paul: welcome to "daybreak australia." shery: i'm shery ahn of bloomberg world headquarters in new york. sophie: in hong kong, we're counting down to me -- asia's major market opens. paul: here are the top stories we are in the next hour. procession -- recession fears down.reasury levels

president trump says talks with china have been good and xi jinping wants to do something. alibaba beat the highest revenue estimates defying the slowdown with a june sales bonanza and robust demand. let's get you a quick check of how markets closed that there is a session in the u.s. a very volatile session at 10 trading day. we saw the s&p 500 fluctuating 12least 1% in the past sessions. it did manage to end the session higher by .25%, this coming as we saw quite strong earnings reports from walmart helping investor sentiment. that also being helped by the fact that we got some strong economic data. u.s. retail sales jumping the most in four months for a fifth consecutive session, consecutive months of gains. still, there was not enough for the treasury rally to subside. take a look at treasuries because that rally resumed. we saw the 30-year yield now breaking below 2% for the first

time ever. the 10-year yield also at one point falling below 1.5%, now at a three-year low. treasuries for do much in demand as we continue to see negative global debt -- treasuries pretty much in demand as we see negative global debt rising to $16 trillion worldwide. japan became the top treasury holder for this month for the first time in two years. of course, china's debt heavily scrutinize given the ongoing trade tensions. u.s. futures at the moment of .1%. let's see how we are setting up in asia. sophie: we're seeing a little bit of a mixed picture with nikkei futures pointing higher, but elsewhere, we are seeing a down day potentially across asia. the trade war between the u.s. and china continues to muddy the outlook for markets.

this morning, kiwi shares opening lower marginally and we .o have more debt switching the four this morning, kiwi benchmark yields have all in below 1% to a record low. yields in australia as well as singapore and japan could be tracking the slight treasuries as well. more governments are being called upon to boost their economies. thailand may unveil a stimulus package as soon as today. the president elected to live spending.- lift we will also get gdp data from china -- taiwan and malaysia for this period. paul: let's check in on first word news now with jessica summers. jessica: china has slammed new u.s. tariffs saying they violate

agreements by president trump at the g20nt xi summit. a short statement from beijing says plans for 10% duties on an additional $300 billion of chinese goods takes the u.s. and china off-track in trade negotiations. hong kong has announced a stimulus package worth more than $2 billion saying the economy will struggle to grow at all this year amid political unrest. financial secretary paul chan 0% --dp will expand our by 0% to 1% at best. that's well below the forecast of 2% to 3%. the outcome comes as protests keep pressure on hong kong commerce and tourism. >> people might ask if these measures are in response to political pressure as a result of the extradition bill. i can tell you it's clear the

two things are not related at all. these measures are a result of our settlement of the economic situation. >> private home sales in singapore jumped to the highest level in eight months as the wider economic slowdown spurs investors to park their money known in a -- in a market known as a haven. developers sold 100 78 apartments in july, an increase of 48% from the previous month and the most since november. purchasers by foreigners more than doubled to 82 units, the highest in a year. two muslim congresswomen are being denied entry by israel after president trump said letting them visit would be a sign of weakness. the netanyahu government says democrats omar and tlaib are , angering democrats and at least one prominent republican who denounced the

move as have some pro-israel groups in the u.s. global news 24 hours a day and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 100 20 countries. i'm jessica summers. this is bloomberg. get back to yields now as the bond rally charges on. the u.s. 30-year yield fell to a below 2%. let's discuss this. is there any other direction for yields when you are seeing subzero debt abroad, coupled growth andg economic recession fears? >> it feels like there is this 20vitational whole -- pull lower yields in the u.s. is not immune to that. in this prior trading session,

we had very strong retail sales, and still, you saw 10-year yields break below 1.5, record low on the 30-year yield, so it goes to show there's this real disconnect between the u.s. bond market and what is actually happening in the economy. it's clear it is not u.s. economic fundamentals that are driving treasuries right now. it's what is going on the rest of the globe. paul: that's a good point. we have heard from a number of commentators over the past few days that the inverted yield curve does not necessarily always equal recession. if, as you say, it is outside factors driving the bond market, will be world bow to recession right now? >> that's the big debate happening right now. the u.s. economy has been a bright spot when you look at the globe, but at a certain point, the u.s. is not going to be immune to slowing growth everywhere else, especially in big powerhouses such as china, germany.

