Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

China sea. Coronavirus cases are in the u. S. Florida passes new york is the second highest state after california. Gold futures had a record, beating levels last seen in 2011. Sasol are plunges. Lets take a look at how export thesis shaking up when it comes to the start of trading here in asia. This is what we are seeing when we are seeing futures. U. S. Stocks fell for a second day on friday. There is a faltering sense of recovery in the u. S. This is expected to focus on unemployment insurance. Pelosi has called that passage contracted the futures is down by a 10th of 1 . Japanese stocks coming back online. Mildly positive. Sydney futures extending losses down about a half percent. A flat start to the cash trading session. Lets take a look at gold. That is always the been the story. Gold prices are not looking too far behind. General concerns about where the Global Recovery goes from here. Global virus cases have exceeded team. 1 million while there are signs the virus spread is slowing the u. S. A second wave in spain is fueling concern across europe. We have the latest. Here in the u. S. We are seeing some relief. We have seen an increase of 1. 6 in the u. S. That is still lower than the average of the past seven days. We are still talking about 66,000 cases a day. Thats have slowed for a first time in a while. Going below that 1000 market day. There have been hard hit states like california, florida, texas, new york. All showing signs of improvement. There are unmistakable signs that the pandemic is looking a little bit better in states like texas and arizona. California and florida still seeing trends that are mixed at this point. We heard a similar sentiment from a california democrat, lawmaker karen bass. She told cnn that Los Angeles County should close. That is something that Los Angeles Mayor Eric Garcetti has closed echoed. She admits that perhaps the state did not opened a little bit too quickly. Arei in the meantime we seeing spain clashing with the eu for reimposing travel restrictions. How bad is the second wave of outbreaks that we have seen there . Spain was probably one of the most to countries in the eu. Easing ofms like the restrictions we saw it earlier this year and the start of the summer tourism season is leading to a pickup in cases. Boththan 920 cases for thursday and friday of last week. Those are like the numbers we saw back in may. Cases that have reemerged are in the catalonia region. That is home to barcelona and some of the most popular beaches in spain. They could reverse course and anyonee a quarantine for traveling from spain. This is a big below to the tourismdependent economy of spain. Norway announcing a 10 day quarantine. France issuing a travel warning. Spain we have seen barcelona impose some stricter measures. Is a midnight curfew for bars now. A Western District is under a partial lockdown. We have seen spain as one problem. Other flareups and other countries within the eu as well. Politicians say bringing back a nationwide lockdown still seen as a nuclear option. Shery we turn to asia. Hong kong is seeing a resurgence of virus cases. Now sendingchief is a warning on the recovery. Post sayinga blog the economic recovery in hong thenwill take longer expected because of the fluidity of this latest flareup. We also have a lot of uncertainties globally. Seen 100ong we have new cases per day for the last four days. That is the big concern here. They have seen signs of recovery. They have not been hit by fresh waves of the virus. The state of contraction appears to have throat slowed down slightly. We have seen some of this during the heat of the pandemic. But not nearly enough according to some of the businesses we talked to. Secondquarter gdp numbers come out of hong kong this week. We speak about Southeast Asia. This remains a hotbed in the region. Indonesia as well. 99,000 cases. Surpassing is 80,000. They could see cases rise to 85,000 nor more. Singapore also reaching 50,000 nor more. Vietnam as well. Seen as one of the early Success Stories to fight the virus. Seeing a first local case in the last three months. We will get you more on the virus later in the show. Coming up next, the latest on the forced closure of the u. S. Consulate in houston. Relations are now in extreme danger. This is bloomberg. Karina republicans are said to be considering a job to extend the jobless payment. This is part of the latest stimulus effort. The fed meets this week to consider monetary policies. That fact in the fight against coronavirus are likely to keep rates near zero. It is unlikely it will shift strategy. Violent inve been several u. S. Cities over the presence of federal troops on the street. Riots in portland which is the center of the new wave of protest. Thousands joined marches in portland shouting, feds go home. In hong kong, seven potential prodemocracy candidates have been questioned over their political views. Candidates were asked to prove they have not violated the citys many constitution or its recently opposed security law. State media reported a person may be infected with the coronavirus in north korea. It may be from a defector returning from south korea. 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. Haidi tensions between washington and beijing have been running high. This follows years of frustration by chinese buying. Officials reportedly broke into the chinese consulate in houston on friday. What are they looking for . What are the allegations . It seems like some of the administration see if thing consulate in particular as a hub of malign activity going back several years. Find their what they have identified. They were burning papers and maybe shredding papers. We dont know exactly what u. S. Officials found. They were breaking through the back door. Are 2000 active cases of counterintelligence against chinese individuals in the u. S. If they maintain that that is being done in houston, they can probably hope to find more. The tit for tat does not seem to be slowing down between the u. S. And china. It feels like china has measures have been more measured. Especially when you think about the heated rhetoric that comes from u. S. Officials. In exchange for the houston closing. It is not an escalation. Maybe that could be different now. This is in the spirit of the phase one trade agreement. Every further day there be escalation. Something could be rolled out at any time. We spoke to someone who says that Collateral Damage could play out when it comes to the u. S. Dollar. If you say by law, do not possibly china or even withholding the payment on bonds that the u. S. Owes payment on, these things are possibilities. , suchave big implications as for the value of the dollar. Haidi we have seen diplomatic conflict spill into conflicts for a couple of market. This is quite the nuclear option. Successfule they are pushing this idea the moment. He would pounce on that. Cooler heads may prevail. This is a not impossible scenario. Shery the latest on the u. S. China tensions. Coming up, we will take a look at a busy week ahead. That is next. This is bloomberg. We have a busy week ahead for economic data. From China Industrial profits on monday to a fed meeting on tuesday, japans leaders drop Industrial Production data on friday. There is plenty to keep us busy. We break it all down. Great to have you with us. Pmi numbers out of china as well. We are expecting external demands. When you look at chinas trade numbers, you see a rebound in their asked numbers. How encouraging are those