tv Bloomberg Daybreak Australia Bloomberg November 20, 2018 6:00pm-7:01pm EST
see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. haid i am haidi stroud-watts in sydney:, where australian markets have just opened. shery: i am shery ahn. sophie: and i am sophie kamaruddin. welcome to "daybreak: asia." >> our top story this wednesday, asia-pacific stocks set to extend the selloff as sliding oil and we contact add to the gloom. apple suppliers face another tough day ahead.
concerns about iphone demand continue to drag. renos backing for now and remains chairman and ceo as the investigation proceeds. >> let's get started with a quick check of how markets closed in the u.s. we saw the dow and s&p 500 wipeout this year's gains. tax was the biggest two-day loser -- tech was the biggest two-day loser. the retail sector also taking ahead as there were concerns of peak earnings growth. the s&p 500 was pressured by the andra day sector as crude prices fell to this year's lows. trailing downs under pressure, falling 2%. it does not help we had a report out of the u.s. trade representative's office saying china has fundamentally not changed its unfair trading practices. that is expected to put more pressure on a grind asian equities trading, sophie -- more
pressure on asian equities trading. sophie: in hong kong, we have gloomy weather and there is little incentive to get out of bed. we have stocks taking off trade in sydney up by .4%. wellington also under pressure. the ongoing tech turmoil and oil slide may overshadow other catalysts that could drive the agenda. trade reports due out from south korea and thailand. also heads up, indiana is up for a public holiday. aussie shares extending losses. the asx 200 is down 11% over the past three months to make it the worst performer in asia. even then, all the stocks are not looking that she -- that she despite valuations falling the lowest level since 2013. the likelihood of a year end value in december is looking even dimmer. this is rendered against china
-xi meeting atrump the end of the month. the situation for aussie shares is not helped by a weaker property market, which is indenting earnings for banks and went on business and commuter -- and consumer sentiment. we have how blocks them at hsbc predicting a slide and property prices as well. haidi: sophie kamaruddin in hong kong. let's get you the first word summers. jessica summers. jessica: the trump administration is threatening to ramp up pressure on china by tightening restrictions on u.s. tech exports. it is debating whether a range of products should be subject to more stringent controls. deutsche bank says such a move would have a long-lasting adverse impact on relations between washington and beijing. president trump admits the crown prince of saudi arabia may have known about the plot to murder
journalist come all caps kobe -- journalist jamal khashoggi but says the u.s. will stick by its allied. he says the kingdom is an important block to iran and buys them of billions of dollars in american weapons. he says that outweighs the horrible crime. the administration says it is still gathering evidence. may prime minister theresa heads for brussels wednesday for more talks on brexit. they will be based on the draft deal she has agreed to with the eu. she has been told there can be no more negotiations, but critics back home are demanding she secure a better deal. the uncertainty has divided politicians, voters, and businesses, leaving sterling under increasing pressure. >> the volatility in sterling is very high, much higher than other major currencies. there will be events that move sterling up and events that move sterling down. that will likely continue for the next while.
's visit toesident xi the philippines has yielded a string of deals. the duterte a administration struggles off u.s. warnings of accepting chinese cash. the trip reflects warmer ties between camilla -- between camilla -- between -- the deals include joint oil and gas exploration in the south china sea. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: a new report from the u.s. trade representative accuses china of continuing ipn technology theft, even after tariffs on $200 billion of chinese goods imposed at the end of september. greg sullivan joining us now from d.c. this seems to be an update on
the section 301 investigation on ip and intellectual property innovation technology transfer. what exactly is it saying? greg: it is an update on that report, released earlier this year. what this updated report says is that the u.s. trade representative has not seen any fundamental changes in the way china conducts its practices, especially with regard to intellectual property and what they call forced technology transfers. the report, a detailed 53 page toort, says china appears have engaged in further activities in the recent months as well. so clearly u.s. trade representative is not happy with any changes it has seen in chinese behaviors for some of these practices, which are at the heart of the trump's grievances toward the chinese. along with the trade deficit to the country, it is these
practices that have struck a chord with the trump administration. shery: no wonder we just heard the administration is considering tighter curbs on technology exports to china. greg: both of these actions are coming just days before president trump is set to meet with xi jinping at the sidelines of the g20 in argentina at the end of the month. the administration is not backing down and even seeming to ramp up pressure ahead of that meeting. whether it is to try to entice china to be more willing to make a deal or clearly draw a line that they want to see changes to china's trading behavior, that any deal needs to be substantial. haidi: a little bit of gamesmanship in the timing, but does not bode well for expectation of a compromise. the other news that came through in the last couple of hours is we are hearing president trump's legal team has omitted written responses to questions in the mueller investigation. greg: that's correct.
