[music] the World Trade Organization warning that restrictions on are at their secondhighest level potentially on record. Oecd also warning on u. S. China trade tensions. They have held a conversation, at least talks aout talks, ahead of potential president ial meeting on saturday. Theyre having those ahead of osaka. Meanwhile, we talked about how markets are drifting. Higher here for the asiapacific. Were still seeing optimism to that meeting between the u. S. And china and japan. Up about 1 10 of 1 . Not thaty story, interesting here with your u. S. Futures here. Were slightly higher here after we reached those record highs, came off a bit in the last couple of sessions. It is that dollar story that continues to weaken. Moment of truth as jeff said, when it came to the broke belowr we that average. We did see the dollar weaken thenst most, except for japanese yen. The wan, still the big beneficiary of this. Were talking about april highs for the currency here perhaps on ais trade optimism, which is reversal of what we saw back in april and may. Heres one of the worst performers yesterday. So well see, is this profit taking, leading up to the g20 . Moment. He dollar yen. Hovering around the 107 handle here at the hotel. At the board and show you whats going on when it comes to bonds. Saw yet another yieldtumbling day. Crude is what were watching out well. Weve kind of eased off a bit from the geopolitical tensions the u. S. Impose economic sanctions on iran. Crew, 57, 93 here at the moment. Gold futures continuing to see a spike. 14, 30, around that price point at the moment. Lot of etf buying into gold as well. 2. 01 here at the moment. 2016 lows right now. Can they go further . Forman, theyre calling 175. If fed cuts two to three times. Barkley, theyre saying yes. Ricing int exactly lower pricing in lower for longer. Theyre calling for 150. Why did i put this here . Well, are these yields in the treasury market low enough to spark japanese investors to stay home . 30yeare the japanese yield down two basis points. Before we go, of course were whats going on in china. Pboc continuing to inject liquidity. We are seeing the overnight repo rate, actually fell to a decade points, that basis weve hit that low about 0. 986, 1 here at the moment. A good signsibly for some of these brokerages today. Whats adding to this was that helping some of these brokerages issue more debt. That could cut their cost here a bit. Brokeragesow the perform later on as well. Livere going to bring you pictures now of nissans g. M. Postgohsn inst japan. We just lost those pictures. What we are planning to do is because we are looking to get some appointments on the committees. They will get a vote on the new board as well. Thats something were going to be following. First word news. In new york. Secretary of state mike pompeo is in the middle east, to rally a coalition of support against iran. Visited saudi arabia for talks with the crown prince unitedheading to the arab emirates. The u. S. Wants better safeguards for commercial shipping passing through the strait of hormuz. Washington accuses tehran of attacking oil tankers, a charge that iran denies. Huaweis c. E. O. , meng wanzhou, are calling for the canadian Justice Minister to u. S. s extradition request. She says she wouldnt have been charged in canada for her alleged crime of fraud and lying huaweis dealings with iran. Meng is under house arrest in vancouver. Case isadition scheduled to begin in january. Qualcomm faces another e. U. Fine a year after having to pay more than a billion dollars over suppliers to apple. Sources tell us brussels may impose the fine as soon as next in what will be the final antitrust penalty from competition commissioner. Vestager stepped down later this google withitting 9 billion in fines and ordering of 14o pay back taxes billion. An appeal against President Trumps steel tariffs has failed earn a hearing at the supreme court. Industry group says that the to justify attempt tariffs is so broad, it violates the constitution. The 25 steel tariff along with a 10 on lastnum imports in march year. Global news, 24 hours a day, on air, at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 127 countries. This is bloomberg. Much. Nk you very were going to get back to those agm taking place in japan. It is the opportunity for them to vote in a new board and Committee Members as well. Know there will be additional Committee Members on board. Whatever happens, this could lay the groupedwork for renault groundwork for renault potentially restarting talks with chrysler. Without carlos ghosn at the helm. Just days away from the headtohead meeting between and xi jinping. Details still being hashed out restartwo attempt to trade talks that broke down last month. Phone with the prime minister. But despite the steps to ease expectations of a breakthrough are low. The consensus among chinas seems to be theres little chance of a full fundment, with many managers holding their positions ahead of fridays meeting in osaka. Lets bring in our guest who happens after g20 is more important than the meeting himself. Billion asover 130 c. E. O. Of st. James place. Live from singapore. Thanks so much for joining us. Im wondering if this is the g20, now when it comes to markets here. No,consensus seems like, but can equity markets rally if we dont gate trade deal . Well, i think whats more likely to happen is markets will was aack, if there perception that the news thats xom out from the come out from the meeting is disappointing. Im sure what trump will want to come out with is some termsption of progress in of his discussions with president xi but whether it will the full deal, i would personally be surprised. I think thats much more likely happen as we head toward the end of the year, ahead of the 2020 elections. So my question, i guess, is status quo enough for markets to continue to be optimistic, or do we need a reduction in some form of tariffs for equity markets to rally further . Well, i think equity markets are going