numbers . They could potentially mean a rebound in global demand. They have been surprising on the outside. We are keeping in mind that when we look globally, what we have seen happening over the last couple of months is that china Global Exports have ticked up markedly. Lockdown conditions and a weakness in demand that is starting to come through. This was put in the context of this recently. The stronger picture is the Business Chinese numbers. Lookinghat will you be at in order to gauge chinas consumption and domestic demand . Even though we continue to see this narrative where you are seeing manufacturing and production pretty well, but not so much for the Services Sector or the demand side of things. What is interesting to look at his some of the travel patterns. That has picked up markedly in china. The services where you have to be interacting with people. Cinema trips, restaurant trips, that kind of thing. Those are lacking well behind. That is what will start coming through as well as the hard data. Willingness for folks to interact. In an environment where they do not have to. Other aspects of spending are not necessary. They are chosen to be avoided by households. Comes to the rba, what are the chances that this inflation data could result in a more dovish turn for the central bank . What are the implications for the strength we are seeing in the currency . Is almost will get certainly a quarter of deflation. Negative year on year growth. The rba is something they have been slacking for a while. A number of oneoff shocks will hit the inflation index. These are a result of covid. We have Childcare Services that are expected to remain free. That is something the government paid for. Component down to zero. Fuel prices will come through in the june data. We also have shifts in rental markets. We have tenants renegotiating their contracts. That is a big component of the cpi, those housing costs. You put all of that together and there is a lot of negative in that headline index. There is some temporary shocks that will push us into this. We should get a rebound all the way across the year. It is not a strong inflationary environment. It is quite a weaker environment because of this shock. I dont think the rba will be surprised by this. I will be surprised if they change their messaging. Beyond asserting that this is inspect expected. It did not warns them changing direction at this stage. We always appreciate your time. We will get more ahead on the outlook for asia. We are just getting an alert crossing the bloomberg when it comes to googles in australia. The consumer and Competition Commission alleging google misled consumers about the expanded use of personal data. Alleging that it failed to inform consumers. We are looking at a situation where the regulators have launched meetings against group google to take action when it comes to what it sees as misleading contacts on that dissemination of personal data. We will get you more details on that as we get them. But lets get you a quick look at the business flash headlines. Isouth Korean Company capable of producing 200 million covid vaccines by next june. That is according to bill gates. And ae the statement letter to the south korean president. Tech company is selling its stake. Buying two years after it. Dave will give the business greater economy under new managers. This marks a quick turnaround from the 8 billion purchase in november 2018. Rollsroyce is said to be in talks for emergency sales of a unit. They will sell the unit to private equity buyers. The potential sale comes after rollsroyce says it is considering all options to raise funds. U. S. Lawmakers are racing against the clock to pass another stimulus bill. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. You are watching bloomberg daybreak asia. I am Karina Mitchell what the first word headlines. Cases 16ronavirus million with the death total at 646,000 people. 146,000 with fatalities. Florida has overtaken new york with the secondhighest number of cases over california and the u. S. Death rates fell in all three states of the weekend as well as texas and arizona. Spain is scrambling to stay ahead of new outbreaks dealing a blow to its tourism dependent economy. Weeks after including spain on a list of safe countries, the u. K. Now requires people to return from spain to undertake 40 days of quarantine, after cases spiked in catalonia around barcelona. Norway and spain have also issued travel warnings. J. P. Morgan and Goldman Sachs see europes recovery outstripping the u. S. , thanks to starkly different responses to the coronavirus. They cite a sustainable recovery based on confidence the viruses no longer out of control and say europes relative success will encourage shoppers to spend and businesses to invest. Europe is also seen as doing a better job on maintaining employment and income. Hong kong reported another 128 new cases of covid19 sunday, making it the 50 and wrote were new infections topped 100 making it the fifth day in a row where infections topped 100. Indonesia is close to 100,000 cases, and singapore has passed the thousand. 50,000. Scientists are due to start a human trial this week. Global news 24 hours a day on air and at quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. Top white house Officials Say the next stimulus package will cut back on the 600 on appointment check in place since march if republicans get their way. Kathleen hays is here the latest developments. Some people have criticized that 600 check because Small Businesses cannot compete with some who got more in unemployment than they did from minimum wage. So what is the work here . So what is the workaround here . We will try to get back to Kathleen Hays in a moment to talk more about the stimulus measures we are expecting and also what we are expecting from the fed. Next we headed to the final days of july and take a look at what is driving Market Sentiment in asia this week, as well as the outlook for a new tech board in hong kong. Despite a challenging week we will end up with four straight months of gains for Global Equities and then some. Lots more to come. This is bloomberg. Haidi lets get you a quick check of the business headlines. Huawei saying it did not stop the u. S. Probe into the chinese tech giant the statement in response to allegations from wallys eagle team which claimed the u. S. Misled canadian authorities by missing key element of a presentation given to hsbc by the cfo. Hsbc says it has no hostility toward while way and did not ensnare the company in the us probe. Indias second largest lender saw profit rise 347 million in that latest quarter held by the sale of the statement insurance subsidiary. Profit camesaid after it set aside 740 million to deal with an onyx except rising bad loans amid the endemic heard it says its growth bad loan ratio stood at 5. 5 . The managing director of hd of sea has reduced his holdings in the lender and selling 7. 