Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Tomorrow. There are two definite narratives being played out. To repeat the status quo for taiwan and that is sent autonomy, semi independence from china. Or more integration with the mainland economy. We will preview it coming up this hour and all morning. Yvonne we will see you soon. He does speak with the legislator at large. David lets get a quick check of your markets right now, 30 minutes into the session. About an hour into the taiwanese session. We should still be above 12,000. 2. 5 of the25 is is 28year high. Dont get too excited. Seere continuing to pressure coming into this friday. Jobs numbers are coming out later so that is fun to watch as well. Asare losing some momentum we head into the thick of things. Take a look at the currency markets and then we will talk about futures as well. You and pushing toward 1. 0. Chinese bonds are seeing a steep drop in yields. Su we will start out with the latest on boeing, critical messages from 2017 about the jet have been released to aviation regulators and members of congress and an identified boeing employee said the plane was designed by clowns. The staffer ended his comments by saying the airplane is ridiculous. The House Committee chair says the emails are, in their words, incredibly damming. Vice premier of china will lead a delegation to washington next week for the signing of the socalled phase one trade deal. Xiss acted as president top negotiator. He will be in the u. S. From monday through wednesday for the signing ceremony. President trump says he will fly to beijing afterwards to begin talks on the next deal. Much of australia is bracing for the return of record hot weather this weekend. This as bushfires continue to burn out of control. Thousands of people across the country are being urged to seek safety. Emergency warnings remain in place as temperatures look to increase. July on as hottest hottest on record. Life on the run is proving expensive for carlos ghon. By 40 tune has shrunk since he was arrested year ago. The cost of his fleeing from japan includes 14 million in forfeited bail money and an escape operation estimated to have cost more than 15 million. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan. This is bloomberg. Yvonne u. S. Intelligence increasingly believes ukrainian jet that crashed outside tehran was shot down by a missile. The jet crashed, killing all 176 people on board. Derek, the last couple of days, we were talking about the deescalation about the u. S. And iran. Does the latest incident change the dynamics . Part of that is because the working theory is that this was a shoot down. It may have been an invert and. Iran may inadvertent. Iran may not have tried to do this. All of this is in the early stages. Late yesterday, singapore, hong kong time, late yesterday, we got some notification from a senior ukrainian minister that basically said that they were looking at all sorts of reasons why this plane might have gone down, including the possibility that it was intentionally taken down or shot down. As we start to wake up over here in asia, you have Justin Trudeau being backed by the u. K. In australia saying, we think this was taken down. That is a really big escalatory step. It threatens diplomatic relations for sure. It raises pressure on this investigation and it somewhat bizarrely helps bowing out because if you are thinking about boeing the company, that stock was up and part of that is because if this was a take down and it was not a mechanical issue, it may not add to the playmakers woes over plane makers woes. If you are talking about a take down, you are talking about increased pain for families. If it was not an accident, it will hurt that much more. David there is a slight difference between someone saying we are considering all toions and all possibilities is their actual evidence that suggests it might have been taken down . Which one is it . The governments are saying , saying there is some evidence of that this was taken down. It is such an incendiary statement to make. You cannot make it lightly. It is not something that you just whip off on television and say this is a great theory. You cannot do that in geopolitical relations. You are bringing up echoes of that malaysian plane that was shot down over ukraine. Echoes of the 1988 incident where the u. S. Inadvertently took out in iranian plane. Worldn think of these in relations, it has happened , there ist each time fallout. I guess adding to that all the speculation is the Vice President mike pence and his comments to fox news. How is that adding to the confusion . Pence with some differing narratives, slightly changed narratives in terms of some rationales behind actions. He went up in rally in toledo i had donald trump and suggested that the death of a u. S. Contractor was approximate to the retaliatory strike of the general which adds doubt to the idea that maybe it was related to an imminent attack. There are some jumbled things and that is the key. It is less what pence more and a lot more the idea that it would behoove the u. S. To have one story and be sticking to it. Instead, you have a lot of leaders making a lot of comments and you start sifting through and you go hold on a second, what was the exact thing . It does add to the confusion. Pence, i guess we need to talk about it a little bit more. Joining us is our next guest, starting off with geopolitics. With these events, more often than not, if the market reacts to an immediate geopolitical event, it improves the buying opportunity most of the time unless it escalates into something bigger. Like what welooks have seen over the last couple of days, it seems to be contained. Hence, the market is taking it in stride. Yvonne even this war cannot shake stocks and derail this rally we have seen, what can . That is the thing. Markets are pretty shortterm. They will react to war if it did come to a war. Unless it becomes pretty clear that there is one, i dont think markets will proactively move to pricing that in. Everyoneactor that looks at is the oil price. That is one of your key mechanisms and that has been defanged a little bit. The sensitivity of the World Economy to a Higher Oil Price is less anyway than it would have been. With inflation low around the world, it means Central Banks probably would not react to a spike in oil prices anyway. We have not even got there. Pretty modest. En you have gotten your fair share of gold increase recently. What have you told those people . It is a big Playing Field for us. Again, i think gold is more if you thought there was escalation and it has a place in your strategy but it would be a more speculative thing. Yvonne the one thing we were talking about at the end of 2019 was and everything rally. Stocks and bonds could rally at the same time. That continue . Could that continue . Not to the same extent. We have gotten more positive on that. On bonds, we are more cautious and we do think Interest Rates are heading modestly higher. They should not continue to rally. It would be tricky for the u. S. 10year to push above 220. I am also saying it could go higher 30 basis points. It is pretty hard to argue not to be overweight equities to some extent. Yvonne patrick will be staying with us. We will talk to him about india. Companies are sitting on a record 83 billion dollar bond bill that is due soon. We will analyze what this means for the already ailing economy. David job numbers are coming up later today. Risks looming. This is bloomberg. Yvonne