the legal team has turned over written responses to some questions from special counsel robert mueller. that was largely spent with the president himself this morning saying he had written the questions and they were in the hands of his lawyer and expected to be turned over today. his lawyers have said they answered questions on the role of russian interference but would not answer questions on the topic of obstruction of justice. one of president trump's lawyers called on mueller to wrap up his investigation now that the questions have been turned over. haidi: thank you so much, greg sullivan in d.c. let's turn to our top companies story in asia. renault is standing by -- for now. it says it cannot comment on the evidence seemingly gathered by nissan against the chairman and ceo. he is remaining in custody in japan for now after being arrested for financial impropriety.
david engle is following all this drama. he is in tokyo today and will be following the drama as we get the board meeting taking place at nissan headquarters later this week. renault's more measured response, there seems to be room for the whole you are innocent until proven guilty thing, right? david: ye app. rifts the wrist -- widens between renault and nissan, that is the question. in the telling statements from renault, the information gathered by nissan seems to cast doubt on that coming from renault as the renault board on asd to keep ghosn chairman and ceo, but he is under investigation. they have named an interim deputy ceo, who also came to the
defense and full support of ghosn in a statement, as well as pledging to protect the partnership with nissan. also the french government weighing in. the french finance minister saying carlos ghosn de facto is not in a position to run the demandbut we will not his formal departure from the board for a very simple reason -- we have no proof. isin, the french government the most influential stakeholder in renault, holding a 50% stake. the french government has a lot of sway. they are not demanding carlos ghosn be out. this is what the finance .inister had to say about that [no audio] stephen: he basically said they
have no proof to request carlos ghosn out. sources are telling us that renault and the government of micron were caught offguard by the investigation and what transpired in japan. it raises the question, has the ceo, the protége of carlos ghosn at nissan, did he conduct a palace coup? it was widely believed and he has been on record saying he did not necessarily agree with the action that carlos ghosn was undertaking, that was further cementing the partnership and perhaps even a merger between nissan renault and to a lesser degree mitsubishi. about all me ask you of these different media reports we are getting, because of this story seems to be exploding. we have heard that prosecutors are eyeing a case against
nissan. also that japan's securities regulator has told nissan about investments. what is the latest as we get these media outlets weighing in? is stillcarlos ghosn under detention by japanese authorities, awaiting his fate on the board decision tomorrow in yokohama from nissan. thatcutors are reporting prosecutors may not only go after carlos ghosn for those alleged financial improprieties, but also against nissan. i was looking at the breakdown of what japanese law entails. a violation of japanese financial law, as accused by not only nissan but now passed on to the prosecutors, would carry up to a 10 year prison sentence, a fine of ¥10 million, $88,000 u.s., or both. and the company itself could also face a fine of up to ¥700
million, about $6.2 million u.s. if the report is true, prosecutors will not only go after what prosecutors say is the greed or lavish lifestyle of carlos ghosn, but the governance that was lacking at nissan, allegedly lacking. shery: you will keep us updated on the fallout from this issue. more ahead, we will have on the carlos ghosn arrest and what it means for corporate governance in japan with wisdomtree's jesper koll live later this hour. haidi: first, vanguard's global chief economist joins us. this is bloomberg. ♪