4 3 millionhares for 11 dollars. Ito sold shares over three days ,ast week, cutting his holdings after 26 years at the home such retire when he turns 70. The lender is winning the rvr approval for one of three candidates to succeed him. Lets take a look at the start in trading week with Sophie Kamaruddin in hong kong. Futures trading mixed this monday morning with s p minis being slightly. Taking a look at the board we have a nikkei futures moving to the downside of singapore where japanese markets coming back online from the long weekend. Check out the yen extending gains for a Third Straight leveln, testing at 106 after breaching that on friday so we could be began to a lower trading rate for the currency with sentiment bearish on the greenback. Check out the aussie dollar under pressure with rising buyers in victoria putting up hurdles for the currency after it had a 15 month high as the yield gap to the u. S. Widened further on the r. B. I. Shrugging off negative rates. Inflation data do this week will be key to see if the central bank will shift to a dovish stance in australia. Holdingeck in on gold, gains above 1900, shive the 2011 high after a seven week gain, the longest running stricken nine years. Gold futures trading at a record high with open interest on the december contract outpacing august, with gold increasing with u. S. Rates near zero. Lets jump into the terminal with a focus on treasuries. Traders eyeing record low yield due to the benchmark 10 year yield having posted its lowest ever click close. We are seeing the negative real yield trading even though her. Shery lets continue our markets analysis as we begin another trading week. Bloomberg cross assets editor adam haigh joins us. Week, in the cards this earnings and ecodata out of china. Japan and u. S. Gdp numbers. What we be watching to see what shifts the dow for Market Sentiment . First lets look at the gdp data. We will get a read on the Second Quarter in the u. S. , which is looking interesting at the we saw especially costs the uptick in the weekly jobless claims numbers last week. Is there anything that will affect fed policy decisions later in the week, which is very much a call on whether people think that dollar will continue its recent run of weakness and help that pertains to asia emerging markets and whether people are willing to take more risk if they feel the dollar weakness continues and provides that continued tailwind for emergingmarket assets. That is the key thing for people this week, and that could drive the sentiment in terms of whether the dollar move continues, whether people expected to continue, if they get a really dovish feel from the fed that could play into their hands. And later in the week, more chinese data giving a sense of whether the bumpy recovery of the economy that went first in an first out of the Global Economic slowdown, whether there is enough and the incremental china data to give the impression to people that they can see light at the end of the tunnel now and that things are starting to turn around and china. We will assess the policymaker stance in china. We have been through a whirlwind of policy signals, in terms of how they are trying to control some of the asset prices, including the equity market, which had a rough week a couple of weeks ago but has kind of recovered some of that dive. Will they did in china play into that narrative as to what china policymakers will try to do next . And will there be more significant easing in the cards from china . I want to talk about how them gold because the question the this chart on gold, question of where the economy goes from here. The Balance Sheet expansion in g4 and the correlations to the outperformance of gold and Precious Metals more broadly. Two Analysts Expect these factors to change . If so given that we are seeing stock prices getting close to where we are seeing futures already trading at a record high , where does this rally go, for gold . In one sense, there is a feeling of momentum continuing in gold. A lot of people have been underexposed to an asset class significanty long, bull run inequities that has started to be tested this year. Is there a broader global Asset Allocation feeling that maybe we need to more exposure to gold . If that is the case in the momentum as to what the price as it seems to be early on as this week starts, then you could still see significant flows into gold. You could see that spot price pushing higher, and futures a record now, have lots of potential to run further. But i think, given that we do have the fed meeting this week, that is a possibility that it could put a pause on this price run we have seen in gold. If the fed comes out and gives people a little bit of the debtors, they might have to rein in, you might see the price come off a little bit in the near term. Speaking objectors we are continuing to watch the tech sector. Today the newtek index in hong kong launches. Could this be the new catalyst get more flows into what has already been a very popular sector . Yes, it has been a popular sector and that has not been a hong kong only phenomenon. But that has been one of the crucial global themes of what we have seen as the pandemic has swept through the world over the last few months, that the Technology Sector has been able to provide what people want, the sense that they will be able to continue spending and continue that investment, whereas other sectors may not be able to do that. Speaking of hong kong in particular, this index provides an opportunity, a first step for other Financial Products to come off the back of it. You see continuing developments and say etfs and derivatives formed and made on the back of this index. It gives not just retail it also Institutional Investors more of an avenue to get into some of names,ig, often global, real industry leaders. 13, sixs not just a month horizon. It is a big story that continues and will continue to play out over the next decade. This is the first step in that sense and theres a lot of credence to the argument you will continue to see flows into the Tech Knowledge he sector in hong kong and china because you have more avenues for investors globally, not just locally within those countries, but globally to get that exposure from what you can get from a Technology Name listed in hong kong. So this index is a huge deal. It is the first step, really, and adding more and more avenues for people to get exposed to technology lists. Shery a new economy names. Adam haigh, thank you very much. We will have more on that new Technology Age and next hour. Joins usseng ceo exclusively. Intel is weighing an idea that would have one seemed on thick a bull for the Worlds Largest semiconductor company, outsourcing manufacturing. While most Chip Companies shut or sold sourcing years ago, intel has held out on a similar move. Ceo bob swan went on the defensive when pressed on the plan. In a world where increasingly everything looks like a computer, an opportunity set is as big as it has ever been, what we talked about yesterday is, we have pushed erics seven nanometer products that we anticipate in the 2022 to 2023 timeframe by two quarters. That was due to a slip in the yields on our manufacturing process technology. So, first, we will continue to invest in our manufacturing process technology. Ultimately, our desire is to play a leadership position in process. But Product Leadership is much more than just process. It includes other things like packaging technologies. It includes different architectures. Interconnectsmory , security, and how we use software to optimize that hardware. So delivering worldclass leadership products is more than simply where we are on the process note. What we are doing is evaluating other opportunities we have to engage deeper with our ecosystem partners. And with our design methodology, we have the ability today to mix and match different products to put them on the same package. What we talked about yesterday is our ability, our enhanced ability, to make this trip enhanced flexibility to make tradeoffs along the way make sure we are delivering leadership products for customers. Shery but no one seems happy with