System to unlock the new iphone and digital payments. Coming to you from bloombergs headquarters in new york. I am betty lou. Yvonne i am in yvonne man. Inflation data out of south korea. Pretty much a miss when it comes to the year on year figures. We have pretty much been around the 2 target for this year already. We are falling about. 1 . Not too much to be worried about. There has been a lot of centralbank hawkishness. Are they ready for some tightening as well . We heard from the governor last month. It could be well on track if this economy recovery continues here in we will see how that plays through. Betty it is interesting. We are paying so much attention to these Inflation Numbers. It looks like were seeing this global tightening trend. People are doubting fed tightening trends. The one who started it is now falling behind, perhaps. Yvonne more selective when it comes to data dependency. They are not looking for these recent inflation trends. Lets look at how things are playing in the asiapacific. The recent trading session on wall street. Ere quite pronounced. The dollar was the star. That is taking a hit with the kiwi at 7286. Australia, we have that decision later on. Look at some more slightly hawkish comments coming out from governor philip lowe. The aussie is going nowhere. Equities seeing some slight gains. Also, japan following the fallout of the tokyo election for shinzo abe, we did not see a lot of reaction. It was quite muted. We will see as that continues and there are more calls for a regime change, especially against the government. 113 for dollaryen. That is quite bullish when it comes to equities. We could see a 130point game. Gain. Looking a little lackluster. Pretty much on holiday mode all day here. Happy fourth of july. Betty thank you. People are already on their july 4 holiday. We closed three hours earlier at 1 00 p. M. It was a shortened training day trading day. To, theu were alluding dow was the index that hit a fresh high. We saw some of that fall back to close up by 130 points. We will probably have some fireworks based on july 4. We will have some range aboundness. It had been up by about 10 points. We are not seeing a lot of stuff happening. What we are seeing in terms of the weight, we are seeing the nasdaq tumbling. In terms of technology shares, they are dropping right now. 32 are up. We are having a little difference of opinion on what is happening on our board. I think the numbers are different than these. Apple and facebook are all down on the day. Lets switch to what is happening in terms of the energy sector. Those are all correct. Those are all up on the day. The reason is because of what is happening in my bloomberg terminal. 1624 here. The reason for this is that the Oil Rig Count is now falling for the first week in terms of the last 24 weeks here. 1624 if you are f following along at home. Take another look at that apple stock. Ramy that would be quite good. Yvonne speaking of oil, we have the june u. S. Auto sales that came out today. Ramy suvs as well as pickups giving the left to what is happening. June infor the month of terms of year on year sales. There is a Silver Lining. In five of the eight major Car Companies, as well as asian Car Companies in the united states, they actually beat estimates. Some of them by some pretty good numbers. You see the tops in terms of the auto stocks. Chrysler, the biggest percentage jump. 4 . Ford is up by 3 . As is General Motors and toyota. Take a look at what is happening in terms of tesla. Tesla on a downward trend. Down 2. 5 . We want to see what happens when trading picks up on wednesday. What happens is after the bell. They announced 25,000 cars being shipped. There is a shortage in battery packs that has hindered them from getting up to where they have been in the First Quarter. 25,000 and change in terms of cars shipped there. We will see what is happening in terms of the day after july 4. Yvonne thank you. Lets get to the first news. U. S. , thend the relations between the powers are being affected by negative elements. Is reported by state media. It follows the u. S. Coming close to a disputed island. The two leaders will meet at the g20 in hamburg. Xi jinping has a derived arrived for talks with proven. Putins foreign it made Affairs Advisor describes the relationship as the best in history. Putin and trump will meet on the sidelines of the g20. Qatar has given into 13 demands. It is not known what the letter contains. The monthlong crisis can finally be resolved. Showing upmages throughout the country in support. The saudi led block will meet in cairo to plan their next move. Rose to itsduction highest in june. Collectiveons raised output by 260,000 barrels a day. Half came from libya and nigeria. Its longest run of gains this year. Enjoying its longest rally since 2012. The president of national has beennd fox sports fired among allegations of sexual harassment. Committed anz unspecified breach. Issues amongling others with former anchor bill oreilly. I am nina. This is bloomberg. Betty u. S. Equities are kicking off rather quietly. Still kicking off the second half of the year on a generally positive tone. The bank shares climbed on energy. Good to seed kudla, you here. I know you rank the opening bell this morning. David that is right. A great honor and a lot of fun. Betty looking towards the second half of this year, a lot of the story for the first half was the ed. Fed. David we had the trump trade and the reflation trade. Health care doing better in the second half. We have seen a reversal of that. We have seen the inflation and the energy come back. One day we think does not a trend make. Technology