They will make a goal in iraq for all u. S. Troops to leave the country. Kathleen president troop President Trump warning of u. S. Strikes if u. S. Troops are hit. The Market Reaction around the world, starting with australia which is open. What are you seeing . ,ophie the s p fell the most sydney futures are the very slightly up. The dollar is under pressure. The aussie dollar being weighed against falling against the yen which remains on the front foot, trading at the strongest double since october, 107. 78. Japanese stocks are set for losses. Tokyo markets back after a long break with pmi do from japan. Resumee treasury to trade in tokyo online. Caution as we return, looking at aussie bonds, the yield curve flattening with the 10year falling five basis points in australia and risk aversion took its toll on middle eastern markets. Lets look at that damage report. All major benchmarks tumbling. Aramco settled at the lowest closing parts price since listing. Oil prices, seeing brent and wti continuing to move higher, jumping more than 1 . Lets get you to first word news. Su we start with reports from beijing which say the vice premier is prepared to leave lead a treat team to washington a trade team to washington for signing of phase one. They will fly next monday ahead of the ceremony on january 15. The paper says china was not expecting President Trump to make a unilateral announcement about the date. Australia has suffered the worst weekend since the bushfires broke out last year. Dozens of communities in New South Wales and victoria have been destroyed. High wind and temperatures to blame. Conditions are set to worsen once again this week. At least 23 people have died and half a billion animals have been estimated to be killed. Carlos in japan say ghosn share his escape plan with two americans who worked in private secretary. Im and security. One was a former green beret who also served time for fraud. The manifest for the getaway flight doesnt name carlos ghosn but includes passengers named eckel taylor and george and one. Arrest,years after his Harvey Weinstein is facing court. His criminal trial on five felony counts including predatory sexual sell and rape is scheduled to begin later monday in manhattan. Jury selection could last up to two weeks with the trial itself lasting six weeks. Accusations triggered the Metoo Movement and a torrent of similar claims against other men. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Kathleen the fallout of the killing of the iranian ternium general is mounting. Iran says it will not abide by the 2015 nuclear deal and iraqi lawmakers demand u. S. Troops leave the country. President trump said he identified 52 sites which will be hit if iran retaliates and that it could be very fast and hard. Now to washington and ros krasny. The escalationhy seems to continue. And it certainly does dont expect to see a war of words with President Trump, who never likes to not have the last word, hitting back in quite strong fashion. Seemed like a flip was switched over the weekend. President trump said we didnt take out the governor the general to stop a war. By saturday he was talking about these 52 targets. On sunday was talking about doing things that were not proportional should iran hit a u. S. Target. Pretty aggressive commentary from the president and backed up by michael pompeo. Bound by thenger nuclear deal. They want to kick out u. S. Troops from iraq. It seems like it is nonbinding given the Senate Resolutions we sometimes see in washington that have no real binding. But nonetheless it is a troubling turn of events. Saw President Trump tweeting from his florida resort. He is now in d. C. What to expect from him on how this sets up his week . Beenthe president has focused on the impeachment investigation. That is still around. Democrats and republicans are still wrangling over how the impeachment trial will go and when nancy pelosi will send the articles of impeachment over to the senate. That could shape his week. Ofxpect you will see a lot meetings and pronouncements even of thepresident out white house. He has lunch scheduled monday with mike pence. He is definitely going to bring his closest advisers towards him. And to monitor the next steps out of the middle east, he is obviously dead set on retaliation if need be. That puts the ball back in irans court. Democrats have been complaining the president shouldnt should have gotten their authorization but some say he didnt need to. But he seems bent on moving. Elizabeth warren on sunday, he lied this to how about ukraine, seems like it is being politicized. Ros there has been a tremendous amount of talk about the whole wag the dog phenomenon when it comes to President Trump. Democrats have cast a lot of doubt about the retroactive notification they were sent by the white house saturday evening. Nancy pelosi said it created more questions than it enters answered. Democrats said the u. S. Is not safer based on trumps actions and dont want to see this administration bumbling into war. We think about trumps refrain, he said it on twitter, got to went the endless wars the u. S. Is involved in, this is a step in the other direction. There are questions about what his motivations were, is it really true to say there was an imminent threat, and maybe there is a credibility track gap because of the rhetoric he has used in the past, what people characterize as outright lies. Time indeed. Ling thousands of u. S. Troops are heading towards the middle east and the next steps are pretty uncertain. But definitely at the time of maximum rhetoric. Much. En thank you so our editor joining us with her insights are you know lets get back to sophie for a look at the markets, in light of the concerns which are growing over iran. Pricing for more volatility. Futures dipping this morning while the yen is on the advance and gold is jumping. A six year as auctions indicate more gains to go for burley and to go for gold. 1 , similaruch as for brent. We have brent fighting the 70 handle this morning as we see hedge funds turning more bullish on crude. That rally in oil, they see the risk premium which is giving what we saw for Oil Prices Last year, kathleen. Kathleen thank you for that dynamic update. With the escalating tensions which seem to have moved the goalposts for 2020 equity forecasts, lets discuss that with the Asia Pacific Investment strategist in hong kong. It is kind of interesting we going into 2020 excited about making progress in the u. S. Trade deal and tariffs going to be rescinded, now the middle east is exploding. Where does this leave risk assets . Event that have longterm implications for geopolitics. It is meaningful for the people who are involved. But for the Global Economy and Financial Markets, the impact might not be as longlasting as it might seem on the outset. We looked at the major geopolitical events of the past since world war ii. And on average we see 4 decline initially. For the s p 500. Than a month later the effect is kind of erased. 