Fraught with risk. Betty we are getting breaking industrialth korea production for the month of july, coming in better than 1. 9 , year on year. Estimates, they expected a decline of 2 10 of 1 , but we see a rebound of 1 10 of 1 . The prior month was revised lower, that is what you see a bigger rebound. Nonetheless, it speaks to the same conclusion among economists in south korea that the economy continues to grow in the second half, fueled by exports as well as domestic consumption, despite all these headlines we had the last 48 hours on north korea. Yvonne that is right. The economy is still on solid footing. But you wonder, we have heard hawkish rhetoric from the bank of korea governor. Can they continue this type of language if this north korea issue is not going away . It could start riling up markets and consumer sentiment, delay investment plans from businesses. That is the key question. We are looking to that press conference from the governor. A big day today with the u. S. Gdp report and china pmi and india gdp coming up this morning as well. Betty in terms of trade today we started cautiously but ended the day higher and risk on, giving economic numbers. Gdp end job numbers. At friday jobs are poor a lee kiefer markets. Setting up for a bid today in asia. Yvonne 3 gdp. I am sure President Trump patted his back a bit about reaching that number. But is it really sustainable . That is the key question. New zealand pretty flat when it fors to the nzx 50,. 7205 the kiwi. Harvey making landfall in louisiana, the crude seeing downside in the price. Well. For the aussie, as something to think of for the inflation, is it time to start unwinding now that we saw the dollar strengthening on the gdp data . Japan was a firmer dollaryen. Weakening now that the north korean fears have receded. Equity futures pointing to 10 points for the nikkei 225. 1 saw bounceback of 3 4 of yesterday. Lets get to first word news with courtney collins. In texasup, the floods have halted shipments of liquefied Petroleum Gas. They handle more than 90 of u. S. Exports to asia. When Tropical Storm harvey struck, propane prices rose. Wednesday, a middle eastern producers said they were also raising prices. The u. S. Is expected to export 28 million tons of propane and butane this year, half of which goes to asia. Opec under investigation in the u. S. Over allegations they paid bribes to resolve a dispute in nigeria. They are looking into claims the company funneled 100 million from its swiss units to new york and california. There was a division of royalties. Chinas hna group saw financing cost more than double in the year. Its 45 million spending spree is having an effect. They have taken larger stakes in Companies Including Deutsche Bank. Companies, including Deutsche Bank. Growth earnings were unable to cover those costs. Warren buffett is warning Central Banks to be very careful about how they back out of qe. The bank of england and others are looking to the end of stimulus. Although the bank of japan remains on a different path. Theett said winding of program is necessary, but fraught with risk. If they were to go back to 1 trillion or 1. 5 trillion, that would be 3 trillion they were not taking up and someone else would have to do it. They will be very careful about how they do it. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Betty lets take a closer look and peek behind what happened in wall street with that strong economic data. President trump rattling nerves with his tweets on north korea. Added on top of that Hurricane Harvey and the continuing tragedy and fallout from that. , today seems more more risk on. Factors weighing on the market. It is interesting how quickly investors sorted it out. There is the focus on the strong economic data. Look at the close, green across the stream. The dollar strengthened from tuesdays lows. The curve reflectance. Lets get into the big movers. Ad has given a great boost to stocks. Freeportmcmoran under pressure. And, we have United Rentals at just one of the examples of the huge spike in equipment stocks having to do with recovery in the harvey region. But also, the volume was 74 above average. Investors targeting these stocks. We go into g btv 2026. You will see the breath of the market has recovered. Records look at the righthand area. The drop in the breaths breadth has recovered. Betty certainly sounds like a rebound. Harvey is still pounding the gulf coast. We are watching how that affects gas futures. It gave a boost to industrial stocks. Su we saw japanese futures spiked to the highest in two years. We look at the price option on commodities. Oil ends up lower, gasoline continuing to move higher. Gold coming up in the last two days, where it had made news by breaking above 1300. If we going to the video and becausethe headlines, harvey came back stronger after going into the gulf of mexico, it closed down the largest u. S. Refinery along the louisiana border. 25 of u. S. Refinery capacity has been shut down. Finally, stocks were on the rise. Drillers under pressure as there is less demand. Industrials and Building Materials among the stocks that rallied. You can see the size of the moves, pretty strong. 6 to 9 . Many stocks have a oneday move. Under look at stocks pressure, drillers and insurance companies, as estimates for the damage goes into the tens of billions of dollars of damage at this point. Yvonne a good question is, how this will impact the economy and economic side of things. With Second Quarter revision numbers that rose in the u. S. 3 , coming out stronger than expected. We also have the adp jobs report for fridays jobs data. Su the focus is toward the end of the week. 3 gdp is the strongest growth in two years. It was supported by spending and business investment. Adp shows robust hiring. The big question a strategists say is not what the fed is going to do in september, but what theyre going to do in december. That is a question that may be answered on friday. Yvonne thank you, joining us live from new york. President trump has a tax overhaul. Speaking in missouri, he gave a broad overview of his plan, but few details. Our guest is joining us live from d. C. What was in this outline . Joe it was a set of boilerplate ideas advanced by both democrats and republicans. Lower tax rates, simplified tax form, easing taxes on middleclass americans, and revising the tax code to get companies to bring back profits being stored overseas. Something that president obama might have said, the devil is always in the details. There will be a lot of details still to be worked out. In general, his speech did come out positive from what we heard from missouri. We heard a lot of talk on north korea and nafta. The president saying, he is prepared to exit this trade deal. But you hear the pharma secretary saying we are looking to smooth edges. Are we close to tearing up nafta or tweaking it . End, it may be a tweak or renegotiation trump has said he does not like nafta. He has called it a disaster. But he has repeatedly said from a negotiating position, you start at the extreme. Hand, secretary perdue, the agriculture secretary, since he was confirmed, has been looking at the Positive Side of nafta. Which, for farmers, is quite good. That is not universal, not all economyorm farm benefits. With we know trump meets his big six, including steve mnuchin, gary cohn, and others, on taxes. What is their stance on the Corporate Tax rate . Are they still getting the 15 Corporate Tax rate past . Have been various proposals put out there. Trump reiterated a 15 tax rate. We have heard different rates coming out. A lot of it will work out with how much the country can afford, in terms of one thing he did not mention is the effect on the deficit and debt. Putting a Corporate Tax rate down to 15 , they seem to figure it will be Something Like a 2 trillion hit on revenue. It depends on what Everything Else that goes along with it in terms of loopholes and Everything Else. That is always a hard part. Betty the details, always the hard part. Thank you, joe sobczyk. Lets head over to sydney. These are live pictures we are bringing you from our sydney office. Is delivering a bloomberg address. He is taking questions. Predicting Economic Growth will accelerate as australia moves from the gfc and slowing them mining investment. Listenrg subscribers can on live ession on their bloomberg terminals. Yvonne we are awaiting the latest reading on chinas factory activity. We have a guest with her forecast. This is bloomberg. Betty good morning, this is daybreak asia. I am betty lou in new york. Yvonne i am yvonne man in hong kong. Estimates think the pmi amount is at 3. 