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00:00This is Bloomberg DAYBREAK Middle East. Top stories this morning. China lowers its growth goal and announces a major tax cut. Lee Ka ching warns of a tough economic battle ahead . Meanwhile there's more evidence that the trade war is hurting the U.S. economy. Two studies put the cost at billions of dollars being borne largely by American consumers. Libya prepares to start pumping again from its biggest oil field adding another complication to OPEC's efforts to trim a global supply glut and a Japanese court grants. Call us Gold Bell. Setting the bond at almost nine million dollars. We're live in Tokyo this hour it has just gone 8:00 am across the EV. This is Bloomberg DAYBREAK Middle East storm Manus Cranny and Dubai. And I'm Tracy Alloway in Hong Kong. Well Madison let's take a look at the US trading day on Monday a little bit of a weird session under way in the US. Take a look at the volatility index from the CBOE better known as the VIX or Wall Street's fear gauge that's spiked from about 13 points at the start of trading to nearly 17 before falling back to about 14 and a half later in the day. That was a jump of nearly 25 percent it comes of course as U.S. stocks reported their biggest drop in about a month. Market participants attributing that move to a lack of clarity on a potential trade deal between the U.S. and China . But clearly there's an open ended question here about whether or not the market is starting to see diminishing returns from this type of good news madness. It is about the news though Tracey takes us back to the surprises that we looked at yesterday which was volatility in the haven assets at a 17 year low and that made me take a look at gold. Gold has been dropping at for six days in a row. These are the futures take a look at this . We're back. Maybe it's my inner ise looking for a little bit of security. There is five days in a row we're seeing gold tenor run this morning. But the flow of money matters and this is from one of the biggest ETF they're yanking money out of ETF State Street fund they took it five hundred million dollars last week. Goldman Sachs so says fourteen hundred twenty five dollars on the upside. Morgan Stanley Tracy they're not frightened. They're bored. They've closed the long position on gold. There you go the beast of Wall Street squaring up over guilt. Yeah you're making those gold bugs cry aren't you Magnus . Well let's get straight over for more on the markets with Juliette Saly in Singapore and the kill in Mumbai. Julia let's start with you. What's the latest Well we are seeing Asian stocks lower for the first time in three sessions today. Tracy of course we have the NPC happening in Beijing they have lowered that target for GDP growth in China to six to a six and a half percent. Still though you have seen some upside coming through in the Shanghai Composite which yesterday broke through 3000 points for the first time since June holding above that level today. The Aussie dollar at a three week low. We just had the RBA no change to that interest rate of one and a half per cent it's been there for two and a half years. But what is weighing the Aussie down is mainly this measure of Trade's contribution to GDP which missed estimates . So that's paving the way for a potential rate cut from the RBA and the Philippine peso the worst performing Asian currency today we had a surprise nomination for the central bank governor which has surprised many in the market and also inflation in the Philippines missing targets menace Tracy. All right Julie . Thanks so much for that it looks like we'll have to go over to the Indian markets slightly later in our show we do have the nifty down ever so slightly about six points this morning . Let's check in on the first word headlines from around the world now. Here's Annabel jewelers. Thanks Tracy Foale and Nissan boss Carlos good has won bail at Tokyo court setting his bond at the equivalent of nine million dollars. Prosecutors have the right to appeal the court's decision and can also add fresh charges to Gunns case which would keep him in jail if he's released. It will end more than three months of detention on financial misconduct allegations. President Trump is turning up the heat on India and Turkey informing Congress that he wants to end key trade preferences with the two countries. The trade benefits allowed duty free entry of products including auto components and textiles. The president says some American companies complained shipments to India have been hit by non tariff barriers. While he says Turkey is no longer merely a developing country China is linking the cases of two Canadians detained amid the flyway drama in Vancouver. An official news outlet says Michael covering quote severely violated Chinese law by spying and stealing state secrets by working for the International Crisis Group. The report also said entrepreneur Michael special was called Rick's primary contact and supplied him with intelligence. Canadian Prime Minister Justin Trudeau is following the case closely. We will ensure that that rule of law is fully respected and we will go through those processes in a proper and rigorous way. It is unfortunate that China continues to move forward on these arbitrary detentions. We will continue to stand up for these Canadians. The Reserve Bank of Australia has left its key cash rate unchanged at one and a half a cent as forecast by all 31 economists we asked. The statement says low rates continue to support the economy and that any pickup in employment and inflation is likely to be only gradual. The RBA adds that this outlook for global growth is reasonable although the risks are increasing. And actor Luke Perry has died at 52 after suffering a massive stroke. He made his name playing wealthy rebel Dylan McKay and Beverly Hills 9 2 1 0 and had been in hospital since last Wednesday after medics were called to his home in the L.A. district of Sherman Oaks . Perry who enjoyed a prolific film and TV career said he was inspired to become an actor by a photo of Paul Newman on his mother's mirror when he was young global news 24 hours a day on air and a TicToc on Twitter CAC by more than twenty seven hundred journalists and analysts in more than 120 countries and then about all this. This is Bloomberg Tracy thanks so much Annabel while China has lowered this year's growth target and announced a major tax cut saying the country must brace for a tough economic battle. Our China correspondent Tom Mackenzie is at the Great Hall of people in Tiananmen Square. Tom no shortage of China news out of that particular event. Today we have China moving to a target range instead of just a target figure for economic growth the defense budget. What are the highlights of what we've heard so far today . Yeah really Tracy the major centrepiece would dismiss this speech by Premier Li Keqiang at the Great Hall of the people which took place a few hours ago and as you say some of the things that we going to zero in on with a GDP target. They did this they did soften this to a range of between six and six and a half percent. Bloomberg economics pointing out that that is the weakest target the Chinese government have ever set themselves and just in terms of perspective 2018 you saw four year growth of six point six percent. Most economists expect that 2019 you're going to get about six point two percent growth in this target is a target around which other policies gravitate . So that's why it is important in terms of the deficit as well we also got that target said at 2.8 per cent so increasing the deficit because last year the target was two point six percent . That's important because it gives policymakers some wriggle room to step up their fiscal support and that is really the emphasis in terms of this speech from Premier Li Keqiang as to how they were going to address the slowdown in the midst of these trade tensions was additional fiscal support. As you say this tax cut of VIX tax cut worth about 90 billion US dollars according to Morgan Stanley cutting that by about 3 percent. And then of course you had additional measures outlined around local government bond issuance. Important because that is the way that local governments fund infrastructure. So increased infrastructure spending is something else that's been on the cards. We've got more details on that from this speech today there's been a lot to go through but we have had some answers now as to how policymakers intend to prioritize stabilizing growth amid these pressures of the trade war but also concerns about financial rescue debt. So Tom this is a government which can bring the A game to stimulus unlike any other isn't it. As Donald Trump would like to be able to do infrastructure like Li Keqiang the other phrase that caught my eye was basically stable . He's talking about leverage. So what else we've got the new bandwidth. We've got the guidance on leverage. We've got a better fiscal stimulus. What else is left in the magician's hat well you're right. I mean they're really trying to emphasize this targeted approach. They've been taking over the last few months we should get some more details out by the way when the central bank gives a press conference at around 3:00 p.m. local time as well. They have reiterated a prudent neutral monetary policy stance. The reality of course is they have started to ease at the edges. You've had of course five Triple R cuts you've had additional targeted monetary funding or additional interbank funding lowering those rates to try to get more liquidity particularly to the private sector they've said today that they are looking at additional Triple R cuts for small banks to ensure that there is even more liquidity to the private sector. They've talked about the need to smooth the intermission process to try and ensure that the liquidity that's going to banks is being passed on to the private companies that need it. So they've re-emphasize that as well. Again we're going to get more details we hope from the Central Bank later . There was another emphasis as well from premier league coaching today which is about job growth. Raising that as a priority a macro policy. They want to create about 11 million urban jobs that's another priority policy for policymakers. Again we're going to be listening out for the BBC later this afternoon here in Beijing. We will indeed. Tom great reporting that Tom MacKenzie in Beijing. Now let's bring in our guest host ise group market analyst Carl Roeder. He joins us from our Melbourne studio. Carl good to see you this morning. And when it comes to Bloomberg we've done our analytics and this is the line that we're putting out as a hoax pragmatic growth sensible economic support even though it is the lowest target that they've ever set themselves. How much more stimulus do the heist believe that will get. And in what form . Well I think we'll see a sustained amount of what we're getting as it stands now. I mean what I took away from what came out from Chinese policy makers today was almost a situation of under promise on on the growth targets and then almost sort of promised to over deliver with the support that they're hoping to get into into the economy. So I think that will be a continued theme till I actually can see I suppose a tangible turnaround in economic fortunes. And I really do believe that they'll stop at nothing more or less to to sort of achieve the targets that they do have before themselves. I'm going to take a little while to actually see that. Indeed it's going to take a little while to see that in markets and that's where the mystery will be looking forward. But as it stands now I think it was something that the markets took rather well that I thought was rather supportive although there was probably a little bit of nervousness coming out from the effectively downgrade to the growth targets Kyle you're talking about the market reaction here saying the Chinese authorities will stop at nothing to help prop up their economy. If you take a look at what's been going on in Chinese equities