historyrd to argue with , especially. the three have an month/10-year yield spread has inverted before each of the last seven u.s. recessions, but at the same time, u.s. economic data is still chugging along. yeah, and we just had data from the treasury department of how appealing treasuries are at the moment. we saw japan becoming the top foreign holder. the reason we care so much about china holdings is could they weaponize their treasury holdings, but if you look under that headline, you can see that the holding of china together , whichlgium's holdings it acts as a custodian for china, it has not really changed that much. can you really blame the japanese for like an treasuries when you are seeing subzero debt everywhere else in the world? >> absolutely not. the pool of negative yielding debt in the world i think is over $16 trillion at that point.

if you are looking for a safe haven high quality asset that will actually give you some returns, you really have nowhere else to go but treasuries. for a long time, it was these currency hedge costs sort of deflating japanese investors, but that is why you are seeing more and more reports that japanese bond fund managers, life insurance companies -- they are starting to just go in unhedged, close and dive in because there's nowhere else to go. thanks very much for joining us. china is vowing to retaliate on u.s. tariffs for violation of the accords reached by president at thend president xi g20. >> i don't think they will retaliate, but if they did, we have the ultimate form of retaliation.

i think there are very few jobs left in china because we would be able to step it up. just so you understand, i have been very mild about it. very, very mild. there's a long way i could go. right.ll china correspondent tom mackenzie joins us with more from beijing. tougher line from president trump, but a tougher tone also from china. >> yes, what we heard from chinese officials was that they see themselves in a position where they are forced to retaliate against the planned 10% tariffs on $300 billion of additional chinese imports that work announced by the u.s. administration. china says they will have to retaliate, saying that move by the trump administration really moved off track the negotiations between the two sites. the u.s. said it was china who backtracked on their pledges back in may, and that's why we escalation.tariff the u.s. may point out they are

also dividing up these tariffs. a first charge will go into effect september 1 and the second more consequential set will go into place december 15. nonetheless, that is not persuading china that this is a softening of tone from the u.s. side, but they are digging in on their position and we don't know exactly what measures they will be taking in terms of retaliation, but they may raise the tariffs that they already have, the rates they already enforcement and chinese markets. they may also publish their unreliable foreign entities list, essentially a blacklist of foreign companies operating in china, and they may just throw up hurdles to u.s. companies that have a footprint in china, make life difficult, cancel deals. we're waiting to see exactly what kind of retaliatory measures china will be taking. in terms of hong kong, china did not welcome the suggestion by president trump in a series of linking of the protest in hong kong and the trade was a factor that should be considered. they said this is an internal

domestic affair and the idea, the suggestion by president trump that president xi meet with protest leaders again will not go down well in beijing. if you are looking for silver linings or some small glimmers of hope, there are these comments from president trump that talks are continuing that he plans to hold a phone call with president xi jinping and on the chinese side, they have confirmed to us that they do plan to go to washington to continue those talks in september. we also saw interest pick up in purchases from china of u.s. pork as well. those are some glimmers of hope, but longer-term, it seems like this is a pretty intractable set of negotiations at this stage. shery: president trump, though, insist china wants to see a deal, and yet, the u.s. seems to be having its own issues. we are seeing fears of recession

growing. president trump's approval ratings in the low 40's when he is headed into a presidential election. how true is it that china is actually desperate? paul: this economics and politics on both sides. the fears about yield curve inversion, as you say, the upcoming election schedule in the u.s. leading up to 2020. in china, the data looking pretty bleak. we have seen that this week put in pretty stark light. in terms of the politics, we have on october 1 a celebration, the anniversary of the foundation of the people's republic of china, so chinese leaders will not want to be seen he in week ahead of that as well. in terms of the economics, we did the china stepping up instead of pumping liquidity too the system yesterday support the economy given the pressures it is under. there's a view from many economists they may go further,