3. Liquidity limits the expansion of enterprises. Joining us is Alicia Garcia herrero in our hong kong studio. We are two months away from the party of congress. Will we flip these next two pages of monthly data and wait for what happens than . What are you looking for under the hood behind it besides this headline number . Alicia i do not think the pmi will be a surprise. I would not worry too much. The underlying message is relevant. It shows investment, no matter how much leverage [indiscernible] we can talk about that later. Notwithstanding all of that, investments keep growing. It is difficult because the economy is so creditaddicted. Yvonne we see export growth going down a bit. Foreign demand seems to have added ebbed. I have a chart about base metals , g btv 6895. Foras led to soaring demand lead, steel. You dont think the infrastructure run has further to go . Can feel prices stay elevated at these levels . Alicia it could, but it would need much more leverage. What we see here is that leverages increasing at a slower pace. I would not talk about deleveraging yet. Because that decreases at a slower pace, decelerating, that is not enough to keep it going. That enormous infrastructure boom in the first half of the year. They said there would be a deceleration in growth down the road. Betty i want to point to another chart that speaks to what you were just talking about. It is g btv 6570. This deceleration your thing and export growth as well as import growth, but particularly export growth what you think is behind this . Does it have to do with the strengthening of the chinese currency . Alicia surely. Sensitivendeed very to the Exchange Rate. They are also very sensitive to prices, generally. We cannot forget that Producer Prices in china have been going up for a while. In the longterm it has stabilized. That means that negative prices and achieved currency is no longer there. Surely, that is very important to understand what is going on with exports, let alone the high increase in wages. We cant forget that is reducing chinas competitiveness. Betty staying on that currency, there are calls for the chinese yen to rise further from the 14 month high that it currently stands at right now. What is your forecast, your outlook for the chinese yen . The chinese yen is pretty flat. That has been the policy so far. Appreciation strong against the dollar. But compared to a trend in the renminbi, compared to other us,encies is it simply, to related to issues like strength. If you want to stabilize, you stabilize before. Now, the wolf is not coming. I think we have gone as far as we could. The second important issue, lets not forget, the pboc has changed its Exchange Rate policy by an by introducing a factor. Is also behind a strong opportunity against the dollar. Dollar, it goes like this. Is no need to show additional strength at this point in time. Thank you so much, great to see you, chief asia economist at natixis. New boss talking about new Core Principles and a possible ipo. We look at Dara Khosrowshahis comments. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Am betty liu in new york. Dara khosrowshahi hunting for an ipo in the not so far future. The company will go public in the next 18 to 36 months. Eric, how surprising was it for dara to come in and give us details like this . To build idea was rapport with employees first and foremost. And Travis Kalanick, the former ceo, talked to employees at ubers Market Street offices in san francisco. Dara answered questions employees had. One was about ipo prospects. His answer, 18 to 36 months away, is pretty far. At least willing to engage with staff. Betty absolutely. At this meeting that he had with employees, Travis Kalanick introduced him. What is there rapport like . I think they are still sort of figuring it out. Obviously there is a tension between embracing the company 20 billion built, gross bookings last year and they continue to grow. At the same time, the company has had a lot problems that it will want to move past. Would want to set their own terms and say, this is my company now. It was that handover of power. They are figuring that out. But the relationship is very much still being determined. Yvonne a lot could happen from now until that timeline for that ipo. Dealing with management turmoil, allegations of sexual discrimination, legal threats, is there a risk for him to name and set a timeline for this ipo . What if he does not solve these issues by then . That would be a big, big worry for investors. Eric these unicorns, there is often the help of an ipo sooner than it ends up being. New investors are brought in. Right now they are negotiating with softbank, didi, dragon year, General Electric about potential investment. 18 to 36 months seems too far away. That is why there is a secondary for anxious investors to cash out at least some of their shares. In ipo is not the only way to get liquidity. Employees would like to see it and are anxious for it, but there is an interim solution they are considering. To have you come a eric newcomer, my from san francisco. Uber,ing that news of chiefas has named a new finance officer, a wellknown internal customer person. Continuitymessage of to shareholders. Betty they have to pick up the pieces. If you are interested in the new features of the new iphone, we have exclusive images to help you. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Morning in hong kong, minutes away from asias first major market open. Pretty cloudy this morning. Betty still nice. It is a 30 p. M. Wednesday evening in new york. Markets were warmer for the bulls. 0. 5 . P closing up i am betty liu in new york. Yvonne i am yvonne man in hong kong. You are watching daybreak asia. Trump hasnt threatened to dump nafta as his foreign secretary was touting. Erdue says he has been trying to convince the administration it is good for u. S. Agriculture. He says there are rough edges that need smoothing out. More talks continue in mexico city. President trump mexico is not happy. But as i told them, you made a lot of money for a lot of years and everybody left you alone. We have to change this deal and hopefully we can renegotiated. If not, we will terminate it and start all over again with a real deal. President trump has appeared to reject the possibility of talks with north korea. He tweeted that the u. S. Has been paying extortion money for decades with no success. He did not explain what he meant by extortion and the white house to climb to comment. Rex tillerson had hinted a possible talks before the norths latest Missile Launch. German inflation rose more than expected in august as the ecb prepared to discuss pulling back stimulus. The rate climb of 1. 