i am shery ahn in new york. haidi: and i'm haidi stroud-watts in sydney not just stock selloff in the u.s. oil and cryptocurrencies also suffered. larry kudlow remains optimistic. >> the economy, the basic economy, has reawakened, and it is going to stay there. i am reading some of the weirdest stuff, how a recession is around the corner. nonsense. my personal view, our administration's view, recession is so far in the distance i can't see it. haidi: who is right and who is wrong, wall street or the white house? jo daviess, chief global economist at vanguard, joins us today. it larry kudlow being shortsighted, maybe? >> i don't know about that. rarely does anyone see a recession coming. i think it is a little too strong a statement that
financial markets have a recession imminent. we don't have high odds of one over the next 12 months. we are seeing a clear picture that earnings growth, economic growth, although still fairly strong, is not going to accelerate. in the context of high valuations, i think that is one reason we are seeing them to increase of volatility today. haidi: how much does the weakness in the recent housing market data suggest that maybe there is a risk that will take a turn for the worse? we have heard over the couple days or weeks various fed speakers sounding more on the dovish side of things. thatrtainly i would say housing can be a powerful indicator. it is one of the first turns of any sector of the economy with respect to the business cycle. our central case has been for some time that the federal
reserve was going to be hard-pressed to raise rates above roughly 3%. we are not there yet. that would mean three more hikes. would startght, we seeing sectors of the economy, such as housing, start to weaken long before the broader economy. haidi: this gtv chart showing inflation expectations for 2019 taking a dive. could a weaker housing market through the fed down? clearly wille fed not try to engineer a recession themselves. stellar, record is not although to give appropriate respect to the federal reserve, they will try to be forward-looking as well, which is why i think to this date it has been a high hurdle for their federal reserve not to raise interest rates. into 2819, i think the burden of proof will continue to rise with every meeting, so the likelihood of them articulating a pause
will increase next year. fory: what does that bode global equity markets? >> i think it is generally positive, although our long-running ceases has been a guarded outlook because it is the valuations -- over one or two months, you can run away from, but evaluation such as price-to-earnings ratio matter for long-term stock market returns. this day was unfortunately coming. we may not be through the market volatility, because we are still not at a quote" -- quote-unquote fair value. we remain guarded in expectations. the background of modest growth will lead to a bumpy ride over the next several months. haidi: we have to talk about the trade war. what, if any, implications do you see for the inflation picture and central-bank policy?
also, if this is something we are now entrenched in, if we don't get a resolution by the g20, are we starting to really run the risk of some disruptions to the global supply chain, to investment sentiment? spending starting to feed through to the real economy? >> it is clearly, should we see a continued deterioration in the trade relationship between the u.s. and china, that is by far our biggest downside risk to the economy. that is not a political statement, just an assessment of the fallout for all economies around the world. in terms of the inflation outlook, an further increase in tariffs, which we could very well see, is very much going to be treated by the federal reserve and other policymakers like an oil price shock. it could lead to a modest increase in ultimate consumer prices. policy makers may try to look through it even if consumers
can't. they would not necessarily react by being more aggressive. if anything, that could lead them to at the margin being more dovish. because the economic knock on effects will be modest, but negative. shery: farmers have been hit hard by the trade war in the u.s. on the $800 million of that $12 billion package to subsidize farmers has been paid out. if you also take into consideration that you have the tax cuts and the boost coming from that fiscal support, what will be able to support the markets next year? or the economy, rather? >> it is a good question. i think the equity market and financial markets today are centered with the laserlike focus on it. i think it is important to keep in contact the positive strengths the u.s. economy does have. it has remained resilient to a number of shocks ongoing for the past six or seven years. the labor market is the greatest
