Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Some of the other Asset Classes are moving on a bit of news. Sterling falling, erasing the gains we saw for the currency before the general election. Going below 1. 31. The thai baht is one of the strongest currencies in this part of the world, Interest Rate. Bit later coming out Oil Inventory story, that is not the oil price but we have 60 or thereabouts. That is reflective of a growth in u. S. Inventory. Bitcoin, continuing to be there even though it is higher. A report says the cryptocurrency perhaps peaked two years ago and on top of that we have a lot of rivals out there. There is a crypto scam in china which is seeing unwinding of the action. That is where we are from these Asset Classes. What else is going on . Lets join su keenan. Japan and the latest economic data, japanese exports fell for a 12th straight month in november. Aat confirms little sign of pickup despite indications the slump in Global Manufacturing may have bottomed. The value of shipments abroad fell just under 8 from a year earlier, extending what has been declinedst run of since 2016. It was slightly better than forecast. The wider economy is expected to shrink 2. 5 this quarter. , the centralppines bank is investigating lenders that may have received funds using the Westpac Service that was allegedly linked to Money Laundering and child exploitation. The bsp says account holders at 10 philippine lenders say could have been sent by australians accused of child abuse. Westpac has a partnership to make transfer to the philippines easier. Anger continues across india as the government defends a law that bars undocumented muslims from seeking citizenship while allowing migrants from other religions to do so. You are looking at protests. The home minister helped move the bill through parliament and told Business Leaders there is no chance it will be repealed. Police, clashing with students in new delhi. Protests flared in the Financial Hub of mumbai. The house of representatives in the u. S. Has passed to giant spending bills that will provide 1. 4 trillion to fund the government through september and avert a shutdown. The bills, after weeks of bipartisan talks. It heads to the senate where they are expected to pass. The white house as President Trump will sign them. Nsa whistleblower Edward Snowden will not profit from his recent memoir because he failed to win publication clearance from the u. S. Security agency. The book was released in september and reveals how he helped build the topsecret Surveillance System that he later exposed. The u. S. Government sued to prevent him from profiting from the book but didnt try to block its publication. ,lobal news 24 hours per day powered by more than 2700 journalists and analysts in 120 countries. This is bloomberg. The news that broke a couple moments ago, the pboc lowering the 14 day reverse repo rate, a five basis point cut. Lets bring in mark joining us with the latest from singapore. In chinese breakout stocks yesterday. Now we have a reverse repo cut. Are the stars aligning for the rally to continue . Certainly they are doing what they can. This is typical of what the pboc has done all year, small incremental cuts in rates whether it is through the rrr, repos. D now the reverse they have been doing these small changes, not yet unofficial rate cut but maybe that will come next year. They are doing the part to help maintain this bullish mood in markets, the fact that the trade war looks as though it is going into the background is also helpful. There could be more room for stocks to rally to the end of the year. Certainly managers will be looking at this and advising clients. Switchll probably help some flows more towards the equity market as the year ends rather than the bond market. People will take this as a positive. Pick. I will make you what should we talk about, the yuan consolidating at seven or the fact that sterling is basically giving up and then some or all of its gains from friday . Take your pick. Shortterm, traders are more interested in the pound because that is a classic example of where too much exuberance was expressed about what would happen with the u. K. Direction over the next few months. People are rapidly unwinding their view. Once the momentum gets going, the pound can move very quickly in one direction or the other. Now that people are sensing that the u. K. Is in for difficult negotiating with it eu next the eu next year, the downside for the pound could be as fast as the upside. We saw it had a tremendous rally going into the december election so it could have a pretty big selloff going into the year. As liquidity gets worse, it will be tough to hold the pound up unless there is something unexpected that surprises people with good news. That is unlikely in the next couple weeks. The downside courage could be sharp over the next couple weeks. The you want will probably be probably be a sideways trade with a year and factors and funding issues. I think the pound is more interesting for the next couple weeks. David great stuff, mark. We will have more on this story and the days trading action across the region for our bloomberg clients. Rishaad Capital Markets chief asia market strategists paul, great to see trade deals. Do we have more coming . Paul sadly, no. Start, but the a underlying tenor is that there is not much of the existing tariff framework that is being rolled back. It is a nonescalation, in essence. Edgesis a bit around the being negotiated but nothing really substantial. We think this is enough combined with the avoidance of a nearterm no deal brexit through to see. Election process policy uncertainty drop. Pmis are stabilizing since the summer. The combination of those factors in october led us on our tactical allocation view to go risk on into the new year, but not much beyond that. Either the big unknowns we had last year at this time, there is more clarity. Can i attach a higher degree of confidence on the earnings . If i believe the ones last year, i got burned. Paul we need to look at aggregate earnings forecast. The u. S. Aggregate earnings forecast is 10 . There is a little risk for that. It is aroundink 15 , not terribly outrageous especially in the first half of the coming year. We are in a lower plateau level of growth. Around 3. 3, three point 5 . From the middle of 2019 to the 1. 52 growth, being the u. S. In that zone it is fairly sanguine. Our view is, and this relates to our Strategic Asset allocation view which is more cautious from the second half of next year into 2021, is that the impulse from the fiscal stimulus still present in the data really drops out of the data from the middle of next year. Then we see a move out of that 1. 52 percent range to 1. 6 in quarter 3, 0. 6 in q4. The u. S. Economic team has contraction in the First Quarter of 2021. Im not quite 100 percent in agreement with the exact numbers based on my work, but the shape is a little come i think the shape is right. My baseline is a slowdown and risk earnings into 2021 starting in the letter part of 2020. On a couplead you times and you were one of the first that said the u. S. Could be heading to a recession when it comes to Asset Allocation. Play things didnt quite out. How have you changed your Asset Allocation . Has it changed . Region in theest area has been india, the best performer in the region. The biggest overweight has been versus 10 , as our alltime highs. 