Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20170906

For continuity or change. , i am to daybreak asia haidi lun here in sydney. Betty i am betty liu in new york. Talking about Hurricane Harvey Recovery Efforts and now we are focused on Hurricane Irma and how the markets are looking at this. 108. Nt to pull up a chart, 4 benchmark catastrophe bond index, which shows you how much these bonds have fallen in the face of these hurricanes and storms. Matthew,ee hurricane the big decline we saw in that. In 2012, this is hurricane they, which devastated northeast region. I remember vividly being out of power for over a week. This on the right sound right hand side is Hurricane Harvey so far. Milder than the catastrophes of the other storms. However, many are saying that Hurricane Irma could be just as bad, maybe even worse than what we saw back here in 2012. Think you dont want to about it that way, but barclays said it could be the most expensive storm in u. S. History. You can see that price action playing out in with orange juice futures, sugar, cotton. They have a worstCase Scenario 130 billion. Betty incredible. Washington, they are talking about the debt ceiling. President trump coming to a deal with democrats, interestingly enough. That helped in the markets. This put a little power back and up 54und in the dow, points. The s p up higher by three tens of 1 . And the nasdaq rising 0. 3 percentage points. That gives lift as asia gets up and running in trade. In a way it removes one of the Financial Risks that has been plaguing investors, at least until december, kicking that can down the road. We have seen a relief rally. A bit of positivity here in the asian session. Lets see how the open has been when it comes to new zealand. Oft nzx 50 not doing much anything, trading sideways all morning at. 7086. The kiwi dollar was one of the worst performers. And the yen, one of the biggest decliners in the g10 space. Check out the set up in sydney. It could go higher by 13 points, reversing modest losses we close with yesterday. Taking a look at the aussie dollar holding above the . 80 level despite the momentary dip on the back of secondquarter gdp easing expectations. Trade, inflation, producer practices as well that will be weighing on it comes to australian currency. A look at trading in japan, nikkei futures have turned negative. Off by about 1 4 of 1 , that is how we closed yesterday. Certainly off session lows. Betty lets get the first word news with courtney collins. The feds latest beige book says the pace of u. S. Growth is modest to moderate with Consumer Spending increasing in most districts. Retail sales and tourism saw gains but most districts were worried about a prolonged slowdown in the auto industry. Low numbers of homes for sale continue to weigh on realty and workers there were worker shortages and construction. The 73yearold was appointed by president obama back in 2014 for a term that would have ended next june. It may give President Trump scope to start reshaping leadership of the central bank sooner than expected. The wall street journal said he is unlikely to nominate gary cohn as the new fed chair. Fresh highhead at against the dollar as the bank of canada raised its benchmark rate to 1 . The second hike since july. It is a nod to their surging economy, policymakers say further hiking will be datadependent. Geopolitics and other about Household Debt will affect that. Costs by alowered full percentage point for a fourth straight meeting as below target inflation allows policymakers to extend the countrys most aggressive easing cycle in a decade. The benchmark rate was cut to 8. 25 . 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. Haidi another busy day in washington. President trump fighting with democratic leadership on an extension of the debt limit tied to the relief fund for Hurricane Harvey. The president took 45 minutes to talk with chinas president about north korea. Lets bring in our senior washington editor, joe sobczyk. We had this 45 minute conversation between a trump and xi. Was there any consensus, we know that china and russia are against sanctions . Joe they were going to work together, but neither side offered a way out or a path forward, or any indication where the Chinese Government may be on the proposed u. S. Resolution, which would bar oil imports or rather, oil exports to north korea, and prevent countries from hiring their gas workers. There is still some negotiation going on. The u. S. Wants to get this next week. Passed it is unclear whether china is going to agree with it or may negotiate some other compromise on the resolution. Russia has come out against banning the oil exports. Thismir putin is arguing would hurt the north Korean People more than the government. Betty we know north korea has been dominating the headlines. Today, debt ceiling agreement also took the headlines as well in the u. S. Why did the president tsai with democrats over the agreement of the debt ceiling . Joe it was quite a surprise. Answer was, it was quick, easy and achievable. He was looking for a deal. He has been feuding with mitch mcconnell, the republican leader of the senate. Democratic leaders, nancy pelosi and chuck schumer, offered him a deal and he just took it. Republicans were split about what to do over the debt ceiling with some conservatives not wanting to go beyond three months or so. With a leadership pressing to extend the debt ceiling past the 2018 elections. They have kicked a this can down the road, and it is not completely over. There will steve there will still be a fight in december over the debt ceiling and funding the government. Haidi we will be back in december talking about this again. What happens then . Joe we have a number of things on the table. It will not make it any easier. There was a budget for the next fiscal year. Trump wants to press through on tax reform. There will be additional funding needed for relief and rescue operations after irma goes it hits florida as hard as it seems it will. The way forward is that he may look to cut more deals with the democrats. He knows pelosi and schumer can reliably offer their votes. If he can split off enough republicans, he may get the compromises he needs through the congress, by passing Republican Leadership. Thanks so much, that buys us sometime. Newss Senior Editor in washington. Lets get news on how this affected the markets. Stocks rising, longterm government that falling, investors hedging against hurricane damage. The debt ceiling did have an impact on trade today. you had a bounce in the s p 500, positive close across the board. That was a key driver, it pushed treasuries lower. If we go into some of the big movers, the hurricane played out in a big way, as well as other factors. Intel was up after winning its latest leg in an eight year title in the e. U. s antitrust case. The Progressive Insurance Company is one of a couple, allstate is in the bunch, in a preemptive measure, stopping granting any new insurance policies to autos. 130 billion in potential damages estimated by barclays. Therapeutics in the spotlight as they have positive on a drug in muscular dystrophy treatment. Lets go into the bloomberg to the big bond story. How the market performed when we looked at the bonds and dollar, which was lower, we heard fischerstion the surprise resignation. Gold was higher for some of the day, lower in extended trading. For more on bonds, we go to g btv 1046. We see a curve correction here. We saw in direct response to the middecember date for the debt ceiling issue to be discussed, yet again. We saw the october bill, which is in white, drop. On thesaw the tbill due 14th, we saw that rise. That tells us there will be a showdown in middecember, yet again. Kicking the can down the road is the term for it, that issue that still has to be dealt with. To watch continue these weather events. Hurricane irma continuing to drive commodities in stock trading activities, particularly insurers and related industries. We now have two more storms to worry about. Su you have hurricane jose and Tropical Storm katia right behind irma. Lets go to the video really quickly. The hurricane is hitting the caribbean. We might have pictures we can show you of the big waves and storm surges hitting st. Thomas and some of the other islands. The gusts have been tracking up to 215 miles per hour. This is the most instructive hurricane we have seen in the atlantic. There are projections that puerto ricos power system could be shut down for weeks. A lot of positioning in front of that is significant, particularly in commodities. Lets take a look, orange juice futures which soared yesterday, that is a big crop in florida, are now adjusting. Perhaps it was overbought. We see nymex crude up most of the day come in a little bit. And gasoline moving higher. It was lower in the regular session. Recovery over the Hurricane Harvey zone and uncertainty as to where Hurricane Irma will hit, and two more storms behind it adding a lot of risk across the board. No respite there, thank you, su keenan in new york. Surprise over korean tension. It turns the yuan into a safe haven, believe it or not. We speak to a persistent china bear. Betty rebuilding after Hurricane Harvey, were live in look at how the 7. 