tv Bloomberg Daybreak Asia Bloomberg August 10, 2020 7:00pm-9:00pm EDT
♪ haidi: good morning. i'm haidi stroud-watts in sydney. shery: i'm shery ahn in new york. china hits back as u.s. sanctions on hong kong, targeting prominent senators marco rubio and ted cruz. beijing steers clear of hitting top white house figures. global virus cases approach 20 million with 750,000 deaths.
to break trump has yet the stimulus long gem. softbank backs the virus handed record losses in may at a drop of the value, some may change with earnings later. let's get a quick check of how the markets are trading. we are seeing u.s. futures under a little bit of pressure, down 1/10 of 1%. we have president trump's executive actions on stimulus measures boosting sentiment. that weighed in indices. the s&p 500 saw the highest close in six-month in the longest winning streak since 2017. aska futures at the moment japan comes back from mountain day holiday. i mentioned softbank earnings coming back later. the japanese yen holding around the weakest in more than two weeks. the bloomberg dollar index unchanged at the moment. this after it touched a one-week
high. watch out for some data this morning. we are getting south korea's 10 day trade data. we are getting japan numbers, not to mention singapore's final gdp numbers. crude headed towards $42 a barrel after gaining the most in a week after saudi aramco said demand will continue to improve. haidi: shery, we continue to watch the china-u.s. tensions as donald trump in the last hour saying he's
administration cabinet official. just like alex azar. democracy astaiwan well as the fight against the coronavirus is an inspiration on the region and the world. he went on to say it is highly regrettable that china has .locked taiwan from dissipating i want to talk a little bit about the sanctions because this is obviously the other flashpoint because the u.s. on friday issued sanctions on hong kong and chinese officials. in chinese now coming back retaliation, 11 different people including marco rubio, ted cruz, tom cotton, all republican senators targeted by the chinese in unspecified sanctions. pat toomey, the republican representative and human rights executive director, kenneth
roth, grover named among those 11 people. the foreign ministry spokesperson in beijing saying this is in response to wrong behaviors of the united states who behaved badly on hong kong related issues. again, unspecified what is going to be in those sanctions. our chiefphen engle, correspondent, the latest in this tussle between beijing and washington. we are getting some breaking news when it comes to daily case numbers out of victoria. casesing 331 new covid-19 in the past 24 hours. also, reporting 19 more people have died from the virus. that would equal the worst day for fatalities that was sent yesterday as well. we are hearing from the northern territory chief minister saying their borders will remain closed for the rest of us truly the next 18 months and definitely
closed for victoria. an indication of how big of a hit that will be when it comes to tourism and travel restrictions impacting everyone across the aviation and tourism sector with those borders to remain closed. still ahead, we are getting signs softbank will return to profitability despite losses. we will discuss those prospects next. this is bloomberg. ♪
>> you are watching "daybreak asia." i am karina mitchell. global coronavirus cases are about to top 20 million with deaths approaching 750,000. u.s. infections are above 5 million, although the rate of increase seems to be slowing. countries are tightening travel curbs to stem the pandemic. finland will order quarantine for most of the world with three months jail for anyone refusing to comply. greece is requiring travelers to
supply a negative test. hong kong with 57 u-local cases of the virus, one third of which are of unknown origin. the city has more than 4000 cases of covid-19 with three new virus linked deaths. the pan had 761 new covid-19 case -- japan had 761 covid-19 cases. the approval rating at something on the pandemic and has its worst support since he came to power in 2012. may hold on further stimulus as the economy performs better than initially expected. analysts were split. policymakers will have to weigh the strengthening domestic picture against the slow. six of nine economists we asked expect the rbnz to hold its kiwi limit. the others see an increase. the world health organization commission to investigate the origins of the virus would start in the chinese city of wuhan
where the infection was first reported. the who says it aims to study individual exposure in people's daily lives before they developed symptoms. the organization says it took years to identify the origin of mers in 2012. the genesis of sars has never been established. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. shery. isry: u.s.-china volatility back in the trading narrative but our next guest says there is a way to beat those ups and downs. macroate street strategist joins us from boston. in the u.s., we saw investors just getting to tech giants that act as a safe haven from the pandemic. can you make that sort of play in asia as well? marvin: yes, i mean, certainly, i think what is unique about
this, if you will, world that we are in, there's so much stimulus that in many ways similar around the world so a lot of what is driving the tech rally here has implications around the world. it is very much driven by longer duration assets, assets that theoretically should perform well during the pandemic, and there's certain economies within asia, particularly northern asia, that have much more of those types of characteristics that may be the other markets -- markets.e the other their equity markets have done quite well over the course of the last several months. that is beingh of helped by stimulus measures, whether it is monetary or fiscal, coming from asian economies? do they really have room to keep spending in order to support their economies and also help risk assets? marvin: yes, i mean, it is a challenge, particularly for some
of the smaller countries. clearly, china has the wherewithal and has been. there is, you know, kind of a long history of the stimulus that comes out of china racing boats elsewhere. -- raising boats elsewhere. it might have an impact in how the country chooses to stimulate its economy, but i am sure that there is some of that stimulus that is going to make its way out into other parts of the economy also. from atself certainly, growth perspective, is looking stronger in a shorter period than much of the rest of the developed world. some of that might be in and out but it provides an advantage for the region. haidi: as we continue to see travel restrictions, they will be around for some time, even if we get eventual lifting and travel bubbles. does this mean that economies like china that have such as of domestic markets, do have that natural advantage? marvin: yes, most certainly.