10 . Is down korea is our biggest underweight for this year and it is down over 20 in u. S. Dollar terms since february of last year. Has been overweight in india and underweight in korea and it worked out well. The rest have been small bets, the relative performance in markets that have been overweight like the philippines ,nd vietnam have actually been have outperformed the benchmark. If we compare against the u. S. , which thankfully we dont have to, that would be a little tough but if we strip out u. S. Equities and technology from the Global Equity space, it has been a mixed picture. Happening before the big war, china was getting more expensive. We saw decoupling hastening and at the same time the supply d. 150 being rejigge taiwanese Countries Companies returned home. 23 of German Companies thinking about or moving reduction here. With what you look at in terms of these markets, what is the impact . Paul the reason why we are constructing on some parts relates to that. At production and capacity shifts, vietnam is a major beneficiary. Vietnam in my coverage is the only markets that has positive earnings revision. Rishaad can they level up . Can they scale up . Are limitations to that. There are skills shortages and that is a factor that is a limitation for both thailand and the and him. Having and vietnam. Having said that, they are seeing a major benefit. Third country repatriation of Production Capacity. That is one of the two reasons why we have not been underweight in taiwan, because it is creating jobs and while the i. T. Sector earnings, for example, globally are 35 percent, singapore 60 , a big reason why we have been underweight in repatriation that in no small part has led to the better performance in taiwan i. T. Sector earnings, which has been about minus nine percent. Taiwan has yield support, 4. 3 dividend yield as opposed to korea, 2. 3 . Well. In the twos as there are additional factors to consider. Around, weul, stick will get to some of them. Ahead, unemployment in hong kong rising to the highest since 2017. The protests drag on. We are assessing hiring trends for the finance sector with a ceo. Yvonne a Company President lays out his arguments for keeping rates on hold. This is bloomberg. Rishaad you are back with Bloomberg Markets. To say it has been an upanddown year for the Federal Reserve be perhaps not exaggerating in any way. Cutting rates three times in the face of weakening global growth, starting the year looking hawkish. Policymakers indicate they will hold rates although there are underlying conditions that havent changed. Robert kapan spoke with us earlier. I have already got baked into my outlook, we will have weak manufacturing next year, growthh Global Global but with a strong consumer. There will have to be Material Change from that outlook. David that was robert kaplan, the dallas fed president. Paul is with us. Forgetme of rate cuts, i the exact number, something on the order of over 40 central to 3000 basis point of rate cuts combined. It went up a little bit. Are we underestimating, that will kick in at some point. Are we underestimating the reinflation percentage potential . Paul it has kicked in already. Better stat. 15 of Central Banks cut rates in 2019. That is a large number, a coordinated Monetary Policy intervention and the reason why we are seeing pmis taking up which we anticipated last october. The question is, is the degree of monetary space, the latent ability of Central Banks to be able to stimulate the economy sufficient to offset the bigger , the Overall Economic slowdown, rather than just the pmi . Imagine a big slowmoving super which is your Global Economic cycle. The pmis are the volatility around that smooth line. T smooth is that enough to offset the general cycle . I believe not. Unlike the previous monetary easing cycle that began in 2007, the fed doesnt have the luxury 5. 25 . Ting at the eurozone and bank of japan arent ending their easing cycle, they are starting below the zero lower bound. Today andmoves made this is helpful, the pboc is constrained not by the zero lower bound but fears of undermining the rmb. It was seven but only a five basis point cut. They are being prudent and they dont want to undermine the r b in the context of the trade war negotiation. In addition, there is a lot of dollar denominated corporate debt in china that is unhedged. In r b terms, that is more challenging if the currency is weak. There is a constraint. Rishaad in equity strategy, looking into Industry Groups and the names you like. Paul there are five big themes that we like. In the outlook report through our bottom up work, we came up with 32 microeconomic themes. The five i would highlight our consumer premium position in inna, premiumization china, in discretionary and staples respectively. We like china fintech and in , healthar, good doctor care and technology. We think they might be right this time. We dont want to be contrary on everything. Picks. Geely to my top i went further and added what fiery i see and added this company. The crowd can be right. We like auto tech, more stringent requirements on safety in north america and europe are toving Companies Like manto autonomous driving. The philippines story is very powerful. That is why we have had this company and our top picks. To the earlier discussion on Production Capacity shifts, we are playing that through industrial parts in vietnam in City Developments and thailand. Yvonne talking about your big surprises for 2020, you have four negative and four positives. Paul these are not a baseline, these are deliberately our second or third case scenarios. I like your terminology. It go wrong . Lp one of them is trump bump version 2. 0. What if, like 2016, going ahead of any fiscal stimulus that was implemented by the tax cuts in the United States, we see that anticipation again that the markets start to factor in a Trump Victory in november 2020, where the republicans retain the senate but win back the house of representatives. One question i get asked is, what is the biggest upside risk tactically . Responses, the democrats might agree to an Infrastructure Spending bill. Now we are getting to the point where that is probably the wrong answer. The right answer might be, if and when trump actually wins. Then he will have no obstacles, and that might get factored into early next year in which case we are in a strong dollar environment, an environment that is driving u. S. Earnings again and we are in a continuation of an America First and multiple expansion driven rally in developing markets that wouldnt emerging in asia and india. David 249 pages. Happy new year, paul. Yvonne that has to be a record on all the outlooks. That has to be the biggest one we have seen. ,avid in case you missed it the hong kong dollar is up for an eighth straight session. I wasnt even born the last time we hit that sort of street. The longest one since 1987. There we go. Coming up, you are watching bloomberg. Flash the business headlines, fedex plunged after delivering a lower profit forecast for a second straight quarter. Adjusted earnings will be no more than 11. 50 per share in the fiscal year ending in may compared to a previous outlook of more than 13. Fedex claims Weak International demand and increased spending. Southwest airlines expects to go more than a year without a boeing 737 max fleet as it is more services. 300 daily flights are being cut through april area that is five weeks longer than originally planned. It represents a most 8 of southwests regular daily operations. American airlines pulled the max through early april while united hopes the plane will return in march. Rishaad lets take a look at usingvers on the market the rank return function. We find ourselves looking at a market, nanjing securities, universal signs [indiscernible] chinese brokerages, which have done well in the last three days. A Risk Appetite is back. Some opaqueness over drug pricing in japan. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Yvonne in hong kong, shanghai, new york city, im su keenan. U. S. Where ain the democratic led House Committee has moved the north american trade agreement, otherwise known as the usmca, forward, sending the measure to a full house vote thursday. Overhauling what had been known as nafta will give president muchneeded Political Capital as he faces an impeachment hearing in the house later wednesday. The Republicanled Senate wont take up the trade accord until the new year, after the conclusion of the impeachment trial. To the u. K. Sterling slumped the most since january. This as fx traders give the thumbs down to Prime Minister Boris Johnsons plan to enshrine next decembers brexit deadline into law. Hard splitt of a from the eu erased to gain since. Ast weeks elections money markets wait in what the probability of a bank of england rate cut before may, falling back to 50 , the same as it was before the election. The u. S. Government is heading off calls by china and russia to ease sanctions on north korea. This, despite claims pyongyang has complied with yuan resolutions. A proposal sent to the Security Council met pushback from washington. President trump said he would take care of any threats kim jongun has in the works. Beijing and moscow say north korea is at a critical situation and needs help. In new zealand, the country is the act ofplace governing the rbnz with two new pieces of resolute resolutions. The move is part of a review of the rbnz that has included a broader mandate and the creation of a policy community with an external members. The current laws are 30 years old and the government says they move they must move up to date. China breaking records for Oil Refineries boosting orders. Hope grows for an easing of the trade war. Growth is still requiring more fuel. China imported an unprecedented 11. 2 Million Barrels per day in november, which beat the u. S. Market of 10. 8 million set in 2005. America became a mass exporter of oil in september for the first time in 70 years. Dayal news 24 hours per powered by 2700 journalists and analysts. Im su keenan. This is bloomberg. Checking in with the trading day across the asiapacific, looking forward to a little bit more in terms of positivity but we have some of these, hang seng up i 0. 25 . A nikkei currently in its lunch break, finishing the morning down a fraction. Therally, a situation with euphoria from this partial u. S. China trade deal sent you sent Global Equities into a bit of a breather. Singapores index is one that is the outlier. Strong gains by 0. 4 . Evidence of a hong kong economy that is into recession. Last month the Unemployment Rate rose to the highest level in two years. David beneath the numbers, the survey out of manpower suggested employers in retail services, finance, property, if you see a negative number, they dont plan to add staff and the First Quarter of next year. They dont intend to increase hiring. A closer look at the job market in financial services, joining us is a lane, is elaine. Good morning. The first thing i have to ask is, have the protests affected hiring trends and people wanting to work in hong kong . Many worry about a hong kong situation but in short term i think this will have an impact on the market. Hopefully this has been a major drop [indiscernible] industries have been affected. Secondly because of the transportation problem. [indiscernible] many candidates dont want to go because oferviews transportation problems. There has been an impact. There arei think positives about the future of hong kongs hiring market because hong kong is the financial heart of asia. The International Status cant be changed. Yvonne we heard a lot of expats saying, i dont know if i should say stay. How much have you seen . Elaine [indiscernible] maybe over 22 of candidates are looking to move from hong kong to other countries like singapore will always be the top choice for them. Maybe shanghai, and some European Countries like the u. K. Yvonne have any roles that were supposed to be based out of hong kong been permanently or semipermanently been moved elsewhere as well . Whether that is the shanghai, shenzhen or singapore. Some roles, certain roles you could do anywhere else in the world. Elaine [indiscernible] operations and i. T. Support. David after people get bonuses the tendency is to shop around. Will that be more pronounced next year . Elaine yes, i think we all know that in december, from december to january is the most quiet season because people are looking for a bonus. This year we could see a lot of relocation happening after they get their bonus. Many candidates are shopping around now and mention they want to move after they get their bonus. Tonne a lot of this is due what is going on here or do you think there are structural changes in the Banking Industry . Trading conditions have been slow, economies are slowing down, trade tensions, how much of that is structural . Think thersonally i impact is not that big on financial sectors locally because of the structuring of the Global Economy and the slowdown. There will be changes in hiring. Yvonne what are the biggest changes . What factors are you focused on . Elaine [indiscernible] private bank hiring [indiscernible] private equity hedge funds. , [indiscernible] aiy slow next year because and technology [indiscernible] becauseremain the same we need people to communicate with people and ai cant replace that relationship. David a lot of the focus on your business is big chinese Financial Institutions speaking of people moving and banks retracing from certain markets, we see a continued hiring across chinese banks. What people want to know is, are there roles available at these chinese banks for nonmandarin speakers come of the people leaving other Western Banks to are there openings for them . I think this is an interesting question. , [indiscernible] chinese companies. This is understandable because i think this is common in different companies. Japanese Companies Prefer to hire japanese as Senior Management and french banks [indiscernible] quite common elsewhere. Expect rings to toover and you expect an end all of this, that hong kong maintains that kind of Financial Hub status. Given the changes we are seeing around the world when it comes to banking, is asia still going to be better off and fare better than the rest of the world because it is a driver of growth. A driver of growth . Elaine yes. I have been talking around professionals and many of them want to relocate to hong kong. Hong kong is a [indiscernible] secondly, they see asia as expanding and all the opportunities are in asia as many of them have mentioned. Yvonne final have yourally, we salary guide. Where will we see the increases and where will things stay flat. Stay flat . Front office, backoffice, chinese banks, nonchinese banks . Elaine i think chinese banks, we see more hiring in the future and maybe a bigger increase in salaries because many chinese owned companies are trying to match the commercial market, trying to be more commercial and generate more revenue than before. We will see a bigger increase in salaries in chinese companies. In back offices, we see figure increase in legal and compliance. For equity, maybe not. Very flat because the private equity market has been very bad in recent years. Ipo, the market has been quite positive. David lots of big listings. Happy new year. Elaine zhang, thank you very much. Yvonne coming up, she gained worldwide attention. Will talk about becoming an influential figure in asias cultural scene. This is bloomberg. Yvonne as part of our equality coverage we talked with wingse ngsie. She spoke about the opportunities and challenges facing female conductors. Years ago, to 30 when i first started my career, it is already picking up. There are more opportunities for women conductors nowadays, at least at the beginning of their , in theand hopefully near future, more women will be in more leading positions. There still seem to be barriers. If you think about the and a, considering vienna, considered the clap of the capital of Classical Music, the vienna symphony has a woman leading it for the first time in its history. Are there still their ears and what are their barriers and what are they . It may have to do with the tradition especially in europe. It has always been a mans world as far as Classical Music is concerned. For a woman to be on the podium is very difficult. That, things have really changed, maybe because