source of the stress. a lot of companies, although they have some exposure overseas , do their largest business in the u.s. not all companies, but a good swath. it is still odds greater than not that the u.s. economy at this time next year is still expanding. but i think we should brace ourselves for a month or two of what we would call growth scares , disappointment on the genuine labor market front, because i think the leading indicators we are seeing are consistent with that. shery: thank you so much for your time. vanguard chief economist joe davis from pennsylvania. next, apple tumbles into their territory and worries over demand for the eyes on. we will see if they can turn things around. this is bloomberg. ♪
haidi: could the iphone -- could the era of the iphone be over? shares have tanked amid concerns consumers are no longer clamoring for the product. ian king joins us now from san francisco. listening to concerns about this for the last little while, but something has flipped the switch at least in the investors mentality right now. >> you are right. we have seen these kinds of things before. we have seen apple suppliers cut their forecast. but really we have not seen as many do it in such a precise manner like we have seen right now. to be sure, apple could have a great holiday season, but at this moment based on quite a lot of evidence, it is not looking particularly good. haidi: not looking particularly good. we have been trying to predict
where peak iphone saturation would be. have we reached that point? ian: we have already past it. 2015 was the peak on the annual numbers basis. since then we have wobbled around roughly the same level. we could argue that yes, it has peaked already. but what that means for overall growth of the company still remains to be seen. shery: i thought the idea behind apple was that you could still sell fewer units and charge higher prices and that should do it. why are investors reacting so negatively to something we thought was possible? ian: what happened there was apple compounded the concerns themselves by casually throwing into the called, by the way, we are not going to give you unit sales anymore. asked,taway an analyst is that because you are scared to report, because you have something to hide?
so we had a decline turning into a rout on the day and that really compounded things. the iphone still accounts for about two thirds of apple the iphone still accounts for about two thirds of apple revenue. is there anything else that could help apple? are they trying to diversify into other products and services? last -- mentioned the is what they want everyone to focus on. they may be taking away unit information, but they are going to get more of a breakdown on services, more information on how much profit they are making. they point out, sales are up 20% overall. whether that is coming from people who use the iphone, maybe not millions more every quarter, but they are spending more on their phone. that is the hope for future sales growth at this company. shery: ian king, thank you so much for that. we are going to keep a close eye on the suppliers of apple with asian trading underway. coming up, the carlos ghosn
10:30 a.m. here in sydney. this is how we are faring in terms of trading on the asx 200, down by .1%. energy seeing declines. otherssie dollar and commodity currencies like the kiwi and the canadian dollar ofing declines on the back oil prices, hitting the lowest in about a year. aussie stocks, the worst performer in the asia-pacific region as these trade tensions and frictions when it comes to beijing and washington as well as the divergent rate policy outlook is really starting to weigh on sentiment. >> you have the usc are coming r cominga report -- usc
up with a report. dow and the s&p 500 wiped out this year's gains in new york. i am shery ahn. joe: haidi: and i am -- haidi: and i am haidi stroud-watts in sydney. you are watching "daybreak asia ." first word news with jessica summers in new york. tensions ratchet up with washington accusing beijing of doing little to change its unfair trade practices. robert lighthizer -- related to intellectual property. it says beijing has not changedtally its practices since an earlier report in march. carlos remains the ceo despite his arrest in japan.