8 beating the forecast of 1. 7 . Meets to talk about their schedule, 72 billion a month. U. S. Regulators have approved a revolutionary new Cancer Treatment that involves extracting in modifying a patients own immune system cells. It is developing programs under which it would only be paid if patients actually respond. Cost, analystsh the limited revenue because of the relatively strong number of patients. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Yvonne lets get more on what we should be watching us trading gets underway in asia this morning. Sophie kamaruddin watching the market. The dollar bulls getting a break after we saw the gdp data out of the u. S. Unlikely to shake off the worst rout we have seen . Slight reprieve of the daughter of the dollar. As we round up, august is looking at a thirdquarter loss. You can see that on g btv 464. The white line showing the drop we have seen year to date. They are at the highest since 2013. You can check that out on the red bars on this chart. Positioning short could leave the dollar more sensitive, which is what we saw on the back of the gdp revision. That could support asian market sentiment. We have other markets in asia to look out for. The output indicating the growth story is still intact. Managerk, goldman fund said the fundamentals in the u. S. , or bets on the u. S. Rate hike dissipating. 3 for a december move. 468, this could be a downer for the dollar. Dollar could the see lows as saw back in early 2015. Drop of over 9 this year could be just the start. Come of thee, also dollar is not out of the woods. Treasuries have been stuck in that range, barely budging after the robust data and trumps tax reform talks. We have seen a lot of risk off sentiments in the bond market. Treasuries have been meandering in a narrow range, the tightest in three months. On the traders seem reluctant to push it in either direction. We seem to have more u. S. Data on the dax. That is what traders are looking out for, as well. Looking the closest to overbought territory since june. Were not seeing a rush to the market. You can see that on g btv 2585. They also pointed out it is not the time to short in any big way. Beyond capital markets, there was the north korean that risk changing the narrative for bond neutral positions are at the highest level in five years. As historically taken place before the fed could likely ease versus tighten their policy. Treasuries near 2017 lows. There could be momentum near 2 that would imply there should be more appetite. But we are not seeing that just yet. Betty sophie kamaruddin, thank you. Obtained images of the new iphone that is expected to be released next month. Our Consumer Tech reporter has seen these images. He is in san francisco. He wrote the story that is one of the most read on the bloomberg. What can you tell us about the new iphones . Thisll be a very significant time for apple, iphone fans, and Greater Technology market. Overhaul fora big apple. Theyre preparing three new iphones, including upgrades to us. 7 ad and 7pl modelthird, premium pro will be more expensive, around 1000 u. S. It will have a 3d facial recognition scanner the basically allow you to look at the phone in order to unlock it instead of scanning a fingerprint. And in todays story you mentioned, it will not have a home button. It will have a touch system for controlling the phone, for things like going to the home screen, toggling siri and opening up apps. Betty you buried the lead, no holds. Hows almost unthinkable often we use that home button. Apple, who were they aiming for with this new phone, at about 1000 . I should know better than to bury the lead. The home a button home button, theyre looking to sell this phone to people who are willing to pay the amount of money you would normally pay for a highend laptop or computer. Someone that uses their phone for everything, who once the latest technology, the highest end product they sell. They are able to sell phones prices that extraordinarily high margins, but prices other phone makers did not think of as conceivable. That 1000 plus price point goes into that category. But it is not unprecedented. The samsung note 8 costs in the high 900. That is a new phone with a stylus coming out in a weeks time. Yvonne how do these two compare . Taking away the home button, will it look more like an android now . Android phones have used the touch sensitive home button concept, it is just a different version. Swiping your thumb across the screen for the phone to understand what youre trying to do, going back to the home screen, shifting the paradigm for controlling the main functions. There will be videos in the os to show you how to do it. I do not think people will go nuts over this. It will be a shortlived height moment and people will ask, why did we ever need the home button . Yvonne could be a thing of the past. Have to wrap my head around that. Thank you for joining us from san francisco. The u. S. Economy picked up more steam than expected in the Second Quarter. The government revising gdp growth up to 3 , the fastest pace in two years. Lets go to Kathleen Hays with a look. That might make the fed more confident on inflation. Doesnt move the needle for their Federal Reserve . Kathleen i think people want a lot more 1000 iphones, that could move the needle. Secondquarter gdp revised higher. 3 from 2. 6 . More momentumy and stronger growth as they move into the second half of the year . Lets look at key things that moved to the dial. Consumer spending revised to 3. 3 from 2. 8 . Business investment revised nearly 7 . A lot of spending on software. 7 porate earnings, up about year over year from 1 in the first quarter. Looks like growth has started to spread beyond consumer spending, can it last . Chief economist in boston, said gdp is getting stronger and it will stay that way this year. We are growing in excess of potential output growth, narrowing resource slack. This suggests the economy has real momentum. It is going to give the Federal Reserve something to think about. , an opportunity to rethink monetary policy. Kathleen this adjust it will normalize in terms of a Balance Sheet unwind as early as september. Will it raise rates one more time . That is the big question. Growth of 21 growth of 2. 1 . Maybe this is more encouragement to think the economy is stronger, prices rise, inflation rises too. Yvonne what about inflation . If gdp stays on a stronger path is that enough to boost inflation to get the fed to move in september . It does not look like it will happen in august. Thursday morning in the u. S. We look at the core pce, the feds main inflation gauge for the month of august, expected to fall 0. 1 . Not good for the fed. Strong support, a healthy gain friday. Average Hourly Earnings expected to rise 0. 1 . Not a roaring number, but a little better. 100 80,000. Is up a boosted expectations by the adp survey of private jobs earlier wednesday. Another reason markets are optimistic and feeling excited about growth. Bloomberg intelligence thinks it will fall to points 2. 1 . Report wills gdp come out and we will see if the economy is rebounding after the demonetization effort. Kathleen so much going on. Gdp growth was up around 7 last year. It declined last year. Secondquarter gdp supposed to be around 6. 5 from 6. 1 first quarter. Growth added is expected to rise 6. 3 up from 5. 