more and more women have joined and conducting business, there are more choices and people are beginning to see the talent that some of these women conductors have. That ifongly believe theres something you are good at, people will recognize it eventually. Im happy to see this is beginning. There is at least the hope. I want to talk about blind auditions, the process where people are addition from behind a curtain or behind a screen. Extensively int the 1970s and 1980s and the result was greater representation from minorities and in gender. You have been doing that in hong kong. How has that changed or affected the composition of your orchestra . When i first started with the hong kong symphony in 2002, i use this blind i knewn method because almost everybody in the town. Hong kong is a very small place and it seemed fair if i dont know the identity of the candidate who is auditioning in the first stage. So we can make a judgment according to what we hear. Eventually, when the candidate gets into the second round or the final round, we will have to have the curtain down so we see who they are. In an audition, in a performance, you need to be able to see what the person is like while they are performing. That is important. You said the podium has always been a very maledominated space, yet you have been very successful as a conductor. What can women in other Industries Learn from your experience of making it in a mans world . When i first started to pick up conducting, i actually never thought of my gender. I just enjoyed conducting. I wanted to learn more and i put a lot of hard work into what i was studying. I just tried my best. Always been ahave sincere person and a sincere musician and that is something that will help win the respect from your fellow musicians. Numeral to what you are doing, i think youve got to be truthful no matter what you are doing, you have to be truthful to yourself and work hard. You are stepping down in 2020 after a long and rewarding career. When your successor takes over, if your successor is a woman, what do you think the landscape will look like for her compared to what it looked like for you when you joined 18 years ago . , the orchestrad was three years old. In 1999. Professional it was a very young orchestra. My main job was to help develop to raise thea and performing standard of this orchestra. I think we have come a long way. Whoever is going to succeed, whether it be a man or woman, i think the Biggest Challenges challenge is to take the orchestra to another level artistically. Even if it is a woman conductor, i dont think she will have to worry much about her gender at all because this orchestra and the audience in hong kong have seen me around for so long. So that is nothing unusual. Wingsie,t was yip the cap the music director of the hong kong sinfonetta. Are about to hear what is bound to happen today. Positive on the sg ex marginally. Yesterday we had a phenomenal session backed by good volumes and good purchases made by foreign investors. The domestic and institutional investors, you saw lots of foreign interest coming back in. We have a new record high, 12,182. 5, the new record high for the nifty. A record high previously. We are looking to defend these levels. The structure seems to be strong and they are holding onto these levels and probably we will see levels of 12,300 in the near term and next year, the target up towards 13,000 the nifty. 14,000 according 45,000 according to Morgan Stanley on the sensex. All this happened without the biggest heavy weighted stock country muting. This all happened on the back of other banks and i. T. Stocks. Rishaad thank you very much. Rescue. Sachs to the the latest on the credit lifeline for struggling wework. This is bloomberg. Rishaad lets look at the latest business flash headlines. American express on the up. Singapore among the big names buying the stake in the Global Business travel division. Buying and. Any also amex will retain 50 ownership with the division value. 5 billion. Id bang analysts and fell ssonolaff lowerthanexpected. Expect revenue down as much as 18 compared to an initial forecast of singledigit growth. Have second Second Quarter results. A Photography Company may be moving further away from that towards health care. Hitachis diagnostics [indiscernible] health care and diagnostics, the highest revenue generator, accounting for more than 40 of its overall income. Obtained newk financing. We learned the deal would free up roughly 800 million in cash for the struggling Office Sharing startup. Lets bring in peter who joins us with the latest out of tokyo. We had the bailout from softbank and now this help from Goldman Sachs. To what extent does the new credit line help ease the liquidity issues surrounding wework . Step in the right direction for a company that has had pretty deep troubles in the past few months. Was heading towards an ipo earlier and had to pull that after public shareholders balked at the valuation and enormous losses and governance practices that they were employing. Softbank jumped in and helped with the bailout to keep the company on steady footing, now we see Goldman Sachs raising this 1. 5 billion and freeing up 800 billion. Now 800 million. Now wework has breathing room. Masaynk installed one of sons lieutenants. They have laid off people and are trying to pull back, trying to improve the profitability at their existing operations so this cash should help them be able to turn around some of those businesses and demonstrate they can get to profitability in some markets. Shortterm, im assuming because they will need more than that. Does this cause damage to softbanks reputation . Peter wework has been a black eye for softbank and masha you son. He masayoshi said he made a mistake and has learned and is trying to do better. , they have about 80 of the equity at the company and one of their lieutenants in charge of the business. What they need to show and what the banks want to see as they extend credit to wework and softbank, they want to see signs of progress at wework that they can turn around the business. Can they fill up the offices they least, get clients in there, make some money and at some point had towards an ipo head towards an ipo . David good stuff, peter. The markets, of sterling under pressure, thailand opening up, a Rate Decision out of bangkok, plenty more ahead. This is bloomberg. It is almost 11 00 e are in singapore. Im juliette saly. The last hour of the morning session right here. This is a look at our top stories. China will buy me more u. S. Goods. Incoming shipments are being moved from hong kong to mainland ports. While way braces for more curves on tech sales as the Trump Administration looks into a loophole to allow purchases. More Rate Decisions in southeast asia. Thailand lowers forecasts. This is Bloomberg Markets. Asian stocks taking a breather after we saw the msci asiapacific index hit 18 months i heisey yesterday. Hong kong also retreating a little. In new zealand, lets look at some of the currency moves we have seen. The pound gave back a little, erasing u. K. Election gains. Pound traders giving a thumbs down to Boris Johnson is new brexit strategy. Weakness in the offshore yuan. We could see this trade squeezed as we head into lunar new year. The hong kong dollar pretty flat. It had been moving higher. Since 1987. Streak we are watching the bank of thailand interest Rate Decision later today. We are expecting the be ok bot will keep rates. Rishaad lets look at the prospects of the trading day in india. Features edging off a little bit this morning. What would that mean . Taking back gains we saw on tuesday. 1 gain on the nifty. The last three trading days it has had, 1. 7 . A little bit of a gut check taking place at the open. State banks in india buying u. S. Dollars. Not having that much of an impact. A little bit of weakness as we go above that 71 rupee level. Was a room as the reserve bank of india says it will do more with monetary easing. It didnt help the bond market yesterday. A little bit of move to the downside in terms of yields. 