tv Bloomberg Daybreak Asia Bloomberg July 25, 2018 7:00pm-9:01pm EDT
yvonne: we are live from bloomberg asian headquarters. welcome to "daybreak: asia" top stories this thursday, trade on the hold. averting and ugly transatlantic spat. both sides say negotiations go on. s&pets, like the news, the pushing higher. expect to extend gains. globalrom bloomberg's headquarters, it is just past 7 p.m. on wednesday. tech making headlines. his book tumbles in late trade as user unhappiness about data safety is revealed in missed
results. qualcomm went the other way. shares jumped on news it is prepared to abandon its pursuit of semi conductors. yvonne: busy day for earnings as well as on the trade front. gdp numbers coming out of south korea for the second quarter. coming in line with estimates at 2.9% year on year growth that we saw for the second year -- for the second quarter. 0.7% of the quarter on quarter, which is a slight deceleration from what we saw. a slight acceleration on your on your. overall speaking, solid growth numbers coming through from south korea. it will raise a lot of questions on whether the bank of korea needs to think about raising rates as soon as august.
we saw in the last meeting, one dissenter calling for a rate hike. more pressure building here. we will see how korea trades when the markets open. in the back of all this positivity, when it comes to the trade front and what we got from d.c. yvonne: ramy: it was a surprise for the markets and investors because we saw u.s. equities get that top at the end of the day right before markets closed. it was interesting to see that it was a breath of relief. it was a pop for the s&p up bite nearly 1%. that is highest in slate january. -- highest since late january. the nasdaq hit a new record high. that was before the negativity coming off of facebook and before those earnings results after the hour. it will be interesting to see how that sets it up or the asia trading day. yvonne: we had a pretty
lackluster performance yesterday in asia. we saw china losing some steam here. we could get some juice into the market. seeing how equities are trading. unchanged. a mixed picture when it comes to sydney and japan. we are expecting a little bit more on how these automakers are going to react to that development in japan as well. switching the boards to take a look at currencies. we saw the dollar dropped after these developers on trade. we see the dollar yen here 110.88 just breaking through the 111 handle right now. the aussie pretty steady. we saw a bit of a turnaround in the currency after the lower pboc reference rate. surprisingly managed to climb back against the dollar. the bloomberg commodities index up nearly 1%. ramy: breaking news here in the mining space.
-- estimates came in better than anticipated, 36.5 million tons there. the estimate was for 46.4 million. year 165. in addition, something happening copperw crest mining's production at more than 20,000 tons. fourth-quarter gold output coming in at 635000 and announce. and ounce. new crest mining. let's head on over to president trump reaching an agreement with european commissioner jean-claude juncker. aiming at averting the transatlantic trade work. he says they will be working
toward zero tariffs. pres. trump: we agreed today first of all to work together toward zero tariffs, zero barriers, terriers -- and zero subsidies on non-auto industrial goods. juncker later said it was time to renew their relationship. >> time to renew our partnership. by falling back on what unites us, trust, values, shared interest. ramy: let's go to washington, and congress editor. juncker said he went to washington 32 deal. how has the crisis past? >> it is certainly a truce.
the standoff with china continues and this averts the next big round which was trump threatening to impose tariffs amplytos and presume -- what they have. that agreement to talk. to negotiate toward a zero tariffs regime there with trade between the two rating partners. going forward from there, there are still a lot of details left to be answered. ramy: what exactly was agreed to and what really is still murky? >> what was agreed to is that the european union has agreed to purchase more u.s. soybeans, natural gas, the exact amount and levels of that were not specified. what was still left on the table is how did they get there to this zero tariff era? they also haven't results the
steel and aluminum tariffs that the u.s. has imposed and the eu retaliated with. juncker said that will be re-examined in due course. there is still quite a bit of negotiations to be done. or whatout any details could be an agreement. yvonne: how is this all really going to work? that is the big question as well. where do we go from here? does it impact nafta negotiations or negotiations with aging? >> -- with beijing? >> probably not with aging. it could come part and parcel agricultural are a big issue. quite a bit of talking and as we've seen in the past, trade deals are particularly complicated. it takes time to negotiate. trump had decided area early in the administration they wanted a
renegotiation. they are still going at it. there are fits and starts of progress, but we will see whether or not the president has patience for it. in may he pulled out of a negotiating and work with china on trade as he wasn't satisfied with how rapidly china was willing to make concessions to the u.s. we have a little ways to go to declare this any he's -- peace rather than truce. yvonne: joining us from d.c., lots of big tex headlines this morning. qualcomm saying it is ready to abandon its pursuit of a next p/e. facebook plunging after hours trade after it these growth continue to decelerate for the rest of the year. to san francisco, let's bring in ian king and sarah frier. talking more about why they made the decision before we even heard anything from china. was it an issue or with the
emanate landscape? >> i spoke to the ceo and he said, there are bigger versus at work here. this is the geopolitical world we live in. we don't see that changing and therefore we had to drop an end to this. will this make a lot more revival talk dead now? go here is until 9:00, the deal is still possible. if china comes in with a last-minute, we are ok with this then we are back on. that doesn't appear likely at this point. from what was said on the conference call, qualcomm just as forward and concentrates on what it is good at and tries to grow organically and in markets like automotive where it doesn't need. yvonne: what does it tell us for the appetite for m&a now?
