Transcripts For BLOOMBERG Bloomberg Markets Asia 20171002

We had these purchasing managers indices out of china. Gauge, fiveyear highs the unofficial passion days,n manufacture slipping to 51. 6. The prithe deficit that has from the official one. We have some of these large firms distorting things. Large firms are feeling bullish. So. L firms less tailored toa move shore up the economy. Pboc announcing it will reduce the amount of cash the banks must hold in reserve. The economy where it has been scarce. Its not the only pmis we have had. The few places in asisa, asia, the markets are trading. Most closed for a public holiday. Pmi in japan. Haidi we had the pmi data from the nikkei business morning. We had japanese stocks building on gains. Boding well for corporate warnings in Japan Corporate earnings in japan. We we ending higher and sellingng for seleign for chinese stock g for ringgit stocks down. Is sliding except for the hong kong dollar. They could be under pressure given the retreat we are seeing in oil. Falling after setting the two years. Was in in singapore gaining ground. Up 0. 4 percent. Booming, trading at the high level at some time. Moving closer to what is going on is singapore. I want to show you what is happening. Kind of refresh this page. Hutchinson port leading gains, up about 2 . Inch real estate players this market after home prices rose for the first time in four years. Adding to signs the Property Market is seeing a rebound even after cooling measures in singapore. The share prices for the logistics player in singapore, unchanged. Glp to buy gazeley and that deal is set to be completed by december. It is a mixed bag. It is going to come down to what we see with the dollar moving had of yellens speech. Rashaad lets turn to events on the Iberian Peninsula and of the first word News Headlines with paul allen. People in catalonia say they may make a formal statement of independent after 89 of move. S back to the authorities imagery praised the Security Forces and said the controversial vote was a event that never happened. Said his trump secretary of state was quote seeking talksor with north korea. This comes after the secretary knocking for the first time that the u. S. Is undergoing talks with north korea. Chinas official factory gauge rose to a fiveyear high, indicating efforts to clean up the Financial Sector and the and the environment are hoping the economy. Beat expectations of 51. 6 in a bloomberg survey. However the private sectors survey dropped. The Chinese Central Bank announced targeted cut in the amount of cash it must hold in the coming year. 95 of ruralto commercial lenders. 0. 51. 5l range from Percentage Points depending on how much business banks conduct. For lenders will also be eligible if they meet the agreement if they meet the requirements. Iranrivers of the Nuclear Agreement are candidates for the nobel peace prize. Theident trump has derided accord as the worst agreement ever made even though it is supported by the National Community the interNational Community. Dayal news 24 hours a powered by over 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rashaad Business Sentiment remained strong. A new poll shows him as Prime Minister after japans snap ele ction. Is there any relief for Monetary Policy . It has to be good news for the bank of japan. An economy Strong Enough to boost not only inflation but expectation of inflation. This survey looks at Business Conditions and the outlook for small, medium and large firms. Is the most influential Business Survey in japan. Sentiment on large manufacturers hit a senior high. Lets jump into this and take a look at the main indicators. You see the white line and the turquoise line, those are large manufacturers. The large manufacturers show the big improvement. The outlook jumped to 22. That is the index of Business Condition sentiment. The outlook jumped. The sentiment unchanged at 23. The outlook moved of one point to 19. People are looking for the strength and services, not manufacturing. Small business rose. That is pivotal because that is where potential wage growth can come from. In terms of what we are looking for, this is a very important part of the survey. Invest ining ready to capacity. This number on the far right, we expected to move, and instead fell. Earlier he said the institute put it all together. Lets say what he had to say about the Tankan Survey. These numbers are quite some of the forecasts are optimistic but everything looks ok. We see companies are not building in terms of optimism. They are not building on the Business Model so far and that is the important part. The government claims a role. Consumption tax hike does not but the stimulus package does. Their Rapid Response after the survey, saying it shows the most capacityed investment shortage since 1991. ,n their view this is a set up for something that was a virtuous step for the economy to take. Japans economy take on more important when it comes to this snap election . Prime minister abe are watching them very closely. Lets look at the latest from news. Kyoto people andiewed they preferred abe. Abe it, andet, 36 support vote forpercent would the party of hope. Survey, they asked are you hopeful for abenomic and percent do shows 56 abe e high hopes for do have high hopes. They want to give him the edge even if they are unclear about his policies. Rashaad next, we will talk about what the latest means for abenomics. And a waste of time, President Trump telling Rex Tillerson there is no point talking to north korea. This is bloomberg. Rashaad you are back with Bloomberg Markets. A check on the latest business flash headlines. Meet on having a tough time of it. Babel registration suspended in its home market. Shares down 5. 