6 . The new taxes hitting the outlook hard. For small and mediumsized businesses it has been a factor. It is weighing on the Manufacturing Services number. Look at g btv 1581 with me on the bloomberg. You can see the services pmi, the white line. Manufacturing pmi, the blue line. Composite pmi, look how they have gone down so sharply, low 47. 45 on aow down to few indices. That was a bumper spring harvest, good for agriculture. Construction may be picking up because of lower mortgage rates, government has public spending more efficient. There has been a drop in home sale prices. Hows this whole question of goods and Services Taxes hitting businesses. There was news today that indias cabinet approved raising the tax on luxury cars to 20 from 15 . If you are in that business you you ared are not not expecting anything good from that. Betty we will see it all come together there, possibly. Thank you so much. Operation,artphone willoughby telecoms first unicorn . This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Betty hong kong has had a tough time in the startup world. Over one billion dollars. One Software Company is working toward that goal, possibly. Traditionally in a territory traditionally focused on finance and real estate. Labs tink think labs terence kwok. You expand your products all around the world, right . For all signing a deal new properties. They have a lot of hotels, 70 something in u. S. And asia. U. S. how important in the is the u. S. Market for you . Very important, we are talking 500 hotel rooms. Product we think im a given the growth of chinese travelers in the u. S. Market, it will be important. Betty how can it not exist . You go there, and get concierge services, you can look up, what are the best places to eat and that sort of thing. We just talked about the apple iphone. People are just addicted to their phones. They get all their information on their phone. So why do they need a handy smartphone in their hotel . Terence for us, the normal hand iphone and handphone are different. An new countryo or city, a lot of times you will not have information. A lot of times you do not have access to information about the city your hotel. We preload everything and make it completely frictionless. When you check into a hotel you can find a handy device in the room and get information about the city, order room service, book a spot service directly on the device. Most importantly, it is something you can use for free. Betty we were talking about the fundraising culture. Iy do think in hong kong know you grew up in the u. S. Terence i was born in chicago but grew up in hong kong. Why is it that hong kong has had such a hard time building a startup world . I know they are trying to, have put a lot of money into this. Versus china or Silicon Valley . Terence a lot of it has to do with the market size. We are a population of around 7. 5 million people, versus 1. 3 billion in china or 300 something million in the u. S. Hong kong is separate from china in that we speak cantonese instead of mandarin. It is tougher. If you look at singapore, the rest of southeast asia, hong kong we are on our own. From day one when we were building the business it was a global idea. You mentioned the challenges within the startup. Financing has been a one they say Speed Capital is selffunded. How big of a hurdle is that in hong kong . D. C. Developments where we see Venture Capital and banks playing more of a part in the early stages . Terence the government is doing a lot. Capital fundsure popping up in hong kong. A lot of the big private equity are based in hong kong. For a lot of companies it is making the right pitch, having a Global Vision that does not limit the vision prospects to 7. 5 million people. The government is doing a lot. I do think there will be more companies popping up soon. Betty who is your biggest competitor . Why do hotels need to have a product like yours . Terence we are arguing that number one, travel is a very infrequent activity. It is convenient to have something. It is proven we are able to help hotel owners generate additional revenue by pushing messages to guests. Because the spot is empty, we give you 30 off. Message thean concierge . Seeugh this engagement we incremental spending from guests. If you look at review sites like trip advisor and Online Travel agents, we get positive feedback from guests. Thank you so much. Ceo in kwok, tink labs new york. Yvonne japan, Industrial Production month on month, missing estimates, falling 8 10 of 1 for the month of july. The estimate was for a 3 10 of 1 drop. This coming off of a more than 2 rise in the month of june. We are seeing things slow down a bit. We do see Company Production plans that seem to be stronger for the month of august. But actual output tends to miss estimates. Weaker demand for europe could be denting sentiment overall. We see foreign demand or asian demand when it comes to the export backdrop continue to slow down and curb production. Doty we heard from kuroda, not expect the growth we saw in the last six quarters to continue. We will watch out for the softer numbers like this output number. We will watch this and the reaction the japanese markets. We can get a roundup of that story and more to get your day going in todays edition of daybreak. Onscribers go to dayb your terminals. Also available on mobile. Customize settings to get the news and industries you care about. This is bloomberg. Is daybreak asia, i am yvonne man in hong kong. Betty i am betty lou in new york. Revenue beat the average estimate by 13 million. They saw thirdquarter sales jumping 35 to 40 from a year earlier. Bought byscanner. Told toldoomberg has been apple is waiting in the battle for toshibas memory chip business. Bain capital is in competition with a group that includes Western Digital and kkr. Depends on memory chips and you not want to be dependent upon arrival, samsung. They put in a 19 billion bid. Optimistic about a recovery in container transport, boosting rates in volume. Million. E 282 one in toased cosco buy it for 6 billion, vaulting into the top three box carriers worldwide. Yvonne plenty more to come in the next hour of daybreak asia. We look at the data that could provide clarity on how Narendra Modi has shaken up the india economy. In half anoins us hours time. We have the market open coming up. Betty and here is how we are looking with nikkei futures up almost 1 . All of that carried over from the rally we have seen here in the u. S. , given the better than estimated economic numbers on the jobs front and revised gdp. The rally likely to get underway. Yvonne china pmi coming up in the next couple hours. The bank of korea decision happening as well. Plenty more to come. This is bloomberg. Its 8 00 a. M. Here in hong kong. Welcome to bloomberg daybreak asia. President trump keeps up the pressure on north korea, tweeting the time for talking is over. Toshiba chip sales go down to the wire. Apple has joined the race with samsung. Betty its just after 8 00 p. M. On this wednesday in new york. Two giants of the Business World talk to bloomberg. Brian moynihan saying it will be hard to reach 2 growth here, and Warren Buffett said the recent market rally is making it harder to find bargains. Yvonne a busy ecoday for all of us in the u. S. As well as asia. China pmi coming up a couple of hours ago. We saw some pretty good Industrial Production numbers for the month of july. One of those economic tigers in the region, 2. 