it now, investors are we will come around 14 nanometer and we are ramping our 10 nanometer products and we so good about where we are. We talked yesterday that 20 higher demand for our 10 nanometer products than we had anticipated earlier in the air. Ear. Arlier in the y we are delivering products and 2020 and expect to deliver on 2022. And we also expect to deliver on 2023. So our focus on the energies will be on delivering these products, regardless of which process it is not in the future. Toif you wanted to outsource Taiwan Semiconductor which some analysts have been calling for, can you do that even if you wanted to . Do they have the technology we need to manufacture your chips . One of the things we have been doing of the last couple of years, is leveraging thirdparty foundries even more than we ever have in the past. We have added over the last five years, our company has grown by 20 billion. With that growth, we have evaluated when we use our own fabrication capabilities versus when we as the industry. So this is something we have been doing for the last several years. We have done it even more so in the last couple of years. So our ability to engage with the ecosystem is greatly enhanced because these relationships have grown over the last few years. I want to understand if you were weighing how you make your fors, what is the criteria exiting that manufacturing part of the business . Simple. Relatively pace ofle, an annual leadership products that our customers on the client, on the server, on cloud, on network and the edge, that our customers can count on. Leadership product are what matters most, not necessarily where it is being manufactured. Where it is being manufactured is an important part of the equation, and we will continue to invest in that. But the priority for us is making sure we are delivering an annual cadence of leadership products, regardless of what problem what process it runs on. Swan. El ceo bob chinas changing Environmental Policies and opportunities in the esg sector. We will discuss that with a leader in the field. This is bloomberg. We continue to see strength for the japanese ran against the u. S. Dollar now trading at the 106 level and we expect japanese stocks to come back after the today holiday. K futures pointing downwards at the moment. We had it go data out of japan. Capital spending year on year growing 0. 1 . Slowdown compared to the previous quarter where theres growth in capex a 4. 3 . These are the final numbers for the first quarters when they were hit badly by the coronavirus pandemic. We have seen this growth of bankruptcies in japan which is perhaps also feeding into sentiment, on how these corporations are hoping to spend capital. Summary ofng their opinions for their july policy meeting. That july policy meeting was the time when they kept their main policy levers unchanged. They are saying boj policies are having an impact on corporate financing according to one member. Another member saying, they need to watch the policy impact for the time being. Not surprising, we had spiked expected the july meeting to be more about the assessment of everything that had been done so far to counteract the economic fallout from the pandemic. Also hade pandemic has so much impact across different investment classes and assets, including renewing the chinese governments focus when it comes to the need to reduce environment pollution. Our next guest says this has led to Investment Opportunities across china in key sectors including lane energy, Waste Management and recycling. Headng us now is the dws of Sustainable Investments for asiapacific. Great to have you with us on daybreak asia. Has this change the government policy and focus in this area, priscilla lu . It has amplified the need a requirement to support and continue to support Green Industries. China has been consistent in its investment in renewable energy, representing one third of the capacity for readable energy in the world. It intends to continue to grow with close to 30 gigawatts of wind and 30 gigawatts of solar plant for this year, shall be close to 10 additional capacity over nobles. Of renewables. It has increased its funding for the state grid even after covid19 back in april, and increased 10 of its budget to the state grid, showing his continued commitment in the space. Similarly it has been clear that sanitation, hygiene, waste about waste treatment, recycling, is as critical now, because of the conditionshealth that really create challenges. Done,t the government has and reinforcing what has already continued to be the funding and financing available, is to focus on building out additional advanced treatment systems, not a look for municipal waste which is in excess of 230 million tons per year, but also industrial toxic waste, terms of treatment as well as recycling. 7 11 presents growth of depending on whether you are focusing on industrial waste which is growing at a faster pace, or just me missable waste which is at or just municipal waste at 7 . We see this as a huge opportunity because of the policies and financing out forcing compliance the financing and policies now enforcing compliance. Continue to see urbanizations with cities becoming denser. What does that mean as far as how the growing classes affecting these esg trends . We have seen continued increase in urbanization, not close to 60 in some statistics at over 62 increasing yearoveryear, 1 2 per year. The middle class is growing from 400 million to 700 million, is the anticipated number of the next 510 years. This increases consumerism, and the consumption of environment resources, which includes energy, water and also impact, in terms of increasing the amount of waste. So what we are seeing is that the government has to focus on being very vigilant managing waste as well as resource consumption. I wonder as an investor, particularly as a global investor, how do you get exposure to these opportunities . Especiallyhis trend, in china, or government has given commitment and provides financing as well as policies to continue to increase the compliance and enforcement. Doc rates opportunities for companies that are leading in this space that creates opportunities for companies that are leading in the space and providing systems and services. Those Companies Leading and Green Industries are the ones growing significantly yearoveryear. Those are opportunities for investment. Shery great to hear that. Head ofu, dws Sustainable Investments asia. Plenty more coming up on daybreak asia. An exclusive interview with kong saying industries hung sent industries hang seng industry ceo. This is bloomberg. Good evening from bloombergs mobile headquarters in new york. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Welcome to bloomberg daybreak asia. Stocks looking for a mix start as u. S. China tensions continue to simmer among allegations of spying. Gold futures at new records. Global cases top 15 million, quarter and the u. S. With signs the spread there may be slowing. A new index focused on chinas tech giants is set to spring into action in hong kong today. We have an exclusive interview with the ceo of the hung sang hang seng index company. Shery japan is coming back after a fourday weekend. Lets get straight to the action with Sophie Kamaruddin in hong kong. This morning as they come back from a long weekend the nikkei two to five losing 1. 