the chief operations officer is to be interim ceo as renault debates whether to push ahead with the plans to merge renault and nissan. the government says nothing has been found against him in france. >> i can confirm that there is nothing striking in this fiscal situation in france. i cannot give you more details because of fiscal confidentiality, but i can tell you there is nothing in particular to be flagged. to the: no end in sight turmoil for cryptocurrencies with every major coin extending a rout. bitcoin tumbled 30%. cap.com says crypto's have been wiped off since january. bitcoin is that the level of september last year when jp diamond famously called it a fraud. the two deadly wildfires in
california could cost taxpayers up to $13 billion, including damage to property and cars as well as business disruption. the fire in northern california accounted for most of the damage destroyed thousands of homes. the new york times as a 700 people are still listed as missing. is ultimate chairman says he not confident google will be better off bringing its censored search engine to china. google pulled out of mainland china in 2010 when founders decided that censorship was unacceptable. bloombergssy told it's a dilemma for any company wanting to operate in china. >> anybody who does business in ofna compromise its some their court all years. every single company. because the laws in china are quite a bit different than they are in our own country. what i struggle with is are we better off giving chinese
citizens a decent search engine, a capable search engine, even if it is restricted and censored in some cases than a search engine that is not very good? does that improve the quality of their life? that is the struggle we have to work our way through. jessica: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. asia investors have a lot to digest today. it could get worse as we saw the ustr reports escalating trade tensions between china and the u.s., not to mention that wti is at the lowest level this year. let's see how things are shaping up. here is sophie. sophie: stock futures are hinting at a dour start to cash trade in half an hour. in sydney, we are seeing the asx losses, trading out a
2016 low, as analysts are raising concern about a weaker property market. the central bank is closely homeing that slump in prices as well as raising concerns around credit supply, so that is taking -- that has put a dent into the aussie dollar, trading at a one-week low. the commodity rout weighing on the currency. the near-term path of least resistance for the aussie is likely to be down rather than up. checking in on stock movers, you have it falling the most since october, sinking to a july 2012 low. cyb g falling the most on record in the wake of the u.k. lenders results, which saw that in trading as well. it was a big mess on insurance
provisions. has warned that brexit uncertainty is hitting the real economy in the u.k.. on the other side of the auctioneerou have an jumping. take a look at stocks to watch. we have the likes of nissan in the spotlight. the credit rating on negative watch. takeda may move after its backing from the e.u. the retail earnings disappointed. we are watching asian suppliers -- the korean clothing may go -- maker. deepened.ump haidi: sophie kamaruddin on the market -- shery: sophie kamaruddin on the market. things are on the headlines. president trump resumed his criticism of said policy as akenng rates we
the market. the boj negative interest rate policy comes under fire and puts governor kuroda on the back foot. our global economics and policy editor kathleen hays is watching all this happen. it started with the president and not being alone on criticizing the fed for the need for more rate hikes. kathleen: exactly. this was not a major speech president trump gave. i was talking to reporters and he said he still sees the fed as a problem. i would like to see the fed with a lower interest rate. we have much more of a fed problem than they do with anyone else. maybe that will make xi jinping sleep a little easier tonight. i am just kidding of course. we cosans after seeing data. yesterday, the homebuilder sentiment was out. housing was stronger in the u.s. but that was due to both the family dwellings. single-family starts fell.
permits were down. a lot of this building we did the last month is considered after hurricanes and things like that which have provoked a wave of building. bloomberg economics thinks this is not going to last. let's put that- on the table. he says he thinks the fed should pause in these interest rates hike. preemptive hikes could cause the next recession. kudlow defending this view that there's going to be a recession. he thinks the economy is fine. it's not so much the fed raising rates. maybe the trade war uncertainty for business investment, which should be helped by tax cuts. u.k.: taking a look at the , speaking of things that are affecting business sentiment, theresa may could use every ally she could get at this point, right, in terms of the bank of
england chief. mark carney, a pretty powerful ally. kathleen: he seemed to be saying that when he gave his first public comments, putting out on ,he table, for all of us to see speaking of a treasury meeting. he said that they welcome the transition arrangements in the withdrawal agreement. and there is the possibility of extending that transition period . many things to be ironed out before a deal could be signed. a bank of england official was talking about -- if we have a new brexit -- no brexit deal, we may have to stop trucks near the dover port. supply side shocks. this could hit the u.s. economy. he said lower interest rates will not help. you cannot cut rates to get out of this. haidi: kathleen hays in new york. let's get more on this latest scandal to grip corporate japan. governance is an ever bigger concern as ever. some of the allegations going
back years. our chief north asia correspondent, stephen engle, is in tokyo. the japanese corporate sector is not exactly unfamiliar with a corporate scandal or two. what kind of reaction are you getting at the moment? it is a top story of orascom in all the newspapers here, and the local television. he is a major icon of japanese turnaround stories, so let's get more perspective on what this means for japan. he is ahead of japan with wisdom tree. you know you're saying. the nail that sticks up gets hammered down. is that what is happening here or is it really a case of japan getting tough on corporate financial crime? those. a little bit but the point about the nail sticking out, japan will not
greed, and intive return for your own personal , and the super common mentality where a ceo gets paid 25 times what the average worker is paid, japan does not want to tolerate. there is no question that he is being used as a symbol to ensure that corporate leadership in japan will stay close to its workers. this a case of japanese prosecutors wanting to make this point? or is it a case of nissan internally, especially, getting fed up with the cold of personality -- cult of personality? >> at the bigger picture story. japan's biggest business lobby has just embarked on a complete amongstf ceo governance the leading companies in japan, so we have got the story coming out now.