potentially lowering interest rates as well. they will have to consider the pressure on the renminbi, but despite the economic problems china faces, there is certainly a view that they are digging in no the long-term and are in mood to make serious concessions when it comes to trade. paul: thanks for joining us. still to come on daybreak australia, translating artificial intelligence into big business. once thought of that can reach revenue of almost $100 million next year. , and outlook for the bond and equity markets. this is bloomberg. ♪

shery: the s&p 500 swung more than 1%.

usede range of corporate weighing on the market. walmart boosted sentiment. cathleen: let's take a look at the snapshot and what you will notice is consumer stocks were strong, relatively flat going into the friday session. let's take a look at the bloomberg because volatility was the name of the game. we are getting a lot of mixed signals. as you said, there are messages from both the u.s. and china and sometimes the messages are tough. other times they are less tough, but it's keeping the markets on edge. let's go to individual stocks. the prominent financial analyst accuses the company of accounting fraud. the company defends its financials.

the company takes a big hit. tapestry and capri, these stocks that have a lot to do with china, consumers being cut off. hedge funds have ditched them, and so is main street, apparently. take a look at some of these others. macy's, walmart with strong earnings on the day, as did shake shack. beyond meat getting caught in the currency. paul: what is the story with commodities? su: the fact that we are seeing the trade war escalate, a lot of analysts say there's just one more bearish element of the the slowing global demand story. we saw a huge unexpected surge in u.s. supply and it makes it worse. go to gold and you have some major analysts out there saying gold is going to continue to run.

demand for the asset to back these etf's that are right now on fire, the gold etf is going to continue to propel the rally. back to you. paul: thanks very much. joining us now for more on the markets, deputy cio from avondale. we have been focusing a lot on the bond market and the debt.rowing pile of is it getting risky to be staying at these for too much longer? >> i'm not sure. risk has many forms and that day today volatility is not

something we will get. you hit the nail on the head and the fact that most equity indexes have higher yields than much of global debt does right now. bel: is it a smart time to taking profits, maybe with one eye to the exit? >> we have been for some time, even as the markets were peaking , having advanced 15% to 20% off the lake 2018 lows, we had recommended clients rebalance back toward the neutral stance. as far as trend or market time, get all the way out or all the way in, we would not recommend that. being attentive to what your allocations are is always a wise thing, particularly now. shery: especially when we are .eeing equities decline are there bargains out there that you would put into your portfolio looking at the long-term value of it? >> i think looking at the long-term, we remain neutral

because you still do have a lot more positive trends coming out of the u.s. economy, although they get masked by the overarching news flow out of the day. you have positive consumer sentiment, positive consumer , very low unemployment, so a lot of things are going right for the u.s. economy and we continue to focus on growth oriented sectors, both in the u.s. and globally. youy: how much are factoring in trump as we head to a 20 election? he may not to have the stock market tank before that. -- as we head toward the 2020 election. >> we do not advise clients to acecate or trim or round up on politics, but there is that factor in the market. ironically, it has the potential to lead to volatility as well.

one never knows what moves might come out or what social media tweets might come out that would swing the market one way or the other, but this definitely an overarching theme, not just of markets but of wanting to have a very supportive economy going into the elections next year. had some very encouraging looking consumer data. i wonder if that surprised you at all, if the u.s. economy is in a good place or perhaps the mood of gloom has not caught up with the consumer yet. >> i think the interesting thing is actual numbers are better than many of the sentiment surveys. you are seeing the bloom, off the proverbial rose both on business and consumer sentiment of it, but on a day to day basis, people are unemployed, going about their business, and they are purchasing -- they're purchasing, you are seeing it come through especially in domestic-based companies, and on a day-to-day basis, much of the