does it give a chilling effect for the rest of the m&a picture? if we are talking about hardware, which is area that i look at, it is very difficult to imagine a hardware transaction that wouldn't be covered by china. as you know, china is an incredibly large market. so much manufacturing is done in china. pretty much every transaction that you could imagine is going to be covered by bureaucracy in that country. we arehe landscape seeing right now, to and fro between trump administration and china, nobody believes we would seek permission. nobody is willing to go out and try it at this point. ramy: sarah, i want to bring in you on facebook earnings. in after-hours hours, share prices down by more than 20%. too muchrs didn't miss
according to our reporting. is this a matter of outsized fall against numbers we are seeing? sarah: the cfo of facebook actually said the company expects revenue to decelerate for a longer-term period. that they will see growth declines in the third and recorder in the high single digits. that means -- i have covered facebook for many years now and this is dealt rare. -- this is rare for facebook. they haven't missed on revenue numbers since 2015. here they are saying this will happen longer-term. the company is coming to terms with the fact that they are very large now and they are facing all of these multitudes of scandals over data privacy, fake news, election manipulation. this company is going to need to deal with those and one of those solutions is a little bit more
conservative in terms of what data they gather from their users. that is one of the things that the cfo pointed to as a reason why their revenue would be declining in growth. ramy: to what degree is this an issue of them already being huge and growth slowing from that side or from the data scandals we have been reporting? sarah: more than half of the world's internet connected population uses facebook. is an incredibly large platform. i don't think it is a mistake that on the call, they spent a lot of time trying to focus investors on the other platforms that they own, like instagram, messenger. the problem is, the only one that has a good church business model is instagram. a lot of analyst are pointing to as doing incredibly well. but, this acceleration in these new products is not going to be enough to offset the slowdown in
the main product. you are right, more than 40% revenue growth is remarkable by most company standards. for facebook, this is what they do. they grow and grow. that is what they are good at. this is a time when that is going to slow. yvonne: what are the analysts saying about the stock drop? was it right to perfection that any slight miss would lead to a downside? sarah: the analysts are expecting facebook to grow at the same rate or faster forever. it is just not realistic. had goodny relationships with advertisers. we wrote in the preview stories that analysts were talking to advertisers and they are spending as much as a have in the past and they are still excited about the platform despite the issues we have heard about. aboutt is not so much whether they are spending on's eighth book, whether they are increasing -- spending on
facebook, but whether they are increasing. facebook user growth is slowing more than it ever has. the company will have to focus on other bets and make sure they are able to continue to grow at the scale that wall street expects. that said, they want to make sure they can deal with the problems on facebook and a way that is satisfactory to their users. yvonne: thank you. ian king our tech reporter and sarah frier joining us from san francisco. lots of earnings to talk about throughout the hour. let's get you caught up with the first word news. again slamming potential auto tariffs and the idea that cars made with u.s. parts pose a threat to american national security. president trump has used the national security argument to put taxes on imported steel and aluminum. this has triggered angry
responses from allies and opponents. here from canadian foreign minister spoke with her counterparts in mexico city. canadianry notion that cars and car parts could pose a national security threat to the united states is frankly absurd. >> g.m. and fiat chrysler fell and concerns that tariffs are wreaking havoc on that auto industry. forecast due to cost of limited and steel. -- aluminum and ill. and $11 billion restructuring could take five years. former fiat chrysler boss has died at the age of 66. he had surgery on his shoulder three weeks ago but suffered consultations and his health rapidly declined. he drove the merger with
bankrupt chrysler. he is credited with turning to dysfunctional car companies into the seventh largest manufacturer in the world. appearsricket superstar on course for an election victory in pakistan. his opponents are already crying foul. his movement for justice party is ahead of the pakistan is one leave -- muslim league. he fell short of the majority needed to form a government without a coalition. day, onews, 24 hours a air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you. facebook faltering. looking close at what a rare earnings miss means. ramy: turning down the heat on trade. what it could mean for asian markets. this is bloomberg. ♪
yvonne: this is "daybreak: asia" and i'm yvonne man here in. u.s. markets rallied on the trade agreement. treasuries declined but automakers. their losses after being spared by the threat. let's talk about that market view today in terms of what happened off of this trade talk to a sigh of relief? >> it was. you mentioned the automakers. we had to earnings reports come out earlier this morning. one out of em and then we had ford. they were both for the awful. both of them cited the trade issues. higher steel and aluminum cost. g.m. was down for most of the day and see at chrysler also down. a lot of the auto-parts makers. once trump and juncker got out
there and said they reach some sort of detente, you saw the broader market rally. you saw a spike in 10 year yields, the dollar dropped, and a lot of enthusiasm come back into the market because folks for the first time in quite a few months sought some sort of resolution or potential for resolutions. ramy: we will pick up from there with our next guest coming in. thank you very much there. newing us now from tokyo is been advisory services president marco cook. pop, to what degree do you think the deal between the u.s. and eu is something that will support over more than a few days? >> it seems like a positive direction. tensions, geopolitical
are always weigh on the market. they can always be an issue. generally, it feels like this was good news. you saw the reaction in the u.s. markets and you are seeing some positive reaction to this news. so, generally what we think is the markets seem to good. the expansion seems like it can continue. these trade issues are something that worry as a little bit. the news this morning was good news. ramy: hop into the bloomberg terminal. i want to show you what is happening. this is the advanced decline at line for the s&p 500. that line is in white. the blue is the s&p 500. 2830 we hit a little over or so. to what degree can we continue on these gains? >> we just released our mid-year outlook. some of the things we talk about their are called still risk
gone. we think expansion can continue but not quite the same way it been movinghas forward over the last couple of years. it has been a pretty long expansion. we think corporate profits can continue to do well, but not just as they have done in the first half of the year. equities, fixed income, we are still seeing that even the valuations are at the higher end, we think the expansion can continue. some of theseseen earnings come through and the guidance has not been very positive. especially with automakers, lord, g.m., fiat. it seems like a perfect storm of higher interest rates, higher commodity prices and asset actuation that we have seen. is this more of a heightened concern now that we have reached
peak earnings? that earnings say have been really strong. we are at this part of the expansion. typically what happens is you see interest rates go up, earnings start to slow down a little bit. it is not sustainable from the earnings we have seen here it we have seen really strong earnings up until very recently. we are at theike point in the cycle where we start to see earnings part to slow down a little bit. off of really strong numbers. you are right, as you pointed out, some of the trade issues are clearly working into some of the numbers that we are seeing. you saw harley davidson talk yesterday and the automakers talk this morning. some of these issues can play into earnings reports. is aally, we think there positive outlook and the market,
just not as strong as we have seen over the past couple of years. yvonne: now that you are in tokyo, we have seen a little bit into some of back these em's and away from some small caps. you think the trump trade is he went over right now? are you looking for opportunities in this part of the world? >> it is interesting. we spent some time with clients in the last couple days and clients are really talking about some of the same things. they're looking for three things. they are looking for income. with jgb yielding so low, interest rates low around the year -- around the world, people are looking for in compared they are worried about currency volatility. with the u.s. dollar moving up, that has had in effect on investments outside the u.s. and the total return of invest its. that has come up quite a bit.
