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tv   Bloomberg Daybreak Asia  Bloomberg  June 18, 2020 7:00pm-9:00pm EDT

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>> a very good morning. i am haidi stroud-watts in sydney. we are counting down to the market open. shery: i am shery and in new york. welcome to "bloomberg daybreak: asia." china's top policymakers debate plans for hong kong. critics say the move will jeopardize anything that has made the city of success. friday will be dominated by new data and the coronavirus.
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was 25%n the s&p 500 better than average over the last month. we are waiting on the let us check of japan, as the pandemic puts more pressure on the economy already sliding into recession. inflation numbers are due at this hour. haidi: let's check in on the markets. we had a pretty tepid handover from the u.s.. stocks edging higher. volumes still below what we have seen over the past month or so. very much a range-bound trading session. we continue to seek a new catalyst. we continue to see rising cases across the u.s., driving the idea of a second wave. beijing struggling with a second wave as well. conflicting data not giving a great deal of intel as to what the future holds. we are dealing and upside on s&p futures, up about .3%. nikkei futures also a little bit higher, japan
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weighing the frostburg of reopening. also the potential demise when it comes to tourism. sydney futures are a little bit to the downside at the moment. we could see a modest bounce at the start of trading here in sydney. in new zealand, off a recession mode. .06% lower in trading stocks. trading.wer in contraction was the biggest since 1991. shery: and in a more forceful statement on souring ties with beijing, president trump has said the u.s. could pursue a complete decoupling from china, but without mentioning conditions. let's crossed our china correspondent, selina wang, injury being with more -- in beijing, with more. this conflicts with what ambassador lighthizer had said earlier. selina: that is correct. he had said u.s. supply chains
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should not be brought back to china but the country should the intertwined and that decoupling of the economies is not an option. but, the president to did this -- perhaps i did not make my self clear. the u.s. does maintain a policy option under various conditions of a complete decoupling with china. tweet comes we learned china is still committed to honoring all of its commitments under the phase one to a deal. u.s. china talks have taken on an added political dimension. the new book out next week from from a national security adviser john bolton, he is claiming that trump in the past directly linked trade talks to his reelection, asking xi jinping during a 2019 meeting to purchase more american farm
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goods, saying that it would help his win in 2020. haidi: in the meantime, we are looking at china's top legislative body studying deliberations on the hong kong mesh -- starting deliberations on the hong kong security law. they gave little details on the draft. it is said that the meeting will be clarifying the four major parts including secession, subversion of state power, tourism as well as collusion with foreign forces. according to the south china morning post, the draft law also states that the federal government reserves the right to exercise jurisdiction in cases except in "very special circumstances," while the hong kong government would be responsible for the rest.
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it is not clear whether it would cases.- in some even though chinese officials had said drafting the law would be sped up, some sources have said it is unlikely to be passed during the three-day meeting. china has said it is determined to push forward with legislation that despite criticism from democracy advocates, business groups and foreign governments. on friday, the g7 road in a unified statement that the law would "jeopardize a system which has allowed hong kong to flourish and make it a success over many years." shery: give us the latest on the work ongoing in china of coronavirus -- the outbreak ongoing in china of coronavirus infections. selina: we have a bit of good news. china's chief epidemiologist says the peak of the covid out rick has already passed. and it should be -- further infections should be sporadic. of the new infections on friday,
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those people had contracted the virus before june 12. he says the peak of the virus 13.june however, he says beijing will be seeing more cases in a few days, reflecting people who were accepted in the past. the origins of the resurgence of the cases is still a mystery, but he said it is not a coincidence that outbreaks keep happening in wet market. for the beijing outbreak, most infected cases are seafood vendors. the sampling results show that contamination in the market is most severe in places where seafood and meat were sold. on and,ur china cars selina wang, with the latest from beijing. as cases continue to rise in the u.s., still ahead, we get more on a potential breakthrough treatment. coming up next, we speak to a ceo about why he is seeing an
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implosion of china's financial system. this is bloomberg.
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>> you are watching daybreak asia. china ise's bank of pledging faster credit growth as the economy starts to recover. policymakers want credit to rise to any percent to push the economy out of its virus-induced slump. a donor says it will be achieved through bond issuance plus higher bank loans. he says total financing loans should top $4 trillion this year. california is reporting his highest single day jump in cases. florida cases are rising the most ever. hospitalized is in texas, hitting the seven days straight of record cases.
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the nfl and college football seasons could be canceled. fell lessss claims than forecast last week, showing only gradual improvement from the west of the pandemic, even as states began to reopen. initial claims totaled 1.5 million, slightly down from the week prior. that was the smallest since claims began to retreat in april. over 20 million americans are claiming benefits. globaglobal news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am karina mitchell. this is bloomberg. you., over to haidi: let's get more on china's efforts to tackle the virus, even as reports of a second wave of infections rise. our next guest says that even --hout the virus, economy the chinese economy is destined to implode on its own.
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kevin smith, thank you for you say china is run by its italian government responsible for running the largest ponzi scheme in history. this would not be the first time someone has made this call about china. but the thing is, with a totalitarian government, as you say, they have all the tools at their disposal to ensure that the bubble does not burst. kevin: sure, that is what a lot of people think. but there is a lot of other examples in history of companies countries that have had some economic downfalls including currency crises. it is not just china that has a problem today. the u.s. has an extreme economic imbalance, too. and there is a debt bubble globally. but china has $42 trillion of assets in the banking system, truly the largest credit bubble
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we have ever seen. haidi: so, how are you trading that idea? kevin: for us, we have put options and a call option on the u.s. dollar really the same thing. we have dollar calls versus both the chinese one and the hong kong dollar. shery: by the dollar is under significant pressure mostly because of structural issues and what the fed is doing as well. how much are you factoring in the direction of the dollar it self? is fightingollar its own problems. but remarkably even with all the money printing recently, there is actually more debt being created that money being printed by the fed, and the amount of dollar-denominated debt all over the world is really the bigger
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problem out there. but we are bearish on the dollar as well. we are very bullish on gold versus all global fiat currencies. relatively, we like the dollar more than some others today. shery: talking about china, you also are not optimistic about the prospect of hong kong. you say there is a credit bubble on its own. we have beijing now debating the security legislation. how is this going to affect the markets? avin: certainly, we have seen lot of pressure in the banking system in hong kong since the protests started in the past year-plus. the average bank stock is down 30% or more in that time. with over $3 trillion of assets in hong kong alone in the banking system, when you have a
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totalitarian government taking be awhen it is supposed to one country, two systems, the second one being a democracy, and the other trade laws that the u.s. and bridge and have agreed to, it is a problem. we think there is capital outflows from companies falling out of hong kong. haidi: so it sounds like you are pretty bearish across large parts of the world right now, not just in china and with hong kong with the political problems, but the market dislocations we keep talking about when it comes to the u.s. how important is holding cash right now are you looking to alternatives? kevin: for us, we have three macro themes in the portfolio to capitalize on what we believe the tactical downturn in the global economy is.