4 billion relief fund will make a difference. This is bloomberg. Betty we are counting down to asias first major market open. It japanese futures looking like this. Up about 1 . Quite stormy and rainy over there in tokyo. This is daybreak asia. I am betty liu in new york. Haidi and i am haidi lun in sydney. Houston and other affected areas in the gulf region begin rebuilding. Editor kelly spoke to the Harris County judge helping to direct the relief efforts. Where we at the stage have lots and lots of debris. We have to get the debris removed. We have lots of people out of houses. We have to find ways to get them housing. I had a meeting with the acting secretary of Homeland Security and the fema folks working on that. People are grateful we made it through the storm. I call them warm and fuzzy feelings. Those will go away quick if we do not get the debris picked up and get people moved toward moving back to their houses. Do you feel youre getting what you need so far from the federal government . Absolutely. Our big concern now is irma. That hits another part of the country that will draw resources away from us, and certainly our hearts are with those people in florida right now. What is the most important thing that has to happen, that even in the next couple days, especially as you engage with the Business Community . We need to get back to normal, it is that simple. We need to make people make sure people are back in their neighborhoods. School is starting, it would be great if kids could go to the right school from the beginning. That is where our focus is right now. What happens next . You have a lot of people that are displaced. What is the shortterm and midterm plan . A this is so different from hurricane that hits a coastal area, this hit our whole county. The numbers are staggering. You cannot bring in fema trailers. We have to come up with a new, creative way. Maybe allowing contractors to go in and start work on peoples houses so they can move back in, even if they are not completed, as long as they are safe. We have to get people back in their own houses as much as possible. Ahead thisther was an indiscriminate storm in a lot of ways. It hit everyone. What does it tell you about planning Going Forward . Are there neighborhoods that wont come back . Are there places you will not build . Question, we will have a largescale buyout of houses in Harris County and this entire region. We are on the gulf coast, we understand flooding. Houses have been flooded time after time and there is no mitigation project in line to help. We do not have a choice, we have to buy those houses out. Betty jason kelly joining us live from our bloomberg television, executive editor joining us from houston. Irma is a worry. As the judge was mentioning, jason. For those on the ground, there was a lot of concern. What is the biggest concern right now in houston . Jason the biggest concern is twofold. Part of the city where the water has not gone down, i am standing here on buffalo bayou, which runs into downtown houston. If you go out west from here there is a big neighborhood that is still very much underwater. We are sure exactly when that water will go down. People who areof displaced and that leads to the second big concern, which is, housing. How do these homes get rebuilt, where to those people go in the meantime, and how long does it take to really get back to normal . Set, peoplee judge are going to their offices, kids to the right schools, and the city feels like it else again. Haidi coming out of that interview with ed, housing seems to be an area of focus. Houston is already known for oversupply. How could that potentially change the dynamics . Jason that is a fascinating question. I have spoken to a number of people here about that. This is a boom and bust town. Given what oil has been doing, there has been an oversupply, especially of apartments. That has shifted dramatically in the last week. What you have seen is, that oversupply goes to pretty tight demand. I spoke with a big apartment developer today who said, it is completely it has completely changed his business. We will continue to see how this plays out. As judge emmett said, there are neighborhoods that are not going to come back. Programs where homeowners are bought out of their homes because they just cannot endure another flood. The city and state and federal goingment cannot afford, forward, to do this exercise over and over. Haidi jason, appreciate it. That relief and rebuilding effort is beginning. Russia fakes Facebook Accounts and divides the u. S. Election . How this is linked and adding to evidence that moscow meddled in last years president ial race. This is bloomberg. ,idi this is daybreak asia i am haidi lun in sydney. Betty i am betty liu in new york. There were a fake accounts likely run from russia that aimed to stir a political controversy in the u. S. Ahead of the president ial election. Bloomberg tech reporter sarah frier has been tracking this from san francisco. How did they find this at facebook . Sara facebook has been looking into whether there was any sort of coordinated campaign by russia and the election or any other state actors. They found earlier this year what they Call Information campaigns, people that want to spread false news and do so using fake accounts and take pages. What the finding today shows is that there is actually money behind that effort. That in many cases, they were using these fake pages, advertising through them, to boost divisions in the u. S. On critical, divisive issues, like lgbt rights, gun rights, immigration, and race relations. Facebook has parsed through all of their data, looked at the ip addresses where these ads are coming from, the spending, and found those fake accounts and pages are linked to each other and potentially to russian money. Haidi what happens from here . Other than the fact that it has added additional insight in terms of what happened during the election . Here, what happens from facebook is going to have to cooperate or is currently cooperating with u. S. Investigators were looking into these same questions. That, the company has to figure out how to make sure this does not happen again. They are checking on the pattern, trying to figure out, how did this occur . Deleted allhey have of those fake accounts because they say that is against their terms of service to have fake accounts on facebook. The main thing is, they want to reassure the public not just in this country but around the world that facebook is not going to be used to manipulate them. Haidi sara, thank you so much for that. Lets go to a quick check of the latest business flash headlines. A Marketing Group says facebook is claiming to reach more people in certain demographics then actually exist in the u. S. Research says facebook claims they have access to 41 million 18yearold to 24yearolds, but only 31 million americans fall into that category. They say measurement issues have been top of line for top marketers. A panel of bankers and investors will reconvene thursday to decide whether noble groups june loan extension constitutes a credit advance. Of bankers and investors will reconvene thursday to decide whether noble the meeting will happen in the early evening, asia time. They are on the embattled commodities trader, acting bilaterally, while waiting on another group. Japan says toshiba intends to make a decision about the future of its chip business in a meeting december 13. Lenders yesterday. But Western Digital is still seeking to have a stake in the unit. That means a decision still might not be reached by next wednesday. Betty another vacancy at the surprisingy fischer everyone by announcing he will resign. What President Trump may due to reshape centralbank leadership. This is bloomberg. Haidi it is 9 30 a. M. Here thursday in sydney. Is seven 30 p. M. Wednesday year in new york, where markets close higher. That rebound where donald