11, if you take september that is the event that set off a chain of reactions that lead us here today. We had a 12 decline initially and a month later we are up. Partiesmpact of the involved like the u. S. , like saudi arabia, will be deeper. Theasia, the impact from iranian issue is not going to be as big as those in the u. S. You are upbeat on china and its economy. What is driving that . China is in a longterm struggle to restructure its economy. Economic slowdown is a trend. However last year what we have seen is a significant slowdown. N trade and investment all of that, part of it is driven by the trade war, some of it weaker demand. Both of those things are likely to give us rebound in 2020, when we have the phase one deal and all we are looking for is no additional tariffs. That is good enough for the more optimistic view. The second aspect is forecasters, economists are still expecting a slower or worse economy in china in 2020. That is a sentiment that is going to turn around in the shortterm. I would expect the chinese economy to perform as well as last year or whatever better. Seei is this the year we domestic politics matter when it comes to hong kong equities . We have seen the macro feature deteriorate. Not expecting an improvement. Retail sales have been awful. The situation is so entrenched. Does it start flowing onto Capital Markets . You are right. The Capital Market to death reaction to escalating tensions has been muted. We reached a bottom during the airport protests. So now what we are seeing is that china is taking a longer term approach. There is no real threat of external, forceful action. Is tok the approach here manage longterm economics and angst, touce popular try to improve the situation. That is going to anchor potential Financial Markets as well. As long as the Financial System remains intact, and for the economy can rebound, the first part is trade. That is going to go with how the rest of the region does, given the phase one deal. The second is probably going to be retail, once the protests the new normal. Get used to the new normal. Haidi it is looking like a year for 2020 to be less driven by Monetary Policy given most, if not all, Central Banks have done what they need to do. It is looking back at transmission. What is the major driver with trading impetus and are there any sectorial stories you like . EasingMonetary Policy that was put in place last year is going to have more effect this year. It is always a bit of a delay. Authorities,fiscal the people spending the money, is kicking in stronger. You are seeing that in china, india. He philippines youre seeing a lot of these big countries in asia. The two of them together is going to give more take on the Economic Activity front. Better . Tors will do first and foremost is consumer. Consumer cyclicals and discretionary type of sectors. Last year we turned more positive on oil. That has done well. There is more kick to that. Well, it willr as do fairly well. For a short time, the value of materials, energy and industrials will also do well but i dont think it has that much sustained growth in it. Heareen we are happy to you are looking for a strong consumer helped by their steps. The asiapacific investment strategist, thank you. Dozens of protesters are arrested in hong kong. We will see white anger why anger is rising against parallel trading. Haidi the outlook for macau casinos. They talk about when it is most pleasant. This is bloomberg. S bloomberg. Kathleen this is daybreak asia. I am kathleen hays. Haidi i am haidi stroudwatts. China is planning to send a delegation for the signing of the phase one trade deal to washington. Happy news for investors to start of the year. This is the South China Morning Post reporting that the trade delegation is going to to sign offext week on this deal. They were taken by surprise not for the first time by a tweet by President Trump on new years the signing stated ceremony will take place at the white house january 15. They had something of a huddle to decide they would then if they would postpone the planned trip, expected to be flying earlier. They did agree to do that and they are trying flying out. The signing ceremony is expected to take place on the 15th. On chinese delegation return the 16th. They are led by the vice premier who has been at the head of these negotiations throughout this process. We are waiting for details what exactly this deal will contain in terms of precise details. The agreement hasnt been publicized or published. We know the Broad Strokes in terms of agreement by the u. S. To pull back and reduce tariffs on chinese goods in exchange for chinas commitment to purchase Agricultural Products and keep and haverrency stable stricter intellectual property laws and legislation. President trump saying he is planning to eventually at some point line to beijing to fly to beijing to start phase two. Some say take it with a pinch of salt given those were very coveted issues on which structural issues, china will not give ground if at all. Replaced onena has of the top officials. He is a strong man, at a time when there is still a lot of support for prodemocracy protesters. How will this work out . With very is someone little if any Foreign Relations experience, very little experience with hong kong. What he does have you is on track record of implementing beijings policies on the ground. He was the Party Secretary of the province of someone who implemented quite effectively and Anticorruption Campaign effectively an Anticorruption Campaign. He is seen as a strong loyalist, the yes men. What it signals to those as thoses, demonstrations continue, it signals beijing is showing no willingness to back down. They want to see law and order reinforced in hong kong. He is taking over from someone who was expected to step down. There was a lot of speculation how long he would hold on to this position given the missteps and very damaging, the local money inns which took beijing high surprised when hong kong citizens voted for and against persia probation parties. We will have to see what he does in terms of implementing policies to see if it changes. Kathleen it could be another chapter in this saga. Tom mackenzie joining us from beijing. Now we go back to sophie and hong kong for stock movers early. Who is leading the pack . Sophie i want to talk about what is on the decline, qantas falling after canceling flights aze created by h the bushfires. This one rising 2 as bullion, having a solid start to 2020, extending gains. Looking at a rise for gold which has climbed 2 as i hit at the highest level in six years earlier across 88 an ounce level. Palladium seeing a jump this morning, extending its record to cross 2000 and out after it had an ounce after it outpaced Precious Metals. This is bloomberg. Haidi a quick check of business flash headlines, tesla delivered a record 112,000 vehicles in the Fourth Quarter and is predicting growth in china after beginning battery production at the end of december. It says it will be able to triple production at its shanghai plant to 3000 cars a week. The stock is storing to an alltime high friday. It is near and 18 billion market cap, almost double. Kathleen mercedes going to recover three quarter of a million cars because of faulty sunroofs. The issue affects several models. 