One progress review should happen soon. More signs offers china strengthening rebound. Sales jumped by one third last quarter to 22 billion. The company insists it is no threat to u. S. National security. Lets take a look at how we are shaping up on this final friday session of the day. Lets get over to sophie he was taking a closer look. What are we watching . Vibes coming through with futures largely higher. We could see some weakness in korea following the drop that we saw for the kospi. On the docket today were looking at cpi from japan. Nikkei futures move slightly higher this morning, while the yen is trading below the 106 handle. Pulling up the chart on the terminal, we are watching to see if tech will bounce back in the region after thursdays selloff which saw the kospi with a big loss and the worst day for the regional tech index since march. Samsung took a hit on the south outlook for to prices. Prices. Outlook on chip potential hits on huawei and delayed 5g. That could hurt earnings for taiwanese chip players. The second half may offset the positive numbers from taiwan yesterday which saw a big jump in july export orders. I want to bring attention to a note from bernstein. Finding middle ground between apples growth and stagnating value place in asia. Specifically finding value strategy within tech. Nameset of cheap tech including taiwanese hardware and korean ship names has returned 9 over the past year. Outperforming value shares in the region, which have been little change during this period. But we are seeing tech shares outperforming driving that rally in asian markets so far this year. Switching out the terminal, on thursday we saw the ecb, boj, and boe announce in a joint statement they will be reducing the frequency of dollar liquidity operations to once a week from september. So a sign that stress in credit markets has eased and dollar demand has dropped. Haidi we are going to talk more about that structural theme. Joining us for more is Research Affiliate head of equities feifei li. Great to have you with us. We have been talking about and what sophie was just talking about, discontinue divergence when it comes to growth and tech stocks as well as value. Just the outperformance of Growth Stocks overvalued. We see this time and time again continuing. A lot of analysts are saying that the short period of time it takes to supersede the highest stocks from the s p suggests we will see a broader rally to come. Do you see that rotation play finally eventuated . Feifei i think you are right. The longestrienced and biggest over the past more than a decade. The value stocks have not been outperforming Growth Stocks. I would say if we think the economy is entering broader recovery phase, likely value stocks do really well during this particular market environment. On the other side of the coin, mega growth companies. They account for almost one quarter of s p 500 index value. So it looks very bubbly. They have been used as a safe haven during the pandemic, even though those companys future revenue is very much linked the Overall Economic prospect. How much Companies Want to spend on advertising, upgrading i. T. Infrastructure, how much Consumers Want to pay for luxury electronics, etc. So tech companies, if they think the broad economic recovery is coming, i would favor cheaply priced stocks such as financials, industrials, energies. Is that really a better bet for longerterm investors . Because what we have heard from the fed this week continues to build a picture that perhaps the postpandemic recovery should not take longer than we think. Until we have certainty about that, is there really any kind of catalyst that will drive these values, and i guess these reopening stocks, higher . Feifei you are absolutely correct. I think it is not a longterm perspective. It is a shortterm. It is really hard to focus on nearterm stock market return for individual stocks. Over the longterm, we know the price, you enter the position really matters. So the value is really for longterm investors. Paul what about the shery what about the broader e. M. Space . We have really lots of pressure points, whether it is the u. S. China trade tensions, or just volatility in currencies like the lira. Feifei emerging markets actually, i think we have been advocating emerging market equity even prior to the lockdown crash because they seem to be a bargain for longterm investors. Their valuation is much cheaper. In the the recent rally emergingmarket rally can be partially treated to a weak dollar. It attracts into emerging markets. I think, again, over the long horizon, over the next decade, we think emergingmarket equities can deliver 7 return. Premium fornice investors to have. Comparatively, you have expected real return close to zero. And you are also right, the political risk, the trade tension between china and the u. S. Will kind of make the picture muddy. I think entire emerging market looks attractive. If you have the knowledge and the kind of research to focus moreon the countries with fiscal and monetary space to cope with the pandemic, the companies with more fiscally stronger institutional frameworks, good reserves, good balance sheets, policy flexibility, i think it will beneficial for investors. Shery so on your thoughts on the dollar and this downtrend, this chart a showing how really the rsi is now looking at lows we have not seen in about the past decade. Is this a longterm trend . Going tokly, are we see more investors embrace that short dollars story . Feifei well, i think i did not have very good news for the dollar at this moment. Dollar lostu. S. Nearly 10 of its value since the flight to safety occurred in march. So, i think there are multiple reasons. The u. S. Government has been super aggressive in providing stimulus package that extends the deficit in an unprecedented way, so the dollar becomes unattractive. So i think the covid19 biological indicator did not help. U. S. Has not been good at containing the spread of the virus, so the u. S. Economy recovery may be lacking other companies, also impacting the weakness of the dollar. Over the nearterm, there will be continued turmoil around antiracism and Political Uncertainty associated with the forthcoming president ial election. The u. S. Dollar may not really take off after those get settled. Shery always great having your thoughts. Outlookead, more on the for the tech sector with analysis of alibabas results. The company is touting a return to previrus avenue growth. Plus, we are expecting revenue data later this hour from japan. Analysis with jesper koll. This is bloomberg. Is bloomberg. I am Karina Mitchell with the first word headlines. President through trump is threatening American Companies with tariffs if they do not move jobs back to the u. S. He says he will offer tax credits if they comply but they will have to pay if they refuse. Longoke in a one hour rebuttal of jill bidens nomination acceptance, but offered no explanation as to how a system would work, and it is not clear if it is official white house policy. China says long rebuttal of jill bidens nomination delayed phase one trade talks will not happen soon after President Trump postponed a review over the weekend. Tensions between beijing and washington continue to rise over trade, human rights, and hong kong, but the Commerce Ministry says they will be in hung in touch. President trump says he is unhappy with chinas handling of the coronavirus. The russian Opposition Leader is in a coma after suspected poisoning. His supporters blame president putin. His frequent claims of corruption at the highest levels of the russian government has made him powerful enemies. North Korean Leader kim jongun is promoting his sister as he warns the economy faces major challenges. He told Party Leaders the country faces unexpected threats in a range of areas, and its development has been seriously delayed. His sister will now be in charge of relations with south korea, as the north tackles sanctions, widespread flooding, and the pandemic. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Alibaba reporting firstquarter earnings and revenue that Beat Estimates, with sales almost back to prepandemic levels. At the same time, the chinese ecommerce giant appealed to President Trump that its u. S. Presence is not a security threat. Our chief northeast in correspondent Stephen Engle joins us. What were the Key Takeaways . Stephen they have come out of the pandemic fairly strong. Of course the march quarter was pretty dire because of the lockdown in china when consumption really grounded to a halt on the lockdown. In the december quarter, they had 38 growth. Now they are seeing a rebound back to nearly that level of 34 growth in revenue, to 22. 2 billion. They got a boost in record sales in their june 18 midyear promotion, sales promotion, that helped contribute to that big jump in sales. Net income also rising faster than expected to a higher number than expected, 47. 