trump surprise to the markets, agreeing to a debt ceiling extension. I am betty liu, in new york. Haidi they may be kicking the can down the road. I am haidi lun here in sydney. You are watching daybreak asia. Lets get you caught up with first word news. The u. S. Is circulating a draft u. N. Resolution that would embark crude exports to north korea. It would prohibit employment of its guest workers in other countries. A diplomat has told bloomberg the proposal called for freezing the assets of kim jongun. President trump spoke by phone to his chinese counterpart for 45 minutes thursday. China and russia have warned against further sanctions. Two of chinas top generals have been left out of the next Party Congress. President xi shaking up the Worlds Largest army. Many as sevenas seats on the 11 member military commission. One has been one of chinas most visible offers officers, accompanying xi to the meeting with trump in florida. President trump has sided with democrats on adding a foremonth extension Hurricane Relief bill that goes against the arguments of fellow republicans who pressed for a longer debt extension. The plan would extend the u. S. Debt limit and provide funds secured the government running through december 15. Hurricane irma has swept over islands in the caribbean, with puerto rico and florida in its sights, threatening to become the most expensive storm in u. S. History. Barclays has estimated insured losses and a worstCase Scenario at 130 billion. May be followed by another storm, jose, which has developed into a hurricane in the past few hours. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Collins. Tney this is bloomberg. Haidi lets get more on what we should be watching is trading gets underway here in asia. Sophie kamaruddin on markets for us. We are set up for a relief rally. That debt ceiling deal that was put together by washington, that put aside one element of risk. We saw stocks higher in the states and the bond rally taking the rally higher. Resignation,chers and whether cohn will get nominated by trump, that could affect asian currencies. The ringgit trading on november highs, ahead of malaysias policy decision later today. You can see were looking at a higher open when it comes to the major markets in asia, seoul, tokyo and sydney. North korea, while on the back burner, that is a hurdle. Arrivedhat, they have at a military base in south korea. If i can pull up this chart to show you the performance over the past five days, you will see the stoxx set to slide. They slumped the most on monday since august 11. There was a stock rally after four weeks of gains. With that in mind, we still have headwinds when it comes to what is going on here. We could have whiter fluctuations for wider fluctuations. Check out g btv 3987. Those are narrowing. The last time this happened, back in june, we saw this preceded a rally in july. That was the biggest in six months. That could relate to bigger volatility in asian stocks before they make an attempt at another record high this year. It is been quite a week for aussie markets. We have more potential catalyst from watching trade and retail sales out today. Sophie we had gdp coming in weaker yesterday. We are seeing futures pointing higher. There are headwinds for the socalled debt forming for the asx 200. You can see that on g btv 3211. That is when the shortterm moving average falls below the longterm line. In julyhis last happen 2015. That was followed by a tumble for the following two months. Aussie stocks have been the worst performer this year. They are heaping more pressure on to a market that is already facing banking woes. I want to pull up this chart, g btv 4123. It is tenuously holding onto that 80 sent u. S. Handle. In july,his attempt but has been unable to sustain the level. Average, theving line in yellow, has proven to be a strong base for now. The fundamentals are looking positive. We have Higher Commodity Prices and decent domestic data. Keep in mind what is going on with iron ore prices. The line in blue on this chart, it has snapped a support trendline. Betty Sophie Kamaruddin with things to watch in the market. Markets are watching this piece of news the departure of fed chairman Stanley Fischer next month, giving President Trump a big decision to make, whether to go for continuity or change. I want to bring in our Global Economics columnist at bloomberg view. Ofurprise here on the timing fischers resignation. Why do you think he is resigning . Great question, dont know. The only real shocker here was the timing. His term was due to expire next year. They tend not to be reappointed. What happens this time, we do not know. Few people thought stan fischer would get a second term and fewer thought he would be interested in one. Betty so it is just the timing. Talking about shockers or maybe not shockers. What about mario draghi . Do you think he will shock the market . We do not yet know what he will deliver. Hardber 31, there is a program unless they allow modifications to allow the program to be renewed. He has three opportunities to do that. Tomorrow is the first. Policy makers will be back from their summer vacation. He is back from jackson hole with all the intel. They will be armed with new forecasts on growth and inflation. Haidi to be expect him to talk about the euro . Daniel we certainly expect him to be asked about it at the press conference. It is probably going to be question one, two, and possibly three. What we have written a bloomberg is, he should not be too stressed out about it. Is it a factor . Yes. It is unclear how much of the euros assent he should worry about. Number 1, 1 thing going on is that the european economy is looking better. That is a plus for the euro. There is also the dollar side of that equation. There is real uncertainty now about how the fed approaches this question of why inflation is not moving up as unemployment moves down. And the socalled trump trade is off the boil. The expectation at the start of the year there would be rapid tax cuts and infrastructure spending, removal of all kinds of regulations, that has not happened. The limit is what drive you can control your. Here. Many Central Banks waiting and seeing to see what the dollar does. Thank you so much for that review, looking ahead to that crucial ecb meeting. Bestxt, the yuan is the performing asian currency this quarter. We will speak to a persistent china bear, who is growling again that a crisis will come within the next year. This is bloomberg. Haidi were counting down to asias first major market open this morning. Tokyo waking up for trade. Japanese futures see a strong upside, 150 points higher, taking the tailwind from the wall street session. A relief rally as geopolitical tensions recede. I am haidi lun in sydney. Betty i am betty liu in new york. Ballooning levels of corporate debt and expanding credit remind our guest of the u. S. Before the 2007 financial crisis. He says china is headed for a crash. In particular, the chinese yen. Kevin smith joins us now from denver. Thanks so much for joining us this morning, or evening here in the u. S. I know you have dug into and said, chinas currency can be devalued, at a minimum of 40 , up to 70 . I want to pull up a chart for viewers to show you where the chinese currency has traded. It is at its strongest level. 