remains a leader. Betty despite the selloff. David despite the selloff. Those investors are not awaiting waiting for what their portfolios look like now. There have been a lot of comparisons to 2000. Prices are high, but valuation is still reasonable. That is the growth story. Betty are you looking at forward or current pe . David we look at that compared to the s p 500. We are barely above the s p 500 in the tech sector in general. We think that you stay with technology. Betty why stay in tech . Yes, the valuations may be more reasonable than before. But before was rather crazy. Is that the right comparison or can you find that are valuable elsewhere . Make theople comparisons because the prices are higher, but the valuations are reasonable. You look at the Broad Spectrum of where we can invest. You want to be in growth stocks, not value. We have gdp in the First Quarter at an anemic rate. We expect that growth will only be at about 2 . Environment, we see the Economic Data still coming in mixed and growth not that strong. We want to stay away from value stocks. To dependat value more on a secular growth story Like Technology rather than relying on forces. We do not have that tailwind right now. Yvonne you mentioned about this. You also hear a lot of centralbank hawkishness. We have seen another big jump in yields. Central banks seem to be traveling the market more so than at any time when qe ended a couple of years ago. David the problem with Central Banks around the world, and we will talk more about it, the problem with Central Banks is that they want to remove accommodation, but they do not have the growth to do so. We are in an environment where Central Banks want to do that. They want to remove commendation, they cannot. They are struggling with growth around the world. The chief investment strategist at mainstay capital management. Sounds pretty good, right . That is the prediction of one of our guests. We will ask it why he is still so bullish. Yvonne manufacturing gains are still heading higher. What will that mean for centralbank policy . Tty this is daybreak asia i am betty lou in new york. Yvonne i am yvonne man in hong kong. Enjoying a global move up in manufacturing gauges. The Central Banks revisit move to tighten Monetary Policy. Lets visit with kathleen hays. What do you have a kathleen . Kathleen lets definitely start with the united states. Index,chasing managers this is one to watch in the united states. All of these gauges, when you look at manufacturing, if they are above 60, they are signaling growth. 57. 8. Mber, if you compare to previous months, the manufacturing what isnd the going on with purchasing managers, they have it retired. Powering up again. New orders hitting a threemonth high. Postedof 18 industries growth. Again, it was not just the u. S. You saw the survey in japan enjoying a big jump in optimism. The pmi moved back above 50, signaling growth. We have the europe pmi rising. Mexico, their pmi rose as well. Even in countries where it slow down a bit, the pmi still stayed above 50. How much will manufacturing pick up jobs probably . Will it make much of a difference . The main conundrum for Central Banks is inflation. Falling inhe rate is many countries, inflation is not rising. In sum, they are pulling away from the inflation target even more. Reserve,he federal which is most likely to raise rates next. On will see the jobs report friday. Betty absolutely. Half lane, stay with us. I want to bring back our guest host. David, why do you say the fed is becoming less dependent . David we think they are becoming less data dependent because they have to if they want to raise rates. Betty like with strong numbers like this . David we are getting strong numbers in pmi. Our pmi, chinas pmi, all very strong. Inflation. Seeing an inflation is lower now than it was a year ago in the u. S. We are seeing the inflation readings coming down. Betty have you figured that puzzle out, why . David i think a lot of people would like to figure that out. The Central Banks have a target of 2 . We are moving away from that target rather than closer to it. That is the paradox that they have. The Central Banks around the world, they want to remove accommodation. A want to normalize rates. They will make the story work to matter the data. Kathleen this is very thinksting. Some people it is the risk that they run by taking away stimulus that they think is fueling the economy. Just for fun, lets bring up another bloomberg chart. Thehows you that the pce, feds main gauge and the one that is right behind it in line, both of them made such a sharp move. What is the risk for the markets . There is a risk in bonds and stocks, too. David the risk is that we have a policy event that becomes a market event. The risk is the indices are moving too fast. We have had three rate hikes in the u. S. Over the past few months. They are hiking in the face of not a lot of inflation with this latest Economic Data. We run the risk of a market event. Ago, we wereeks getting close to where we could start moving towards an inversion, which would be really bad. That would indicate a recession, possibly. Do you feel like we are anywhere near that . David not at this point. Kathleen you watch a lot of companies. You talked to a lot of companies. Why are prices not rising . Is it the internet. I do not want to raise my prices and lose market shares. Rising . Prices not david there are lots of schools of thought on this here it technology is one reason. Robots do not demand higher wages. They do not create wage pressure. There are a lot of schools of thoughts out there. Fact is that prices are not going up. David, you mentioned