to be driven much more the outlook for corporate earnings, particularly in the United States and across the world. The and 2019 earnings dont appear quite so positive as 2018 earnings were. Markets have done very well so far this year. Ad therefore, there is potential that there may be disappointment as we head into the second half. Growings not helped by geopolitical concerns, whether its the trade talks or whats iran, then clearly that may have an impact on markets in the shorter term. Chris, tom here. This suggests that the market is pricing in. Priced us in in terms of not getting some kind of deal s. The downside already priced in for markets, do you think . Well, i think it probably is, tom. As i say, there is some real disharmony as a result of the and etween trump markets would react negatively to that. Markets aresuspect more focused on whats happening in terms of the situation with the, whats happening to oil price, rather than anyssarily expecting immediate outcome of the trade talks. A i think this will be further iteration of the broader u. S. China negotiations. But theres a long way to go yet. Everything that investors do have to factor in, where do you think yields on the tenure go from here . Is there a further downside for you, and where do you want to be in terms of u. S. Treasuries if you do want that exposure . Thats reallynk fascinating. If you go back to the end of last year, when u. S. Treasuries or the 10year treasury was at about 320 and people were up to 350, there was nobody out there who was saying that by midyear this year, u. S. 10 years would be at 2 . So what tends to happen is that trends continue over, over a period of time. Easily see a could years,ield on u. S. 10 whether it gets down to 175, that. R Something Like but beyond that, you know, where was the opportunity in the u. S. Year from here, unless we are predicting a real substantial slowdown in the Global Economy . And most people are suggesting that 2020 might be economically slightly weaker than previous years. We may be heading towards the end of this global expansion. I dont think anybody is, at point, expecting a very globaltial slowdown in Economic Activity unless there is some event that we havent foreseen. But do you think its still were seeing the s p at records. Obviously you have this set into markets now at the moment. Or are there other parts of the market that are a little bit more attractive, given the fact that the u. S. Stocks are already hitting records already . Infor me, i think staying stocks has always been the right thing to be. Theres been many people who ofe said, over the years this recovery and equity market, since the lows of the early part now is the time to get out. Theyve always got out way too early. So while we may not see every quarter in equity markets being posted, over the longer term, weve alwaysthat had with our clients is to retain that exposure, to benefit from that. The point i suppose thepoint that im making is opportunity to use u. S. 10 years as a safe haven, which is beenitely what they have perceived to be in the past. Probably not quite so exciting. Youre not going to realize a huge amount of return for them in the short term. I have to ask you about a major story in the fund industry, particularly in the u. K. It was of course a fund manager place had a very important relationship with him. You did have about 3. 5 billion that he was running for you. What do you think this whole of trustoes in terms within the industry . More a, for me, its picture of how the active Fund Management industry is perceived, relative to the passive Fund Management industry. We still believe that active management is the way to make our clients realize better, longer term returns. I dont personally see it as an issue of trust. Were other issues woodfordn terms of the situation. Actually, i think its a to realize trying where managers can do the job that one needs of them. If thats not the case, we might my colleagues and i have to make a decision to move to other managers who we feel are better equipped to do so. Would you welcome further Regulatory Oversight of the industry . Well, i think theres a danger that you get a regulatory swing that makes it more difficult for Fund Managers to operate. That instance, one needs to be working with understandto try and the opportunity of investing across different classes and andss different more liquid possibly less liquid investments. But what needs to be explained what the situation is regarding the liquidity of those investments. Hadhe portfolio that we larger. Woodford, we had and midcap securities rather than the smallcap securities he held for other clients. Chris, appreciate it. Thank you. Joining us from singapore. Betweenp, as tensions washington and tehran escalate, whats next following president to pressurest move irans leadership . Well also look at nissans first annual Board Meeting since gmos. Wnfall of carlos this is bloomberg. Youre watching bloomberg markets. The Trump Administration imposed irans Supreme Leader. Are designed to deny Ayatollah Ali Khamenei resources. Inancial President Trump said the ayatollah is responsible for quote, hostile conduct but repeated he is not seeking conflict with tehran. Us now via web cam is iranian american counsel. Also the author of losing on enemy. And the professor at georgetown university. Much for joining us. Do these additional sanctions the Trump Administration strengthen the hands of the hardliners in tehran or do they put iran closer to coming back the investigating table . It makes sure that the iranians will not come to the negotiating table with this administration, at least not as long as they continue on this path. I think when it comes to the financial pain this will impose painfulranians, the sanctions have already been imposed. When it comes to these type of measures, i really doubt they much effect at all, except for the fact that when theyre sanctioning irans top diplomats, the signal trump is sending is that hes actually not