5 o. Some factories have not followed inspection process. There have been checks carried out by unauthorized technicians. Glp is buying European Logistics Company gazely. Beat blackfin and schroders in the race to pick up gazely. Deal will not affect planes were privatization. Highrollers up as continue to play. Beating the average of 14 percent. The momentum continues as golden week is supposed to generate more. Lets get back to the latest bank of japan survey. Pretty positive numbers for shinzo abe ahead of that snap election. We are joined from tokyo by the chief macro strategist. All, look at those numbers from the Tankan Survey. What are you making of it . Generally speaking, there is a good result. Sector shoulding a stronger sentiment. No Manufacturing Sector is holdi the Manufacturing Sector is holding up well, held up by construction. Rashaad this brings me to Monetary Policy and what the government and bank of japan and governor kuroda do next. If they do not have this 2 inflation target, with this be thetime to start tapering Quantitative Easing Program . Showed the upward momentum of inflation is still moderate. Expectingnies are higher prices in the future but the changes moderate. Doing well and inflation itself is gradually improving. Less than 82 a year. It is not an offshore target. Toy will continue to try stabilize the longterm Interest Rate at about zero. Because thereis is more con they have jgbs . D the market is in foreign countries, longterm Interest Rates continue to rise, then japanese in this case the boj should be able to purchase more jgbs. Rashaad with the numbers that survey, ite tankan appears japan is doing well economically speaking. Is the whole of japan doing well or is it these first tier cities . The more population is going to larger city areas. We have structural diversions between large city areas and local areas. If we look at todays data, Manufacturing Sector in Smaller Companies is reporting better economic conditions. Rashaad does this all mean, also because of the state of the opposition that shinzo abe is a shoe in to be Prime Minister was again . We are now in a little bit fluid political situation. Beme minister abe needs to adjusting his policy to the reality. His policy to make education free. Whichould be a policy would be popular in the local areas. Rashaad how will he do . Will the coalition maintain their majority . It is very difficult to predict at this moment. The Current Coalition has almost majority. Of the even if the party of hope does well, the coalition could keep majority. Be undernment would , whichrent coalition means the easy Monetary Policy would continue. Rashaad thank you very much. Catalans could be on the verge of declaring independence. Cataloniaeaders in say they will make a unilateral declaration of independence after voters overwhelmingly backs the move. The referendum was marred by violence as police tried to shut down pulling nation polling stations. The euroationally, responded to the violence in spain. We saw the bloomberg reporting there was a premium of price to markets before the vote. Spanish bond prices showed little concern. In some sections of the interNational Community there will be surprise at the level of aggression. We did see that the 2 million backed independence. Said he is president going to inform the Catalan Parliament of the results and that could move to to vote for independence. This is what he had to say. State has written another shameful page in its history of catalonia. Too many times oppression and violence have been the states response to catalan aspirations. He saw the spanish Prime Minister say that the vote was unconstitutional and denied it ever happened. Lets take a look at what the Prime Minister had to say a little bit earlier. Referendums been no in catalonia. Today all spaniards have seen our rule of law is still strong and enforce. The response to those who want to subvert it. Been going into polling stations, grabbing the ballot boxes. Sed the president appealed to the eu for support. Im not sure how much support he will be getting. Rashaad dont waste your time talking, President Trumps message to Rex Tillerson. It is a Beautiful Day in singapore. Im coming to you from bloombergs asia headquarters. The markets are open. Eakyo sydney with some covey ts. Loads going on at the moment. The conference of japanese manufacturers. Index cameufacturing in over the week, and thats also showing an upside, thats a surprise to people out there. The production pmi for september due for most of the major economies. The pmi measure coming out on monday. Weve also about fallout from that spanish election for independence the party suggested they could declare independence by the end of the week. Meanwhile, it didnt happen. What about the trading day thus far . Lets find out more. Bondser we do have sliding along with gold bullion losing. 4 . The greenback is gaining ground, up. 2 this morning, rising for the first day in three. Bank of tokyo mitsubishi says the dollar dollars directionally driven by short delivery positions. Should the treasury yield hit 2. 