But security saying you will see the boj stop buying longer take 2020. In a move in the aussie in focus today. We are hearing hedge funds switching to bearish. The dollar is weaker ahead of inflation data due for november. Were also watching the thai baht, stronger against the ringback. Trade data against the greenback. Rishaad the Indian Trading day, futures are looking flat. What we have seen, discussing a short while ago, record highs for the nifty and the sensex. Friday no exception. It toheless, that brought a record high for the index of some of the heavyweight stocks. The rupee is flat. The 10 year yields, big move lurched to the downside, Something Like 10 basis point in terms of the yield. The prospects here of further Interest Rate cuts, again brought to the fore. It says something that has gotten more and more credibility as we do see further signs of weakness, particularly on the demand side from the indian economy. Thats a look at what we have in prospect. With look at what weve got in first word news with su keenan in new york. Su thank you. We start with early trade data from south korea. Monthly exports could decline as much as double digits for the First Time Since may. Outbound shipments fell 2 from a year ago while deliveries to china rose more than 5 . Semiconductor sales account for the largest share of exports and those declined 17 . To hong kong, where its back to business as usual monday morning , this after tense scuffles over the weekend which saw Police Officer draw his gun and point it at protesters. No shots were fired in the incident, which escalated quickly during a rally in the city center. Demonstrators gather to show support for the weaker minority. Witnesses say police moved in after a chinese flag was whipped from a pole near city hall. Thereia, the government is defending his controversial citizenship law as protests continue their throughout the country. Prime minister modi asked his supporters to thank lawmakers for pushing the bill through last week and accused opponents of spreading lies. Violence has been on the rise with at least 17 People Killed while for have died and two in karnataka. In australia, bushfires are burning out of control, still in new south wales. Devastating property and farmland, disrupting the plan of thousands of residents. At least nine people are known to have been killed and hundreds of homes and buildings burned down. The fires are being stoked by record high temperatures, and the government has been criticized for downplaying the effects of climate change. To boeing now, and the ceo Dennis Muilenburg, he has reportedly being personally rebuked by the aviation regulator for the way hes handled the grounding of the 737 max jets. The New York Times says the faa criticized him at a private meeting last week for trying to pressure the agency into letting the max jets fly again. The faa reportedly said boeing should concentrate on providing information about its Software Upgrades for the max. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Juliette china says its cutting import tariffs on generate first. The move is partly on january 1. It comes as beijing looks to finalize the first phase of their trade deal next month. Selina wang joins us from beijing. Lets start with this tariff news. What is on the list . Thena so according to ministry of finance, this includes goods such as frozen pork, including paper products, some hightech goods, and this cut would begin on january 1. Now, what were hearing is that this isnt directly related to the ongoing negotiations for the trade deal and leadership reiterated this is part of chinas broader effort to reduce import tariffs and that tends to further lower these duties to meet domestic consumption needs an open the economy further. China has been cutting these tariffs since 2017 and this follows a similar move of a broad cut across a swath of import moves last year. This importing of frozen pork helps china leaf meet shortages ahead of the swine fever. Rishaad tell me, where are we with this phase i trade deal between the two sides . We still havent had any signing dating announced and one of what are the differences . Selina thats right. Were still lacking details in terms of the location and the timing, but we have been hearing positive sentiment. Trump said the two sides are arranging the formers the siding and there has been a lot of skepticism as to whether or not china can reach those very ambitious targets. Purchases of u. S. Farm goods, or sources say there are no major sticking points, but a contentious issue that often happens is the translation of the documents from asian to chinese, which is a very painstaking process. But sources are saying right now that the negotiations are still moving as planned. We are hearing sometime in january is likely when a siding could be signing could be happening but we dont have a concrete time or place for when this could be happening. Rishaad thank you very much. With us his jp morgan head of Asia Investment strategy. Weve got to be concerned. Whats your take on all this and why its taking so long . Guest i think its somewhat of a repeat of the process we saw earlier this year. Weve been here before in terms of back in april. When they came to an agreement on broad topics, and to translate documents and thats also spread around because the documents are negotiated in english. Like we saw last time, there was quite a bit of concern amongst other leaders in beijing and then pushback. I think finalizing the details in that document takes time. Is, thisbut the thing might be the easy stuff. I keep saying that. And its taking so long to get that done. Alex yeah, i think the easy part was the numbers were on agriculture. Thats the only details you saw in the fact sheet. The other chapters were intellectual property and tech transfer. Theres