actually talking about alternatives in this part of the world. interestingly, in japan there is about 1% of most pension funds are in alternatives, yet they are looking to get it to about 5%. that is a big increase. we're been talking to clients about how do you increase income in a portfolio? how do you think about the currency volatility? had you start to introduce alternatives into portfolios and from our viewpoint real estate and real assets? yvonne: great to have you here. margo cook. plenty more to come on "daybreak: asia" this is bloomberg. ♪
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to alleviate transatlantic ties. watchingou're "daybreak: asia" and let's get to first word news. >> president trump has reached a deal with european commission chief jean-claude juncker. the president says the two sides agreed to expand european imports of natural gas and soybeans third and to lower industrial tariffs on both eyes. says washington and brussels will hold off on other tariffs won't negotiations proceed. pres. trump: what will we are working on this, we will not go against the spirit of this agreement unless either party terminates the negotiation. if so, we are starting the negotiation right now, but we know very much where it is going. >> we agreed that if we are making sufficient process on other issues, this can be done from one day to another. >> secretary of state mike
pompeo faced anger in the senate at the start of a hearing on president trump's policies on trade in russia. the foreign relations committee said there are serious doubts about the u.s. strategy. pompeo defended president trump's decision to meet one-on-one but offered few details. the british government is said to be weighing a radical option to break the deadlock over the exit. breach -- it might in rate the northern irish party. they may allow the eu to impose market regulations on the province when the rest of the u.k. breaks away. it is seen as a backstop but would avoid a hard border with ireland. 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. thanks. we are counting down to some
major market opens in the asian of it. turnems like it is asia's to react to the u.s., eu trade agreement. we also have a lot of data from south korea coming through. sophie: on the transatlantic trade front there may be progress. china, that is the key. for asia, china looks to be digging in its heels him at the latest out of policies to stimulate the economy. in johannesburg, xi jinping said there will be no winner in a trade war. let's jump into the terminal to see what is going on there. this is export resilience even in the face of trade returns. a lopsided picture. rising 2.9% on year as expected, that may reinforce the be ok's confidence. thebig picture here is that
korean economy that is growling not roaring as the risks remain elevated. weakness in the labor market well as the effect from the u.s. china. ramy: there are a lot of earnings to look at. including the small report from his book. sophie: that face plant from facebook will hurt asian tech shares this thursday and following facebook after-hours slump, nasdaq futures are already in the red this running in asia. news that facebook lost china's approval for a subsidiary will add to the pain as long as the of qualcomm and an xp deal. reported drop in orders for the first quarter, but lifted profit outlook despite. it cut the backlog forecast. to deliverted
stronger earnings. algae innotek posted unexpected profit for the second quarter. asian auto stocks will also be ones to watch after u.s. carmakers cut their projections. north american sales, they have been a sore spot for both resulting inkely thinner margins. that may provide some cushion their toyota also seeing some optimism on the china front saying it is studying possibilities to accelerate business there with a goal of doubling annual output in china to 2 million units per year. ramy: thank you. checking the markets ahead of the shifting gears, and ugly wednesday for detroit's big names with shares plunging as trade and general motors slashed its target and fiat chrysler followed after lackluster sales
in china. ford announced a costly restructuring. with u.s. considering tariffs on all imported cars, the industry faces and even tougher future. craig, its focus on general motors because we are seeing the first pain and evidence in regards to the rising tariffs on steel and aluminum. >> that's right. i feel like we have felt this was coming. you saw you and aluminum prices tick up when the trump administration said that these tariffs were going to be put in a place. it didn't actually have to be implemented for the prices of the raw materials to go up. we started this year with ford warning about this as eating an expected headwind for them. were notat chrysler talking about this being an issue. up.really so prices go
you have gm now which began talking about being consistent with last year's record. now saying that will no longer be possible. had chrysler and ford just operational issues, putting trade aside and from material aside, they are both struggling. in china and that is a significant headwind for them in the second quarter and through the rest of the year. season $11ford, it billion restructuring in the next three to five years. that along with lowered the outlook. what is this related to pretensions? -- trade tensions. >> i think that figure has nothing to do with it. they will have a significant problem on their hands along with everybody else if we do have auto import and parts tariffs because even the f-150's
and escapes they make here in a litany of other models, even those models using a lot of imported parts. for a carts content 50% to 60%.u.s. is this would take a bite out of these companies'business. talked about taking drastic steps including getting out of the north american sedan market and this $11 billion a gear is putting a finer point about how much this will all cost. importantly, this will take three to five years, which is obviously a long time. craig, we saw the developments in d.c. with president trump and jean-claude juncker think they will work toward lower if not zero tariffs on industrials and autos. how does this eliminate the trade overhang with the autos for some time now?