5889 on the bloomberg. The yuan is at the strongest and has forced other chinese there is to leave their short positions on the yuan. But not you why . Kevin as you indicated, we are bears t, china yuan it began in 2014. We saw the debt in balances building in china since the Global Financial crisis. They had a fourfold increase in their banking assets. The bubble is really quite excessive. Betty when you expect this to happen . We already started to see it happening in 2015 with the 4 yuan devaluation we had at that time. Since then, china has only expanded bank credit even more. Now we have this National Party Congress Event happening in a few weeks. I really think china has aheadlly expanded credit of this event and stabilized the currency. It could prove to be the catalyst for the unwinding. Betty why do you say that . Kevin just the sheer amount of what they call a credit gap we have seen in china. The bank for International Settlements has a threshold of 10 in terms of bank at a growth relative to longterm gdp trend as a warning signal for a banking crisis. In china, we are at 26 today. Numbers, if you look at them straightforward, same to support your view. But you have to remember, you are faced against the Chinese Government. Betrs have said, who have against china, it is really, really hard to bet against president xi and the Chinese Government, that they would ever even allow Something Like of 40 or 70 devaluation in the chinese currency. Kevin that is right. It is not up to the Chinese Government in the end. Theyre the ones that created the bubble in the first place. Banking assets, they have increased the 38 30 38illion, u. S. Equivalent trillion, u. S. Equivalent. Betty you are saying they do not have enough with of their current account balance and Foreign Exchange reserves to protect the chinese currency . Kevin that is right, the reserves are encumbered through the years of swaps they have entered into to defend against the capital outflows. There are really two major problems with the debt and gdp and banking imbalances. The first, the banking balances are vastly overstated by huge, nonperforming loan problems. The second, the currency is massively overvalued. One ely, it is banks, it is bank runs and speculative attack by the Largest Global macro hedge funds. They took down the british pound in 1992, it is a like of those big dogs coming in that will tip the balance at this point. Betty have you increased your shores on the chinese currency . Kevin we have been able to maintain a steady position through the use of yuan put options. We use risk controls. We also have equity shorts in china. We have been able to limit our exposure. While we are in a drawdown, your to date, we are still alive to play the game. Betty what would make you change this position . There is not a lot for us to change our views on the macro imbalances in china. Credit bubbles do not just disappear. Credit bubbles ultimately burst. This is one that we believe is inevitable and possibly imminent. Haidi when do you see the chicken coming home to roost . Even the most bearish analysts i know who have covered china for years and years, most have said it will be a slow, protracted, painful transformation. But there will not be a hard landing at the pboc because regulations in beijing do have the resources to maintain stability. And stability is all they are going for at this point. Kevin there is been a big push in new credit to have stability. Ultimately, when faced with a bank runs and speculative tax on the currency, with a huge, nonperforming loan problem they have and the massive about valuations, i do not see how they will protect against the crisis. This is one that should lead to a Global Financial crisis like we saw start to develop in 2015. Is not a system where you can have bank runs or speculative attacks about the authorities clamping down. Clamping down on capital outflows is one thing that china has certainly done. Sign of aness of a economy that is about to emerge into a global, develop the economy, and more a sign of an oppressive, totalitarian regime. Haidi i am not arguing against a that at all. In may be one step forward, three steps back for china. But that is something they are capable of. They have been capable of defending the currency to date because they want to avoid social unrest ahead of the meeting. But it has been at the cost of encumbering the foreign reserves and currency swaps. In the face of half 1 trillion per year of capital outflow. Ultimately, that is a margin call type of problem that china will have to face. Betty in our bloomberg story about you, noted your fund is a huge outperform or when compared to other hedge funds, up 300 since the inception. However, your down for this year. Perhaps owing to this short you have on the yuan. What are investors saying to you . Are they questioning or leaving you because of this bet . Both inflowse had and outflows recently. We have a number of people that really want to be there for the china currency bust, and we are positioned for it. Some, certainly drawdowns are never pleasant. We are down about 12 , year to date. We have had bigger drawdowns in been down over three and percent, cumulatively, over 11 years. Beenin 2015, when the chinese t bubble started to burst from late july when we had the 4 2016, weon, to early were up 25 . Intoink that is a glimpse what to expect on a bigger scale. That is how we are positioned. Betty thanks so much for joining us and talking about your position. Kevin smith, founder and ceo of crescat capital. You can get a roundup of that story and many more in todays edition of daybreak. It is available on your terminal and mobile. You can customize your settings to get the news on industries and assets you care about. This is bloomberg. Haidi a quick check of the latest business flash headlines, japan adding to its restaurant account for the first time in five years following a food contamination scandal that sent sales plummeting. It is planning to open more restaurants and will close following a turnaround that prompted its u. S. Parents to pull back on plans to sell a stake in the company. The ceo says it she expects the trend will continue next year. When we look at systemwide sales and profitability, our revised forecast for net income was 20 billion yen. That is the highest since we became publicly traded. It includes accounting adjustments and nonrecurring items. If we remove those, we are at ¥11 billion for net income. Billion. Was ¥13. 2 but i am confident we can achieve full recovery in that area. There is soenough, much more potential in japan. Haidi Goldman Sachs said to have started work on at planned u. S. Ipo for hna group. They will not be providing about ther concerns ownership structure. Has notd pactera started the formal ipo process yet. Expanding anes earlier order, handing the european airplane maker a win. Is valued at 13 billion 14 billion. The transaction establishes airbus as a possible replacement at united for boeings topselling airplane. Apple is said to have sealed a music. R warner it is their First Agreement with a major label since it began its ondemand Music Service two years ago. Alex webb joins us from san francisco. How significant is this deal for apple. Alex it is not the first a deal they have sealed the they started apple music, it is the first time they have renewed a deal. It is a renegotiation of the terms they agreed on two years ago when it started. , theyanaged to reduce have a couple other deals in the works. It shows the labels are getting behind music streaming, they see it has longterm viability. That seems to be what it is suggesting. Haidi conversely, how important is it for warner . Warner is getting 55 , that is what we are hearing from our sources. Will decrease as apple brings on more subscribers to the music streaming service. That is in line with what they are getting from spotify. It gives them longterm confidence in what they are able to get. It mean in does terms of outgoing deals apple has with sony, universal, and the like . Alex we can probably expect them to be in a similar range. Spotify sometimes pays 52 . Apple is hoping it is closer to 52 . It is an important thing from apples perspective. As much as they are an important organization, their relatively lean. They allow them to concentrate on the video service. Worry about apple music, the streaming service, that continues to have a lifespan and they do not have to worry about that in the years to come. Alex webb from san francisco. Next hour, we join bank of americas Merrill Lynch leader to talk about the latest move that the fed. Next hour,we also talk debt fro draghi. Betty and we talk etf with black rock blackrock. Haidi asian stocks said to follow the u. S. Higher as President Trump makes the debt limit deal with the democrats, also talking up tax reforms. Betty the u. S. Talking about banning exports from north korea. Missile launchers were reportedly deployed in the south. Haidi another top vacancy at the fed, with Stanley Fischer stepping down. It gives President Trump a choice between continuity or change. Betty an appetite for expansion, mcdonalds in japan, they tell us why they are adding restaurants for the first time in five years. Theyre going to love it there. This is the second hour of daybreak asia. I am betty liu in new york. Lun in sydney. Di the other thing i am thinking about is the strength of the yuan. There is talk about whether it has become a reserve currency or perhaps a safe haven currency. Look at this chart, 6914. The correlation in the trading pattern when it comes to gold, it has been trading very, very closely, in the event of risk Office Sessions in the market. What we have said over the past month is, them yuan has been the best performing in asia. The selling you might expect to see in asian currencies in the the saber rattling, the Nuclear Tests out of north korea and geopolitical tensions, it has been a top performer going into that key leadership meeting, the Party Congress in october. The other thing we are watching is the trade data from beijing tomorrow. Look at this chart. There is not a lot of argument, for trump to talk about currency manipulation. We are expecting the trade surplus to rise again. That is not something the administration will be happy with. Has been curious thing this move and acceleration in the chinese currency. And the quietness you are hearing or not hearing it all out of the pboc. It seems interesting we have not heard anything from the central bank on this. What is also interesting, this currency driving, despite people toll betting the yuan is set fall, it does not reflect economic fundamentals at all, like our past guest, kevin smith, a few moments ago. Haidi he is such a bear. Pretty riskbe appetiteheavy to bet against the pboc. We know they want stability. Riskake a look at cnh reversal, they are still at a 3. 