wednesday, we will see the socalled phase one trade deal signed. President trump says he wants to start negotiations on phase two. We will start right away negotiating phase two. I think i will want to finish it after the election because i think we can make a better deal, maybe a lot better deal. David against the backdrop of the jobs report. The phase one agreement was we are talking jobs. 205,000 new and strong labor market inflation running close to our symmetric 2 objective. As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of Monetary Policy likely will remain appropriate. Do you think the jobs report will justify . I think most likely. It would take something quite special to for the fed of course. The weather, thanksgiving, december is a difficult number. We will see where it comes out. Consensus probably on the lower end. If we take a step back and look at the longerterm central bank and fed outlook, that is one that is positive for markets. Our view is that we have not on from worrying recession, it now looks like the Global Economy is recovering. We are starting to see that slowly coming through in the data. What helps even more is Central Banks are basically on hold and almost asymmetric. If inflation overshoot a little bit, the fed will probably let this run. If growth weakens, they could cut again. You have this asymmetric set up and that is quite helpful for markets. David if i subscribe to that view, you think bets on europe, european stocks is a misguided one . We had a record overnight and i have heard a couple of people tell us, look at europe, its cheap. This a lot and it is interesting that people have this impression that europe is cheap. I guess i get that comparing it to the u. S. It has been expensive for many years. If you place your strategy on u. S. Looking expensive relative to the rest of the world, you would have made no money. Think if you are bullish on markets, the better place are Japanese Equities rather than europe. That has been the upside surprise of the last year. Why buy it now . If you are negative on growth, europe has a lot of performance to give up. I dont think it works on the others. Yvonne you mentioned japan, are you focusing on the things does that mean that i rotate out of the big names . You start rotating to other parts of the market. Everyone likes to talk about the value growth rotation. We were a little bit dubious about that. Talking about the growth recovery but we are not talking about growth shooting the lights out. Quite a big difference from worried about recession three to six months ago but its probably not enough to drive Interest Rates substantially higher and that is probably what you would need to get a real rotation into value stocks. Overdone. Ift is from a regional perspective, you want to buy the markets that are cyclically geared. Those of not performed yet. Credit, what do you like . We dont think growth will shoot the lights out. Quality, wee up in prefer ig over highyield. Outlier is emerging markets. You could argue that is higher quality. We think fundamentals are Getting Better in emerging markets overall. Yvonne you dont think they are too expensive . The whole complex is expensive. If you look within credit, that is probably the one area where there is probably still something to play for. David are you recommending any exposure to chinese credit . You have a lot of supply coming to the market. What is the play . It is not an area we are generally able to play in so we dont look at that in great detail. We are not too worried about a big accident happening. We do not look at that as an asset class in detail. David we covered the world there. Cross geography, up and down the spectrum. Great stuff, as always. Happy new year. Yvonne coming up, we will hear more from our conversation with the hong kong finance secretary. He said hong kong is still a good place for business. This is bloomberg. David welcome back. Happy friday. Lets get you the latest business headlines. Responding to geopolitics and the region. In the region. The company has counted overseas expansion in the face of a weak domestic market in japan. That strategy has been hit by the protests in hong kong and the u. S. China trade war. Trouble forports of yet another company backed by softbank. Latin American Delivery Service is laying off more than 300 staff. It comes a day after another softbank investment slashed half its workforce. Have a look at j. P. Morgan chase, they are lower as well. They are taking office space in chinas tallest skyscraper. 20,000 square meters. Many overseas investment firms are expanding in shanghai as china continues to open up its financial industry. Yvonne lets get your movers here in the region. Individual names we will highlight. One of the worst performing on the board, they reported the worst overseas sales in a decade due to the political unrest with hong kong, south korea market not doing well either. At the top, we have aerotech international, a taiwanese stock. They are a component maker. David that is a quick look at your movers. Since we are approaching the japanese earnings season, it is really getting underway. 17 company set to report earnings. 17 Companies Set to report earnings. Results over the course of the next few hours or so. Plenty more ahead. You are headed to the lunch break in tokyo. Happy lunching. This is bloomberg. In shanghai 29 a. M. And hong kong. We start with the latest on the u. S. And iran, u. S. Intelligence increasingly believes the ukrainian jet that crashed outside tehran was shot down by a missile. Sources tell us that rockets were detected from iranian battery just after the 737 took off. Followed by an explosion near the plane. The jet crashed in flames killing all 176 people on board. Iran originally blamed technical issues. Voted u. S. , the house has to limit President Trumps authority to strike iran. The result requires trump to cease military action against iran unless authorized by congress. Democrats say the vote Defense Congress is constitutional powers what republican say it endangers national security. Boris Johnsons Brexit deal has cleared its hurdle in the house of commons. Favor of the agreement bill which now goes to the house lord for ratification. Johnson wants the bill passed this month so the u. K. Can leave the european union. He campaigned an election on the promise to get brexit done. Much of australia is bracing for the return of record hot weather this weekend. Bushfires continue to burn out of control. Thousands of people throughout the country are being urged to seek safety. Emergency warnings remain in place. Last year was australias hottest and driest year on record. Fires are seen by many as the consequence of global warming. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan. This is bloomberg. Tradingidmorning, last session of the week, u. S. Futures are little bit higher. We are losing some momentum as we make our way into lunchtime here in hong kong. Basket sitr that september. Not looking too good as we approach the india open. Yvonne lets stick to india. There will be a record 83 billion bond bill looming over Indian Companies. The pressure to repay the debt is adding to the woes of an already slowing economy. David lets talk about the credit implications. Why is this problematic that there is so much debt . The timing could not be worse for this. The economy is slowing and there have been the problem started when top rated nonbank financer defaulted and that showed that even with the top ratings, it is no guarantee. Subsequently, there have been other nonbank financers who have stumbled. Without much debt coming due, there could be the risk of some failures to meet the obligations. Yvonne the Indian Government today 5 growth this year. What is at stake more broadly for the economy . If you look at the nominal figures for the gdp, it is even worse. And 40 years. Mix. Ave a volatile the shadow banks lend to everyone from local merchants to rich property tycoons and the real economy effect is huge. Without much debt coming due, companies will need to refinance. If they have to refinance at higher borrowing costs, that puts more pressure. David i will put the chart appear. Up here. What can policymakers do to support growth . What can they do to help over . Ies tied the game,at is often kicking it down the road a little bit. Policymakers have done quite a bit. The central bank has kept liquidity healthy. The government itself cut corporate taxes last year which investors liked a lot. That boosted Investor Sentiment. The yields and spreads on the higher bond market have done pretty well. The real risk are for the weaker type borrowers. There is a budget coming up likely to be unveiled next month by the finance minister. People in the credit market are speculating if you will take further steps to help the credit market, there are a few things they could do. Tweak the tax withholding rules to make bonds more advantageous. Make it easier for Indian Companies to borrow offshore. Indian companies that might have to pay a little more onshore are often going offshore. It helps them diversify their currency. David solve the debt problem with more debt. Why not . We will speak with a legislator at large. This is bloomberg. David all right. We will have a look at your chinese markets. About an hour into the session, losing some momentum across asia. We are headed into some event risk in taiwan. To thelection has led next month being a very good month for equity markets. Five at of the last six elections, gains of at least 5 . If you believe history repeats aself, go and find yourself taiwan etf right now. Yvonne that is something to look out for the next 30 days or more. How the vote could shape the future of the relationship with china. Asiahief north correspondent david engel takes a look at where the two party stand on the issue. Tyingjing has considered taiwan a thorn in its side. Taiwans first female leader refuses to endorse the one china principle. It also becomes her top selling point as she campaigns for her second term. In 1992, beijing and taipei reached an understanding that they are part of one china while disagreeing on which government is legitimate. Taiwan will never be unified with china as long as she is in power. Her support for prodemocracy protests in hong kong has helped boost her popularity ahead of this weekends vote, a reversal of fortune after her partys defeat in 2018. For here opposite opponent. Critics say he has struggled to articulate a clear china policy. The future of taiwans relations with the mainland has become a central issue in this years election as beijing adopts a more assertive approach despite closer ties with china, more and more people on the self ruled island are identified as taiwanese. Support for unification has fallen over the years. That is a headache for the communist party in beijing. Yvonne lets get to steve who joins us live from taipei with our next guest. We are now a few adverse after the a few hours after the final rally. Tonight, the venue switches over to the incumbent president. Lets bring in for more analysis also known as the crypto congressman. First off, how in the final hours of this campaign, a highly contested campaign, is the kmt going to win back the seat in that office as well as the legislature . People, aover 900,000 very strong turnout. We have seen a surgeons and energy a resurgence in and support from all over the world. At this venue alone, you hardly taiwane so many flags of flying. Kmt is really surging back. Do you think he will win the election you think she will win the election tomorrow . You go outside taipei, you see a lot of central and southern cities who are unsatisfied with the current administration. People at the bottom of the pyramid feel their needs are not being taken care of. The lower income families and households have not seen the Wage Inflation the other level ilies have and that is why in 2018 hurt she has had a dramatic turnaround. On the wings of the prodemocracy movement in hong kong. Is that a hard momentum to fight against . Plays a factor into this election and it is not all of it. If you look beyond that, you see the maturity of taiwan is still plagued with a slow economy, which is not improving. The stock market is high. It is not something the average citizen can afford. The economy is doing well. It is doingl well in the number but not for the average persons income. It is very much bottom sentiment with the current government performance. A playkmt has long said for independence is a call for direct conflict with china. The devils could argue as well closer integration with ainland china could invite one countrytwo system framework which could lead to a repeat and what we are seeing in hong kong. The major difference in they are confrontational and provocative. Kmt can manage the relationship with china better and without sacrificing democracy. That is something we need to communicate better with the general public and to make sure economic stability and maintain the freedom of our society. You represent a new face of the kmt. Advocating a more progressive approach. The kmt law and considered the old staunch nationalist party. What are the new ideas that would be implement it to bring in those people who identify with being taiwanese, not chinese . We need to deregulate our laws. We need to make it easy to invest in taiwan and way to attract and we need to attract global skilled workers. We need to look at what is going on with the u. S. And china trade war and how taiwan can position ourselves. We need to look at our high tech sector. Industry,onductor continue provide innovation to the world. We want to diversify as well. We cannot over rely on chinas market. There is a lot of things that are very difficult right now economically for taiwan. You have been very critical. You call it the 12 screw ups. What are you so against . They are trying to work to build the economy. That the asianea Silicon Valley came out, it was building, Talent Exchange or creating taiwan as a tech hub. It was sold as an outdated idea of creating buildings and making sure all of these buildings are set up so they can have power. What we need in taiwan is to startups are homegrown and can go global. Fort now, we have trouble taiwan startups to go global. The last time you and i talked, you said fighting against the government is a hard battle because it is traditional and conservative, does not take a lot of risk. No matter which party. It is hard to get innovation. You want to turn taiwan into a blockchain island. What does that mean . Have you made any ground . We have made quite a few improvements since last we chatted. We have trouble with our current financial supervisory commission, they are very conservative. They consider this a threat to the establishment and financial industries. Our current government is not really welcoming innovation. They are trying to set something up but it is not business viable. We want innovation but we dont want real innovation. There has been a lot of cyberattacks. Taiwan has one of the highest cyberattacks in the world. 