no detail yet and they are trying to flesh out some of the detail in the broader report and its harder to find Common Ground between the two sides, definitely on the structural issues. Juliette juliet in singapore. Youre saying the likelihood of phase two is preunlikely. It took so long to get to phase one. Alex i think its fair to say that. What were looking at right now, youll have to wait to see if china falls follows through on the. Do by 40 billion . It will take time to look at the followthrough and keep tariffs in place to see whether there is followthrough. By the time you can see whether phase i was a success or not, youre running into the election. Just based on the particle calendar, it will be hard to start phase two. Its hard to come up with an idea of what would be in phase two, given they wanted to be as wideranging as possible. Juliette the tariffs announced today, perhaps investor fatigue as well. In terms of what assets could benefit here, this is our question of the day. Which assets do gain from the tariff cuts we are expecting on the first of january . I thinkrtainly, companies in sectors where they are cutting tariffs, hightech goods around agriculture, frozen pork. In general, youre looking at chinese cutting tariffs on things they have to buy anyways. Pork is a great example. The hightech supply chain and agriculture, especially around meets, will gain. But i think the bigger impasse will be the reallocation of trade from the phase i deal. If china does have to buy that much more in goods from the u. S. , it would mean they are buying less from other countries. That reallocation will play out over time. There is not likely to be much of a Market Reaction until we see more details from phase one and what impact it will have. Rishaad this is it, isnt it . Were confused by a lot of things going on. This can be just a trade war, but we also have the recognition theres a hegemonic conflict, as well, and that makes people reluctant to actually get involved. And this is making it harder to make a deal. Thats really whats happening. Alex yeah, i think most people recognize the fact that the trade war is one aspect of a broader conflict, and it also seems that most think its a broader conflict will last. Rishaad we cant go back to way things were, thats for certain. Alex of course. And if they do settle trade or we see an increase in goods, theres still export bans in terms of u. S. Products going to china. Theyre still Market Access bands. Theres still very large access concerns in china. Youre likely to see these tensions persist, or even worsen among other aspects of the relationship, even if they do settle with the trade issue. Juliette in terms of that, youre still bearish in potential slowdown because of anything, the phase i deal is growth negative here . Bit yeah, i think its a confusing as to why youre seeing a lot of consensus in terms of chinas growth figure for next year, when the average tariff reduction were likely to see is 1. 7 Percentage Points across tariffs that exist in the u. S. , u. S. Imports from china. And if china is forced to buy that much more from the u. S. , especially uneconomical purchases, that might be cheaper elsewhere, then it just reduces their net export figure and its not necessarily growth positive. I think the key question mark is whether or not this deal is seen by broader businesses, and china has confidence improving, and if you see improving. Thats one of things from the trade deal. Given the fact its so narrow, its unlikely to result in a boost in confidence. Juliette alex, you stay with us. Thats alex wolf with us in hong kong. Still ahead, Narendra Modi goes all out to defend indias controversial new citizenship law, saying critics are spreading lies. Delhi. E live in new rishaad thanks jump back in the freight, cutting Interest Rates slowed down by other headwinds. Well be asking alex whats in store for 2020. This is bloomberg. Quiet, looking rather these Monetary Policy after a wave of Interest Rate cuts in 2019. The pboc are expected to hold fire. Those in emerging markets may ease further as we do have Global Growth and Global Growth concerns remaining slow. Bloomberg economics has appeared lower rates has weakened the power of Central Banks to tackle the doubt. Juliette still with us is alex wolf, head of Asian Investment strategy. Alex, kind of in line with what the fed is staying is saying, they will be on hold in 2020. The bank of american ceo saying he things the consumer is still prestrong. Thats a positive sign there. Were inh, i think agreement on both points. They will maintain and easing bias with a cautious outlook around growth. The consumer has been healthy, but thats the only point of health in the u. S. Economy. Manufacturing has been pretty weak and you still have a positive consumer, but it is probably weighted more towards the risks further downside then there is risks for the upside that would force the fed to hike. We think they will likely be on hold, but theres still risk of having to cut if we see further weakness. Juliette he mentioned. Does that come back you mentioned capex. Does that come back in 2020 . Alex it could improve slightly on the back of this phase i deal if businesses had a bit more confidence in terms of the outlook, but we think that whats driving capex is broadly high inventory levels. Those inventories are worked off and you can see a broad improvement in production and in the overall manufacturing sector. Then you can see some building of additional capacity. Were in that process. We are some improvement, but we dont think were poised for a big bounceback. Rishaad exactly that sort of idea, when you look at the numbers out of china and you see negativity there in the pmi data, as well, the point being is that down to capacity or overhang . Whats the deal . Alex i think its