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we have short positions in the u.s. stock market. over-valued.ecord we believe we are in the early stages in a global recession. we think after a 10 year bear market, our second theme is that we are in the early innings of a precious metals bull market. there is a lot of exciting things there especially in the mining space. and then the china currency short that we have. shery: kevin smith, thank you very much for joining us. karen: thank you. shery: crescat capital founder and chief investment officer. you can get more on the market and other information to get your day going on dayb on your terminal. also available on the mobile and the bloomberg anywhere app. also, don't miss our coverage of the bloomberg invest global summit starting monday. we will bring you the biggest names in finance, economics and investing. ♪
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up next, the latest on treatments for covid-19 amid accelerating virus cases in the u.s. this is bloomberg. ♪
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haidi: the united states continues to be a focus of coronavirus infection, with california reporting its highest single-day jump in cases. hospitalizations in texas hitting a seventh straight daily record. from our we are joined by bloomberg opinion columnist. that you seesay these rising infections around the state, but this is not something you would call a second wave, it is actually a continuation of the first wave of infections. >> that is something i absolutely agree with. outside a few states, there
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really hasn't been any full control of the virus. you still have these ruling plateaus of -- rolling plateaus of infection and states moving to reopen and now we are seeing the inevitable consequence that when you have a significant amount of community spread, any steps you take to reopen the economy even if they are measured over time, will lead to more cases, unfortunately. shery: so where are we in the progress for treatment or a vaccine? max: still very much a long, long journey on that, particularly on the vaccine front, where companies and research labs are just sort of starting the really big population level studies that you need to approve it. where there has been a little more progress is on the treatment front. this week, there was a u.k. study.
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they had been running this since march, testing a number of different treatments against the common controlled group. and they finally had a pretty notable success. the first medicine has shown a mortality benefit. proven to prevent deaths in severely ill patients. it is actually a pretty old story, dexamethasone. widely available and widely used. it had a significant effect especially on people that required ventilation, the gravest risk from the virus. while it isn't something that could change the trajectory of the pandemic, it could over improve outcomes in some of the highest risk patients. haidi: the goal from the beginning of this was to flatten the infection curve to say, get the hospitals to a point where they can cope with the levels of patients coming through with covid. has not changed even with the rising numbers of cases? worth do think that it is
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sort of recasting what the goal should be. that is definitely the most important, the most acute goal. if that is your only goal and you don't make a sustained effort to mitigate the virus get intoat, then you the situation like you have in the united states, where we are still month into the crisis, having upwards of 20,000 daily new cases. even if there is hospital capacity, there are still a lot of beds failed, still a lot of people at a high level of risk. as benefit of keeping cases low as possible is to get further developments in terms of treatment and in terms of a vaccine. the further you can push out more cases, the better outcomes will be for any individual who contracts or is at risk of contracting the virus. so it is worth thinking beyond
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just not overwhelming hospitals, i think. shery: dr. fauci is saying that we are still in the first wave of the coronavirus infections. the second wave is expected to come around fall. how can we best prepare ourselves? max: there are a number of different things. one is just to get everyone into the ongoing mindset of the steps people can take personally to reduce their own risk and that of others around them -- wearing a mask, social distancing. another key thing, it is especially a good idea this year to get a flu shot, just to reduce the risk of having concurrent outbreaks of influenza and the coronavirus, which could put an extra strain on testing and on hospital systems. then for states and regions to continue to build the capacity to contact tracer and isolate
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people. not just, you get a positive test and you are left on your own to do the right thing, but giving the people of the support they need, housing if they need it if they live with a lot of people so they can reduce the risk if possible of infecting others. n, bloombergise opinion columnist, thank you for that. this company is said to be seeking a bankruptcy loan after its plan for a share sale were abandoned. ow jones says it is in talks with lenders after regulars questioned its unusual approach to pay off creditors. shares had risen sharply from the low of may 26, prompting the company to consider a sale. it stopped the plans as stocks declined. has back $34 billion of china, in the biggest
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shopping gala in the post-pandemic in your. j.d. and rival, alibaba, are hoping that pent-up demand signals that a recovery is on the way. have surpassed 2019's total by midafternoon thursday -- sales had surpassed 2019's total by midafternoon thursday. this company has suspended its coo of daughter said they could not find billions of dollars in cash. the cash seems to have gone missing in banks in asia. wirecard says loans could be terminated if it's much delayed annual audit is not published by friday. company,ost vulnerable reliance industries, continues its dealmaking spree and is said agreement that may come next month, which reliance
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has offered for future retail. of group operates in a range consumer sectors including food, home products, personal care items and fashion. haidi: all right, we are taking you to pictures of canberra, where the prime minister in australia is speaking about a massive cyberattack targeting government as well as private sector institutions, saying that the attack actually took place last night and has continued. we have been hearing that the prime minister had said, this is the world we live in, these are the threats we face. the prime minister saying that they don't engage lightly in public attributions, but he has repeatedly said this is a state actor behind this. is cyberattack on australian institutions, both in the government and private sector. this comes at a time of increased tensions between cumbre and beijing. t is worth --
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canberra and beijing. thats determined earlier china was responsible for a cyber attack on its government before the federal election in may. we are not getting that attribution when it comes to who is behind this latest cyber attack on australian government and institutions, just that it is a state actor. the prime minister is at this point refusing to go on further on who is to blam blame there. we will live it there. you can continue watching it on liv shery: let us look at how stocks are trading at the moment. u.s. futures up .4% after the session ended mixed in new york. the s&p 500 is slightly higher