looking for negotiations at because if youre truly looking for negotiations, you wouldnt be sanctioning the guy talk to. Re supposed to what would you expect the next step then from iran to be following this announcement . I think the iranians are to now movetinue forward with setting aside some restrictions that were imposed on them. From their perspective, theyre the only Country Living up to the deal. The u. S. Is out, of course. The europeans say they really want to keep the deal. Yet they are very respectful of trumps sanctions and abiding by them, but theyre not abiding by own obligations. So the iranians are saying, ok, well, then theyre gonna start pulling out as well and see if that changes the minds of the europeans and chinese and russians and gets them to come in, in a much more forceful and way, in providing iran with the economic benefits it promised. If they dont, i think the iranians are going to continue until thingcalate changes. You mentioned if your latest thatle, the new republic, the president may have been conned. The whole situation, when it comes to iran. You explain why there is a sort of conflict between the hawk and the Trump Administration, versus what the president is saying now . Of athink there is a bit debate over, what is it that trump actually wants . Mades a good case to be that he actually does want negotiations, just as he did with north korea. The perspective of bolton and pompeo and some of beenountries that have pushing for the maximum pressure strategy. From their perspective, they ant this to escalate towards military confrontation. We saw that clearly last thursday. When push came to shove, bolton and pompeo counseled trump to take military action. Trump didnt listen to them. Seems to double down on this maximum pressure strategy but to genuinely believe that negotiations. O this is part of the problem the iranians are having. The Trump Administration is all place. E trump has one perspective and one objective. Has a completely different one. Very difficult thing for them to engage with an administration that is in conflict with itself. You mentioned, maybe going to the playbook that president obama had when it came iran, what would it take for the u. S. And iran to get to the now . And Start Talking at this point, the best way would be for the Trump Administration to start adhering deal. Nuclear i would not hold my breath, mindful of the hatred that trump has for president obama. What can happen is that trump what pompeo and bolton are selling him is pushing him closer and closer to war. And he chooses to replace his who actually do agree with the idea that diplomacy is preferrable to war. That were to happen, and the iranians themselves feel they leverageed some because of escalation of the nuclear program, then there is a small possibility they would be able to have some negotiations. But i very much doubt the to go to thegoing table as long as john bolton is the National Security advisor. Your insights. R author of losing an enemy. Remember, you can become part of the conversation. Us instant messages or guess questions when they come on the show. Out at tv go. This is bloomberg. Markets in hong kong and mainland china. Day. Take a look at the pretty flat when it comes to chinas futures. Were still up 3,000 points at the moment when it comes to the benchmark. But yesterday, cutting their targets for the shares. Theyre saying 2800 which a 6 to 10 t downside. One stock were watching out for, after sinking to a record 20 , after that short seller report. We are resuming trade here at the moment and we are seeing a bounceback close to 11 . They have denied all those accusations as well, surging a good earnings front. This is booger. Bloomberg. [music] youre watching bloomberg markets. Look at markets here today. Were just drifting slightly lower when it comes to the open china. Were watching obviously the trade front here. Have confirmation that they with theyre having discussions leading up to osaka. At least some progress here of whats going to happen in japan. Absolutely. Talking about talks. Expectingy, were possibly for the two president s to meet in osaka, is saturday. Been 100 confirmed. But youre right, theyre having so wehone conversation, are expecting maybe some progress this weekend out of g20. A Holding Position for investors in the chinese markets. Going to how were hold up this morning. Red on the board. Downside. Ch 300 down, 1 10 of a 10th percent. Down about four points. Shanghai composite, also down just over three points. The china, those small cap stocks, down about 2 10 of 1 . A bit of caution now. You had those conversations around the train conversations theres also focus on the interbank liquidity as well, to aight rates dropping 10year low of around 1 . There is concern still about the small to mediumsized lenders. Some ofove it up to movers here. For e some upgrades you had an upgrade for the auto by Credit Suisse well. China Life Insurance upgraded as well. Buy, though its trading low, down 2 10 of 1 . Strong earnings, up 17 . By therong performance Sports Equipment maker as well. We can move it on to the currency, because, of course, theres been some view that the this rangee within ahead of that g20 meeting. Policymakers trying to put a ahead ofr the currency that meeting. That is the view of some economists of course, currently 6. 87. We had the fixing, by the way, at 6. 85. Falling to a three month low as well. Yep. So we watch the currency at the moment. How honge a look at kong markets are trading. We mentioned how it was slightly go. R at the get shares also down about 42 points. I talked about that credit report. Theyre seeing an upside. Targets,aying the side now at 30,000 for the hang sang. Hit about 12,000. Were not there quite yet. Take a look at some of others here. Pretty much flat at the moment. But as you mentioned, it has liquidity issues that were seeing when it comes to some of these Smaller Banks were focusing on, as well as leading up to g20. Chinas equityon and bond mar