Home turf. Betty hello and welcome to daybreak asia. I am betty liu at Bloomberg Global headquarters in new york. Been on thes u. N. Voting on these tougher sanctions against north korea, but not tough enough, right . Of the oil embargo falling far short of that that was talked about were discussed by north korea. Still, this is going to cut north korean exports by about 90 , and that is still going to have some bite on north korea. Haidi absolutely. Looking at these numbers, the sanctions cutting 55 of north korean death, diesel, and heavy fuel. Energy short of that embargo as well as the freeze on his assets that have been sough t. It is a little bit of a compromise because it was widespread expectation that the sanctions would not have gotten the vote of china and russia. Betty ahead of all of this news, which was widely expected, the market had a steady day a seller day. A record for the s p, with leadingls and techs the way. The dow higher by 260 points. The nasdaq also gaining by over 1 . The question of course, haidi, every time we see a day like this, is is this for real . How long is this going to last . Haidi is this for real is really something that has analysts scratching their heads. [laughter] investors are really, you know, continuing to drink the koolaid. We are setting up with a positive lead when it comes to asia, given we have the relief rally risk across the board. You are seeing the fade safe haven assets falling. New zealand, we are seeing off our session highs. Nzx up. The dollar index strengthening the first time in eight days overnight, so a little bit of respite when it comes to the futures. We are looking to open higher. We had the bounce when it comes to the beauty i wti. Asx closed by. 7 . Just a reminder, how we are heking up ahead of the tokyo begin futures, flat at the moment. At nikkei 225 ending up 1. 4 . 4 . At. 1 the Security Council proving for us showing since against north korea. Key demands to washington on board. The u. N. Says the measures are the strongest ever imposed on pyongyang. Today, we are attempting to take the future of the north Korean Nuclear program out of the hands of its outlawed regime. We are done trying to prod the regime to do the right thing. We are now acting to stop it from having the ability to continue doing the wrong thing. Haidi joining us now from team coveringr National Security. We are getting the comments coming through from the russian envoy urging for dialogue and negotiations for north korea, saying a political settlement is required in this dispute. There is only going to be excepte if other parties that north korea will remain having nuclear capacity, no . Right. The ultimate goal according to the yuan resolution is to get Six Party Talks to resume again. Those started in 2009, 8 years ago. It is not clear north korea has any interest in returning to the negotiating table at this. Ball has been to have a missile that can carry a Nuclear Weapon to the united dates, and he seems to be dead set on working for that. Nikki haley and her comments today she praised the passage of the resolution, but she also said listen, the u. S. Is willing to go alone if we have to to make sure they do not become a threatening Nuclear Power to the United States. Was this seen as a step down or was it the necessary compromise because anything harsher was going to trigger the veto . Bill sure. With russia and china pushing against the sanctions just a few days ago, the u. S. Was looking for a way to get them on board, still do something tough and new , but there was very little chance they would ever totally cut off Energy Supplies in north korea or target kim jonguns assets abroad. Fare are probably sets too for russia and china, particularly for china, which does not want to have any kind of a failed state on its border that could send refugees across our give south korea and opening. Or give south korea and opening. Betty is this a win for the u. S. Or is this actually a loss here . In the sense win that the International Community is still united. One week ago, russia or china are both saying they were both not sure they could get any new sanctions. You are making a little more progress on that front. Nikki haley said these measures will target about 1. 3 billion in north korean revenue, which is an important percentage of the money, the hard currency they have. There are still big steps out there that could be taken that everyone seems to be a little bit reluctant to undertake. Bill, whated, and are people reading into the fact that we have not really got in a north Korean Response yet . And that we have not gotten an other missile test since the one a few weekends ago. Bill i would not get into reading the mind of north korea, but there were expectations ever have an icbm would be tested the past weekend. It was an important political anniversary for north korea. I would be on edge over the next, you know, a few hours, few there is somehat sort of response by north korea. It would be a bit surprising if there was not. Betty thank you so much, bill. From washington, reacting to the human sanctions. First word news now with more with emma chandra. A u. S. Supreme Court Justice has issued a shortterm order restoring President Trumps ban on entry of thousands of refugees. Orders put the Lower Court Ruling on world until a High Court Decides whether to grant the administrations request for a longer term. The ruling affects about 24,000 refugees who have been assured basic services. The u. K. Parliament is debating a key piece of brexit legislation that will allow theresa may to copy e. U. Laws onto british statutes book. Support from northern irelands democratic us unionists means part of the bill allows ministers to change existing laws without consulting parliament. Despite uncertainty, london has retained its crown as the Top Financial Center in a survey of industry professionals. York. Ong, singapore, new london fell only two points, the smallest decline among the top 10. People are making contingency plans. At the moment, can only make them on the basis of an expectation of a hard brexit. That is the only proven thing you must tell yourself to do. The longer it goes, the more likelihood there is that those hard plans will be implemented. China plans to ban trading of bitcoin, dealing a new blow to the 100 50 billion of the currency market. Last week, it is outlawed in the initial client offerings. It is home to many of the worlds biggest bitcoin minors. The changes come as beijing clamps down on financial risk ahead of its communist Party Congress next month. Global news, 24 hours a day, powered by more than 2700 morealists and analysts in than an hundred 20 countries. This is bloomberg. Betty. Betty the other big story that we are tracking today of course is irma, weakening to the Tropical Storm shary not the hurricane as it moved past tampa and allows florida to avoid the predictions of destruction. Almost 7 million customers lost power. Millions of people were displaced. Irma is still threatening to dump heavy rains on atlanta where schools were shut down a lot of with public transport. Joining us now on the phone for the latest is john 11. Was not aily, it category 3, 4, 5 hurricane some had expected in florida, but there is a lot of damage that has been on florida. Give us an assessment of florida. What is going on . Good to be with you. Obviously, a lot of people are feeling relieved. It is important to remember that if you are sitting in the florida keys right now or naples and you are returning to your home for the very first time, there is going to be nothing really been for those people, but of course, the threat was that this major storm was barreling toward one of americas great population centers, what of americas great Business Centers as well. That did not play out anything like the worstcase scenario. A lot of relieved people in miami. Betty so what happens from here going haidi so what happens from here Going Forward . You have the process of replacing the displaced people, trying to get power restored to households. Jon trying to restore power to households . Absolutely. We are talking about something on the order of 7 million homes and businesses without power. People are very uncomfortable in their homes. ,hey are trying to get ice their dairy, their meat, their fish. A lot of folks who left town to avoid this thing are