2011,between 2001 and saying the glass panel could deteriorate and lead to it breaking free. The recall is expected to begin february 14. Happy island wednesday. Valentines day. Haidi the ousted chairman will not seek a return after winning despite winning a legal case against the country. He wished to be reinstated but now he doesnt wish to return in formal capacity. The family owns 18 of the company. More analysis on the iran tensions. This is bloomberg. Rg. We wake up to a dangerous moment in politics. Couldnt have been worse. I am not sure he understands the applications of what he has unleashed. The game has changed. The military calculus has changed. The markets are coming down to effective deterrence. Seeing this in the context of what has been a series of iranian aggression. The overriding sentiment is uncertainty. Increasing uncertainty. There is a lack of really knowing exactly what iran is going to do. Conflict with out lots of trouble. Very strong conditioning over the last few years which is to take these shots. For Global Markets you need like to have a global war. To see that in china, we backed iran up. We cant know what is going to happen in the middle east. The current overnight events in iraq i think are certainly a question. It adds to the uncertainty. Some guests weighing on the impact of the killing of the iranian general qasem soleimani. We are seeing that in the commodities space, gold extent fridays advance to rise above the six year high for both spot and futures prices. Seeing haven demand spurring appetite for gold. Options markets seeing extended rally for gold as well. In the oil space we saw a jump of 1 . The beauty i easing gains after topping 64 barrels dollars a barrel while brent is eyeing the 70 handle right now. We are seeing the yen maintain its advance, firming up the low 108, trading at the strongest level since october while s p is under pressure early in the asia session. Treasury futures taking higher. We are waiting seeing haven demand already playing out. The 10year yield falling as much as six basis points. Haidi lets take a quick look at the impact implications, tensions on the oil market. The president of Energy International joins us. Great to have you with us. We have seen tensions between the u. S. And iran previously, they have had a shortlived impact on the oil market. There is a great deal of unpredictability which i think prevents most experts from being able to say what they think will happen. Does it feel like a longerterm issue for markets . Exactly. I remember we had the discussion made at the market open after the saudi aramco attack in september. We were discussing and i have mentioned you dont think it will be a longterm or high risk premium. The reason was the market at that time, market looked clearly understood the magnitude of the disruption from saudi arabia and had approximate estimates of when saudi production could be restored. The current tension you are talking about, it is the beginning of the game. No one is sure what will be theys retaliation and how affect each other. Wet we think is potentially call the risk premium, it could be something that even could go even higher and stronger than the attack from september last year and for a longer term. Is it within the realm of possibility or likelihood that iran would target oil assets as one means of retaliation . We dont think they will start with targeting the oil assets because clearly they would like to take revenge on americans because trump and the an ounce u. S. Announced it was president order to kill the man. Obviously the retaliation would come on the u. S. , not on the oil. Also iran has attacked twice in two months, it is a lot of effort to reshape and restore its relations with the arab neighbors. We dont think they can meet the target, they might put political pressures or military action against u. S. Interests in the iraq which would be military aces or personal. We dont think it will have at first target to wales ability or energy facility. Something that is if the tension increases and we are going to have u. S. Response back, we have all of the militia groups as they were working with , they might go on action themselves without getting any orders from iran. They are saying they are going andake their own revenge they are not going to directly take orders from iran. We could not anticipate what would be the reaction. They might go after the u. S. Also we have confirmation that some of the oil company, like from, have been evacuated iraq. This all could interrupt production in iraq. Kathleen it seems a lot of analysts are saying 70 a barrel on brent crude, that is probably the top. Given where supplies are. But we have already got Iraqi Parliament telling the u. S. To get its troops out of the country. Top iranian officials have threatened to retaliate severely against the u. S. And some are much more concerned there could be an unintended, unwanted conflict on the ground in the region. A seems like that could make big difference in the oil market. When we are thinking about retaliation, we should consider the customs. He is not yet buried. They are in three days of mourning. We dont expect immediate retaliation from iranians before he is fully buried. Now they are removing his body from [indiscernible] recently just now. They take the body. It is one of the largest funerals in the history of iran. Then after that to his birthplace. There is not going to be a severe retaliation before he is buried. Retaliationtical that started in the pope parliament of iraq. The official said they are not looking for a war. They are not intending to have civilian casualties, but they will take retaliation. It is not limited to military retaliation. They will use their instruments politically and have forces out of iraq. Another iranian commander mentioned any country in the region that hosts u. S. Military might think of the consequences. Will goht target iraq further to u. S. Forces in other gcc countries. It is a guessing game. That is why we dont know the consequences of this attack or retaliation. It is not one retaliation. Kathleen obviously saudi arabia plays a big role in opec, not best friends with iran but they are in a position where they are speaking about no conflict. They are talking about the risk. What role will they play . Attack,after the saudi pull offntries try to the agreement at least to remain status quo and prevent any tension of conflict. What we are thinking, referring to my earlier comments, we think iran will not provoke saudi arabia and the other way, uae. We think they will limit retaliation to u. S. Interests points in iraq and they are going to put pressure to have the u. S. Forces leave. The big question is what would be the response of these groups and nonstate actors in iraq and in the middle east, that they might go after taking revenge for soleimani. We dont know. In the official we think these countries will try to resolve. Uncertaintylot of released by all of this. Andgy International Founder president. Lets get to su keenan. China which is pledging more support for Small Businesses while at the same time vowing to stick to prudent Monetary Policy in the face of its slowing economy. The pboc says it will improve incentives for lending to small operations, making it easier for them to gain access to financing. They will also diffuse major threats by focusing on longterm regulations for internet and lending. Dozens of people were arrested in hong kong sunday amid a protest near the china border that turned violent. Againsts marched parallel trading. This is where mainland chinese enter hong kong to bulk buy goods to sell at profit back home. There is growing resentment because it drives up prices and shop rent. And hospitals in hong kong admitted seven more people with flulike symptoms who had recently traveled to a chinese city. It brings the total to 15. 59 people have been diagnosed withumonia with pneumonia in that city. Ainese have ruled out recurrence of the sars virus. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Coming up next, the macau casino revenue will grow this year. The names tipped for the biggest windfall. We will have those next. This is bloomberg. Ext. This is bloomberg. Haidi we are counting down to asias first major market open. What a new year, they find themselves in increasing escalate tensions in the middle east from both sides, heightened rhetoric from both President Trump and in iran. This is how we are shaping up with the open of trading in tokyo. Got a stronger yen contending there. 107. 90. Sing dollar yen trading at the moment. Also safe havens playing out with gold and oil continuing in the early asian session. Our next guest said macaus vip gaming segment is likely to show recovery around the middle of this year. Aining us from hong kong is Global Gaming research analyst. Great to have you and happy new year to you. What are your expectations this year . Is it a selective type of recovery and how much is tied to bottoming out or a slight improvement of the macro scenario on the mainland . We think the key will be for mac recovery in the second half of the year. The math has remained strong going into 2020. The key for the stocks to continue performing well will be a recovery in the ip. That would be dependent on two things. One is macroeconomic strength in the abilitycondly to move capital from china into macau which has had tightening over the course of last year. It is always about some politics. Expectations do you have, and the names giving that you are saying we have seen recovery that is going to be focused on the upper end of the market . Has been strong for most of 2019 and we expect that to continue. Plus or minus a couple of Percentage Points but it will be fairly robust. The vip will be the question for the segment. We think the First Quarter and Second Quarter remains pretty tough on a yearoveryear comparison basis. But at the middle of the year we should start seeing a recovery as well as as long as the macroeconomics recovery maintains pace. We think the operators that are linked towards vips like wynn would outperform. Have seen that happen. Operators like them have started to perform well. Be a year2020 to where the ip oriented operators should outperform the others on a relative basis. Kathleen im interestedkathleen in the fact of the vip has so much to do with the weakness we have seen in macau this year. A chart we can show everybody, the gaming industry is on track for the first year since 2016. Lots of green bars and you have this red. The reason for the Bloomberg News story is things like the trade war uncertainty, protests in hong kong. Vips . This stop the they generally have so much money they can keep going regardless. Why did they slow down this past year . Biggest factor is tied to liquidity. The ability to move money from china into macau. That has being a big hindrance for the vip segment. Over the past 18 months. On math it is not an issue and wont be but on the ip the liquidity aspect is a critical driver. We are dealing with a small number of individuals which require liquidity to generate large vip numbers we have seen in twice of and 10 and 2018. We have seen this slowdown. While it has been negative, three or 4 negative, the mass has been strong, north of 10 growth. It is the vip segment, the lower profitability segment in macau which has shown the decline. Overall profitability has remained in growth mode. Kathleen the bloomberg story also argues that 2019 would be , because there will be new hotel and improvements that are kicking in. Do you agree with that and where do you see that strength . Part of 2020ly there is limited supply coming online. Renovated supply after being off line. That will be helpful. We dont start seeing more supply kicking in until the latter part of the year with the redeveloping China Program kicking in and also as jm opening their palace project which is open later next year. 2021 is when we see more with galaxy phase three. The early part of this year doesnt have a large amount of supply outside the sands and qynn wynn renovation i mentioned. We dont think it will be the main driver. Haidi thank you so much for your time. The Global Gaming Senior Research analyst talking about the prospects for macau. We are getting breaking news crossing on iran. This joint statement from president macron, angela and Boris Johnson, condemning the recent attacks on Coalition Forces in iraq. They say they are concerned by the negative role iran has played in the region and there is urgent need for deescalation. They are calling on all parties to exercise responsibility of the the current violence in iraq must be stopped. Also these three countries are reaffirming their commitment to find the fight against daesh. We will bring you this story. Wherever you see the Market Reaction, gold trading close to a sevenyear high, oil continuing to gain and dollaryen hanging onto the strength ever since the attack in the killing of the general. We will bring you more details and Market Reactions shortly. This is bloomberg. Is is bloomberg. Haidi you are watching daybreak asia. Emergency crews in australia are battling 200 fires after one of the worst weekends in the bushfire crisis. Hundreds of robberies have been destroyed, searing temperatures and strong Winds Continuing to fan the flames. Lets go to our opinion columnist. Not unusual in australia. You are seeing various politicians saying it happens every year. The robin higher casualty numbers in the past. In 2008. Ering it but it is different. We have seen heavy criticism of the way this leadership has dealt with it. What have we seen and what is seeing seen globally . There are a number of things that are different. But really the first time the scale and the early timing of these fires which typically come in february or march means most australians, crucially holidaymakers from the southeastern cities near the coastlines, are seeing it, feeling it, tasting it, inhaling it. The scale, the timing and geographically the way this has had makes this a much more vivid thing for a majority of australians. There is a crocodile dundee image of australia. In reality it is a heavily urbanized area, and that that is where these fires are concentrated. Haidi what are we seeing when it comes to the Political Class . We are seeing strong response from the Prime Minister but that is only after a lot of criticism. They are in overcorrection mode right now. And this is primarily driven by the outrage really accompanying the Prime Ministers vacation to hawaii. It is never a great idea for them to go on vacation far from 12 when there is a national emergency. To go to hawaii and have his afice obfuscated about it was disaster. He has been in overcorrection mode ever since. The Opposition Labor Party has undergone this rumination where they concluded they lost the election because they were too brian for proenvironment. They were running from the time when they could be capitalizing on it. The call up of Army Reserves on the weekend, lets see how this plays out. It raises some interesting constitutional issues in australia. You. Een thank i want to bring you breaking news now from reuters. They say nato will hold a meeting on the iraq, iran crisis. Lets remember the assassination of a meeting of iranian general done by the united states. It was friday in in asia which has led to so much reaction already. We want to take a look at, besides this, something more cheery. The Stock Exchange in tokyo is holding its first opening , so something to cheer about and maybe in japan stocks. Sophie doesnt look like it will follow through. Futures in red across the board. When it comes to stocks to watch, looking at mitsubishi which before the break and said it would book an impairment charge of 1. 