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after trading in the narrow range, sentiment pressured with a weak jobless claims numbers. , as theutures are up japanese yen holds below the 107 level. we have seen a lot of strength of a jet yen on risk aversion. it has been gaining ground the past few sessions. right now, an ongoing depressor by the australian -- ongoing primer by the australian minister on a cyber attack. coming up, we are minutes away from japan. we will break down those numbers next. this is bloomberg. ♪
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>> breaking news out of japan right now. we are getting the consumer price inflation at the moment. that lynn inflation of 0.1%, in ther acceleration -- headline inflation is 0.1%, lower-than-expected. core inflation, 4.2% a faster deceleration in core consumer prices for the month of mayp core cpi, which excludes food prices, it came in line with expectations, rising
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0.4%. still, the key focus is the core cpi numbers. it is a deceleration, if all of 0.2%. this coming after we saw the first reading below zero since december of 2016 in the previous month. we now have a second month of cpi, core cpi for japan in negative territory. joining us for more insight on those numbers is bank of america global research head of japan economics, izumi devalier. great to have you back. the core cpi number is worse than expected. but of course, given the cratering demand, it may not be surprising. we also have the d.o.j. seemingly giving up, for now during the pandemic, the inflation target. izumi: yes. i think overall, in the april and tokyo may cpi, we saw a pickup in inflation on because
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there was a huge demand for so-called stay-at-home products like rice cookers and home printers. but this is not a sustainable trend. think about it, 50% of the cpi in most developed economies is services. across the services sector, such as restaurants and hotels, you are seeing tremendous downward pressure. i think over japan is handed for a modest about of deflation or disinflation. the worry should be about this inflationary pressures, not about inflationary pressures right now -- the worry should be pressures.flationary shery: how much of this goal has been delayed now of the inflation target? izumi: i don't think even before the coronavirus prices that most analysts, including ourselves, were not expecting 2% inflation
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in the forecastable horizon. this put the goal further out. you are right. the bank of japan had already been pivoting away from that sticking to the 2% target. now they have completely set that aside and emphasized the fact that their main purpose right now is crisis control and responding to pressure that incorporates and households are facing. they put together this very aggressive corporate financing ¥110am that provides up to trillion in financing. whether it is corporate. bond purchases or loan support. i think that will be there focus for the next year or two. haidi: i had to chuckle before when you said the concern now is disinflationary risk, not inflationary risk, because i
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remember a time when we were worried about real inflation in japan. incremental as the dis inflationary favored might be, it has taken monetary and fiscal policy just to get to this point, so how fragile is the recovery and the return to some semblance or even if that link inflation for japan? izumi: i think that is a very good question. the good news is there is some structural tightness in the labor markets. i don't think you will see as serious about of disinflation as we saw in the early 2000's. i think we are going to see a k priceprolonged wea setting due to the fact that aggregate demand will fall far short of supplies for years to come. we are talking about significant hits to income from the crisis.rus
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by government has been putting together a two very large fiscal packages. but even with the fiscal help, it is not enough to put a hole in the incomes created out of this. we will see an increase in conservative behavior from households and corporate. on the corporate side, it means cutting back on. on the household side, it means building up savings again. going to be extreme downward pressure on demand. haidi: how much of the downward pressure also comes from the tourism? we have this story in a bloomberg saying that japan had a target of 40 million tourists. it could actually finish with just 5 million, given we had just 1700 in the last month. how does that play through when it comes to tourism businesses and related industries, including retail as well? izumi: yeah. that is actually a significant issue.
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the inbound tourism in general has been growing very strongly over the past eight years under prime minister abe. its contribution to gdp directly is not huge, it is about 1% of tremendous spill over into other sectors such as retail and restaurants. you add it all up, it comes to 2% gdp or more, with a lot of significance for the regional economies. so that is a big concern. the government will try to offset this by reviving domestic tourism. it has a campaign to get the japanese out and about and traveling during and after the summer. but given how far inbound it has grown, it will not be enough to compensate for the decline in demand. that is just another thing we worry about and which we will have to offset by some other measure. america had of
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global research and japan economics, is in the diwali a. let's get you the headlines. >> the coronavirus outbreak in beijing has been contained, after more than 150 people were confirmed positive. the center for disease control says more cases will be reported, but they will not reflect people already infected. the peak of the outbreak is seen as last saturday. authorities will halt all buses, having shut down schools in beijing to help halt the spread. president trump has given his most forceful statement yet on beijing, saying the u.s. could force it decoupling with china. ambassador lighthizer headset a full decoupling was not up with the option. the president did not specify conditions for such a move, so questions remain on phase one trade deal. he says high-ranking politburo
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member said all parts of the agreement will be completed following concern that falling oil prices and the coronavirus disruption could scupper purchases. pompeo offered no details about his tweet. facebook removed a series of ads and posts shared by the trump campaign for violating what the company calls its policy against organized hate. the ad refers to "dangerous mobs and far-left groups." an upside down triangle which nazis nazis to refer to prisoners in concentration camps in world war ii. global news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. shery: crude oil sees a bump after a deal is finalized to compensate for missing supply targets. this is bloomberg. ♪
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haidi: let's look at the asian trading session this friday with sophie kamaruddin in hong kong. sophie: it is looking like kiwi stocks are under pressure. we are seeing some slight risk-on moves elsewhere. the yen is hovering around 107, holding onto a gain with little reaction from the data from japan, core cpi continuing to fall in may. japanese stocks could make gains, with japan lifting restrictions on domestic travel. but that could be waiting on jgb 's. on china's bond market, we saw the selloff continue on concerns squeeze. expectations are ramping up for a rrr cut is china's cabinet alleged more support. rates doubling over the past month continuing to go higher.