>> i guess, i will believe it when i see it here in that is my reaction to this. to carlly with regards tariffs. the u.s. it does have a low levy on passenger cars. but they have a high, 25% tariff on pickup traps -- pickup trucks and that is something to part ways with. that will be in a real impediment. some members of the eu are not as 80 about taking tariffs down to zero. companies in france who don't have a business here who don't see anything to gain from tariffs going to zero because they don't have any business in the u.s. to speak of that would and if it from that. on the other hand, ford that is still in europe, fiat chrysler is so strong in europe. benefit potentially
from shipping some cars on the margins from the u.s. into the eu. yvonne: thank you. our bloomberg auto reporter from detroit. let's bring in david could the -- ceo and chief investment strategist and former auto engineer. lots of experience in the auto industry. he is on the line for us from michigan. when it comes to zero tariffs on autos, is that something you are encouraged by? how much of a relief as this news we got from d.c.? >> good morning. it is encouraging, but probably undoable. it is encouraging the news we got today with the meeting between president trump and jean-claude juncker. they have agreed to talk. we will see where this goes. this has an president trump's operating tile, to set a stake
in the ground and say i will do this unless we have a serious discussion. at least having think they are moving forward on. it is encouraging on trade between the u.s. and eu. how surprised by these cuts? we have seen a perfect storm of higher interest rates. the fluctuation in currencies and whatnot. can you still high on the weakness? i don't think so. i think we are in wait and see mode is a the uncertainty over where the tariffs on commodities go. putting the biggest dent in the outlook for this year. in gm by a half a ford buy $600 billion here in.
if there are further tariffs.com, you have problems there again. a lot of uncertainty in the auto space right now. we would be on hold for that reason. yvonne: who stands to lose out more? you talk about where we go and nafta talks and that will be a big question mark as well. a lot of these makers build cars in canada. could u.s. car companies be the worst hit? >> i don't think they will be the worst hit. i think that in terms of who loses, everyone loses. a lot of the car companies lose as car prices across the board go higher. contentnt of imported in u.s. vehicles will impact u.s. sales. deal are vehicles, a great of canadian imported or exported autos go right to the u.s. if you look at the trade balance
between the u.s. and the rest of the world, we are talking about the eu, asia, canada, mexico. driver's seat the here. i don't want to say that a trade were is winnable, but other countries and regions have more anyose by a trade were or escalation of tariffs. i'm curious whether this that we are talking about is a new normal in terms of the weight we are seeing of the auto industry. our correspondent was that are general motors, that is something to do a tariffs, but with ford, it is more within the company itself. is two things that are going on in the auto industry. what we are talking about now, the legacy business that is the
autos being made now. the emphasis on trucks and suvs. in the future of the automotive industry. we are the net autonomous and flexible mobility that we see gm andhip out of em -- ford trying to catch up. a major restructuring they just announced. there's a lot of dynamics in play right now. yvonne: david, thank you. founder, ceo and chief adjustment strategist. more earnings to talk to about. south korea reporting second-quarter operating -- operating profit 5.5 7 trillion yuan. there were a lot of questions earlier in the last couple weeks. the question of the super cycle in prices. how they reached a peak. we're seeing growth when it
yvonne: this is "daybreak: asia" and i'm yvonne man in hong kong. ramy: an alert right now crossing the bloomberg terminal. donald trump has tweeted that work on documents related to the agreement between the u.s. and eu have already started. his tweet was very positive, saying it was a great meeting on trade today and they have come to a strong understanding on no tariffs, no barriers as well as
notes subsidies. apparently work has been started on these documents related to the agreement between the u.s. as well as the eu. more now on one of the day's other big stories. that is a's book. after posting lackluster second-quarter earnings. let's go to massachusetts to bring. as a global market intelligence firm. thanord, tanking more putting percent. many investors saying what is going on. numbers this but not by much. -- numbers miss it not by much. >> this expectation, but much larger story at play. when you listen to the call, you heard it between zuckerberg and thaterg and it really was the company is entering a new
chapter. when you look at the growth they were telegraphing, that growth is dropping. their growth rate number was down to 38%. they are telegraphing something in the midst 30's going forward. we haven't seen this from facebook. that is the big change. they are entering a new lower growth chapter. there are all kinds of ramifications. ramy: the question on ad load as well. past three to four quarters we have been seeing the price per at has been rising but the number of ads have been falling. so, this also gets to the engagement question which is -- in the early days of facebook it was about running display ads, running ads. even in the beginning of instagram. classic display way. now, they're starting to see that they want to get more creative and get more subtle with their ad growth. -- with her at tools.
this new chapter where you will see more pressure on the company going forward to monetize new services and monetize things in new ways going forward. you're seeing that in the numbers. yvonne: the 20% plunge after hours, do you think that is justified? it seems like in this that we are still talking about revenue north of order percent. we still talking about double-digit numbers. >> there was clearly a shock fact are associated with this today. what you find interesting is that this is a company that is talking about telegraphing growth in the mid-30% range. traditional tech company would kill for growth and that kind of range. if you look at that, if you look at ibm and hewlett-packard
enterprise, 35% growth is just crazy. it is a new chapter. that was my take away from the call. up,days of facebook showing getting a billion users on the platform, and being able to monetize them are over. now, they are getting into subtler ways to grow revenue that will be more difficult to do. investors need to get your heads around that. we are now entering a new phase. this is a valuable company. this company has a killer platform of which only one exists in the world. they will figure out new ways to monetize off a lower growth. personally, i think this was about the shock value. yvonne: we heard from mark zuckerberg during the earnings call about the bright spots but they do see. instagram is one of them. let's take a listen. >> this is a moment to reflect on how this acquisition has been an amazing success. when instagram joined, they had
16 people. since then, the team have built stories, now i do tv. this has been a story of great innovation and product. effectivery of how integration has been. yvonne: instagram, whatsapp, messenger. how much progress do think has been made in monetizing these apps to offset the slowdown? >> they talked about that a little bit on the call. i have to say, i agree with mark ekberg in that instagram was a fabulous acquisition. potentially one of the most valuable in modern tech. you're talking about a company that was very small, that is -- it is engaging people in a new way. that engagement means that people keep coming back to it and coming back to it. so, when instagram is trying to do is come up with ways to monetize different components of
instagram. now, you monetize the stories. stories, right now require more technology and more refinement in order to monetize them in a new way. we are seeing the same thing out of whatsapp. there is a nice video engagement , but it is harder to monetize. that is where you have to get your head around the future of this company. they have to do more development on these platforms in order to monetize them going forward. you heard that on the call them all three of them. basically, i need to build my own data center to deploy ai to do things like automated chatbots that will pick up the conversation after someone starts doing messenger work within facebook. or within instagram in the future. they want to do some invention here and doing that invention is doing to take money. yvonne: we appreciate.