however, inion, looking at how the consumer is making its way back. not only in asia, but around the world. inse travel restrictions are place ultimately because there are concerns about the virus that continue to pop up, and that does impact social interaction. part of this is still a large sociology experiment in terms of trying to figure out what is it going to take to get people to engage with each other the way we did before the virus? it might be a slower grind, and when we see these flareups, you know, we just hope that a vaccine is somewhat forthcoming and widely distributed. haidi: i want to get your views on the yuan and how you think may be some of these tensions and uncertainties can be expressed, in particular, the offshore yuan, which we have seen a bit of verizon after the selloff on friday. sentiment being hit by the china-u.s. tax actions take --
tech actions being taken by president trump. three-month expected volatility, with the potential impact of u.s. elections in november, has outpaced one month implied volatility. the premium is sitting at a high. is this a good trade to express views about how much uncertainty we have going into november? marvin: i think so. i think that the market for the most part is, you know, absorbing some of these rapidfire moves that are coming out of the u.s. administration as part of the political process. but you know, given how the election is evolving and emerging here, i don't think anybody really expects it to all of a sudden fade to the background. if anything, i think expectations are around further, maybe not -- escalation might not be the right word, but
further actions to really try to put the administration in a better light as it relates to what is viewed as a somewhat negative agent these days within the u.s., and that is the broader chinese discussion. shery: just before we let you go, of course, we are expecting tons of spending from the u.s., another round of relief measures coming up. what is not going to do to treasury issuance, and how cautious are you given what we are expecting? marvin: yes, a lot more stimulus, a lot more treasury issuance even though we have had a ton. so far, rates, clearly, have not been impacted by all the issuance that has been sold so far this year, but this next round is going to be a we have seen a little bit of a steeping of the curve. i do think the fed is going to need to possibly get more
involved in its asset purchases if those fields and the curve steepen's to a degree that it impacts the perceived recovery. i would watch it closely. real yields in particular have been important for a lot of different trades that are widespread. >> marvin low, always appreciate your time. the world's number two gold still,r, higher prices but it is not planning to take a more aggressive approach. very gold ceo mark bristow tells us the company will make decisions based on the long-term price of $1200 per ounce. keep the want to relevance of being a large-cap company in the resource space, you want to continue to replace gold, you have to get your head around the importance of copper
coming with the gold. we have to move to bigger and bigger deposits, which are then usually deposits that come with gold. process, very little difference in the technology. think we have to spend too much time on that. we have built a great business in randgold first. now the barrick group. we have been able to deliver high-quality returns to shareholders. at a time when they need it. just to answer the question about, are we going to be seduced by gold, the price, absolutely no. >> you have always tried to play -- when it comes to the gold price, making sure you are doing it on a reasonable
and sustainable metric. there are people around the world shouting at the television saying ask mark where he thinks the price of gold is going. it has come up very quickly. where do you think it is going? >> it is a good question. what i say is if you look back to 1972, there have been two gold sparks. 1980 and 2011. of course we are busy with one now. they are all sparks. what is important is if you look post-each big rise, there is a new basis form. i will try to explain why. what happens when gold prices run up like this is the paper money is at risk. a flight that, you get to safety. the flight to safety comes off as the global economy stabilizes. you don't have to be a rocket scientist to understand all this
printing of money is going to result in damage to those core global currencies, and the measure of that is an elevated gold price. we are expecting the gold price to settle at a new base. we see lots of volatility over the next while. this is an unprecedented global event that is going to take some time, certainly more time than post-2008 global financial crisis. at the end of the day, there will be a new base and we will wait to see what the base is. in the meantime, sticking with $1200 is the right thing to do. we have allocated our business on a 10 year plan at $1200. we have those ounces to fund.
if we were to change the gold price, we would take away from those margins and we don't want to do that. there are opportunities to take additional production on the the 10 year plan and we are definitely looking at those opportunities going forward. that would be my point. >> barrick gold ceo mark bristow. stimulus talks stall with democrats and republicans still nowhere near middle ground. we will have the latest. ♪
indigo reported a $386 million loss for the june quarter with the carriers net worth falling by almost a half. ray inhalers -- ride hailers are being forced to convert california drivers from independent contractors to as thees in an argument industry struggles with the coronavirus fallout that has undermined ridesharing. sydney airport is looking to raise 2 million dollars with just over 1.4 u.s. to mitigate the fallout from the coronavirus. the company is offering stock at a 15% discount. the money will be used to cover debt securities and for general purposes including capital expenditures. president trump aims to keep stimulus flowing with republicans and democrats unable
to form a deal. kathleen hays is here. what did we hear from the president and the white house just a couple hours ago in terms of his latest position on this deal? >> he is pretty convinced it is going to move ahead. president trump is nothing if not confident. we just started talking through the plan he announced on saturday. he started with extending on a plane and benefits, $400 per week, the key part of this is state have to come up with the $100 to add to the government $300. that is how you get to $400. many of them are saying we are already asking the federal government for more money. how can we come up with that? president trump still seems confident, pretty convinced he can get it done fast. let's listen to what he said. pres. trump: a lot of money will be going to a lot of people very quickly. i have instructed the secretary of the treasury to move as
quickly as he can. >> he also talked about suspending the payroll tax for people making up to $100,000 a year. this is one that has been criticized by practically all democrats, even some republicans. suspending student loan payments until the end of the year, that's another thing he is stressing. not havetudents should to pay back loans when colleges are not reopening as they should. a date for thee next round of talks. >> we certainly don't. that is why president trump said he was going to forge ahead. some thought this would put political pressure on both sides, certainly on the democrats, not to let the president be the one who gets the stimulus checks to people. so far, they are separated by three major issues. cities and states, it is a big one. and of course, jobless benefits.
democrats want $600 per week to be maintained. i told you what president trump and republicans one. , did theuchin today democrats desire to get $1 trillion to city and states is absurd. areaid republicans unwilling to put the difference. republicans want to keep it to $1 trillion. democrats want 3.5 trillion dollars. chuck schumer, the leading democrat in the senate, hopes republicans are going to be pressured to get on board with some kind of deal, come to the middle with us head of the august recess. the clock is ticking. we will see if it gets these sides to go. >> next, trump once again asserted that children are not affected by the coronavirus even after a report that showed cases among children. we will discuss.
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>> you are watching "daybreak asia." china is heading back, -- hitting back, including at marco rubio and ted cruz. beijing saying they have behaved badly on hong kong issues. it is not clear what sanctions would actually mean. china's actions are seen as a symbolic attempts to retaliate against washington's moves. 10 people are known to have been arrested in hong kong, including of a former
pro-democracy group. police say she and others were involved in efforts to reach the new regulation. -- breach the new regulations. washington turns up the heat on beijing on a range of fronts. health secretary alex azar saluted taiwanese democracy and its handling of the pandemic, drawing sharp criticism from china. beijing says taiwan is, quote, the most important issue in china-u.s. relations at the moment. the government of lebanon has resigned after last week's devastating explosion in beirut. angere amid rising public after a blast responsible for 200 deaths and the destruction of a large part of the city. the prime minister said it is recentent disaster in history and blames corrupt elites for sabotaging his administration.