7 Economic Growth for south korea right now. Fundamentally. D a lot of talk about how much kobe can can wg wgo be . Justs it going to rile not the market but also the economy . Were expecting Economic Forecast also. Betty its interesting with south korea, in some ways its allows the economy and the markets to remain resilient in the face of asernal factors including, weve been discussing the last several days, these geopolitical tensions with north korea. That continues to allow south as one of those tigers in asia. In the meantime, lets get to first word news with Haslinda Amin in singapore. Good morning, the floods in texas have halted shipments of liquefied Petroleum Gas which account for more than 90 of u. S. Exports to asia. Propane prices rose when it struck last week and middle eastern producers said they were also raising prices. The u. S. Is expected to export 28 million tons of propane this year, half of which will go to asia. Chinese Energy Companies sinopec is said to be under investigation in the u. S. Under investigation it paid bribes in nigeria. Sec and Justice Department looking into claims the company through100 million banks in new york and california. Toney is said to be have caused tax breaks and the division of royalties. Than doubledt more in the first half, assigned that a recent spending spree is having an effect. Since 2015, that taken large stakes in Companies Including Deutsche Bank said expenses rose to more than 2 billion from less than 1 billion a year earlier. The earnings were unable to cover it. Brian moynihan says he is encouraged by data showing the economy on firmer footing but says it will still be a struggle to reach 2 . Speaking exclusively to bloomberg, moynihan urged the Trump Administration to forge ahead with tech reforms, saying the u. S. Is no longer competitive. He also said the slowing birth rate is making the search of growth more difficult. If you think about the time in the 1990s and 2000s when you had Economic Growth, population was growing at 1. 5 a year. The difference is a lot of people and a lot of demand for houses, for food, cars, for everything. Without population growth at a faster rate, it will fight to get between 2 and 3 . The arkn buffett says it hard to find bargains but he still prefers stocks to bonds. An investment powerhouse through shrewd deals. He said the market has become much less attractive recently but Interest Rates are low. They are still very attractive compared to bonds. Paying 45 times earnings when you buy that on, and earnings are not going to go up. Its a form of investment where the earnings cannot go up. Stocks dont look nearly as attractive as they used to. The comparison becomes far less dramatic. From Warren Buffett later on bloomberg daybreak asia. 10 50 if youre watching in sydney. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Haslinda Amin. This is bloomberg. Were seeing equity futures are equities in the green. Solid ecodata coming out in the u. S. Frexit telling coming through from the wall street session, lots of data coming out for asia. We just had japanese industrial output weaker than forecast, setting begin further above the 110 mark. The nikkei is looking at second day again so far. The kospi adding to wednesdays gains and tech shares leading on the s p 500. Koreahave the bank of expected to hold pat at its policy decision later today. Ecb, and we have the euros on inflation that is due out on thursday. Ahead of that u. K. s Holding Steady after germany inflation surprise to the upside. Bank of America Merrill lynch is not impressed, saying the euro. As overshot the eurozone data one a look at whats going in the commodities space. Barrelelow the 46 a mark and metals are falling ahead of chinas pmi reading for august. Ricks acting a tick down for that month but today chinese corporate earnings will be very much in focus given the four Big Developers a standout in hong kong. Earnings could be a key driver once more today. Betty thank you so much, sophie. President trump kicking off his sales pitch for a new tax plan with a warning to congress. He told them not to bungle a chance to reinvigorate the economy but gave very little detail about the plan. For more on this were joined by jodi schneider. What is President Trump trying to get congress to do on tax law changes, and whys it so important for him . He wants a rewrite of the u. S. Tax code. He wants to reduce the corporate rate all the way down to 15 from the current statutory rate of 35 and he wants to get rid of some tax breaks and exclusions that make it a better deal for regular workers, which will be a hard left, particularly in this environment or hasnt been have get much the congress at all. Thats really why he wants this so badly. He wants to remove the memory of the problems trying to get rid of obamacare, that spectacular defeat in july just before so just before congress let the the summer recess. And also he wants to give the Business Community something. Betty we talk about this all the time, but the likelihood of tax reform getting through as quickly as he wants, what are the chances . Jodi really difficult. There has not been a rewrite of the u. S. Tax code since 1986, not a major one, because it is so hard. Every industry fights to keep those tax breaks, so it becomes politically difficult. The president has shown it is hard for him to work with congress right now in his recent likents about two people senator Majority Leader Mitch Mcconnell probably are not going to help things, but he badly a win here,uld use so theyre going to push, but tax reform is something that is really hard and takes a long time usually. Betty were getting mixed messages. There is widespread confusion about what he tweeted, the president saying talking is not the answer anymore. What is the strategy now for north korea . Jodi weve had back and forth over the last week, a week ago the president said north korea is starting to respect us, and then after the Missile Launch over japan, the town changed. Then he said were not necessarily going to continue this after 25 years, which required the defense secretary to comment when asked if there would be if they would not have any more talks, he said no to the fact that talks would be over. There are a lot of mixed messages, and its hard. Theres one message and then it changes tone. So this will be really interesting to watch over the coming weeks and see what happens with japan. Japan is in a particular situation politically, what they do. We have not heard a lot from china either on north korea provocation and that may provoke more messages from the u. S. Joiningapple said to be the battle for the human chip business. Talking about making a bit. Lets get to our asian managing editor for tech joining us live from tokyo this morning. Weve heard rumors that apple might be in the mix before, but what is the latest on apples interest now . As many plot twists here as game of thrones. Toshiba has been trying to selloff this per month. They desperately needed the cash. It up like they were getting close with Western Digital, the american chipmaker. Now sources are telling us apple is jumping in on the side, in talks with bain about mounting a rival bid for the chips business. The toshiba board is meeting this morning, looking at the various alternatives here. They had been under pressure to come to some sort of conclusion, probably with Western Digital, who has been waging a battle, not just offering money but also going through the courts in order to assert its rights to get this business. The apple bit is still in flux, according to the sources we talk to. In the past, bain had put in a bid up about 19 billion for this unit, but