chief operating operator with idc research. another alert to tell you about, busy day when it comes to news. the chinese company listing -- about to list in the u.s. set to price the ipo at the top of the range is -- ranges. it will be at $19 per share. we have seen red hot ipo market in the u.s. when it comes to chinese listings. a lot of the questions on whether the and continue given the trade worth that continue to be simmering in the background between u.s. and china. with will speak more. more on daybreak asia. this is bloomberg. ♪
barclays have one dismissals in lawsuits alleging price rigging. they won a dismissal from a gold price-fixing case. with our clays, they won a dismissal from a silver price-fixing lawsuit. this goes to the heart of the lawsuits that three of them proposed alleging conspiracies to rig not just silver and gold but also platinum and palladium. an alert both barclays and ubs winning dismissals from price-fixing cases. yvonne: we are counting down to the market open. let's see how futures are setting appear at the moment. we are seeing modest gains across the board with the exception of korea. solid gdp numbers for the second quarter. we will see if that actually figures through here. -- goals through here. reduction inarent
the trade tensions overnight. president trump and jean-claude juncker have step act from the brink of a trade worth or that should certainly be dominating the headlines here. looking ahead to the japanese bond market. we are watching the move in the 10 year jgb. plenty more to come. the market open coming up. this is bloomberg. ♪
>> we are live from bloomberg's asian headquarters. i'm yvonne man. welcome to daybreak asia. the top stories, trade war on hold. and both sides say negotiations go on. markets like to the news, the s&p higher for a third straight day with the age of the ethic expected to extend those gains. inocencio in new york. tech is a major focus right now. facebook tumbles in late trade as user unhappiness about data safety is revealed.
big deal making headlines australia, entertainment is to buy fairfax for $1.6 billion. yvonne: we have seen a busy news day when it comes to earnings and the trade front. jean-claudeump and juncker reaching a deal. it seems like markets are liking the news so far, but given that the expectations were so low, we're seeing a bit of a bounce here. see if it sticks when markets open today. ramy: one thing we did get is that donald trump tweeted a very positive sentiment at least regarding the result saying that documents were being formed even as we speak.
it will be easy to see if this ,olds, but the earnings front we can take a look at it. , is not an understatement to say that it takes down more than 20% after estimates and gave guidance towards a new normal when it comes to the growth of the company. >> let's take a look at how things will fare in the market opened afar. you are watching the 10 year jgb as well. sophie: we are seeing a jump in the yield, about .09%. this after the relic we saw on wednesday, looking at what the boj may do. and on that front, we have the yen catching a report that the boj is reviewing allocations. asis buying more topics opposed to those links to the nikkei.
we do have japanese shares of about .2%. in we do have the coffee focus here, about .7% after second-quarter gdp came in line with estimates for a two 9% on year growth as a growth hell that despite trade tensions. over in australia, we are seeing that will change there. keep an eye on banking stocks with the new ceo ready to take it over as a securities regulators over the trust deficit. resorts --ching resource players. and jump in the korean won trading around 1119 against the dollar. and on the tech front, a damper on some of the trade shares. falling and after our stumbling a spoke.
the strong forecast results in korea, we are seeing the chipmaker topping estimates. continuing along with a supply shortage. we are keeping and i as well, dropping on the back of reporting a decline. this is a company delivered profit as well as the dividend hike. >> checking the market there. the u.s. and europe pullback from the trade war. impose to not to tariffs.
yvonne: you have to do it step by step, don't you? pute the -- since trump tariffs on auto exports. it takes a look like a positive step. european --the meeting with the european president jean-claude juncker, he came out of the saying it was a very big day. sides can win in this zero tariffs era. trump: we agree to work together towards zero tariffs, zero non-tariffs. subsidies on non-auto industrial goods.
>> it was a little unrealistic if they thought it would be that. and it's purchases and imports of u.s. liquefied natural gas and soybeans, they have agreed to cut industrial tariffs except for autos. that still has to be worked out. they have agreed to hold off on instituting other tariffs while negotiations proceed. juncker says tariffs on steal, his part and trump for says it will try to reveal. and unless you think this is just donald trump trying to make a very positive case of something where people see a lot of paul, let's listen to what jean-claude juncker said very briefly. about what could
happen next. >> we are making sufficient progress with other issues and this can be done from one day to the other. kind of agreement on vehicles, autos, truck, parts. it is very important between the two trade blocks. , this isis perhaps what we're going to see. the eu agreeing to buy more u.s. goods and looking at lower tariffs. good tradea relationship with the u.s., maybe it does look ahead and tell something to the rest of the world. we shall see. waree the u.s. and eu trade the encouraging. >> the question is, he's already signaled that they are going to start weaning the euro zone economy off of stimulus. and, in fact, even though there is a trade war, it's not
expected to stop the european central bank from confirming what they are going to do. that they will and bond purchases in december and rate hikes will come after summer of next year. and on that point, i want to quickly call up a chart for us so we can take a look at what mario draghi is looking at. he is looking at inflation and growth. and here it is. that's where the ecb wants to see it. did come back in the first quarter. bloomberg economics feels there is enough momentum there for the economy. has said.at the ecb the biggest risk of growth isn't the terrace itself, it's what i can do to business and consumer confidence. the press conference afterwards, mario draghi is going to get so many questions on that front. you see an impact on trade, and move ahead with stimulus while the trade war may continue?