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the overnight rate at a four-month high. this chart on the terminal, with have seen credit spreads tighten on the mainland. the yield gap were corporate debt is now at the narrowest level in three months. credit spreads may widen they are in june as investors focus bonds.virus liquidity is likely to tighten further as well. shery: right. let's turn to commodities. oil futures appear on track to with two top trading houses saying global demand is recovering rapidly. su keenan has the story. there are still concerns over the supply glut. su: yes, we have record high stockpiles in the u.s. and new concerns that u.s. production is coming back online who fast. if you look at this week's trading in west texas intermediate, is it on -- it is
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on track for gains. we are seeing gains in electronic trading of 1.5%. yet it is still fragile. we have the two trading houses as you mentioned, saying demand is recovering rapidly, but there is concern about outbreaks of the coronavirus clouding the picture. the u.s. benchmark and the west texas intermediate has not been above $40 since early march. again in electronic trading, we are seeing it for the first time come close to just above 39. the concern is that the strong rebound in prices when it rebounded from the crash to zero is restrained by the supply glut. international prices are above $40. we have brent crude in the august contract selling about the september contract for the first time since march. that is a sign of tightening supply, which, again, industry
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insiders will tell you is positive. bottom line, a lot of insiders are seeing a sustained rebound. u.s. shale companies have to invest in -- refrain from investing in new drilling to improve the supply-side and get out of the $40 range, it is to be more disciplined and wait for prices to go above 50 and go higher. back to you. haidi: so, su, in the meantime, both opec and the u.s. are cracking down when it comes to violators. what is the story there? su: we had opec+ leaders succeeding on cracking down on the cheaters. they met virtually on thursday. the meet online like everyone else these days. they met to implement or the production cuts to finalize what they put in place at their last meeting. they also worked on a deal where their biggest cheater, iraq, would pay back or compensate the
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group for falling short of it out what targets in may -- falling short of its output targets in may. meanwhile, the u.s. slaps sanctions on several mexican companies which either bought or helped to shape than his will and oil. the trump administration. -- either bought or helped to ship venezuelan oil. the trump administration slaps sanctions on some of the companies. back to you. haidi: su keenan with the latest. this executive director says oil demand will weaken in the coming years. he says hydrogen is the fuel of the future. he was speaking to the mark about european -- to bloomberg about european plants to become carbon neutral. are onlyan emissions 8% of the global emissions.
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it is the same effect on everybody. what needs to happen here is investments ines the european green deal. they should make investments in such technologies that would inng europe on advantage terms of industrial policies. for example, electric cars, or hydrogen. this now, inork on a couple of years old here hydrogen being a key technology -- in a couple of years, you will hear hydrogen being a key technology. europe made a big mistake, in my view, 10 years ago. subsidizes solar power and solar energy. but in other countries, they took the leadership from europe and exporter to the rest of the world. but now, perhaps in europe
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learns from 10 years ago experience with hydrogen, with electric cars. they can continue to have leadership. >> i am glad you brought up hydrogen, it is a perfect example. we can say it is great, but still very expensive, it doesn't have the scale. had a you convince a country like india, for example, to spend money to build wind farms and solar and invest in hydrogen, when they just want the cheapest fuel, which in some cases is the dirtiest? how do you do that with economics still are not there? >> first of all i should say, in ea, we don't live in a parallel planet. we know what is the first and foremost priority for the governments or the people in the streets. now, when it comes to the cost a new solar india, plant is cost competitive
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vis-à-vis coal, no question about it. you look at other parts of the -- employment at coal-fired power plants. it is the reason we believe prime minister modi put a very ambitious renewable energy target, 450 gigawatt. i spoke last week with range and prime minister. he is sure that even under the -- ii spoke last week with spoke last week with the indian prime minister. he is sure that even under the conditions, they can reach the target. it was to be behind the curve. -- no country wants to be behind the curve. at the energy summits, there are all these different views on different technologies, nuclear, solar, oil.
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but when it comes to hydrogen, all countries in the world love hydrogen. the problem is it is still expensive. takinge right policies this on board, we can reduce the cost of hydrogen by manufacturing a lot and lot of new equipment as we have been first solar in the last 10 years. there is a big opportunity for hydrogen in the next years to come. left.have a minute where does this leave oil companies? what are they supposed to do? >> it would be wrong to believe that we don't need oil anymore. we will need oil. this year, next year and a year after. oilthe growth or demand for will not be as strong as before. that is for sure. especially, we will need oil for the petrochemical sector, for aviation, for transportation,
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especially for cars. we may need less oil in the future, but still, we will need oil. iea executive director there. coming up, australia government says all levels of the government are being targeted by sophisticated cyber attacks. details next. this is bloomberg. ♪
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haidi: as we reported earlier, australia's prime minister says as sophisticated cyber a checker has targeted the country's health and education systems. they are calling this attack unprecedented. what do we know. >> it was very diplomatic during the whole press conference. he merely said, this is part of the world we live in. but he said the frequency of cyberattacks has been increasing. the ministry of health, education and ministry are being targeted. let's take a quick listen to what he had to say. >> the australian government is aware of and alert to the threat of cyberattacks. our government expert agency on cyber matters is the australian .ybersecurity sector
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it has already published a range of technical advisory notices in large times to a potential targets and has been briefing states and territories on risks and mitigations. regrettably, this activity is not new. but the frequency has been increasing. paul: really interesting about the press conference is what scott marson did not say. finally, somebody asked if it is china. scott morrison said the australian government is not making any public attribution, but he said he is very confident that this is a state-based actor. he cannot control any speculation that other make. in the room might somebody else asked, well, do you know which state is behind this? and the prime ministers said the threshold to answer that is very high, but we can confirm with confidence that this is the
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action of a state-based actor .ith a significant capabilities there are too many state-based actors with those capabilities. so the prime minister is leaving us all to draw conclusions. shery: not surprising he's getting those questions, given the rising tensions between china and australia. that is exactly right, tensions have been ramping up for the past few months, all going back to australia's call for an independent inquiry into the origins of coronavirus. beef and burly experts have reduced, -- beef and barley exports have reduced. china issuing advisories about travel to australia. chinese spies became prime suspects in a hack of australia's political parties, having exposed information about voters and mps in the lead up to the elections.
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so china has form in this regard. but prime minister scott morrison is definitely not pointing the finger in that direction, but clearly inviting others to make their own insinuations. shery: paul allen in sydney. let's now get a quick check of the latest headlines. delta says it expects to break even early next year, after bleeding cash because of the coronavirus crisis. the ceo told bloomberg that recovery has begun and rising demand means more flights. will be restored he called the rebound "meaningful," and said around 1000 flights a day will be added to the schedule next month and again in august. revenues are currently at 15%. jetblue is buckling in the post cking thebu post-pandemic trend, not only restoring flights but adding new ones as well. mostly from florida and
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philadelphia as well as extending its premium mint k,rvice to new wor -- newar new jersey. this will mean jetblue is operating more than half of it mid-year capacity by august. emirates is increasing its number of destinations to 40 by july. qatar will see its net worth rebuilt 239 flights next week by the middle of next month. the decision follows a recent move by the uae to ease travel restrictions. haidi: let's check in on asian markets on this final friday trading session. we are looking like a pretty mixed and muted start. after a largely unmotivated session in the u.s. overnight. kiwi stocks off the session lows, down .4% said they futures in positive territory despite
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state-actor cyberattack on australian institutions. more on the market analysis in the next hour of "daybreak: asia," with chris weston.