9 billion for the controlling stake in indonesia. They will end this xerox deal. Nissan also in focus. Carlos ghosn press briefing. Crude prices extending fridays gains. Brent is eyeing, but it is tempered with the option of little followthrough. Also didnt see as big a jump in september. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Haidi good morning. Asian major markets just opened. Kathleen and i am in new york. Sophie welcome to daybreak asia. Haidi oil jumps and gold hits a six year high. Iran says it will no longer abide by the 2015 nuclear deal. Protests continue at the killing of the general in iran. They say all u. S. Troops should leave the country. Trump says he is prepared to hit iran in a disproportionate manner. This ceremony marks the start of the trading year on a day when all of this geopolitical news seems to be weighing heavily on the nikkei and japanese stocks. Oil prices jumping. We are waiting to see what extent. Lets get to the market action. The Tokyo Exchange held the Opening Ceremony for the 2020 olympics. The nikkei 225 is under pressure. Since octobermost 3. Lowerpening nearly 2 after [indiscernible] is stronger since october. Cosby under pressure kospi under pressure. Bonds, demand push bond higher. U. S. 10 year yield under pressure off by two basis points. The aussie yield curve flattening. Jt be opening higher this morning. Commodities, a push higher for oil extending the advance we saw friday. Crude topping 64. Gold the highest level in more than six years. Market a backdrop of markets looks intense. Kathleen lets get more on mounting tensions. Joni scheider is here to run us through the fallout. The following is widening. Calls for reprisal from the that there be attacks on u. S. Assets and Service People in the region. Parliament voted the u. S. To remove their troops from the country and on the radiant side, we heard from them iranian side, we heard from them in terms of the agreement, that they will no longer abide by part of the agreement. That was the death knell for the agreement. And is all going on obviously tensions heightening. Safe havens, rushes of safe havens in terms of gold and we 70 in theil hit futures trading. International the response . Statementd a joint from u. K. , france, and germany and we are hearing a nato meeting will be held later to talk about what is going on. We are starting to hear from the international community, we heard some things of the weekend, but now statements are coming in fast and furious. , france, the u. S. Germany, u. K. , are condemning iran. Germany and france have continued until recently to really push for the 2015 Nuclear Agreement to stand up. Obviously the u. S. Left it in 2018 and calling for the emergency nato me of the nato meeting. We heard over the weekend from france and germany, asking that they are not be titfortat reprisal but now we are hearing a serious it is time to meet and do something. Everyone around the world is concerned. Because of the increasing language, increasingly tough inguage from iran, iraq terms of kicking out u. S. Troops, and President Trump, who earlier had made calls and is now ratcheting up his rhetoric in terms of saying any attack on the u. S. Will be met with disproportionate response. So words are heating up. Twitter. Stly on i should point out. [laughter] look at the other side, the impact on the markets. Mark joins us in singapore. It has been a quiet start to 2020. What a day for tokyo markets to reopen. Traders were probably hoping for an easy start. Not the case at all. The dollar yen, often one of the first places people go to in the time of risk aversion. Looks like we will be set for a lower trading range in dollaryen. In thestable trading last part of last year and we sought around the 109 level but things have changed, partly in response to geopolitics but also the outlook for the fed, which is asymmetrical. They probably will be more inclined to lower rates as they need to. Have ak the dollar will lower bias this year and probably help dollaryen in a smaller range as well. Oil prices are spiking. Opening andcks are in the red. To make upsia need their minds quickly about how seriously they want to take the take these geopolitical risks. Is isen the question this a one or two day wonder . Until something really big happens, there is not an issue. A guest say this will not mean anything in a few months for risk assets. Is there another side to this . Mark we see Financial Markets do not have a big Attention Span when it comes to geopolitical risk in the last for years. They seem to prevail with just a few days at the most and then people go back to focusing on other issues. Especially when more related to the middle east. They become part of the backdrop that we expect things to go wrong in the middle east from time to time. Even the attack on the Saudi Oil Fields last year did not disrupt markets for long. You would under normal circumstances expect within a few days people would put this behind them and things will settle down. Aroundtoric this time sounds severe and maybe that is what people will focus on. The fact that on both sides the language sounds stronger than it has been in previous cases. Maybe that will mean it has a lasting effect on risk assets. It will be interesting to see what happens when the you when discusses it un discusses it. Market pricing over the last few years, kneejerk reactions are typical and do not last long. But it could be within a few days, markets are back to focusing on global trade, inflation, which direction Central Banks are going, and the trend of asset growth through 2020. History tells us this will be a shortlived event. Kathleen everyone has to be wary, hoping other issues involves everyone is 2020 gets underway. Thank you, mark. You can follow this story and trading on the blog on bloomberg. The first word news. Trade reports from beijing says the vice premier is preparing to beat a team in washington next week. This for the signing of the socalled phase one deal with the u. S. The delegation will fly to the states next monday ahead of the ceremony january 15. China was not expecting trump to make an announcement about the date. Australia is suffering the worst weekend since the brushfires were broke out. Walesia and new south communities have been destroyed. Strong wind and high temperatures stoke the flames and at least 23 people have died so far and half a billion animals have perished. 3 afterll more than the fires canceled flights. Says carlosapan ghosn shared his escape plan from americans who in private security. Withs a former green beret extensive experience with extracting hostages. This does not name him himself but names passengers. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Still ahead, irene tells us what is in the ipo pipeline this week after asia dominated rankings in 2019. Us to talk about key data points and what the fed wants for policy and is parts of the world. This is bloomberg. In this part of the world. This is bloomberg. The strong part of the economy is the consumer side. Labor markets are strong and incomes are up. The consumer side has offset the weakness on the investment side and the economy has been moving at a good direction. I am a little surprised by the weakening number. I think manufacturing has been struggling and several have been contracting recently. The gm strike was part of that. It is over. It is a bit surprising. Mester and loretta soundingvans down optimistic on the u. S. Economy. The fed is unlikely to lower rates until june and loretto forecasts a temporary pause in the asian rate cycle as well. Singapore. Us from as we talk about this, i would like to show you a chart. You know it by heart but to show our audience the chart. This is not the first time it has fallen below 50 in the contractionary territory but it has gotten weaker and a lot of people say, we are about to sign phase one. Why are manufacturing numbers better . Remember with the phase one deal the bulk of tariffs are still on. The u. S. On china and china on the u. S. Slightly improved more in asia. We think any improvement will be kept on a lid. The fall in the Manufacturing Index is indicative of why we are more cautious of the Economic Outlook. The fed has room for one more rate cut. Kathleen this is interesting to me. Rob, who didtly to not pencil anything and for the month. 13 of 17 fed officials at the december meeting says they are betting on no more rate cuts because even with weak manufacturing, they think the consumer will hold up. You disagree . We do. More andit will soften we have a cautious outlook and we think it will feed through in coming months and see them turn into a more cautious outlook. They have space to cut rates. China . What about ,ven if we see a bottoming out a hiccup in the macro picture, a temporary resolution to the trade war with the u. S. , do you see a market improvement for china . For the pboc to take a step back . We think they will continue to be cautious. We recently upgraded the chinese Economic Outlook up to six trips 6 . That was due to the phase one deal. Seee it was modest, with improving confidence and should see a boost for the chinese economy. We think the pboc will remain cautious and will depend more on liquidity than trying to provide a credit boost to support domestic demand. Haidi the consumer story will be key. Even if you see a toplevel easing of trade and greater monetary overtures from the pboc. Absolutely. We see exports improving a little bit but we need to remember the World Economy will be sluggish this year. Export will be fairly modest. We do it for small infrastructure spending, more on the fiscal side, but primarily keep primarily consumers will drive it. Luckily the labor market has been holding up well. Otheren in terms of asian Central Banks, it is easy to conclude the bank of japan will not do anything, but many emerging market Central Banks have started to cut rates. Are you in the camp that says they do not have to do it now because the fed is not moving, particularly if you are betting on a rate cut for the midsummer for the fed . We think the majority of the rate cuts have already been in place. Cut ratesnks in asia in philippines and indonesia. Further out, we look for modest rate cuts and we think there is still room for indonesia and philippines and malaysia. Malaysia because we see domestic demand flowing slowing more. Gdp growth is moderating. On hong kong. Rd any expectation of an improvement if the political situation remains protracted throughout 2020 . Not really. Underway,rocess going it is hitting tourism, unemployment is rising, retail sales, we do not see that unwinding anytime so we are looking forward despite fiscal stimulus packages, looking for hong kong to contract. The situation and hong kong does not look like it will be improving anytime soon. Haidi we will be waiting for that market pmi later today. It is not expected to look great. We appreciate your insight. Lets look at the markets. It has been an eventful start to the new year. A risk off mood across asset classes. Pressure. Ks under bonds being pushed tighter higher. Yields falling across the curve. Nikkei 225 off by 1. 8 after the six daybreak. Downside for most stocks in tokyo. All stocks gain ground. Gold miners in sydney. Set to snap a two day gain. Prices,y space, gold earlier we saw gold jumped to the highest level since 2013. Of spot andadvance futures price. With oil, we are seeing in easing and brent eying a 70 per barrel mark this morning. Look at how markets are reacting to the latest escalations and tensions in iran. Breaking are getting news. President speaking to reporters aboard air force one as he returns to washington dc from florida. Reiterating the threat to iraq station sanctions, saying they will threaten if the u. S. Is not reimbursed. If trump is threatening major and iranon on iran says they will be issuing warnings and the potential for retaliation. President trump saying he has spoken with Boris Johnson on iraq and iran and we have seen a joint statement from macron, angela merkel, and Boris Johnson condemning the events in iran and calling on iran to stop further retaliation. The president continuing heightened rated eric rhetoric, saying they will be major retaliations on a run. We will have more retaliations on iran. We will have more. This is bloomberg. Haidi it is a down day in japan as the yen continues to strengthen. Words a continuing war of between President Trump and iran following fridays killing of the top general. Look at one of the losers in the tokyo session. Or. Table decline coming back to trading after the holiday. Nissan after for plunging to 35 in april of last year. The chairman will be holding a press conference on wednesday at 10 00 p. M. Our asian Business Reporter joins us. This story is incredible. What are we expecting this week . This is a longawaited press conference that hopefully will do a few things. Shed light on how he got to be rude in the first place. Extraordinary. The great escape. This is straight out of hollywood. We are still trying to find out the facts, exactly how he managed to pull off the extraction. Ghosn said heos is looking forward to speaking to the media freely. So we are looking for a hint of the institution, government, and individual he will isolate and probably attack in his effort to defend himself. Challenges he faces trumped up in an effort the story we have now is inspectors at the airport did not conduct extra checks on large cases before they were loaded into a private jet and they were thought to lift carlos ghosn away. Basic stuff. Giving him free path from the airport. The other story we have out of the u. S. Reported by colleagues is he was accompanied by two americans. One a former u. S. Special forces and accompanied carlos ghosn onto the private jet to make good his escape. Be following the carlos ghosn story throughout the course of the week. This is bloomberg. Kathleen taking a live look at the tokyo Stock Exchange, marking the first day of trading after a long vacation. Not so good for the Japanese Equities today. The impact, the fallout from the assassination of irans leading general by a u. S. Grown attack is weighing on japanese stocks and stocks around asia as they open. Lets get to the news that is not going to be favorable for equities. Managersank purchasing Manufacturing Index has come 38. 4 in the, month of december. 11 of the 12 months, this index has been in a negative territory. Perhaps they could increase investment in exports. Another grim reading. This, this day like news could be seen as something optimistic. We have the market pmi for hong kong. We have seen an uptick from 38. 5 the previous month. The current reading his 42. 