recently take a look at this chart. Pull it up on the GDP function. If you're a Bloomberg client you can see almost every Shanghai listed stock is above its long term average at the moment and that includes companies that were warning of big losses you know five point five billion yuan. I think one of them warned of just a month ago is the market getting this one right. Should they be betting on stimulus to this extent from China . Well I think what they're betting on is that it's worked in the past and that they're going to put their money into a place which I suppose using that precedent can can potentially. Am I supposed to live in some sort of upside in the future. I think it fundamentally comes down to a conference in Chinese policymakers that they do have the tools available to them and they can use the tools available to them to be able to prop up prop up this market profit prop up this particular economy. The flip side of that so is that I mean if you look at some I suppose fundamental measures in terms of Chinese equities you could argue that it's been some time that there's been an attractive proposition there for investors to jump into. It's the Chinese stocks to some extent. And I think we're starting to see that because this trade war risk really now is being put to one side and has almost been priced in entirely that we'll see a resolution there. And I think it was very much a sentiment playing the short term I suppose the risk is with the vertical rally this parabolic rally that we've seen in Chinese equities over the last month or so in response to that is that there's probably a bit of irrational exuberance and a little bit of momentum chasing just basically jumping into the market on the understanding that now we've got impetus for a rally. This is gonna be a choppy market. Chinese markets always fairly choppy as it is. And there's going to take a little bit of discernment to be able to wade through things and make sure that you know proper value and proper trades are found . So you'd expect in the short term a pullback. But I think really that there's the the support there in the market to be able to I suppose provide some kind of substance behind this move in the medium to long term. I think there's just gonna be a little bit of turbulence in the way what we work that one out . I'll keep channeling those central bank phrases from history . Carr wrote that our guest this morning will get a little bit more from you still ahead. Thomas Gold is granted bail. The default in this undated could be released today. We are live in Tokyo. But before that we'll be digging into some more of this week's key events including Friday's U.S. jobs report and the ECB s latest rate decision. This is Bloomberg it's like shots off the DSC gate here in Dubai. And I'm showing you the I'll show you aren't just strengthening ever so slightly this slight wobbles all the way around on the potential for a trade deal as the White House moves its focus to India Turkey . That's next. But price swings implied volatility by the way on the offshore you want is the lowest since December the 21st . This is the personification of basically stable. So vol is dropping all the way around across assets including the offshore Yuan. TRACY Yeah Manus. Well let's move over to one of our other stories for today. Treasury Secretary Steve Newton will invoke special accounting measures until June to help pay government bills without breaching the legal U.S. debt ceiling . The limit came back into force on March 1st after being suspended by Congress. But the Treasury Department can override that to prevent a default on payments. Newton has appealed to Congress to increase the debt limit as soon as possible . Meanwhile investors are awaiting the latest U.S. jobs report due on Friday. The economy is expected to have added one hundred eighty one thousand jobs in February. That would be down from the blow out three hundred four thousand back in January. We also got the ECB ise latest rate decision on Thursday. IAG group market analyst Carl rota is still with us from our Melbourne studio. Carl there's a lot to get through. I want to start with the US market. We did see that drop in U.S. equities just on Monday's trading session and I have seen some analysts from Barclays and Goldman saying that the recent rally hasn't been backed up by flows into equity funds. So there's actually quite a big gap right now between the price movement on U.S. stocks and the inflows into U.S. stocks. What's your take on the durability or the fragility of the US rally that we've seen so far this year. Well I think everyone's still waiting for the pullback that we have to have. But the problem is this is that every time it's called it seems not to come. We saw a lot of that even in last night's trade into the back end of the session we didn't rally into the close quite considerably which obviously I suppose ameliorated some of those concerns that perhaps we're heading for some kind of retracement in the recent rally. I mean I think that really what we've seen the best part of this recovery for now is probably been exhausted. I think that 20 at 15 level which has been sold off in particular is going to be a real obstacle for the market to push beyond. But the simple fact of the matter is is I think that while conditions remain reasonably supportive again we're seeing a better growth outlook in the United States earnings aren't going to be as rosy as they have been in the last couple of years . But there's still going to be fairly solid looking forward despite the fact that we are still getting downgrades that that flow into equities at a sustained enough level just as a yield chasing play is going to keep equities propped up. But I think what we are going to see is this 20 15 level being like I said something that's very difficult to push past. It might be a bit of an indication that we could see some more selling if if anything else a consolidation perhaps in the market before we have the impetus to push higher. So I wouldn't be calling an end to this sort of push higher yet in equities I think the fundamentals are still supportive of nothing in the short to medium term. It's just it is looking a little tight at this point in time. And the great debate is what comes next in terms of growth in the United States of America. There's a couple of different indicators the New York Fed suggests it is gonna be a tough time. And then the Atlanta GDP no index keeps popping up as a news alert all the way around Bloomberg and this is what it is is that growth is going to be pretty anemic in this first quarter. Is this going to verify or solidify the pause by the Fed it will from a fundamental sense and I mean I think that was more or less priced in from the markets anyway that really we're gonna be in for a pretty tough quarter because of so many headwinds. Probably. You know I suppose thrown at the markets so to speak in the last three or four months. I think the real interesting thing for me at the moment is some of the activity we're seeing in industrial metals and some of the turnarounds we're seeing and perhaps what you might consider leading indicators of fundamental growth. Now again I'd be loath to say that we're returning to some kind of point like we were in probably the end of 2017 in particular and started 2018 which saw some really strong growth conditions no growth conditions around the world in multiple geographies moving in quite a solid direction of course that was fueled by fiscal stimulus in the United States and what not getting back to that level I suppose is quite suspect. But I do see positioning in the market at the moment that suggests that although we're going to be still seeing probably some some pain in the short term around the growth outlook that will probably I suppose spring back a little bit in the medium term to see the growth growth prospects improve a little bit. Not in such a great way I think overall if you look towards what Central Bank public policymakers might be thinking is that we'll probably see rates on hold for the time being until they have to cut again but there'll be enough strength in the global economy to be able to keep rates steady to keep the outlook strong enough there'll be a plaintiff. I think equities on a yield basis because there will be nowhere else for funds to flow. But I think that we still have some probably bugs to work out just in the next weeks to months while some of the data that has been building from some of the tough I suppose circumstances we had in the last three or four months gets played out. So it really has to be probably carved up over time horizons there. But I said I think there's still reason for optimism at least in risk assets although not as much as perhaps has been warranted in the past. Yeah. Carl I want to press you on this point because I think it's important I see minuses. Atlanta Fed now cast chart and I raise you cities economic surprise indexes which have really been rolling over . This is both the US index the global index and the emerging market index. Is it possible that the concerns we've seen around economic data over the past few months this disappointing economic data in many ways a lot of that has been attributed to trade tensions but is it possible that these are late cycle developments in trade tension. Guys I guess I know actually I absolutely agree. I think that before this trade war really became I suppose the highlight of the financial news cycle if you if you'd want to put it that way there was some kind of slowdown in the global economy emerging that was suggesting that there was and like you said a late cycle developments going on in the global economy I certainly agree that I think you look back at some of the main metrics that you would use particularly PMI figures and data in China as well. Again if you look at industrial metals to which I am seeing a little bit of a pickup now is sentiments changed. We were seeing all of those in somewhat of a downtrend before the trade war became I suppose the risk risk do you. But I think what has happened is that the trade war and some of the geopolitical risks that we've seen around the world emerging in different geographies Brexit there too but to a lesser extent has somewhat accelerated you know maybe what it was already a reasonable downturn a downturn in play nevertheless I think what we're actually seeing now and this is why I think that we've got some some I suppose you know paints go in the short term and maybe some I suppose stability in the medium term is that I think once we get some of these geopolitical risk and the way these headwinds out of the way will return to perhaps the trend that was looking to play out even prior to that. But if you look into maybe the outlook into the end of 2019 if you look at the outlook well into 2020 where we are in a light cycle phase of the business cycle and we continue to see slowly slowing economic growth. I just don't think that there's necessarily the imminence there which justifies I suppose panic. For now I think there's enough I suppose juice left in the engine to be able to see risk assets are performing reasonably well just not as well as we've seen in the past. What were these parabolic rises like I said before that we've seen in risk assets but the growth story still has a little room to run. But I do think that you know on the basis of that if you lose your central bank policy is a guide that it will be enough to keep central bankers on hold keep them giving good news to the markets markets continue to. OK but is not central bank policy or how the markets move. God we're gonna have to draw a line under it that you're right or you can lean right into the central banks will they bring back quantitative easing as a standard to in the United States of America. Wrote a market analyst at IAG Group thank you so much for being our guest host this morning still to come on the show tit for tat over the hill while a saga continues as Beijing accuses two detained Canadians of working together to spy on China. This