considering coming back, but also at the same time, maybe thinking they will stay where they relocated or whether it was new york chicago. These are not navigable right now. Many of these homes are simply inhabitable. They jon, looking at impact, you know, we discussed in the last hour about the reduced estimates of the damage, what are the latest numbers on what this is going to cost and what this might do to the u. S. Economy . Jon sure. We were a originally looking at catastrophic numbers, 200 billion in damage. The latest is 49 billion, which is still mindboggling. It could be lower. That we still a lot dont know. In terms of the Economic Impact at the outset, you know, this could have been so much worse if a category five storm had come ashore in the city of miami, and luckily, that did not happen. Yeah, a huge amount of really, but still, no easier for those who still have to rebuild and get their lives back to normal. Let us get a look at the record close. The relief rally from irma. It is all about risk being back on in a return of confidence. Joining us on set is su keenan. Betty and i were saying earlier like what gives . Is this real . Lack of drama. Vixaw a big drop in the index, the biggest drop in three weeks. The s p 500 hitting a record in. He first month we saw the dow topped 22,000, and the big movers clearly spell relief for the insurance industry. Heritage is one of those insurers with enormous exposure in miami. Reeling equifax reeling. Risk on is the story here. You go far to the right and see we begin to drop going into september. Here is the big drop here as investors rush back in. The calculations, betty, ask how bad could the damage be from irma . And a lot of economists are be ey andating the harv irma damage. It could take a 1 drop and knock off the gdp. What we are hearing from many economists is that it will definitely throw the economy almost that will not change. Bank of america is saying the hearty damage, likely, will be at 108 billion dollars, close to what was originally thought. Moodys is saying the irma damage is anywhere from 49 billion to up to 92 billion. That is still a sizable member, but again, fairly big production from we thought, dodging a cannon. That is the apt analogy here. That man is or why the market is once again anchor just a huge sigh of relief. . All right. Thank you so much. More on the north korean sanctions. They are going to cut deep. We will get reaction from Hoover Institution research in a few moments. Haidi our next guest expects donald trump to put who share his deregulation and balls. Stein joins us in just a moment. Betty we are counting down to asias first major market open. We have not really seen this in a a while, right . Haidi possibly showing a higher gains in thee huge markets. The s p atbat record. This is daybreak asia, and i am betty liu in new york. Haidi i am haidi lun in sydney. We have been talking about harvey and irma. It could make it tough for the fed to take the economys pulse. The central bank could hike in december, but no certainty. Joining us is eric stein. He has worked on the markets desk at the new york fed. Great to have you. Isnt the problem or the distortion when it comes to the numbers that come out after a major weather event like this . Eric first off, thanks for having me on. There is some distortion in the short term. Points. Uple. 1 as we saw through hurricane harvey, a lot of cars needed to get built. There is certainly going to be some noise in the data for the next couple of months on both of the hurricanes we just had. Haidi i just want to throw up our work function when it comes to the fed funds rate. That has not been moving terribly much. Expectations when you had all the way out to december is still around 35 . The problem is inflation, right . Is there a point where they are going to have to move despite inflation being where it is because it simply isnt. Eric first, three months until december. We have not even had the set timbre meeting september meeting. And then we have another three months until december, so as you said, inflation is important, one variable holding the fed back from hiking more aggressively. That being said, growth is strong. Financial conditions are generally loose as prices are going up. I certainly think they can hike in december, but we still have three months. Lots of things going on between now and then. Yeah, so we have got sort of the situation facing the markets at the moment where you have the relief rally. Irma was not quite as devastating as expected. North korea, the latest missile test, did not eventuate over the weekend. Is this a cycle we are in now geopolitics . To we have been talking about how sanguine, resilient, or maybe stupid the markets have been in the face of all these risks. Eric look, markets are going to move back and forth. If you look last week, we had a significant rally in u. S. Treasury bonds. The Material Change about the u. S. Growth or inflation outlook , things that should affect treasury bonds, no, it was focused on the hurricanes, both coming back from harvey and what irma was going to do as well as what you mentioned in the geopolitical risk from north korea, so, what we had were treasury yields going up, the dollar was stronger against the yen, stocks up, and i think as you put it correctly, a relief rally that irma was not as bad as people were hearing. Earlier, wet to had mentioned this story saying the u. S. Markets have the following dollar. That is making this resilient. That in hongn see kong, g btv 2206. It takes a look at the small caps and what is going on with the, and you can see from white line that they are underperforming the s p. Breadth is smaller. Some people saying that this is just technical. There is a warning sign that the economy, when you look at small caps, is not as strong as expected. Are we falling ourselves saying lower dollars and lower rates continues the bull market . Eric look, i dont have the chart up here in hong kong. When you look at stocks in the u. S. , there are multinational firms exporting, but when we are in a weak dollar environment, other than today, that certainly helps the Larger Companies when they translate the currency earnings back in the dollar. To me, it makes sense that you see them outperforming. Stein inank you, eric hong kong. We have much more ahead. You can get around about that story and many more you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals. It is available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on the industries and assets you care about. This is bloomberg. Haidi a quick check of the latest business flash headlines. Citigroup is inspecting trading revenue to fall 15 in the Third Quarter from one year ago and says volatility remains somewhat subdued through the groups chief Financial Officer says the fall is ahead of the u. S. Election. The lowest quarterly figures since the final three months of 2015. Have beend to called in over claims of bribery. The allegations relate to misconduct in which the bank is a shareholder. They told the u. S. Justice department about the allegations last year after they audited and uncovered potential and appropriate payments. Is 19. 2 billion , not to be matched by other bidders. The timing use giant is promising responsibility for r d and new capacity expansion. Foxconns bid is backed by apple, softbank, and sharp. Says they offered similar amounts and posed an antitrust risk. They are positioning to recruit some of the market shares lost to alibaba in the worldss Largest Online shopping market. It lists almost 400 openings in china. I cbc says amazons on my market share in china dwindled to less than 1 in 2016. Down to theing opens of markets in japan and korea. We are seeing quite a nice tailwind coming through from the risk obsession. Fresh records for the dow and the s p overnight. You are seeing japanese markets are looking positive. The yen is going to be the real catalyst today given it fell 1. 