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. this is bloomberg. >> president donald trump again asserting that children are not as affected by the coronavirus amid heated debate over school reopening's. pres. trump: they do not get very sick. they do not catch easily, they do not get very sick, and according to the people i have spoken to, they do not transfer it to other people or certainly not very easily. i think schools have to open. >> one report is challenging that you with data showing the number of infected children jumped. michelle, how bad are the infections among children? >> the numbers are rising. we saw the second half of july almost 100,000 children in america diagnosed with coronavirus.
that increase by 40%, the number of cases we had. it is true kids tend to not get as sick as other people. especially the elderly. but they do get sick. they can transmit it to their family and to their grandparents and other high-risk individuals. we are getting more reports of severe multisystemic problemsion and other that are making children critically ill with coronavirus. sometimes affects can last for weeks or months. race for a vaccine, we are now hearing an extended timeline in terms of potentially even if we get regulatory approval by the end of the year, getting this dispersed to the public could take longer than that. >> right. think about what we are talking about here. there are over 300 million people in america. many people will want this vaccine.
you need to have two doses of it. we are talking about 700 million doses of vaccine and it does not even exist yet. hurdle isogistical going to be enormous. theher we are going to have department of defense, the military helping inoculate people, how is going to be parceled out, all of that is in the works. it is just not possible for everyone to get it up front. >> michelle, if it is going to be a sense of availability starting with the most vulnerable populations, what does that mean for the notion of the level of herd immunity you need for any vaccine to be relied upon? >> that is a great question. the other critical piece we don't know is how effective this vaccine is going to be. we hear a lot that between 60% and 80% of people need protection from the virus to get
herd immunity. means you arejust not at risk of picking it up from someone else. if the vaccines are only 60% effective, half the people that get an are not going to be contribute into here -- to herd immunity. going to be people who are going to get it first and the rest of the public is going to continue to be exposed and not have any protection from the vaccine and perhaps from having that infection as well. when it long way out comes to the second step of this coronavirus. >> michelle cortez in minneapolis. johns hopkins bloomberg school of public health spoke to us about herd immunity. we spoke about plans to reopen schools this coming term.
>> the threat of the virus was existential to new york. the number one concern. if they can get this fixed, other things could happen. that was extremely important. they conveyed that sense of urgency through all those press conferences. the second thing is people in new york really understood that. because of the leadership and because of the things that affected them. whatreally mattered for people did. >> just one image here, i live right up by the mount sinai hospital complex. the sirens went all night. at 1.i counted eight ambulances .utside mount sinai that was in april. joshua sharfstein, what to they need to do in texas and florida?
>> i think again, prioritizing the virus, getting levels down, so they can safely do things like opening schools and going back to some essential activities that are threatened. by coronavirus. i think the leadership, the messaging has to be clear, consistent, constant, and there needs to be if not a total shutdown like new york, a restriction on activities until they really can drive the number down and not let up until it is really low. >> how close to herd immunity are we? >> it is a question on everyone's mind. nobody knows for sure. the fact the virus affects a lot of people of without them knowing it, and the number of people it affects can be estimated at different numbers, makes people wonder
whether more people are infected then we really appreciate, which would make it harder for the virus to transmit. herdportant concept is immunity in this context is not absolute. it is relative. it is not like suddenly we have herd immunity and the virus is going to go away. it is more like we slowly get more immunity in the population and it is harder to spread. at some point, that will push some areas into a time when the virus is going down in the population, but it could still come up in the right circumstances. it is nothing to wait for, like you wake up one day and we have herd immunity. it's more like slowly we are seeing it is just harder for the virus to spread. that may partly be the case in new york, but particularly in areas that have such high rates of infection, it is a little bit harder for the virus to get
around, and that is an extra level of security. still, if people are reckless, they can get coronavirus. we should not be waiting for herd immunity. we should be taking steps to protect ourselves and maybe we will see the virus come down eventually. >> let's talk about school. i sigh report over the weekend, 97 thousand children around the united states tested positive in the last two weeks of july. that is around a quarter of those tested. decision to try and reopen schools in september? there are lots of other factors you need to put into the mix. nevertheless, we still have significant numbers of children carrying the virus that may be asymptomatic, but they still have it. >> it is a questionable decision in areas of high rates of viral spread. it is likely, particularly high school students who are mixing with each other in classes and all those things are going to,
you know, past the virus around. potentially other people could get infected, get quite sick, their family members, that is what we want to avoid. of publicrg school health. a reminder, it is supported by michael bloomberg, founder of bloomberg lp and bloomberg philanthropy's. next, we will assess expectations for softbank. this is bloomberg. ♪
>> we are less than 20 minutes from the open of trade in japan, south korea, and australia. let us see how we are setting up. >> asian stock futures are mixed. i think they are slightly higher this tuesday ahead of the session that brings us the final 's gdp andngapore india's factory output. on the earnings front we have softbank and wh group among companies reporting. japanese markets come back online. nikkei futures in chicago off by 0.2% ahead of that. the dollar near a one-week high. wti peeking above $42 a barrel early in the asia session. we have been observing a shift in the em space out of stocks as
demand takes up for higher returns. more inflows into high-yielding markets and away from bullish positions on china. charles schwab, kathy jones, seymour expanding opportunities in em debt. -- volatilitycks is picking up for mainland shares. price swings for the msci china index is outpacing the asia case by the most in five years. the gap could widen further depending on factors like the upcoming phase i trade deal review. and turning to tencent, switching up the chart, the stock is set to test a 50 day moving average after the worst two day drop since october 2011. stock aregs for the at the highest since 2018 ahead of earnings do wednesday. tencent has been a pillar of support for the hang seng, which has sunk to a six-week low on political risk and u.s.-china
tension. the report will be keenly watched. softbank, the , the tech giant suffered headline wrecking losses in may. some unfortunate high-profile investments. that may be reversed when softbank reports earnings tuesday. we see kind of a turnaround on foot. how much of this is being driven by the fire sale that is still ongoing? does this invalidate the strategy we are seeing? you for having me. yes indeed. before this started we had been they were able to monetize assets, and buyback, that was a key.
