- >> especially in the mark. >> r.b.i. has to normalize. we are expecting a rate hike in june. i think the factors are more peripheral. a lot of what is driving r.b.i. policy is happening domestically. you are saying the central banks are not having to respond so much to the fed hiking. it is clear the indonesia bank's move is about supporting the currency and fed rate hikes. former head of the r.b.i. at a conference in may raised the point about central banks having to intervene to support currencies, raising the question
of this being much more of an impact. you don't agree? hanna: in the philippines case, it was more about inflation and domestic imbalances. in indonesia, it was about the pressure on capital flows that actually pushed indonesia to hike. i think there is a bit of differentiation. inis a little bit of a mix asia, but more driven by inflation. the central bank of turkey's rate hike was more driven by pressure. from is a differentiation deficit economies. in more of the surplus economies meeting the last policy was more dovish, compared to expectations relative to the markets. some in emerging-market nations, including some in asia
that used to have been reduced. there anyone in asia you are concerned about regarding their position, connected to what comes? who should we watch out for? >> a locked up small economies in asia are quite exposed. is in aa, indonesia better position than 2013 -- the e.m. is matters for china. the current account for chi has shrunk quite substantially. we need to assess what extent external pressures are making on chinese policy. is interest rate in china linked to what is happening in the fed. what has helped china is the tighter management of capital flows. we need to look at what extent china can sustain its divergence. we will get essex reserve data fx markets will watch how
>> a check of the business flash headlines. toshiba has confirmed it is in talks with a sharp about its pc business. eported sharp would buy the unit for about $46 billion -- $46 million. toshiba will -- remain a minority investor. samsung is under investigation with china, along with another company, after a chipmaker says it has been visited i regulators.
yvonne: we are half away from trading in singapore. you are watching "bloomberg daybreak: asia." let's get the first word news. >> reports from washington from the white house aide. politico says he held onto information out of concern that the president might comment on them. truck moved markets last week by tweeting an event -- in advance of the main numbers. that indicated that they would be favorable.
he is stoking a debate about his powers. he tweeted that he has the right to pardon himself, although he has said he has done nothing wrong. his comments come as white house sharpen their defenses against the claims of russian meddling. rudy giuliani said apart it was possible but would lead to impeachment. apple is making its strongest .tatement yet for piracy says applegineering will make it more difficult for big data to monitor individuals. features for mobile users to win themselves off of their addictions. a mountain erected with barely any warning, leaving no time to
escape for residents. ordered.ns were not powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to go to the asian markets. let's get the lotus -- latest with sophie. >> stocks are trading. the kospi is snapping a three-day rise. samsung is the biggest dragon soul. seoul. in steadyies are holding with yields trading around 2.94% and oil is holding losses as opec stressed the need r supplies to meet demand. trading at $50 a barrel.
i want to highlight nintendo, which is adding around 2%. recovery after the worst today slump in 18 months has puzzled investors considering all of the good news. blaming technical charts and analysis very let's check on tot -- 20 oh to an honda, they are holding a three-day event. on monday, honda reported that car sales to china fell. thank aviation leaders around the world are in sydney for the second day of ion as agm. joinedun is there and is by the ceo of the world biggest long-haul carrier, emirate.
much to talk about with tim clark joining us. aviation leaders gathering around the world in sydney this week. the challenge poised by oil prices is a double whammy. tim, think if joining us. let's talk about this balancing act. it cuts intoo low, demand. prices are starting to show a little damage on our bottom-line . it is not as bad as it used to be. we are managing it as best we can. airfares will have to rise. toally when it went down
$30, there were issues. that affected the global economy in a number of ways. for us, the demand for premium cabins also fell away. we're looking for equilibrium which should be $50 to $60. we can look at that and hopefully the suppliers can live with that and we can move ahead. fuel surcharges are already in. it is fully transparent. as prices rise, they go up in increments. wish i to recover as much as we can. -- we tried to recover as
much as we can. volatility, airlines can hedge and come unstuck. the trick is to manage the division. -- fuelt higher fuel prices than they were in the past. trade talking about tensions and potential trade wars, this is challenging for this industry. do you see tax on a passenger flow or cargo level in your business? >> no. this is not a change in the way global trading happens. what you see is a reset and once it has taken place, the
manifestation of that is a little worrying, but basically give it another year and we will be back on track again and the global economy can move ahead. will it affect air travel for passengers? no. will it affect cargo movement? the short-term, maybe. but i am not sure it will have a profound effect. is a time of proper decline. what is the outlook for summer? >> emirate is very strong. we're looking forward to a very robust summer. strongs the demand is even with the fed higher than it was six months ago.
aircraft start living again in one week's time. over the course of the summer, 267 aircraft that will all be flying by then. this was an internal issue for us. step was a slight out of assessment and we have sorted it out. now we have no problems about recruiting highlights. once we have it all sorted out, gives us the ability to fly the full program in three or four.