4 , that could prompt an unwinding of the dollaryen position. Yieldhave the ten year gaining 2. 3 basis points. Thats trading at july 13 levels. The offshore yuan and Malaysian Ringgit are falling in a sixth session out of seven. Take a look at the equities space. We have stocks led higher by what is going on in australia, gaining over 1 . Shares in sydney are rising for a Third Straight day and the nikkei 225, that is climbing up. 2 . We had a survey this morning, as well as a read on japans manufacturing pmi, rising to a four month high. But the topix, that is being today. By nissan shares in sydney, though, we do have beach energy soaring, earlier surging 23. 3 . We are seeing apple suppliers gaining ground. Apple has raised the shipping targets for 208. Theres a look at the early equity numbers in asia. Is find out what is going on first wordwise, and get the latest headlines from paul allen in sydney. Japans large manufacturers climbed before the reading. 22 was up from 17, the highest in 10 years. The reading for large nonmanufacturers was 23. It should climb 7. 7 in fiscal 2017. South korean exports rose to a record level last month in the latest sign trade is underpinning momentum in the Global Economy. Shipping rose 35 from the year earlier, driven by the demand for steel and conductors. Expectations show south korea is surviving the war of words between washington and pyongyang. Elon musk has a new vision for global travel, saying the journey between new york and shanghai could be done in 30 minutes. He is planning a new rocket, which he claims can fly to mars, the International Space station, or make trips around earth. Musk says anywhere in the world can be reached under one hour come with tickets costing the same as full fair economy in a traditional plane. The thing about going to space is there is no friction. Once youre out of the atmosphere, there is no turbulence, nothing. Theres no weather. You can get to most longdistance places in half an hour. And if were building this thing to go to the moon and mars, why not go to other places on earth as well . More cracks are appearing in President Trumps administration. His infrastructure guru promoted the trillion dollars plan to beef up americas roads. The president tells lawmakers that those types of deals dont work. Infrastructure was a feature of the president s election campaign. To says it has completed the First Fully Automated journey. The near 100 kilometer trip was carried out with no driver on board as the minor news towards the auto project next year. Are not of the trips in the economist mode, although up until another have been drivers in the cab. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im paul allen. This is bloomberg. We have donald trump telling his secretary of state Rex Tillerson there is no point negotiating with north korea. In a series of tweets, he said, i told Rex Tillerson he was wasting his time, trying to negotiate with little rocket man. Up aseets coming washington has opened up Communication Channels with pyongyang. What is going on here . Is it a situation of them playing good cop bad cop, or is d note right han knowing what the left hand is doing . Is seems it is leaning towards the latter. Donald trump is saying to Rex Tillerson, you are saying this, i am not happy with that and i will undercut you. Some will say this is unprecedented, but this is the latest in a series of undercuts of secretary state Rex Tillerson, what he has been doing over the course of his relatively short tenure. It is important to notice that donald trump followed up his tweets with one later on, saying that he thinks he will be successful, where other past president s have failed. In one tweet he said, be nice rocket man. Being nice has not worked in the last century. Why would it work now. He said clinton failed, bush failed and obama failed, but i would not fail. The question i am asking is if anyone is on the same page. The secretary of state spokesperson said these are not contradictory. In fact, she said diplomatic channels are open for kim jong un for now, but they will not be open forever. Not only that, the secretary of states spokesperson says the president sent a strong message to north korea, show up at the diplomatic it will be for the invitation its cold. We will have to wait and see on this. If secretary of state Rex Tillerson is not on the same page as donald trump, we can depend he has a lot of question marks around his head. All laughing the same question on what is happening here. Lets get it into perspective. Things have quieted down, havent they . They have and this is coming in the backdrop of mr. Tillersons visit to beijing, to china, to talk to people there. They are trying to triangulate have to strategize to get north korea to come to the negotiating table to discuss the Nuclear Arsenal and as we have been airing the former secretary of state jack lews comments, he has been saying that all roads still lead to china, that the u. S. Does have to engage them there. Looking at the trade flow, china is still north koreas biggest trade partner, some 6 billion a year goes between both countries and they need to address everything from trade, as well as a fuel supply to get to the central aspect of really pressuring north korea and pyongyang to come back to the table. Now, they have been some of the most popular carry trades this year. The risk would be in the tantrum saint i tantrum seen in 2013. Joined, and the question is, will this continue into the Fourth Quarter . If not, how is this really going to evolve . What will be the catalyst to unwinding it . As you said, they have made some popular trade this year, 1. 