the title of our jeffries report 40 -- thea and the idea is it is not in shareholder interest that softbank is doing all this. monetizing andff giving it back to the shareholders. in march, when the market started collapsing, softbank started to do that and that is a good thing in our opinion. the buyback is still there. they had ¥4.5 trillion on reservation they talked about. aboutsed ¥.5 trillion, $42 billion, buying back their own shares. debt. a we changed our recommendation back then on the 23rd of march. we think it is good, positive thing. sustainable? how much of this has come down
to good timing, good luck? other than buybacks, this has been the tech rally. >> you are spot on again. our argument is this. ¥1 trillion has been bought back. if you take a closer look at the notts, the assets were looking very attractive before. if you look at late last year, these assets were getting discounted heavily. circumstances, the section has changed. the bubble. probably 1998 early 1999. there is still bubble left.
limit anyelps downside. if you remember softbank late last year, they change the business model. it asked its companies to focus on profitability area the current market, if you look at cloud valuations, there is no concern. there is no visibility on profitability. already, thek was market is catching up. now markets might actually reward. companies are listed and they are growing. yes, you are right. backstop. >> given the current environment, does that mean softbank will be able to deliver ipos aprocess of several
year? >> looks like it. demand for ipo growth stocks, there is hardly any -- you get to invest in fixed income instrument. if you want to invest in aaa stocks, aaa bonds. the fixed income money, the kind of ipos that are happening, i have not seen many ipos fail. they are all flying high. now the whole thing about shell companies which get listed which then by -- buy shell companies. i'm not against bubbles, by the way. why not? you just need to know whereabouts we are.
we can still resume until the middle of 2021 and try everything to keep interest rates in check. because of what's happening with the pandemic as well, these are going to lift the veil. sellingank has been steak for a long time, criticized for unwillingness to exit investments. of the sellinge spree we are seeing? does it make sense? >> to us, it makes absolute sense. it is exactly what we had been asking. you need to sell everything in case of alibaba. you need to monetize it. , that is 65%. that is unsustainable. you have to put your money where your mouth is. you just can't keep saying, oh, these are very cheap.
you have to do the buyback. now that you have done the buyback, they have started, they are buying, they are in the market, that pushes the stock higher and higher. pendulum will the shift. it will go far above its share value. so far, it is good to see they are even willing to monetize something that was not doing well with them. that is a very good sign. >> great having you with us. equity research managing director at jefferies. we have breaking news at the moment. we are getting the latest data from johns hopkins on the coronavirus infections, global confirmed covid-19 cases surpassing now officially 20
million. we have seen death surpassed 330,000. more than 5 million infections in the united states. the global infection number has surpassed 20 million. we have some eco-data breaking of the moment from south korea. we are getting the 10 days of this month, trade numbers, the average exports falling 12.7% a year on year. 10 days,omes to exports falling. number for exports falling in the first 10 days of this month, 12.7% year on year, remember the export slump in south korea has been easing. we have seen semiconductor exports gaining ground. exports to china, which is recovering, also gaining ground. chip exports dropping between a percent year on year.
we also have data out of japan. >> a widening current-account surplus as widely predicted by economists a bloomberg. now seeing that june current-account surplus taking billion in¥157.5 terms of the current-account balance, we have had estimates that will be expecting ¥132.6 billion. the drop in exports have narrowed in june. ahead, expecting that current-account surplus to expand more gradually into the third order. ofhave seen heavy purchases foreign bonds by japanese investors. that could increase receipts when it comes to fixed income. ♪
>> top ride hailers uber and lyft have lost the first stage of a crucial court battle. california has forced them to convert independent contractors into employees. is there likely to be an appeal? appeal, butonly can both have vowed to immediately do so. that is why the san francisco judge issued a 10 day pause on the parliament area injunction. an early one in a
theical court battle that so-called gig industry is watching closely. uber down 2%, lift a earlier gains. if they are forced to reclassify california employees, they would be on the hook for overtime, health care, benefits, and it would upend the business model. have beenand lyft devastated by travel restrictions related to covid-19 loss in writer revenue in the last quarter. uber had argued the injunction would cause massive harm to drivers and riders. the judge issued the ruling basically stating that lyft and uber are violating a relatively
new law by not classifying drivers as employees, but insisting they are contractors. >> if uber and lyft were to lose their appeal, how big would the impact be? >> if that injunction stands, the ruling could mean both companies hold services in the most populous state in the country while they adjust their business model to comply with state law. shows pricesalysis would skyrocket as much as 30% in san francisco, four fold in less populated areas, as they pay additional costs. uber and lyft reacting to the decision said both believe most of their drivers want to be classified as contractors because they don't want to see the industry devastated. back to you. >> su keenan with the latest. coming up on daybreak: asia, reaction in singapore's final second-quarter gdp data.
who plans to investigate the origins of the pandemic starting at will han. wuhan.rting with and banning the we chat messaging platform in the u.s.. breaking news out of singapore with the final gdp numbers for the second quarter. we are seeing a revision downward of your near contraction of 13.2%. the preliminary estimate was 12.6%. it is bigger than what analysts expected. on an annualized basis when it comes to seasonally adjusted growth rate, quarter on quarter, a contraction of 42.9%. 43%, so we ares in line, but still a contraction and it is a revision downward from the upper limit area numbers. and it comes -- from the
preliminary numbers. sectorufacturing tricking .7% year on year. the construction sector plunging 59% year on year. we have a broad set of sectors -- the manufacturing sector shrinking 7% year on year. a vulnerable economy to external shocks dependent on exports. it would be the worst external crisis since independence in 1965 reaction to the final gdp figure out of singapore with the ocbc bank head of closure will -- global treasury division lena link later in the show. ena ling, later in the show. back from the long weekend we see the nikkei 225 adding .8%.