5 against the greenback, the biggest klein in g10. That will give a boost to equities. North korea will continue to dominate conversations in washington this week as President Trump looks to push ahead with his domestic agenda. We discussed the way forward with the Hoover Institute, next. This is bloomberg. Haidi we are 30 minutes away from the asia first major market open. Betty that is right. Looking like a pretty positive day in the markets. And what a beautiful, gorgeous fall evening here in new york. 7 30 p. M. Monday in new york, where markets closed considerably higher. The s p at a record up over 1 . A huge sigh of relief about hurricane irma. I am betty liu in new york. Haidi that is a beautiful shot of new york city. I am haidi lun in sydney, where you are watching daybreak asia. Emma chandra in new york. The un Security Council has unanimously approved new sanctions against north korea, punishing the regime for its latest missile and nuclear test. To drop key demands to win support from russia and china. The u. N. ,mbassador to nikki haley, ceci sanctions will cut 55 of gas, diesel, and heavy fuel shipments to kim jonguns regime. China is consistently committed to the denuclearization of the korean peninsula, to the peace and stability of the benzema, and to the solution of the issue through dialogue and consultation. Meanwhile, kim jonguns regime seems to be setting up assets to secure bitcoin and other cryptocurrencies that could be used to avoid trade research and. A security researcher says they attacks and collected bitcoin ransom payments from victims of the attack. Cry malware americas second major hurricane softens toand a Tropical Storm. A warning has been lifted in southern florida with miami beach starting a cannon. Some 7 million homes and businesses remain without power schools, services, and transport links still distrusted. Posted 12 billion of shares in the biggest Public Offering of the century. This as the government continues its privatization of the services giant. He offering will be priced as soon as its 25th, almost two years after the bus was lifted along with the banking and insurance units. 731 million shares will be folded japan, and 183 million internationally. Upon his, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Haidi thanks so much for that. We are looking at asia. Let us get a bit more on what we should be watching as trading gets underway. Sophie is in the markets for us. We learned this morning of voting for thee fresh sanctions on north korea. China saying the situation is sensitive, complex, and grade. Part of the complexity has been chinese tensions over south koreas missiledefense system. That has dealt a blow. I anticipate you are watching for the reaction when it comes to the kospi, but automakers in particular. Sophie korean automakers are facing the toughest year in china. Sales are dented among the geopolitical tensions. Just last friday, ratings downgraded first hyundai and kim motors to negative from stable, given the profitability. Ressures difficulty is in the chinese operation. As you can see from the chart on the screen, hyundai shares have fallen 10 this year, given this picture. Sales have shrunk 64 in china since the dispute over the Missile System began. As you point out, the outlook is likely looking worse. If you check out the breakdown of Financial Analysis first hyundai on the terminal, you can see the decline in sales first hyundai so far this year. Rosyutlook may not look as for what is going on given these tensions between south korea and china over the deployment. Betty indeed, sophie. Also base metals rebounded on monday, including materials used in electric batteries. Tell us about the outlook for lithium in light of chinas big plans to go full ev. Both battery makers and minors have had a strong year. Index tracking the Largest Lithium Companies has risen 45 this year and is not the strongest level since august 2011. With china in the mix, that could add more pressure on longterm supply and push up lithium prices. Demand has been outpacing supply so far, and citigroup expects the markets remain tight this year, going through early 2018. Following chinas announcement, they have filed in. The lithium etf has claimed to the highest in over six years. That is what this chart is showing you right here. Holdingsng the biggest in this etf, which is aptly t. Aded under the ticker li was assets having more than doubled last year, this year we could see the gain even further given the demand for lithium could drive more inflows and push up prices further. Betty sophie, thank you so much. Sophie kamaruddin with some of the commodities in metals to look at. More now on the new sanctions against north korea, passing unanimously by the u. S. Security counsel. They will cut deep and more than half of kim jonguns fuel supplies, but it has not stopped short of demanding the full oil embargo on north korea with chinese and Russian Support waning for that are declining. With us now is the Research Fellow and policy director for mitt romneys 2012 president ial campaign. Falls short, but do you consider this still a win for the u. S. And the white house . I think it is important because it sends a very strong signal. A very strong signal. The problem with sanctions is do they actually work . Historically, there are examples were sanctions have been effective at compelling policy change. Iran and south africa are two primary examples. You can contrast that with you but where decades of sanctions did not seem to have much of an effect on the castro regime. Tightening the sanctions on north korea this is really the only viable the dramatic pathway that exists. Ultimately still the option the u. S. Wants to exercise. This was a win for the Trump Administration and United States and ultimately for the only part of the process that will end diplomatically rather than with the military. Betty what is going to happen the next time north korea comes out with their launches of another missile . The question also is what are the chinese going to do visavis this . Are less severe than the u. S. Wanted because of the chinese and russians, and at the end of the day, if you cannot get the chinese and russians to assist in implementation, but also in enforcement of these sanctions, it is going to be difficult to get the outcome you want. So, kim jongun is ray much of a wild card, a loose cannon, so to speak. Sanctions, to expect the whole of this pathway to be a rational one that we can plan out now i think is simply betty to go from a, to be, to see to b, to c is unlikely. When it comes to Corporate Tax reform and Health Care Reform, and now, we have got in this hurricaneeptember, irma and party, and all of that, and you know, you know, also the dreamers issue. That became a much bigger issue than we have thought. I want to play for you an interesting quote from steve bannon about how this daca controversy will affect washington. I understand how he struggled with the decision and how he is giving a possibility of a legislative thing. He said he would rethink it. The guy is in the far right on the conservative side the guys on the far right and conservative side are not happy with this. Complicated the agenda, no question about it. Steve bannon happens to be right about this that there are people within the conservative part of that the public and party going to like any action to legalize the socalled dreamers. The question becomes does this become a point of leverage in negotiations, something the republicans end up giving to get Something Back from the democrats . The difficulty is that donald trump has proven to be an unreliable ally in some ways. If you look at discussions over the debt ceiling, a lot of consul republican thought they t get anything. Legalizing or up moving towards legalizing these socalled dream act individuals, what do republicans get in return, and by the way, on the policy, i think some republicans disagree with the policy of legalizing some of these people who are brought here illegally as children. , tax was seen as the low hanging fruit. You have seen health care take on a urgency . Lanhee the republicans have until september 30 to utilize this legislative mechanism known as budget reconciliation, kind of an arcane mechanism. The arcane think of it away is it gives republicans the ability to do Health Care Reform with just republican votes in essence without getting any support from the democrats. They have to do that by september 30. If they do not do that by september 30, the opportunity goes away, so they know if they are going to do health care, they had do it by the end of the month, which is going to be very challenging given the rigmarole they went through when they tried to do this a few months ago. Haidi i want to take