they need to figure out what to do about Western Digital. It is taking to the courts to assert that it has right in deciding whos going to actually get this company in the end. I cannot quite keep up with the news flow on toshiba. We were hearing earlier this week on how their could have some resolution by the end of the month. With apple now potentially in the game, how does that affect the bidding . The month isd of here, and sources have told us that toshiba and Western Digital are still quite far apart on any kind of resolution. Japans government has been actively involved here, something thats been confusing the situation on a number of different points. They had hoped that to achieve a toshiba would either be the final bidder are reach final terms on the agreement at this Board Meeting today. It looks like that is very unlikely at this point. Sources are telling us its very unlikely directors will reach any resolution at this point. Apple coming in on the side of pain only a few on the side confuses the issue and makes it more attractive for toshiba, but it will take more time to analyze that bit and also look at the Western Digital offer. They are quite far apart with Western Digital on several key points at this point. Betty what about the antitrust complaint in china . Peter this is a different issue for apple. Apple is on the verge of introducing their next iphone, the 10th anniversary phone. On the cusp of that, developers and china have gone to the government and raised antitrust complaint against apple, saying the Services Apple offers violate antitrust laws on a number of different points. Apples not happy that decision on which apps to approve for the store and also the revenue that apple takes for those apps and for instore purchases that people make in the apple store, so that gone to the government comments versus have told us Chinese Government is reviewing an antitrust complaint, trying to decide whether theres enough bear to move on with some kind of action against apple. Its the last thing apple needs in china, is the biggest market for apple but they face very stiff competition from local players there. They dont want the government jumping in with yet another problem for apple. Betty peter, thank you so much. The drama continues. From tokyo. G us its a story that has not ended for a while. Will tell you more about two deals making it rain for Warren Buffett, the billionaire investor. Yvonne and why investors should be focusing on the chinese large caps. This is bloomberg. Betty good morning, this is bloomberg daybreak asia. Yvonne our next guest says chinese ashares will take the lead in coming months. Saying we should be focusing on large caps, especially those paying out a good dividend yield. Kevin wong joins us live in our studio. Lets take a look at what happened on wednesday, given what happened in north korea, and we saw the shanghai composite, one of the few markets besides thailand that came through this unscathed. Was there something more here . The one thing about ashares is there correlation versus equity markets are the lowest. As result, people are looking at which market can we maybe invest uncoordinated with the other equity markets and ashares or where those markets where investors are looking more toward. You have in messier china and the h shares outperforming significantly. Chinese equity market have been , theout 40 and ashares renminbi has appreciated quite a bit but still lagging behind. Its trading a little bit cheaper than in messier china. Investors are starting to realize there is a lot to like and there are some opportunities within the larger caps, and also companies are paying a little more dividend because more chinese investors are open to that. Yvonne you mentioned about the dividend play which is an increasing trend in china. On shower is still relatively more expensive. We still see that premium in h shares. Obviously sometimes asia tends to be more expensive and sometimes h shares perform better. For chinese insurers, Going Forward, they can actually use the gains i made on the markets trading income as part of their overall net income. The difference can be counted is net income. Probably will see a little less speculating on a share market and more those companies will be paying dividends. As a result youll see insurers want to focus more on those companies that retain good amounts of dividends. As a whole, ashares are playing catchup and people will start to focus more on fundamentals. On i will pull up another chart that tells the story a different way. It shows you the shanghai composite really underperforming the msci emerging market index. It seems to be widening here. Whyhey are so attractive, is that momentum going the other way . At the end of the day, its the fact that people are sort of speculating and they feel its more important to invest in the offshore markets, whereas ashares are still somewhat limited. Going forward, what will tend to happen is that people will start to see there is that gap and the gap is widening, and it is a Good Opportunity for investors to take profit in places like the offshore china markets and other some of the markets you mentioned earlier and start to invest. Starting to see a little more northbound flow coming into the stock over the past few days. And if the renminbi continues to youreate a little more, going to see more people wanting to invest in ashares. If the renminbi is going the other way and starting to appreciate again, you will start to see more people having a bit more interest going back into the ashares market. Betty and if you do, where do you want to be . Capsfocusing on the large and companies that pay little bit more dividends. Youll see those opportunities within the financial space and the consumer place as well in china a share markets. Do you think the campaign is more positive for chinese stocks . This is have to realize helping china now. Earnings growth will be double digits for the first time in the past few years. This is what were seeing, over the past few years, earnings were not coming in at a very good number and now what is happening is that because he have the anticorruption campaign, everything is sort of cleaned out. Earnings Going Forward will be sustainable. That is one thing that is happening that investors have to keep in mind is that this will help china Going Forward. Get a roundup of the stories you need to know to get your day going in todays edition of daybreak on your terminal. Its also available on your mobile. Customize your settings and get news on the industries and assets that you care about. This is bloomberg. Yvonne frances biggest retailer posted firsthalf profits. 