We sowting to see what with the u. S. 10 year yields dropping. Slightlyrecovering, higher than 2 . Look at the boards, we will show what else you are watching out for. Of these Chinese Markets a little higher as well. We were watching for the treasury market. Gold up, 1 when it came to the strength coming through for the chinese currency. We talked about ticking down. Giving weakness to the hong kong dollar. About the fed . Seems to be a one trick pony. Kathleen hays with us. Deepening into domestic growth. Aware is jay powell leaning where is jay powell leaning . Domestic not just the economy, talking about rising tensions. The fed watching that closely. Inflation not only failed to meet the 2 target, it moved further away. With theaid, compared june meeting, since then, manufacturing, trade, Business Investment have all weekend weakened. He talked about the labor market. He was asked the question in this context, representative Carolyn Maloney of new york who asked. Did the june jobs report change your outlook for whether an appropriate a reduction is appropriate . Whats the straight answer is no. Globalertainties around growth and trade continue to weigh on the outlook. Inflation continues to be muted. Place. Hings are still in jay powell says the market looks good. Why will that not cause inflation . Tightwe have a hot, market . To call something hot, you need to see heat. We hear lots of reports of companies having a hard time finding qualified labor. We dont see wages. I dont see that as a current issue. Speaking of the metaphor, figureessed, trying to out why inflation is not rising, he said the phillips curve is a heartbeat. Kathleen, we are going to bring in a chart of what traders are pricing in as far as the number of cuts. The pricing seems to be more than 125 basis points. Overall, closer to three. My question is is it just trade or talk, or is jay powell turning into a super dove. He is going to have a red shirt and purple cape. Something and talked about the data, he didnt really want to be dependent down. Are clear about a 25 basis point cut in july. They are holding out for a 50 basis point cut because they think he has gotten dovish. It is an insurance cut. That is what he is saying. The Federal Reserve meeting showing many of the members saw a stronger rate cut as the risks group. For many, that means a majority. In june, this was growing. Jay powell thinks he is going to take us the rest of the way. Are they dependent on the data or more about Risk Management . Thank you. Lets take a look at your first word newss. The Trump Administration has been rebuffed in its attempts to put pressure on iran. Blaming the u. S. For saber rattling and the middle east. He warned of new sanctions against iran, claiming the Islamic Republic has been enriching uranium for some time. Big story. Britains ambassador has quit after criticisms of the Trump Administration theory. Johnson, also offered his support. He had written the administration is dysfunctional. Back him andned to would not commit to keeping his job. The woman committed to being president says they will not stay in the block at all. He she said the u. K. Should be allowed to delay the date if necessary, adding the consequences of a divorce will be catastrophic for all sides. The u. S. Justice department antimoneyng whether laundering laws were violated. Deutsche bank says it has fully cooperated with the inquiry. Kong ipoahead, a hong on orders on top isnt tap and is four times oversubscribed. The market. About and geopolitical tensions. The u. S. Ambassador to china sharing his views. This is bloomberg. You are back with Bloomberg Markets. The between tokyo and seoul, both Companies Say they are willing to meet, but neither can afford to risk looking weak. The south Korean Foreign been on thes he has line with mike pompeo. Now in the studio, max baucus. U. S. Ambassador to china for three years. Always great to have you. I am wondering, these issues with south korea and japan. How does the u. S. Told the line between these allies . They are both allies. I suspect as we know, our east asian investors, they are going to the region right now. Saying, lets figure out some way to Work Together. Even though it is a deep, longstanding issue. Compensation, it is going to continue. Do they need to get involved, the u. S. . Basically not, no. We dont want it to get out of hand. The point where it is causing more difficulty. You have to decide yourselves, but cool it. Ultimately, we have a position where we have these u. S. Allies having this to. Dont want to really lessen what is going on. We also have beijing looking at this. People are rubbing their hands in glee as they see an alliance with a lot of appearing a lot of cracks appearing. They dont mind seeing japan and south korea fighting with each other. Through withows its technology, that is going to disrupt supply chains which are going to help while way huawei. Chinau. S. Trade war. That is front and center. We were recently at a conference entitled what now, what next . No one can answer the letter part of it. I am deeply concerned. Somewhat toward decoupling. Even though the u. S. Has not produced hard evidence. I am. S. Wants to worried that is going to push us it is a concern. Frankly underlying a lot of the trade tensions we have. Tech issue. Im curious how does it resonate. Does it resonate with your regular voter . At this is all taking place against the backdrop of approaching president ial elections . National security is