is Bloomberg UAE PMI UAE new orders new employment numbers all falling on the Emirates and BD data kind on the PMI is let me give them to the overall index fifty three point four that drops from fifty six point three in January so this is the readings. That's the lowest since October 2016 on the headline when it comes to new orders 55 double Nicole NASDAQ from sixty point nine so quite a precipitous drop there. The lowest reading since October 2016 . Unemployment is also falling. Let me switch over to Saudi Arabia. We also have a note that a little bit of a bump for the whole economy of Saudi Arabia fifty six point six from fifty six point two. That's the highest reading since December 2017. A change in shape in KSA. We're talking college gold. That's next. This is Bloomberg it's just gone eleven thirty in the evening in New York. You're looking at live pictures of midtown Manhattan there. Bit of a different scene to what we saw yesterday during that snow storm . Snow ended up falling slightly less than expected just five inches of mostly slush instead of as much as 10 inches predicted at one point. Meanwhile we have U.S. equity futures sliding this morning well down just a point really after yesterday's big fall the Bloomberg Dollar Index also ticking up. It's been a few days that we've seen strength in the U.S. dollar. Now let's check in on the first word headlines from around the world . Here's Annabel jewelers. Thanks Tracy. Well China's National People's Congress has opened with headline announcements on growth the budget deficit and inflation. Premier Li Ka Ching says GDP growth is expected to be six to six and a half percent slightly lower than last year. He also said inflation will be unchanged at 3 percent while the deficit will be two tenths wider than in 2018 and that China must brace for what he called a tough economic battle. More evidence is emerging that President Trump's trade war is hurting the US economy. Two new studies say his tariffs are the most consequential trade experiment since the 1930s. Smoot Hawley measures that are blamed for deepening the Great Depression. Economists found that the impact of Trump's duties on the US is in the billions and that it's being borne largely by American consumers . Libya's biggest oil food should resume pumping today. Output was halted in December when the food was seized by state guards and armed residents. It was then taken over again last month by militia forces. Libya's state run producer now says regular output will be restored with capacity of up to 300000 barrels of crude a day. It says the shutdown led to one point eight billion dollars in lost production. The pay is a weekend off for the Philippines named budget secretary Benjamin Yorke known as the new central bank governor to succeed the late Nestor as vanilla deal dono was a surprise choice for many analysts who predicted that he'll be inclined to cut rates to encourage growth. Don't know will initially said the rest of its Vinny's six year term which ends in mid 2023. Self-proclaimed Venezuelan leader Juan Guido has defied threats of arrest and returned to Caracas to challenge President Maduro. He met supporters at the airport and fellow opposition lawmakers say his ability to fly in and challenge shows that Maduro his grip is weakening. U.S. Vice President Mike Pence earlier tweeted that any threats against whites would be quote met with a swift response. Global News 24 hours a day on air and a TicToc on Twitter CAC by more than twenty seven hundred journalists and analysts and more than one hundred and twenty countries. I'm not about rulers. This is Bloomberg get a check on the markets his Juliet in Singapore it is certainly a little bit at risk off today. Annabel we did have that very positive sentiment coming through yesterday in Asian markets on those trade optimism hopes but that seems to have paid it off a little today with the exception of the Philippines which is rising by about six tenths of one per cent . You've got Australia's market down by a third of one per cent no change from the RBA as expected and the Aussie dollar actually holding at a three week low down by a quarter of one per cent there against the dollar. That is more to do with the fact though that we had some trade weighted expectations coming through in terms of the GDP numbers and that suggests that the RBA could next move to cut rates when it comes to interest rates the peso they're down by one per cent leading declines in Asian ethics markets as Annabel was talking about a surprise RBA governor appointment there and also inflation coming in weaker than expected. And we are seeing weakness coming through in a lot of the ATMs today Indonesia off by about 1 per cent but worth noting Manus that the Shanghai Composite actually went on the lunch break in positive territory so outperforming what we're seeing in other Asian equities today. Yesterday that index rising above three thousand points for the first time since June. Juliette let's talk about some currencies because the peso is on the move in one direction. What's that going to present in terms of a challenge ready for the new central bank governor. Well we're hearing from a lot of analysts that the new central bank governor Giacchino which was a surprise as we said the budget secretary is actually one that's in favor of lowering interest rates. But when you look at the real interest rates in the Philippines you can see that since March last year they've actually been tracking below 1 per cent until we started to see that very aggressive right move coming through from central banker Philippines which has seen the real rate rise to about 1 per cent this is the white line still well below though what you're seeing in other Asian economies like Malaysia Indonesia South Korea. So a lot of analysts now starting to say what is this going to mean for the Central Bank if he is going to be on a rate cutting path and we saw inflation today come in at a weaker rate than expected three point eight per cent although importantly Tracy that does mean it's back between that two to four per cent band that the central bank is happy with . Yeah interesting challenge there for the central bank. Juliette Saly for us thanks so much. Well Tokyo's district court has approved former Nissan chairman Carlos Gomez bail application and set the bond at 1 billion yen. That's almost 9 million dollars. Let's head over to Tokyo and our conglomerates telecoms and media editor David combs. Dave what's the response likely to be from the prosecutors here. Because of course they could always appeal that bail decision but also released new charges against goen yes that has happened before and several times this is his third appeal for bail. The court has approved it this time and they've announced the amount. You know when you look at all the events surrounding this it looks a lot more like he's going to get it this time. But as you mentioned the prosecutor can still come in. There there's still an array of charges that have been floated around that have yet to be actually laid. And yet to be put into an indictment so it is possible that he could be rearrested on new charges. That's what they would have to do to keep him behind bars. But because this is the third time because of the timing of it because of the new pressure that's been coming from his new legal team that suggests that he will be coming out of jail very soon. It's interesting isn't it that this story that we've got this morning it's about his family going to the U.N. you read this story this morning. I find it fascinating. Amnesty International they raise their concerns about the lack of rules and regulations regarding interrogations during free trials. I mean this is some pretty hefty sort of international condemnation of the process the potential processes in Japan. You think it's a reaction to any of that Absolut Well it certainly could be they haven't said anything about that. That that would be the response. But you know Japan is very sensitive to the decisions of the U.N. to cases that are brought before the U.N.. Japan is an enthusiastic perhaps one of the world's most enthusiastic participants in the U.N. a big supporter of the U.N. supplies 10 percent of its budget. So this was definitely a strategic stroke on the part of God's new legal team to apply the pressure there. You know the U.N. is a very important institution and it's not hard to imagine that the pressure was mounting international you know the U.N. has a very long list there called the Mandela Rules named after M.C. Nelson Mandela that have to do with how prisoners are to be treated. There is more than 140 of these rules are very specific and it seems clear that some of the treatment they're going to receive could be in violation of those that would be very embarrassing for that to be brought up for Japan. So that that could have well played into this decision OK. Thank you very much. That is our Bloomberg conglomerates and telecom and media editor Dave Nikkei on the very latest breaking news. Carl has gone set for Bell excuse me . Australia's central bank has held its nerve in the face of a credit squeeze and tumbling property prices it's keeping its interest rates unchanged as it waits to see how consumers respond. Let's get to Sydney our correspondent Paul Allen is our Paul. Good to see you as always. So the currency didn't move a great deal on what appears to be a little change statement from the RBA still still slow slow slow as we go that's right. Business has been slow as we go for two and a half years now. All 31 economists surveyed didn't expect the rate to move. So no great surprise that the cash rate still parked of one and a half percent but the EV live blog here at Bloomberg did describe the statement as plain vanilla really accommodative rates. The RBA saying consistent with supporting growth that noted the stronger job markets as usual and the job market here in Australia isn't a very healthy state. But housing you mentioned there the drop in house prices continues as Sydney prices now off more than 13 per cent below their 2017 peak. Now on the one hand this does give the RBA to ease rates further without fear of igniting another house price bubble . But then there is a concern that these easing house prices are crimping household spending and consumption and therefore growth . Well you mentioned growth Paul I have to ask you about Wednesday's GDP print of course the RBA decision coming out ahead of that although we did have the net export figures this morning. Why is so much being so much attention being placed on this particular print and what are we expecting in terms of GDP right now. Yeah well the GDP growth figures have been a little bit underwhelming especially when you compare them to the ISE expectations for 2019 which is around 3 per cent seems a bit heroic when you look at the actual numbers. Growth has been slowing. The estimate for the quarter a 4 percent point 4 percent growth to be two point six per cent on year and we did get a sneak preview as you mentioned in today's current account figures. Our net exports are shaving an estimated two tenths of a percent off that number. Although government consumption expected to add three tenths of one per cent so we'll have to wait and see when those numbers come out. But some of the economists who are predicting an RBA cut or two in 2019 also are not optimistic on those growth numbers. Shane Oliver from AMP the chief economist there thinks it's going to be 0 percent for the quarter but we'll have our answer in a little under 24 hours time. Yeah not long to wait now. All right. Paul Allen there for us in Sydney. Thank you so much. Let's turn to another top story from the Asia region. Far away could be opening a new front in its legal offensive against Western critics. But the FTSE and the New York Times say it is preparing to sue the US government banning federal agencies from using far away products . The potential action comes as China accuses two Canadians it has detained of espionage. Canadian Prime Minister Justin Trudeau has