5 year low. Lets take a look at how we are setting up as asia wakes up to trade. We get over to sophie for a look at the early action in the market. Are kicking off today with elements of risk taken off the table. An imminent u. S. Government shutdown. Perhaps kicking the can down the road to december. This is not far from mines. Thaad launchers have arrived at a military base in south korea. We are not seeing reaction just yet, the dollaryen unchanged. Marginally lower here. We are seeing the bond rally take a breather. Some traders may be choosing to stay on the sidelines. Alliance investment saying their team are sitting on their hands and keeping cash handy. Keep an eye on sovereign debt risk, specifically in south korea, after cbs jumped wednesday. You were talking about them yuan. We have the pboc punishing speculators. We have the offshore yuan trading at 6. 8355. We are looking for chinas forex reserves. Check out what is going on with the aussie, up 1 10 of 1 , holding it . 80 u. S. This has been a tough level to sustain for the aussie dollar. Weaknesse iron ore that could put this currency under pressure. They are falling below the key support trendline. We do have a steel on the back foot in shanghai. We take a look elsewhere in the commodities space. Oil is very much in focus. New york crude trading above 49 a barrel, that is a fourweek high. Brent is at the highest since the last day of the opec meeting back in may. Now we are seeing pressure for oil prices. Take a look at the Brent Bollinger band, g btv 4108. The rally has pushed the for ager band bend second straight session. A drop below could signal a pullback, which is what happened in july. Quite a bit to consider in the asian market session today. Betty thank you so much, watching of these markets trade. Lets get the first word news with paul allen in sydney. Latest beiges book says the pains of u. S. Growth is modest the moderate, with Consumer Spending increasing in most districts. Low numbers of homes for sale continue to weigh on real estate activity. Fed vice chairman Stanley Fischer has resigned, citing personal reasons, and will step down in midoctoberfed vice. The 73yearold was appointed by president obama in 2014 to a term that would have been next june. Departure marks President Trumps scope to start shaping leadership that the Central Banks sooner than expected. However, the wall street journal is unlikely says the president is unlikely to nominate gary cohn as the new areahair Hurricane Irma has caused devastation on the aisles of the caribbean. It is threatening to become the most expensive storm in u. S. History. Barclays has estimated insured losses at a worse Case Scenario for the storm at 130 billion. May be followed by jose, which has developed into a hurricane. Two of chinas top two journals have been left out of the communist Party Congress. Is hoping to shake up the Worlds Largest army. Ll as many as seven seats on the commission. Global news 24 hours a day, followed by more than 2700 journalists and analysts in more countries, this is bloomberg. Haidi President Trump has cut a debt ceiling deal with the democrats, adding an extension tied to relief funds for Hurricane Harvey. Trump spent 45 minutes talking north jinping about korea. We are joined by jodi schneider. Lets start with those talks about north korea. Might we see china, even russia, around to these sanctions . Is unlikely. These are some of the toughest sanctions that have been proposed yet, including oil and freezing the assets of kim in north korea. It is unlikely that russia or anda would agree to these, they do have veto powers in the security council. Itll be interesting to see the reactions of president xi jinping. 45 President Trump did speak minutes yesterday in advance of this. It is perhaps reassuring to the markets that the two president s are speaking a man all the turmoil, but speaking of reassuring, having the debt limit, at least that issue is kicked down the road a bit for three months, but that was reassuring for the markets today. Yes, at least temporarily, but kicking the can down the road is exactly what is happening not only in terms of the debt ceiling, but the budget. They will be tied together in the senate when the bill comes to the house to extend the debt ceiling until the summer 15th december 15. It also provides funding for the u. S. Government until then and provides hurricane funds for the victims of harvey. Yet this is not something Republican Leaders wanted. This is a deal that essentially President Trump concocted with the democrats, who wanted a shortterm deal, figuring they may be able to get concessions. Ater Republican Leaders were not happy with this. They had wanted a much larger debt ceiling after the 2018 election. We will be back down the road talking about this again in december. The departure of fed vice chairman Stanley Fischer next month gives President Trump a big decision to make, whether to go with continuity or change. Even, head of is Global Economics research. He has also previously worked at the new york fed. Great to have you. With so many vacancies, this gives the president a chance to remake the image of the central bank. How much of a risk is it, do you think, going into next year . I dont think we will see radical change at the fed. I think we will get to a board of governors that has a similar slightly dovish, the way we have seen with janet yellen. I am more concerned about what the fed does when they face a real issue Going Forward. When you get to a world where you have a real inflation problem, the fed has to hit the brakes. It is important to have a bunch of fed governors who know the history of the fed, no the mistakes the fed has made in the past, and are ready to act aggressively when inflation rears its head. I dont think changes at the fed mean a lot in the shortterm because the u. S. Does not have an inflation problem, but i will be watching closely to see who takes over at the reins. Do you think the softness that has come through is, in fact, transitory . Broadly, are Central Banks setting up for this inflation simply because the world has changed, economies have changed, and it is really kind of a structural issue we are dealing with . I dont think it is purely structural, but it is partly structural. I dont think it is hard for Central Banks to raise inflation these days. We have had low inflation for many years, so the average person does not expect inflation, and those low expectations are self fulfilling to some degree. But i think in the u. S. Case, with the Unemployment Rate likely to fall even further, there really is a chance for the target,chieve its 2 and i hope they kind of keep their foot planted on the accelerator so we get to that 2 target. You are right, globally it is going to be very hard to get back to normal inflation, particularly in europe and japan. Betty absolutely. Ethan, i want to talk about the rate hike outlook. I want to fold up pull up the fed funds futures, where they are trading. Right now, it is a 32 chance that by december we will get at least one rate hike. Im curious, is this an accurate right now, seeing the devastation not just from harvey , but the impending devastation coming from hurricane or must Hurricane Irma . Could that have any influence at all on where rates go . I dont want to sound hardhearted here. These hurricanes are a karen this humanitarian disaster, but they actually a durant this humanitarian disaster, but they orrendousnh humanitarian disaster, but they stimulate the economy. Our view is that the