30 million attacks a month. A lot of that blame is on china. And then there is that connection, people extrapolate and say that it is the kmt allowing at. How vulnerable is taiwan . Something that is that needs to be communicated better with the general public. Everyone on this island wants to protect taiwan and loves this country. In terms of cybersecurity, taiwan needs to build ourselves up as a cyber hub in the asiapacific. That is why work with ait to set up the Cybersecurity Alliance to position taiwan as a cyber hub. When you could we need to train our cyber technicians and to make sure we have a Cyber Network to fend off cyber thefts , to fend off there are a lot of things we need to do. It is not just a oneparty issue. We need to work together, bipartisan. Is predicting a victory in the taiwan president ial election. We will see. Yvonne great interview, steve. Reach out tonue to candidates and officials from all sides of this taiwanese election. Slightly,change gears taking a look at india right now. With a 200 point on thursday. Point. Down about 12 good morning. How are we set up today . Good morning. It was a monster bounceback we saw in indian equities yesterday and the reason was simmering tensions between u. S. And iran. Board,ly was across the nifty was about 190 points in yesterdays trade. Indices gained. In terms of broader markets, with the frontline indices scaling higher, who are finally seeing a little buying coming back in the broader market. That is another sign that there ,s any sort of fresh buying volatility will support that. The focus shifts to the union budget which is february 4. All right. Great stuff. We will be heading back to mumbai and hopefully things will pick up a little bit. Yvonne we have battle of the charts coming up. This is bloomberg. Yvonne happy friday. Time now for battle of the charts. Yvonne lets start things off in beijing. Lucille, what do you have . , somewhat, rally, 35 . Compared to its bigger peers, growth is at a level unseen since march. It is in the longest winning streak against its bigger peers since 2013. A lot of reasons behind this. More sensitive to liquidity changes and we had those big rrr cuts. Sentiment with early indicators for economic gouges, showing some signs of stabilization and this imminent signing of the phase one trade agreement. We were talking about that. David can we get to phase two . Yvonne cindy, what do you have got . President ial election years in taiwan, the Investor Sentiment has really been this good. Reaching neweps milestones after a best year in the decade. The taiwan dollar is among the best currency in asia. In taiwan is a buy markets. Thanks the restoring of investments by Taiwanese Companies as well as the recovery of the Semi Conductor industry cycle. Analysts are saying this trend of taiwans economy and markets regardless of who may win the president ial election the saturday. This saturday. David it looks like a win either way. I am going to go with cindy today, topical as well. Lucille, next time. Sorry. Yvonne she picked the right chart for the right day. Congratulations, cindy. You can interact with those charts on tv. Catch up on some key analysis and save those charts for your future reference. We have more to come. 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. Week, tgif, almost 8 00 in singapore, on haslinda mean. Laste im yvonne man, the hour of the morning session in hong kong. Top stories, iran accused of shooting down a 737. Reports say there is evidence of at least two missiles being fired shortly after takeoff. Haidi the u. S. And china are anticipation of a trade deal signing. Yvonne at the hong kong government, months of protests, job cuts and retailers struggle. Bloomberg markets asia. A big weekend in taiwan. Lets get to chief northeastern correspondent Stephen Engle on the ground in taipei for us. Steve, what is in store . At less thans open 24 hours and we will have another big rallied in front of the president s office here in taipei. Kmt night was the big party, but polls open tomorrow and voters on the island have to decide, do they want the status quote of the existing leadership, or do they want closer integration with Mainland China . That is what we will be examining all day, weekend and on monday. You. haslinda thank we will have more from Stephen Engle later in this hour. For now, lets look at markets, business as usual, ricks risk on sentiment, jobless claims lower than expected and easing tensions in the u. S. And iran, all that adding up to bring sentiment back to the market, looking at where we are in the asia pac index, up by 2 10 of 1 , giving up earlier gains. At the csi 300 index is lower by 2 10 of 1 . Having said that, a rally in small caps signaling optimism in the chinese economy on the back of a phaseone trade deal. The pbo appears to be easing, j. P. Morgan says it expects more broadbased gains for chinese stocks. Taipei right now, election day is tomorrow, stock up 3 10 of 1 , taiwan has had a massive run, 20 rise year to date last year, and they are seeing money pouring in because of the incentives for local companies to be investing in the country. Lets do a swap and look at where we are in terms of the dollar. The dollar is gaining against major currencies, jobless claims lifting sentiment, adding to signs the u. S. Economy is resilient, with the yen easing gold at, one own i. 54, 1549, not anyone to the 1500 people were expecting, and crude easing below 60. Yvonne we are taking look at lines from japanese media on this carlos ghosn saga. Japan is to nhk, requesting interpol notice for Carlos Ghosns wife, carol, and prosecutors may seek the arrests of Carlos Ghosns escape helper. There has been speculation that there were people instrumental in him leaving japan, carlos ghosn has denied that but we are now hearing more reports japan is requesting a notice for carol ghosn. We are looking at Indian Markets and we were just talking about the robust rally we saw yesterday, 1. 5 gain on the nifty, and it looks like we could be continuing that oil story around iran, tensions seem to be receding and we were talking to jp morgan Asset Management earlier, and they say once oil prices receded is time are seeingrupee, we that strength at the moment, india 10year gilts as well, we are seeing yields tick lower. For the rest of the bond market, treasuries overnight, and nifty futures, we talked about we could be seeing decent gains after reports on numbers for the Third Quarter and we will have the likes of that coming up this afternoon. Lets go to su keenan with first word news in new york. Start with critical messages from 2017 about the boeing 737 max. They have been released to aviation regulators and members of congress. An unidentified boeing employee said the plane was quote designed by clowns and that the max design team was supervised by monkeys. By worker ended his comments saying the airplane is ridiculous. The House Committee chair says the emails are incredibly damning. China has confirmed its vice premier will lead a delegation to washington next week for the signing of the socalled daysone raid deal. As the president s chief negotiator throughout the tariff saga. President trump has said he will fly to beijing afterwards to begin talks on a next deal. Two australian now, much of the country is bracing for the return of record hot weather this weekend, as bushfires burn out of control. Thousands of people across the country are being urged to seek safety, and state emergency warnings remain in place as temperatures are set to increase. Last year was australias hottest and driest on record, and the fires are seen by many as a consequence of global warming. Life on the run is proving expects of proving expensive to carlos ghosn. According to estimates by the bloomberg billionaires index, the foreman this on chairmans fortune has shrunk by 40 since he was arrested one year ago. His wealth is calculated now at 70 million. The cost of him fleeing from japan included 14 million and forfeited bail money, and the escape operation is estimated to have cost more than 15 million. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Keenan. This is bloomberg. Haslinda we worked intelligence increasingly believes the craney and jet that crashed outside tehran was shot down by a missile. The jet came down in flames, killing all 176 people on board. Lets bring in Senior International editor Jodi Schneider with the latest. What do we know or suspect about this disaster so far . Jodi we are hearing from the prime ministers of canada, the u. K. On dust ready, that are saying there intelligence shows that this plane was brought down by anna rainey and missile missile, perhaps fired unintentionally, perhaps it was unintentional that it hit the airplane, but they are all starting to say they are hearing intelligence of this. From thegly we heard canadian prime minister, were about a third of the passengers on the plane headed for ukraine were from canada, and he is saying the intelligence clearly shows this is what happened. Disaster took place only s tookafter the iranian responsibility for hitting those to u. S. Iraqi basis with is known tod iran have a store of shortrange ballistic missiles. So this is all coming out. This is where the investigation will likely be headed. President trump, when after about this, said he didnt have any intelligence that showed that, but a pretty rough neighborhood was his quote. So the investigations continue into this. It is going to be a complicated investigation, giving it was a boeing plane and given the iran happen u. S. Tensions iranu. S. Tensions, so it will be hard to get the investigatory details the u. S. Usually does. About mike pence on comments he made, because there was confusion about what he said, from what we have been hearing in intelligence and analysis from the u. S. Comments were very contradictory to President Trumps comments. President trump said he was glad to see there wasnt a real escalation, that his assessment, and based on reports he had been given, his assessment was the iranians did not intend that there be a lossoflife, that they had a part of the spaces where there were not service people. s comments were in direct contradiction to that instead the iranians intended to kill americans, so i much more ominous tone. It raises the question of whether the u. S. Believes that there was intention to have a lossoflife, and for iran essentially to be escalating things. That calls into question with the u. S. Response should be. The head of the joint chiefs of staff in the u. S. Said, his comments were similar to mr. Pences and when mr. Spokesperson was asked about this contradiction from what was said by President Trump, she d not comment. So s she did not comment. So we have two sides of the so it is interesting and somewhat curious why we are hearing these contradict the comments from the Vice President now. You. Nda thank guest thinks the impact on Global Securities should be minor if theres no further escalation. Was no best case and reo further escalation, but it is not to say that iran wont use proxies, that is highly probable. The risk and geopolitics has stepped up and changed over the past couple of weeks. At the moment it looks as though there has been a deescalation, that is clear, but from President Trumps previous comments, before the latest situation emerged, that he was interested in doing a deal with iran, but a broaderbased deal, and i dont think that general philosophy has changed, even though the events of recent days, so that suggests there is some desire to come together, and come to a broaderbased deal, but clearly the last week has muddied the waters quite a sophie haslinda a lot. Haslinda gold has retreated, oil as well, what are the underlying markers . This is a market that wants to go up. Back fromyou step last weekend look at predictions we weregoing into 2020, more positive on Something Like gold in the first half of the year relative to oil, as an example. The reasons are fundamentally based in that we thought there could be more easing in the u. S. To shore up growth there. Clearly there are still week spots, butew weak the fed could move again to shore up growth. But the fed have been very clear, we are staying low for longer until inflation picks up, which says to us one very important point, real Interest Rates in the United States are going to go more deeply into negative territory. That is very supportive of gold. We also saw that earnings started to pick up, in asian in particular. Art of the reason we at part of the reason we added asia and japan to our Asset Allocation a few months ago and again at the end of last years because we saw earnings expectations picking up, the i. T. Sector was recovering, that was leading a recovery in asia, and on top of that, we felt the u. S. Dollar had peaked and is a consequence, weakened dollar wooded would see in asian currencies. On u. S. Access u. S. Assets and begin to focus on emerging markets. And wither dollar deeper negative Interest Rates, the u. S. Has very positively driven gold in the past. Geopolitics tends to be very haphazard, and doesnt tend to last very long, as we have seen in the gold price. But then coming across oil, the very important thing for oil is we had Global Growth and demand pushed down a little bit last year, and we have seen supplyside pickup. Yvonne when you mention gold, there is a fundamental story about why it has outperformed oil, but what about the rest of the havens . Has the iran story pushed that on the back burner . A couple of is things going on, particularly if you think about the swiss, for example. Clearly we have a stronger swiss over the next 12 months, largely based on the dollar view. So from a geopolitics we believe at ubs there is a notable front of conflict between the u. S. And iran, but that does not rely periods where there is a rule out. This where thereconflict betweed that does not rule out periods where there is a flashpoint. Japan does not rule out china,ng growth in particularly in i. T. And we expect to see some recovery in the japanese equity market. So overall, the conditions in japan improve, china but noneths we do have a weaker dollar, which has strengthened the yen a little bit and can challenge the equity market in japan from time to time. So while we dont suggest this situation is going to deteriorate, at the same time we cant rule out these flash points which will cause people to go back to these safe havens. That is why when we look at gold, we have a forecast for gold over 12 months of around 1600. Is a step back below 1600 dollars again should be expected, but the fundamental , we expect it to stay higher Going Forward to the end of the year, particularly the risk around also the u. S. Election beginning to come to the fore. Wayne gordon of ubs Global Wealth management, more for him later. For now, our asia back chief joins us forg qian the outgrowth on the economy, in