3 . Intel announced it was considering outsourcing manufacturing. We are seeing the 106 handle amid the risk off mood. Jgb the focus will be on tuesday sale. More earnings on deck for financials. We are watching sk discovery and sk chemical on bill gates giving sk bow about of confidence for the effort to develop a vaccine. When it comes to movers in seoul nursing Airline Stocks moving to the downside, korean air moving the most in 18 weeks with the kospi adding. 3 wada korean won is on the front foot below the 1200 level. To the board to check in on movers and said a. The asx in sydney. The asx off. High. E aussie dollar aussie bonds falling with the yield curve steepening ahead of a new syndication. Switching the board to check out on a sub be minis. We are seeing little changed and treasuries holding flat at the start of the cash session in asia. Traders on watch for yield to draft lower after the u. S. 10 year yield had its lowest ever week of growth at 59 basis points. Spot gold adding to gains above 1900 while gold futures hide an alltime high with the contract providing a booth along with a weaker dollar, which clocked a fourth weekly decline, the longest run of losses since january 20th. Haidi rising virus cases in the u. S. , the impact on the economy seems to be can tripping factor set of undone the mighty dollar. An willingness to shore up the greenback. Globalead to the chief Market Strategist and forex trader. Simply, how much further does the dollar have to fall . What is your view on that . I to get is quite a bit to fall in the coming months. We have a huge boost for the euro in the form of the eu agreement. This was really, really solid. And this is where we will see that dollar weakened after the agreement went through. The u. S. Losses tailwind from Interest Rates and we will get that reinforced as a Federal Reserve board moves away from stabilization back to accommodation. The shortage of u. S. Dollars, what is really holding the dollar in place now is equity markets. We are seeing that exceptionalism fade now. Gradual decline we might see a freefall of u. S. Equities are continue to decline precipitously. That is despite potentially getting out us to millis package being secured later. Us to millis package being secured. And we are despite eight stimulus package being secured. And we are cautiously starting to see recovery based on virus cases . Are being reticent to fall into the bear trap now. Theres a lot of noise in the background with the u. S. China trade tensions that continue to simmer. Didlso the fact that stocks make runs higher on good numbers and that is a worrying sign. Behind the covid narrative there are the lingering economic down. We are almost going to move to a growth diversions. Those economies that emerge from covid quicker are going to do better, therefore the currency. Now the u. S. Is lacking in that. Never count out the u. S. Consumer and that is one thing we have to keep in focus when we are shorting the dollar. Dollar weakness has helped some commodities especially gold and other Precious Metals really rallying. Not all because of the weak dollar but the macro environment as gtv chart on the bloomberg showing the relative performance of Precious Metals when it comes to the broad Commodity Markets as a percentage of Balance Sheet , as a potential as up potential as the percent of gdp continues to rise. We have seen gold futures pricing at a record. How much further up can echo . Can it go . It is interesting. Were looking investors with the dollar falling over the last couple of weeks quickly. Theyre looking for alternative assets to hedge the falling dollar and gold has been in the highlight. Gold has more to go here. I do not think you can give up now. Clearly i think its going to reach that 1920 level which is the alltime high. What it is getting triggered by mostly is the beneficiary of safe haven amount. Safe haven demand but also the beneficiary of falling yield. This is a key signpost. If you factor in another 2 decline in the u. S. Dollar broad traded average, perhaps another rise in tenure inflation, and perhaps a tenure treasury yield falling another 30 basis points, around the. 25 level, i think that will put us up to 2000. For me it is tied to what bond yields are doing. The question is can gold keep on rallying, it is really one in which real yields keep falling. We have to be cognizant of how the real yield markets are playing out now. Shery we are around that time of year when it gets difficult for emerging markets. Going into august, what are you looking at . Where are you bullish . That is good. I get worried about those correlations. Usually the second worst markets for emergingmarket currency. I continue to like china because it is not only the two big connects argument but also the local governments have rolled out the welcoming mat for investments. We have seen that to the press when they are encouraging the retail army to try to buy stocks. This is reinvigorating growth by the fact that it is allowing companies to deleverage because they are getting stockmarket and stock markets are going higher. This is positive and i see this as a positive influx of Foreign Investment and i think the yuan will continue to appreciate going forward. Haidi how much importance to market implications are you assigning to geopolitical tensions as this relationship between china and the u. S. Continues to unravel . That is interesting. Now we have a war of words that we saw the escalations to the consulates. I think for growth and risk assets it is whether it morphs from applicable war of words now and comes into an economic deep down, the reversal of the p1 trade deal. I think that is unlikely to happen before an election. That would significantly dent stock Market Sentiment and in my view that will be lasting President Trump would want moving into probably an election that he is going to have to come from behind to win. Cleef chief Global Markets strategist joining us from bangkok. And heres a quick check of movers in tokyo. Stocksjapanese chip laggards on the nikkei. Taiwan semiconductor is getting the six nanometer order from intel according to the commercial times. We have seen intel under a little bit of pressure and taiwan some conductor performing very well. Today japanese chip stocks under pressure. Haidi still ahead in exclusive interview with the ceo of the hang seng indices as he prepares for the launch of a new tech index tracking hong kongs 30 biggest Tech Companies. On thefirst more details surgeon virus infections in Southeast Asia with vietnam preparing its first locally transmitted cases in three months. This is bloomberg. You are watching bloomberg daybreak asia. U. S. China tensions continue to simmer after american authorities broke into chinas houston consulate three days after giving staff 72 hours to close the mission over allegations of spying. Beijing describes them moves as forced entry which broke diplomatic conventions and vowed to respond as necessary. Friday beijing order the u. S. To close its consulate in the Southwest City of qingdao. Guilty toman pled acting for an illegal agent for chinese intelligence in the u. S. And is facing 10 years in jail. Wasell was a closed accused of working for chinese intelligence and set up a fate consultancy to obtain information about a marking government and military staff and try to recruit others. A protests have broken out in several u. S. Cities of the presence of federal troops. Rights were declared in portland , a center of the new wave of protests and in seattle, amid tear projectiles. Marshes justwing joined marches in portland shouting, fed home, in response to the trumpet administrations setting federal troops there late june. In hong kong prodemocracy candidates have been questions of their applicable views and past damons ahead of but is late of counsel elections past statements at of Legislative Council elections in also having to prove they did not violate the election and security law. One candidate was asked why he made a trip to the United States calling on Washington Post sanctions on hong kong officials. Global news 24 hours a day on air and at quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Global wires cases have exceeded 60. 