5 rights at about now, compared to 6 in indonesia. It is a surprise that carry trade has been a popular trade. However, we are seeing some cracks. If the talk of President Trumps petrol fall incidentally, we have seen 500 million being sold last week. In indonesia we dont see big inflows, we are suddenly seeing it flatten out quite a bit. If the tax reformer talk picks up and that sends yields higher, particularly of the dollar starts picking up in strength. If stability against the dollar starts to change, the carry trade will start to diminish. Our asian currencies, particularly in the crosshairs here. One of the most talked about rupee. Uld be the in 2013, both of these currencies got affected by the tantrum. Certainly, the current account deficit. 2013, you arein looking at a deficit of 20 billion and now we are looking at 10 billion. It is in a better position, and the same for indonesia. Basically, you have got the buffers to modulate this should the daily capital outflow pick up steam. I would not expect as big a depreciation as you saw in 2013. I think the countries are looking for a gradual decline, if there was to be a decline. David, what are people telling you about the levels that could fall then . The outflows keeping with pace of the declines, sentiments them is here, you are looking at markets trading. You are looking at the dollar rupee. They could certainly test above the 67 level. Rupiah, you are looking at 13,600, and after that, heading to about 14,000. Given the stability of the two currencies this year with the rupiah trading in a narrow range, there will be a slight difference. About 67 for the rupee and 14,000 for the rupiah. Bank . T about the central it does not seem to be too concerned about the pace decline. We were a decade lows a few weeks ago, werent we . That is one of the currencies that has not appreciated against the dollar this year. It is certainly back in the trend. One of the reasons for the current account deficit. Central banks and said, we are not worried. It is the fundamentals. The reason why the current a got deficit is increasing is because we are importing more goods because we are expanding. In many ways, you could argue it is a good thing. As long as the Exchange Rate is moderate, it will not be an issue. With most central things, it is not necessarily the direction, but the speed by which the currency declines. They doesnt word. You would expect the central bank to be a bit more worried about the rhetoric and extend the path of the downturn. Very muchthank you indeed, talking of the dollars strength and this comeback for the greenback. We look at the recent moves by the currency and where it is expected to go this quarter. That is next. This is bloomberg. You are back with Bloomberg Markets. Lets look ahead to what we can expect in the currency space with the Senior Market analysis from singapore. The big story is, has this dollar rally gotten lame . Have aink we do potential for the dollar to continue rallying into the last quarter of the year. I think there has been an awful lot of bad news priced into the dollar and it off a lot of tightening priced into other currencies, most particularly the euro, running into this quarter. You come a long way, particularly in the euro. That looks very overdone. We see the trajectory of u. S. Nexrates next year. We will see the Dollar Strength must last quarter. Rishaad i think it is 65 to 25 , the certainty of there being a rate move by the rfed in december. Couple weeks ago, that was around 30 to 40 . Movingseeing u. S. Yields higher. And so, i think there is still a degree of complacency. Also, the commitment of traders report shows traders are still adding bearish dollar trades against most of the major g10 currencies. For me, there is still quite a lot of complacency out there and there is a sense of not believing this. Thus, the potential for a decent correction on the dollar is in the cards. Rishaad well, often you need the capital to bring down a currency. We saw the euro move slightly lower after this independence vote in catalonia. Is that something we will see more of . Lets face it. Even if they start tapering, the ecb very clearly signaled they are going to keep rates at around 0 for a long time, whereas the u. S. Is on a tightening track, amongst other g10 countries, such as canada. Although the market tends to try to be forwardlooking, they might have looked well over the horizon here in this particular case, i think. The same with the yen. Japan will be easing for years after everybody else has confined it to the history books. These actions and barcelona and catalon province of the weekend could be a bit of a catalyst. That could be a catalyst for some more stress showing up in the eurozone and more bearishness on the euro in the shortterm. Rishaad lets move that to the dollar and look at the currencies most effective. About the countries having the worst of it, having a pseudopeg. Must change the value of your pig most countries in this region run some sort of peg system to the u. S. Dollar. Which means as the u. S. Tightens Monetary Policy, they will have to tighten Monetary Policy come or let their currency depreciate. As the homeland Investment Bank number to get through, and if to raise rateses and be quite hawkish, they could put pressure on u. S. Dollar funding and some of those pegs. As your previous guest said, im not expecting a massive temper tantrum. Rishaad what about the dollar where you are . Dollar is the singh in a gently dovish monetary setting. I would expect it to make its way back to 1. 