fed is more likely to hike then not in december, but obviously it is a very close call. I dont think the hurricanes will sway the fed one way or another. Weve got to look at the reality, ethan, as hardhearted as that might sound. Before we go, we were talking about fisher and these reports about cohen no longer being in the running at the home of the fed. Do you think that makes it more likely that janet yellen will be reappointed, or who do you think will take the fed over . , i think like most economists im kind of skeptical about yellen being reappointed, not because of her record. I think she has been great. But because of her views on regulation. She has been quite outspoken defending the doddfrank legislation, so that lowers the odds for her. I think that somebody like to seems like theen most likely candidate, a person with business experience. It seems like the Trump Administration likes to terms of Business Leaders rather than phd economists for these kind of jobs. I would not be surprised if somebody like cohen becomes the next chairman. Ethan, hang on, because we will talk about mario draghi. In the meantime, black rock explains why funds are seeing record flows. How you can take advantage. Also be looking at the yens status as a safe haven as tensions on the Korean Peninsula continue to build. This is daybreak asia. Is finallyo draghi having the talk he has long avoided. Charting the course of future stimulus plans. We are also going to hear from the ecb later on interest rates. The bank of, americaMerrill Lynch head of global and what the comic head of Global Economic research is back with us. At this meeting tomorrow, do you think mario draghi is going to lay out the Balance Sheet . I think draghi is trying to delay that decision as long as possible. Betty but hes got a hard deadline. They have toint, make an announcement about a new Balance Sheet program, but right now, the euro looks so strong. This is not a good situation for europe. They dont want a super strong currency. Given that he has very little flexibility Going Forward, and a little bit slow to make changes, it is probably the best he can do. We think he wakes another month before announcing a new buying program. But they are kind of on a preprescribed course towards nextg kiwi next year qe year based on political constraints around what they are willing to buy. Betty but i dont think the euro is going to end up lowering anytime soon. If you look at a chart with got, it shows the yearend forecast for the euro right now are above the median. Almost all the analysts here expecting that we are going to. Tay above trend with the euro i dont think there is going to be much relief when it comes to the currency. Ethan i think they are trying to avoid something worse rather than fix a problem. I think the problem right now is that europe is looking a little healthier than the u. S. In the sense that we had very weak inflation ratings out of the United States, and that has tended to weaken the dollar. I do think the euro will start to soften a bit Going Forward, as it becomes clear that the u. S. Is not as weak in terms of inflation as we thought. And i do think the fed is likely to hike up at a december meeting , so that will take some of the upward pressure off the euro. The problem right now for the ecb is there is not much they can do for themselves, because theyve got a constraint on their buying program. They can only buy equally across countries, so when they run out of german debt, they stopped their qe program, and it is unfortunately to my mind that they would accept this constraint, because it makes it hard for them to manage monetary policy. Ethan, i want to go back to this idea of how the ecb unwinds. I want to pull up this chart which is super complicated, but thats also kind of the point. This is the Balance Sheet broken down by assets. I wont go through the mall, but suffice it to say, it paints a picture of how unprecedented the ecb. Enges are facing the that thethe risks markets are pricing in that this could be messy, because we have never been here before . The ecb does not have a big challenge yet. They are in the process of slowing down their buying program rather than ending at. The fed has a big challenge. So far, they have been able to convince the markets, we are going to shrink our Balance Sheet with almost no impact on the markets. I think they have been a little bit lucky so far, and at some point, the markets are going to Pay Attention here, and we are going to see upward pressure on bond yields. As you said, this is uncharted territory. It is hard to believe this is stableo be a perfectly exit path, that there are no consequences of shrinking your Balance Sheet. There are always consequences. Ethan, i appreciate your time. Next, after years of lackluster sales in japan of course, we had the food safety scandal mcdonalds is making a quiet comeback. Find out what is driving the turnaround, next. Betty this is daybreak asia. Haidi japan seems to be loving mcdonalds, with the chain increasing its restaurant count for the first time in five years. The ceo says it is a trend expected to continue. When we look at systemwide sales and profitability, our revised forecast for net income was ¥20 billion, but that is the highest since we have become publicly traded. And however, it includes a number of accounting adjustments and nonrecurring items. If we remove those, we are at ¥11 billion for net income. The alltime high was ¥13. 2 billion, so weve got a little bit of work to do. I am confident we can achieve full recovery in that area, but thats not enough. Theres so much more potential in japan. Haidi for more, we are joined by lisa do in tokyo. Improvingis casanova mcdonalds prospects in japan . She has done a lot of things to try to turn around mcdonalds. She does not think the company has fully recovered financially. They are not back up to their alltime high profits, and she thinks they have the potential to go further. In terms of customer satisfaction, she thinks they have hit probably alltime highs. One way she is trying to improve profitability is by bringing in more customers. This year, mcdonalds is trying to do that by improving its menu. They have introduced a whole lineup of burgers that are more suited for japanese taste. For example, they have a pork and gingerfocused burger. It is very suited for the japanese palate. Another thing they have done is partnered up with japanese candy brands to introduce new make flavors. Mcflurry betty they are near a record high, but has the Company Really put those food contaminating issues behind . I think if you look at it from the point of view that they just recorded their 21st straight month of increased samestore sales, and kind of from the point of view of the consumer, they have managed to get past the issue. If you look at their initiatives they have done, like put qr codes on the food items so that customers can scan them and see where their food came from, or they have a website where you can follow the supply chain of thosefood, looking at types of initiatives, it really shows that they are listening to their consumers and addressing concerns like that. Haidi betty lisa, thank you so much. For ag could be worse fast food chain fanfic contamination issues. Haidi, several countries here are dealing with those issues. Chipotle comes to mind. They are still struggling to recover from their own issues with contaminated food. Haidi can we saw that kind of play out in china as well, with some of these food Safety Scandals over suppliers. It takes a long time to regain trust and reputation, but it looks like mcdonalds japan is turning that around. We are watching that recovery story very much over the next few months. Betty next, we will be live in tokyo to find out why a rival of japans Prime Minister says the country needs to rethink its stance on the u. S. And Nuclear Weapons. Singapore. S 8 30 in we are half an hour out from trading their. Betty you are watching daybreak asia. We are getting headlines coming out of the south korean Prime Minister, saying that north korea may launch a missile on september 9, so this sunday. Again, there are expectations for north korea to launch. Nother missile on september 9 you are seeing reaction in the markets with the traditional yen spike. It is right now trading at 109. 