a big deal. Theyve got a lot of press attention and tv. We will hear about 5g and huawei. That does compromise national security. I worry they are being used as a Political Tool by this administration. Trying to whip things up, helping them get reelected. I dont know. It is concerning. Secretary of state was flagging a risk the chinese were going to delay this. Do you think the chinese feel now it is better to deal with president trump, who is unpredictable but perhaps still wants a deal, or could it change under democrats . Xi and thepresident would not mind seeing trump reelected. He is a known unpredictability. A successor would be more firm with china. That is partially because with the china, establishing u. S. And the nextat, administration is going to be tougher on china. I wouldnt be surprised if they would not be too upset with president trump. The table, back at it is a second date. Does that make the bar to walk away higher for both sides . Or is it still the same . I worry it is still the same. Nothing definite came out of osaka. Versions, huawei can buy u. S. Hightech products. That is going to be hard to do. Are going worried we to stay where it is. No rollbacks, no increases. China will be able to buy a lot more soybeans. I am hopeful we will do more. We may get a better deal because the closer we get, the more trump is going to want to deal. He is going to one that stockmarket to shoot up 4, 5, six months before the election. He will do whatever it takes to help his reelection. Where does this leave us all . Always therd is hardest. We seem to be 90 there, 95 there. What is the stumbling block . Is it is a unwillingness to do a deal . Electioneal before an to engender that euphoria . Stumbling block . If there is one, tangible as opposed to political . I think it is more political. China is becoming more nationalistic. Xi is becoming more satisfied with his position. Personalitiesmore , nationalism, pride than anything else at this point. I think both sides two deal. Deal. T to get your take to on president trumps twitter tirade on the u. K. Had mess at her. Ambassador. Did you make of all this . Personally, i dont say things publicly. Or anything that might become public. He have to be very careful. There are ways to thingy to say things confidentially. Some channels are more likely to leak than others. Sayou are going to something that strong about the president , you have to make sure it is almost person with your boss rather than cables or channels. Virtually nothing is secret these days. Things do getlly, said behind closed doors. Because you already diplomat, you have to make sure it is a diplomatic way you are saying it. Was there another option . Or really wasnt a resignation was it a resignation . I think the fellow who was about to be promised or does not like him. Trump once the guy who is going to be Prime Minister to curry favor. That is why trump has made these statements. There is no option. How does it change diplomacy. Especially at a time when the u. S. Needs allies. It makes it very difficult. They dont say it publicly. That is the thought. I run into so many people, we have virtually the same thoughts. America. A hurting i dont want to be partisan, that is what i hear. It is great to hear have you to have you. Coming up, we are looking at an ipo slated to trade next week. Getting pricing soon come in next 48 hours or so soon, next 48 hours or so. General market sentiment, that is coming them next. This is bloomberg. Lets have a look at the latest business flash headlines. Amazon, flirting with a valuation of 1 trillion. Pushing it through the 10 digit mark. Personal fortune hitting 1 billion. Even more is portable. It will cost 200. 100 less than the original. Nintendo helped shares surge. Nn resortsts wi announcing 200 billion expansion plans. Hotels,feature two interactive sculptures, gardens, and a construction space. Asia division, budweiser brewing, will price its ipo at the low end of the market range. They are offering 1. 6 billion shares. Ipo ofll be the biggest the year. Oversubscribed to since last week. The offering is expected to value the unit at 64 billion u. S. Dollars. Lets go check on markets. Thcing some key factors. We saw yields lower. U. S. Futures slightly higher. Looks like we are set to break above the 300 level on this thursday. Gold futures, a leg up. Has beenbaht interesting, flirting with a six year high. The bank of thailand is wary. The last thing they needed was the fed chairs saying what he said. Sending a stronger currency. For an economy that is not doing as well as they wanted. Exports are going to get dampened. It has been a problem. The boards, the latest. The latest in korea and japan. We have a date when they will be talking. Tomorrow. I think you can see, it is pushing up. Samsung up 2 . It wasorean won, strengthening to begin with. Recession lows there. Watching the airlines as well. Goldman sachs upgrading the sector. When it comes to the growth prospects, demand is seen as rising. 