dismissed those allegations. We will ensure that that rule of law is fully respected and we will go through those processes in a proper and rigorous way. It is unfortunate that China continues to move forward on these arbitrary detentions . We will continue to stand up for these Canadians let's bring in our Bloomberg opinion columnist Tim coleman. Tim it's nice to see you this morning. It's really interesting to watch what Waco go on the offensive here and they're doing it in various jurisdictions now it feels like what are they hoping to achieve well this is the weird thing about it. They were doing so well trying to make the world think that this is a trustworthy good international citizen. You know because there've been a lot of charges and allegations levelled at them about espionage and corporate spying stealing of trade secrets and many other things . But the last few months this charm offensive was working and then suddenly they turn around and sue Canada. That's specifically almost a personal case with Sabrina deciding that the CFO that is deciding that she wants to sue the Canadian authorities then reports of suing the US over a separate issue which is ban on highway products. What they're trying to achieve. Frankly I don't know. Because even if both legal cases have merit even if they win both legal cases I don't see that there's a positive outcome for them in either respect. So it seems to be very much a case of them cutting off their nose to spite their face. Maybe they want to save face. Maybe that's what it's about. But I don't see there's any good outcome to come from this are they. I suppose the question is this they they've launched a new P.R. initiative this year. Global commerce initiative into the mobile world congress last week and really lambasted in all but name the United States of America. Are they galvanizing any support around the world as a result of the strategy. I would say they are. They're chipping away at concerns over Highway products specifically with regard to espionage. There is other concerns about highway that that exists but the espionage charges that they're devices specifically their equipment is aiding and abetting Chinese espionage state espionage. There have been rather successful at allaying concerns at the operator level. Even regulators saying well you know maybe it's a risk that we could handle. So yeah they had been successful. So that's why this belligerent tactic with these two specific court cases does surprise me a little bit that it seems like it's it's a reversal it's going back a couple of steps on all the progress they had made over the last few months. Yeah well that's what happens with belligerence Tim . You know it comes back to bite you on the literal proverbial at some juncture. Tim Colbert thank you very much. Opinion columnist. On the very latest with Hawaii. Up next on the show Ferrari design in Farina unveils the fastest Italian car and that made it comes with two million euro price tag. Cheap at half the price. Tracy and I already on order for one each . We've got an interview with the CEO. That's next. This is Bloomberg it's about 140 5 p.m. in Japan you're looking at live pictures of the Imperial Palace there. We have the Japanese yen currently trading a touch weaker against the greenback just above one hundred and eleven to the U.S. dollar. Meanwhile Japan's new member of the government's economic and fiscal policy council was talking about the need for more foreign workers in that country to help boost GDP. All right. Speaking of GDP let's check in on the Indian markets now with Bloomberg Quince neuron shot in Mumbai. Neurons were all about economic growth today. And President Trump has found some middle ground with Xi Jinping and he is now turning up the heat on India and Turkey when it comes to trade. What's going on there. Yeah I think Tracy good news to you and the comments about Trump saying that India is ise nation and you know some benefits need to be evil a generalized system of preferences. I think that statement was the talk of down this morning in India. It's not had a big impact on the markets because frankly if you look at what the Indian markets are doing they are very very flat. The Nifty the Sensex the nifty bank all of those indices are flat . The money markets haven't changed too much. It's not a material market in bag. But at the point of time when we're looking at news on the macro and the geopolitical space this is important to the Indian stand. I'll just quickly leave you with what they Nikkei has been because it's not had impact on the markets but important to know what they stand is David Ingles minister gave a statement saying that the GSP or the general system of preferences benefits to India. But any means relatively limited to the do not. Hundred and ninety million dollars and that we've signed other agreements with the US. So this getting it evoked will not have a material impact on Indian trade. The only caveat out here is we do not know if these benefits are being taken away. In fact Indian investments in the U.S. and if doors also have a deal impact or no. If that were to happen then that's a negative. But for now I don't see anybody's pricing that body up. Any news sport on this would be center stage. To be honest back to you. Yes. Certainly for one for us to watch and we'll be waiting for further details of that news. Let's get a quick check of the latest business flash headlines now. Here's Annabel jewelers thanks Tracy. Well J.P. Morgan is turning less bullish on Macao gaming stocks downgrading Galaxy and Wynn Macao to neutral from overweight its latest analysts note says any big rally would require estimate upgrades which the bank sees as unlikely in the current macro and demand situation. The Macao gaming sector has risen more than 20 percent so far this year compared to an 11 percent gain for the Hang Seng index. Meanwhile JP Morgan has won the race for the job of overseeing live stock. In the early hours of trading after the ride hailing goes public. The IPO is stabilization agent. Overseas the first price setting and manages additional shares allotted to underwriters in a so-called green shoe option. It's a coveted role for the banks bank which because it also comes with the potential for more commissions on trades and some good news at last for Jaguar with its eye paced electric SUV scooping the carmaker's first ever European Car of the year award at the Geneva Motor Show. The pace is Jihye Lee first electric car and the company said such vehicles are the future. It's been a tough start to the year for Tata Motors luxury unit J La suffered a four billion dollar loss last month reporting for sales in China and a heavy debt burden. And that's your Bloomberg Business slash minus and about thank you very much and the sister company of Ferrari designer Pinon arena has unveiled its first hyper car that t stop. It's a 2 million euro electric Q Pay is first complete model made by the brand with nineteen hundred horsepower a top speed at 250 miles an hour and it is the fastest and most powerful Italian car ever made automobiles. Been a Ferrari not CEO a Nikkei a patch SEC spoke to Bloomberg at the Geneva Motor Show when we did the initial research study. Of course we thought it's a very traditional car collectors but people who have a Ferrari to have a book is while we started collecting orders starting in Pebble Beach last summer. We realized yes part of our clients are traditional collectors but part of our clients are I want to call it self-made technology and innovative new people who haven't even bought a hyper car before . They come from biotech they come from a tech industry innovation and people where we think we just gone beyond luxury as a status they want something which is sustainable zero emission and understated but lots of let's say Italian corporates for Marinello on some dog outside but they don't have the image as being understated Pina very not always had the image of being an understated very classy brand and having a design language but modern technology. We are approaching a new audience which actually we feel people are in that self indulgent space but never 16 cylinder and the engine is not a necessity anymore for their enjoyment that we want the office . They want luxury of about guilds. Let me ask you because for it obviously has a lot of experience with design. Now your work is stamped all over is now for males. Is this your message to them to say hey you can make an electric car too. Yes obviously you have to see it's two different companies right. We have been in Farina SBA income Yano which is listed at the Milan Stock Exchange which is a meet to be company. We have the same shareholders we are but we are a completely different company . We are to opinion very now based in Munich. Anthony Shery Ahn and our business is to make a peanut Fiorina brand a household brand in the luxury automobile space. So actually we are side by side with our sister company but we will sooner or later compete for our clients. I'll ask you about China because the Chinese car market right now is shrinking. Obviously the luxury car market is different but I'm wondering how do you see the Chinese luxury market in the emerging luxury like the emerging markets developing for you know cars like this. I personally think there is a big big divergence between classic automotive market premium market and luxury market. If you look at the statistics of the World Economic Forum or ultra high net worth individuals for fastest growing ultra high net direct individual numbers are in Asia and China Hong Kong Singapore but also the tiger states. So we think our future clients of course will come from the US. It's gonna be our single biggest market we're going to have very serious buyers from Europe. But I think the growth forest is definitely markets like China still Japan has a very strong classic ultra high network individual and a strong sense first RTX is gonna be new markets like Hong Kong Singapore Korea and some of his new emerging markets. So for us it's less about the global car market it's about how do global ultra high network individuals perceive future luxury and go beyond because consumption well Bloomberg size and scope is coming up today's number is two hundred ninety two million dollars. Find out why next. This is Bloomberg it is time now for Bloomberg size and scope. Every day we break down one superlative from our coverage and today's number is two hundred ninety two million dollars. Here it explain why is Bloomberg cross asset reporter Eric Lamb two hundred ninety two million. That's about enough to buy you one hundred thirty of those two point two million dollar cars we're just talking about Eric but that's not what this is. This is about China. It's about the music industry. Yeah the number we're talking about today is really showing how fast that industry is grown in China . It's yet another area where we're seeing an emerging disruptive market in China. And in this case we're talking about music streaming the figure that we have two hundred ninety two million that's how much streaming revenue in China. Gram by 2017 it's almost tripled from levels in 2014 and it's propelled China's streaming market into one of the top ten largest in the world. So some of the winners in this case would be a company like Tencent their unit Tencent music recently listed in New York it's up 40 percent since listing late last year. Eric thank you very much Eric Lando the very latest on how to see the streaming market in Asia. Eric thank you very much Tracy is only going to be an Nejra Cehic day in terms of where the next sight line for risk goes and the trade dispute and you've got the Shanghai still above 3000. We've got a report from the Fed in New York saying it's costing consumers three billion dollars three billion dollars a month in additional taxes. S & amp;P futures as you can see they're just nipping into the red. There's a bit of trade angst out there as Trump refocuses on India and Turkey now in the form of trade dispute. The dollar is