1 million level coronavirus cases exceed 16. 1 million. Asia is hitting grim milestones. Our markets coanchor yvonne man has the latest. Lets start with hong kong, how serious is the outbreak . The third wave we have talked about is worse than what we have seen before where we have seen 100 cases every day for the past four, half of which are of unknown origin. We heard from the finance chief sunday saying the economic recovery is going to take longer than expected, because of the third wave and you add on the Global Economic uncertainties. He said business and Economic Activity has been trying to recover and now hit by this fresh wave, the Economic Situation the Second Quarter is still severe. The state of contraction appears to have slowed down slightly, he said, and he is urging landlords to offer rental concessions to tenants. Keep in mind we have the trade numbers out of hong kong coming out today, expecting a slight improvement for june before the third wave hits. The secondquarter gdp numbers will be crucial and they come out wednesday. I economists expected a 7 contraction. Haidi in the meantime in Southeast Asia, that remains a virus hotspot in this part of the world. Yes and you still see cases there are elevated. Indonesia still ranks number one in the region with 99,000 cases, never to the philippines surpassing 80,000 cases. Philippines. , the and now weighing whether to tighten curbs in the capital manila if cases head 85,000 by the end of the month. Singapore also exceeding 50,000 cases, where we are still seeing hundreds of new infections a day, mainly from Foreign Workers via dormitories. We did hear the government is set to finish testing Migrant Workers next month, potentially allowing businesses to start kicking off construction again as their employees can return to work. Vietnam seen as one of the early Success Stories, now reporting its first local case in three months. Looking ahead to the philippines, duterte a is set to make his state of the nation address today. Looking for clues on measures to lift the economy facing the worst loss in three decades. And the potential followup to that 34 billion stimulus package we saw. Haidi yvonne man there in hong kong with the latest on markets. In the u. S. , Health Officials have issued guidelines for schools as District Across the country way in person classes classes, person following calls by President Trump to resume this fall. We spoke about the risks of reopening every and back into classrooms. We still are learning a lot. What we do know is the very young, under the age of 10, seem to be suffering from mild disease, although there are instances of severe secondary syndromes that occur in the population. For the most part infection is not that severe if you are under 10. What we do not know is how will that population of kids is transmitting the virus to others. Because we know from other diseases like influenza, the very young are actually good transmitters of virus to their teachers in school, to their parents and other household members. That is the information we are missing now. That is crinkle for opening schools, particularly that is critical for opening schools, particularly schools were elementary educated. Statistics at particularly the log slope and california is pretty good on a relative basis versus the disaster that is florida and texas. Is it fair to combine florida and texas together, to aggregate their data into what is to come on cases becoming deaths . This disease has shown us it is really about local spread and local transmission and local cases. So i try not to encourage people to collapse across to broadly across the country or another state, because it really does matter what is going on in certain localities. I think you are correct, in terms of there are some more worrisome numbers coming out of texas and florida. And some other states. Even worse than that is a large number of states that are showing, the beginnings of increases in cases. That is telling us theres a systemic issue going on across the country in terms of how we are intervening to get the virus levels down. Withtotally see that alabama and mississippi having a tough week about. If that is the case, what is the experience we have learned from new york, to help florida . Massive testing. Capabilitiesckdown , in terms of being able to limit the spread of the virus. Waiting until those virus cases get down to manageable levels. There are a number of guidelines out there. One the cdc like to put forward is this 5 positivity testing. When you get to those levels, then other interventions like Contact Tracing can be put into place effectively. And that will then be the tool that will keep infection levels down. But Contact Tracing will not work when you are having 60,000 cases across the country come through, because that is too much of a strain on the infrastructure and it cannot be done effectively. We spoke to the chief executive of roast yesterday and he was worried the are testing too much and theyre not enough cats. Roche. He suggested we only test people with symptoms. With abby enough to get and handle on it . It is an important question. If you are getting tested and do not get your results for six days, the testing is almost irrelevant. You have to be quarantined for that time and that current cdc guidelines say should be got quarantined for 10 days after symptoms. So we have to find a way if testing is going to be limiting we have to find a way to use it more effectively. It may be we need to scale back who we are testing and speed the time in which results come through. One wouldve liked to of seen by this point in time that manufacturing in this tradition capabilities for these tests would have been scaled up so we can handle a larger amount of testing. It seems we are back to the beginning of the pandemic in the u. S. , where we are also having a supply chain issue when it comes to testing. Haidi that was a professor for the Johns Hopkins Bloomberg School of public health, which is supported by michael bloomberg, the founder of bloomberg lp and the founder of bloomberg philanthropies. The number of new virus cases confirmed in melbourne and victoria state, we are hearing ahead of what is potentially a press conference from the Prime Minister in the next hour, that we see a record high when it comes to numbers of new infections reported, said to be announced out of victoria state, reported according to local media including the australian newspaper. That would be a daily record for victoria, and a Daily National record after victoria had the higher number of jelly totalitys have the highest with 10aily for tallies deaths reported over the weekend. This is bloomberg. Haidi a quick check of the latest business flash headlines. Europes Biggest Tech Company sap sle its taken four x selling its stake in qualtrics. Sap plans to keep a majority interest while keeping the business interest autonomy. This marks the turnaround from an 8 billion purchase in november, 2018. Talks for an emergency sale of a unit which makes parts for the typhoon jet. The company is in talks to sell its main based itp arrow unit two private equity buyers. They are talking to blackstone in discussions. Rollsroyce said it is considering all options to raise funds after cutting 9000 jobs. The south Korean Company backed by bill gates, Sk Bioscience could be capable of producing 200 million covid19 vaccine kits by june according to microsoft founder. A lettere the claim in to the south korean president. Sk bioscience is reportedly seeking to list on the South Korean Exchange with a value of 2 billion. Shery stocks moving now, ono pharma the most in performance with a drug reported as a potential virus treatment and sk discovery rising 16 . Aftermicals also jumping, bill gates said in a letter to president moon that the korean Pharma Companies he backs Sk Biosciences could make 200 million 200 million vaccine kits by june. Haidi lets take a look at the after therkets, pharma stars. Or nikkei playing catch up catch down after the fourday weekend, down by. 9 at the moment in tokyo. The kospi higher by. 7 modestly toralia, the upside. 