6. 75 on that, particular note. Lets get you now to new york. The first word news. We will start in japan. Japanese exports fell for a 12th straight month. This was in november. It confirms there has been little sign of a pickup despite indications of a slump in Global Manufacturing. The value of shipments abroad fell just under 8 from a year ago. It extends the longest running divide since 2016. The the wider economy is expected to shrink 2. 5 this quarter. Is Philippine Central Bank investigating lenders that may have received funds using the Westpac Service that has been allegedly linked to Money Laundering and child explication. Holderssays account could have received money sent by australians who are accused of child abuse. To india now. Anger continues across the country in protest as the government defends the controversial law that bars undocumented muslims from seeking citizenship. It allows migrants from other religions to do so. Police clashed with students in new delhi. Protests flared in mumbai. To the u. S. Now. The house of representatives has passed to giant spending bills. Together they provide 1. 4 trillion to fund the federal government through next september. The bills come after weeks of bipartisan talks and now head to the senate where they are expected to pass. The white house says President Trump will sign them into law. And as a whistleblower Edward Snowden will not profit from his recent memoir. This because he failed to win free publication clearance from the u. S. Security agency. Wask was authored released back in september. Revealed how he build build the Surveillance System that he later exposed. He will not profit from the book. 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. This is bloomberg. Weve got more details how china would increase imports from the United States by as much as 200 billion under the phase one trade deal announced last week. Lets get over to beijing. Tom mackenzie is in shanghai. Are these realistic goals . Tom thats the key question. The overall target according to the u. S. Is that china will buy an additional 200 billion worth of goods and services on top of what it was buying before the trade war which amounts to 184 billion. You are talking about close to 400 billion in terms of a twoyear time. Thats according to the u. S. Heart of is agricultural purchases, about 50 billion u. S. Dollars. For we are hearing from china is that they will remove all waiver tariffs on ethanol. The chinese were buying 200 million balance gallons back in 2016. They will waive those tariffs. Ethanol will be a big part of that. They will look to try to shift some of the trade that goes to hong kong. That is worth 10 billion u. S. Dollars. There are questions over the impact on the hong kong economy from any change in trade flow. The other thing they are looking at doing is keeping the retaliatory tariff think in place but issuing waivers to private companies and state companies more regularly to help them by of those products. They did that back in november with poultry from the u. S. That is expected to add one billion u. S. Dollars to the purchases from china. They will keep those retaliatory tariffs in place that they will issue those waivers more quickly. We are waiting for more details. China has yet to confirm these targets. Thats another aspect that we will get more clarity on as we go into the new year. Juliette the u. S. Might be about to tighten its grip on wally. Huawei. They were blacklisted in may over what the u. S. Claims are major security concerns. They pushed back on that to say that there are no issues when it comes to cybersecurity. It was blacklisted by the u. S. In may. You did still have u. S. Companies continue to sell some software and hardware using what some people have described as a loophole, if they can prove that some of their products is done out of the u. S. , the threshold is 75 , they can continue to ship those components and Software Services to huawei. What the Commerce Department is looking at is closing that loophole by raising the threshold to 90 . Already, they are facing a backlash from u. S. Companies. Chip companies and Software Makers who are concerned they will lose out even more market share as huawei becomes more sealed off from their products. They say, their competitors in south korea and taiwan will move in to fill in that space. They are lobbying hard against this change. It could come in as early as january. Even if you have some partial resolution with trade and tariff, the tech war between these two companies cant get countries continues. Juliette thanks as always. Joining me now is amc bank head of asia research. Your thoughts on what we have seen between the u. S. And china . No signing yet. There is still skepticism purchasether china can up to 200 billion more than the 2017 baseline in terms of the agricultural space. There will be a lot of trade diversion. China will buy 50 billion from the u. S. That means they will need to buy less from other countries such as brazil. That goes to the wider deal as well. China simply will need to buy less from other countries. What will the result be . Further trade distortions in the Global Economy. What happens in 2020 . Theres also this election deadline for the u. S. Side. A positive spin is that they will not have tariff escalation heading into 2020, or so we hope. There were still potential risk that if china is not able to fill the amount of purchases that have been agreed to, theres a chance that the u. S. Might then increase tariffs as retaliation. Lets hope that they dont get to that situation. That certainly remains a risk. In terms of phase two, issues around National Security are more difficult issues. They cant be easily resolved. We will still see underlying tensions between the countries as we move into phase two. Juliette i have a chart on my terminal. The fact that both currencies are below the seven level, is that a positive sign from china in terms of there being willing to meet the u. S. . What we are seeing in the currency market, markets screaming for relief. It is not the chinese side trying to strengthen the currency here as part of the agreement. Taking a been handsoff approach in terms of currency management. That is how they will continue to play it in 2020. I have a sense of 200 billion more goods being bought by china, is there any currency implication from that . Its an awful lot of money. It is an awful lot of money. There will be an implication in the sense that, for china, that requires ongoing demand for u. S. Dollars to fulfill those purchases. That is part of the reason why i still believe that the yuan will weaken modestly over 2020. We have these phase one deals. Also, we will see quite a lot of trade distortion and i version. Divergent. Perhaps trade will be rerouted through hong kong. There will be a lot of that going on as well around the world. China will need to buy less from other countries as it buys more from the u. S. There will be applications. We are yet to fully see how they may play out. It will become clearer as 2020 progresses. Rishaad the thing is, the trade bane erhaps not the biggest show in town. It is people delaying decisions on investment. Do you think this phase one, even though details are sparse, is enough to let people have more certainty and get going with those ideas that they had before all of this . I believe that the margin is definitely an improvement. We will not get any further tariff escalation in the near term. Companies toce start investing and boosting their employment scenarios once again. I think what doesnt change is the continued shifting Global Supply chains and production relocation that we bardi been seeing over the past 12 months. We will still see production shifts out of china going into countries such as vietnam and malaysia. That is the new