nipping into the green but nothing too evident and a slight bit down to the dollar. You want to see whether that in juice will do it all over again tomorrow morning. DAYBREAK. Middle East continues for the next hour. This is Bloomberg this is Bloomberg DAYBREAK middle east our top stories this morning. China lowers its growth goal and a ninth is a major tax cut. Li Keqiang warns of a tough economic battle ahead . Meanwhile there is more evidence that the trade war is hurting the US economy. Two studies put the cost at billions of dollars being borne largely by American consumers. And Libya proposed to stop pumping again from its biggest oilfield adding another complication to OPEC's efforts to trim a global supply glut and a Japanese court grants Carlos Gomes bail setting the bond at almost 9 million dollars. We'll live to Tokyo this hour . It has just gone 9am am across the Emirates. This is Bloomberg DAYBREAK middle east warm welcome to the show. I'm Manus Cranny . So another day I'm guessing we were kissing a trade deal today . We might just be a little bit more anxious according to Robin light highs in global trade. How does it look for India. This is the state of play you've got the February Nikkei services P am I. This is the health of the India economy fifty two point two. That's a little bit higher than the market had seen last month of fifty two point two. Sorry it's bang in line with what we saw in the previous month. My apologies on that. Of course Donald Trump has moved his sightline line from hugging up to China and doing a deal. He's not trained his sightline very clearly on India and Turkey in terms of those favoured status that they have of some imports into the United States of America . So we just roll on from one trade angst to another. That's the Indian data. What do you do when your anxious little bit of better protection. Do you really having a good go . The dollar was you know splendidly going forward. We were effusive in our risk on rally and dine went gold we got a small bonus this morning. Why do I focus on this. Because we're ripping money out of the largest ETF in the world at the fastest pace in almost a year. So you must debate. Do you want gold in your portfolio at any level. Goldman Sachs a fourteen hundred twenty five dollars. Why the economic cycle is aging and you will have low volatility returns in 2019. Morgan Stanley are not so convinced they closed their long position and they said look you've struggled at thirteen hundred and fifty dollars let's just give up. Move on and rock on to the next thing. So those you pay them ise that's the state of play in India to the gym and board what you can see is a manifestation of some of the stories that we have playing out this morning angst over trade . Asian equities drop ever so slightly. China lowering its global grades growth forecast to a bandwidth of 60 65 percent. That is the lowest ever. That has to a certain extent shaken the equity market. Aussie dollar is dying or B.A. leaves rates on change . You are just seeing a response mechanism really to I suppose a more languid R B and also the dollar's a little bit stronger this morning per say on trade angst or is it an ageing cycle . Let's get to Annabel Drood. She's got your first word headlines from around the world Annabel. Good day thanks it's awful and Nissan boss Carlos goad has won bail a Tokyo court setting his bond at the equivalent of nine million dollars. Prosecutors have the right to appeal the court's decision and can add fresh charges to Goins case which would keep him in jail if he is released still and more than three months of detention on financial misconduct allegations . President Trump is turning up the heat on India and Turkey informing Congress that he wants to end key trade preferences with the two countries. The trade benefits allow duty free entry of products including auto components and textiles. The president says some American companies complain shipments to India have been hit by non tariff barriers. While he says Turkey is no longer merely a developing country China is linking the cases of two Canadians detained amid the waterway drama in Vancouver an official news outlet says Michael covering quote severely violated Chinese law by spying and stealing state secrets while working for the International Crisis Group. The report also cited entrepreneur Michael special was called Rick's primary contact and supplied him with intelligence. Canadian Prime Minister Justin Trudeau is following the case closely. We will ensure that that rule of law is fully respected and we will go through those processes in a proper and rigorous way. It is unfortunate that China continues to move forward on these arbitrary detentions. We will continue to stand up for these Canadians Libya's biggest oil field should resume pumping today. Output was halted in December when the field was seized by state guards and residents. It was then taken over again last month by militia forces. Libya's state run producer now says regular output will be restored with capacity of up to 300000 barrels of crude a day. It says the shutdown led to one point eight billion dollars in lost production. Self-proclaimed Venezuelan leader Juan Guido has defied threats of arrest and returned to Caracas to challenge President Maduro. He met supporters at the airport and fellow opposition lawmakers say his ability to fly in unchallenged shows that Maduro's grip is weakening. U.S. Vice President Mike Pence earlier tweeted that any threats against al-Qaida would be quote met with a swift response. And actor Luke Perry has died at 52 after suffering a massive stroke . He made his name playing wealthy rebel Dylan McKay in Beverly Hills ninety two and has been in it and had been in hospital since last Wednesday after medics were called to his home in the L.A. district of Sherman Oaks. Perry who enjoyed a prolific film and TV career said he was inspired to become an actor by a photo of Paul Newman on his mother's mirror when he was young global news 24 hours a day on air and a TicToc on Twitter powered by more than twenty seven hundred journalists and analysts and more than 120 countries. Man of about rulers . This is Bloomberg madness I heard about thanks for the round of night Jonah has lowered this year's growth target and announced a major tax cut saying the country must brace for tough economic battles show credo full analysis of developments in and outside China shows that in pursuing development this year we will face a graver and more complicated environment as well as risks and challenges unforeseeable and otherwise that are greater in number and size. We must be fully prepared for a tough struggle to go there's energy. Je ne our China correspondent Tom Mackenzie is at the Great Hall of the people in Tiananmen Square. Tom good to see you this morning. What are the highlights of what we've heard today . For me it's almost like setting the bar low but bringing the a game of stimulus I think that's a really good way of putting it actually matters . You know this was a relatively somber speech as we heard from Premier Li Keqiang talking about the rising instability and uncertainty he's talking about the increasing downward pressure on the Chinese economy and the hidden risks and dangers that he was warning about and and then laid out how the Chinese government was going to recalibrate their response to take into account some of these these risks. And one of those of course was softening that GDP target as you say to a range of between 6 and 6 and 5 6 9 per cent and that is the weakest target that they've set themselves ever. And it compares to the full year growth target or growth that we finally got in 2018 of six point six percent. Now most economists think we're going to get somewhere in between that range probably six point to six point three percent by the end of the year. We also got the deficit target as well so they raised the deficit targets 2.8 percent . Again that allows them to have space on the fiscal front. And we saw that you pointed to these tax cuts 300 billion dollars in tax cuts cuts to fees and cuts to Social Security. So again the question really is whether or not this is going to be enough especially if we don't get a trade war of course that seems to be like a trade deal. That's the outline a clear case at the moment it seems like we're heading towards a direction where we're going to get some kind of deal if we don't know. The question is whether or not this fiscal support will be enough . Tom MacKenzie hope that's not a Freudian slip that we don't get that we do not end up with a deal because let's face it these markets are stuck to great shock shot great reporting as always top wrap up warm. It could be a bumpy ride in China for sure . NASA's 80 is the founder and president at NASA's 80 associates he is my guest host NASA. Good to see you this morning good morning. Bloomberg economics team have written a lovely line a pragmatic growth target which is the lowest they've ever sat and a sensible economic support plan. Is that would you take away from the NPC so far I think the first thing to notice is that the tone is much less exuberant and happy than it was last year . So much more realistic from that point of view. And let's remember that the overall target for 2010 2010 20 is to double the size of the economy. That's the overall target for China . And that assumes that on average over the 10 year period you have a growth rate of around six point two percent. Right. So it's highly likely that over 2019 2020 they'll achieve that so they'll have a doubling of the size of the economy. And this is enormous. I mean let's remember that you're talking about the second biggest economy in the world. So doubling it over a 10 year period is a major achievement. Having said that the big question mark is of course whether or not you're going to have a trade deal. Everything seems to be indicating that you're moving towards a trade deal. I do find the markets a bit over optimistic in that they are thinking that you're going to achieve some major historic deal as long it could. Lew said I don't think you're going to reach a historic deal and if you look at the White House and the administration there are different voices speaking. Absolutely. When it comes those voices Robert lighthouse it's very interesting he talks about he wants regular conversations and he wants the ability for the US to respond proportionally or indeed unilateral action and things like of trip wires. This is not just a deal. And then we're off to the races forever correct. And one thing to note is that light ise comes from a time when he was in the Reagan administration. He did the Japan trade deal. He did the Japan trade deal. And I might say there's a bit of arrogance in the approach towards the Chinese as though you're going to tell them you have to implement this. And if you don't implement this I'm going to push the tariff lever or other sanctions as I wish . And let's get to markets because you said perhaps I had my last guest. I think you might have read Alan Greenspan's book Irrational Exuberance. Sure. Let's have a look at the Chinese market. We're nearly 7 trillion in market capitalization. It's gone up by one point one trillion in February alone. I love the fast and furious market there's nobody rocks. Fast and Furious market better than myself but an asset cannot endure. Or if the doubled the size of the economy surely this is the start of a glorious roar higher. Well you've got two things. Of course you've got the trade deal or expectation that the shoe deal will happen. But more important is the increase in the size and the share of China in the MSCI index. Yeah likely quadrupling. I think this is what really led to that strong rally along with the expectations of a trade deal. So let's be fair if you look at the share of emerging markets in MSCI and particularly Asia and China it's way below their size and the global economy. So the point I think is that as this happens the pressure will be on China to open up its internal market. And I think