just a bit. Risks next, are there that could knock it off course . This is bloomberg. Yvonne welcome back. Wednesday will see the socalled phaseone trade deal signed, and President Trump says he wants to start negotiations on phase two. Right away,tart negotiating phase ii. It will take a little time. I think i might want to wait to finish it until after the election, because by doing that i think we can make a little better deal, they little better deal, maybe a lot better deal. Haslinda the u. S. Jobs report in december is coming out later in the u. S. , Data Collected during the week in which the phaseone agreement was reached, so this is important. Projects economics numbers above consensus gains, saying 205,000, clocking nearly a decade of job growth. Lets bring back wayne gordon, ubs Wealth Management director. What assumptions are you making about nonfarm payroll, and the other thing is, given optimism in the u. S. Economy, not talking recession anymore, why are we looking at a weaker dollar . Wayne the consensus is a touch strong on the number that comes out, largely because last time we had the issue around gm, and that had to work its way through. So there may be a little revision as we go back on those numbers, and then we are slightly under 200, i would guess. Nonetheless, largely the u. S. Economy is doing very well, no doubt about that, with the exception of the manufacturing side, the number was quite weak and surprisingly so. But the important thing there for me was that inventories looked like they were starting to bottom out, so businesses looking to start rebooting industries, which is very important on the production chain. Also housing is doing very well and consumption has continued to remain resilient. Those overall metrics in the economy are very robust and very strong. However, your questions about largely because from a relative change point of view, the u. S. Stays resilient and strong, but we start to see improvement in europe and improvement in emerging markets, so consequently you start to get u. S. Investors who have primarily been there to stick with the u. S. Stock market, as it continues to do well, you begin to see earnings improvements outside, yields can be higher outside the u. S. , and as a consequence but will move that way. I weaker dollar for 2020 . Yuan has been steady come around seven for a while now, and with a weaker dollar you are going to start to come down to around 6. 8, those sorts of numbers. I think taipei should be thinking about it, which is really stable relative to some big swings we saw over the last year or so. Yvonne what is behind that strength . The pboc has been doing targeted easing, we saw the rrr cot come into effect a couple of days ago, is it mostly on trade headlines that is keeping this elevated . Wayne yeah, when you think about fundamentals of the economy, the trade issue is a large shadow cast over china growth, particularly with regard to how much companies are willing to spend, where investment plans are going, etc. So if you remove that shadow to the degree that it has, dont mistake me, phase two is going , and in theifficult previous discussion, President Trump wants to get going on it immediately, he is probably correct in the sense that it will be passed the election before we see that resolution. But overall with the china economy, we revised growth from 5. 7, 5. 8, weves, lifted that to six test on the removal of that trade risk. Not only that, but the pboc have continued to ease policy, and that is continuing to move through on both infrastructure as well as small to mediumsized enterprises, so the consequences for growth are a little bit better. I think the risks we were reflecting when it was above seven for example, pretty much dissipated that gives you a broader and stronger yuan over time. Not only that, we see a weaker u. S. Dollar abroad, which by consequence supports a stronger cny. Of ubs wayne gordon Global Wealth management joining us from singapore. A jobs report due out later on, and the broader outlook for asia economistard asian qian wang. This is bloomberg. Lets do a quick check of business flash headlines. Reports of trouble for another company backed by softbank. Wrappi ompany company rappi. This comes after another softbank investment cut its workforce, as zoom pizza stopped actually making pizza. J. P. Morgan chase and nomura are taking extra office space in chinas highest skyscraper. We are told j. P. Morgan is boosting shanghai tower space by one third, while nomura is doubling size of its lease to around 5000. Expansion in shanghai as finance as china liberalize is financial regulations. Islinda the gong means it time for stock of the hour. Not a good day, see lsa downgrade, not just from tensions in hong kong but also south korea, fast retailing worst overseas sales in a decade, and see lsa says the stock is overvalued. When it comes to hong kong and south korea, they say the next big thing could be a warmer winter in japan, not helpful with the stock falling 3 . We have plenty more ahead, check out those stocks on tv on your bloomberg today. This is bloomberg. Pictures, at live 11 30 a. M. In singapore, the middle of the trading day. Looking at the fti, pretty flat. It was comfortably higher earlier but has given up gains pretty much. Abouthings to tell you here in singapore, change to make it easier for listed companies, easing reporting rules for most companies that will take effect february 7. The e. U. Ended its portal he reporting role in 2013 and for applies toit only companies on its smallcap exchange, so good news for those safer companies, they start reporting february 7. Lets get headlines from su keenan in new york. Thank you, haslinda. We start with u. S. Intelligence. It increasingly shows and believes ukrainian jet the ukrainian jet that crashed outside tehran was shot down by a missile. Rockets werewo detected from an iranian battery shortly after the 737 took off, followed by an explosion on the plane. The jet crashed in flames and killed all on board. I ran initially blamed technical issues and set an engine caught fire. To the u. S. , the house of representatives has voted to limit President Trumps authority to strike iran. The result of the vote requires President Trump to cease military actions against iran unless authorized by congress or in response to an imminent threat. Democrats say the vote Defense Congress constitutional powers, but republicans say it endangers national security. Reportedlyjapan is asking interpol to issue a red notice for the wife of carlos ghosn. The notice requires local Police Forces to do all they can to isest carol ghosn, who alleged to have lied under oath and questioning in japan last year. Authorities reportedly also want to arrest anyone who helped the 4 who helped the former nissan chief to escape. Lebanon has said it will not send carlos ghosn back to japan. Finally, much of us trail your bracing for the return of record hot weather this weekend as bushfires continue to burn out of control. Thousands of people across the country are being urged to seek safety, and state emergency warnings remain in place as temperatures look set to increase. Last year was australias hottest and driest on record, and the fires are seen by many as a consequence of global warming. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Su, thank you. Lets look at markets, asia tracking gains, u. S. Slightly lower compared to when trading first began. By whatgains boosted happened on the s p 500, which reached yet another record high, u. S. Jobless claims following more than expected as people are on the nonfarm payroll are due later today. We have the nikkei to 25 higher higher. I 225 senggains for the hang kospi. And the we also see the dollar gaining against major currencies as risk tapers down. Yvonne and we have day to have a stellar session that we had thursday. The rupee continues to see this drink that we saw, Holding Onto Gains we saw now that oil prices have steadied a bed and geopolitical risks have receded as well, but we do see yields aching slightly higher, six basis points for the india 10year. You mentioned the jobless report, we did hear from the fed vice chairman, who told the council on Foreign Relations labor market means current Monetary Policy easing a good place. The strong labor market and inflation running close to our symmetric, 2 objective. As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of Monetary Policy likely will remain appropriate. Our next guest sees the u. S. Avoiding a technical recession but says the economy will drop below normal growth. Lets ring in vanguard chief asia economist wang qian. You dont sound as confident as richard . Important goal for 2020 is that policy uncertainty will remain elevated into 2020, and that will continue to weigh on Business Confidence badly, and most importantly we will probably see corporations be more cautious in terms of hiring. And that will affect the labor market. So for the u. S. Actually, we have seen the number on payroll going near 200,000 going near 200,000, but in 2020 we will see that start to decline. So 100,000 to 150,000, the labor market slows down and fiscal support start to fade, then you would see consumption start to weaken. Expect u. S. Economic growth to slow to 1 in 2020. Yvonne we have a faceone deal that could be signed and week. There is talk of a phase phaseone deal that could be signed next week. There is talk of a phase two. How likely is it that we get any meaningful from a phase two . No matter how you call it, a phaseone deal is very similar to what we got as a temporary truce at the end of 2018 or the middle of 2019, so the same thing, we buy time for both sides but we didnt really solve the fundamental issues. Beenwould say we have always holding the view that it is very difficult for china and the u. S. To reach a sustainable and comprehensive deal in the foreseeable future. The most important thing, as you were saying, that facetwo deal is going to involve negotiation on some very fundamental issues, including industry policy, government subsidies, something very fundamental to chinas growth model. Very wide there is a discrepancy between the two countries on that, so even if we sign a phaseone deal, that is a question, and i think a phasetwo deal will be very, very difficult. Haslinda the faceone deal is driving a lot of the optimism in the market right now. The question is, how soon do you think we will see the benefit of a phaseone agreement . How soon will we see improvement in pmis and growth . Wang it is definitely pushing up sentiment in financial market, as you can see, but if you are a businessman, you want to build a factory, hiring a lot of people, extending your business, under consideration is not just of the outlook tomorrow, next month or this year. You want to make sure there is a good market for your product or service in the next three years, five years, 10 years. So i would say the longterm outlook matters more for business, not just a phaseone deal in the next three months. So i want to say at this moment, sentiment in the Financial Markets is definitely improved, after the real economy, 2019 adjustments in the inventory cycle, that helps, that actually reduced the , sossity for adjustment bute is probably less risk, it dont see business recovering to normal and then everybody will start to make investments again. That is nothing case. Research, we found that household be favor household behavior will be very different in a high uncertainty regime versus a low uncertainty regime. So our model has growth of 6 in a low uncertainty regime, but about 3 and a high uncertainty regime. Could be the wildcard, because geopolitics are at play in 2020. General,ould say in supplyside oil shock is definitely our next factor for the Global Economy, in general. On question about the impact growth is really about the duration. How sustainable this Oil Price Hike would be, right . Are already very sustainable in production could pick up quickly in response to a Higher Oil Price, and in general Central Banks are going to look through this temporary shock, and they are going to retain and accommodative Monetary Policy and that will provide an outside cushion for the Downside Risk to growth. Yvonne markets are certainly pricing that income a this cyclical upturn. When do you see that Inflection Point in terms of the growth picture, pmis turning a little less negative right now, people saying we have reached the bottom in the fourth quarter, but when do we see the turn of that data . Wang i think that is important. I look at concerns that the market might be overly complacent, because the market was hoping for a synchronized, Global Economic recovery in 2020. That is why we see in the market thei reflation trade. But i want to say that when you are in this high uncertainty regime, households tend to be more cautious, they tend to wait. Taxrtainty is just like a which makes a household discount even more, so they wait before they make a big, important decision. That is what we are going to see in 2020 maybe if you could get a little stabilization in the growth momentum, but i just dont see a strong rebound in the growth cycle in 2020, not yet. Uncertainty just continues to remain elevated. Yvonne is it the same story when it comes to china as well, and its recovery this year . How do you see things playing out . Wang i would say that in china people have better confidence about policy, so that would help push down the Downside Risk. We are still seeing china growth so little bit more, say about 5. 8 this year. Despite the risk on the external front. China policymakers still have policy room on Monetary Policy and the fiscal policy front to cushion the Downside Risk. But the interesting part is, do not hope to much from china , 2009, i think in 2008 2015 and 2016, china was in crisis mode and just tried everything to promote growth. But in the last several years, china has multiple policy goals to maintain a very tight balance that includes growth stability, Financial Stability, pushing Structural Reforms to find a new growth driver for the chinese economy. That means a largerscale stimulus is unlikely. I would say for 2020, you would probably see more targeted easing, targeted monetary easing foe saying focusing on small to medium enterprises. That is what you are going to see. Haslinda that is the pboc. What about other asian banks, will they recalibrate given the fed plans to stand pat . In 2020, the economy is growing, so to that extent i want say that would leave policy room for asian Central Banks to cut Interest Rates in support of growth. But very near term, at this moment, emerging Central Banks probably wont stay on the someines because there is improvement in the Economic Data , so they will be more data dependent, but if the economy momentum starts to deteriorate again, yes, they will be ready to ease again. Thank you for stopping , vanguard chief market economist for asia. This is bloomberg. Haslinda it is a riskon day in asia. Lets