6 billion yuan. And annual active consumers and china has grown by another 16 million to 742 million active ecommerce consumers. That is twice the population of the United States. Also, its 33 owned financial affiliate ant financial, which s profitsalipay, it grew roughly sixfold, getting a glimpse into the financials of this behemoth ahead of the anticipated dual listing in hong kong and shanghai. This is what one analyst called the results. Validate theesults thesis that alibaba will emerge from the pandemic stronger than before. Of course they need to work through those operational problems that they had in march, but once they come out of that, he said like other Ecommerce Companies in china like jd. Com, they have learned how to do this, even more efficiently through the lockdowns and beyond the lockdowns, as more people shop online. Operational excellence will only be accelerated. Haidi and of course it seems like executives at alibaba spent a lot of time trying to clarify. Is much of a threat potential action from the Trump Administration when of course we know alibaba has been trying to be bigger international for a while . It is still tiny in the u. S. Compared to china. Stephen yeah. You do not want to necessarily get in the crosshairs of the Trump Administration. Look at what is happening to wechat and tiktok. Obviously on a more broader scale what is happening to huawei. So, donald trump has alluded to the fact that other Chinese Services or companies could be targeted. We had the state department talking about universities should divest from chineselisted stocks in the u. S. Theres no bigger target potentially than alibaba. And alibaba we all know has huge ambitions for its Cloud Services initiatives and is planning to spend a lot of money in the United States to build out its Cloud Services. So, that is also a target of the Trump Administration, saying in the Cloud Services of these Chinese Companies perhaps pose the biggest gap in National Security threats. On the ceo of alibaba Conference Call spent a lot of time to assuage the fears of not just investors, but the white house, saying our primary focus in the u. S. Is to support businesses, american brands, retailers, Small Businesses, farmers, to take American Products and sell them to china and to the rest of the world. We will see if the white house listens. But right now wilbur ross says there is no formal action steps on alibaba. Haidi Stephen Engle with us, thank you so much. For more analysis on the proper we will haved, more on the next hour. And Acquisition Companies have been one of the hottest Asset Classes this year. Their profile has been boosted, including draft gains, their chairman and former dell executive told bloomberg exclusively of the revenge of the Retail Investor. Avoidare trying to hitsdriven businesses. Parts of mobile gaming is like the movie studio business. We are going after manifestations of great rick and mortar businesses that will be transitioning, especially here in the pandemic. Gone i mentioned, you have public this week. You have done another one. Seems like it is being talked about every day. Is it frothy in this backspace . Harry if you call it frothy, the activity is clearly there because of the zero Interest Rate environment, all the uncertainty. If you think about it, i would call it the revenge of the Retail Investor, because when i look at our recent example with rush street, it is a fascinating case study where if we had done a traditional ipo, rush street would have been very successful. It probably would have taken them longer to get there. But the Retail Investor would not have been able to participate until the very end, until the ipo itself, it would be the last couple weeks and then the typical Retail Investor would be clamoring to their broker and get a minimal amount of shares. We with rush street, announced last week, the proxy is going to come out in a couple weeks, then there will be a final roadshow to solicit the shareholder vote. Silver is this nice healthy period of two, three months. And Institutional Investors like it as well, because if you happen to be at the butt end of the roadshow, you might have one hour to decide if you want to put in an order with your friendly investment bank. Now you can literally have weeks, time to meet the management under a nondisclosure agreement. So in a way, that is what has propelled this move towards the back structure. I think a lot of it is just getting more time. Sellers knowing they have more certainty that a deal is going to get done. But it is wonderful for the investors because they have a lot of time to ponder and think about things. Lets talk about the Retail Investor because that is a big part of this. It allows them to get at the front door and not wait until the company is listed. Isnt there also concerned that the potential investor doesnt know what they are getting into with this . The traditional way, theres a let more access to information they have. Harry actually the information is quite good. We have slides up. You would never get those in an ipo until the bitter end. Those will be around for three months. Theres a webcast presentation. Theres the comfort in knowing of transactions. Fidelity is a significant investor, so you know big institutions have looked at it, fidelity is coming in at the same price as a Retail Investor would. So, you feel that theres the sponsorship. But like Everything Else in investments, one has to be diligent yourself and do all your own work. But theres the chance as a Retail Investor to do your own work. Aery next, uber and lyft win ruling in california that spares them from having to make their drivers employees for now. This is bloomberg. Uber and lyft soaring in late trading after winning a delay on a Court Decision would have forced them to make drivers employees would benefit. Su keenan has the story. A big win for the ride hailers, especially when they have been hit hard. Su a critical win in a highstakes legal battle over driver pay. The delay allows both companies to operate as normal while they are appealing their lower court loss, when they were ordered to swiftly comply with the new state law that would force them to convert their gig drivers into employees with costly benefits. It has been widely known that this is a move that would have destroyed their Business Model. Shares of both uber and lyft as you can see shot up as much as 8 and 9 on the day. Had beenanys shares lower prior to the decision, because uber indicated and lyft outright stated they planned it to suspend all operations in california as of midnight thursday. And that was because the deadline to convert their drivers was friday, under the order that was paused. The delay does come with a few strings. It would require both companies to start preparing a detailed the plan for how they would convert drivers to employees if they lose their appeal. This couldr said indicate the court is frustrated with uber and lyft because they appear unprepared to make the conversion, even though the law has been in effect for several months. Decisionwords, the appears designed to protect drivers from immediate disruption, while warning these companies they cannot keep burying their heads in the sand. Haidi what happens next, then . Court hasthe appeals scheduled arguments for october 13. And winning will not be easy. The state attorney general has opposed the delay that they were already granted, and a spokesman for lyft in reaction said the companys fight is not over. While they do appreciate they will not have to immediately suspend operations, they say they plan to keep fighting. Uber said they are glad that the court of appeals recognized the important questions raised, and access to their services will not be cut off while they appeal. Back to you. Haidi su keenan there. Year, now isthis overtaking walmart with the stock rising follow up fivefold. Shares are nearly 10 times the level they were trading at this time last year. Tesla is planning a stock split to make shares more accessible to individual investors, coming to force at the end of the month. Emirates has finalized his preferred mix of new boeing jets focusing on smaller ones rather than big jumbos. Its pushing to slot more of its 115 strong 777x order to the dreamliner, with negotiations continuing about delivery dates. Australias bank recorded an estimate it was down 33 on the year at 700 50 million aussie dollars and 540 million u. S. Down from last year which was . 44 a share. Ceo at 11 30 their a. M. In hong kong. Next, we are minutes away from japan releasing cpi data. We are going to hear from yes per goal. He says were going to be hearing from jesper koll. We have breaking news out of japan. We are getting the Consumer Price numbers for july. Year. Sing 0. 3 year on bank in line with estimates. An acceleration from the previous month. We had the past three months headline inflation stayed around at 0. 1 acceleration. We are getting the core cpi numbers year on year. Coming in flat. This is a miss because analysts expected a little bit of growth of acceleration of 0. 1 . But for a second consecutive month, we are seeing core prices in japan remaining flat. This coming after two months of deflation. Also when it comes to the core prices, which excludes energy on top of food, acceleration in prices 0. 