where I'm optimistic is that China during 2019 2020 will start opening up the domestic market for foreign investment in a bigger way. But tell me this which is that there is a natural spillover effect isn't there. From what we've been discussing in terms of Asia . Asia absolutely we're into the worn into the Aussie dollar little bit of reaction on the Aussie this morning on how it might happen it might not happen but that spillover effect does that change how you invest. It must because the trade deal if it happens has implications for the supply chain for the Chinese supply chain. So all Southeast Asian markets directly linked to China will benefit from this. Remember that the major impact would have been on those it would have been on Vietnam Thailand and others who are suppliers into the Chinese supply chain. So you're going to see much benefit and expectations of higher growth. Okay. And I say you stay with me. We've got a little bit more to get through that is NASA safety. My guest host this morning some breaking news coming through on Turkish Airlines . Got the full year net income coming through across the Bloomberg net 4.0 5 billion lira they asked me what that was for four point one to a lot of these airlines. Obviously an intense competition with one another. That's the full year net income on the sales side sixty two point nine billion that's a little bit lighter than the market had expected to where about one point seven percent below the estimates on the full year net income on the airline story. Still ahead on the show Carlos Goen is granted bail. The Fallen Nissan leader could be released today. We're live in Tokyo. But up next we're digging into some of the week's events. The key markers in your diary include in the jobs report on Friday the ECB latest rate decision on Thursday. This is Bloomberg 45 minutes away from the start of your cash trading here in Dubai. Beautiful day is a day IFC ise financial center. You are nipping into a rising territory. The dollar is low . Pledged pledge to stabilize the yuan won't translate to a rigid level. That's what Westpac are saying. Volatility is at the lowest this year on the yuan and Premier Li Ka Chang reiterates ethics policy is to keep the yuan stable and at appropriate levels. So that is the very latest coming from China and the stability on the yuan. One more read had to give you a little bit more breaking news coming across the Bloomberg. This is from South Africa. Nedbank group on the banking side full year adjusted earnings per share twenty seven point three six at Rand per share at the market had pencilled in twenty seven point three eight one so it is technically at just a little bit below what the market had anticipated but it's more or less at the money final dividend seven point two Rand pressure. If you are a shareholder that is Nedbank coming out with that numbers at more redheads to come I'm sure that's harkened back to the big story of the day because if it's not China it's debt and the Treasury secretary Stephen confusion is going to invoke special accounting measures until June to help pay the government's bills without breaching the legal US debt setting debt limit will come back into force on what it came back into force I should say. On March the 1st after being suspended by Congress but the Treasury Department can override that to prevent a default on payments the Fusion has appealed to Congress to increase the debt limit as soon as possible. Meanwhile investors are awaiting the latest U.S. jobs report due on Friday . The economy is expected to have added one hundred eighty one thousand jobs in February down from the blowout 340000 in January. Also got the ECB ise latest rate decision on Thursday my guest host is NASA say founder and president of NASA's Ada associates. So it looks like my is going to do some accounting trickery to help himself get over the debt ceiling. The jobs report for me is still going to be potentially one of the biggest movers a drop in the headline but it's all about the wages isn't it. It is but you should also be aware that a lot of people have dropped out of the jobs market. If you look at some of the numbers they're telling you something like 20 percent of the age group 25 to 55 has simply dropped out of the of the market. So that has helped the unemployment figures come down and also unemployment compensation has also come down. But yes the market will be expecting that and any change in the numbers below expectations I think will confirm that the U.S. market and the U.S. economy is slowing down. We've already seen construction numbers pointing in a southward direction. If you look at housing starts if you look at the housing sector as a whole pointing towards a slowdown probably in the third quarter . Now this is a debate that we had in the last hour. Tracy went after the Citigroup Global economic surprises. Let's have a look at the GDP it's in the library. I looked at the night GDP from the Atlanta Fed Tracey's question I think was very prescient. These are these are the data points city economic surprises across across the world emerging markets et cetera . Whether this is just late cycle natural cadence of the world just coming off an accelerated growth phase or is it trade angst . I think you've got a combination of the two in the trade thanks certainly FTSE trade just exacerbate exacerbate things . Absolutely. But it's also affecting investment. We don't always look at the investment numbers. I think we should look at real investment. And if you look at real investment including FDI into the US it's come down substantially. So I think we need to focus much more on that and the numbers I think would point to the fact again that you're having a slowdown in the United States. So what you have right now is a bit of a wobbling bit of a level. But I think first quarter is really what you want to look at. The markets really waiting to what's going to happen to the trade deal with the Fed. The New York Fed have produced their research a number of different research pieces came out you know how much is the trade war the real trade war the levies the tariffs that are hitting the US consumer. I mean I was stunned. Three billion dollars a month in additional taxes on companies and a further one point four billion dollar deadweight losses put in the same month a month in this ise the United States consumer. I don't necessarily that's going to stop the consumer. No. But but but it has a slow buildup. Has the important the important point there is that Chinese exporters have not reduced their prices to maintain market share in the US. What's happened is that importers and U.S. producers using Chinese inputs have simply pushed the price increase onto consumers in the United States and they're feeling that two impacts I think on Trump and the administration. One is the farm sector which explains why Trump is talking about putting pressure on China with respect to foreign goods and the other one is how do I help U.S. consumers who are now feeling the brunt of the tariffs. Yep. Well certainly the consumer is it is the engine of all of our optimism that's always great to get your opinion nice teachers and as I say the founder and president of NASA's safety associates coming up on the show Opposition leader Juan guy Johnson returns to Venezuela with a warning for his supporters. More on this story. That's next . This is Bloomberg the opposition leader won Gallardo has returned to Venezuela and it was quite a return. He acknowledged the failure to spark a military rebellion with deliveries of humanitarian aid to the country and he warned supporters they face a long struggle for democracy. The turmoil in Venezuela is a factor affecting all markets as to is Libya North African country has said it will resume pumping from its biggest oil field today. Complicating OPEC's efforts to trim that supply Bloomberg global markets . Emerging markets managing added Justin Carrigan our Middle East energy reporter Anthony Depaulo join me now around the DAX to try and put some perspective on this. And Justin let's bring you first of all we've got we've got Guido we're turning back . We saw the photographs of him being snapped. There was always the risk of course that Maduro would go after him and arrest him because in theory he had but not in theory. He did break. He did break the law. Why do you think Maduro has held off on not arresting him. Well I think the optics would have been very serious indeed if he'd decided to arrest Guido at the airport . It would have set off obviously under a lot of protests. And of course they had this threat hanging over them from you know claims by the US that there would be very serious repercussions if he was put under arrest. So Boehner has made the judgment that on balance probably leave him alone for now and let the situation go back to pretty much how it was two weeks ago before Guido went on his whistle stop tour around Latin America. Yeah I mean and he himself came back and he said look can we call the twenty third of February a success. Obviously not the word will help us but it's up to us to continue. So you don't get the sense that this struggle is going away. The one thing that I did see was of course yesterday we had Vice President Mr. patents tweeting you know sort of almost at your peril Guido's safe return to Venezuela is of the highest importance at the world is watching to the U.S. The long arm of the US. It is I would say reaching over Maduro is every action. Absolutely no question about that. In fact the long arm of a lot of countries . Now why do has some 50 countries backing his cause at the moment. But Maduro when all is said and done is in the situation as I said pretty much how it was two weeks ago. Why do it failed on the on the food deliveries. He's got a lot of diplomatic support. He's got a lot of support obviously on the ground. We saw the pictures arriving in Caracas. He has but he hasn't got the military justice. That's right. That's an the beneficiary and that's crucial. OK. Keep keep those thoughts . RTS let's bring you in. I mean when you know you're never far apart they don't sit physically far long pilots so they can compare notes Anthony for you. I want to talk about what's happening in terms of in terms of the supply because Venezuela comes in. But we've not got a whole new supply factor to deal with in our oil market. Yeah I mean these are two factors that are going in different directions. We've got Venezuela on the one hand where production has been going down. Yes because of the story instead of the economy there. U.S. sanctions that effectively prohibit U.S. companies from from buying the crude is causing the Venezuelans have to go out and look for other buyers that that's potentially going to drag down production and exports further financial sanctions will continue to hurt that. Also embargoes on the sale of a later product that's that's needed to dilute Venezuela's oil before it can even be used to that part of Libya. Libya on the other hand is bringing supply back up because that field is going to come on has already come on and they're bringing back 300000 barrels a day they say within the coming days. So that would bring Libya back up to about one point two million barrels a day of production according to to our forecast. Interestingly these things kind of move in the same direction in terms of the impact on prices in the market because the Venezuelan oil that's coming off as very heavy oil the Libyan is a very late oil. So we've already seen the spread between light and heavy crudes very narrow which is a rare occurrence usually the heavy crudes because they're harder to refine their cost less than the Lakers. But now they're going in that same direction gentlemen fast and furious politics and oil mixing a cauldron for potential snatch a punch up in the market. Gentlemen thank you very much. Our Middle East markets editor Justin Carrigan our energy reporter Anthony De Paola . We're going to catch up with you my next and we're going to talk Saudi stocks rally too much it's New York where