retelling among the biggest boost and softbank under pressure ahead of its report card do later today. -- retelling the biggest boost. when it comes to currency the yen hovering around 106 as the dollar selling is losing momentum. jgb set to track treasuries lower. the surplus for june could support buying. usg morgan stanley expects the global recovery trend is part of the drag but the downside can be limited on uncertainty of the u.s. fiscal debate. let's which the board to check in the open and south korea the kospi at -- adding .5% while the atean won holding steady 11.86 this morning -- 1186 this morning, as we do just data for the first 10 days of the month. shipments fell on a yearly basis, a steep decline after the
moderation in july. also on the radar and south korea, the finance ministry will be releasing its monthly budget report. the on the lookout for information on a potential fourth extra budget. switching the board to check in on the open in sydney. the 200 extending gains on a three week i, the likes of bluescope leading -- a three week high, bluescope leading on the benchmark in australia. and the aussie dollar holding steady on a gauge of business confidence do later this morning. peaking above $42 per barrel. asian earnings as we approach the halfway mark for the current reporting season, 60% of those listed on the msa aipac index that of reported have posted beat trailing the 84% seen for s&p 500 companies. aggregate earnings for asia are lagging estimates by 4% compared to u.s. peers that are 22% ahead
of forecasts. but several investors do see that gap shrinking. on monday asset management 22 strong fundamentals and high-frequency indicators saying recovery is underway in the reason -- in the region even though we are seeing selling. -- amundi asset management. haidi: tight is retaliating on u.s. sanction against hong kong -- china is retelling. joining us is a jp morgan asia chief market strategist. when it comes to fx you start to see volatility, starting to build up. what happens post november? is there the sense this is a market that is pricing in for this not to be a big deal after november? >> while i think the u.s. and china relationship beyond the elections will likely remain tense. both candidates clearly still maintain a hawkish attitude toward beijing.
the key difference would be how the two candidates handle basing , once elections are over. beijingity -- handle once elections are over. you might see a candidate joe biden taking a more multilateral approach, whereas president trump traditionally has taken a single line on china. markets positioning or observing ,he election polls and trends it is too early to call. to me the key will be the difference in approach to either candidate and how they handle china the next coming years. haidi: let's talk about the in thatities tit-for-tat by beijing and washington. been -- one scalp has been tencent on the back of wechat and tiktok.
after the today selloff in tencent, it feels like this happens every time, the analysts change their hold to a by. would you add-- buy. would you add to position in tencent given the strength of the domestic growth story? -- i won't talk about individual stocks but i feel strong about the tech sector in asia and china. there are opportunities with consumers in the region getting more adapted to technology, especially after the covid pandemic. a lot of people were forced to go online to do their shopping, their finance, to go to school, to see a doctor. where technology companies are able to catch those trends, and the next 2-3 years, there will likely see faster growth in revenue. theconscious that u.s.-china trade tension is concentrated in the technology sector, so you may speak of
volatility but i would agree that the buy on depth strategy is appropriate for companies in strategyuy on a dip is appropriate for companies in these growing sectors. shery: are you expecting beijing to step in and help these chinese technology companies under pressure by the u.s.? >> i think there will be specific support on specific companies. if you look back to the last few years, this is the year where china is going to announce its next five-year plan. i think there's going to be a lot of emphasis on technology, both in services and perhaps more importantly develop its of hardware. as you have seen in the past couple of years, the threat of a ban on semiconductors and components and chips being sold to china, that potentially uproots the chinese manufacturing sector in the technology side. so i do think there will be a lot of policy support and buys toward developing that technology component. shery: what sort of catalyst
would you need to see two beer toward the value sectors? ini think the key would -- order to veer toward the value sectors? >> the stocks sold are those hit by the pandemic, whether airlines or travel or consumer discretionary or industrial actors, we do get closer to vaccine being developed and distributed, i suspect not just in asia but globally, you could see sectors the worst hit potentially make a strong comeback. shery: and we are going to get a debate on inflation this week. we expect producer consumer price trends in the u.s. and we have them already out of china. our inflation concerns building in -- our inflation concerns building in markets? -- are inflation concerns building and markets?
>> not yet, we are still in a depressed environment therefore inflation come especially demand-side inflation is unlikely to be a key issue for the next 12-18 months. beyond that, how would central banks and governments react if we get a better economy, if we get recovery, how would they unwind the policies to millis? that will contract -- policy stimulus? for the time being the market is taking a benign view on the outlook. shery: great having you on, jp morgan assets management. still ahead, tencent has lost $66 billion in lot market value following president trump's order banning americans from doing business with its wechat app. we have the latest. singapore double-digit contraction the second quarter. ofspeak with the ocbc head treasury strategy and research. this is bloomberg. ♪
>> you're watching daybreak asia. earlier president trump was moved abruptly out of the white house briefing after someone was shot outside. secret service agents ushered him to safety out of reports of the incident beyond the white house gates. he returned soon after saying it was up our caution and that he waited outside the oval office. presidents have been criticizing males in voting after the incident occurred. the highest level visit to taiwan in decades as washington turns up the heat on beijing on a range of issues. secretary a czar how on the market -- on democracy in a trip drying sharp criticism from china. beijing says taiwan is the most important issue in u.s. china relations at the moment.
china's hitting back at u.s. song sings -- sanctions on hong kong officials but is stopping short of people close to the white house. senators marco rubio and ted cruz with beijing saying they have behaved badly on hong kong issues. it is not clear whether sanctions would mean. china sanctions were seen a symbolic, and attempt to retaliate over washington's recent moves. 10 people arrested in hong kong under the new national security lock including agnes chow, a founding member of the now-defunct pro-democracy group, demo cease to -- demosisto. detained for using funds from overseas bank accounts of support their programs. 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 and karina mitchell. this is bloomberg. haidi: singapore's economy shrank 13% year on year in the
second quarter, flatly worse than initial estimates and signaling a long recovery ahead. shery: a look at this with had ofling, ocbc bank treasury research. , bang in line with what can through today. what drove this revision? thehis was mainly due to june industrial production never out for the manufacturing sector. we did see the -- production number out for the manufacturing sector. 2.5%d see the positive year on year to contraction of 5.7%. the main drag came in terms of unexpected deterioration in terms of the manufacturing outlook despite the reopening of the singapore economy. shery: we have seen the government with their massive stimulus package worth nearly
20% of gdp. with a have to come in with more -- will they have to come in with more? >> for parts of the singapore economy, more assistance is still required. we saw the announcement that the national wage counsel would be reconvened. if you put this together with the national jobs counsel formed recently, it does look like they will be looking further in terms of extending support to make sure the labor market does not take from here. -- does not take from your. we also saw they would extend the foreign worker levy rebates for some worst hit sectors in the economy. there's a high probability they will look to extend some current support schemes to ensure we do not get a cliff effect when some schemes roll off. how much support we expect out of a strong recovery your starting to see in china?