03. You saw an Immediate Reaction to those headlines. Absolutely. We are getting these comments from a summit in seoul at the moment. We are looking at the Australian Defense minister speaking at the same event. Of course, september 9 is the Foundation Day for north korea, and we have had reports from there hasesting that been detected movement of the icbm, and some suggestion that it would be fired this weekend. Also getting these lines that ab e and moon have completed their summer talks in russia. Another comment from south korea saying that there is not much time left until north korea is believed nuclear armed. It does feel like the stakes are high at this time. To recap, we had that 45 minute conversation between Donald Thompson and president xi jinping. Other side on the of things, against the sanctions against the north. Betty it seems like the game has changed after the new year test over the weekend nuclear test over the weekend. Whats get more news from paul allen in sydney. Aul the u. S. Is drafting resolution that would buy crude oil exports to north korea to ban its exports of textiles and prohibit employment of its workers in other countries, while freezing kim jonguns assets. President trump spoke with his counterpart on wednesday. Launches have now been deployed of a south Korean Military base. President trump has signed with democrats on adding a threemonth extension of the u. S. Diplomat and Government Spending to a Hurricane Relief bill. That goes against the arguments of fellow republicans who pressed for a longer that extension. The plan would extend the u. S. Debt limit and provide funds to keep the government running through december 15. The loonie hits a twoyear high against the u. S. Dollar as the Canadian Dollar raised its benchmark rate, the second hike since july. Policymakers say further tightening will be doubted. They cited risks including geopolitics and concerned about how to solve debt. Has lowered borrowing costs by a full percentage point , as fourth straight meeting below inflation that allows policymakers to extend the countrys most aggressive these new most aggressive easing cycle in a decade. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, im paul allen. This is bloomberg. Haidi time to see how the asian markets are shaping up. We are getting risk off reaction again in the end with these headlines. Potentially we are going to see another nuclear test this weekend. We have the dollar tweeting at 109. 09, but the nikkei 225 is still up 6 10 of 1 . The cost me maintaining a momentum, along with the korean won. Asian stocks grading grounds gaining grounds today, but they have not offset the monday slumped just yet. Take a look at what is going on in the bond space. There is a mixed bag. Treasury yields sliding once more, and that is dragging on the dollar, which is down about 1 10 of a percent. Of 8 . Cbs is falling, but it is still at elevated levels of the 70 mark. I want to take a closer look at what is going on with aussie stocks as well. We are waiting on data. We do have the asx 200 up about one third of the percent. One third of 8 . Health care sliding, and consumer stocks are falling onghtly, very much a drag this segment ahead of retail sales data for july due out later today. Taking a look at how the currency markets are faring, the south korean won still performing the best out of expanded majors on the wcrs function. We had the renminb ring it set for a third day of gains. No change expected. We did have a surprise rate hike from the bank of canada. The loony easing some of its games in the wake of that decision, but it is still trading near a twoyear high. A last look at the cost be kospi. Ot getting much of a dent financials leading gains after falling on wednesday. I. T. Stocks also pairing ahead. Energy east shares Energy Shares tracking. We do have oil prices now under pressure, but today so far, we are seeing korean assets ng their head despite concerns about a Missile Launch potentially this weekend. Betty sophie, thank you so much. As you mentioned, south korea thee ministers is telling defense conference that there are expectations that north korea may launch a missile on september 9. That may increase pressure on japan, and shinzo abe says the nation to discuss whether to allow the u. S. To place Nuclear Weapons on its territory. Those conversations follow north koreas latest nuclear test over the past weekend. For more, here is Isabel Reynolds in tokyo. Isabel, the fact that north korea has launched this test, does that fundamentally changed the game for japans defense considerations . I think it does, but not necessarily directly. The has changed now is that u. S. Is potentially under threat, and japan relies very heavily on the u. S. For its own to terrence. It is looking with great concern to see how the u. S. Will react. The general consensus among the government is that japan must make that alliance with the u. S. Stronger. Being suggested, allowing the u. S. Military more freedom as it does in japan, is perhaps one way of strengthening that alliance. Chances of are the japan actually changing its policy at accepting Nuclear Weapons . Isabel i think in the shortterm, the chances are pretty small. As the only country ever to have suffered nuclear tactics in more time, this is an extremely sensitive issue in japan, and the top Government Spokesperson came out today and slapped down the idea and said that japan will maintain and expand on Nuclear Weapons, we are not considering reviewing this policy. That, theresaid have not been a lot of opinion polls on this, and it would be interesting to find out whether opinions are changing because of the situation on the north Korean Nuclear issue. Betty the former defense minister, shigeru issued a, he wants to open a debate and enjoy some popularity in japan, so what is this intrigue that surround him . Isabel he is someone that has been around for a long time. He is very much seen as an expert on defense policy after having served as defense minister. In 2012, he narrowly lost to abe to become the ruling leader. He could have become Prime Minister at that point, he just narrowly did not. Since then, he has maintain high levels of popularity in the region. Heng outside the cabinet, has had more freedom to criticize abe and come forward with more ideas for the administration. Most people have stuck behind abe. When it comes to defense, he has always taken a logical line. He wants to cut through the contortions that japan has had just where its constitution with actually having a military, and he wants to be straightforward about it, saying we have a military, we have to defend ourselves, and that has got him some degree of popularity in japan. Haidi isabel, thank you for that. The yen has long been regarded as a haven currency. What about when the risk is coming from nearby and targeting japan . We are joined by patricia lui. . Here does begin go from here we have seen a move to safety, reports from the south korean Prime Minister saying that expectations for a september 9 launch. But it is this kind of unintuitive idea that when japan is a target for risk, the yen is still a safe haven. Patricia there has been a lot of discussion about what will happen to the yen in the event of a conflict. There are a lot of of views, and there also seems to be the fate of the yen will depend on the extent of the conflict, if japan will be involved, and if there are damages to japan. The immediate idea is that the yen may appreciate, and that is basically based on three reasons, and thats the carriage rate. We know that the yen is a very popular currency for funding in carry trades. There is a lot of that out there with the viewer interest rate. There is going to be a lot of unwinding of the the yen. This will in directly bring the yen stronger. We have japanese investors who are abroad, and they have an investing abroad for a long time. They hold about 3 trillion in Foreign Investments as of last year, and they can bring the money home is because they want it to be safe, and also because if japan is affected by any ,amages in the outbreak of war manufacturers, fund managers, and insurers will want to bring the funds home for reparations. J. P. Morgan chase is one of those people that think the bigger the damage in japan, the stronger the yen will be. We saw this during the march 2011 are wake when the yen depreciated very briefly and then appreciated very sharply, because there was a lot of repatriation for money back home. Finally, thats also the argument for the yen appreciation, that it would be a safe haven. Treasuries would be in strong demand, and this would drive yields lower, and therefore the dollar weaker as well and again stronger as a result of that. Right, but what are your arguments for yen depreciation . Patricia thats the idea that there will be coming right