it's just gone twelve thirty after midnight . We're a minus one degree. So the thaw seems to have hit New York yet. S & amp;P is a smidge lower. You know yesterday we were kissing the trade. Today we just prevaricating about what Robert light Hazar is warning that we want trip wires in here in terms of behavior by the Chinese. Let's roll it over have a look at the dollar because look the consequence of a little bit of angst by the way the U.S. are not training their sight lines on Turkey and on India in terms of trade the dollar just pips a little bit higher up an eighth of one percent. Is it you differential that we're up for the fifth day in the row before the Fed speakers. It's all about the Fed. Everybody we got Rosen and we got Kashkari the dove of them all. We'll be speaking a little bit later on. So we're all ears to the Fed . Dollar is bet. First what headlines out about our juniors has the agenda thanks madness. Well China's National People's Congress has opened with headline announcements on growth the budget deficit and inflation. From L.A. Chang says GDP growth is expected to be six to six and a half percent slightly lower than last year. He also said inflation will be unchanged at 3 percent while the deficit will be two tenths wider than in 2018 and that China must brace what he called a tough economic battle . More evidence is emerging that President Trump's trade war is hurting the US economy. Two new studies say his tariffs are the most consequential trade experiment since the 1930s. Smoot cooling measures that are blamed for deepening the Great Depression. Economists found that the impact of Trump's duties on the US is in the billions and that it's being borne largely by American consumers. Treasury Secretary Stephen minutia will invoke special accounting measures until June to help pay government bills without breaching the US that legal US debt ceiling limit came back into force on March 1st after being suspended by Congress. But the Treasury Department can override that to prevent a default on payments. Knows should has appealed to Congress to increase the debt limit as soon as possible. And the Philippines has named a new central bank governor with budget secretary Benjamin joke no succeeding the late Nestor Espana finance chief Carlos Dominguez confirmed the appointment saying his experience as a technocrat and professional manager makes him the ideal person to lead central bank policy. Job No will initially serve the rest of his six year term which ends in mid 2023. Global News 24 hours a day on air and a TicToc on Twitter followed by more than twenty seven hundred journalists and analysts in more than 120 countries. I'm mad about rulers. This is Bloomberg. Let's get a check on the markets now. His Juliet in Singapore. Juliet Well Annabel that central bank a move from the Philippines is really weighing into effect markets today. Have a look at the peso. It is the worst performing Asian currency down by one per cent against the dollar in terms of the non deliverable forwards we're seeing quite a hefty drop in the currency as well. This governor as you were saying is seen as a guess and perhaps going to cut interest rates at a time when we've seen the central bank in the Philippines very much on the front foot in terms of raising rates inflation also weaker than expected today you have seen some upside in Philippine equities today. Elsewhere though we are seeing Asian stocks lower for the first time in three sessions. A lot of foreign outflows coming out of the Indonesian market. It's off by over 1 per cent but importantly Manus we have seen these CSI 300 actually outperform remember yesterday it closed above that three thousand point level for the first time since June. And we're continuing to see that market hold on to eight month highs as the NPC gets underway in Beijing. Jim good to see you this morning. Let's talk about company specifics because you've got a investment boosting one Chinese stocks. What are the details. Yes. Well yesterday we saw a lot of surge coming through in tech stocks in China after we saw Beijing announce this new plan. And now companies are getting on the back foot of this and starting to announce their own investment plans into AI and robotics. One of those is TCO . It is up by 10 per cent the daily limit says its plans to invest 80 billion yuan that's around 12 million dollars over the next three years on semiconductor A.I. and big data. This is a company that manufactures electronic products and sells them as well in mainland China. Let's have a look though at some of the losers. We've seen Flight Centre in Sydney come off its recent highs down by about 4 per cent on the close in the Sydney session. And I'm also watching pidgin in Japan down by eight per cent the worst performer. When you look at the Emaar function on the Bloomberg this is a company that sells maternity and also cares products for elderly people and baby care products and its latest results are suggesting that perhaps the China growth story is not quite there for this company. It says shares have dropped the most since October because its latest results were a little bit on the negative side in terms of what people were looking for in its growth strategy story minus Juliet. I always saw that storks delivered babies not pigeons but there you go. Let's keep an eye on all sides . Gina thank you very much. Great roundup there on the markets the very latest from our Asian counterpart in Singapore. Now Saudi Arabian stocks are about to join a major emerging market benchmark gaining the attention of many money managers for the first time. So some investors are familiar with the Gulf markets say that the biggest stocks in Riyadh have already rallied in anticipation of their inclusion in the gauges . They're looking at Dubai as potentially something with a bigger gain to be had. Joining me now is Yvonne man managing director and head of equity research at Icahn capital. Great to see you . So here's the latest by the way I'm going to hang out the bunting when this inclusion finally happens for Footsie Russell and MSCI but I've got a chart and it is about that valuation Dubai versus the Dow. Well it is the widest since 2000 and 10 . So my question to you is is this is Saudi fully valued on the proposition of inclusion and is Dubai a respectable alternative proposition given that differential. Yes indeed that's what we've been thinking as well we had a big overweight on Saudi by the middle of December and we've been slowly tweaking that position basically on the basis on the back of feedback that we got from investors saying well we're not going to play the Saudi trade. They're still quite wary about the valuations where they're sitting lack of catalysts because those with the growth are looking Saudi is not that compelling and also concerns about Jerry's selling in our view that's not all warranted. I think still there's a bit of leg room let's say for the Saudi market to go higher because we think juries will be probably be selling into tune in line with the passive potential inflows in the Saudi market. But you know we start to see indeed the rotation particularly from decency funds into Dubai. We saw it we saw about 100 million of outflows out of the Saudi markets back into the UAE. And that's interesting because valuations obviously are very compelling. We saw the likes of all the smaller units rallying very strongly and actually we benefited ourselves as well we positioned ourselves in the core portfolio by buying into the EMR holding company. OK. So you've taken that reposition on board there's a number of different layers of stories aren't there in Dubai. One. One is float. Let's just dig a little bit deeper into into the reverse flow is is it economics or politics that's causing the draw off in flow from Saudi is there still a cash soggy hangover or is it the economic delivery that's manifest in the questions on the road show. No it's mostly about index flows right. So people feel that overplayed as older which then moved back to the by market or not BW market which from a flow perspective was really was a way to finance the Saudi treats and that flow trade already kind of migrated back. Mind you I mean the first IBEW bank increase and foreign ownership limits is going to have some ramification for three major stocks in the index which are Denmark. In my development any more malls and there have been butchered but then bounced back quite strongly on very deep value. Okay. And that foreign ownership limitation as you say. Do you think that's fully priced into the market. I mean this is something I've asked various people but you're more at the front end of it. So to what extent you think there's more to go on those foreign ownership stories to limit on for example. Well there is a limit as well. But if you look at first IBEW bank the inflows are about 900 million dollars. So we're talking about a couple of percent point of the market cap far up itself has rallied probably 60 percent of the last twelve months obviously is over overpriced in our view it's trading at well below two times book value. If you compare to Amy pier and are trading at one to one point two. So obviously our view is it's overvalued overplay the ready and we start to see maybe around index inclusion let's say the increased weighting in the index for Ferb that people start to migrate into in terms of even deeper value names again you're travelling quite a bit. I'm curious to know what the response is from international clients I mean it's not as if they're suddenly woken up and realized that Saudi Arabia is going to stop market or that we've got to stop market. What are the conversations from investors. Because for me the juxtaposition is I've got to look at Egypt which some say is very fully valued as well it's had the best start to the year and in a number of years vs. the today versus maybe these value opposite opportunities in Dubai. So when they look at the market how did they talk about it. Well when we look at our US climb it's probably only 15 to 20 percent is playing to Saudi trade and the rest is happy to be underweight the region and even underweight Saudi basically. So that tells you something that we may not see the 40 to 60 billion dollars that we've been expecting as investors are just happy to be on the way to Saudi Arabia. And what about Egypt. We've had the best start to the year since 2014 and in Egypt. So you know everybody comes in sits in that seat. They get bullish on Eastern tobacco. They get bullish on the consumer and they get bullish on on Egypt making their inflation target. What's your thesis. I mean a run like that is it too splendidly overdone. Well although we like to disagree with consensus often gone kind of agree with this trade because if you look at the market is down still almost 20 percent versus April we're up 20 percent since the low of December which is in line with emerging market index basically. I think the fundamentals of Egypt are definitely stronger than the rest of the emerging markets. I mean it's more driven by domestic growth and a reform agenda whilst the emerging market I think is more fragile and the outlook is still less a cloudy outlook for China for example having reverse say the growth outlook of sixty six and a half percent albeit be there is actually fiscal space. So I believe in the reform agenda inflation is trending down as you rightly point out. And I think there's a very good case very high conviction from our side that rate cuts will come through in the second half because even inflation could reach right by around October or even mid single digits. So we think there is a very compelling case way ahead of target though wouldn't a mid single target is 9 per cent by 2020 simply because the comparison base that we had in October we probably hit five and a half even in October although we expect it to bounce back to slightly over 10 by the end of the year. OK. Yup always great to get you into the seat and expand our horizons around the region. That is yup my managing director and head of equity