12 in 2019. The likes of air china. Future land is what we are watching out for as well. It has been cut. Stocks still rebounding. Lots to talk about. We are headed into the lunch break and japan. Negate, dollaryen, low. We are headed into the lunch break. We are talking beer, we are talking abn, how it affects Companies Listed in japan. This is bloomberg. Most of us dont know how much data we use, but we all know were paying too much for it. Enter xfinity mobile. Americas best lte with the most wifi hotspots, combined for the first time. When youre near an xfinity hotspot, youre connected to wifi, saving on data. When youre not, you pay for data by the gig. Use a little, pay a little. Use a lot, just switch to unlimited. Get 400 back when you buy the new lg g8. Call, visit or click today. Its 10 29 a. M. In hong kong and 10 29 p. M. In new york. We start with the latest on the fed. Fed chairman jay powell has made it clear he is preparing to cut rates for the first time in a decade due to the slowing Global Economy and a stable labor market at home. He told congress that manufacturing, trade and investment are weak around the world, and that u. S. Wages are not inflating. That is suspected to Lower Borrowing costs at the end of the month. Japan and south korea say they are willing to meet over tokyos decision to restrict tech exports to seoul. They want to overcome decades of mistrust, and neither seems to have political to resolve the worst dispute in years. Has warned korean businesses to brace for a battle. Accuse them of reneging on various problems. Necessaryasure is a review of export controls for Japans National security, and not a monetary issue. We have explained that such measures do not violate free trade rules. Our government is making determined efforts to have japans unfair export restrictions withdrawn and defined countermeasures. Most importantly, the government is committed to finding a diplomatic solution. We hope that japan does not push this to a dead end. Su the u. S. Is to investigate frances plan to act on dead tax, which could mean the u. S. Oses retaliatory iteris. Tariffs. Robert lighthizer will have a year to decide if the digital levy would hurt u. S. Firms and outline any tariff reaction. The u. S. Has lobbied aggressively to stop eu nations from taxing a revenue of companies such as facebook and google. Lawmakers in brazil have voted to reform the pension system, in a move that promises major savings for the government and finally establishes a minimum retirement age. This still the bill still faces legislative hurdles. It is seen as a significant achievement as previous administrations tried and failed to enact major reform. Global news, 24 hours a day, on air and added talk on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. About 19 hours until happy hour. What we mean by that is we will get pricing of this massive ipo that is coming online before theatrical trade. We are talking the asia unit. Look at the bloomberg chart. One of the core issues is debt. Beard calling this stabbed on a debt tax. The top panel of your screen is your net debt of the parent company. Your bottom panel shows the longterm debt to total assets. Eventually, after that everything, then veering and amount of debt actually went up on the company. One of the aspects as we approach this massive what are the risks as we approach this . Discuss the ipo. Thank you for coming along. As david is saying, is it about that . Is that the reason the ipo is being undertaken . The second part of my question is, it is not them taking over miller before that. The thing is, is that a primary motive . They say it is not. What is the truth here . I think there are two reasons they want this ipo. One is to address this as you just showed them a chart. They have struggled to repay the debt they have taken on and they need to accelerate the rate at they were at. The 10 billion or so that this ipo will raise will go some way to help them achieve that. , a genuinek that reason for floating in asia it is overlooking part of the business that has given the strength of abi and latin america. It is still in market with the brands play well. We are still in the inning of the asia story. There is a lot of growth to be had. There are new markets to enter. This ipo will give them a somency with which to do m a in the region. Rishaad very good points you are making there. This is already three times oversubscribed. Do we expect Something Like a green shoe option to be instituted here . I. E. , it would increase the number of shares issued . That is typically the green shoe option, 10 15 . Do you expect that to raise even more . It is certainly a possibility, given the amount of cash that they need to raise to pay down debt, as you just mentioned. They have not disclosed at this point what they will do. I think they will leave the options on the table to perhaps do a bit more. Thed lets have a look at other part of what they might do with the money. They have said that they might be open to acquisitions. As far as your research is concerned, are there specific assets that make them strategic for them . And where would they be looking for those assets . Great there are some markets in Southeast Asia where abi are nowhere near the one or two. These of thailand, vietnam, thee markets are growing on consumption basis. That growth will certainly help to offset the decline that got and westernrica europe as well. I think the need to target growth markets, there are plenty of opportunities here. Acquisitions in the region are more likely than not to be small built on what will be in a small markets in aing healthy stage. Do think that the valuation if you take a look at 2020 earnings, it goes anywhere from 28 to 33 times, which is above the likes of heineken. Does it justify that kind of valuation . Philip even at the low end of the range, which i believe they have built. It is a Pretty Healthy valuation. That is a reflection of where the market is. I do