environment wherein as Companies Continue to diversify their manufacturing production. Rishaad please stay with us. I guess will be with us with more analysis. The global Tech Industry shattering as the United States ways fresh caps on huawei sales. Details on that on the way. Juliette the dallas fed president tells us why he sees rates on hold in 2020. This is bloomberg. Juliette dallas fed president reinforced the fomc message that Interest Rates are now on hold after three consecutive cuts this year. In an exclusive interview, he told bloomberg what could more warrant a move. A Material Change in outlook. Either for better or for worse. Ive already got baked into my outlook, we will have weak manufacturing next year, sluggish global growth. Pretty sluggish Business Investment. With a strong consumer. The would have to be a Material Change from that outlook. I think its fairly balanced at the moment. Im hoping we will get some stabilization and trade. The moves the fed has made have also been helpful. The risks are balanced. If you see the risk tilting to the upside and the need for a rate hike, with that be hard to do in an Election Year . Would you consider that ill advised, something the fed will try to avoid . It will not be a factor in my thinking. , i will divorce Political Considerations and influences. We will try to make the best decision we can in light of circumstances. You repeated this morning, you expect to percent growth next year. That hasnt changed. 3. 5 unemployment. You dont really expect the passage of the phase one trade the to have much impact on economy. Certainly not out of the gate. Thats probably correct. Ive been hoping there would be some trade stabilization generally. This is part of that. Youve heard me say this before. I think the trade issues with china will go on for years, not months. Most businesses are adjusted to that. These issues of intellectual property, technology transfer, and the deeper issues with china will be going on for a long time. Phase one is better than not having phase one. It doesnt mean theyre still wont be trade uncertainty. Rishaad that was the fed president speaking to kathleen hays. He becomes a Voting Member of the fomc next year. Other Central Banks expected to keep rates on hold this week. The bank of thailand is expected to keep policy. Indonesia on thursday. Decade. Had have a still with us is our guest, head of asia research. In thailand, the bank of thailand is certainly in a bind. They have very strong currency. The economy is weakening because of it. They are not expected to do anything. What do you think is going through their minds right now . The bank of thailand, theres not a lot they can do. I doubt they want to cut rates further. They are worried about financial stability. They have already cut twice. It is not having a material impact. More on othero measures to encourage outflows. For the time being, my view is positive. I believe it can continue to strengthen even though we have had lackluster growth in thailand. Robust current account surplus. , thething will month receipts that are generated continue to be converted into the real source of pressure on the thai baht. Tell us about the other currencies regionally speaking. What is the foundation of that, which is bound to be where the dollar goes next . Bottom, them the other two currencies that we are constructive on is the taiwan dollar and the philippine peso. For the taiwan dollar, it will be a very strong beneficiary from the Global Recovery in the tech cycle. It will soon be reflected in asian export numbers over the turn of the year. Already, we have seen Large Companies benefiting in part from the u. S. Action against huawei. Revenues have hit record highs. The taiwan equity market is at record highs. The market is now anticipating that the taiwan economy will continue to recover. It will be very good for the taiwan dollar. For the philippine peso, it has been hearst that hurt by the growing imbalances in the economy. I believe those are starting to correct now. The current account deficit has also improved. That is paving the way for the pesto to correct from undervaluation. It is still very cheap. It will continue to correct. Juliette what do you think about the hong kong dollar . It is a very long rally. It has been rising for eight days as of today. Elevated borrowing costs behind this. Does this continue . In the near term, we can see that continue. A large part of it is probably positioning. A lot of people were position for the weakness in the hong kong dollar. In terms of the Interest Rate spreads, we have seen hong kong Interest Rates much higher than the u. S. I have a chart showing a lot of these price swings we have been seeing in the rupee. Probably not one that will win any prizes in 2019. What do you see for 2020 . Some further weakness to come. Yes, it is a highyielding currency. Theres a lot of attractiveness. Between the highyield errors in believe the macro environment is a lot more stable in indonesia. Furtherthere is nearterm weakness in the Indian Economy around the issues they have with the nonbank financial companies. Rise of the new haven over the old. A yen move there as well. Interesting different currency swaps you are watching there. Definitely. One of the key things we are trying to do in 2020 is take the dollar risk off. Theyre still uncertainty over the general direction of the u. S. Dollar. It basede are playing on individual specific merits rather than trying to take a directional the one the dollar. Juliette have a great christmas break. Thank you so much. Plenty more ahead. Juliette a quick check of the latest business flash headlines. Fedex plunged in late trade after delivering a lower profit forecast for a second straight quarter. Adjusted earnings will be no more than 11. 50 a share. The previous outlook was as much as 13. They claim week International Demand and increased spending to handle soaring ecommerce shipments. Halted at the open in hong kong on news that it is set to offload part of its 12 stake as part of psas merger with chrysler. The by isnt a french stateowned entity. The sale may lead to the breakup of the partnership with psa in china. Board members have now formally approved the tire. Time now for stock of the hour. A lot of moves coming through in china. Brokerages, tell us what you are looking at. I could have picked any number of them. This is the most actively traded. What we have is mainland Security Companies posting strong gains. It is the fourth day we have had these gains taking place. What is behind it . An easing of trade tensions. A more favorable domestic policy out there. The policy boosting sentiment, generally speaking. Thats the biggest gains we have seen since june or thereabouts. There we go. Go to your bloomberg terminal. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Were in the middle of the trading day. We are hearing it is probably unlikely singapore will loosen its property terms prior to elections, experts saying it would be an unpopular move. Construction still going on at a number of units being left empty. Word su to first headlines with su keenan su . We start in the u. S. It democraticled House Committee has moved the usmca, the north american trade deal, forward, sending the measure to a full house vote on thursday. Overhauling what was formerly known as nafta will give President Trump muchneeded Political Capital as he faces an impeachment hearing in the house later wednesday. However, the Republicanled Senate is going to be taking up the trade issue after the new year, and therefore, the impeachment trial will come first. To the u. K. Nowhere sterling plunged the most since january as fx traders gave the thumbs down to Prime Minister boris nextons plan to enshrine decembers brexit deadline in law, erasing all of the pounds gain since last weeks conservative election win. Money markets also weighed in with the probability of a bank of england rate cut before may, falling back to what it was before the election. Sticking in washington, reports say the u. S. Has little chance 2 stopping the nord stream pipeline, despite several years of trying to bring the project to a halt. Sources say the project is newly complete nearly complete and sanctions passed this week will have no effect. Is headingvernment off calls by china and russia to ease sanctions on north korea despite claims that pyongyang has complied with United Nations resolutions. A proposal sent to the Security Council met pushback from washington with President Trump aying he would take care of any threat kim jongun has in the works. Beijing and moscow meanwhile say north korea is in a critical situation and needs help. Zealand looking to pass two new pieces of legislation that will separately regulate deposit takers from the. Anks other role the current laws are 30 years old, and the government says they must be brought up to date. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Rishaad lets take a look at what is happening as far as regionals go. The nikkei just coming back afterwards lunch break, down at the moment and hang seng turning now, also lower. It is a muddled victory out there, kind of getting over the euphoria we did have for the last couple of days or thereabouts because that partial u. S. China trade deal still has some is to dot and ts to cross. Asx is up at the moment and sydney, cooking quickly looking at the prospects, nifty at the moment flat on the futures contract, the rupee, some state banks have been buying u. S. Dollars. Weve seen a little bit of. Eakness creep into the rupee at the moment, 10year yields remain unchanged at 6. 70 5 . The American Government is weighing new limits on sales of chips and other vital components to quality, sparking another furious round of lobbying by technology companies. Our technologies editor joins us from beijing. Give us the story here, john. John the u. S. Has been trying huawei allies not to use equipment. It has also been taking steps to limit American Tech Companies ability to sell to huawei. A lot of Chip Companies have gotten around the band by arguing that the products they sell more than 75 are made outside the u. S. , so the Commerce Departments been does not apply to the product. The Commerce Department is considering raising the bar to 90 , so any product would only be able to get through the loophole if it was 90 made outside the u. S. Next . What happens we also hear china is threatening retaliation if been huawei as well. John the chinese have made it clear they will not stand idly by as what they would say is an unfounded allegation causes one of chinas national champions, one of its biggest, most important companies, to be barred from important markets overseas. That said, the u. S. Is continuing to push the sanctions in terms of equipment huawei can buy from u. S. Companies. That is also having an impact on its business. Executiveater china jeanluc. Thank you for keeping us up to date. Expects the Digital Economy to go mainstream with at least 50 of aipac growth coming from general products and services by 2022. Guest advises decisionmakers in the industry. Byl us how this happens 2022. The currentok at situation from a Digital Industry hasvery actually accelerated in terms of their Digital Transformation assets. You see we are going to move up very quickly. Haidi what are some of the other aspects we could be looking at . Understand singapore has a caveat for this to happen by 2030. Ai is one of the big areas. Digital transformation marketplace, right now we are kind of in what we call chapter two because it started six or seven years ago, so we are in the second phase. The first was the core of the marketplace, and in the second phase, data and ai will play a significant role. Haidi tell us about some of the transformation leaders you look at in the asiapacific region that have kind of set the bar in this space. I think a wellknown one know be dbs bank, which we very well. China airport group, basically one of the best airports in the world if not the best airport in the world, is one such entity seen pushing ahead from a Digital Transformation perspective. Malaysia is another example, big into data and analytics. Health pharmaceutical care provider in the marketplace, also very big in terms of adoption of technology and really pushing Digital Transformation. Rishaad you mentioned all those companies, and we use technology and all these buzzwords, if you will. Give us an idea with those companies, what specifically they are doing and what they are actually harnessing in the is makinghere which the companies more productive, etc. , etc. Otherwise, its all kind of ephemeral and you dont really know. Andra if you look at it from technology standpoint, there is a variety of different littleogies to discuss a bit about ai, which i would say data as a whole is really the key for all of these brands. Next would be Cloud Technology and pretty much for all the organizations, cloud is part and parcel of the platform they have harnessed leverage. Mobility is always there because when you look at customers, be it consumers, business customers, mobility and applications on mobile devices, definitely the way to go from a ital transfer formation Digital Transformation perspective. I would say digital ai, cloud, and of course, early on, you have the segment talking 5g in the next few years. On enabling any organization to push ahead. Take example of air asia. What does it need to do to go digital . Sandra you look from an Airline Industry perspective, digital can mean in terms of the entire Customer Experience process, right . From the minute we decide to book a ticket to the point of in to reallyheck getting on the flight, it will be from a digital standpoint, and that is how we define a Digital Airline. That is from an Aviation Services sector perspective, but if you look specifically at air asia, they also get into surrounding ecosystems to really expand and really get into this Digital Airline notion, so some of the things they are embarking on is really getting into marketplace for insurance, for digital payments, for entertainment services, and these ecosystembased services will be part and parcel for any organizations who really want to be at the cutting edge of Digital Transformation. Beingd personal data used there, leverage for those benefits, and you did Say Something interesting in your previous answer because 5g how does that change the landscape . 5g from a technology standpoint, provides obviously the 24 7 conductivity, low latency. Is basically a technology that promises organizations to be able to get really connected not only in their own environment but also in the ecosystem and consumers. So many apps, so much data out there. What can companies do to be proactive in terms of Cyber Security threats . Sandra thats a good question. That is the concern for a lot of these organizations who have started the Digital Transformation. ,n our recent ceo survey traffic remains the number one remains thetrust number one priority. Perfect no kind of solution, and it is an ongoing journey for organizations, but it is really important for organizations to understand the different trends, anticipate them, and be able to react when it happens. By 2024,u are saying the number of apps will increase 700 times. Central its not just one individual, one segment. This is the entire market. 700 . Thank you so much. ,oming up, despite the protests indias home minister says his government will not repeal the controversial citizens act. More on that next. This is bloomberg. Thei a quick check now of latest business flash headlines. American express rose in the u. S. Trade as singapores Sovereign Wealth Fund announced it is among bigname investors buying a stake in the amex global division. Ares managed by blackrock also buying in. Were told amex will retain 50 ownership with the deal fellow young the unit at 5 billion. It now expects fullyear revenue to be down as much as 18 compared to initial forecast of singledigit growth. It will release full secondquarter results on january 14. The stock has lost more than half its value this year. Fujifilm may be set to move further away from photography. It is in talks to buy hitachis diagnostic unit. It is valued at 1. 