u.s. citizenry is a lot less tied to market movements than the rest of us that watch them for a living are. look at consumer stocks, do you differentiate between, say, walmart and macy's, like retail discount stores? at the gdp chart on the bloomberg, we are seeing this huge divergence when it comes to deep discount retail outperforming luxury brands. >> it is interesting because historically, having good comps and those discount brands was more indicative of a weaker or softer economy and people that were struggling, but you also andchanging business models changing global attributes. a lot of discount retailers will primarily be u.s.-based with their sales, whereas a lot of the luxury good retailers are going to feed off what is going on in the eu, what is going on

inother developed markets southeast asia like china. shery: the philadelphia saying business outlooks outperformed expectations. >> i think there was a lot of angst at the edges, if you will. not angst, but watchfulness in terms of what will happen to supply chains, what will happen to getting goods here versus their. on especially small and intermediate sized businesses, they, too, are keeping their heads down and continuing to go through and look for sales where they can. they are trying to make sure cost structures are in order and that they are very adept. from an intermediate or long-term standpoint, the issues with tariffs and supply chains mean companies are looking to diversify where they get goods from, and that actually makes the global economy healthier in

the long run. great to have your insights. thank you. plenty more to come on "daybreak australia." this is bloomberg. ♪

paul: just to get across some breaking news on the bloomberg terminal. more earnings in what is earning season ramping up. gold miner, full-year net income, $561 million, big lead on a year earlier, 200 $2 million from a year earlier. we have seen in figure run-up. full-year dividends for new crest. share.nts or that was a beat on the 11th sense on the year. star entertainment, one of the gaming stocks and australia.

net worth up 34%, but we have $.10 per share, star likely to face competition from crown here in sydney as well. more to come on "daybreak australia." this is bloomberg. ♪

on a chilly.m. here friday morning. futures currently pointing lower by about .3%, which might stem some of the selling we saw on thursday. the rba having its worst session in 18 months. more losses expected today, but just not quite so bad. i'm paul allen in sydney. shery: i'm shery ahn in new york where it's 6:30 p.m. let's go to first word news with jessica summers. jessica: china has lost its status as america's top foreign predator as japan became the

leading holder at treasuries. tokyo increased its stash of u.s. bonds, bills, and knows point $22 million to one $1 trillion, the highest level in 2.5 years and a fraction ahead of beijing's holdings in june. the last time japan was america's largest foreign predator was may 2017. the world's largest shipping line has added to its gloomy forecasts. they released earnings along trade.warning about shares jumped as prophets did meet expectation but then fell as maersk went on to say the trade war could remove of 2.5% of global demand this year and next. jet of-weekl to a low after dovish comments from an ecb policymaker. a two-week low.

that's after a governing councilmember reportedly said significant easing is needed next month. he said to have added it is better to overshoot than undershoot on monetary policy. the iranian oil tanker detained by the u.k. at gibraltar has been released, but the u.s. is reddening sanctions against anyone who supports the vessel. the grey swan was seized on suspicion of smuggling iranian crude to syria after tehran provided assurances it will not sell to any sanction destination. washington says the releasing of the ship is appeasement. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 100 20 countries. i'm jessica summers. this is bloomberg. shery: let's get straight to sophie for what to watch in markets in hong kong.

sophie: asian stocks are set for a fourth weekly drop in us shares being caught in that dragnet, heading for a third straight week of losses and more declines looking likely with futures pointing lower in sydney . thewhere, nudging higher in asia session and nikkei futures hinting at strong volumes perhaps being a sign of support as bargain hunters may enter the fray. levels here 20,100, considered rock-bottom and that's where the price-to-book ratio becomes one. checking in on the bond space, kiwi 10 year yields on the move fishing below 1% for the first gross fore outlook new zealand's economy, that is looking dimmer. wednesday, the slowing population growth suggests weaker consumer spending at a shop housing market at a time when the central bank wants to revise domestic demand -- revive