think, given the premium positioning of these brands, these brands can grow at a rate of that of the Broader Market in asia. Multiple premiums i think is appropriate. Times is Pretty Healthy. I am going to go back to the debt position. It is endemic in this industry. Im just taking a look at the financial asset function on the bloomberg terminal. They have 11 billion worth of debt, 11 billion worth of r d and debt, which is nothing compared to the likes of them. Do they look at these companies, and say, hang on a second, perhaps we could get a slice of this as well in terms of buying something. The chinese corporate taking over Something Like this. If you look at the alcoholic beverage industry, it is a very scalable business. The advantages in scale come from procurement. They come from distribution. It helps to build brands. Skilla very scalable a average down in terms of capital. It is very tempting to average the Balance Sheet for acquisitions as long as management can execute on the costs savings. It would not surprise me if other players in asia in the could consider m a. It is slightly more nuanced than the appeal of the product that is slightly less appealing outside the quotas of china. But it is certainly a possibility. Philip, appreciate your time. Thank you for coming on the program. We eventually talked by joe. Yvonne indias budget may be inadvertently frightening off Foreign Investment here. We will talk about that a little bit more. This is bloomberg. Rishaad youre back with Bloomberg Markets. Fixedhe banks head of income 18,000 positions globally. Call with conference the banks a move to resize bank Trading Operations that will lead to dismissal. Deutsche bank announced to quit equity sales. It is part of the farreaching overhaul. Taking over the ecommerce pioneer. Unexpectedoff in ways because of the littleknown units at emerging as one of indias top startups. Digital payments phone pay has hit 100 billion 1 billion of fundraising was valuation up to 10 billion. The transaction have quadrupled over the past years. Gain developer is teaming up with amazon for a new lord of the rings videogame which will be an online multiplayer title. They will have Marketing Operations in china and taiwan and amazon will cover the rest of the world. Amazon studios is working on an tord of the rings tv series boost interest for its prime membership streaming service. Announcing plans for a 2 billion expansion will include a theater at a museum. It will be called the crystal pavilion. The complex will be next to the palace on the strip. Feature a hotel, interactive sculptures, gardens and a performance space. Construction is expected to begin in 2021 with a grand opening set for three years later. Yvonne lets take a look on the currency side of things we are go strength toe strength. It was on jay powell. The dollar softening on that testimony. There was also news about the trade talks are undergoing between south korea and japan. That looks slated for tomorrow. David the announcement came just what time is it 40 minutes back. Dipped. Ee it further it is also getting up across names like samsung, the kospi, we will continue to track this for you. In the meantime, lets look at india because the market opens up exactly about one hour from now. 10 44 right now. What are we doing now . Well, ok. Not this one. Yvonne thats the wrong one. David i pointed it out for you. Take us through the previous. More of risk on trade anticipated in the session. They have announced rate cuts. A crucial beach of the hundred Day Moving Average on the downside. I think the hundred Day Moving Average is 499. We just about took support around mid level. Todays session was anticipated to be slightly higher. You were facing exhaustion coming into the new bank over the last few days. The bigger heavyweight and banks have a full or index. It was excessive buying that to place. Some profit taken has been witnessed. When you are watching after the Broader Market, Domestic Institution buyers are wrapping in the flows we are seeing on a daily basis. They before yesterday withdrew some. It is difficult to give a Broader Market standpoint. It looks like quarter one earnings will be a downward. Not much anticipated, even from the larger nifty. X financial has maintained that you will see a growth of 3 . Which is not good from an equity market standpoint. Todays session has a slightly positive open with the rest of asia. Yvonne yesterday we were talking about indigo and the 10 that we saw yesterday. Are we likely to see more pay . What else are you watching out for . After that 11 cut that happen from classification. Party deals were executed at arms length. The other one they are considering will be plans for funds. It was about 1. 