look at india to see if it is joining the party. Looking at the nifty, gains emphasis due to announced three q earnings later today and industrywide sales data for december, r. B. I. Holding, reverse repo auctions to be released later today as well. Yvonne and a lot to look ahead to when it comes to the india session. Looking at the government of hong kong as well, saying it is ready to spend boldly to shore up the economy. We spoke exclusively about resilience in the Financial Markets. The tourism board has been looking very closely at the Tourism Commission in terms of further positioning hong kong and the iraqi of highvalue tourism. And we will continue reform on the retail sector. Tourism. But if the situation shows this kind of high rental cannot be sustained, the market will adjust itself. Do you think hong kong can remain a luxury hub . Past six months, because of the unrest, people peoplebout their safety, worry about whether it is still safe for them to come here. I doce this is removed, think we are still very not just as a Tourist Destination but also as a place to do business. Sector,inancial property sector stayed robust amidst seven months of protests. Do you expect it to stay that way, where you see this dichotomy between retail and tourism, but the Banking System remains strong . Cannot hold up . Can that hold up . When you look at the inflow and outflow of funds, our Exchange Rate as well as the Banking System, you may not realize you have the same thing going through very difficult times in terms of society. We still maintain that our Financial System is very robust, Financial Stability is no problem. Yvonne the hong kong dollar peg, will it stay intact . We have no intention to review it. Haslinda what would force you to abandon the peg . No circumstances. No circumstances. It has been serving us very well, functioning very well, we dont see any reason for this to be reviewed. Haslinda not even if the economy weakens further . Yvonne yvonne not even if the economy weakens further. No, no circumstance. Yvonne themr engagement with indicates yes, they have some need a, whether they contingency plan, but we do not to movesubstantial plan Business Investment away from hong kong. At the end of the day, hong kong still is a very good place for business, the institutional strength, the core are still here, and hong kong still plays a very Important Role in chinas economic development. Yvonne that are still here, was our exclusive chat with the Hong Kong Financial secretary, paul chan. Counting down to the election in taiwan, a vote that will determine relations with china for years, we are live in taipei next. This is bloomberg. Yvonne the taiwan vote this future could shape its with china. Asian correspondent Stephen Engle takes a look at where the two major parties stand on the issue. Phen taiwans first female leader refuses to endorse the onechina principle, raising tensions across the straight, but that has become her topselling point as she campaigns for a second term. Taiwan has been ruled separately from the chinese mainland since 1949 and today is a democracy. In 1992, beijing and taipei reach an understanding that they are part of one china, while disagreeing on which government is legitimate. Vows taiwan will never reunify with china as long as she is in power. That enter support for prodemocracy protests in hong kong has boosted her popularity ahead of the weekend vote, a reversal of fortune after her partys municipal election defeat in 2018. It is the opposite for the kmp candidate, whose perceived friendliness to china has turned into a liability. Makes say the mayor has struggled to articulate a clear china policy, even as he warns against a push for independence. The future of taiwanese relations with the mainland have become a central issue in this years election, as beijing adopts a more assertive approach. Despite closer ties with china, more and more people on the selfruled china identify as taiwanese. Support for reunification has fallen over the years. That is a headache for the communist party in beijing, which of use a retaking taiwan as a Historic Task that must be completed at whatever cost, even if that means by force. Haslinda our chief Asian Correspondent Stephen Engle is in taipei. This election is against a positive backdrop in the markets, up 20 last year, a 19year highend inflows into the taiwanese economy. Set the scene for us. Yeah, the economy is doing well here, stockmarket near record highs, gdp expected 2. 5 expected to be for 2019 to be 2. 5 , could be even higher for 2020 according to economists, could be the highest among hong kong, so it is rare for an incumbent toulouse when the economy is doing really well. However, bigger issues are at play. We just laid them out, relations with china always at the backdrop and sometimes in the forefront of taiwanese elections. I think i have been covering them for 2000, so this is my sixth president ial election, covering it, and every time the china angle seems to get more intense, and this year is no exception. On the one hand, there is the status quote of Self Governance as proposed by the incumbent president of the last four years, and the rival alternative from the kmp, the nationalist party candidate, and that is more integration, closer economic integration with the taiwansas a key to economic survival. Today i talked to an advisor who is from the United States, hooverchen with the he institution at Stanford University and an advisor to mitt romney. I asked him about the importance of this years campaign. Fourtime want to express itself this way, i was at the was at the rally last night, jubilant is the way to describe it, a lot of energy, and that is an important statement at a time when democracy is receding in parts of asia and around the world. Stephen the party he is talking about is the dpp, and the candidate will be right here at a large rally. Last night it was the kmp candidate, and standing room only, it was shoulder to shoulder, packed with kmp supporters in tan and blue. Today it will be a slight tinge of green for the supporters. Steve, is this election the incumbents to lose, looking at the background of the challenger, he rose to fame quickly after becoming a mayor, and didnt really have time to prove anything, no track record. Is that what is leading to the change in fortunes for him . Stephen one thing i have learned about taiwan elections, nothing is a foregone conclusion. I was here when the dpp was widely expected to lose, i shot came out and there were conspiracy theories and behold, the dpp one that election. So nothing is out of the question. And in the last week of the campaign we are not allowed to produce any opinion polls, so we have to leave it up to the people to decide, starting tomorrow morning. But i am certain the hong kong issue is playing a key role in that will be on the minds of people when they go to the polls. Yvonne our chief Asian Correspondent Stephen Engle in taipei, thank you. We will have a full round up of the election on our middle east show sunday and all through programming on monday morning. You dont want to miss that. Haslinda an exciting weekend. That is it for this edition of Bloomberg Markets asia. Eastberg markets middle is next. This is bloomberg. Taylor i am taylor riggs and this is bloomberg technology. Coming up, apples shine. The Company Keeps hitting records plus, a new the food Delivery Business is getting crowded. Grubhub may be looking to consolidate. And, sales for in the sky. It is no news