mostly overhang. Thats the missing aspect of the Global Economy the past year. Everything has been blamed on the trade war. But it looks a bit more simple than that, in terms of a broad inventory cycle. When we saw the secret has Global Growth, inventory has built up quite a bit. You saw growth slowed down because of tightening. You saw growth slowing down in emerging markets. As that growth slowed, youre left with inventory overhang. You are working that off, as you work off those inventories. Surely, stimulus has not helped that much in regards to that, as suppose apart from soaking up demand, that it can do that. Alex you havent seen that stimulus out of china. Youve seen tax cuts targeted and smaller than what weve seen, and thats helped with maintaining consumption amidst a broader slowdown, but a broad stimulus will build further capacity, which is not what they want to do. Juliette i want to ask you where you think the dollar goes in 2020. Ive got a chart showing we have seen hedge funds cut some of their dollar long positions to their lowest levels since june 2018. Its been a big story of 2019. What does it do in 2020 . Alex we think it goes towards depreciation. We maintain a depreciation bias in terms of the dollar. The dollar is hard to predict. Often, most forecasters have gotten it all wrong. But we think it does screen as verily fairly expensive. Ultimately, its the relative growth story. If we see the world approve improve, whether trade, the manufacturing cycle pickup, that relative balance shifts more towards the rest of the world and away from the u. S. Then you can see a flow out of the u. S. Into the rest of the world assets. Even though last year it continue to stay strong, if anything appreciated on the back of risks, if you see risks reduced, you see Global Growth improve and that can push the dollar weaker. Juliette youre still saying in u. S. Equities in 2020 . Inx yeah, we favor the u. S. That we think we still see positive earnings growth. Last year was a rough year, but we think they will bounceback this year. With think the risk reward balance looks good. Its fairly defensive in the event things to get worse, the trade deal falls apart, or recession risks pickup. The u. S. Is defensive because of the strong consumer. Europe is a pregood play on the fact we are seeing some improvement in many factoring, production, and trade, and the fact that is highly cyclical. We like cyclicals. We see positive earnings and a favorable dividend in europe. Rishaad as we go into next year, what have your clients been most curious and most interested in . Alex i think trade has dominated the discussion in terms of phase one, what impact they will have, whether there will be followthrough, whether that can boost growth, particularly in the region. For Global Growth . Thats been one key. Everything looks really expensive. Thats one of the concerns, things look fairly expensive. How do you allocate . Were not expecting growth to pick up. Rishaad pricing six months ahead. Alex right. Thats one of the bigger concerns. We think that the cycle, this past year we were concerned about the cycle. We think we are late in the cycle, but we think the fed moved and the phase when trade deal somewhat extends the cycle, reduces the tail risk. We think well still see growth charge along. We like kerry. We like alternatives, as well. Thats what we are trying to recommend. Rishaad have a great christmas and a fantastic new year. Alex wolf. If youre a bloomberg subscriber, catch of all our interviews by using tv. You can enjoy the chat by sending instant messages to our team and guests during our live programming. Has a look at tv on your bloomberg terminal. This is bloomberg. Rishaad lets have a look at the latest business flash headlines. Prince weise is set to report their probe into claims it spied on his former head of hr. People close to the investigation telling us the bank will say the surveillance was carried out by the office of former ceo the former coo. That would be done without the consent of the ceo. It would mirror the claims about spying on his former head of International Wealth management. Thatat time, the coo said the case was strictly an isolated event and full accountability has been taken by the individuals concerned. Takeovers planning a of the uks hardwood Wealth Management group, this according to sky report, which says the deal will be announced to the London Stock Exchange monday at a price not expected to represent a big premium to hardwoods friday close. Rishaad time now for the start of the hour. Youre looking at Samsung Biologics. Why . Juliette im seeing a lot of upside in the south korea stock, but Samsung Biologics is seeing trade volumes search, up the most in two months. This is after key want securities said some south Korean Companies could benefit from the upcoming Jp Morgan Health care conference, which is going to take place from the 13th16th of january. Looks like a lot of these Health Care Companies will have the opportunity to meet with Global Pharma Companies over possible details possible deals. One of the participants is Samsung Biologics, up 5 today, the most in two months. If we look at it over the course of the year, almost a percent, and pretty strong recommendations if you look at the anr function, with 14 buys, two holds and just one sell. Trading volume also surging very, very strongly. If we look into some of the moves that we have seen in terms of volume over the last couple of sessions, its been quite low. Todays move is very strong on the back of this call. To get the clips of this and other stocks of interest today, it is most go on your bloomberg terminal. And when we look at Chinese Markets today, were seeing weakness coming through, despite the fact we heard the Chinese Government will cut import tariffs, including first important phar