Southeast asia, gdp out of fullyear growth for 2019, philippines not playing ball the first trading session and dollaryen, gold, oil and treasury futures looming, looking at where we go moving forward as well. Dollaryen 108. 66 and gold futures pulling back slightly, by a futures contract. That is the markets. Uneventful. Here is the first word news. Kim jongun says he is no longer bound by a pledge not to willmissile tests and debut a new weapon. He says u. S. Sanctions leave him no choice but to reconsider commitments that underpinned his meetings with President Trump. Trumps reaction was muted, repeating that kim agreed to denuclearize. Hong kong kicked off the new year with renewed protests, vandalism and tear gas. Demonstrators and Police Clashed into the night after tens of thousands of mostly Peaceful Protesters took part in a march. Protesters vowed to maintain their fight for more democracy and less chinese control. Willdent trump says he finalize the first phase of a trade deal with china january 15. He is planning to go to beijing to begin talks on a second phase. The first part will see an agreement to increase purchases on u. S. Goods in exchange for lower tariffs. Japan is expected to speak with lebanon about Carlos Ghosns escape. Japanese Officials Say the government is unaware of details including how ghosn managed to flee and his exact whereabouts. The countries dont have an tradition treaty. An extradition treaty. News 24 hours per day, powered by 2700 journalists and analysts in 120 countries. This is bloomberg. Numbers, 50 1. 5, slightly lower than expected but a good reading in expansionary territory, lower than 51. 8 we had last month. This compared to the official manufacturing pmi numbers which we saw in expansionary territory last week. Smaller exporters and generally, this has been painting a positive picture, more than the official gauge that has been in expansion for five months for this caixin reading. We are seeing anticipation that trade talks would lead to a phase one deal. Sentimenturing that in december. It is not all clear ahead. Early signals show headwinds and external demands. The pmis of the eurozone and japan fell into contractionary territory. David early signs we may see the end of the jungle. To talk us through how far we need to go, the head of asian economics at Oxford Economics is with us. Happy new year. Lets start off with china. Any incremental addition to growth from a phase one trade deal . We have had two items of good news. One was the trade deal, the other is that we see the soft and hard data in the industrial sector, it is not as married and as varied and the pmi Data Confirms that. Upgraded our forecast to 6 for this year, which is kind of the same as the target. I think what it means for us is that in that december Central Economic conference, they gave policymakers a mandate for some more easy policy, and reflection rrr is a of that. At the same time we dont need a huge amount of stimulus this year given what is happening to the economy. I would say this is not going to array of newa vast stimulus measures. It will make sure the economy is on track but i dont think we will see massive amounts of additional stimulus later. David the 6 growth forecast, does that consider the offset in terms of the rrr and future offsets . Someat forecast included more stimulus along the lines of what we are seeing but not a huge amount. Beijing, a question, in terms of the trade deals, seems like markets priced that in. What is the risk that relations could deteriorate again and tariffs could snap back after the deal is signed . There is still phase two and phase three. Yes, this news about the phase one trade deal was positive for us in terms of how we look at the economy, not just for china but for the world. Quite some risks. To me, the biggest risk, if you ask people in washington on the one hand and beijing on the other hand which side has gained a most and the most and which side has given the most, you will get different answers. I dont care who is right or wrong but that means there are, there is risk of reescalation this year as people start to reevaluate this deal and as we start to move to this supposed phase two. Data showat does your in terms of who has given up more and in terms of who could benefit most . We still havent seen the exact agreement. We know how long it is, it is apparently in english, 86 pages. Think it is exaggerated to say there is no detail in this deal, i dont think it is true that the deal has no teeth. The key question is, at the end ,f the day, washington has holds the springs over here. It is up to judgment of the Trump Administration to tell us whether they think china is doing enough in those areas, like tech transfer and intellectual property rights. It is a political judgment, i would argue, not up to a lawyer. It is up to politicians. David another part of the chinese economic story is the default story. Im guessing investors in the credit markets are trying to extrapolate to what extent that continues the default story for next year. Do you think conditions that led to certain parts of corporate china leading into defaults, do se conditions possessed persist . Definitely. There are lots of companies with poor financial results. They are part of the financials there are parts of the financial sectors that are exposed to that, smaller banks, shadow banking entities. If you look at the landscape of chinas financial sector, there are risky parts. For me as somebody looking at the overall economy, i only get worried if there are significant risks of systemic problems, something that could freeze up the interbank market, something macroeconomic. I would say if you care about Credit Conditions for individual companies or whole sectors, you should continue to be worried as we are moving also to a new phase in chinas reform programs where it looks like the government does want to make the consequences of their decisions, that investors are doing. David the fact that they are able to continue pursuing reforms means some of the arent asisks perhaps present