another look at the north korea sanctions issue to the prism of the fact that these watered down compromises, if you will, what does it say about the way that washington is dealing with china, the way that perhaps it is suggesting it does not want to earn the ire of beijing, and it was backing away from the earlier harsher rhetoric of a trade sanction against countries like china that do business with north korea. Do you think that is also a step down or is it also that this is the official line that nikki haley have read out, and we could still accept anything from the president himself . Lanhee we have to expect the unexpected from donald trump jr. There is a push and pull to the u. S. Relationship with china, and you see this over and over again. You see the push from President Trump, which is usually a more aggressive line on things like trade, and the pullback from people like rex tillerson, the secretary of state, nikki haley, the ambassador to the united nations, which is a more traditional way of dealing with the chinese. At the end of the day, it is a pragmatic relationship the u. S. Is seeking with china and the recognition that in order for any of this to work, the chinese have to at least be brought in. That means in this case cutting back the severity of the sanctions. In the long run, the question is are the chinese actually going to help with this or is this just a sort of go on the get along for now, realizing the north koreans kind of crossover the line with that last nuclear test . Anchor bringing it back again to steve bannon and that interview we saw on 60 minutes with charlie rose, he mentioned gary cohn. He thought gary cohn should have resigned if he objected to what trump had done in charlottesville and other matters. What did he think of that . Lanhee this reflects the division in the white house between the socalled economic nationalists, led by steve bannon, stephan miller, and then what they would term the more globalist wing of the white house staff, led by gary cohn. I think the challenge here really is that it reflect a larger Division Within the Republican Party in terms of policy. You have some republicans who it deal who is agree with the idea of more relaxed immigration policies and you contrast that with where steve bannon is. Betty do you think it more likely that janet yellen will stay on as chair . Lanhee he will make a decision to change out the fed chair. A number of peoples names have been there first. Gary cohns fortunes seemed to have dropped in the last couple of weeks, but people have been talked about. Taylor,rse, john another colleague of mine. These are all names that have surfaced with a think would be Excellent Choices in their own right. Betty how long do you think gary cohn will stay on . Lanhee i think he is committed to getting tax reform done, based on everything i understand about what he is there. I do not know how long he will a. Obviously, the situation is uncomfortable for him. Betty just before we go, steve bannon himself what kind of power do you think he will wield outside of the white house . Lanhee i think he will have more power now outside of the white house than he did when he was within the white house because he can be a force to help donald trump. He can be more bombastic than he could do in the white house structure, particularly with general john kelly taking over as chief of staff. He is able to be the free agent he always wanted to be. He still talk to donald trump on the time, so it is not like he is any less close to the president. This really is a great role for steve bannon, if your steve bannon. [laughter] betty indeed, and it makes you wonder why he did not do this earlier. Lanhee he went in there with the expectation he would help to drive the president s agenda from the inside. I am said the president asked him to come with him as a loyal soldier in the trunk movement. Once he imposed a more traditional art on the operations of the white house, it was going to be difficult steve bannon to exert the level and kind of influence you wanted to exert. Now, being on the outside, he gets the opportunity to do what he wants to do in a way that is unencumbered. Betty and do you feel that john kelly has indeed put his fingerprints all over the administration, and particularly on trump . Do you get the sense that he gets his imprint on there . Lanhee look at the response of the Trump Administration to the natural disasters that have come through the United States. Hurricane harvey and now hurricane irma. That is john kelly. The discipline donald trump has the response has been very good from this administration. Everybody across the board has said this administration has been on top of it eerie that is a credit to john kelly and the atsident for sticking to it, least with respect to this particular area of policy. Betty thank you so much. Lanhee chen, the Hoover InstituteResearch Fellow. And we have much more ahead on daybreak asia. Welcome to the jungle. Amazon to take on alibaba. We will look at the companys chinese expansion plans, next. This is bloomberg. Betty this is daybreak asia. I am betty liu in new york. Haidi i am haidi lun in sydney. Betty, amazon taking on the fight for global dominance to alibabas home turf. This is a pretty ambitious thing given we know just how dominant alibaba is. It is a monopoly in china. Betty it absolutely is. But you know, nothing really seems to stop jeff bezos these days. And analyst joining us now from San Francisco with these ambitions from amazon. Why do they want to now go to china . [laughter] it is too big a market to ignore. If you look at the ecommerce market, by 2020, china will account for half of the global market, more than that. At the same time, extremely difficult to penetrate. They have tried for the last couple of years. The market share is very low, single digits. Alibaba sort of dominates the space. And jd. Com. If you look at the story of what kind of jobs are sort of listed on their website, it seems like they are in the process of figuring out what niche they could latch onto to counter the local dominance there. Haidi we were just talking narlier it is a uphill battle. Youre talking a 1990 dominance a alibaba talking about 99 dominance by alibaba. It is the introduction, the delivery. What is the likelihood and selling point for amazon then . Jitendra when they launched prime in china of october last year, the idea was to make it available to chinese consumers. If you look at what country chinese consumers dubai goods from, the u. S. And it is a big market read it is growing. You have the gateway issues, the Delivery Network and how efficient it can get. What we feel is, if you look at the job listings, every attempt from devices to devices to aws to logistics. Right now, they are trying to experiment, but an ongoing effort after launching prime last year. Betty what about the limitations from the Chinese Government . Are there expectations they are going to try to protect alibabas turf . Jitendra see, that is the biggest challenge, but if you actually look at what they have been trying to do is localize more. If you look at the aws services, for example, they are trying to do as much as they can to all the local regulations and different parts of asia they are doing business in. They are trying to play the game within the rulebook in china. What is more interesting is localization from amazon in countries like India Working really well. If they can find a niche for logistics, then they can very slowly sort of ramp up their niche. You do not expect a big revenue contribution coming in the next couple of years here. This is more often ongoing effort to figure out exactly how massivetackle this month monster market. Betty thank you so much. Jitendrar world waral tackling china. [laughter] i would not want to hazard a guess, betty. [laughter] 101. it is eco 20 ,they cut prices by this is according to forswear labs, resulted in a 25 jump in customer traffic. No wonder, right . Everyone wants a great bargain, haidi. , initially, itt seems, proving the point that amazon, maybe they will have a tough time in china, but they are not having a tough time trying to get the bricks and mortar business. Haidi lots of people ordering beans, tomato sauce, turkey, apparently. Yeah, money talks, right . Take a look at the bottom line. Heavy discounting appears to have worked out