4 . Also missing analyst expectations. We do have the covid19 pandemic and the outbreak rising rapidly, especially in the tokyo area. That could be dampening the recovery momentum. Lets get more analysis on those numbers from wisdom tree japan ceo. Always great having you with us. When it comes to the headline number, it came in line with estimates. The inflation number accelerating. Not so much when it comes to core prices and core prices as well. What do you make of this . Jesper basically, the forces of deflation and inflation have been a tight about toll tight battle. There is a lot of demand pullback, particularly with the covid anxieties rising in japan. There is no price power. Anybody, if at all, companies are using discounts. The only deflationary pressure is in some bottleneck areas, like certain food items, for example. Basically, japan has no inflation whatsoever. Shery we are seeing a little bit of strength for the japanese yen throughout the week. We are at around the 105 level. How big of a wild card the japanese currency, especially when we have a weakening u. S. Good dollar u. S. Dollar . Jesper at the end of the day, the most important determinant of inflation is the terms of trade. And Exchange Trade is hugely important. If the dollar were to weaken. But would keep japan back into deflation, because lower import prices, you know, would undermine the ability to charge higher prices. We know what an effort a was to drag it out of zero deflation, right, to have that flightline. What does it mean for the effort it to get itself out of deflation . Jesper it is very interesting. Because the one thing is that there is a lot of productivity gains, a lot of streamlining of the Way Companies offer their product here. As a result of that, there is a lot of good deflation raising the purchasing power. Thegreat thing about japan, one thing you should not underestimate is we do have wage inflation. This is actually good news. They have money in their pocket, it is still today rising at a rate of around one. Percent to 2 . That is very different from where we were four or five years ago when wages were declining. Your viewsnt to get on what the bank of japan does next. Because there is increasing pressure on them to buy more bills. We have seen this stimulus plan unleash bond to supply across the economy. Do we have the situation where fiscal and Monetary Policy is working against each other in some respects . Jesper not really. Japank the key focus in is on fiscal policy. For all intents and purposes, the bank of japan is technically finetuning its bond operations. But for the average investor, unless you are an expert bond investor, that is not really what matters. What does matter is that japan is likely to get another fiscal package. Readyminister abe looks to put together another supplementary budget, probably coming at the end of september, beginning of october. Is the fiscal side of things where japan is going to shine while the bank of japan stays in a more passive follow mode. Week, we have seen a lot of volatility when it comes to the south korean markets because of the chinau. S. Tensions and how that could affect the life of tmc or samsung. Where does japan fit into this global tech struggle in the chinau. S. Battle . Jesper it is extremely interesting. Because actually, japan has a good chance to come out as a winner because as the United States cuts out for political reasons china suppliers, american customers are going to go somewhere else, and of course, japanese suppliers, particularly of capital goods, of hightechnology equipment, may become a net beneficiary as the United States pivots away from china. Shery japan is known not to have great relations, whether it is with south korea or china. We have seen those export issues also at play. Could some of those be a risk in the future for japan . Jesper look, i think there is obviously political intervention, security concerns, these are the big unknowns out there. However, lets look through the media headlines and focus on what is actually going on. You actually see that orders from the peoples republic of china for japanese machinery, machine tools, etc. , are actually growing now at a rate of 20 , 25 . And that shows you that yes, there is Political Uncertainty. But right now, lets get on with actually doing business. Haidi but really, always appreciate your time. Japan ceo jesper koll there. Lets get a look at how we are shipping up ahead of this fridays session in asia. We had more tech gains, the tech driven rally continuing in the u. S. , ill be at pretty light volumes for the dow and s p. Pretty meandering price action on those stocks outside of tech. Action futures looking like we are seeing a gain. A quarter of 1 higher. The nikkei 225 setting up there for a positive overall in futures. Seeing upside of. 5 . Trading in singapore. Dollaryen sitting at 105. 73. Dollar weakness after snapping the fiveday loss. Back to trading lower when it comes to the dollar against most of its g10 peers. We do have dollars seeing eight, testing the crucial level. The selloff we are seeing in risky assets, it really got sparked by the fed minutes midway through this week. We are seeing it play out when it comes to you on trading as well, looking like positive momentum there for chinese risk assets. Coming up next, but nomination of Kamala Harris pervak for Vice President s is turning out to be one of the highlights of the year for equality. We will speak with the director at Rochester University candidate professor, kelly dittmar. This is bloomberg. Is daybreak asia. Lets get a check of the first word headlines. Global coronavirus cases continue to rise but there are indications that rates may be slowing in the u. S. Hospitalizations in california fell to their lowest since june, but nationwide infections above 5. 5 million. Worldwide fatalities are approaching 800,000 with the economic fallout expected to ask to infect the whole economy. The irs says lower unemployment could persist for years. Germany is warning eu leaders to avoid the new virus lockdown, despite the pandemic continuing to hammer the Single Market economy. Chancellor merkel says the block must not close borders, but must act in unity to prevent any further spread of covid19. She held facetoface talks with friends with french president Emmanuel Macron he says economies cannot be shut down again because the damage would be considerable. New Research Suggests almost one third of all People Living in new delhi have or have had the coronavirus. A study of 15,000 residents in the city say about 30 of people show a history of covid19. The prevalence of coronavirus antibodies among those surveyed has risen from about 23 in june to almost 30 now. The latest study was carried out in the first week of this month. Except theill democratic president ial nomination later as he brings the partys Virtual Convention to a close. It is seen as an a of the most important moment in his career as he tries to encourage voters to send him to the white house in place of President Trump. Biden must show he understands the virtual format of the d c, speaking without the support of the traditional pack. Packed hall. Haidi staying on the u. S. Election, Kamala Harris made history as the first woman of color to accept the Vice President ial nomination. No matter what we look like, no matter where we come from, or who we love, a country where we may not agree on every detail, but we are united by the fundamental belief that every human being is of infinite worth , deserving of compassion, dignity, and respect. In many ways, 20 20 is shaping up to be a historic year when it comes to quality representation in politics. Kelly dittmar is the director of research at women in politics and the associate professor of Political Science at bridges university. Really great to have you on with us. We saw viewership soared to the highs of the entire convention when we had a Kamala Harriss acceptance speech to the Vice President ial nomination. There is clear energy and excitement surrounding the fact that she is running. Im wondering, if she likely to run into the same hurdles, the same old questions of likability, electability, that Hillary Clinton ran into four years ago . Kelly i think we have to be very clear and honest that these institutions, particularly our political institutions, dont just change overnight. She will confront some of the same sexism and even more so, racism, that unfortunately is still characterizing our politics. At the same time, we are in a moment where there are a lot of of women and womens organizations in particular that are ready to call this out. I think the difference, even from four years ago, is that you have more individuals really poised to call the alarm, or sound the alarm, when they see her being treated differently and unfairly. I think we have already seen that in some of the early commentary about her, both her race, and her gender. See gender and race play in the board room, they really fail to make mileage when it comes to representation. So what about the political playbook . We know what President Trumps playbook will be going into november. How do you counter that . In 2016onald trump ran very much on the idea that he was the manliest person to be president , and therefore, he was the most fit. So it is this strategy of masculine dominance, if you will. He also queued a lot of