>> we still need clarity on some statements from the last meeting. depending on the language, it seems like it shows a different description there. we will see how things go, kathleen hays, thank you. to abandon a $24 billion bid unless china make a last-minute move to approve the deal. telling bloomberg does not think beijing will give the blessing which isthe deadline just now four hours away. let's go to the senior international editor and all, saying look, the silence from beijing, we will be a dead deal? >> the ceo doesn't see any region -- reason to change the timing. forces beyond their control were at work here. it was 20 months and negotiation and they will have to pay a big bankruptcy is well that they
would by $30 billion of stocks. it is costly but it looks like it will be ending. this deal, these companies have religious become a pond in this u.s. china spat? >> the timing is interesting right? and so the ceo statement is telling that he thinks that there are other forces at work here. the companies had been 20 months in the making and mxp wanted to not that it could -- do have to show that it could be a standalone company and not have a future. for qualcomm this would have been an opportunity to really reduce the line of the smartphone market and get it to that itl auto market badly wanted to do. >> given what we saw in the sea with jean-claude juncker and
is there talks for the u.s. and china? >> that is what analysts are hoping. time, there may be other ponds to come. this may give other companies pause before they go through this deal. but people and companies that are perhaps doing these things, this one has not worked out so well. to have somet concern about with going on ahead. ramy: and qualcomm is up by 6%. can a revisit this sometime later? >> it doesn't some like it from the statement. it sounds like qualcomm said they are going to walk away.
but it could be done in a number of ways. they did not have much overlap in their market that a mutually agreed-upon. it wasn't like somebody was pushing to it. again, the statements today, barring this last-minute , they move on. the deal is over, thank you very much, judy schneider. let's get to first word news with jenna dagenhart. jenna: planning potential auto tariffs and the ideas that cars made with u.s. part pose a threat to american national security. president trump has used the national sick or any argument. national security argument. they spoke with trade talks about the counterpart in mexico city.
canadian cars and car parts could pose a national security threat to the united states, that is frankly, absurd. jenna: the german government is weighinga security -- a way to impose market regulations on the province when the rest of the u.k. breaks away next march. it would avoid a hard border with ireland. gm and fiat chrysler both fell on disappointing earnings and concerns that tariffs are wreaking havoc on the auto industry. profit forecast for the year with gm blaming higher motto the cost including aluminum and feel. they cut the full-year earnings forecast and warning of an $11 billion restructuring that could take five years.
the hearing on course for an election victory in pakistan. although his opponents are already crying fell. they suggested movement ahead of the muslim league, the former premier, and winning the most seats but falling short of the majority needed to run the government without a coalition global news 24 hours a day, on air and on tictoc on twitter powered by more than 20 evan hundred journalists and dan -- 2700 journalists and analysts in more than 120 countries. it back to you. innne: we will a cap what is store for bond purchases ahead of the ecb policy meeting. -- we will look ahead at what is in store for bond purchases ahead of the ecb policy meeting. b's johnd the nys about what thek
yvonne: we have been watching with going on in the market, and tokyo markets just opening. we have seen this gradual pickup in the yield, now back to about 0.9%. when it comes to the 10 year .ield here it when we approach 0.1%, we will hit the highs in the last year or so. the director and portfolio .anager joining us in hong kong what do you make of this movement? they will tweak policy next week or something? are the markets doubting what they can do? authoring them is the shape of the yield curve and some sort of stability of rankings to some help, rather
than inflation. so will it be at the end of this month, will it be a bit later in the year? to treadgoing to have this very carefully because too much of the tightening, it will not be very welcome. >> i guess you could say the boj has not been very here. can they deliver something that cosmetic? a little more flexibility when it comes to the 10 year yield target. >> it is certainly what they are hoping to do. but so far, they are still in this lack out -- blackout period. how effective that was, we really don't know. and we shall see. >> [indiscernible]
>> that i am not really able to tell you. [laughter] but when you look at the u.s. treasury, it would be a big move. when it comes to data, you mentioned inflation is still in the doldrums here. japan has been disappointing. do they need to do something >> ishake things up? suppose there's a lot to do in the sector. it is something we have all been waiting for, a catalyst of companies with a large amount of cash. jazz and up the financial market, which is think would boost sentiment. and they are in the midst of a trade war like any other. and the situation in chinaand ta
, it is probably a positive for the whole region. ramy: switched gears and look at what is happening with the ecb and the policy meeting there. mario draghi clearly in the spotlight for what is expected guess.ore of the same, i what are your expectations? i expect the meeting to be really boring. they could probably cancel all the meetings for the next five months given what they told us last time. those tweaks are possible. in a way, it is dependent on the fed, for that matter. they are stuck in the same gear, wait and see. it will not be to rock the boat too much and that euro would be the stated objective. to be the prevailing sentiment here. in terms of any possible change, look ahead to the summer of 2019.
>> this is quite far out in the future. it is relatively high probability of recession and a three to five-year horizon. late into 2019, we would be getting at a point where the fed has tightened substantially. and where growth should be starting to slow because the sugar rush will be coming to an end. see if have to wait and they increased interest rates. it is so pretty low and weakening of the euro is nowhere near enough to generate inflation domestically. yvonne: we will get no kind of clarity on the definition of summer. it depends on what language you're looking at. markets are pricing in a rate
hike until late 2020. will have a we volatility when it comes to bonds and to the euro as well? geraldine: at the moment, i think it looks like whatever happens to the curve in the u.s. and also in japan for what is happening seems to propagate in a global manner. and we will see when the qe year and then the impact this will have on the spread. this is the thing that they would have to monitor. and moving on to monetary policy. yvonne: and in terms of reinvestment and clarity, we look at the operation twist. or even a yield curve control policy. what do you think would be a bit more of a feasible approach without disrupting market.
ramy: because they have a yield curve control that is not a possibility in europe. they are hoping that they managed to twisted or keep a cap on the european curve that is very steep. it is not the same story in the u.s., hoping that they can find conditions and keep them relatively loose. not on theinly agenda. and they are running against constraints. ramy: you are not convinced this time may be different. tell me more. geraldine: the flattening of the yield curve, it should be flatter than it would be.
pension funds and the tax reform in the u.s. it is always very hard to say that this time is different, and i wouldn't there to go to far on that point. but the curve would have been flatter than others. and this is the curve expected to receive been somewhat. -- to re-steepen somewhat. yvonne: we talked about the painful selloff but is that attractive to pimco right now? diversifiers, they need those in case something goes wrong. and it is very unnerving. that part of the curve will have the most juice.