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that evening from bloomberg's global headquarters in new york. i'm shery ahn. >> asia's major markets have just opened for trade. welcome to "daybreak: asia." >> asian stocks face struggles -- weeklyly gam gains. the coronavirus continues to with new infection
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records and global debts up to 100 50,000. china says the beijing outbreak is now contained. protest than the pandemic. the outlook for commercial rents amid warnings that sector may go bust. >> in japan, we are seeing gains for japanese stocks. the nikkei 225 added 7/10 of 1% after a two-day decline. a little reaction to the inflation data that we got this jjb keeping an eye on the space of japan with domestic travel, keeping an eye on the tourism sector. checking on the south korean market, switching up the board, we are seeing the kospi resume gains. the benchmark could be
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falling with geopolitics back this week. dollar, slightly higher ahead of retail sales. the asx 200, opening slightly higher, but keeping an eye on tourism stocks in australia, as well as domestic travel prospects. this us policy support to , global and stocks bonds, having rally. if we can avoid the worst of the pandemic. 2008 are rumors of crisis investing here, but this time around, the sticks could be higher. shery: let's bring in the head of research at pepper stone group.
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chris, we are now seeing a little bit of upside for stocks in early trading. investors here in the u.s. are searching for a new catalyst. any excuse to get the rally going. where are we headed from here when we have seen this market exuberance already? >> i think it has to come from the data. economic data is key. has provided ay degree of improvement. we are seeing that, no doubts about that. if you look at dividend futures for next year, they have been improving. you can droid dividend futures on the cme. i think the market is anticipating the corporate's cash flow will improve, they will look at their cash flow policy and reward shareholders going forward. people are looking at the income in the future. i think now when he to see the
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earnings side at least give us some belief that there is going to be earnings provision. we had a market downgrade, which is an incredibly high multiple. we have to thousand 21, that everyone is looking at, and earnings for next year, that is an incredibly high multiple. we need to now believe the data will improve sufficiently that the earnings side will account. -- will account for it. if there is anything that then wes the data, probably will see a little bit of downside in the markets. shery: are you seeing some of the fundamentals in japan? you are a buyer of the nikkei 225. valuation means less in japan. i think valuation globally has been an awful predictor of returns recently. i love the flow you have been
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seeing in the trend, in the technicals. a look setup we see -- i love the setup that we see. if there is a continued move higher in global equities, that japan will probably be one of the performers. bank of japan is doing everything it can to promote this. t i see ine wha the market. i see outperformance coming from here. >> has significant are your holdings and allocations -- how significant are your holdings and allocations at the moment? >> one of the things we are looking at is catalyst. if you have a look at breakevens , we're seeing this real yield and 10 yearal yield
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real yield in the negative. really yields are moving lower again now. that should be good for gold depreciation. longer-term, if you look in terms of the holistic portfolio, it is well-documented that you try and spread the variance here. you are looking at long call related return. the debt situation is only going one way. it is not going to be improved. gold will continue to be a hedge against all the madness you are seeing and -- you are seeing from the deficit side of things. i love gold, but what concerns me is so does everyone else. short-term, we are seeing the real yields. we are seeing volatility start to pick up.
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will that continue? >> the last few days, the u.s. in the face ofd this growing wave of bearish bets. saying we will see a collapse coming through. but every time you look at the u.s. dollar, all these various factors, people are happy to buy the pullbacks there. if you look at the euro-dollar come out testing 112 at the moment, it looks like it will be going lower in the short-term. measureslike the put in place argan training sovereign spreads -- are coun contraining suffering spreads. we will see the equity story regime, then the dollar will
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selloff in time. i would not be betting against the dollar in the short-term. >> always appreciate your time. pepperd of research at stone group. confirmations out of beijing, the capital city in china contends with the second wave of the infections. two major airports have canceled over 800 flights in beijing, according to local media friday, even as local experts are saying that the outbreak is now under control. still ahead this hour, we will thealking real estate with ceo of champion reit.
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this is bloomberg. ♪
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>> you're watching "daybreak: asia." japan's key inflation gauge frozen economic activity amid fears of inflation. consumer prices fell from a year earlier, matching a drop in april when inflation turned negative for the first time in more than three years. smallerts expect that a fall, but a fall nonetheless. meanwhile, u.s. jobless claims fell less than forecast last week, showing only gradual improvement from the worst of the pandemic estates begin to reopen. initial claims totaled 1.5 million for the weekend of june 13, down from the weeks prior. -- the week prior. latest figures show over 20 million americans claiming benefits. australia's prime minister says the country has been the target
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of a major cyberattack, with both public and private sector organizations being targeted. it was a state-based attack because of its trademark type of target, but he stopped short as to say who was to blame. there appeared to be no major data breaches. policymakers want the total flow of credit to rise by about 20% this year to push the economy out of the virus-induced slump. the governor says it will be achieved through special bond issuance. should total financing top $3 billion this year. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm karina mitchell. this is bloomberg. shery: in his most forceful presidentyet,
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trump says the u.s. could pursue "a complete decoupling from china." we have our correspondent, selina wang. reporter: lighthizer said china should remain intertwined with the coupling. not, it and china are is not an option at this point. perhaps i did " make myself clear that the u.s. certainly does maintain a policy option under various conditions of a complete decoupling from china." this comes as mike pompeo met with chinese leaders and stated that china is so committed to honoring all of the specifics under the state's trade deal.
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at the same time, trade talks have taken on this added political dimension. week,s book due out next john bolton claims that trump directly linked the earlier trade talks to reelection chances, asking xi jinping to buy more american farmed goods, saying it would help him when again in 2020. -- win again in 2020. shery: also intensifying tensions between 10 and the u.s. is the issue of hong kong. they are starting deliberations on that security law. what are we expecting here? according to state media, beijing has submitted this draft to its top lawmaking body. startedliberations on thursday. the timeframe for introducing the law is still unclear. some political analysts expect it will come in july ahead of key elections in september.