though words, racial resentment in our country and generated a lot of energy in the population, particularly among groups who felt like it was the other, it was immigrant populations, it was people of color, it was women who were taking away the power that they had had historically. You will continue to see that this year. On the democratic side, you see the rivers. An attempt to demonstrate that this party is more inclusive, that it accepts a different groups and populations, and values all popular it values all populations. You see that in the dnc. To demonstrate the diversity in the speakers. And then with Kamala Harris election, really know that this party is trying to move things forward in nominating the first woman of color ever to be a Vice President ial nominee. We will see if voters by that. Of course, the democrats have to do more than just bring in speakers that are diverse. They have to be sure that those individuals have power and influence in the partys agenda, and alternately, if the Bidenharris Administration wins, in setting the agenda in that administration. Shery if you were a political strategist trying to get harris elected, how would you advise her to fight characterizations like we have heard from investors, like jenna gundlach, who said she is a little too charismatic, that she is a little bit dominant with heard personality, things that in male political figures you would think our assets, he was saying them as criticisms. How do you fight that . Kelly i think the great thing is senator harris, because of how far she has come in politics, she is so used to this that she already knows how to deal with it. But i think some of the things we would recommend is being willing to call it out. We are in a different environment than we were four or eight years ago, where i think there is more recognition and support for women really standing up and saying, this is unfair treatment. Sex, whether it is race, or in this case, the intersection of both and how she is treated differently as a black woman, or south asian woman. I think her willingness to speak out, what she has already done in her first speech, she called out the criticism that she was too ambitious, she did it in a veiled way, but i think we will see that with her. And also recognize that she uses other thirdparty validators and surrogates to call it out as well. I think she has got a group behind her, she has her own k hive ready to call out this treatment. That will help her as well. Shery kelly dittmar, thank you for joining us. Associate professor for Political Science at rogers university. Dont miss our set our special coverage of the convention later at 9 00 a. M. In hong kong and 9 00 p. M. In new york. Wto says global trade is starting to come back after collapsing to a record low in june, but the outlook remains uncertain. In these turbulent times, they come as the wto looks for a new leader, with a current chief stepping down this month a year before his term expires. We asked director general roberta about succession plans. Important the most trait a director general can bring to the membership is the ability to capitalize. The ability to figure out solutions, if and when members are having opposite views about any particular issue. This is particularly important with the environment that we live today, a very polarized world. Not only in terms of trade and economics, but geopolitics as well. So being able to bring opposite sides to the table, finding commonalities, making things move, i think that is the most difficult challenge for the director general at this point. In an organization that is driven by the members, so that the director general in the organization itself cannot create rules, cannot create any kind of outcome without an unlimited of all members, all 164. We have a time where we are seeing change in terms of gender equality, and i believe all of the former leaders since its inception of the wto have been men. Do you think it is time to see a woman put in charge . It will definitely be a welcome development. I dont think gender should be the only parameter guiding the succession. But i think it is absolutely natural that an organization that has been there since 1995, never being led by a woman, that this time around, a woman would be taking the head of the organization. There are eight candidates now. All of them very high profile. All of them extremely qualified with three women who are also very qualified. Im sure the members are going to find the right person for the job. Let me ask you about the u. S. Electoral process. Do you think a victory for joe biden would change the trajectory of the wto . Clearly the Trump Administration has not seen had the same worldview as the wto. Would a President Biden make a big difference . Speculativeis a bit because i have not seen or heard much in the campaign about the wto, particularly on the side of the biden camp. I dont know exactly what plans they have for the organization. Clearly, some changes may come, particularly in terms of nuance, particularly in terms of strategy. Thato approach the issues are before the organization. Happeningof what is in the wto has to do with the headwinds of geopolitics. Particularly in some access like the u. S. China. In the nature of this relationship, to some extent. Those are not going to disappear. They are not going to change. So, i dont know how much of a change we can expect. That it is definitely possible that Something Different will come out. Haidi that was the wto director generalr. Lets general roberto azevedo. Chinas biggest oil drill list is cutting cost as it prepares for a future of low prices. It has been producing credit crude at 26 a barrel. Down from 29 last year. President xi jinping has asked majors to raise output and reduce pendency on imports as the worlds biggest consumer of crude looks extremely increasingly toward energy security. They have posted a profit of 1. 3 billion for the quarter through march, offering a glimpse of its earning power ahead of a muchanticipated ipo. That is an increase of 560 for the same time last year. And it is planning a dual listing in hong kong and shanghai in what could be the largest share to sell in years. It could value the company at more than 200 million. Expansionlanning an in china with inhouse medics and local hospitals in shanghai. As it looks to attract more users to its health care app. The Company Reported a net loss of 31 million for the first half, that is down 22 year on year. Revenue came in at 400 million 400 million. Plenty more to come on daybreak asia. This is bloomberg. Have, portfolio that we which has helped the feedthrough of the last six months of covid, will stand well going forward. Despite all the uncertainty. Still battling the challenges. If you think of the finish, three of our operations set new production records. Nine of 10 operations decreased their actual operating costs. Electronics, agriculture, supply chain logistics, clearly areas that are very busy and very hot at the moment. We have been the beneficiaries of growth in those segments in china. The pressure of covid19 here in australia is a test case around the globe. We are hopeful we can have the majority of our domestic business by the end of the year. With stimulus programs around the world, australia included, to try to get economies back on their feet. Get people employed. They all have a positive impact on the demand for copper. I think we are going to see quite a bit of volatility and uncertainty in the way the rest of world recovers. We are positioned as well as we can to navigate through some clearly political tensions at this present time. Big guests we the have had this week on bloomberg tv. A balrog of earnings coming out of australia continues. We will have another major executive. We will hear from Steve Johnson at 1 30 p. M. , if you are watching at sydney. To go through those earnings where they did Beat Estimates. Lets pavlyuchenkova show markets at the moment as we get into this final trading day of the week. This is how it is faring when it comes to trading in new zealand. 3 . Sydney futures looking like we will see a moderate upside as we get into the 01. 4 . This is u. S. Big tech and to drive the rally higher. Meandering trade from the s p in the dow. Nikkei futures also looking like upside of 6 10 of. 6 . Serious downside going to the side of trading in seoul as well as taiwan, with Foreign Investors dumping taiwanese equities over the past two weeks. Shery we have breaking news out of south korea right now. The first 20 days export numbers for august. The daily average export falling 3. 7 year on year which is really not too bad, given the first 10 days was in the double digits. When it comes to the 20 day export numbers, falling 7 , imports falling 12. 8 . Rising 2. 9 xports year on year in the first 20 days. Exports to china falling a little bit. 2 . Exports to the u. S. Rising 6. 2 . The daily average export numbers falling 3. 