in possibility of an event in the next few months is quite high. Do you think it is wise for investors to prepare for Something Like this . David you need to be constructive on the markets. We are still bullish on stocks. Some have a diversified portfolio with those hedges in place. When you look at risks to the market, there are not a lot except for the policy event by the fed. The biggest risk is that policy event by the fed or other Central Banks around the world. If Central Banks are raising the rates, that could be reason to buy stocks. They are really not doing much at all. Are we at one of those points for stocks . David what they are doing is really reassuring. Hikesave had four rate in the last several months. They are doing it at a fashion and a pace, we are looking at the market and the economy and the pace of Interest Rate hikes. We cannot have a conversation about Central Banks without pulling up our favorite function. We do pull it up a lot. I just want to point to this number here, which looks a little higher than what we saw here. By december, a 53. 5 chance we will get at least one more hike. Where do you stand i the end of this year . Byid one more hike december. I think they will work on their balance sheet. Betty when . David that is what they will be talking about with the september meeting. We will not see another hike in september. They will start to work on the balance sheets. Betty david, stay with us. David kudla, our guest host for this hour. Kathleen hays also joining us. You can get a roundup of what is. Ppening in daybreak asia you can customize your settings so that you only get the news on the industries and the assets that you care about. This is bloomberg. Yvonne this is daybreak asia. Betty i am betty liu in new york. The u. S. Is streamlining its Wealth Management is this in europe. Withtions will be combined messed up businesses to reduce the number of offshore booking centers. Wealth managers are under pressure from locker room record low rates. A former barclays executive told a london court that they will deny conspiracy and conspiracy to commit fraud. Richard are the most senior u. K. Bank executives to face charges in the financial crisis. Authorities are said to be widening an investigation into the 400 million bond market. They are examining whether banks, brokers, Pension Funds colluded. Are calling for records of online chats and other communication. Yvonne a Chinese Court has million of assets belonging to an internet giant. Move came after this ase portrayed superior to apple. They are now struggling with a cash freeze. Future,ead, facing the future,ead, facing the how your looks may be the key future,ead, facing the how your looks may be the key so we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Reporter 7 30 a. M. Tuesday in hong kong. We start with a little bit of rain. A little cloudy as we start. Asias first markets opening. Pretty greatlooking. Not that way here in new york. Betty 7 30 p. M. Monday evening here in new york. Highsw hitting fresh during the session. Im betty liu here in new york. Yvonne i need on man in hong kong. You are watching daybreak asia. Now to your first word news with nina melendez. Reporter japanese finance minister is strengthening his Political Power Base bridging factions in the diet can give more control over the ruling dip liberal democratic party. He pledged support for Prime Minister shinzo abe after the bruising defeat in local elections. That may force him to rethink policy, including his ambition of rewriting japans pacifist constitution. Japan and the eu say they are close to a freetrade deal that would bring together two regions that account for more than a quarter of the worlds economic output. Eu trade commissioner told reporters the basic deal is in place and an announcement could come on thursday. Japan wants to remove levies on auto exports, but the eu wants tarriffs lessened. There seems little chance of sales matching last years record in the auto market. Deliveries are expected to fall 16. 5 million vehicles, which would still be one of the best years in history. Most automakers saw better sales than expected last month after a fivemonth losing streak. Tesla delivered just enough cars in the Second Quarter to meet its first half sales guidance, with production held back by a temporary shortage of batteries. It shipped more than 22,000 cars and suvs, compared with more than 25,000 in the First Quarter. Tesla also says the new model three will go into production on friday, with the aim of turning out 20000 and month by the end of the year. Global global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I mean a melendez. This is bloomberg. Thank you. We are counting down some of the major market opens in asia. We bring in our Global Markets editor, adam haigh. We are waiting for the r. B. I. Decision. It has been resilient. Is it now time to reverse . Reporter the message coming anz from the people at freddie aussie dollar bulls to be aware as we go into this message. They are making the claim of resilience. Lets bring it up on the terminal. It shows you the strength of the aussie dollar recently. Last week was characterized i a bankerslobal central pushing more on the hawkish commentary, and the expectations commentary ande discussion in the market has been around whether the rba will in the hawkish language. All things considered, if we go into the meeting today, we expect that wont be the case here, but there is still a risk and that skews a downside disappointment risk for the aussie. People are cautioning against any hawkish move from the rba and think they will have to wait before they got th