really well. That china story, the china ambitions, we will wait and see whether it can gain any traction in that incredibly dominant market by alibaba. Up next, volkswagen says it is going fully electric over the coming years, playing catchup of course with the likes of tesla. We are going to hear from the volkswagen ceo, next. This is bloomberg. Haidi this is daybreak asia. I am haidi lun in sydney. Betty i am betty liu in new york. Volkswagen investing 24 billion to develop and build electric versions of all 300 models in its suite by 2030. The Worlds Largest carmaker planning to invest 60 billion in batteries needed to power the cars. The ceo spoke to bloombergs matt miller at the frankfurt motor show. Is, well, volkswagen is very robust, financially speaking. , so you dont really have to worry. We have the necessary whistles to implement our plans. Of course, were making investments every year. We are investing parts of our profits. We have said in the past, and we will the future, and we will make the money we will need for those investments. Do you still feel the need to sell a certain units if there was talk about the possibility of a sale of ducati, some heavy truck parts units, maybe an ipo . Is that all Still Necessary to this plan . Have been reading about this in the newspaper. Sometimes, i do not really understand this ongoing discussion. One of my most important tasks is to think about our Product Portfolio on an ongoing basis and to ask myself whether we are properly positioned for the future. This is what we do. We are relaxed about this. If and when decisions need to be taken in terms of a sale or , thenition of companies we will talk about it openly. Matt you did say in the press release today that you plan on an electrified version of each in your00 or so models portfolio. Does that mean we will see an electric ducati monster or even a superbike . Really,ave to ask them but to answer your question, volkswagen has learned from the past, and over the past two years, we have understood what people understand by sustainable mobility. And this roadmap that we have announced and which they alluded to is a self commitment and will be our goal Going Forward. That was the ceo speaking to matt miller at the frankfurt car show. Coming up on the next hour, when it comes to daybreak asia, we will continue analyzing the latest sanctions. Fresh sanctions, but water down, on north korea, with a former u. S. Ambassador to the united nations, bill richardson, joining us over the next half hour. Betty we talk about the impatience of markets with a strategist. Stay with us. This is bloomberg. Haidi asia set to extend the stock rally after u. S. Markets close at near record highs. Tumbling. The Security Council slapping those new sanctions on north waters downthe u. S. Its demands to get russia and on board. Haidi riding out the storm. Millions of homes and businesses are still without power. China. Power plays in we speak exclusively to a solar a big bet ond batteries. This is the second hour of. Aybreak asia liu. Etty betty, i suppose it raises the interesting question, does it change anything from the markets that have been stubbornly resilient . Betty indeed, right . Is this a game changer at all seeing todays rally. A sigh of relief for watereddown version of the u. S. Sanctions. If they were that harsh, there what kimconcerns about jongun would do to react to this, throwing more volatility the situation. First lets get to paul allen in sydney. Paul . Betty. Hanks, the u. K. Government has won the vote by a majority of 36, however the guardian is reporting that the Prime Minister of the conservative party will demand significant changes before it becomes law. Parts of the bill allow ministers to change existing resultingut parliament amount to a power grab. Brexit ongoing uncertain, london has retained its crowd as the worlds Top Financial Center in a series of professionals. Hong kong leapfrogged singapore into third place, behind new york. London fell only two points, the the top decline among 10, although european cities set jobs afterking brexit climbed. Contingencye making plans on the basis of an expectation of a hard brexit. Thats the only prudent thing as a board of directors you must tell your staff to do. Goes the more likelihood is that those plans will be implemented. The u. S. Supreme Court Justices issued a shortterm order restoring president ban on entry for thousands of refugees. Issued by Justice Anthony kennedy puts a Lower Court Ruling on hold until the High Court Decides to grant the request for as longerterm order. The ruling affects about 24,000 who have been assured basic services. Tradinga plans to ban of bitcoin and other Virtual Currencies on domestic blow tos, dealing a new the 150 billion market. Week it outlawed initial coin offerings. Accounts for 20 of bitcoin trades. Come as beijing clamps down on risks. Hours a day,ws 24 powered by more than 2700 in morests and analysts than 120 countries. Im paul allen. This is bloomberg. Betty paul, thank you so much for that. Lets look how asia is waking up to the new sanctions on north as whatut not as harsh was anticipated. The s p 500 hitting a new record high, bonds looking mixed in the region, the dollar losing some holding overnight gains. Out the korean wan, resuming gains. The nikkei leading regional stocks higher here. The read that weve gotten on the north korean sanctions thus far that while it doesnt solve anything, its positive for that itt in demonstrates the United States may not want to further antagonize china, perhaps helping keep this risk on momentum going. Seeing energye aocks gain about. 8 of percent, perhaps tracking the rise were seeing in new york crude. Check out financials along with healthcare stocks this morning. I just want to pull up the board to show you stocks im watching we didicular, because have chinas u. N. Envoy once more underscoring beijings missileure of the chinese sales sink. Local media this week reporting Asiana Airlines is cutting china flights from october to march on expectations of soaring far weret thus getting a mixed response in those stocks on the back of the nations sanctions on north korea. Now, haidi, the markets are closed on account of the extreme weather, but july trade will be released this tuesday. Out for that data on the agenda. Haidi . Much. Hie, thank you so the u. N. Security council has numbsly approved new sanctions korea over its latest missile and nuclear tests. While washington had to drop key demands to win support from russia and china, u. S. Nikki haley say they are the strongest sanctions on kim jonguns regime. In hongder joining us kong. Jody, i guess were seeing the compromises. Theyre much less stringent what had been proposed. Basically it cuts imports of Refined Petroleum products to banslion barrels an area, textile exports, and has some freezes of assets on cargo ships, but not nearly as strong as what had initially been proposed. Haidi the fact that it was the originalfrom demands had to do with china and opposition, correct . Jodi exactly. They hold power on the u. N. Security council and would vetoed what initially was proposed, a ban on on kims assets abroad. Really tough sanctions. Basically those were scaled back, this was pushed forward, and russia and china went for it. They got e a win you know, they were able to get this through, but at the same the we havent seen sanctions have much of an effect yet. They certainly have not slowed in northar program korea. Haidi yeah. I mean, thats a question, right . Changeis really anything. Jodi, what does the road ahead like . Jodi the u. S. Can say, the u. N. Can say, they are taking steps, reacted. Have there may be some diplomatic room ahead. Theres been some talk that some quiet talks going on with the u. S. Certainly the temperature is lower than it was a week ago when we were talking about, you there beld confrontations. So it does look like theres but possibilities ahead, again these sanctions do not seem to be having much of an on north korea and it really is back in kims handson he does, what kind of provocations, you know, is willing to make. Haidi right. Curious to to see what his going to be. Editorhneider, the asia in hong kong on the u. S. Sanctions. Still ahead, why north korean hackers are targeting bitcoin exchanges. Haidi . Haidi well get more on the tensions, the moving markets, when