7 . We are seeing a recovery on those export numbers. Coming up on daybreak asia, we will discuss the markets with our guest. We have the korea, japan and Australian Open next. This is bloomberg. Shery welcome to daybreak asia. From bloomberg World Headquarters, im shery ahn. Haidi im haidi stroudwatts in sydney. Asias major markets have opened for trade. Asian stocks will except the gains after the big tech giant u. S. Markets again. The nasdaq hitting a near high on easing concerns about the recovery. Futures pointing higher in tokyo, sydney, and hong kong. Joe biden well except the democratic nomination for president later, addressing the Virtual Convention and what is seen as the most important moment of his political career. Rare admission of weakness. Kim jongun warns of major challenges facing the northam north korean economy as he has more power to his system. They lets get straight to Market Action with sophie. Japan, south korea, and australia coming online. Sophie starting out with australia, after we saw it drag lower by health and materials on thursday, we are seeing a pickup ever so slightly for sydney stocks by. 1 . Keeping an eye on sun court on the earnings front. Aussie dollar trading above 72. Over in tokyo, stocks are gaining ground with the nikkei up seven temp i. 7 . We are seeing quality stocks lag value peers in japan. 106, thetaying below biggest weekly gain in a month. We did get inflation data from japan. Staying for a second month. From south korea, we got the latest flash numbers on exports. We did see a contraction. Chip exports did rise. Exports to china did come under pressure. We also got improving Producer Prices for korea for july. But his overseas demand that could take more to get the kospi out of the doldrums we saw on thursday. We are seeing what is going on with the kospi. We are seeing a gain of more than 1 for korean stocks. Samsung bouncing this morning, more than 2 after the biggest drop since june amid concerns over chip prices and impacted orders weighed. According to nh investments, while accounts for 10 of chip revenues. Over in taiwan, it was a big drag on thursday. We are staying seeing stock futures settling higher. The jump in export orders needed to be considered. In hong kong, hung saying futures are pointing higher after the index fell the most into weeks to see the benchmark drop below its 50 day line. Keeping an eye on that with earnings do along with this friday, following alibaba, which saw revenue nearly reclaimed prepandemic levels. As we round out the week, just want to pull up this chart on the terminal, showing more signs of turbulence ahead had from a technical viewpoint. The asia japan index has fallen below a trendline that has been a support since march and a gauge is diverging from its 14 day rsi. The last time that happened was before the pandemic upset markets had sparked a 30 drop for this gauge from the 2020 hi. High. Showingur next guest is fatigue and the u. S. And strategic overweight when it comes to china. The longterm bullish attitude to equity bounds. Joining us now is head of asia equity strategies, Frank Benzimra. Always great to have you with us. I want to pull up a chart that goes some way to explain your overweight china equities call. What weare china across are seeing on the s p 500, as well as the and bci country index. It looks like there is still a valley evaluation to be found. Valuation comparisons seems to suggest china is cheaper. We are going to try to get that chart up for you just now. There you have it. Had thedespite where we s p reclaiming that february hi, or superseding the february high. Doesnt thats adjust there could be further upside and broader upside in the next leg of the u. S. Rally . Seeing on the are u. S. Affect is that yes, you have the u. S. Equity market which is back to its high. Explained for a large part by the huge amount of by the linend also in u. S. Treasury yields. What is thek at potential for further downside you need to have stronger earnings. The effect, at whether it is the u. S. Dollar, or the current currency, whether it is a yield, or even the u. S. Equity market, this seems to be some kind of medic. What we ares to looking most fiscally at the asset, we find that what is happening on the china asset, on the china equity, is pretty interesting because you have some earnings resilience which has been pretty evident in the last few months. Linked to the shape of the recovery which has surprised the upside when it comes to supply and industry production. If you are a global asset manager looking at a merger, what is interesting is the related fromns global liquidity. Caseis one you can make a and even at this level of valuation on china equity. To bring somewant breaking news to you from pfizer. The pharmaceutical giant saying that their vaccine which was withoped in conjunction the biotech company, saying that they are on track to seek an october regulatory review. That pfizer is seeing a supply of 1. 3 billion doses by the end of 2021. They are looking to get that fda and other regulatory to review by october, saying the immunogenic to city in younger and older adults, and that it was well tolerated within that 11,000 participants. I am wondering though, given the vaccine race, how much are we seeing the markets really already pricing in . Ive heard from analysts preiser prior to pfizer coming out saying an october regulatory review and even approval was likely. It does seem like the market is always one step ahead of its good news assumptions when it comes to the vaccine story. Seeing ist we are that the progress that we can read in terms of a vaccine is something that the market is starting to take into account. We also have a sub quarter, which is going to show some sharp recovery. Some bullishng element to the risky asset. That, everything is about valuation and where we stand in terms of equity valuation, and what has been taken into account in that. Broadly speaking, the earnings picture, it is still remaining very challenging. Challenges about the shery what about the challenges with the u. S. China tensions . We see the pressure coming from the u. S. On chinese tech companies. But that also impacts the likes of samsung where sk hynix the u. S. Made equipment in order to do business with chinese tech like huawei. Are we seeing real costs here for some of those northeast asian tech giants . See for sure in the develop and development in the economic conflict between the u. S. And china, the tech war has been targeted to very specific names. Perspective,quity it is a questioning, at least in the short term, ive the socalled momentum trait that we have seen. Especially on the tech sector in asia. Wonder whether it is something that is going to be shortterm, or whether it is going to impact the earnings on the mediumterm view. I think a lot is going to depend on the response from china on the different measures that were taken, and which so far has been very muted. And if anything, what we are seeing is we can see accelerated investment from china in some specific technologic sector. Taking as why we are rather strategic view, and we continue to keep the strategic view on some of the disruptive technologies. Whether it is 5g or social distancing. ,aidi that was Frank Benzimra head of asia equity strategy. Great to have you with us. We are looking at against at gains. The cash profit beating estimates. We are seeing upside trading of 5. 3 . Coming down a little bit. About 5. 5 . We will be hearing from the suncorp ceo later on. Steve johnson will be joining Bloomberg Markets at 1 30 p. M. If you are watching that conversation in cindy in a sydney. We will be previewing the final day of the Democratic National convention. This as joe biden prepares for the most important address of his political career. Coming up next, the latest on north korea as kim jongun issues a dire warning on the economy and delegates more power to his sister. This is bloomberg. Karina you are watching daybreak asia. Im Karina Mitchell. President trump is threatening American Companies with tariffs if they do not move jobs back to the u. S. He told supporters he will offer tax credits if they comply. They will have to pay out if refuse. The president spoke in an hourlong rebuttal of joe bidens nomination acceptance, but offered no explanation of how such a system would work and it is not fair if it is official white house policy. China says delayed phase i trade talks will happen soon after President Trump postponed a review at the weekend. Tensions between beijing and washington continue to rise over trade, human rights, and hong kong. The Commerce Ministry says they touch. In the president says he killed the plan Weekend Review because he is unhappy with chinas handling of the pandemic. Alexei Opposition Leader navalny is an a, and hospital after suspected poisoning on a trip to siberia. His supporters blame president putin while the kremlin says it is awaiting the results of tests before commenting. Claims of corruption at the highest levels of the russian government have made him powerful enemies. He has been arrested several times. 