-- we are starting to see in china? >> in china's case it is really a first in first out on the covid situation. if you look at the rest of asia including singapore itself, i do not think we are quite in the same situation as china. probably we will not see a full recovery, earliest probably end of the year, more likely in 2021 itself. now, see bright spots for electronics looks like it is picking up momentum. watch forf the key to the singapore economy it would be the services sector. the sector shrank 13.4% year on year in the second quarter. bear in mind this is the key driver of the jobs market, because they employ the bulk of the singapore workers. this would be very much an important determinant for where
the job market goes from here. clearo not see that trajectory for now. our base case forecast is we will probably see growth, a muted recovery for the second half of the air and on full-year we are looking at [indiscernible] percent. haidi: how dire is the jobs situation because we saw in the asian financial crisis, job creation was sluggish. will be worse this time around given 35% of the workforce is over 50? seo have demographics working against that as well? recognizeme around we the covid-19 pandemic is an unprecedented shock. ands contributing to global to best recession. i don't think there are any sectors untouched by the impact of the pandemic although we do
see the mild med cluster doing better -- the biomedical cluster to better in terms of reporting vaccine and ppe demand. if you look across the board growth never show at all. the key engines for singapore have been affected by the pandemic. in terms of the job market, the john support scheme has provided support, which is why although we saw the unemployment rate climb higher, at 2.9%, it is still barely -- fairly low on a historical level. going ahead we do expect softening to come, mainly because if you look at how the pandemic hits, it is a little bit like a slow-motion train, still seeing the ramifications spread to the economy. going forward, we expect there will be few further -- further job losses, which is why think that national wage counsel and national jobs counsel are reconvening and there will probably be more support coming
three to ensure the unemployment rate does not deteriorate. that's it. i think further fiscal stimulus, the bar is set high because if you look at what singapore has done in the four months, we have close to one had a billion, around 52 billion drawn from past reserves. probably the expectation of a significant amount of fiscal would be aom here less probable scenario. more to come on "bloomberg daybreak: asia." this is bloomberg. ♪
haidi: the hospitality business has been one of the hardest hit by the coronavirus pandemic. bloomberg spoke with dale hotels and hospitality -- jal hotels and hospitality on how industry has changed. >> we saw green sprouts in the summer with pent-up demand. we have had a virus spike in some markets in that demand has retracted. if we look forward, our expectations is that we are going to see a modified version of corporate business coming our way, in september. less sure if they will continue to tag along. the big question is group business. it should be coming back and it will be dependent on the vaccine and when it is widely available. >> let's focus on how important that piece of business is, hilda. some hotels are managing to capitalize on the state case and trend. people check into a hotel in their own city to have the experience.
there are some ways to get revenue back. before we get airplanes back in the air, how do you get that corporate traveler or group, the all-important group revenue, back in the system? if it leads to corporate, that is easier to attack. we are all eagerly awaiting to see what will happen from a governmental perspective, in september. by that i mean, ease of travel, any restrictions, corporate policy. what we are seeing from jll ourselves, we are traveling, we are starting to travel for client meetings. technology has been interesting in terms of how that has provided a bridge in a disruptive environment. so that is what we are seeing. hopefully demand will come back in a modified version. people do need to travel. a client of ours said, we can continue to run a business with
technology but for us to be able to grow we have to get people out on airplanes and they need to go. on the corporate side and the group side, there is quite a bit of pent-up demand. socialbout all the catering businesses put on hold, the wedding set of not happened. there is definitely an eagerness to get back and book hotels, once we are able to. but really in earnest we are waiting for the vaccine to come here, to be widely available for some of the bigger groups, the conventions and expo business to come back. that 1000 people meetings and greater. >> the way people book things, will it change in the sense of the time? to book when the virus might have come back in a certain country, one year off, but i might look for next week. >> the booking window has gotten shorter over the years. with the prices -- with a crisis
it has gotten that much shorter. couldr point, the window go from one day, one week, maybe one month. some corporations are looking at what to do with some other group commitments they had for 2021. the reality is that is being pushed a little bit to the second quarter or second half of 2021. again, all of us waiting for the vaccine. the name of the game, to your point, is short booking windows and a lot of hotels are being flexible in terms of penalties, as a consumer, you would have to pay if you have a cancellation. >> what kind of additional costs the industry still facing in terms of this safety and cleanliness, to lure back those willing to travel now? cost isocus now in guest cleanliness but it is around the labor cost. we are paying a lot of attention on hotels located in markets
that are highly unionized. the labor structure there is very much firm, dictated by the labor union. so there may not be as much >> ability. we are focused on that -- there may not be as much flexibility. we are also paying attention to some of our bigger corporate clients who have the wherewithal to invest in technology, given how important a feature that is to come to the whole travel experience. hotel and hospitality america ceo. asry: coming up next, geopolitical tensions continue to rise between the u.s. and china will get you the latest ahead of the upcoming trade discussions. this is bloomberg. ♪ you doing okay?