that is where i would attempt to hang around. yvonne: geraldine, thank for coming in joining us in hong kong. get a roundup of the stories you need to know to get the day going in today's edition of "daybreak." go to tv on your terminal. go to the bloomberg anywhere app for that. this is bloomberg. ♪
ramy: a check of the latest business flash headlines right now. japan's asa has plunged after an experimental all summer's with biogen slowed progression of the early stages of the disease. this is the first in decades of failures,ittered with but dr.'s stress more information is needed from the larger, longer studies. a 3% gain in the regular session. is talkingnk ceo
yvonne: 8:30 a.m. in singapore. good morning to you guys this morning. half an hour away from the open of trading there. i'm yvonne man in hong kong. in new'm ramy inocencio york. let's get to first word news with jenna dagenhart. president trump has reached a deal with jean-claude juncker avoiding a transatlantic trade war for the time being. the two sides agreed to extend liquefiedmports of natural gas and soybeans. and to lower industrial tariffs on both sides. washington and brussels will hold off on other tariffs as
negotiations proceed. secretary of state mike pompeo faced anger in the senate at the start of a hearing on president trump's policies on trade and russia. the foreign relations committee chair said there were serious doubts about u.s. strategy. pompeo defended trumps assist -- trumps decision to meet with vladimir putin one-on-one in helsinki. sergio marchionne has died at the age of 66. he has surgery on his older -- shoulder three weeks ago and his health rapidly declined. he joined fiat in 2004 and joined the merger with bankrupt chrysler. tos credited with building dysfunctional car companies and the seventh largest manufacturer in the world. the number of people killed by fires in greece has risen to 81. a house to house search in athens, there are many more casualties. firefighters from italy and romania have joined the effort.
they're trying to determine if the fire was started deliberately. i'm jenna -- dagenhart, this is bloomberg. see how the to asian markets are shaping up so far this morning. let's get another eight with sophie kamaruddin. sophie: mixed so far. the yen is gaining ground, trading at against the dollar. and strong gdp data helping boost the cost be as well as a three-week high. they remain resilient in the second quarter despite trade tensions. they are in a playlist. using the graphic on the terminal.
that has pushed higher. we haven't hit that threshold in about a year. the operations, a steepening of that yield curve. indicating that move for the jgb market. a? at what the boj will do next. blackrock expecting some fine-tuning that won't upset the market, vanguard saying that there is little chance of that. some of the stock moves in the region, swinging this year despite topping estimates of results thanks to booming chip sales. chinese declined a miss in earnings. the company also pointed to the
high-performance of shiny smartphones. aisai, falling short of shock and and the stock fell overnight about 11%. so trading around record highs. ramy: a check on the markets, thank you very much. a look at earnings and facebook plunged in after-hours trading after the release of disappointing that can order results. rejections,sed reflecting user disenchantment. miss that it wasn't a bad mess. miss. wrinkle investor so much as it was a prediction for future quarters. growth, the
revenues that facebook posted, future quarters aren't going to just grow at a lower rate than they had in the past. the growth would be down in single digits, essentially. commentary, of a understanding that facebook can to grow at the rate that it used to. ramy: instagram being one of them. >> and mark zuckerberg said it was an amazing acquisition, it did contribute to growth of the company dramatically in the order, although he didn't give specific numbers. but certainly a lot of investors and analysts are looking for any sign of what will be the next driver of facebook. , it has so so large much of the world interconnected.
there's really not a lot of room to get from here in terms of advertisers and users. we saw stagnation in the u.s. and declines in europe. investors were looking towards and other properties facebook hasn't tried to monetize like whatsapp which is extremely popular around the world. >> does this spur people to look at facebook and rethink their models? we see margins compress. a lot of them had to do with this cambridge analytic a scandal. a- cambridge analytic scandal. >> facebook is trying to tell us that is what it is going to be. invest a do need to lot more and content moderation and hiring people to make sure that they don't interfere.
they are making those investments and also investing in other things that are going to contribute to the core business over time. like their content for facebook watch, the virtual reality initiatives. they are opening up offices around the world. it's not just about combating the big problems that have come up for facebook, but they are trying to invest and get future growth. the spending is outpacing their growth in this quarter, and that is something that is a little concerning. >> it will be interesting when markets open and see how stocks trade. the bloomberg tech reporter joining us from san francisco. shares plunge as trade tensions weigh on profit forecast. general motors cut targets on higher steal and aluminum cost.
gm chrysler follow that after lackluster sales in china, announcing a costly restructuring. but the prospects for carmakers. kevin joins us. what are we looking at? kevin: gm was a bit of a warning shot as they cut aluminum and steal tariffs. the imf has estimated that, if the auto tariffs trump is threatening are imposed, it would do more than double the damage of all the other tariffs that trump has either implemented or suggested. it looms large over everyone. , hyundai makes half the cars it sells in the u.s. nissan is one third of the cars. the u.s. is still the biggest market.
is something that everybody is watching and the u.s. market is having trouble, already passed its peak. the sun, in particular, has been guilty of boosting discounts, consumers, and it tried to pull that back now this year. success soimited far. china is increasingly important, and they have improved a bit in china as well as. that's right. it has been the biggest market since about 2010. year,an into trouble last got embroiled in a political squabble between china and south korea.
and consumers boycotting korean brands including hyundai. they are not still recovering from that. they are trying to get back in the first order. -- first quarter. sales have slumped below the year ago. 20170% decline in sales in because of that. it is a long road back for hyundai. it has been an advantage for people like nissan who has been able to take more share away from hyundai. the chinese market is due to become the biggest market this year. we also take into account foreign-exchange rates. we have been talking about seven to the dollar, mark. what is the look out here? we see some strength in the one and the yen.
both of these currencies have declined substantially. signis at least a positive , all carmakers have tried to make more cars because the foreign-exchange is the elephant in the room. for these carmakers at least, it is positive. nissan and other companies would involve an estimated 105 over this year. hurry tonot in any change those estimates even though the yen is closer to 110 than 105. ramy: fairfax media and another company set to merge for one point billion dollars. integrated company.