western-style ceo greed will not be tolerated. stephen: what will this do to japan and corporations, incorporated? jesper: the bad news is the corporate ceo's will become more risk-averse. this is a bad example. not a positive example of the ceo actually succeeding in doing something good. i am a little worried that the risk-averseness is going to accelerate in japan. the second point is that -- let's not forget. he is one of the greatest corporate executives of all-time. stephen: nissan was unloved when he took over. not just unloved. it was bankrupt. no japanese wanted to touch it. within five years, he turns it into the most profitable car company in the world. and then, he forges the alliance with renault and makes renault a global contender. stephen: but was it an in
equitable partnership? renault and the french government had too much say? jesper: renault is a state owned enterprise. the french state owns the majority of the voting share. and nissan, which does all the engineering, and efficiency in the new product design, they getin this, so absolutely. stephen: was this an indictment on the western ceo in japan? was this a closing of the door? for thei think that time being, it's going to be a little bit of a closing of the door, and i think that, you know, corporate ceo pay in japan is going to come under even more scrutiny. stephen: and where does the alliance go from here? if there is a chance that this dissolves? jesper: there is a chance this results. i don't think it will because everyone is aware that there are too many car companies in the world, and further consolidation is required.
a further splitting up would mean that each player is going to be confined to the dustbin of history. stephen: where does this go? you know the japanese system. are we in the legal process? how does this play out? jesper: it's very interesting. the prosecutor is on to this now, and now, it's up asset. the japanese love process. every single email for the last 15 years is going to be scrutinized, so it's going to be a drawnout process. stephen: say the alliance does dissolve, can nissan be a leader in the global auto industry that is facing so much disruption from tech companies and others? jesper: i think that nissan's management insult certainly has the -- itself certainly has the guts to want to do it on its own. there is a new techno arrogance. nissan, leader in the people's republic of china. so do they really need to know? -- need renault?
stephen: a lot of questions left to be answered. we are going to send it back to you, from the streets of tokyo outside of nissan's dealership. shery: stephen engle in tokyo. we are keeping a close eye on nissan, which fell the most since 2016 in the last session. plenty more to come on "daybreak asia." this is bloomberg. ♪
>> haidi stroud-watts in sydney. shery: i am shery in new york. the u.s. is accusing china of theft. it comes 10 days before the leaders of the two nations meet at the g20 summit in argentina. the professor of global affairs at the johns hopkins university school of international studies joins us now from washington. welcome to the show. it is great to have you with us. there seems to be more consensus
within the united states and u.s. allies that the trump administration is not wrong in addressing these concerns over china, especially when it comes to ip theft, but are they right on addressing these grievances now? there is a pretty broad consensus internationally and in the united states that chinese trade practices have been a problem for quite a long time and there are concerns around other unfair practices. critiques that have been raised of the trump administration's approach is the president seems to be focused mainly on the trade deficit, which is not the center of gravity in this dispute, and also that he seems to be following a policy that separates the united states from other countries that are concerned about chinese trade practices both in east asia and europe by imposing punitive tariffs on them as well. surprised are you
that's we are seeing this administration or the united states being more open, talking about competition with china? hal: i think some of this would have happened regardless of who had been elected president in 2016. there was a growing consensus within the u.s. national security community that the relationship with china was becoming more problematic and competitive, so i think hillary clinton would have done some of these things as well, but there has been a distinctive element that has come with the trump administration because of the president's own views on trade and trade deficits, and because of some of the economic nationalists he has surrounded himself with like robert lighthizer. shery: you say that we are in one of the most fraught geopolitical situations that we have been in decades. it's not just about china at the moment. it seems like washington has a sort of -- battling these frictions on multiple fronts. hal: i think this is in some