3 billion in share sales. Is this stock bets up 70 in the last seven days of trade. That is something that is keeping these in todays session. That was devina in mumbai. Up next, battle of the charts. Be on the show in the battle, but what will be against it . This is bloomberg. David welcome back, you are watching Bloomberg Markets stock check. We are looking at sports. Fila korea. Money waters was out with a report on the companys. Fila is one of their partners. We were down as much as 6 at one point. We have come off the bottom because we are seeing because i can see we are moving towards negative two. Leaning. T of the sport yvonne there was interesting because we saw yesterday the stock surge. One of the analyst said investors are seeking alternatives to the china sportswear play after this muddy waters report. They are buying into the lien in story. The stock was up the highest in nine years. We are seeing that tearing off a little bit. David those little [speaking foreign language] that was the tagline in china. Wasaad i think the tagline when he was in chelsea. Lets move to whats going on with top media, tech and business moguls in sun valley and idaho. Major deals have been struck there and the past. Are there with ambitious plans after making term sheets for acquisitions public last month. The founder and coceo mike cannon brookes told us what kind of reception he has had so far. Disagreed withdy our statement at that m a process. They mightve disagreed with our attempt to improve it or solve i think therally legal firms dont like it less than the bankers. You put out this timesheet and it is free to use. Anyone can use it. There has not been any uptake as far as you know so far . As we know. Far we have done 20 plus years with experience. We put down a set of terms that we think are very le, fair. If anything, a little bit buyer unfriendly, prospect friendly, which is the way we think it should land. The problem with the process is, you end up hating each other by the end of the bludgeoning of lawyers backandforth. Then you have to Work Together and there is a negative environment created. Its similar to earlystage financing. Convertible notes. Series notes around the world. People source documentation to make the process easier. If you start using the standard dock people will have that. Lets talk about that. You think you have to get the stamp of approval. He put the money back in 2010 that you do not need, but you needed the community to give you guys a thumbsup. Should the same thing happened there where we see it as a model that is more friendly that gives less power . It is confusing from the vc perspective. The are trying to maximize speed with which they get the money and how much money they give. They are not necessarily incentivized to be entrepreneur friendly. It would be the end of their journey with the company. I think they should see it as these entrepreneurs have built something great, continuing the process and have it find a good home. People will pay what they pay. I think they should look up on it favorably. It makes their world easier. Rishaad that was our exclusive interview with mike cannon brookes on the sideline of that sun valley conference in idaho. Its time for the battle of the charts. Breaking news. Our asia across asset reporter eric lamb will put our best charts against each other. Viewers can access their charts on the bloomberg. What start things off in bangkok. The thai baht rose today 10 year its is level since june 2013 after the fed chairman signaled that the u. S. Central bank is set to reduce rates for the first time in almost a decade. Rising ballpark goal prices explain 77 of the gains in the thai baht since december of last year according to goldman sachs. Thailand is the largest gold chaining trading in asia where gold exports represent 1 of the thai gdp compared to other markets where the 0. 2 of a. 1 or the economy. When gold prices rise, gold traders tend to take profit on their long gold positions. Hmm, interesting. I did not know there was that kind of correlation. 77 . Eric, dont convention to maybe change. Taking a look at west texas intermediate crude. The crude prices jumped or point 5 overnight with a potential hurricane barreling into the gulf of mexico and u. S. Crude stockpiles dropping. This chart is looking at the resistance levels. The price is bumping right up against that 23. 6 level of above 60. 88, which we are very close to at this point. That is a really interesting resistance point. Look at that as the potential hurricane comes into the reason. Does get pastit that level, another resistance level we can look at is a little higher up, that green line of just over 63, almost 64 a barrel. Two key levels we are forced to look at as the situation develops. David that is a very good come back as well, eric. I almost gave it away picking prim. I think prims chart had incremental information that im guessing not a lot of people knew about. Peopleer thing as well, have been talking about why gold was on the way up. That is dropping knowledge really from goldman sachs. Was that 77 of what . Thats right, 77 of the gains of thai baht since 2018. Yvonne i am going to give it to prim. I just thought it was interesting. Sorry, eric. Rish, what did you think . ,ishaad this was a toughy that one. I kind of agree with david. I am going to give it to eric. Sorry prim. David i thought you agreed with me. Yvonne thats ok, its two out of three. Gtv is where you can check out those charts. On can catch it all Bloomberg Television and catch up with a key analysis and say both charts for your future reference. Lets get a quick check on asian markets. Things are looking pretty green after the fed jay powell delivered on possibly rate cuts this month. This is bloomberg. I am emily chang in San Francisco and this is bloomberg technology. Coming up, no love for libra on capitol hill. Jay powell says he has serious concerns about facebooks cryptocurrency. Plus you will hear from the global chief diversity officer. She tells us how they plan to double the number of female employees globally in the next five years. Internet for all, it is going to take thousands of satellites to do it. Will t
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