anymore. What would you consider the biggest risk this year . I think on the one hand, still relations with the u. S. Domestically, it is going to be interesting to see how they will thate that game or quandary of reform and opening up on the one hand, and stability to produce on the other hand. All of us, we like reform but that means opening up and opening up to allow people to shift their money in and out easier and that can at times be difficult for financial stability. There has been criticism that instead of reform, china has been reform and closing. There is not a lot of real opening. What is your view on matt . That . I dont know. I definitely think i consider myself lucky that i am an economist and not a Political Science person. There are a lot of areas where we cant point to progress or reform in china, but i would argue only the economy, if you look at the Technical Levels on the fiscal side, looking at reform that has to do with the labor market, the financial side, we are seeing things, i feel that at the technical level there is a decent amount of economic reform taking place. I think the key challenge for those reformers in beijing is to make sure that they dont lose those its of the apparatus parts of the apparatus that are critical to those reforms. Selena stay with us. We would love to get more of your views on reform up next. In the newkong rings year with clashes and tear gas as protesters vow to keep the fight going in 2020. David the economy in singapore, slumping as the trade were between the u. S. And china takes over. What 2020 holds for that economy and the rest of the region as well. This is bloomberg. Selena we are seeing thailand headlines crossing the terminal, considering implementing more measures if necessary on the thai baht. We have seen appreciation with it following falling below 30 per dollar. The thai bank could be curbing outflows for stocks and bonds. This is the first time it reached that level since 2013. The bank of thailand noted it was due to low trading and volatility, 30 further adding volatility will lessen. The bank is concerned about appreciation, that it needs policy coordination. This is in the minutes for the policy meeting. Now we will go to marcus. Why did we see the currency reach the 30 per dollar level monday . I think the baht has been the top performer learned by a robust [indiscernible] level. Below the 30 [indiscernible] liquidity amid year and liquidity. We saw italy above the 30 level this morning we saw italy above the 30 level this morning. David that leaves the question what we have been asking, because of the currencys strength, is there any other thing the central bank can actually do to manage the strength in the currency or is it down to other policymakers in the country . Lets rest retrospectively look at 2019. Cut policy bank has rates to a record low of 1. 25 and eased policy [indiscernible] easing the rules on outflows. The next meeting is scheduled for february 5 so it is possible the central bank will contemplate [indiscernible] last but not least, intervention. The central bank is fearful of moving [indiscernible] may ber the central bank labeled a currency manipulator by the u. S. David always a risk but when you look at where the currency is, might be something to mull over. Thanks, marcus. Economy Southeast Asian to another, talking singapore. Out this morning with gdp numbers slumping in the final month of 2019. Trade sectors struggling to gain traction despite the easing of tensions between the u. S. And china. Advanced estimates show gdp annualized 0. 1 in the fourth quarter. Everything else, the growth for of theas the slowest decade. Our chart takes us all the way back to 2000 back to 2004. , that is not the annual figure but trust us, the annual figure fullyear is at zero point 7, 0. 8 . Singapore dollar come little changed. Inal thoughts from louis. Want to get to where we are in the cycle for a lot of these emerging, including singapore, recoveryare in the story. Last year was a tough year for asia because of that week global trade story and added to that, the u. S. China trade war. As we see things improving a little on the u. S. China front, within china, we can see if you look at chinese imports, how are they moving from monthtomonth the echoes we have seen a bit of fromvement since monthtomonth . We have seen a bit of an improvement. In terms of the outlook we are not as varied in terms of what trade means for asia. Trade is important for asian economies, so that is helping a little. We are not out of the woods and as we continue to emphasize, if you look at the forecast, which economies we think will be best positioned for growth, those are the ones where domestic policymakers added to growth in terms of fiscal or monetary easing. David lots of people talk about fiscal stimulus as something to consider and watch. No one seems to talk about whether they can afford it. Whether they can afford to fiscallyy to stimulate their economies and whether we will see debt hitting these markets. There is definitely in europe , japan, those are countries where we need to worry that debt , Government Debt is high. Numbersjapan, the asian dont look as bad as they do for europe or other emerging markets. We feel that, especially in the developed asian economies, korea, hong kong, hong kong is wellpositioned for a fiscal easing. It depends a little on the country but overall, because asia has been so conservative in recent decades, they still has have some powdered to use if they want powder to use it they want. Kong hasong implemented fiscal stimulus. How much more are you expecting in 2020 . Does that provide a floor under the weakening economy . We expect more fiscal easing. Looks like it is quite data dependent. The more that the weak data comes in, the more willing the government is to spend. We still think the fiscal easing in hong kong is relatively modest compared to the shock infringing on the economy. The overall effect is that the economy will continue to weaken. We expect hong kongs economy to shrink, not just in 2019 but also in 2020. Selena what are your expectations for the strength of the u. S. Economy . We spoke to our previous guest who said the strength in the u. S. Consumer shouldnt be taken for granted and we could see significant weakness next year, this year actually. We definitely expect growth to weaken from Something Like 2. 