moment in the industry is that the infrastructure, if you want to come to new york, there are no slotsilable. is growing to 300 ,illion passengers a year coming into the air travel operation. we need a solution to congestion area -- congestion. we are working to try to find .reas of common ground a lot of things are going on and i think ites will recognize that working with
us is a good idea. it is in the hands of the shareholders. on the short-term, i would say no. haidi: what about full integration? >> they are working on that. putting the two carriers together and working as one as best we can. we have 244 destinations at the moment. that will get bigger. challenge big is the proposed by low-cost ultra long-haul carriers? >> i am forever the optimist. i used to say, bring it on. this was back in the 1990's. --k at what is says done look at what it has done.
this will be a highly affordable product that gives a new range of choice. more people are traveling. the airtio was if would be able to handle this level of business. haidi: would you step away from the extras to offer that segment? we will be doing a bit of that. we know there are people who want cheaper fares. looking, we are much better to understand and deliver
when in the past we could not do it. now, the airline industry is ,ood at doing that, unbundling restructuring, and pricing what people want. emirate flag? it >> i don't know. we call it something. haidi: houston can we expect that -- how soon can we expect that? >> in about two years. prices andr than oil geopolitical tensions, what is one thing that worries you about the industry? >> the main thing that worries me is the lack of infrastructure . a third-party operating on a different agenda where they have
been privatized and they are in positions of unlimited power. partnership relationships that you need to have with airlines, providing a fair cost. the investment they need to make to make sure we can pay for airlines. that is a real inhibitor. these have the range to go youss the transatlantic. can start connecting fares with these aircraft, which will relieve art of that problem. going into a highly congested hub is a huge impediment. haidi: we appreciate you joining
-- plead guilty tuesday to conspiring to violate the u.s. corruption act. paying billions of dollars to settle charges. the british government is selling stake in the royal bank of scotland. at monday's closing price, the state was work 2.6 billion pounds. during the financial crisis, the government injected more than 45 billion down -- pounds into rbs. coinbase is expanding into japan, raising its profile in one of the world highest crypto markets. they arty operate in third a few -- 32 countries. -- they already operate in 32 countries. microsoft purchase
will give it access to a community of 28 million programmers. they are ready to embrace the open source coding. microsoft,hink about we have always been a developer first company. that is how we got started. now we are in open source. with that, coming together in makes a lot of sense for us. ramy: up next, we head back to aviation and one of these airline biases -- bosses stands out. in a moment, we will talk about diversity and the glass ceiling in aviation. this is bloomberg. ♪
82% of global air traffic. so this picture says a thousand us from they joins conference. angus, you are on the ground there. how scarce are women in leadership positions in the aviation industry? angus: i think the question is, could it be any worse? looking at that photograph, the answer is no. in 30 members, just one woman. this is the group that represents hundreds of airlines around the world. they carry a huge proportion of the global population. there is a mass scarcity of women in the top echelons. when you look at the chief 3%cutive ranks,
representation of women in the ceo rooms. that compares to 12% in other industries. , even in the best represented region, there are only 60% of women in senior executive roles. they have an agenda problem -- they have a gender problem. yvonne: we see other industries, similarh, that face gender divers the issues. is this any different? angus: it is similar to tech, grappling with a history. it is a male-dominated industry and changes very slow. level, the gender is even.
are very few women in chief executive roles. the highest-ranking u.s. .viation executive is a ceo there is background noise, sorry. the female representation is around 3%. there is a shortage of pilot, a shortage of technicians, they -- grappleto topple with problems with half the world population on their side. bettertter have representation. ramy: is anything changing? is anyone doing anything to address this? or is it stagnant?
is slow progress. people have been talking about this for years. there are some pockets of hope. down here in sydney, the director porters are 40% female. an isolated pocket of hope. jeffrey airways last month appointed a woman ceo. affirmative action , i do not see it changing anytime soon. something people are reluctant to hold up as a target. i spoke to the chairman of iata and he said it is an industry
problem. it stretches across all the airline. without training member -- mentorship and things like that, it will be like this for some time. yvonne: angus, thank you. thathose of you wondering, was the slugger ceo in that picture, the only woman. we have rish coming through next with bloomberg markets. we will be talking about fed rate hikes in india. patel was talking. yvonne: that is ahead of the r.b.i. meeting, which makes it more industry. and we will look at the
political shenanigans of south africa and all civil defaults in china. we could have more in the somethingnd that is we will be asking all about. ramy: looking forward to that. before we headed over, let's take a look at how markets are trading now. nikkei 225 up by a quarter of a percent. negatives, note getting a push from the u.s.. yvonne: that is it for us. this is bloomberg. ♪
rishaad: equity markets struggling for a bit at the traction. we did have a wall street close at a 12 week high, balancing tariffs. the mood may not last. g7 leaders are preparing to meet and others are threatening trade retaliation. apple taking a swipe at big tech rivals. they are also offering an opcode to help tackle screen addiction. i'm rishaad salamat and this is "bloomberg markets: asia." ♪