1. A little bit of improvement but in contractionary territory since falling into contraction last month. But the pickup, not as bad as what people have been expecting p lets get more analysis on been expecting. Lets get more with endocrine. Quite bluntly this woman said there will be no improvement for hong kongs economy as well as the protests remain protracted. What are you seeing, and are you cautiously encouraged by the fact we havent seen a steeper contraction this month . Reporter probably feeling we are bottoming out. We are cautious. There are big slumps in tourism arrival numbers from mainland china. That is hitting hard volume and value of retail sales in hong kong. We saw those figures last week. Small and big stories. Now looking at the pmi side of things, perhaps there is a bottom in size, and we might see some kind of a very gradual recovery. I am talking about a rebound. It is a questioning of bottoming thing bottoming out and not getting any worse. Dozens and to be any kind of Circuit Breaker or right through in the protesters, so we have on theta, pressure broader economy. It remains questionable if it is hitting the bottom. Kathleen we have already seen the Manufacturing Index for china at least look like it has flattened out around not Getting Better or worse. When you look out over the phase one trade deal with the u. S. , what is the outlook now . Right there in this is the big story is if the trade agreement can be signed off in a couple of weeks. And then what kind of detail in that trade agreement, how sustainable and durable it is. And forcure list hong kongs manufacturer and aonomy, it will be seen as boost for export volumes in the region and how chinas own economy stabilized and that will have a global affect into hong kong. You must remember things are. Oving fast disappointment on the trade story, people will view it as fragile. Not to forget we have this world of geopolitical risk coming out of iran and the middle east. People could move on quickly from trade wars to worrying about risks of security and detention happening in iran and the middle east. Another cloud on the horizon. Asia you to our chief economics correspondent. Lets get back to the big breaking news we got a few moments ago. President trump threatening major retaliation against iran anything, and they are threatening sanctions against iraq if they take the the u. S. Military operations out. We can see how iraq is stuck in the middle between iran, who has threatened retaliation around the region and the u. S. And now trump is going to exact a big cost. It is very interesting. We are hearing from the president not just in tweets. He was talking to reporters back on air force one, back to the white house. These were his words. Not written, speaking to reporters. He is saying, he, on our side, if they do anything, that is stepping up the rhetoric in terms of what would happen. We have seen tweets. He is saying for them to do anything is the important part of that statement. On to backside he went say to reporters that we are not leaving a less they pay us back is what he is saying to iraq. He seems to be making an economic argument that if they kick us out, there is a cost to that. Which is an interesting argument to hear at this point. He went on to say that making a on ther the attack iranian general the other day, saying iraq has done many things to the u. S. And been allowed to do those, but this is a time for the u. S. To shrike back. Very tough talk from the president. He seemed to be making some kind of notes about trying not to get ahead of this, to let things diffuse, but now he has changed his tone and it is being more forceful on iran and iraq in from of the retaliation other countries, saying to diffuse the situation, saying the u. S. Shouldnt act, that there should be not disproportionate kinds of responses in all of this. The president now is casting that aside and made the comment about disproportionate response and he is saying the u. S. Will step up if iran does anything, which seems to state that this is not over. Congress, there have been questions since the attack about whether he should have informed congress about this before or the leaders of congress, the gained of eight, democratic and republican leaders, of both chambers of congress. He hadnt done that. They are now calling for him to basically get any kind of approval before taking other actions that could be seen as being continuing to intervene militarily in the region. We will see where that goes. We are hearing there will be a nato emergency meeting between france and germany, calling for that emergency meeting, that those countries feel it is past the point where the u. S. Continues to go ahead themselves. This is something that needs to be discussed in a wider landscape. Especially with the white house speaking to Boris Johnson. Very interesting watching the international response. Jodi schneider with the latest on iran. Look at how markets are faring. Commodities seeing a lot of action from gold nearing the 70. Palladium also reacting to the rise of tensions. Us get more from david stringer who joins us. What are the prospects of further strong gains given the start to the year we have seen . We have seen gold benefit already this morning. Touching a more than six year high in early trading. Aat is building off what was strong game in 2019. There had been expectations from plenty on wall street that gold could continue to rise this year, the likes of Goldman Sachs and citigroup, looking for prices as high as 1600 an ounce. Clearly the geopolitical tensions are going to be something that investors really are going to be watching and see how the repercussions play out. I guess there had been some concerns and expectation of defusing of the trade war, prospects for a breakthrough with the u. S. And china, that could trim gold prospects, but now we are seeing this further scenario and further tensions. Kathleen it seems like there is , theyors who are already are looking for a reason to buy. It is not just gold. Palladium is on fire. That is right. It certainly touched a new record high in trading so far today. Absolutely, you would expect it is also winning the haven demand we have seen a markets this morning, some of the order broader move into Precious Metals. It is quite a specific story. It is a supply story. The metal is used in auto catalysts. This is down to the old balance. Demand is rising as we see tighter admissions standards. Global production cant keep up. It is spurring the price gains we have been seeing. Kathleen thank you for joining us from melbourne for this very sparkly Precious Metals story. Now we want to get more reaction. What are you focusing on . The flight to safety, the yen and treasuries along with old. Rising to the highest level in seven years. Oil certainly getting a boost, extending the events from friday with brent eyeing 70 a barrel. Traders betting prices will rise. Has yet to gout to levels seen after the attacks on saudi marketook at the broader moves in asia. We are seeing stocks losing steam. The nikkei is off 1. 8 this morning. The kospi is under pressure and asx 200 stepping a two day event although gold miners are tracking the rise we are seeing in bullion. And bonds are pushing higher. You have treasuries gaining ground with this 10year yield off two basis points this morning. When it comes to stocks moves, we are keeping an eye on oil players across the region. This one on the rise in tokyo. Soft numbers for japanese autos. Stocks fell 20 and u. S. Auto sales missed estimates for nissan, toyota and honda. Haidi lets get to su keenan. Withe are going to start an arrest in hong kong. Dozens of people were arrested on sunday amid a protest near the china border. It turned violent when police attended to disperse the crowd. Thousands marched against what is called parallel trading. Mainland chinese enter hong kong every day to bulk buy goods and then sell them at a profit at home. There is growing resentment as the prices drive up and shop rents. And seven more people were admitted with flulike symptoms who had traveled to a chinese city. The total now 15 with patients suffering from respiratory infection and ammonia symptoms. 