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>> you are watching daybreak asia. australia has reported three have -- 331 new cases in victoria along with 19 new debts. deaths. with melbourne under strict lockdown, the northern territory announced it is going to stay shut from the rest of the country for 18 months. the government of lebanon has resigned after last week's devastating explosion in beirut. the cabinet quit amid rising public anger at the blast which is now responsible for at least 200 deaths and the destruction
of a large part of the city. the prime minister says it is the biggest disaster in recent lebanese history, and blamed corrupt political elites for sabotaging his administration. out inther is big world the air india crash that killed 18 people. sources say rain at the airport was within the safety range and the pilots had been briefed before the plane came into land. however, sources say the 737 touched down near the middle of the runway before skidding off the apron and into a valley. the flying crew was experienced and neither pilot made a distress call. and president trump says he is considering a cut in capital gains, a move he dropped last semester because it would not help the middle class. he now says budget -- the cut would crave more jobs. the president can lower than 20% capital gains rate without congress, but some advisors say he could issue an executive order. a unilateral change would likely
trigger a legal challenge. 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. president trump also saying he is not sure if he wants to make a deal with china ahead of trade discussions this week. this comes as china retaliates against sanctions imposed by the u.s. over hong kong, with sanctions of its own. let's get the latest from her chief north asian correspondent, stephen engle. the president saying the u.s. does not view china the same as it did eight months ago. what does this mean? >> it means a lot has happened in the last eight months, obviously. there are a lot of headwinds in the u.s. china relationship, blame over the coronavirus, over hong kong, over taiwan. we will get to that issue in a second. then there is corporate issues, huawei anday --
tiktok and others. donald trump is calling on the idea of the phase one trade deal. >> we did a phase i deal and it was a wonderful dale and all of a sudden it means very little, -- that will never pay for the loss of life in our country and we of the world, so we are, view china differently than we did a month ago. -- a wonderful dale. -- deal. >> before the press conference donald trump held earlier today, the people's bank of china governor put out a statement via that she walked news agency -- xinhua news agency via the u.s. embassy -- china epicene united they willassy, saying fill the phase one trade deal the matter how the situation in changes including opening up the financial sector in china, which has been a big play from the
financial sector -- plea from the financial sector out of the united states. late last week we had the united states sanctioning 11 chinese and hong kong officials including carrie lam, the chief executive. beijing has retaliated with sanctions on 11 americans. it did not include any top cabinet officials and the trump administration, instead targeting mostly republican lawmakers, in the senate and house. we can bring the graphic up to see marco rubio, ted cruz from texas, tom cotton, a republican senators, plus pat toomey in the house of representatives, and human rights watch executive director kenneth roth who was denied entry to hong kong in january, all these individuals in the united states now sanctioned by beijing. however we do not know the details or extent of what the sanctions will entail. the foreign
ministry spokesman says the sanctions are in response to quote the wrong behaviors of the united states who behaved badly on hong kong related issues.' another flashpoint in u.s.-china relations this visit to taiwan this week from the u.s. health secretary. what did we see their? -- there. >> that is right, the highest profile u.s. official to visit taiwan and for decades. you can imagine this will not fit well -- sit well with beijing. they voiced their displeasure. the foreign ministry in beijing yesterday said taiwan is the most important and sensitive issue in u.s.-china relations. so in a cabinet level official visits and has talks with taiwan and the president of taiwan, it is definitely not a positive in beijing's eyes. health and human
services secretary having talks with taiwan, calling their democracy and the about battle against coronavirus, an inspiration to the region and the world. eng wang said it was regrettable that china has blocked u.s. efforts to participate in the health assembly. haidi: stay with us for insights on the impact of hong kong's national security law and the state of press freedom after the arrest of the apple daily founder, university of hong kong law lecturer sharon cost will be with us on bloomberg markets later. the chief executive of financial advisory has warned a second wave of bankruptcies could be on the horizon. speaking exclusively to liberty, we also discussed the pressure of economies and the tech cold war between the u.s. and china. >> we have been through a
massive first wave of restructurings. i think the second wave, which i believe will come, depends on what we were talking about. many of the weaknesses at many companies have been disguised or hidden by very significant government support. as that support is withdrawn or as it is not continued at the same rate, the pressure on many corporate will become more manifest. i personally, unfortunately, think that we will see another significant wave of bankruptcies across corporate america, as that plays out. >> as an investment banker people want to talk to about the work you're doing with corporate clients. but this year alone, lazard has had significant sovereign advisory work, lebanon, argentina. can you explain that disruptions you are seeing for sovereign debt? what kind of demand do investors have to investing countries that have these issues related to the
pandemic, but then all these other out on issues that are rising as well? >> what is happening in many countries, some that are lazard clients and that you mention had pre-existing conditions if you will that are exacerbated by the pandemic. for a whole set of other companies -- countries, the pandemic is causing fiscal pressure, just like it is here in the united states for state and local governments. also we are seeing if substantial increase in the federal deficit. revenue declines you need to have additional spending to help cushion the blow from the pandemic. the result of that is then a significant increase in public debt. unfortunately for many sovereigns across the globe, they are really not in a position to handle that additional debt. and then that causes a debt crisis as it were. promisinging some signs about creditors and government's coming together in argentina, ecuador and
elsewhere, to reach agreements to deal with the problems before the become outright crises. we will have to see if that spirit of cooperation can continue into what inevitably will be other sovereign debt problems over the next year or two. morees the issue of sovereign debt problems arising, how do you think of that? obviously these are countries with weaker financial positions. but what will become of the united states as our debt level starts to swell? >> the cbo has report on the deficit and in the first 10 months of they are is double last year, not surprising. we are running as a get fiscal experiment, one that we absolutely have to run. because the alternative of not so not -- not providing support to the economy to offset the impact of the pandemic, what be much worse. it will cause long-lasting damage to the economy. so yes, debt is increasing in the united states, but that is ok. >> peter, you also have a
bird's-eye view here about how corporate america is reacting to a lot of these tensions created between the u.s. and china. what is of chief concern to your clients now? >> the relationship with china is complicated, obviously in the technology space in particular your sing a lot of tension, much more -- you are seeing a lot of tension and much more rapid deterioration in the relationship. what many have called the technology cold war. we need to remember it relationship with china is much bigger than what you read about in the newspaper or on bloomberg, where the flashpoints are. most flashpoints are in technology that has been building for a while, and it has accelerated over the past several months. there are many companies that are concerned about the implications. we will have to see how this plays out. >> that was the ceo of lazard group. next, a grim milestone,