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they gave little details on the draft that clarified for major offenses.- four major postouth china morning said the law also states the central government reserves the right to exercise legislation under circumstances. that has brought up questions whether or not this locker -- this law could allow hong kong to be extradited in some instances. this is despite opposition from democracy advocates and business groups. shery: we always appreciate your report, selina wang, our china correspondent in beijing. let's turn to the virus outbreak. china's ambassador to the eu says the push to find a vaccine needs
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to be a global effort. he talked about beijing's effort to curtail the pandemic and reiterated the stance that hong kong affairs are an internal issue. development, i globally working for the international community. and wejob, or your job, cannot do it isolatedly. as my president announced on the videoconference, china will, when we come out with the to the, we will take it public, for all. >> ambassador, i want to ask you about hong kong, because this
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bill has been controversial and areurope, there institutions and the european parliament, who say they worry parliament is being removed from hong kong by the chinese authority. what do you say to that? ll, when we talk about hong kong, we must keep in mind, hong kong is a special administrative region of china. so hong kong affairs are china's internal affairs. not interfering in others' international affairs -- internal affairs is part of international law. the euro parliament had a motion would beution
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interference in china's affairs, which we are opposed to. it is not acceptable. the is and european parliament, for example, commenting on this, members of the european parliament saying the one nation-two system is a way forward. that is something fundamentally china cannot agree to. this is something that is just for china to deal with. for any country, as you know, upholding national security is the duty of the central government. european countries, like the u.k., left germany, and others all have national security germany, and- like others all have national security legislation. this legislation aims to close the loophole. we should not look at this issue
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with double standards. systemsone country-two is china's basic state policy. to fullyesolve implement one country-two systems will not change. discarding national security is a building block for a found implementation of the one country-two systems. and for hong kong's stability and prosperity. the legislation will not change hong kong's capitalist system, its high degree of autonomy and their basic law, or the lifestyle of hong kong's residence. >> let's talk about trade. yesterday, the european paper, it put out a
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mentioned many people talking about china. they worry about more money, too much intervention and european companies. how do you read that -- in european companies. have you read that? -- how do you read that? do you think backing european companies has become more difficult now? >> i noticed your issue with the paper. we are studying the paper. euis hoped that the relevant measures will comply with the policy rules. keep clear of protectionist moves, and refrain from creating new trade barriers under the pretext of subsidies. recent measures taken by the eu
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have gotten some chinese concerns, to speak frankly, who are afraid the eu is closing a store. this is worrying. eu,hina's ambassador to the speaking exclusively with bloomberg. coming up next, japan lifts domestic travel restrictions as the economy struggles with the coronavirus. that story is next. this is bloomberg. ♪
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>> other countries in the region are lifting restrictions today. our bloomberg health care reporter is watching developments in beijing and across singapore and in japan. you are based in tokyo.
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what are the changes happening today? >> in tokyo, the city is going through the phase of reopening today that will open openingomy completely, the clubs and live events to restrictionsfting on operating hours for businesses. they are going to lift some of the adjusted distractions they had on domestic travel between sectors in japan and sporting events will be coming back without spectators. >> singapore is also easing restrictions. what are we seeing? >> singapore, similar like in a, is any -- phased reopening.
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the door will still be closed for bars and live events. they are recommending people to be careful and maintain social distancing when they are out. in singapore, the capacity will be limited in some places, like malls. >> when it comes to the areation in beijing, we hearing from experts that the outbreak is under control, yet at the same time, we are seeing measures being taken, like further cancellation of 800 flights today. exactly. i think everyone has their eyes on beijing and what is going on there with the increased outbreaks they are seeing. they also have closed schools, as well. >> lisa du in tokyo, our bloomberg health care reporter, thank you for that.
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set am -- record. they signal china's recovery is well underway. up more than were 33% from a year ago and surpassed 2019's total by midafternoon thursday. ,ndia's most valuable company reliance industry, continues its dealmaking spree. it is said to be near stakes india'ss partner. they are offering items in a range of consumer sectors, from groceries, depression.
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backing offers its entrepreneurs from underrepresented group. the was launched before spark of race relations amid the death of george floyd. tough rbanext, a official is warning australia's coldnment against going turkey on stimulus. we will discuss a proposal for a tapering arrangement, next. here is a check of how markets are trading at the moment. we are seeing be asx 200 gaining 4/10 of 1%. losses in theows last session after that unemployment rate surged to a 19 year high. kospi, down 7/10 of 1%. we are seeing more expectations that the bank of korea could be joining the market on qe.
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,he nikkei, up 2/10 of 1% holding steady above 107. this is bloomberg.
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haidi: devastating impact of the coronavirus continues to be the theme of the day for central banks around the world from dueling economic reports in the u.s. to a top monetary official. in australia warning the government against going cold turkey on stimulus. bloomberg global economics and policy editor kathleen hayes is here with the highlights. and let's start in the u.s. with disappointing jobless claims versus an eye popping jump in a key manufacturing index. which one wins? >> i have to say i think the jury is still out, shery. but it's interesting we get a view that was disappointing on the job side. but when it comes to manufacturing, maybe we're getting a little bit better jump than we thought.
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now, we want to look at a chart of a jobless -- of jobless claims and continuing claims. this is a great chart, this consolidating chart but not exactly what i was going to look at. i guess you could say if we were going to draw that into the conversation that maybe gold is consolidating. because they're also confused and should you think the economy will grow stronger and maybe sell some gold or is it going to be weaker? at any rate jobless claims were about 1.5 million in the latest week. they were 1.57 million the previous week. here we go. this is the one. a beautiful chart. you can see those yellow bars showing you that steady drop from about seven million in the week down to the current level. but that's still way higher than the little bars you can barely see which used to be around just over 200,000. and along the bottom, continuing claims. now, they actually stayed -- they fell i should say down to 2.5 million. they were supposed to drop more to 19.9 million so they plateaued and people on unemployment claims for
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unemployment benefits i should say for four weeks or more. and so the question is just how strong it is. but put that chart down for a minute and say one thing about the unemployment claims numbers. a lot of economists, for example, they didn't foretell the big jump in jobs in may. there seems to be a disconnect between the numbers these various state labor departments are collecting and what we're actually seeing in the economy. steven stanley from amherst pon securities says he's giving up on the jobless claims data now. so let's move on to the other number i want to show you. and that's the philadelphia fed's manufacturing index. because it had quite a jump. in fact, it was supposed to remain very negative at -21. it jumped up to 27.5 in june. in may, actually, it was down -- a number of 43.3. anything below zero means the people they talk to, the businesses there are seeing contraction and less orders. they're not going to hire workers. you see that big number jumping
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up, and you have to wonder is this for real? what bloomberg economics said is that the philly fed index the first turn on a long road to recovery. an encouraging sign we have to see as -- if it lasts as more states reopen and we see the risks that the cases of covid-19 continue to rise or maybe they don't. for everybody, that seems to be the key. shery: and bank of australia board member saying the government shouldn't be removing stimulus quickly as we get this debate over whether the job keeper benefit is going to be leveled off. so what does he say and why is he concerned? >> first of all, hats off to michael. he's been our -- in our sydney bureau because he got this interview with the deputy governor, the reserve bank of australia. and you're absolutely right. a lot of these stimulus programs, particularly the job keeper program, are scheduled to end at the end of september.