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 Karina Mitchell. This is bloomberg. Back to you. Shery north Korean Leader kim jongun has delivered a rare warning about the economy, saying improvements have been delayed amid a string of internal and external challenges. He also said they have delegated more power to his sister. Lets look closer with our editor, john herskovitz. North korea is not necessarily known for being transparent or candid about their country. What exactly did conjunction say about the economy . Did kim jongun say about the economy . Abouthe was speaking for eight months. He said north korea has fallen short of its goals of improving the economy, and working to improve the daily lives of the people. We dont get these frank emissions all that often about the difficulties it is facing. North korea is facing a lot of difficulties. It has been hit with tough sanctions for the past few years. Nuclear and Ballistic Missile testing. It closed its borders in january because of the virus crisis which cut off the little legitimate trade it has. Now, it is in the middle of serious flooding that has wiped out its farmland. All of these things combined are putting north korea on the track this year for its biggest Economic Contraction in 20 years. More than 20 years. So it is a very Bleak Outlook for north korea. Kim was trying to deliver he delivered a rare message that things are not going well. Hopefully, for him, he wants to see some improvement, more push on the economy. But you just dont get these types of statements from north Korean Leader all that often. Haidi no. Interestingly, we have seen him delegate his response abilities to his sister. Is this part of a power play we have seen between the siblings . And what are the applications for international relations, given part of that new role she holds is dealing with the u. S. . Jon we have seen this. It is very unprecedented that north korea acknowledges a sibling leader to begin with. We have seen the status of his sister being elevated. Since the time of the olympics, when she was north korea im inry the Winter Olympics 2018, when she went to south korea as north koreas delegate. Been at the forefront of relations with south korea and also more and more with the u. S. It is unprecedented for this type of arrangement to happen. Yesterday, a south korean withker was in a briefing the spy agency and talked about the spy agency saying she has been elevated in position. Some people took this to mean there is a powersharing arrangement going on. The analyst of north korea who watches closely is skeptical about her being elevated to this point. But they do acknowledge the role she is playing with the u. S. , with south korea, and the emphasis that is put on it in the past year, has been unprecedented. And also, as there have been Health Care Health scares about kim jongun this year, she has been elevated by western media as the most likely successor if something were to happen to her brother. Haidi our asia government editor Jon Herskovitz there. Moment, joe a bidens president ial acceptance speech will be the most significant address so far in his political career, and will set the tone for his white house campaign. We will preview the final day of the d c next. This is bloomberg. G. President ial candidate joe biden is set to deliver the most important address of his near 50 year political career, aiming to persuade the nation that he should replace President Trump in the white house on the final night of the Democratic National convention. Lets go to our chief washington correspondent kevin cursorily for more. What do we expect to learn and what is the town and the issues hes going to set out . Kevin on the policy front, look to see whether or not he adopts a more centrist Economic Vision or placate to the far left democratic socialist wayne of the party. In terms of the politics, he has got to make his pitch to swing voters. The 70,000 plus or so voters that went for former president obama and then crossed over and went for President Trump in key parts of the country like youngstown, ohio, flint, michigan, southwestern pennsylvania. The democrats have to win them back if they want to win. Finally, will he stick on message . This is a teleprompter speech. Its been different, the theatrics of it all, because it is a convert a Virtual Convention. Gaps . E have major the republicans will be watching for that. Democrats assure me that will not happen. Shery all of this coming at a time when we see u. S. China tensions. You spoke to secretary of state keith kroc about the state departments warning on chinese stocks. Kevin exactly. Andent a letter to Colleges Universities urging them they would be prudent to divest their financial entanglements relating to their endowments from chinese investments. He says it is a foreshadowing of other policies to come in the shortterm. When i asked what the response has been, take a listen to what he told me. Because i can tell you, most of these boards of trustees, i didnt know back when i was the chairman at purdue that their endowment funds are invested in many Chinese Companies. It may be done through Venture Capital firms, it may be with the Companies Listed on the american exchange, it might be with the ones listed on chinese exchange, or it might be through an emerging index fund. As you know, the president s Financial Working Group announced hey, by the end of next year, these Chinese Companies have to do something equivalent, and they have to have their books audited, so they have to be as transparent as all the other companies on the exchanges. Thats key because right now, the risk is huge for the average american investor. It creates an unlevel playing field. Kevin you mentioned that and a couple months ago, this is something you when i had talked about in a previous interview. Since then, the senate has passed a unanimous consent, legislation that would require chinese firms that are listed on the u. S. Exchanges to follow and comply. If is the president supportive of that . Is not likely going to be taken up in the house . I think when you see the results of this recommendation from the president s working group, in essence, thats what they said. Or have to be transparent you have to delist. And, you know, these companies are forced, they have one other choice. That is to get their books audited. That is probably a high likelihood that they have to restate their financials. As a guy who is taking three companies public, i will tell you, if you have to restate your finances, that would be the time you want to go under the desk in the fetal position. Kevin that is about 200 companies this could impact. Are you nervous about the impact that could have on american investors who are already, many of them in the middle class, facing significant Economic Uncertainty . Keith by the way, i think that is why the heads up. It does not end at the university endowment. You think of the state pension fund. If you think, for example, the mother of state pension fund, a 500 billion fund. They have tens of millions of dollars. They may have over 100 million invested in Chinese Companies. As you know, their chief Investment Officer was asked to leave. But the citizens dont know that. The firemans funds, teachers only hasd i think not the president done a great job of waking up the world on this, but also congress. You can see this is one of the most unifying, passionate, bipartisan issues, is this a threat from china. Whether it is in the universities, the pension funds, wherever it may be. An last thursday, thats why we announced that we have now deemed as a Foreign Mission run by a foreign country. So that is really to shine the light on it. This has to do with our Transparency Campaign that we are doing with shin junk, hong kong. It is important. Kevin i asked the undersecretary about where all of this is headed over the next couple of weeks. He said there could be new emphasis placed on how funding how china receives funding for their one belt, one road initiative, and whether or not u. S. Institutions are in fact behind that. Stay tuned for those developments over the next couple of weeks. Shery chief washington correspondent Kevin Cirilli there with a long night ahead of him. Dont miss our special coverage of the Democratic Convention later. That starts at 9 00 a. M. In hong kong, 9 00 p. M. In new york. A quick check of the latest business flash headlines. Amorite has finalized its preferred mix of new boeing jets focusing on smaller wide bodies rather than big jumbos amid the collapse of air travel. It is pushing to swab a more of its 115 strong triple sevenx order to the green liner. Negotiations continuing about delivery dates. It issearch this year and overtaken walmart and market value with the stock rising fivefold from a march low. Shares briefly crossed 2000, nearly 10 times the level they were trading at this time last year. Tesla is planning a stock split to make shares more accessible to individual investors. Uber and lyft jumped after winning a legal ruling that spares them from having to make california drivers formal employees. A state Appeals Court says they can maintain their Business Models while they challenge a judges order to comply with labor laws. Uber and lyft say they may have to shut down in california. They offer drive or formal employment benefits. This is bloomberg. Haidi we are waiting of course for pmi numbers out of japan. This, after we had Inflation Numbers coming out earlier today basically suggesting inflation continues to hit that flat line at zero when it comes to japan. This is what we are seeing when it comes to dollaryen, trading at 105. 