to mr. demand. paul: let's get more on what we should be watching us trading gets under way in asia. the dominant theme this week is, of course, yield curve inversions, but it's not just the u.s. where this has been an issue. you are looking more closely at asia. >> there are some notable things happening in places like singapore, of course, where we just had that pretty poor growth reading that has really continued to put a bit of downward pressure, and of course, the main movement of exchange on the currency rather than policy itself, but close at a home in australia, you get to closer to levels -- home in australia coming go to precarious levels on bond yields. all of this, of course, is part of that downward pressure on global yields. really in most of the developed world, also, in many asian

emerging markets as well. this morning, we have already had new zealand 10-year bond yields slipped a low 1% for the first time in history there, and what we heard yesterday from the bank of australia assistant saying, isnd he is the yield curve inversion really comingl about that recession in the future -- he questioned that. a lot in the market are in his camp at the moment, and given how much central bank buying of securities and bonds across the world, you are in a very different place now than what previous cycles. we do need to treat this with a certain level of caution. but of course, markets at the moment continuing to hammer down and push on yields. shery: equity investors pretty nervous about what is going on, but hedge funds are in a long

bit. what's going on? >> you would have thought there would be a little bit more caution in equities over the last week or two, but one style that has done very well, one style popular with hedge funds are momentum trades. we put together this portfolio of long/short momentum factors, and that is over the last 11 days, looking at gains every day over the last 11 days, which took that back the last 11 years, that is pretty much the best performance you had over that period, during that time. from the chart here in the gtb library, those gains have come with increases in that bond etf. as you have had this decline in yields, you have had real flows coming in to momentum trade. given the magnitude of the move you have had in bond markets and in bond proxies like utilities and real estate investment those kind of parts

of the equity market that people seek for the yield, you expect at least given a couple of weeks of strong performance there would start to be a few headwinds building now, so keep an eye on that momentum factor to see if we are at some kind of inflection point if things start to turn there. .aul: thanks for joining us now for another look at the charts we've been talking about, you can find those on our chart library at g tv on the bloomberg terminal. shery: hong kong has announced the stimulus package worth more than $2 billion. the government now warning that the economy will struggle to grow at all this year amid political unrest. let's cross to hong kong and our chief north asia correspondent stephen engle joins us there. measures thathese were promised by chief executive carrie lam? >> i think the question is will they be bold enough? carrie lam has been talking about the need for bold

measures, but it has been several months now, a couple of months of unrest, and the economy has definitely been hurting. they have been harping on this, how the economy has started to sink it will get final gdp numbers for the second quarter later today, and we are expecting basically a confirmation of preliminary numbers are year-over-year growth of just 0.6% is the estimate consensus estimate. ubs among others saying for the full year, we could see 0% growth. paul chan, the financial secretary who will get to adjust the second, saying the full-year is likely to be anywhere from 0% to 1%. that is revising lower a previous forecast of between 2% to 3%. global turmoil between china in the united states is definitely a headwind. the protest most definitely in the past couple of months a headwind. we have not seen a contraction in gdp growth year-over-year in hong kong since the third quarter of 2009, so, yes, we got

a stimulus package yesterday. i will run through it briefly, but i want to first go to paul chan because very curiously, he did not want to link this stimulus package to the protest. maybe did not want to give credence to the argument that protests want to bring down the economy as a show that they have some sort of voice. they have long rallied and called and chanted and said, if .e burn, you burn with us paul chan very interestingly did not want to say the stimulus package was due to the protests. let's hear from him. >> people might ask if these response to in political pressure as a result of the extradition bill. i can tell you, it's clear the two things are not related at all. these measures are a result of our assessment of the economic situation. again, curious back away from