59 people have been diagnosed with pneumonia in the city with the cause unknown. Chinese authorities ruled out a recurrence of the sars virus which killed hundreds in 2003. In new york city, two years after his arrest, Harvey Weinstein is finally facing court. His criminal trial includes predatory sexual is full and rape, scheduled to begin later monday in manhattan. Jury selection could last two weeks with the trial itself lasting up to at least six weeks. Accusations against weinstein triggered the Metoo Movement under torrents of similar claims against other men. Now, options have come close to a record sale with a giant bluefin. Setting the highest second highest price ever. The fish was bought by this corporation for 1. 8 million u. S. Dollars. They run a sushi so my chain across japan. This makes it second only to a similar bluefin also bought by the company last year for 3 million. Powered by more than 2700 journalists and analysts in more than 120 countries. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Haidi we will be discussing the outlook for ipos in china and in hong kong this year. We are joined by kpmg partner. We have already seen l start to 2020. Lets look at last quarter. It was the best for new real estate listings in the region in up to a decade. Citigroup, Morgan Stanley among those predicting more offerings for the first half of this year as investors and issuers start looking past trade tensions and avoid uncertainty around the u. S. Elections. They are later in the year. The outlook will depend in large part what happens in hong kong where months of protests have hit investor sentiment. You can see the City Exchange is still the busiest listing venue. That is nearly topping new york. And some warn the appetite for ipos will be waiting in 2020 after eyepopping returns last quarter. Haidi that is right. Lets get more on the outlook. The macro picture certainly weighing in on things. Is the head of great to have you. Give me a sense of what you are feeling going into 2020 as for the level of activity and positivity in the mainland and hong kong. I think 2019 and did very well in terms of the amount of funds raised. Also number of companies that went public. Looking at the pipeline for 2019, expect 2020 will be because of a number of factors. We got alibaba coming back to the Hong Kong Market in the last quarter of 2019. That will help create the interest among some of the overseas listed Chinese Companies to come back to the Hong Kong Market. Enhancementtinued of the connect, northbound and will help investment encourage more investors coming into the Hong Kong Market. Strengthhere we see with the new economy sectors, emerging technology companies, Lifesciences Companies continue to benefit from the Listing Regime in hong kong. Nationalhina, the Peoples Congress has just passed a new Securities Law in december which paves the way for broader adoption of what we call the Registration System for listing. We have seen the impact of the based system,on how it benefited the Shanghai Exchange in the second half of 2019. Adoption,broader especially the teanecks platform chinex platform and more streamlined process of Chinese Companies. Haidi i want to look at some of the recent really headline grabbing highprofile ipos we have seen in hong kong that have seen a lot of interest but performs not terribly well. I am talking about xiaomi and others in fintech and others. Really kind of stating after the listings. Do you expect a better performance with hong kong Capital Markets in the context of seeing the protests continuing to drag on and dragging on the macroeconomic actor in hong kong . The mix of investors, mostly international investors. A lot of companies have Business Operations that are outside of hong kong. Monthslly the past six we havent seen a huge amount of impact on the trading as well as listing in hong kong. Moving on to the 2020, as well there are no major uncertainty or volatility in the Macro International market, i think hong kong will continue to fair well. Kathleen will the marketplace strong role . The star market, which is certainly first onto the scene onto the burst scene last year, was it a newcomer affect or will it be a big force this year . It will be. We have seen a strong pipeline which is already applying and registered with the star market. This is a strong effort and commitment from the csrc to make sure that china a share listing market is market oriented, registration based. This continued reform will drive increased number of ipos. Kathleen one of your specialties is lifesciences. What you see . You can see the Health Care Reform continues to push for new measures to make sure that the wider part of the country population can benefit from innovative drugs. Private market investment already indicated a strong interest in this sector that paved the way for more Companies Ready for public markets. In the coming year, hong kong and china will see increased contribution in terms of fundraising and number of Companies Going ipo from this sector. Kathleen looks like more and more investors can see how much money is in this deal. Thank you very much. Away forget if you are from the screen, you can always find indepth analysis in the newsmakers on bloomberg radio, now broadcasting live from our studio in hong kong. Bloombergthe app, radio plus or bloombergradio. Com. This is bloomberg. Om. This is bloomberg. A quick check of the latest business flash headlines. This company will end his partnership with xerox at the end of march next year. It will turn the two companies into rivals. In november fujifilm made another independence move from spending money to buy out their venture. Samsung will launch new products. A Teaser Campaign shows a rectangle and a square, prompting speculation of a new galaxy series and full double smartphone. They launched their first job galaxy fold in february but it only went on sale in september. Haidi competition is heating up for Digital Banking licenses in singapore with two more groups looking to bid. One announced it includes one of asias largest massage chair makers. Listed i fast said it is also in the game, teaming up with a group of chinese partners. Taking a look at what else we are watching in what has been an increasingly eventful morning of market action. Few pmiwe have had a readings that showed a slight pickup in output and new orders rose. But staying contractionary itory, making for the since the survey began. On tap Hong Kong Retail sales in another doubledigit slump as retail and tourist sank. Jewelry and watches and luxury goods not faring well. Kathleen head of asian trading strategy from citigroup joins us to discuss the rising tension in the middle east. Keep it right here. This is bloomberg. Bloomberg. Welcome to Bloomberg Markets china open. We are counting down to the open of hong kong and mainland markets. We will get your top stories. We are looking at oil, looking at gold. Iran abandons the 2015 nuclear deal. Retaliation ifor u. S. Targets are attacked. A signal that beijing is determined to restore law and order in beijing. And japan tht
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