it comes to the equity rallies weve been getting. Analysis is next. This is bloomberg. Today were attempting to take the future of the newborn Nuclear Program out of the hands of its law Nuclear Program out of the hands of its regime. Were acting to stop it from ability to continue doing the wrong thing. Onin the course of working the resolution many are stating that this resolution is a for work on political settlement. We would like to in the very see proof of that and call upon all members of the Security Council and all u. N. Members to undertake specific efforts not in word but in deed find ways for political and diplomatic settlement of the issue of the korean peninsula. China is consistently theitted to denuclearization of the korean peninsula, to peace and peninsula, ande to a solution. U. N. Security Council Approved sanctions against north korea just a few minutes ago. By sean darby. Thinkim curious, do you what the markets are breathing a sigh of relief that we didnt get the stringent sanctions first talked about in the immediate aftermath nuclear test korea . H sean i would agree with you. What road seems to be traveled one of negotiation really than provocation. There is behind the scenes a genuine desire to realize that north korea is on path to going nuclear, and its best to actually negotiate some form of settlement than provocation, and possibly use sanctions as the ultimate source. Theres been a reversal of the week. S over the last i think thats really what the markets are seeing as weve seen the u. N. Pictures at haidi indeed. Sean, intopriced, the markets when it comes to the north korean situation . Sean i think possibly there wasnt really any sense of panic weeks. E last couple you could see that by the reaction, and even indeed some asian markets, particularly the currencies. I think what people will be focusing on is Global Growth is doing very well. Fact, we still see more Central Banks easing policy. We saw that last week with brazil. And indeed, economic numbers, whether they are even in the United States, going to be affected by the course of the hurricanes. In this part of the world, g. D. P. Numbers in china are going to be revised up. Of data the actual tone for investors is actually very bed, where people will focusing on going into the end of the year. Haidi that might be why you see the risk on risk off injection pull back up. Bloomberg chart shows exactly that. Have seen this risk off index drop dramatically in the when itg of august seemed like we were pretty much even, withlear war north korea, its ticked back up. In fact, were seeing a sharp rebound. Think this is going to this momentum of risk on is going to continue . Sean i think it is. I think the irony at the moment is that for risk takers the environment is very good. Data is getting better. Every time we have the sort of risk off events, whether its european, geopolitics, nuclear with nort north korea, it stimulates the global economy. For the next months were in for better economic ata, and indeed until we get bad inflation surprise the risk on theme will run its course until 2018. Haidi yet where do you set rate expectations by the fed . Sean i think thats been the , the politics in washington over the last week, weve come the crux, which is that this month will signal the Balance Sheet will reduced from midoctober this year, and that really will be the casting stone for ms. Yellen, that perhaps the focus isnt on the short rate, long end of the u. S. Bond market. I think the focus is going to for fedor the fed, and watchers. The way weve adapted the tragedstrategy is the long end e where theres a reflation trade out there. Haidi sean, how much do you assign, in terms of risk, that the president will try to remake fed, i guess his own image, or at least fill the positions comes to his view on policyation or keeping loose . Sean thats a good question. Its difficult for anyone to have a good stab at it. The paradox is that the in 2018tion of the fed good bit ofy have a growth already. Mr. Trump inherited a good economy, and its getting better. Equally theyve been fortunate have a low inflationary environment to work in. I think initially for investors its going to be very much work as usual, but the difficulty when we do get inflation pressures building up in the u. S. , pretty much at the wage level, making life more difficult, because no one will any clue as to how the fed will react. Its not a shortterm problem. More problem for actually the latter part of 2018 we feel. Haidi yeah. You mentioned the strength of global reflation. Do you believe in the china fact that it the may continue past the congress . Sean putts well, i do. They expanded their own balance deflationaryter a environment for china. Paradoxically now theyve got a ratehigher inflation running through the economy. Is theyre doing genuine reforms. Whether thats restricting new allowingbeing built, dividends to grow, i think the background now is to actually encourage growth, but do the supply side reforms around it. That will be what people will be looking through at the congress is just how much the that mr. Xi jinping has. Theres been lights flashing that theyve succeeded. Story forats the 2018. The growth rate, i think theyre committed to, because they must rebalancing. My that rebalancing has to come at the expense of shortterm growth. True. Well, thats i think that the way you can look at it is that the good news china is that productivity gains are moving up the valueadded chain are still very intact in the economy. Legacy issuesres of the s. O. E. s, valueadded in china has been rising, and indeed you can see that through the adoption of china,cks within for 1 3g that accounts of those being bought. Real income in china is still accelerating, measure that most people would use to look at Economic Growth over longer term. So i think thats the good news, is theres a commitment to reforms. The top line g. D. P. Growth is going to have to slow, whether demographics, or deleveraging. You know, the good news is they to break out of middle income trap thats at times hurt parts of asia. Haidi all right. Well leave it at the good news then. Always appreciate your insight. Joining us from hong kong. Function. E you can watch us live, of course, but also catch up on deepdiventerviews, into any of the security or bloomberg functions that we talk about. Become part of the conversation by sending us instant messages. Betty a quick check of the latest business headlines. At an over bribery group. Ian energy stanchart told the u. S. Justice department about the allegations auditors after ununcovered payments totaling 750,000. The offer for toshibas ship unit is unmatched. Backed bybid is and sharp. Bank, foxconn says rival bidders, who amounts,duty similar risks. Titrust haidi amazon hiring by the positioning china, itsf to recoup position alibaba liu. The Online Market share in china dwindled to less than 1 in 2016. Citigroup is expecting trading revenue to fall 15 from quarter from a year volatility remains somewhat subdued. The same period last year saw a ahead ofthe activity the u. S. Election. The drop would be the lowest quarterly figure for the final three months of 2015. Financialngs secretary says the citys housing situation is actually showing improvement. Earlier this year, they sounded the alarm on the overheated calling it a dangerous spoke. In the past two, three months, the market has quieted down a little bit. Has comeof volume it down from april and may. Level, itsprice the same. Been properlyhas addressed as of the end of june terms of potential the number is about 90,000 units in the three or four years. High it wasl historical high since the sectorsion of those from 2004. Also completions will continue at a high level. The only factor that may be a little uncertain when compared with the situation in june is u. S. Interest rate to be slower seems than expected. Been monitoring the carefully. Ery but our assessment of the basic situation remain the same. Do you see property prices to go down in the future . The timing is difficult to but our past experience u. S. Ates that if the Interest Rate goes back to have, it will definitely an impact on our Interest Rate. This with decreased supply in years, i wouldnt be surprised if theres adjustment in the market. All right. U. S. Ambassador to the u. N. Bill richardson joining us next. 8 30 in the morning in singapore, just about a half the open ofm trading there. Just waking up. A bit of a clearer day than yesterday. Lun. Aidi betty im betty liu in new york. Asia. Watching daybreak lets join paul allen in sydney. Paul . The u. N. Security council has unanimously approved sanctions against north korea, regime for nuclear testing. Kim jonguns regime appears to up obtain bitcoin. Areregime hackers increasing their attacks on cripko currency exchanges in korea, and also collected ransom. Americas second major hurricane in 15 days has storm,d to a tropical but irma is still threatening torrential rains in atlanta. Surge warning has been lifted in south florida, but the region dodged a cannon. Some 7 million homes and businesses remain without power, and schools, services, transport links are still disrupted. Will sell about 12 billion of shares on the countrys biggest public this century as the government continues its the postalon of services giant, priced as soon as september 25th, almost two as japan post was listed with its banking and insurance units. 