that. the stimulus package basically increases personal income considered tax-free. extra payments to social security recipients, subsidies for kindergarten, primary, secondary students amongst free rent for lower income housing, tenants in government housing, one off electricity subsidy dollars.ut 260 u.s. that is for citizens. businesses will get a number of fee waivers and reductions in rent, low fees for local companies on support for industry retraining. a little bit different this time, a broader package rather than a one-off payment like they have done in years past. paul: very quickly, the experience of the last couple months suggests protests are likely to ramp up again on the weekend. what can we expect? >> we are probably expecting an 11th straight weekend of some sort of dara i say unrest, but at least demonstrations. we have heard protesters have applied and have been granted at partial application for a

rally in victoria park. they want to march from the tory apart all the way to the central business district just outside our offices here. we understand the police did not necessarily approve that march part of it, but the assembly is approved, from what i'm hearing. we are also hearing the chatter on the message groups is that they want to call for some sort of financial disruptions today, so if you are going to go to the bank and you have some banking duties at lunch, go early. there could be some disruptions of banks. chiefgood advice from north asia correspondent stephen engle. thanks for joining us. alibaba surged in new york after posting better-than-expected earnings and revenue and that is to spite economic and geopolitical headwinds. quarterly revenue rose 42% on 15 billion dollars. our china correspondent selina wang has a breakdown of the

numbers. alibaba seems to be defying the slowdown in china. 's earnings just reflect the strength of online sales in china despite these economic headwinds and trade war. chinese commerce sales jumped 40%, almost twice the rate of chinese overall retail industry sales. boosted bybaba was sales promotions as well as better algorithms to target users with, but on the other hand, they are also benefiting from long-term structural changes in china's economy that should boost alibaba's sails in the long run. the first is that in these larger tier one cities, consumers are going for a consumption upgrade, meaning they want more higher-quality goods and more of them, and in smaller lower tier cities, we are seeing fast digitization, urbanization, so a lot of users are experimenting with mobile shopping for the first time and alibaba's investment to push

into lower tier cities is starting to pay off and it is clearly able to fend off some competition specifically targeting those lower tier cities. mentioned macroeconomic headwinds. we continue to see trade tensions between the u.s. and china, not to mention market volatility at a time when we were expecting alibaba to lift in hong kong. how challenging could get for alibaba? selina: for one, there were a lot of questions about it alibaba's planned hong kong ipo listing could be delayed because of the protests. we did not get a lot of answers from that on the earnings call. there are concerns in the long-term there could be pressure on margins as they expand into areas like artificial intelligence, entertainment, cloud computing, etc. -- we the negative loss did see a negative loss as operating margins continue for the operating sector and growth did start to decelerate. in the media and entertainment business, losses have been

narrowing, but they do still persist ultimately dealing with well,tory headwinds as but something bolstering alibaba which has not been mentioned quite as much is the boost it is financial,m ant which has been on an absolute role. their operating income tripled from the prior quarter and alibaba is seeing the benefits of that. fory: thank you so much that. china correspondent selena wang with the latest on alibaba. coming up next, u.s. treasury yields have sunk even further and brandywine expect them to fall even lower. structured credit, tracy chen, joins us next. this is bloomberg. ♪

u.s. treasury yields sank further with the 30-year yield dipping below the 2% level for the first time ever and the 10-year briefly dipping below 1.5%. does now at its lowest in three years.

the bond rallyes continuing. she is a portfolio manager and head of structured credit at brandywine global investment management and joins us trump philadelphia. great to have you with us. more and more confirmation that the economy could in fact be in a delayed cycle stage. how do you position here when you are trying to turn defensive? >> sure. approach four pronged in terms of turning defensive in our positioning. ae first one is to find credit sector that has been delivering. we are in the very late space of the credit cycle, but if you theret global markets, links in the later stages of the credit cycle. the mortgage borrower in the u.s. has been the levering and

mortgage debt as a percentage of gdp has been going down drastically from 100% during the peak of the crisis to around 75%. whereas you see the corporate sector has been levering up. mortgage credit is in a relatively early stage of the credit market and corporate credit is in a later stage. we try to position ourselves to get more exposure in the mortgage credit market. secondly, we can always upgrade in terms of quality. we focus more on ig credit, especially aaa to single-a. that's the second approach. the third is to hedge using safe haven bonds like u.s. treasury's and the fourth is actually too short corporate spreads, especially by buying protection