level,testing that 106 and we have earnings out of japan encoding softbank and rockets on. kospi gaining, the seven consecutive session of gains. we did get sport numbers for the first 10 days, the daily average exports falling year on year, the export some easing. the asx 200 at a three week i also. kiwi stocks under pressure ahead of the rbnz policy decision tomorrow. a today drop, the japanese yen weakening as well as spot gold extending a drop for a third consecutive session. barrel as we42 per continue to see this extension of gains after saudi aramco said
demand will continue to improve. watching are also company taking a slide after the game maker said it would delay the launch of dungeon games to august 12 to comply with tencent anti-addiction system. lossestbank expanding for fifth session despite expectations ever returned to profit, the stock falling to low we last saw july 20. could yetelco giant post higher profit for the fiscal year but it has benefited from the work from home about trend, ntt. jen drug application is getting an fd -- biogen any an fda priority review. the aussie building materials hardie in sydney
on the back of an earnings report. higher after biogen gets an fd a parody review. now, the significance of the grim milestone in covid-19, we are seeing cases starting to pick up at a faster rate? >> yes, it is a grim milestone. it is sobering because we are seeing the pandemic worldwide. it is at a faster rate. it took six months after the virus surfaced in china in january to reach 10 million. now in six weeks, it has gone from 10 million to 20 million, doubling, which is a steady acceleration and quite concerning.. we really are seeing cases all of the globe, , the u.s.n india
cannot get cases under control, brazil. again, the u.s. is still the hardest hit place, 4% of the world's population and a quarter of all cases and all deaths. we continue to see community spread in hong kong and cases in japan rising. what does this tell you about intentionally a new wave of cases, given that we solved these -- we saw these places -- we thought these places have the virus under control? >> that's right. these are places things seem to be under control. some are calling of the third wave and asia in places dealing with this from january. in hong kong, very interesting. the cases are more than 4000 now, the third wave has been tougher than anything else, than the earlier ones. what is interesting is that 90%
of the deaths from the virus have happened since the resurgence in july. times the toll from the first half of the air. a lot of this -- year. a lot of this is because of elder care facilities. the same in australia. the death rate was relatively low the first time around. now in austria for tally records were broken onto's executive days -- on two consecutive days. seven people died sunday in the state of victoria in care ,acilities for a lot of this related to operating elder care homes. india a different situation from the rest of southeast asia. what are we seeing their in terms of the virus and ongoing concerns? >> in india, this has been a place where we have seen a lot
throughout, but we have had a real concern that it jumps from one million to 2.2 million and 24 days which is very concerning. recoveries have surged rapidly which is the good news, people are recuperating. but up the case lows are going up. -- the caseloads are going up and this is a concern and places that are type lee packed -- tightly packed, a concern try to get this under control. everyone is waiting for this vaccine but we are now hearing a vaccine likely will not be 2021, wherell into most people can get it and use it, especially most americans, so this is very concerning and not something that is going to go away. with flu season coming up in the u.s. and places that have had warm weather, it is going to get cold and fall. the opposite in australia.
[indiscernible] internationalior editor, jodi schneider. seenemand for pp has elisha at the top of global hygiene -- malaysia at the top of the market. riley top glove is the world largest rubber glove manufacturer and its managing director at joins us exclusively. in a moment, president trumps ban on chat is taking a call on its parent company tencent and we have details next. this is bloomberg. ♪
haidi: a quick check of the latest is this flash headlines. american express in advance talk to by the online mall business letter cabbage back by softbank -- small business letter. valued at $850 million. bbage deal is seen as opening the door wider to mom-and-pop stores. nikola surged after winning in order for 2500 chocks from republican -- republic services -- in order for 2500 talks from
waste management company republic services. republican -- republic has the option to increase his truck order to 5000 vehicles. mcdonald's is suing its former ceo easterbrook who is accused of having affairs with muslim ploys and trying to cover them up and arranging for -- having affairs with multiple employees and trying to cover them up and for one worker to receive eight stock award. a consensual relationship, it argues he should not have been paid because he lied and concealed evidence. shery: let's turn to tencent. it continues to fall following president trumps move to band we chat. of the past two days the stock has lost $66 billion of market value. joining us, our asian tech reporter. usually when you have u.s. pressure on a chinese company, there is expectation that beijing will step in, to help its firms. why are these expectations
helping the stock now? -- why aren't these big dictations helping the stock now? that's why aren't these expectations helping the stock now? haidi: we seem to have lost zheping. tencent is one of the stocks we watch as it has been dragging down the hong kong market. today since the executive orders from president trump and that has been weighing it down. been bullish a lot changing their hold to buy after the recent correction. this is going into the start of trading in shanghai, hong kong and tengion. up 1.1%, on a is current account surplus, continuing to expand. theee the kospi, one of top performers extend on the rally .6%.
a here in a stroller at we see gains of .7% -- here in australia, gains of .7%. in new zealand, softness as we get into the rbn z monetary policy tomorrow. shery: we do have our asian tech reporter back and let's talk about the fall in tencent. how about has the stock reacted to the latest salvo from president trump? we see before that we chat, tencent was one of the greatest. after friday, [indiscernible] in market value into days, one of the worst today's in decades. 2 days inthe worst decades. trumps ban mentioning wechat
also living room to further expand into tencent as a whole. the worst case scenario, tencent international business [indiscernible] in other business segments like payments could be affected by the u.s. administration. the thing is when you take a look at market expectations, we have seen a going into a third day of selloffs. but analysts are changing their course from hold to buy, which is what we usually see happen after a pullback in the tencent stock price. is there a sense, is the expectation that the chinese to mystic growth story will continue to sustain the company -- chinese domestic growth will sustain the company? or that it will be treated like a national champion by the government? >> we need to wait and see. after second rates start tomorrow. [indiscernible] report 20%ted to
revenue growth in line with [indiscernible] the bigger question is how it can be [indiscernible] bytedance, and gaming. [indiscernible] ended inr the pandemic china basically, people are spending less time in videogames , and other aligned entertainment content. that will be a challenge for tencent to keep on growing [indiscernible] as it was. haidi: our asian tech reporter there. coming up on "bloomberg markets: china open" we hear on the war over wechat and tiktok.
>> it is 9:00 in beijing and shanghai. welcome to "bloomberg markets: china open." >> we are counting down the opening to trade in the mainland and hong kong. u.s. hitting back at the as sanctions on hong kong target prominent republicans marco rubio and ted cruz but beijing steering clear of top white house figures. >> tencent