1 and we await this week inflation data which could be make or break when it comes to the aussie dollar. Including a more dovish tone from the reserve bank must join a after the currency had been trading at a 15 high against the weaker greenback. Kiwi stocks are also off by. 25 when we get into the trading week which present a lot of data when it comes to growth implications and sentiment implications as well as lots of earnings globally. Coming up we discussed hong kongs new decks focused on chinas Technology Giants. The ceo will be with us next. For an exclusive interview. This is bloomberg. A new index focused on chinas Technology Giants set to give greater access to growing dominance in Hong Kong Markets. One us, vincent vincent. Great to have you with us. Congratulations on this launch. Tech indexn this launch amidst this pressure of listings by these tech giants including alibaba at a time when they have listings in new york but they want another one in hong kong. Will we see this tech index as a that for those businesses fear their prospects in the u. S. As we continue see this chinau. S. Escalation . Market isong kongs new opportunities. Previously, the Hong Kong Market is a play for investors to look at opportunities. We have the hang seng index and the hung saying China Enterprises index. People, great investors. Fastgrowingthe china stocks. The Hong Kong Market is investors,ived by that they can invest in the tech stocks. Isry the tech sector expected to be a bit more volatile than the industries we already have. How much will that affect investor appetites when it comes to this index . Vincent i believe that whether it is america, europe, even local investment in hong kong, in china, we are used to looking sectors inging Tech Hong Kong as more volatile than the traditional, typical stocks. Expect high returns, then you also expect high volatility and higher risk. For the tech stocks, we understand that some of them might be testing their business model. So, people need to recognize that. Vincent, do you expect this new index to become almost a property if the u. S. And sub banning providers from having access to major tech stocks . Kong, in thehong past couple of years, we have criticized for a certain extent the Hong Kong Markets lack of new economy sectors. We do a lot of traditional large banks, property, these kind of stocks are in hong kong. Now, we are seeing that some American Companies are returning to the local market. Use thely, they may u. S. Market as a funding source. There are investors that are clearly interested in those stocks. Market, theg kong infrastructure, the regulatory changes. Bringing Mainland China investors to hong kong, so all of the conditions are now stocks,r large tech whether they are in china or already listed elsewhere. Now they have the opportunity to come back to hong kong. We hope that using the Hong Kong Market to invest in this important emerging tech market in hong kong. Chart,s we saw in that tech does make up a very minimal portion in a market dominated by the big financials in hong kong. I wonder what the response from big financials has been so far. Vincent that is a very good question. Weeks, wet couple of are intending to launch the index, we already received a lot of responses, both from the market, the media, as well as various market players. Last monday, we announced detailed of the index. Major Management Companies are knocking on our doors, asking for more details about the index, and they are looking forward to realtime launching of this index. I would say that chinese issuers, whether they are derivatives,fs, they are very interested in creating an ecosystem for Investment Products to serve the market, to serve global investors. Expect fund flows to indexes . Other what we hope is that if our index can catch investor , then this stock index ofl become a major barometer local and national investors. Known to investors, and funds will flow into it. At the moment, i think because can, with have we this launch of the index, paying very strong attention to our indexes, we can attract various investors to make use of this index for market investment into the tech sector. Attracting those investments, not to mention the coming of Tech Companies to hong kong. How will all of that impact and change not only hong kong but the hong kong stock market . For the stock market, just like any platform, you need to people know what you are the market is well known. Investors can make use of the Hong Kong Market. But ultimately, what the market is as i said earlier, people will look at the local hong kong stock and then chinese stock. Now, we are getting attention as for global place, Tech Companies to come to hong kong. Think it is important that you reach critical mass. Then investors will come. I think a large number of suppliers and investors, then the market can create a kind of fair valuation to the companies and investors. When do you expect options and futures trading will be available for the tech index . Vincent i believe, given this strong market interest, the stock showing value for future investment trading, they will right. So, what is next . Which sector will be next to ca new index to see a new index . Vincent thank you for this question. We definitely will spend a lot tech investors. In hong kong, just like in america, people understand the dow, the s p, and the nasdaq. We hope that in hong kong, they continue to have interest in all the indexes we provide. The hung saying index, the the hang seng index, the hang seng china index. Given time, i think people would recognize the kind of dynamic between hong kong. Shortterm, but i think longerterm, more effort to create this kind of dynamic. Great to haveally you with us. Sengnt kwan, ceo of hang indexes company. Good luck with the launch later today. Coming up, more on the hsi index. Just ahead, hsbc response to chinesethat it framed Telecom Giant huawei. This is bloomberg. This is daybreak asia. Global coronavirus cases have now passed 16 million with the death toll at 646,000 people. The u. S. Continues to lead the count with more than 4 million cases and 146,000 fatalities. Florida has overtaken new york as the state with the second highest number of cases, behind only california. Cases and deaths fell in three states over the weekend including texas and arizona. Spain is scrambling to stay ahead of new outbreaks. Spaineeks after including on a list of safe countries, the u. K. Now requires people who return from Summer Holidays there to undertake 14 days of quarantine. The move came after spikes particularly in the catalonia region, around barcelona. 