12 ,perating income fell below the 800 million forecast in bloomberg surveys. It tasted challenger key retailers and cut its investment forecast by about 4 . Expedia has named a new ceo, quickly felling filling the job with a wellknown internal candidate. He has been the cfo since 2011. Stock was lower on news of the departure. Should happen in 1836 month. People associated with both men say the personalities are in stark contrast. The new ceo seeing as a man of principle with little ego. His first task will be to rewrite ubers ethical code. Taken look at markets here in the asiapacific, the u. S. Ego data for Second Quarter, 3 growth. Dollaryen back above 110. Kospi still seeing weakness given the north korean geopolitical concern and s p 200 up 14 . Yvonne a 30 in singapore, dark clouds looming this morning 8 30 this morning. Ty gloomy they get are gloomy again in the line city. In the lion city. Sonny perdue saying hes been to convince administration that has been good for agriculture. A second round of talks in and the president underlined his determination to put america first. Next mexico is not happy, but as i told them, you made a lot of money are a lot of years its everybody left you alone. Efully we can read renegotiated, but if we cannot, we will terminated and start over with a new deal. Saying its trump not the answer. He said the u. S. Has been paying what he calls extortion money for decades with no success. He did not explain what he meant i extortion, and the white house declined to comment. Secretary of state Rex Tillerson had hinted of possible talks before the latest north korean Missile Launch. The brexit chief said the lack of taste in talks with u. K. Akes it difficult london is hoping it will be the case as it attempts to bring trade into the negotiations. However, he told lawmakers he sees little possibility of a final brexit deal by the deadline of march 2019. Havee living in india handed in nearly all the rupees. Ade void by the Prime Minister banks have received the equivalent of 240 billion, 99 of the now invalid currency. The government had estimated about one third of that would not be declared after the cashback was announced. An inquiry by prudential regulators come saying expects a report within six months. Investigating the banks culture and accountability over money laundering. Scott morse and also said the economy is emerging from its financial crisis. I believe we can continue to take confidence that a brighter each are is emerging within our economy. There are better days ahead. Its not wishful thinking. Its becoming the emerging economic consensus. Weve been able to push through what has been an arduous post gnc funk. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Amin. Slinda this is bloomberg. Yvonne lets see how the asian markets are shaping up so far this warning. Mix first thought this morning. Boj decisiong the coming up. Lower by utilities. The 10 year yield just above the zero level but china bonds are catching up. Base metals are in a funk and the aussie is steady before the data out from china. Aussie shares rising about. 3 . Check in on some early movers, reliance worldwide sinking this morning, the worst in over three while one miner up for the most since october. Keep an eye out for a key technical level with the nikkei. Below the 200 Day Moving Average but is now holding above that level. Alas look at one sector that is really outperforming, defense related stocks in japan. Up org into the sector than 128 this year. It could spur further gains for the sector. Betty thank you so much, sophie. Indias is due to release secondquarter gdp numbers later , which are expected to show a recovery in growth. Lets look ahead to that with our guest. Kathleen hays is joining us as well. Vishnu, as we were talking about earlier, theres so much to get a handle on with what india has nine with implementing the gst and other structural reforms. Do you think we will start to see the payoff reflected in these gdp numbers . See is wehat we will will definitely see the numbers bouncing. Optimistic. Ly more is for structural reforms, gst will take a lot longer. This is going to change the game in raising growth potential. Right now what were seeing is a little bit of remonetization bounce that has converged with the very low inflation is going to boost gdp numbers rather than being a payout for the structural reforms. In the bigs bring feature from the recent past. Ive got a chart to show the pattern of gdp growth, peaking so strong in the first quarter. F 2016, around 9 relatively speaking it still very strong growth, but when you big surprise,t, the latest news, a lot of that cash actually went into the banks. What is the impact of demonetization on the Indian Economy . Vishnu what it did, it developed a shock to the Indian Economy. If for some of the great economy to come into the mainstream because people were forced to rethink how to get out of this type cash situation. It was an exercise where you would have some kind of creative construction. Thanking has widened, Digital Banking has now taken a step forward. India has a lot more banks now. Its a question that remains. Was a time for them to rethink how the economy ought to work rather than giving rise to, as you pointed out earlier, its questionable whether or not the corruption angle was the sharpest one. Lets look ahead to gst because thats a big question mark now. Weve seen the purchasing Managers Index owing down. Shows the extent to which they are coming down. I dont know if its all because of the gst and the uncertainty. What do you see their . I think industrial activity has been hampered more by the Banking Sectors in a problem. It has to do with inefficient allocation coming back to hot nonperforming assets and has limited the ability of banks to extend credit to the industries. Some of the effects were compounded by demonetization. The direct impact, given that a lot of it affected the ability to auto sales have picked up nicely in q2. There is a divergence there. The take away for us is, we come to realize the demonetization is going to be a lot more fleeting. Investments are not performing and allowing that to be addressed in a way that can allow the economy to realize potential growth. That could be one of the key cornerstones apart from labor reforms. Yvonne the government gave the r. B. I. More power. Do you think the rbis equipped to tackled this issue more so than a commercial bank or a Bad Loan Bank . I think the r. B. I. Is still going to feel his way around this, because of the size of the corporations involved. They got more teams in terms of the constitution and the ability to get Bank Restructuring underway given the bankruptcy laws have been enhanced, that the court system is also burden. Its a question that remains to be answered. In the meantime, there appears an answer toof where the capital for banks is going to come from. Consolidation in the Banking Sector alongside the r. B. I. Possibility to take on nonperforming long. One thing for sure is this a can that maybe kicked a little more down the road but needs to be addressed, and certainly something that cannot be avoided. Betty on a final note with the Interest Rate outlook or the r. B. I. , inflation is slowing there. Are we going to get another rate cut . Vishnu i think if you just look at the optics of inflation, the argument is yes, the r. B. I. Can cut further. They have the greatest latitude to cut rates. They should not and all not to cut rates from here because inflation is going to downs back from where they wanted to be. The goal remains price stability and its really the banking channels they need to clear up. The wider concept of transmission rather than the pricing of the Banking Sector in terms of rates. Thats where we stand on them not doing this, if your going to see some fiscal slippage in terms of farm wages and going into the 2019 elections, but all said, it would not be a tragedy if the r. B. I. Cut once more. But we think holding it may be the optimal solution right now. Betty thank you so much, vishnu, head of economics and strategy on the outlook up india. And thanks to Kathleen Hays. Next, results from chinas big four banks showing the governments drive to get against bad loan seems to be paying off. This is bloomberg. Yvonne this is bloomberg daybreak asia. Betty a quick check of the latest business flash headlines. Secondquarter revenue beating the average analyst estimate by 13 million. The chinabased travel booker had thirdquarter sales jumping from a year earlier. They account for about 40 of global Online Travel booking. Yvonne apple waiting into the memory chips. Memoryepends on flash from toshiba in iphone and ipod and wants to continue supplies and not dependent on rival samsung. China state on state on carrier boosting profit in the first half. China has air benefited from a pickup and investing Business Travel but reported a 4 fall in net income, due in part to losses at cathay pacific. Air china says competition is increasing rapidly. Banks chinas biggest forecast beating earnings for the Second Quarter. Busted leveraging campaign. Lets get to our china correspondent joining us from beijing for more on these numbers. Run us through this. Back of china was leading the pack. They sell their net income increased by 23 in the Second Quarter. They are one of the top four banks. Three all saw and average net income increased around 3. 