give us the top details here. >> this was about $2.2 billion us trillion. about $.94 per share and a 22% beanie him. that.seven years for it will create australia's largest integrated media player. and radio,llion, television, print, and really traditional and australia -- in australia. , a localming service competitor to netflix. a very big deal here. we see a new leadership is going to be under the ceo, also
the chairman. >> this does smell a lot more like a takeover than a merger. the shareholders will retain a 51.1% stake in the new entity nine.will be called , theyirfax chairman aboard carefully consider this. cost savings implemented. i can't help but wonder if this is the first bit of consolidation.
ramy: this is daybreak asia. i'm ramy inocencio in new york. yvonne: i'm yvonne man in hong kong. this year, hong kong approved the biggest change to rules and two decades putting in position to challenge new york for some of the hottest companies. this is a growing rivalry. we will talk with chief operating officer and global head of listings. dual class shares in hong kong. do think that changes your competitive advantage. >> we have endured a dual class structure for quite some time. they went through a consultation
process and over several years, it was decided to waive voting rights. they are coming to new york. >> we have seen it. to go look at this gdp chart. looking at china right now, we have the latest news on this qualcomm deal falling through. do you think that is going to impact the cross-border activity? >> yes and no. when it comes to new business ipos, i've been in the country for a new day -- for a few days. there are still a strong appetite despite the political rhetoric in raising capital in the united states. when you look at the companies already listed, you start to see an impact whether it be with
qualcomm that we saw this morning, some automakers impacted by the potential tariffs as well. so on the new business side, we don't see a meaningful impact by the rhetoric in the country, but on the existing side, we are. ramy: -- yvonne: what is the pitch you will make to chinese companies? they are worried about the budding trade war between the u.s. and china as well. >> we have been in the country for a while but our message is that the u.s., in spite of all the rhetoric, is to the deepest and broadest liquidity anywhere in the world. many of their peers are traded to the united states. and if you're looking for a dollar-denominated share currency, the u.s. market is the best place for that. ramy: are there any sectors that are coming out in this climate that are preferring ipo? john: we have seen a lot of technology companies.
throughout my travel throughout china, many of these companies are very young. two to four years old. their ability to grow and scale with an the country and have hundreds of millions of users is very attractive to u.s. investors. i know companies are leading the way with ipo's. >> in terms of slowing chinese growth here. is there anything less than >> if we look at growth over the last few years, we see meaningful revenue growth and a lot of that has dropped down to the bottom line. by results and confidence. ramy: how to the bloomberg terminal because i want to show to what degree is this a
factor when trying to determine an ipo. >> seeing that they can get a higher valuation in the marketplace. to know the management for quite some time. that lack of being able to connect to shanghai and that hong kong shanghai. interesting to see what the companies will do in the quarter ahead. we are serving see
things come back to hong kong has been here for some time. have that listed in the u.s. and the company has pretty much changed. for some of them, yes. but for some of the business models, they are more familiar to a chinese investor base. on china tower, for example, a state owned enterprise. a different time zone with a similar investor base. yvonne: we have hurdles and a lot of companies speculating that they gave you the waters right now. do you think it is a function that the rules are still to flex for the way that they digest? or is it what they are overseeing in china at the moment. john: the rules are still working with the csrc and the regulators to make the cbr program work. yvonne: what excites you the
most here? these companies have been around three to five years. usersds of daily active and the technology companies are looking to grow and band outside of the region. i think of the end of september, we had seven transactions from china that we want to see come to new york. it's an exciting time. we saw pricing at the top end of the range, are we expecting a lot of optimism here? the tradeking about war and the valuation. are they priced to high? -- too high? john: it's on a case-by-case basis and investors should look at the fundamentals of the company and how they will perform in the long run. some ec price below the range as well. yvonne: thank you, john, from the new york stock exchange and global head of listings.
we have breaking news? ramy: an alert i want to tell you about crossing the bloomberg terminal. because anna -- casana's directors have tendered their resignation. as managing director as well eight other members have submitted their resignations, unclear if the prime minister has accepted them just yet. this is in regards to a shakeup that was triggered a few weeks chastised themed sovereign wealth fund that he founded back in 1994 when he himself was prime minister at that time. religious sovereign wealth fund being a rash of resignations. no word on if the primus minister has accepted those. still ahead on daybreak asia, this is bloomberg. ♪
ramy: welcome back. a quick check of the latest business flash headlines. topping second-quarter profit estimates and boosting sales of memory chips and a weakening won has boosted overseas sales. supplying tips to the likes of reinforcing optimism that chips remain resilient after a spike in prices led to record earnings last year. yvonne: the singapore and indian stock exchange is have resumed discussions of potential collaboration. may preferties
ongoing arbitration proceedings depending on the outcome of those discussions. on an 18 your partnership between two of asia's biggest exchanges. mattel slumps after hours, taking another hit from the collapse of toys are us, revenue falling for the fourth straight quarter. falling to $841 million. trailing to 30% and estimates by eight percentage points. it probably plans to cut more than 1/5 of the work force. yvonne: nestle has failed to get a break in a 16 year battle to trademark the kit kat bar in europe. neededy more proof is that the forefinger design is distinctive throughout the 28 nation bloc. another company that makes a similar looking snack in norway and opens the
door to cheaper generic imitations across the block. now i'm thinking about kit kat. before we hand over to bloomberg markets asia, let's look at where markets are trading. the nikkei down about .1%. ospeiosby -- caused a -- k down .3%. yvonne: these were solid gdp numbers and futures setting up in singapore, looking pretty positive here. and a lot of focus on the trade tensions as they deescalate with president trump and jean-claude juncker reaching a deal. that is it for daybreak asia. market coverage continues with rish and haidi next. ♪ two, down and back up.
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virgine did the name come from? richard: the only reason we will go into a new sector is if we felt it was badly run. david: is there something in your life you haven't achieved? richard: we are on the verge of fullfilling that dream, a virgin spaceship going to space. daivd: now you are a sir, you were knighted. richard: i was slightly nervous it would have been a slice at the head rather than a tap on the shoulder. >> would you fix your tie, please? david: people wouldn't recognize me if my tie was fixed, but okay. >> [laughter] david: we'll just leave it this way.