3 in 2019 to maybe Something Like 1. 6 this year. Business slowing, investment is weak, and Employment Trends are likely in our view to moderate but we dont worry too much about a very large moderation because there are quite a few buffers. , the Balance Sheet looks healthier than 10 years ago, so that gives them a little, a buffer. We think there are buffers in the u. S. Economy so we are not that afraid of a sharp slowdown. Usena thank you for joining right after the new year celebration. You can catch up with all of our interviews by using our interactive function, tv. You can dive into the securities and bloomberg functions we talk about. Become part of the conversation by sending us instant messages. We will look at them and talk about them. This is for bloomberg subscribers only. Check it out on tv. This is bloomberg. David welcome back. Thank you for joining us, happy new year. The latest headlines, cheers. Shares are tumbling in china after the Company Reported incomenary fullyear net slightly below analyst estimates. Liquorer of the potent u. S. 5 billion dollars dollars, a 15 rise from last year but short of estimates. They are targeting a told total revenue of 5. 5 percent. Tencent shares rise after it led a consortium to buy a stake of Universal Music Group. This ends talks for a deal that values the company at 30 billion dollars. Tencent and partners offered to increase their stake to up to 20 at the same valuation until january 15 next year. In macau, the industry slumping, gaming revenue slipping for a third month in december, marking the gambling hubs first decline since 2015. Gaming revenue was less than 3 billion for the month, down almost 14 from the year before. Struggled to learn high rollers lure high rollers. Selena lets take a look at mrr, the movers in the asiapacific gaining about 0. 2 , the biggest gainer is a company that manufactures products after a new years eve report that china will have significant certificates for genetically modified corn. One of them will be developed by this company. They stand to gain from this policy. I want to bring up this company, their projections missed estimates. This is the first time they since 2015. Ates this raises concerns that the economic slowdown is spreading to the resilient Consumer Sector in china. David not so much recession proof. A look at what is happening in , yesterday you would have seen protests, some of which turned violent. The markets are still moving up. This is bloomberg. Selena it is 1 29 in sydney. These are the headlines. A trade deal between the u. S. And japan has kicked in. Japan is reducing tariffs on u. S. Beef, pork and other agricultural products. Japan is pushing to secure tariffs on cars and auto parts it exports to america. Japan says u. S. Officials have given assurances that new tariffs will not be introduced. And localsf tourists are leaving areas south of sydney as the bushfire crisis is set to intensify in australia. Seven people have been killed and hundreds of properties destroyed. The fires have been burning for weeks and the scale of the seen criticism of Climate Change policies. I want to thank allah those fighting the fires, all of those supporting them in these difficult times. The conditions remain tough. Of stayinga matter safe and being patient and doing what we need to do to put ourselves in a place of safety. Been killedle have in indonesia as monsoon rains hit regions around the capital, jakarta, triggering the worst flooding in normal seven years. The down shut one of their airports the downpour shut one of their airports. Rainfall will continue for the next few days. Commissionera david stern has died after suffering a brain hemorrhage three weeks ago. He was the longestserving commissioner of any professional u. S. Sport and is criticize boostingedited with than 5 billion. He retired in 2014. Day,l news 24 hours per powered by more than 27 hundred journalists and analysts in over 120 countries. This is bloomberg. On the for a check mainland and hong kong markets, a strong start for the Asian Session after we saw rrr cuts on the pboc that that was expect it and priced in. Donald trump said the signing date and place, january 15 for the phase one deal. That is boosting optimism. Xiitive comments from jinping about chinas gdp Economic Growth in 2019. Good news except for this company which put out preliminary earnings not as good as expected. Taking a look at this terminal chart, this shows expected volunteer volatility for this index falling to 2018 lows. We saw it jump 22 from december 24, perhaps a sign this market isnt going to continue despite the increasing geopolitical about protests, december was positive for hong kong. It was the bestperforming major market in december. Precisely on that note, a good december, very calm markets, then what we saw over the past few days, hong kong kicked off the new year, renewed protests, vandalism, riot police and demonstrators fighting and running into new years eve and new years day. Tens of thousands of mostly Peaceful Protesters flooding the streets. Lets get the latest. Stephen engle is outside to give us an update of what has been happening over these past few days. It is a new year but nothing much has changed. There is angst on the streets. We saw the march yesterday go from Victoria Park to central in hong kong. It was justrs say over one million people. The police put the estimate at 60,000. That is quite a discrepancy but that is not uncommon, the police put the numbers lower. They took estimates from the initial gathering in Victoria Park. It was probably more than 60,000, perhaps less than one million, but tens of thousands turned out yesterday in support of their pursuit of protection of their civil liberties. Not everybody is violent that this did turned violent late into the