5 . As you say, the strong or robust economy here has helped, but its really the net interest margins that have been pushed up , as a result of the interbank lending. Up rates being pushed benefits the big banks and not so much the small banks. In terms of other things we been looking at as well, nonperforming loans. We have a chart that shows what is going on since around 2010. 20102017 is the time range. We seenast 1224 months it pickup and then start to level off. Lower. Ios have ticked between 1. 4 and 2. 2 for the big four banks. Overall the nonperforming loans ratio is around 1. 72. At least each reject or is going in the right direction. The other point of interest, weve seen the flipside, more traditional loans have picked up quite strongly, suggesting the government is having some success in the leveraging the credit to the real economy. Well get another gauge of the health of the chinese economy when we get that manufacturing data later today. What cand expect we expect from china pmi . It will be out in a little less than 20 minutes. The forecast of 51. 3 for the month of august, compared to 51. 44 july, so just a smidgen lower. Showing their still relative strength in the economy here. Theres been a couple of early indicators that have been mixed on this. One index showing you orders have strengthened, and small to Mediumsize Enterprises are showing a little more confidence. Suggesting relative strength in the Manufacturing Base here. Terms of nonmanufacturing emi, 54. 5,y it came in at marginally below what we saw in june. A couple of sub indexes were construction suggesting that Infrastructure Spending remains strong. Will be getting the private survey that looks at smaller businesses tomorrow, but its the official pmi data that we will get today around 9 00 beijing time. You so much,hank tom mackenzie, our china correspondent. U. K. Prime minister theresa may got a taste of traditional decor when it came to it appeared her host were too polite to say how unimpressed they are with the idea. Stephen engle is in tokyo. Postbrexit trade deal is going to be a hard sell. Stephen i think it is being a hard sell right now. The japanese are very notoriously very polite. Plan foray peaches her a proposed postbrexit fta with japan, she wants to model it after the soon to be completed in youjapan trade deal, and the observers we have talked to say maybe the japanese are not too impressed because they cannot necessarily figure out why they would leave the common union there. If are talking about japanese saying the nail that sticks up gets hammered down, theyre wondering why are you sticking out and standing up from the e. U. . David cameron himself said the addjapan trade deal would trillions to the u. K. Economy. She has an uphill battle. Yvonne and also dealing with cultural side of things in passive aggressiveness. Stephen engle join us live from tokyo there. Can see previous interviews andwatch live at top also become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Betty this is bloomberg daybreak asia. At warrene cash file Buffett Berkshire hathaway has been growing partly because of one acquisition fell through. The rally in market means its getting harder to find a bargain when it comes to stocks. Theyll be shooting fish in a 2009. In late 2008 and stocks have been steadily going up. March of 2009 was the low, so eight plus years. Stocks are not going to earn more just because you pay more for them. So they have gotten less attractive, but they are still very attractive compared to bonds. Youre paying 45 times earnings when you buy that on, and the earnings are not going to go up. Paying 45 times the rate. Stocks still look attractive compared to that, but they dont look attractive nearly as much as they used to and of course if Interest Rates goes up, then the comparison becomes far less dramatic. I wonder if there is a direct connection between nose, and how much is because the central bank s have injected trillions of dollars in euros and yen into a system that has driven asset prices up . They probably wanted to drive them up, but Interest Rates are to stock prices what ravi is to matter what gravity is to matter. You might be buying real estate, you might be buying stocks. If Interest Rates are 21 like they were in 1982, youre looking at stock at six times earnings. Rates, thats what drives valuations, and weve had these very low Interest Rates for a lot longer than i thought we would have and probably a lot longer than most people thought we would have them. Betty that was Warren Buffett speaking earlier today. Were getting breaking news on chinese manufacturing pmi, coming out a little bit earlier than expected. Slightly better than the estimate of 51. 3. Continued expansion here in manufacturing in china. Maybe not the robust expansion that some might have expected, but certainly it looks to be that trajectory continuing their in china in manufacturing. Yvonne everyone keeps talking about growth is going to continue to slow, but we are really not seeing that. 51. 7 is still a sizable beat here but were talking to economists out there, with the Party Congress coming up in two months time, you can skip the next couple of months because it will be steady as she goes for the economy for the next couple of months. 13th straighthe month weve seen manufacturing in expansionary territory. Will have analysis coming up on bloomberg markets. Will have that coming up next. Will look at satellite imagery in those ways of looking at whats going on in manufacturing. Were seeing a little bit of convergence. And economists will be joining us in about 10 minutes time. Mixed messages from the white house. Will be looking at that throughout the program and a lot of india data coming out. In mumbai asfloods well. Betty were looking forward to your coverage there on bloomberg markets. This is bloomberg daybreak asia. This is bloomberg. David at one point, your father left your mother. Ginni it was sudden, and my mother found herself with four kids, no money. David lets talk about ibm for a moment. Ginni we are the champions for business. David when you are meet with a president or other president s, do you see ceos willing to say, mr. President , that is not a good idea . Ginni people are respectfully honest and give their opinions. David do you feel a certain possibility . Ginni women do need role models. We are still a small minority that runs these companies. David in the stay fit category. Inni i do box with a person he does not get to hit me. [laughter] would you fix your tie, please
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