731 million shares will be sold in japan and 183 million internationally. Global news 24 hours a day, powered more than 2700 analysts fromd more than 120 countries. Im paul allen. This is bloomberg. Paul, thank you so much for that. How the asian markets are shaping up. From wall street overnight, all sorts of risk factors falling by the wayside. Sophie, were looking risk on asia open . Es to at least for today it could be hard to keep a good stock down. We have stocks mostly higher. Bonds are looking mixed. The nikkei 225 set to for a second straight session. The korean won, thats the one toght spot when it comes agency agencies, following the sanctions on north korea. Base metals on the rise, while and silver are dropping. Lithium minors on today extending mondays rise in the wake of china preparing for a total shift to electric vehicles. Itsxy resources, again, exports of lithium to china this year. Thaternstein forecasts lithium demand may increase from 2015 to 20 30. Haidi . Were going to stay with china, sophie, because this is clearly the top story for us reaction,cking the the diplomatic response to north korea taking shape in the form unsc voting on sanctions against north korea. Tom, you know, we have these sanctions. N we kind of knew that in the original form beijing was not ball. To play was it a surprise that they the resolution as it was worded . Last week, toward just a few days, or a day so after that nuclear test in north korea, you sanctions being discussed by the u. S. , and their oil exports ton north korea, for example, and you heard from the likes of china and russia, quite strong that. Ck on what you get is possibly a sense that you had the chinese and the setting out, and the other side, and theyve come to a compromise. China has been pretty vocal in export ban onfull oil supplies to north korea for the very obvious reason. Want to see regime collapse, something weve talked months asa number of this crisis has unfolded. Its expected or believed that china provides the vast majority, 90 of the 10,000 to norther day of oil korea. Theres also the very practical concept, or idea for china, that the pipeline that goes between china and north refinery on the north korea border is old and leaky, and if they were to stop exports altogether that could be difficult to switch that pipeline back on. Heard from chinas ambassador to the u. N. Saying that he hoped that the sanctions be fully implemented, but also calling for a return to dialog. A listen to what he had to say earlier. Consistently committed to the koreanarization of the peninsula, to the peace and stability of the peninsula, and to the solution through dialog and consultation. So china and russia both call freezes freeze for scenario, where you get the u. S. And south korea stopping their initary exercises, and return, a quid pro quo, you get north korea stopping its nuclear development. Clearly something that the u. S. Has pushed back on, or is not tied into yet, but its something that china and russia have been pushing for quite some time. Ministry in china putting out a statement condemning the north korea Nuclear Program, but also taking swipe at the u. S. And south the deployment of thaad missile. Haidi what evidence is there that china will implement the sanctions . Implementation is key, of course, isnt it . Back at theber beginning of this year china took its own steps to ban exports of coal to north korea. Terms of what weve seen from the previous set of sanctions, thethe ones we got just in last few hours, but the ones roughly about a month ago, it is seen informally, officially at least, that china has been strictly, buthose informal reports, at least on the border between north korea and china, there are these longheld and established smuggling routes, and that those continue to some degree, and for the chinese officials to unpick those. You can still buy north korean example, on the chinese side of the border. Pushing through those is going be difficult. These areas are linked. Reports from the financial chinas that some of big state banks have stopped now allowing new north korean bank opened, and some are clearinghouse, closing down korean bask accounts held in china stateowned lenders, reports from the u. S. That they may look to target lenders withtate ties to north korea. Dont think north korea will stop pursuing its nuclear its finalogram till course. Haidi weve seen the thelapping of geopolitics, relationship between south korea comes to, when it tourism, the controversy over thaad, beijing and washington, a trade war,f because of what beijing will or do. Not do these sanctions take that do you stillor expect tensions on that front to continue . Tom maybe it does take it down a notch. To ask the u. S. Gave china for their sanctions. Taken a stuff stance withst south korea, informal sanctions of its own kind on everything from tourism exports of cosmetics, and the south korean economy was hurt. Lot of that, as well as china backing sanctions that target the north korea economy. Theyre imposing their own unofficial sanctions on the south korean economy. From the automakers. In terms of whether it dials down tensions, the chinese ofport from the latest round Security Council resolutions between china, benjamin and andington, is beijing washington, is another question, takes theably it sting out, but its been a rocky relationship, hasnt it . Into. S. Probing intellectual property violations, potential trade on chinese exports of steel. But now still exist, theyre on the same page in u. N. Of the latest Security Council action on north korea. Haidi tom, thank you so much that. Tom mckenzie coming to us from beijing, wrapping up what we this u. N. R on Security Council vote on further restrictions further sanctions i should say on north korea. In the middle, pyongyang has a way to avoid financial restrictions, crypto currencies. Thel talk about this with u. N. ,ormer ambassador to the bill richardson. Betty this is daybreak asia. Im betty liu in new york. Im haidi lun in sydney. Trying toa could be get around trade sanctions as has stricter sanctions. Techs reporter joins us. How effective is this trying to get bitcoin for north korea right now . Right now pretty much every against northrned korea, including its ally china, as you guys were talking about earlier. Guess what. Bitcoin is a currency with no country. Its stateless. It very useful to north korea, because no one can sanctions on bitcoin. Because its very secretive, allows north korea to collectey around, to money, to store money. The goal of these sanctions that cutust saw is to basically off funds from north korea. Giveryptko currencies they north korea a way to continue money, to raise funds, and also move funds where they need to, cash it out into various currencies. If they need to pay someone in others, they can find crypto currencies that are more secretive to convert them into and get hard cash to do the things that kim jongun wants to do. How thisronic twist on technology is evolving. Haidi right, how its being used. What activities has north korea been engaging in to amass the bitcoin . Sure. A new report talks about how targetinga has been south korean exchanges, since year,about april of this which coincides with bitcoins big rally this year. Since the rally began, weve