after any yen appreciation. We have mitsubishi expecting that the yen the dollaryen could rebound about ¥10 after appreciating about atn. That is because the japanese , foreigners in japan at the moment, would want to bring the money out. Foreigners hold about 30 of japans stocks at the moment. Foreigners have also continued to buy the jgb bonds. The numbers are out, and the foreigners saw the third biggest bonds,ing of japanese even in spite of all the north korean tensions involved. There will be a lot of exodus out of these assets. Finally, we have the process the prospect of increased u. S. Defense spending, a boost to Economic Growth and therefore the dollar. Betty we will certainly continue to watch the yen amid this turmoil. Patricia lui, the forex editor in singapore. Up next, etf slows in the u. S. As you know, they have been surging, already passed the total for the entire year last year. Are we seeing a bubble . We will put that to blackrocks mark wightman, next. Betty good morning. Im ready liu in new york. Haidi and im haidi lun in sydney. Products have been surging, 30 billion in august alone, and now more than 40 billion 400 billion for the year. That is for all of 2016. Mark, should we be getting nervous at this point . Seeing at thisre point is that clients are finding a cheaper, more efficient way to buy whatever they want. Equities,nt u. S. Japanese equities, they are fighting a cheaper way to buy, and that is why the growth rate has gone from 15 last year to over 20 for use of etfs. It is a way of accessing markets. The underlying exposure is what the clients really want. Its like using amazon prime. You buy the milk there because you want the milk. Haidi are you seeing this as a global phenomenon . We have looked at the global challenges etfs take up elsewhere around the world. Where we are seeing it is global institutions, and by that i mean asset managers, banks, pension plans, all over the. Orld they are all using etfs as ways of trading bonds more efficiently than actually using the underlying bonds. They are using etfs right next to the underlying bonds as the way of building portfolios. The story that is not seen in asia that is truth through the west of the world is the growing wealth. Seeingted states is rapid accumulation of etfs and growing climate portfolios. That we have not seen in asia. Australia, yes, but not in the rest of asia. Betty maybe etfs are now the amazon of the Fund Management world. Is there any place at all in your view for active stock figures . . Mark absolutely. Active stock pickers as a set are so much larger than not just etfs, but the whole world of indexing. There are many dollars allocated to people pricing securities around the world. All indexing is only about 10 of the financial markets. Thats pretty small. There is a huge space for stock pickers to price securities and make money for their clients. Etfs are just a way for clients to build or folios when they dont want a stock picker for a growing exposure. Betty the downside of that is that you have more etfs investing in companies. That makes, by default, these etfs as passive as investors. Cause lessperhaps corporate governance, there are not active managers holding the ceos accountable. That is a concern right now in japan, where the etf market is so huge going to the boj. Mark right. The first thing is, remember that most people use etfs to discover prices. What etfs are allowing individual investors and institutions to do is to say that the price of this particular set of securities, what it should be relative to about one. An important part of what etfs do is help discover prices. Is, at 10 of the financial markets, at maximum 15 or so of u. S. Equities, is that affecting price discovery . I struggle to believe that. We have many trillions of dollars of people out there saying, hey, this stock is cheap, that one is rich, and this will be here for our children and maybe even our grandchildren. When we see indexing as a huge portion of the financial markets, maybe we will see more opportunities for people to make money picking stocks. Thanks so much for joining us in hong kong. You can get a roundup of that story in todays edition of daybreak. Bloomberg subscribers can go on their terminals. This is also available on mobile in the bloomberg anywhere app. You can also customize your settings so that you only get the news you care about. Check of thek latest headlines. Intel has won the latest round of its fight with the European Union over an antitrust fine. Top court says intels appeal must be reexamined by a lower court tribunal, criticizing judges for failing to accurately analyze aspects of the case. The whirling could also have ramifications for other disputes involving tech giants google and qualcomm. Haidi Indias Telecom regulator has criticized apple for refusing to approve an antispam iphone app. The chairman claims apple is wrong, calling it a ridiculous situation. Operators toile block them. The standoff could impact apples efforts to expand in india. Betty a panel of bankers and investors will reconvene thursday to the sky whether decide whether novo groups june event is a credit event. Owners of credit swaps on the commodities trader have been acting bilaterally while awaiting consensus. Here, and a big story apple is set to seal the deal with songs from warner music. It is apples first deal with the major labels since it started its ondemand you ondemand Music Service two years ago. L. A. Ob joining us from how big of a deal is this for apple . It is a big deal in that it sets the stage for the other two. There are three major record label groups. Ony, warner, and universal of the three, warner is the smallest, but it has gone an inmate the first deal, and the assumption is that sony will fall in shortly after, and universal after that. Now it does not have to worry about it and can focus on other things. Betty the Music Industry has been busy, especially that facebook deal yesterday. Lucas, how important is this for warner music . Nows for warner, they are the first of those three major music groups to have deals with in three biggest players online music apple, google, and spotify. Youtube are with particularly difficult, but now warner has really set the market in a couple of those cases and can reap the benefits of the boom and ondemand streaming. What are the means for other upcoming deals that apple has to make, the likes of sony and universal . I think for apple, what we have seen over the last year it is a much greater emphasis on online services, on entertainment, on media. They are hiring executives to produce tv. They have been making tv shows and movies for apple music. And all these music deals, first with warner and those to come with sony and universal, have helped establish the floor of what apple music is, and all they are doing and video can kind of build on it from there. We are seeing the beginning of whatever apple wants to do as a player in hollywood. Haidi lucas, thank you so much for that, coming to us from l. A. That is just about it for us here on daybreak asia. Now it is time for a look at what is coming on bloomberg markets. Rish, what are you watching . Rishaad we are looking at j. P. Morgan, the head of Global Fixed Income currencies and commodities joining us. . Hat is the ecb like mario draghi is talking later on. We have been talking on the program about this. It has been a doubleedged sword, because he says the euro is very strong at the levels it , 1. 20 against the euro. It is now up to 1. 58 or thereabouts. It gives a bit of fear about the european economy, that it may not be strong enough. Looking at that, and then a regular on the program, shane oliver at anp capital, the chief economist. We will look at the retail data that we get out of australia. Was a tad weaker than anticipated. About 15 minutes, having a look at the asian theomies confronting headwinds of growth, looking at singapore and possibly extending my conversation to china as well. That is all to come. To come, rish. Thats it for daybreak asia. What was the human genome project . Dr. Collins the entire instruction book for an organism. Discovers it harder to the human genome or be appointed by two president s . How long do think people can keep increasing their longevity . What is the single greatest Health Challenge the United States faces today . Dr. Collins more people died of opioid overdoses than car wrecks last year. It is just unbelievable. Would you fix your tie, please . David well, people wouldnt recognize me if my tie was fixed, but ok. Just leave it this way. Alright