128 kong reported another new cases of covid19 on sunday, making it the fifth day in a row where new infections topped 100. Most were transmitted in the community. Havingia is now close to 100,000 cases and singapore has passed 50,000. Scientists are due to start trials of the vaccine this week. North korea has ordered a city near the chinese border into lockdown. At jongun made a decision an emergency meeting of the workers party. They say that the suspected infection is from a defector returning from south korea. 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. I am Karina Mitchell. This is bloomberg. Hsbc is denying it framed how framed huawei, saying it did not start the u. S. Probe into the tech giant. Allegations of how the legal team, which claimed the u. S. Misled authorities. Lets get more on the details with our Senior International editor. Why is this kind of turn of events significant . Because significant hsbc is continuing to be embroiled in huaweis legal fight to extradite the chief Financial Officer from china. Hsbc now responding to these media reports over dealings with it, saying itg did not start the u. S. Probe of the company. They claim in a statement that they simply prevented what they call the objective fact. This is basically hsbc trying to get a get itself sort of untangled from this. It was further thrust into the spotlight with new evidence in canadian court, where its lawyers argued that the u. S. Misled canadian authorities by omitting key elements of its Powerpoint Presentation at a 2013 meeting, according to the globe and mail. Hsbc has been walking a tight rope. What have been the implications of the u. S. China tensions for the bank . Hsbc has been somewhat in the middle of these tensions. Obviously, it has been embroiled in this huawei case. Banning the u. S. And other countries from using a huawei. Hsbc, which is a londonbased bank, but which has a very large market in hong kong , has come out in support of this Controversial National security law imposed by china on hong kong, and basically has supported china in its efforts and also in efforts to quell the protests. Next, what can we expect for huawei in this fight . Jodi at this point, the u. S. Has continued to press forward get him attempts to extradited to the u. S. They have prompted lenders to clear transactions and violations of these sanctions. The u. S. Is not backing down. But china is not backing down from its criticism of the u. S. And canada, and continuing to say that it will take actions in the u. S. On for this if and canada continue this fight. Yet another element in in the tensions between the u. S. And china. Haidi we will discuss this is bloomberg. Chipmakers after the break. This is bloomberg. Sachss 3. 9 billion agreement with malaysia over the 1mdb scandal could clear the way for a settlement with the u. S. Justice department. It includes a payment of 2. 5 billion to resolve probes into the involvement with the fund. It also guarantees an additional 1. 5 billion will be repatriated to malaysia. Indias second largest lender saw profit rise in the latest quarter. Proffer said that the came even after it had set aside over 740 million to deal with a rise in ad loans amid the pandemic. It said that its ratio stood at just under 5. 5 at the end of june. The managing director of a bank has reduced holdings, selling 7. 4 million shares for 114 million. They sold shares over three days last week, cutting holdings to 1 . He is set to retire in october when he turns 70. The lender is now awaiting approval for one of three candidates to succeed him. Ofreportedly, a new order six nanometer chips from intel and the latest evidence that the chipmaker is positioned to be the biggest winner from intel factory woes. The Semiconductor Giant is weighing a move to outsource more of its manufacturing, heralding the end of an era in chipmaking dominance. Bob swan told us his products will continue to lead the market. Product leadership is much more than just profit. It includes other things like packaging technologies, different architectures, memory interconnect, security, and how we use software. So, delivering worldclass leadership products is more than simply where we are on process. Shery our Bloomberg Opinion columnist tim culpan is on the line. This would be the end of intels biggest differentiator. How bad is it that they have to outsource this . Clip that youle played from bob swan is wonderful spin. He really knows how to try and spin the story but it is bad. The thing that has differentiated amd and intel from everyone is that they designed and made their own chips. There were very few Companies Left in the world who do both. Premuch everybody is outsourcing their design to qualcomm. Now, intel is in that same boat. That is a real problem. They can certainly catch up by using and leaning on amc, but despite all that spin from bob swan about architecture, software, at the end of the day, there is not a lot differentiating amd and intel anymore. It is really hard to spin this in a positive light. Is this just all good news for tsmc . Tim it sounds like good news. It is hard to see the downside. Let me go down that road a little bit so people can see where the risks lie. If they start to get hints that intel would like to lean on them more and more in coming years, then tsmc would like to set aside more incapacity and maybe expand capacity to fit into their roster of clients, which includes apple, qualcomm, and so many others. And amd and nvidia. That would set them billions of dollars. In the belief that intel would be coming for them. The flipside is that it could put them in the sites of antitrust regulators and customers who start to worry that one supplier could be a little bit too powerful. A little more than 50 of the foundry market. Maybe samsung is the nearest rival. Therek there is a lot out who would be a little bit concerned in the longterm that maybe they have too much power. Is a ways away. Shery tsmc, how well they have done in the past few decades, their approach has been revolutionary in this area. Tim it started from the very genesis of tsmc from day one, that we are not going to design chips. Time, they said fabrication plants. They said, come to us, we will do it for you. They started from the start doing that. A part of that is, we will never compete with our clients. Qualcomm, nvidia, even huawei. They have been very careful not to allow leakage of ip between clients. That has been a very important thing because tsmc has access to the secret sauce of so many customers. They have spent so much time, money, and energy focused on that one thing, how to make the chip, not how to design it. That is how they are where they are today, not being cingulate focused on one thing. Singularly focused on one thing. Thank you for your thoughts. Coming up, beijing language and Culture University the head of international and regional studies joins us. Strategist gives his insights into the debut today. Our markets coverage continues as we look ahead to the start of trading. Hong kong, shanghai, and shenzhen. Standby for Bloomberg Markets china open. This is bloomberg. It is 9 00 a. M. In beijing and shanghai. I am tom mackenzie. David i am david ingles. We are counting down to the start of trade. Top stories this monday, geopolitics in the spotlight as u. S. China tensions continue to simmer amid constant closures and allegations of spying. Tom