68. The greenback just resuming its losses after finally snapping that five session set of losses. The general downside after we had the fed sounding a little more bearish when it comes to prospects for recovery. We are continuing to wait for pmi manufacturing services, as well as composite numbers out from japan. One of the largest i. T. Outsourcing companies in the world is getting caught in the geopolitical crosshairs. It is being it has seen his business changed by changing immigration in the west and the coronavirus pandemic. The ceo spoke exclusively to bloomberg about how they are navigating these tension. For us, our focus has been in our businesses in the u. S. , which is 60 of our business. How European Market is 25 of our business. Then the rest of the world withising different parts, australia being a significant part. We have a Small Business in china where we work with Chinese Private enterprises. Essentially companies that are growing up in this tech space. And some Global Companies that operate in china. At this stage, our business works carefully within the global guideline government regulations while supporting local businesses in their jurisdictions. Have any hopes particularly for the United States, which is such a part of your revenue base, for which policy would make doing business with the u. S. Easier, particularly for those employees that are here on the ground . See really is the change in technology and the continuous change that u. S. Their mindset in to leverage technology. Morehat we see more and companies centered in europe doing that as well is what is driving our business. Othercourse theres dimensions, but the primary activity that drives all of this change is technology innovation. Our Digital Business today in befores quarter grew at 25 . And we think that is really where the greatest impact is. And the work that we do in the cloud, on cybersecurity, these are the types of changes that we benefit from the u. S. Of course there are other dimensions, as you referenced, on policy. But they did not have the biggest impact because of the technology drivers. Talk about how you have seen your role as a Technology Leader change within the covid pandemic. Theres news that you have almost been embracing publicprivate partnerships here in the United States to help launch Contact Tracing applications, for example. Is that something that you see is doing more of . Salil our Technology Platform and capability to some of the states we are working closely with to make sure that if they want to launch any of these within their support, their tracking, their handling of the covid response, we are there for them. One of those examples was in rhode island, where we work closely with the governor in ensuring our Technology Platform was leveraged as they saw fit so they could address the needs of handling covid within the state. So we are ready for that. We are working with other states in the u. S. , and actually across other jurisdictions as well. We have done quite a bit of work in supporting the communities in india, in the u. K. , and we are starting to do more of this across asia pacific as well. Lets now turn to alibaba. First quarter net income and revenue both Beat Estimates with sales back at levels not seen since before the pandemic, fueling hopes of chinas economic recovery despite worsening ties with the u. S. Isning us now from hong kong director of Equity Research billy leung. Great to have you with us. How big is the risk, first of all, for alibaba 20 comes to potential measures coming from the u. S. , given that some of those measures are also targeting u. S. Firms not to do business with Chinese Companies, including Cloud Service providers like alibaba . Billy yeah, hi, thanks. I think you are correct in saying that there is some risk. We look at alibabas cloud business, theres a large part coming from overseas, about 30 or 40 outside of china. But its interesting to mention that within that overseas business, a large part of that is actually in southeast asia. So, in terms of u. S. Exposure, it is not as high as one would think. U. S. Hether or not the administration can stop u. S. Companies from dealing with alicloud outside of jurisdiction, i think that is a different matter. Shery so when it came to the earnings, what stood out to you . Our columnist at bloomberg was pointing out that we saw this huge jump in what is called a new retail, but they were mostly brickandmortar businesses. So is that telling us something about the future of growth for alibaba here that seems to be a little counterintuitive for an Ecommerce Company . Billy i think we have to look at the whole ecommerce, or the Retail Business as a whole. When you look at the new Retail Business, it is part of the alibaba strategy. This includes supermarkets, a lot of offline stores. It is part of the entire ecommerce ecosystem. So i would not say it is a new part of their strategy, but expansion of their whole retail strategy. But to be fair, if you look at theyore Retail Business, grew 27 year on year in the june quarter. So it is still growing very nicely. We are seeing new revenue models such as livestreaming coming into its wechat platform as well. So we are still seeing growth in all areas. Haidi how low can you go when it comes to the competition war and the increasing domestic competition that we continue to see from the likes of jd. Com . Is it sustainable . Billy you are correct in saying that competition is steely. That comes back to the issue of how alibaba would position itself in the longerterm as an ecommerce platform where it facilitates trade for merchants, is it a Retail Service provider where it provides commerce and marketing in onestop, or is it a Financial Institution where it protects its ecosystem through the transactions . I think in the longerterm we could see alibaba coming more of a marketing, or a Retail Solutions platform, as opposed to where we are seeing an ecommerce retail platform. Haidi in terms of that Retail Solutions, marketing, Business Development side of this business, how much of that is risk when it comes to u. S. From these trade tensions . Billy well, a lot of these are still provided within china. For example, helping a lot of supermarkets, local services, mom and pop shops. These are the core clients. In terms of actual impacts outside of china, its quite minimal. Billy leung with his take on the alibaba earnings. Lets look at how the markets are faring this friday. Sophie kamaruddin is in hong kong. Sophie we are seeing asian stocks reclaim some of the loss from thursdays selloff on the tech slump that hit hardest in korea and taiwan. This morning we are seeing in the kospi getting some ground, but easing a bit. Samsung leading the gains. In japan, adding nearly 1 as we digest some ecodata out of japan. Inflation staying at zero for a second month. Pmi numbers for august showing the manufacturing pmi nudging higher the 46. 6, but under pressure for the Services Component now at 45 on that reading. Lets check in on the fourth corner, the dollar slipping as headwinds gather against the greenback. Bayer is pointing to stretch evaluations, while more bullish for the euro. Bet on a rise to 125 after the u. S. Elections. Check out the yen, trading below 106, set for the best week in a month. Tested next week. Offshore yuan testing 690 on news the u. S. And china are planning a call to talk trade. Pulling up the chart on the terminal, i want to highlight some headlines out of china this morning. The government has introduced new budget rules to tighten local Government Debt management. So therefore, prevent debt risk. This, at a time china is boosting liquidity injections to sooth market nerves as demand for capital rises on debt issuance, which could be reigned in on this latest of element. On wednesday we saw sluggish demand for a one year Government Bond option, which further narrowed the yield gap between the one and a 10 year, as you can see on the chart. This, as we are seeing interbank liquidity tightening. Shery coming up next, Central Banks around the world are sending the same message. The uncertain impact of the coronavirus means it may be a while before they can move on rates again. Let takeaways from the r. B. I. Minutes, and more. This is bloomberg. Is bloomberg. Karina you are watching daybreak asia. California endured months of virus isolation and now surging wildfires are forcing people to flee their homes. More than 55,000 residents have been evacuated across the state, with fires burning over half a million acres. It is threatening 25,000 buildings. A record heat wave has forced rolling blackouts. Germany is warning eu leaders to avoid a new virus lockdown, despite the pandemic continuing to hammer the Single Market economy. Chancellor merkel says the bloc must not close borders but act in unity to prevent further spread of covid19. She held facetoface talks with french president Emmanuel Macron, who says the economy cannot be shut down again because the damage would be considerable. New Research Suggests almost one third of all People Living in new delhi have had or have the coronavirus. A third a study says about 30 of people show a history of covid19. The prevalence of coronavirus antibodies among those surveyed has risen from about 23 in june to almost 30 now. The latest study was carried out in the first week of this month. Inflation remains at zero for a second month, even as the economy starts to reopen following the coronavirus emergency. Cpi excluding fresh food was unchanged from a month earlier. Economists had forecast a gain of. 1 . The reading adds pressure on the bank of japan and to concern that prices may struggle to rise after the countrys strongest contraction on record. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Staying with centralbank policy makers around the world are sending virtually the same message. The uncertain impact of the coronavirus means and may be a while before they can move on rates again. Our Global Economics and policy editor Kathleen Hays is here with more. Lets start with the river reserve bank of india. Pretty clear they are in need of more stimulus. What is the answer . Kathleen it is not such an uncertainty. It is just that they cannot start cutting rates now, or cut them more, because of their inflation path. They do not know how long it is going to keep going, how high it is going to get. A lot of the comments are optimistic it will slow down soon enough that they can move ahead, but right now the reserve bank of india is in a corner. They are stuck between growth that is cratering now because of the shut down to contain the virus, versus inflation that is being pushed up by food prices. A fact, if we move to bloomberg chart to take a look at the reserve bank of india and what is happening thewre, you there, you can see stubbornly high and rising the inflation inflationto 6 , and because of this rise in vegetable prices, it may be seasonable, but look how the headline and the core is higher. It is what is standing in the reserve bank of indias way. At the same time when secondquarter gdp comes out, it is expected to fall 19. 9 yearoveryear, hitting hard the impact of the virus. It was still positive in the First Quarter at 3 . At this point, covid19 cases are still rising. The strict lockdowns, all of that to contain the virus, are still there, and they pose very big headwinds to the economy. How are they going to start growing . Really an uphill battle right now. Even so, they are expected to delay rate cuts until december on the food prices start to recede. Bloomberg economics thinks they will start cutting the key repo rate which is now 4 , four times starting in december, to 3 by june. That will be an aggressive move. We will see if inflation behaves and will allow them to do that. Shery the central bank in the philippines pausing on this aggressive rate cut. What is the big question hanging over their economy . Kathleen they are in the position of having already cut rates a lot. The most aggressive rate cut or in asia this year. Take a look at another chart you will see how quickly they have cut their rate to 2. 25 . The governor said after the reading yet today they are taking a prudent pause. They want to see if all the steps the government is taking to stimulate the economy on their side of this come together to support the stimulus from the bsp and get things going. He wants to let rate cuts fully work their way through the economy before they move again. They released the medicine of their july meeting. So why is it feeling uncertain about the data showing a pickup in the new economy . Kathleen what the minutes say from their july meeting is they want to have clear signs of recovery for they start thinking hard and planning what they are going to do when it comes to the september meeting. Economist said he thinks the data was showing that the breadth of recovery was uneven and impartial. Some at the ecb meeting were questioning if they would need to even send the full 1. 3 tr illion lets see, thats euros of their pandemic purchase program. At any rate, that was the uncertainty. They are not sure what the economy is doing, so they are sending out a cautious signal from those minutes. Again, just waiting to see if the data can verify that the economy is picking up. Since virus cases have picked up again in france, spain, germany, it looks like that hesitancy, that uncertainty that they were expressing at the july meeting was the right thing to do. And again, it remains to be seen what they will do in september, but until the virus cases get back under control, that is the kind of uncertainty that will keep them on hold for a long time. Shery Kathleen Hays with a roundup of global centralbank decisions. Coming up next, global drugmakers are losing in china as domestic competitors undercut them to supply medicines. Details, coming up. This is bloomberg. Haidi a quick check of headlines. By 59 atch exports rose in july from the previous month and another sign the mainland economy is on the mend. But globally, exports are still down 17 for the month on year. Because it isews, half of what was the previous month. The bad news is the industry expect Global Exports to be down 30 for the year as the coronavirus continues to hit demand. Chinas biggest oil drago oil driller is cutting costs. It has been producing crude at 26 a barrel, down from 29 a barrel from the same period last year. President xi jinping has asked them to reduce dependency on imports as the worlds biggest consumer of crude looks increasingly towards energy security. Planning a major expansion in china with inhouse medics and local hospitals in shanghai and wuhan as it looks to attract more users to its health care app. The Company Reported a net loss of 31 million for the first half, down 22 year on year. Revenue came in at 400 million 67monthly users is at million. Shery competitors undercut their prices by as much as 95 . Greater china executive editor has more on this. We just had chinas latest round of centralized drug procurement. What were the results and what drugs are we talking about . Talking, we are everything from treatments to schizophrenia to viagra, the drug from pfizer of course. Thererage or in total, were 55 kind of drugs that were involved in this procurement. On average there was a drop of about 53 for all the drugs. Is there a geopolitical overlay to this story. We know that beijing has been very keen to promote homegrown across a variety of sectors. His former one of them . Is pharma one of them . John it is political in a sense that providing health care in china is a crucial thing that the governor here wants to do. That is largely because the population is aging extremely quickly. Pandemic has spread across the world, the question of which system provides the best form of health care increasingly comes to the fore. You can definitely see that playing into geopolitics. And of course china wants to foster its own domestic drug industry. It wants Cost Companies to create the next kind of treatment for alzheimers or cancer. So that is definitely part of the plan here. This what is also driving campaign against moving away from generics into spending for other types of drugs to treat cancer, for example . John you only have so much money and you can only go so far. So if you can cut the amount of spending that the government has to do for generics, than the government has more money it can drugsto high range new that are just being developed. This procurement is being done by the National Healthcare system, which covers 95 of the population in china. So it is subsidizing drug purchases by most of chinas 1. 4 billion people. By opening access to that huge market, it can force drugmakers to cut prices. Then it can invest that money into these new drugs, helping to drive innovation. Shery so what does this mean for an multinationals . Will they be staying in china trying to compete, or will they retreat . John the Business Model is changing. That is the net result. Viagra,er, for example, there is a much cheaper generic for it, so pfizer has to charge less for viagra in china as well. At the same time, china is beating up the pace at which it has you can tap the market faster. Shery give us an overview of Chinas Health care system . Because we are now seeing it could be one of the cheapest and best in the world. Quickly, if you can. John china really has this huge market. It is volume and using that volume to force pharmaceuticals to cut their prices. So it becomes a volume game and that is the leverage the government has used to make it a more costeffective health care system. Haidi john liu in beijing. Coming up, special coverage of the final night of the Democratic Convention is coming up. Of course joe biden is making his case for the white house in the most important political speech of his career. This is bloomberg. This is bloomberg. From bloomberg World Headquarters in new york, i am david westin. This is a special edition of balance of power, live coverage of the Democratic National convention tonight is the fourth and final night of the convention with the theme americas promise. Over the past three days we have heard from Vice President of candidate Kamala Harris and an array of democratic luminaries, and even a few prominent republicans. But tonight we hear from the man himself, joe biden