ways the most fraught geopolitical environment we have faced since the cold war, in large part because u.s. relations with both china and russia are deteriorating at the same time, and obviously, president trump came into office talking up the possibility of some sort of rapprochement with vladimir putin, but that was not in the cards for a variety of reasons. you have seen tightening u.s. sanctions on russia, increasing military activity in europe to deter russia, at the same time that the u.s.-china relationship has been sliding into greater competition. what do you make of president trump's pretty straightforward announcement that the u.s. will be standing by saudi arabia despite these revelations regarding jamal khashoggi that continue to be revealed in the media? hal: i think it is shocking but not surprising. shocking in the sense that the continue toems to
believe some rather dubious saudi excuses about what happened in the consulate in istanbul, but not surprising in the sense that this is the line that the president has taken since the crisis began. he has consistently shown himself willing to essentially look the other way on this issue. he has consistently talked up the benefits of the u.s. alliance with saudi arabia, which are real, in fairness to the president. but he has made clear throughout this process that his preference is simply to put this issue aside, to perhaps slap some symbolic sanctions on lower level officials and saudi arabia, but not let it get in saudi officials in arabia, but not let it get in the way of the relationship. >> saudi arabia is the backbone of the u.s. middle east policy. yes,guess, that's true -- that is true. the united states has more leverage with saudi arabia than the president makes out. the saudis cannot simply make a
wholesale switch to russian arms because they are rather dependent on american supplies and spare parts. there are relatively few countries that can provide the security guarantees that the united states provides for saudi arabia, so that is a degree of dependence in the relationship, but it's mutual. as much as we need them. the president seems willing to take all of the american leverage off the table preempt. haidi: just reading -- preemptively. haidi: just reading your piece, it's critical. it brings me to this point of do we kind of need to get real about what china is? there is no longer disillusioned that it's going to, you know, be tempted into changing into this liberal democratic economy. you are seeing some of these metal economies in this part of the world and asia in particular being drawn towards the sphere of beijing's three things like wealth and roads. it's not that clear cut for
these countries to make a decision between traditional allies and the economic benefits of siding with beijing. hal: i think the vast majority of countries in the asia-pacific would prefer to have some alternative to chinese dominance in the region. yes, they all want to take advantage of the economic opportunities that are to be had in trade and investments with china, but at the same time, i think they are quite wary of chinese intentions and worried about what china will be 10 or 20 years from now in the world stage. if you look at recent polling, countries throughout the asia-pacific prefer the united states to china as a world leader, in part because of the nastier characteristics of china's internal system and what that means about how china might behave on the international stage. can the united states and the democracies with which it is allied, can we provide alternatives to dependence on andese financing, to loans
shery: this is "daybreak asia." i am shery on in new york. haidi: i am haidi stroud-watts in sydney. softbank's vision fund will invest $2 billion in a -- funding and development. they sell products from consumer electronics to food and claims that half of korea's population has downloaded its app. obviously some made -- masayoshi son made a fortune backing
alibaba. the of the structure company says it is considering selling minority interest in some of its assets. it will be listed on the london stock exchange. the ipo could give them more firepower for deals and would also cut its exposure to the u.k. ahead of brexit. haidi: japanese shipping line reducing forippon, crew members. the goal is to make it easier for seafaring workers to convert money into their local currencies. most of the crew uses 800 -- the digital coin would be pegged to the dollar. coming up in the next hour of "daybreak asia," we will be discussing the market plunge. we have got of course the major market opens, up next, falling
haidi: a very good morning. i am haidi stroud-watts in sydney, where asia's major market have just opened for trade. shery: good evening. i am shery ahn. sophie: and i am sophie kamaruddin. welcome to "daybreak asia." haidi: out of story this wednesday, asia-pacific stocks look set to extend the global set off as sliding oil and week tech ed -- weak tech add to the gloom. demand continues to drag. the stock is at a six-month low.