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here's what he said. let me read it to you. the strongest form of cold turkey which he says they should avoid would be to cut back where they were before. that would have a significant negative effect on consumer confidence, on consumption behavior, and remember, consumption, 60% of the economy. he also said that -- what's needed now is more programs besides the job keeper subsidy to curb a rise in the unemployment rate. it's up around 7%. 7.1% in may. the worst forecast suggests that the unemployment rate could get up to 10%. he went on to say that tourism, education, things that have made money for australia and created jobs in the past with borders closed are not able to do that. and those are also areas that need to be stimulated by the government. shery: our global economics and policy editor kathleen hayes there. and we do have breaking news out of china right now. we are getting the coronavirus case numbers out of china.
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coming in at 32 for june 18. now, when it comes to beijing, 25 new coronavirus cases in beijing. and we had heard earlier today two of the beijing airports were canceling over 800 flights on friday. this according to local media. we have seen coronavirus cases in beijing now top 150. is the worst outbreak since. we saw the original outbreak in the city of wuhan. and this outbreak in beijing also having spread to four different provinces right now china reporting 32 additional cases. 25 of those in beijing. haidi: all right. coming up next, chinese lawmakers in the meantime have begun talks on the controversial hong kong security law. we'll have an exclusive chat with champion c.e.o. about what it means for the city's property markets. this is bloomberg. rty markets. this is bloomberg.
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shery: this is "daybreak asia." china says the coronavirus outbreak in beijing has been contained after more than 150 people were confirmed positive. the center for disease control says more cases will be reported. but they will reflect people already infected and the peak of the outbreak is seen as last saturday.
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authorities will halt all cross-province bus services from friday having shut down markets and schools in beijing to halt the spread. meanwhile, president trump has given his most forceful statement yet on souring ties with beijing saying the u.s. could, quote, pursue a complete decumming from china. this comment refuted companies rom trade representative light -- the president didn't specify the conditions for such a move but questions over the phase one trade deal. secretary of state mike pompeo says this week's talks with china in hawaii brought a commitment from beijing to honor all parts of the phase one trade deal. he says high ranking politburo member yong chur all parts of the agreement will be completed following concern following oil prices and the coronavirus disruption could -- offered no details about his tweets. and facebook has removed a series of ads showed by president trump's campaign for violating what it calls the
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company's policy against organized hate. the ads which referred to dangerous mobs of far left grubse including an image of an upside down red triangle. the symbol was used by nazis to identify their political victims in concentration camps. during world war ii. global news 24 hours a day on air and bloomberg powered by more than 2,700 journalists and analysts in more than 120 crins countries. this is bloomberg. haidi: our next guest manages property worth over $10 billion and a portfolio with nearly three million square feet of grade a commercial real estate. joining us now from hong kong is champion c.e.o. ada wong. great to have you with us. we hear these deliberations are commencing again over the controversial national security bill that's resulted in greater unrest in hong kong. i'm wondering how do these concerns weigh into your expectations of how the property market will fare in
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the city? ada: well, i think the social unrest is like more shorter term impact. i think the longer-term impact is more on the virus, how are we coming out from the covid-19? i think, for hong kong, you know, we see a very good encouraging improvement in the retail sentiment. especially after the relaxation in the social distancing. like say, for example, for our mall, back to 80% year over year. and all we're missing is just the tourists. and in terms of the office, we see that most people are already coming back to work. and the longer term impact of he office is like wait to see. haidi: what about when it comes to rates? are you still hearing that there is a greater need when it comes to rent relief? is that still part of the concerns and demands that are
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coming through? ada: well, yeah. there's always -- those who are heavily reliant on chinese tourists. but especially for those who are traditionally reliant on more local consumption, we see that actually the businesses on the right track to coming back and actually we already see some -- year over year growth already for selective tenants. right now, the consumers, and the economy is not good. but with the right retail strategy, like say, for example, some of our talent offer very valuable like all you can eat -- and people conceive that there is good value for money actually. the businesses are already up year over year. but very good may. haidi: to your point earlier that you are expecting to see more of an impact from the coronavirus pandemic, how much of that is because we might see more flexible working
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arrangements? ada: yeah. i think flexible working arrangement is definitely true for like non-financial industry like say for tech industries. there are several -- smaller local tech firm already saying that they will give up their office space permanently. but still, i heard that even if they give up their office space permanently, they still need office space for meeting space. so that's actually encouraging and maybe some more short-term rental co-working space. and i think that for all multinational firms, they're all going to review their needs. but for me, i think that financial institution asset management, banks, these are industries who need physical interaction. i think they may have a small impact on the office needs and maybe more for the -- for the
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back office need. but for the frontline people, frontline office, physical interaction and office space is still needed. and especially for central office. , hink -- and the the office people could give up their space in b.b.d. but the c.b.d. is something that every single firm is going to keep. and there has to be some levels of physical interaction. haidi: what sort of arrangements or adjustments i should say are you making to the -- for the post-pandemic world? ada: for the post-pandemic world, definitely from a hygiene, health and well-being perspective, we are adding a lot more. especially on the -- from the uilding management side, and screening, ventilation, contactless office and space between people in elevator and all these immediate arrangement is being made. nd because a lot of our office
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from mainland china or overseas because of the border control. so oftentimes the decision maker cannot come to hong kong to review right now. so we have recently initiated i think the first ever 360 degree office virtual tour in hong kong. so that's -- the tenant can view our office premises online, despite all the social distancing restriction. and we also have a live chat function to enable retile conversation between tenants so vell well received by tenants especially -- so very well received by tenants especially. so this showcase our office is like standing out and we are also expanding our customer base. especially for those who cannot be in hong kong right now. haidi: ada, are you making any changes to your outlook where you're investing strategy or