seen attacks on at least three south korean exchanges. And keep in mind, the reason theyre targeting south korean exchanges, obviously because of the language, im sure, easier to get there,s but actually south korea is one of the busiest trading hubs for bitcoin right now. Its not just because its nearby. Its also because its very, theres a lot of trading happening in korea. Have the Second Largest Exchange by volume. Exchanges,into the and either steal from the exchanges or they go on and users. Rom individual the report also talks about how they hacked into an english language news website for bitcoin. So when anybody visited the website to read about bitcoin korean hackers could track cocaine, you know, how could possibly figure out who owns bitcoin and so own. All know back in may and june, millions of computers were affected around the world, ransom you had to pay within bitcoin. That hack was leading to north korea. Thats also one way they managed to raise bitcoin funds directly. Theire stepping up activity. Haidi absolutely. Much. Thank you so certainly another angle to the bitcoin story. Lets stay on the north korean not as tough as the u. S. Originally wanted, but softened to bring russia and board. N bill richardsoner is a former u. S. Ambassador to the united a formeralso democratic president ial candidate, and former governor joining us on phone from massachusetts. Bill, i know youve been the way weve handled, in particular the way korea. As handled north what do you make of the universallyat have been called watered down . Than theyre better nothing, but at the same time i think china has decided to hurt bring them, but not down, not really weaken them. So its a partial victory. Its a cutoff of natural gas. Cutoff also of textiles, a big export of the north koreans. Right. What we wanted, the United States, was a cutoff of oil, assets of the north korean leadership, but we didnt get that. Better than nothing, but not enough to pressure north korea. Sound resigned there. You know, its better than nothing. But will it be effective . Bill well, the last sanctions passed two weeks ago korea in after north their coal exports and their seafood, their north korean workers and energy plants, was had. Oughest weve ever this is an addition to in sanctions, butse theyll take time. I think the issue is going to theis china going to stoop smuggle stop the smuggling at the border . Stop theseing to sanctions . Betty right. Bill i think china deserves enough tot, but not make real pressure on north korea. Betty bill, you visited north korea. Believe you visited at least eight times that country. What do you think kim jongun, who, you know, is so unpredictable, how do you think to this . G to react bill well, the good news is have a missile test during his holiday on saturday. News. The good but the bad news is that in the next few days im pretty sure have a missile test. Betty why are you so sure . Bill hes unpredictable well, because thats what he always does. Think he was hoping the sanctions would not be strong. They are strong. To bring himoing down. I think at the same time he stay in power. He wants to be a major player in asia. He wants to deal directly with the u. S. Ego thing. Is is an so i think hes going to shoot another missile. Dont doubt it. Betty do you think this is going to embolden him even more, bill . Bill yes. Anger him. S going to hes trying to provoke the sixpartytes and the countries, south korea, japan, and i dont think we should bite. Should come up and think of a diplomatic negotiation. The only way out here. I dont think a preemptive any sense. Rike makes i think we have to buttress and increase and better our relationship with south korea. Were going out and insulting south korea. Not working together with them. Theyre our main ally. Think weve got a lot of important steps we need to take days that show north korea were unified, but also that were smart. To bite. Going were not going to go and be pettiness. Their betty bill, you said, you know, ofly on, that this set watereddown sanctions is better than nothing, but is it really . At ituld also be looking from the perspective of hes going to think that hes theseded in driving divisions between the members of the Security Council in that they could only get together for these compromised results . Theyve kind of shown their terms of the limitations, and that north korea can proceed with relative impunity as its done to date. Bill i think what north korea for either china or russia, mainly china, to veto sanctionsf additional from the ones two weeks ago on coal and seafood that were tough. They werent vetoed. It was a compromise. Watered down from horrendously strong sanctions oil exports. That didnt happen. So it was natural gas. Was textiles. Hasould be that china realized that north korea is becoming a real problem for them. While theyre not ready to get them to get on their knees, theyre ready to seriously hurt with these sanctions. The issue is will china enforce at the borders and stop the crossborder smuggling. Is starting to get tired of this north korean ness andt impetuous defying everybody. Betty whats the endgame . To a foreignng correspondent earlier, and he said look at india, pakistan. Is it just that the goingational community is to have to accept a Nuclear Capable north korea and then we can have negotiations . Bill kim jongun wants to have not beingapons, and like iraq and other countries their Nuclear Weapons, libya, and then negotiate from strength. Biggestorth koreas card. They have maybe 20 Nuclear Weapons, missiles, some that might reach the United States, theyre technology, but also a very, very poor country economically. Theyre a country thats got starving. Betty right. Bill i think theres a endgame,on there, an where kim jongun is going to assistanceconomic and the end of sanctions. I think eventually thats what he wants. Betty bill, we were watching haley, the current u. S. Ambassador to the u. N. , talking just after the vote had taken place. Youve been in her position before. Im curious about what you think youve heard from her these last several weeks, and outharsh words shes come with. Do you think shes in danger of the u. S. Red line that might regret on north korea . Bill one of the problems with u. S. Policy is we have mixed messages. The secretary of state talking dialog. Haley beingikki very aggressive, military oriented. Thisnk weve got to stop provocations on red lines and talking to north korea as if weve got a military advantage scared. re going to be betty where do you think thats coming from . Well, thats coming from the mixed messages at the white house. Youve got a National Security not disciplined. I do think general kelly is the chief of staff, is trying to bring some discipline, but different a lot of points of view out there that need to be unified in one problem is the president is the one that constantly shifts. One day, one thing another thing another day. Betty right. Unified dont have a effort. Betty i think youre right about that, bill, we dont have but which sidet, do you believe . Is the more militaristic side, out oreyll carry that is it the diplomatic side . Bill i think eventually it will diplomatic side. I dont see a military solution, a preeventive military strike is work. Ing to weve got 30,000 american troops in japan. Orea, 50,000 weve got a nervous area. Think the solution is in diplomacy. I dont see a military solution. Would wipe north korea out, but there would be such calamity, damage, a columbia deaths of our friends, allies, even our troops. Governor oformer new mexico. Haidi, some pretty strong words, alsold say, that bill had for the mixed messaging that were seeing out of the white house. In hisstion, you know, mind, he believes that were likely going to see another missile test from kim jongun in the next few days. Betty, i always wonder, when you have two unpredictable personalities on both sides, are the chances of a policy misstep, right . Betty indeed. Asia. It from daybreak Bloomberg Markets is next. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Reporter its 9 00 a. M. In hong kong. Im david. This is Bloomberg Markets asia. David the Security Council, imposing new sanctions on north korea, but short of the oil embargo the u. S. Was hoping for. Hong kongs finance chief warns of renewed properties if the feds surprise them. Sentiment among