research at Aachen capital. Up next a beat for the fast food restaurant. Cathy Sidey company is expanding in the Kingdom but has it reached saturation point. We speak to the CEO Halid al-Sayed. That's next. This is Bloomberg let's get a little bit more company news for you. Not in the region shows in happy food services are up just over 3 percent after the fast food restaurant operator posted better than expected numbers. The beat was attributed to a 2 percent rise in profits through higher sales lower selling and marketing expenses. Let's bring in the CEO for the company for happy. It is colored ise seed Halid. Great to have you with us this morning from Riyadh. Talk to me. I buy the business in terms of what you've done some people sort of say to me Look you've doubled you've doubled your footprint since 2014 and you could be hitting a saturation point in the kingdom. What do you say to that thank you it's my pleasure to be with you. The businesses going in terms we started with a slow year in 2018 and started to pick up in the second half and we posted giddily great results in the third quarter and the fourth quarter we had a really good push. We think that you know the vision of 2030 is really going ahead. A lot of that's really new good news coming from the government really have pushed the economy to to grow slowly and I think they are reaching their goals. And here is one of the companies that have been benefiting from this and to the things that the analyst community are going to want to know. We've got this opportunity with you employee costs and rents. The first one is climbing and the second one we understand is dropping can you can you put a little bit more context a Ryan that for me. First of all the employee costs what are they looking like . Well certainly they are increasing you know the fees that are growing every year from the government that work with about you know around 8 million under the 30 year. But to a degree we are managing that. We are cutting costs from other sides from some of our marketing expenses from our suppliers. We are renegotiating you know some of our terms and deals with them and we are really getting you know great help from them. Okay. And in terms of the rental side on the on the drop in rents are you seeing that feed through . Yes yes. We are seeing you know the rents going down on some of the sites but not all of them. But we are getting also you know some of our long term leases to be a demon. He renegotiated the game and we managed to get some good good cuts on those and I constantly try to monitor how many burgers I have and what my saturated fat content I do more for my fitness pal than most people. So changing the menu is incredibly important in your business. Are you seeing a dramatic shift in buying patterns and how are you meeting that with a healthier options. Well that is not really a big shift or change of that. We are we are always before even that you know we are within we had in our menu some healthy. Most of our products are healthy. And do we have the seeds of we have you know the the brown bread do we have lots of options grilled chicken and now on a menu. So all of the customers when they come to the restaurant they would really have all all menu options whether they can choose from it I'd be queuing up at half a on my next on my next trip my next trip to the kingdom . And what about expansion plans are you gonna focus on the franchise model and if so is that going to be regional or will you look to Asia to be in Asia in all the other countries. Look we have all of the deals that will do will be international. We are focusing now on Asia. We are a negotiating tour with two to three new deals that will be announced to finalization. I think within two to four months from now hopefully. What size. Could that be. What size could that deal be. I think that be. Well I really you know I will. The company would announce that after signing that it would be a good news finally and I could say OK well we look forward to the good news when you get the good news make sure you please call me fast. And sure sure. How are you doing with prices. How are you doing with prices. Are you able to make price increases stick. No we don't have any pricing . But as I told you we have seen the sales are picking up pretty since the second half of 2018 and we are seeing that also at the beginning of 2019. So really we don't need to do any increases since we have a good negotiating with the real estate and with our suppliers of food. So we don't need to increase any prices this year. Okay. How does that turn up for the healthy burger with a low price holiday outside the C of healthy food services thank you very much for joining us on Bloomberg this morning . Now to one of the racial stories sister company of Ferrari the designer Pina Farina has unveiled its first hybrid car. The name Batista and two million euro is the price tag for the electric car. It's the first complete model made by the brand with nineteen hundred horsepower a top speed of 250 miles per hour. It's the fastest and most powerful Italian car ever made automobile. Being a foreigner. CEO Michael scarce spoke to Bloomberg at the Geneva Motor Show when we did the initial research study. Of course we thought it's very traditional car collectors but people who have a Ferrari who have a big parties . While we started collecting orders starting in Pebble Beach last summer we realized yes part of our clients are traditional collectors but part of our clients are I want a solid self-made technology and innovative new people who haven't even bought a hyper car before. They come from biotech. They come from a tech industry innovation and people where we feel we're just got beyond luxury as a status they want something which is sustainable zero emission and understated but lots of let's say Italian car brands for Marinello on sun dog outside. But they don't have the image as being understated. Very not always have the image of being an understated very classy brand and having a design language but modern technology. We are approaching a new audience which actually we feel people are in that self indulgent space but never 16 cylinder and so the engine is not a necessity anymore for their enjoyment. They actually want the opposite. They want luxury of about guilt. Let me ask you because being for obviously has a lot of experience with design . You know your work is stamped all over Ferrari's now for males . Is this your message to them to say hey you can make an electric car too. Yes obviously you have to see it's two different companies right. We have been Farina SBA income Yano which is listed at the Milan Stock Exchange which is a meet to be company. We have the same shareholders we are but we have a completely different company. We are ultra mobile opinion very now based in Munich. Shery Ahn and our business is to make the peanut Fiorina brand a household brand in the luxury automobile space. So actually we are side by side with our sister company but we will sooner or later compete for their clients. I would ask you about China because the Chinese car market right now is shrinking. Obviously the luxury car market is different but I'm wondering how do you see the Chinese luxury market in the emerging luxury like the emerging markets developing for you know cars like this. I personally think there is a big big divergence between classic automotive market premium market and luxury market. If you look at the statistics of the World Economic Forum or ultra high net worth individuals the fastest growing ultra high net direct individual numbers are in Asia and China Hong Kong Singapore but also the tiger states. So we think our future clients of course will come from the US. It's gonna be our single biggest market we're gonna have very serious buyers from Europe I think but grow fast is definitely markets like China still Japan has a very strong classic ultra high network individual and a strong sense first that this is gonna be new markets like Hong Kong Singapore Korea and some of his new emerging markets. So for us it's less about the global car market it's about how do global ultra high network individuals perceive future luxury go beyond because consumption and utter indulgence. I love it. Night to Tokyo. We've got the district court they've approved the bail for the former Nissan chairman Carlos Ghosn setting the bond at a billion yen. That's almost nine million dollars. Let's get to Tokyo and our conglomerates telecom and media editor Dave Mark Gurman joins us now. Dave and what not. That's a hefty tag isn't it by anybody's estimate. That is will everyone fully expects that if this does receive final approval if the prosecutor does not appeal this decision then in fact Carlos gold will walk free on bail and willingly pay that money it is it is a large amount . But as we know from much scrutiny of his salary. He's a well-off individual and he should have no trouble paying this . You know there are other conditions that were part of this agreement and that includes surveillance at his home some limits on who he can meet outside and that sort of thing. So this would be a very strict regimen that he'll be under if he does in fact walk out free to think International. I suppose attention came to bear here because he his lawyer. They they were they were talk they were talking about this as being hostage. Justice it certainly appears to be the case that the pressure of his legal team played a role here you know coming a day after announcement by by his lawyer characterizing it that way as hostage justice you know he is offered bail. This would be the third time actually that he requested bail and was finally granted. So yes that would appear to play a role. You know there was also an appeal to the U.N. that could very well have been a pressure point here . You know in general Japanese officials are very sensitive to what goes on in the U.N.. Some countries are paying less attention to that. But of course Japan participates very enthusiastically in the U.N. accounts for 10 percent of its budget has very often been selected as a temporary member of the Security Council and has always been lobbying for a permanent seat on the Security Council. They take the U.N. very seriously and that is one of the approaches that was taken by the legal team was this appeal to the U.N. so that could have played a role in this decision. You know there's also the march of time he's coming on a 100 days in jail now that's a milestone. You know it could be that they felt for a number of factors that it was time to to finally bring that to an end . And in terms of how he was treated there is a couple of lines in our story this morning which surprised me that he endured continuous interrogation by prosecutors and had only limited contact with his legal team. So of course this is this is what we understand so far yes based on everything that's been reported about this he was held under very strict conditions which you know the words harsh and even cruel have been used to describe it and certainly when you when you think about being held in that kind of detention in a small room with this kind of case you know with these kinds of charges hanging over your head without access to the kind of paperwork you know without access to the kind of questions that you can ask other witnesses to respond to and that sort of thing to sort of build a defense you sit there and you know the perception is that this is all based on an effort from prosecutors to try to coerce a confession to these. So that when they bring it to court they have a more of an airtight case . Yes. But of course this is something without a confession . We're going. Has has been a criticism against the Japanese . Dave we have to leave it that Dave Nikkei. We'll catch up a little bit later on Shery Ahn programming conglomerate telecom and media added to Daybreak Europe continues next a narrow charge a mess up. Quick look at the markets. Chinese stocks flirting the 3000 level .

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