6 billion dollars. Health care and diagnostics is already the highest revenue generator among fujifilms business segments, accounting for more than 40 of its overall income. Rishaad equities and away in mumbai. The session is just about a minute old and we are looking at marginal positivity in these numbers, right . Thats right. Close,esterdays record the front line indices, we are seeing marginal gains in the opening session, and remember, gains so far have come in on back of Global Optimism that we have seen. It has been a liquidity driven rally. The last two trading sessions, money and equities, and as we speak, its its with it sits with marginal gains. Traders are expecting 12,300 on nifty at least by the end of december. Nifty bank is seeing marginal gains. I think the focus for the shift in broader markets have underperformed because both the midcap and smallcap index have so far given negative returns for this year. Haidi it looks like telcos are the stocks to watch today. What are you specifically looking at . Focus. O seems to be in in the last half an hour of trade, we did see some gains coming in after we got news from a Telecom Regulator saying they interconnected chargers. It was to be implemented january 2020, but now is to be implement to january 1, 2021. Remember, vodafone, receiver of those charges, saying that could ind to some ebita boost 2020. Theres marginal negative according to brokerages and we are seeing some bit of market reaction, but the other stock is henderson unilever. The stock has been falling the last five sessions. Yesterday, the Parent Company lowered their Sales Forecast for 2020 citing a slowdown in south Asian Countries as the reason. Remember, india contributes the most and it comes to south asia. The euro market has not been growing. Sequentially there has been a decline. Thats why negative reaction has been seen in the last five to six sessions. Of sellingverhang for next year. In mumbai talking us through the open, thank you as always. The india home minister is defending his governments new censorship law, addressing Business Leaders for the First Time Since protests against the legislation erected across the country. For more on this, were joined by our asia government correspondent. Has there been any improvement on the ground . No, instead the situation looks even more tense because protests are spreading. Yesterday, we heard really. Iolent protests in delhi we saw mobs throwing stones at police. There were violent clashes. I visited a University Campus where protesters said they intend to continue protesting against this law until the government repeals it, so the situation looks pretty grim method moment. Narendraweve got modis righthand man, i guess you could call him, making comments. What has been the impact . He has made it clear that they are not planning to repeal and that they are planning to see this through. Yesterday, as a matter of fact, he made a statement earlier this week where he said now they are going to turn their attention to building a temple on the site of their religious mosque, which could inflame things further, worsen these religious tensions, and he seems to be reassuring the markets that it does not matter what happens on this front, the government will be able to steer the economy away, into better times, and then he said that in the next three quarters, the economy will improve. Frankly, it is difficult to see how because right now, india is growing at the slowest pace in about six years, and unemployment is at the highest in 45 years, so things look grim, but the government seems like they are not moving on this. Foraad thank you very much that report. Coming up, the bank of thailand and its latest interest Rate Decision. We have a preview for what they may or may not do. Haidi it has been an upanddown year for the Federal Reserve, cutting rates three times in the face of weakening global growth, and policy makers are indicating they will hold rates given the underlying circumstances have not really changed. Ive already got baked into my outlook will have weak manufacturing next year, sluggish growth, pretty sluggish Business Investment but with a strong consumer. There would have to be some cheerio change from that outlook. To those comments feed into what we have this week, which is a lot of Central Bank Decisions . The bank of thailand first up later today. Economists expect policymakers to stay on hold as they wait to see if previous cuts will succeed in elevating growth and perhaps take some of the strength out of the currency. Slowing. Omies the Central Banks expected to be on hold. Tell us more. Hoursiland just in a few from now are going to deliver their Rate Decision, and none of us expect thailand to hold. The economy is slowing, on track to be at its slowest pace this year since 2014. Why are they going to hold . The central bank has already. Autioned i guess we are expecting to look more at the language they use in this decision, making it clear that they are willing to go they want to keep some ammunition in reserve. Bank indonesia, which goes tomorrow, still no story, although they have been a lot more aggressive. They cut 100 basis points since july. They are saying they want to wait and see for the transmission of those cuts, so they see a lag of about six months. They are expecting that to hit the economy in the early part of next year. Indonesia on track for its slowest growth since 2017. Rowth is the key message here haidi tell us what other measures they can really do to stoke growth. Policymakers are trying to signal their next move, but as you say, a lot needs to be done. As i said, thailand may be is about reading between the lines and making clear if they do not cut today that they are willing months,wer in future the coming months, depending on where growth ends up. For indonesia, they have already cut the reserve ratio for the bank twice this year. They have indicated they could tweaking. Economists almost unanimous in expecting a hold, but the Indonesia Central Bank has also made it clear it is willing to cut rates further, so just wants to see what impact the moves it has made so far have on growth. Again, it will be about the language that comes in the statement tomorrow from the bank of indonesia governor. Rishaad all right, have a good one. Lets quickly check in now with what is going on with markets. This is where we find ourselves at the moment. Nikkei down, hang seng just going to its lunch break, a little bit below the gain line here. In rally weve been seeing december, is it a santa rally . Can it go on iesco is it fueled by the u. S. China trade accord . Perhaps also a resolution to brexit, or is it at the moment ofo deciding a little bit clarity to what we have so far . Lets look at what is going on with the hong kong dollar. We do see the hong kong dollar at the moment moving to the side. , near the stronger haidi time for you to go to the Money Exchange because the hong kong dollar has been rising for its eighth day, set for its longest climb since 1987. We were saying earlier that this rally was turning short a little bit, but volatility coming. That is it from Bloomberg Markets asia. Bloomberg daybreak middle east is next. This is bloomberg. Taylor im taylor riggs in San Francisco for emily chang, and this is bloomberg technology. Coming up in the next hour, goldman to the rescue. Wework gets financing. We will have the latest on the credit lifeline. Plus, proposed tariffs pushes apple to the forefront of the u. S. China trade standoff in 2019. The relationship with President Trump may have helped the company avoid a steep levy