using the igc x because it has relatively low kerry, so it is a very cheap hedge. >> are you concentrating your portfolio in the u.s.? are you going globally? >> we actually have both u.s. mortgage credit as well as european mortgage credit, especially spanish mortgage credit. we like both. like rmbs, cme nbs, and also some consumer see followed by a bs because the u.s. household is in a very good position right now. if you look at today's retail number, it's very strong. i think the u.s. household has a very healthy balance sheet. the u.s. savings rate also has been going higher.

paul: you noticed you are hedged for a recession risk because something is going to break. i'm just wondering if you have any idea of what that something might read. where do you see the biggest risk? >> right. this is not only yield curve inversion, but it's yield curve inversion in a very interest rate leaning environment. when i'm thinking about something is going to break because i think the fed is obviously behind the curve, a have the over tightening for the past year, so actually questioning when they continue

to cut if they cut too little and too late and can they prevent the next recession? i'm not so sure. when i talk about something is going to break, i think either public market for emerging countries. paul: you also shared a view of -- share the view of a number of guests we spoken with. japan offers a bit of a glimpse of the future. is that what the economic future is and we just got to get used to it? >> right. creditlook at the global market, that's too much debt. the central banks, three major central banks, boj and ecb, they have been trying to achieve their inflation target and have failed. has not been working at all. also, you have the global growth slowdown. the major driver is china's slowdown, which, in my view, is

totally structural. i think the market has been getting it wrong, that they have overlooked china's high tolerance of growth slowdown because they wanted the growth to be more sustainable. they don't want to have a massive stimulus to the economy to have very superficial growth. they want to have sustainable slower growth. actually, i don't think they want panic, even if gdp growth is slower than 6%. i do think that is the major risk for global investors if they get that wrong. the aspect of the trade talks, i do think the market also gets it wrong because previously, we have been easily the u.s. could win the trade war, but right now, the situation actually flipped. i think china may have more bargaining power than the market estimates. shery: some fundamental issues

there. more ahead on "daybreak australia." this is bloomberg. ♪

paul: a prominent chinese capitalist expenses new venture to go public in the next year of years with revenue topping $100 million in that time. we spoke exclusively to bloomberg in beijing. >> we don't plan this ahead of time. of high the trajectory innovation, today it's fair to say it is fastest to $100 million revenue company in the world for ai. >> where are you now? >> we're not quite there yet, but by the time we project we will get there which is not far from now, it will be 100 million dollars in revenue. a lot of unicorns are not at $100 million in revenue. i think it can get there pretty

quickly. at that point, it should be well over a unicorn and can be listed pretty publicly. >> what is your timeline for an .po that would be less than two of years from now. >> you wrote in your book that the area of technological discovery is over and now it is all about implementation. we are still at early internet portals back when everybody was using yahoo! and it was not even a google yet more amazon north's book, so there is a lot of room

to reap rewards. we are seeing venture deals fall dramatically. value deals fell 77%. do you think this is a long-term winter or a healthy short-term place to bring valuations back to healthy levels? >> on the negative side in an economy that is slowing down, everything slows down, including venture capital. what will happen is there will definitely be a shakeout. 's will continue to thrive. many of the smaller first time vc's that may have raised money using unconventional ways are going to get in trouble. the positive side is if the economy is challenging and the valuations are down, there's a good chance for us to go shopping. coming up in the next hour of "daybreak asia," chinese companies are rethinking plans to ipo in hong kong.

a guest's jobto it is to advise firms when and where to go public. paul: that is it from "daybreak australia." all the action coming up in a moment on "a break asia," plus a check of the markets. this is bloomberg. ♪

paul: good morning. i am paul allen in sydney. we are under one hour away from the australian market open. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday, asian markets faced declines after a rocky session off wall street. recession fears and treasury yields down to levels not seen in years. president trump says he will talk soon to his chinese