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your asset holdings because of the uncertainty either related to covid-19 or the geo political issues in hong kong? ada: i think actually this is a good time to invest. because you know, this is q.e. infinite right now, right -- infinity, right now, right? and money being pumped. and i think it's better to invest sooner rather than later. and i think this is actually a good time to invest, right? because a lot more willing sellers. haidi: so what are you investing in? what assets are you looking at? >> well, we're definitely looking at -- i think -- anything that could create value. the majority will be focused on office. because i think retail, covid, or this more and more online focus will definitely have an impact. primarily we are focusing on office. could be hong kong. could be greater about a area and overseas as -- greater bay
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area and overseas as well wherever there is value. haidi: how concerned are you the long-term outlook for hong kong? not only because of the ongoing protests but it seems that china wants to raise other hubs -- financial hubs that could perhaps even one day replace hong kong? ada: well, i'm actually very positive on hong kong. in the long run. because i think hong kong has -- positioning ourself as an international finance center. and hong kong because of our law and our losses different from china, so i think hong kong has always have our own uniqueness. and money, currency, and the people, you know, i think it takes years to transform a city to become like an international finance center. and hong kong like -- the people, our history, and, you know, i think we are part of china for sure but a little bit
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different and we can leverage on this very unique characters of hong kong and continue to be one of the major international finance centers. especially for a springboard for those like chinese corporates who want to go to the international market. haidi: and just finally you mentioned earlier the foot traffic in your malls has returned almost back to normal. just that the missing piece of the puzzle are the international travelers. given what's happening right now globally, and within hong kong, with the ongoing protests, what happens to your business, what's the impact if those international travelers don't return? ada: i think for our mall we are relying on the chinese greater bay area tourists. so i'm just hoping that if we cannot have a bubble, and just integrate the bay area, and can be reopened, then tourists can slowly come back. and i think there's also a need for us to like just change according to our -- and i think
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that for hong kong, i'm hoping that our retail market will no longer just be a seven million people but rather a greater bay area market and a 70 million people market. this is the only way that can keep hong kong and the retail industry supplied. haidi: ada, really appreciate your time. ada wong. champion reit c.e.o. and don't miss our coverage of the bloomberg invest global summit beginning on monday. we will be bringing you the biggest names across finance, economics and investing. including the hong kong exchange c.e.o. charles lee. and the national australia bank c.e.o. ross mckyun. this is bloomberg. ♪
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shery: a quick check of the headlines. telsa is honing in on placing its new u.s. production plant outside aufrnt, texas. filing an application with local authorities for a tax abatement. elon musk that tesla was looking for sites for the cyber truck and the model y crossover. tesla is evaluating the renovation of a concrete factory currently owned by martin mariota although not yet bought the site. jetblue is bucking the post-pandemic trend not only restarting flights but adding new ones as well. the carrier will add 30 new domestic routes from the new york area. but also from florida and philadelphia. as well as extending its premium mint service new york-new jersey. the conditions and restart will mean jetblue is operating more than half its typical mid year
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capacity by august. and qatar airways are adding more cities to their destinations and boosting flights on existing routes as they ramp up post virus. and increasing the number of destinations to 40 by early july. and qatar will see its u.s. network rebuilt to 39 flights per week with the middle of next month and emirates decision follows a recent move by the u.a.e. to ease travel restrictions. delta says it expects to break even early next year. after bleeding cash because of the coronavirus crisis. the c.e.o. told bloomberg the recovery has begun and rising demand means that more flights will now be restored. and called the rebound meaningful and said around 1,000 flights a day will be added to delta's schedule next month. and again, in august. revenues are currently at 15%. chinese investors just experienced something that's never happened before.
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losses on some of their $3.5 trillion state bank-issued high yield wealth management products. joining us now is china markets reporter gina yu. what was behind this loss? >> we are actually seeing the worst in china in a decade when traders are actually cutting bets on the potential for more stimulus from the central bank. so we are seeing the government bond yields soaring in china and this wealth management product, they're tied to the bond performance so the bond price dropped and net asset value on the products have plunged. so it's something that rarely happens. but that's why we're seeing the first-ever losses on this project. shery: does this mean that this will have an impact on the broader chinese wealth management industry? >> yeah. i think wealth management products, a very popular investment among chinese.
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and actually 90% of these products are helped by them and even when the government has been tightening the regulation around these products, demand for the products were quite steady given the return that's much higher than the saving rate. so this -- might trigger changes in the industry pushing investors to consider other kind of investments. potentially a good opportunity for houses like blackrock and vanguard which are expanding in china. shery: our china markets reporter jeanna yu there. before we hand it over to the china open a quick look at the markets trading. we are seeing a mixed picture with the nikkei gaining around .3%. we are seeing tech and consumer discretionary stocks leading the gains. the japanese yen now holding steady below that 107 level. it's been seeing consistent strength this week.
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this is fifth session of gains against the u.s. dollar on some risk aversion. the kospi has been weighed down by health care as well as industrial stocks. the korean won is also losing ground against the u.s. dollar. and around that 1212 level. this after the korean won actually led the gains among asian e.m. currencies in the previous session. there have been lots of expectations for the bank of korea could be joining peers and embarking on q.e. after cutting policy rates. and we have seen sovereign debt sales really doubling with the government funding a third budget. and that's increasing the pressure on bond yields. the a.s.x. 200 up .8%. we had seen a little bit of pressure on australian stocks after the unemployment rate surged to a 19-year high. coming up, an exclusive interview with the hong kong-based private equity firm p.a.g. which oversees a $38 billion. c.e.o. wei zhang to discuss the
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outlook for the city as officials begin talks on dwessive security legislation. plus the market outlook with morgan stanley china equity strategist laura wang joins us at the bottom of the hour. and don't miss our coverage of the bloomberg invest global summit starting monday. we will bring you the biggest names across finance, economics and investing including blackstone, steve schwartzman, nd jim chanos and apollo's jim velder and also sitting down with pershing square's bill ackman. this is bloomberg. ♪ loomberg. ♪
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tom: welcome to bloomberg markets china open. i'm tom mackenzie. ngles. i'm david i let's get your top stories. today, president trump risks a complete- decoupling remains an option for the u.s.. his own trade representative says that would not be possible.


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