39. I still think that the domestic economy here is quite flat so, they will want to keep a dovish stance on that, though we are starting to see some life in the residual Property Market after a long time. Rishaad is the carry trade dead . Got it all. There are plenty of funding currencies out there to do that. You just have to look at yen, frankly, and i think that will be in favor. I think this is more of a shortterm correction. You can still fund a carry trade at 0 using euros or yen. There are a couple lovely candidates out there for the 0 carry trade. Rishaad we have the rba coming out with an Interest Rate decision. Nothing to view tomorrow. I think they are so concerned about the domestic economy and we have seen things like coal and iron ore get taken to the cleaners over the last month, dropping dramatically. I think the rba will remain on hold and they will want to see how this evolves. Plus, we are seeing some corrections and slowdowns in the melbourne Property Market. They will probably follow the macro route, much like the new zealand central bank, rather than starting to hike rates. Rishaad great talking to you. Now, coming up, a man with a plan. President trumps top Economic Advisor breaks down the white houses ambitions. This is bloomberg. Rishaad the white houses framework last week was met with accusations that it was designed to benefit the wealthy. Gary cohn says the proposals represent a Growth Opportunity with lower revenue to bne made up for. 1 if you can grow the gdp by , we can pay down 3 trillion of the deficit by a 1 change in u. S. Gdp over a 10 year number. We are very excited about our tax plan. We are bringing back American Companies to america, having them produce products that can america and hiring american workers. You must agree that this would hurt revenues in the shortterm. Even in the reagan tax plan, they lost 20 billion in revenue over the first four years. We are putting incentives in place for companies to spend money in the United States, to bring businesses that to the United States. Yes, this will cause the money in the beginning, but like any company that has ever been built, you invest upfront to create greater returns in the longterm. We have to make an investment. We have to invest in ourselves. Thate grading a tax plan encourages you to invest in this country and invest in the future of our country. Lets talk about how you will get this done, get this through the congress. One of the things you are proposing is curtailing deductions for state and local taxes to pay for some of these tax cuts, so we dont go too far into the red. Already we have mr. Ruskin saying were going to have to make some accommodations for some of the members that are in the higher taxpayer bracket. Becausecluded in that his own district takes 3. 5 billion in deductions. Are you going to have to modify that . You have seen our blueprint an d plan. Our blueprint does not allow for deductions for state and local taxes. A couplet to achieve mingles. Number one was lower rates for everyone and number two was simple of location. Of all trying to get rid of the loopholes and deductions that mostly wealthy people use. Rishaad gary cohn there. Lets turn to a luxury home in hong kong because it set a record, the worlds least Affordable Housing market. The project stretched about 520 million hong kong dollars, 67 million u. S. Rishaad almost 10 00 a. M. Here in hong kong. I am Rishaad Salamat. Japanese sentiment hit a 10 year high and abe is favored to continue as Prime Minister. Violence mars the referendum. Its another shameful page in spains history. The exchange of thailand went from laggard to leader. This is Bloomberg Markets. We dont have any trading in hong kong and in china. We have reaction coming through from some of these gaming stocks. They said they will perhaps get their chance in hong kong,. Thursday of the trading quarter. Looking at what is going on out here, and this is the reason we cannot get reaction. This chart, showing us how well its coming back. Revenue after this slum taking place on the way from june, 2014 ago with itsmonths first positive move for revenues and we have been having 14 consecutive months of Revenue Growth for this biggest gaming hub in the world. What was driving it originally . It was your ordinary joe, but the vip traffic is now coming back and forming the book of the account giving forming be lk of the account this revenue. It, the First Quarter of 2016 and we have been coming that gradually in this against clamp down onof corruption and conspicuous consumption. Lets have a look at what is going on out there. Lets look at the flavor of the market action. Thoseur money is doing in limited markets, which are trading today. Reporter asian stocks are looking at a second day of gains with some Risk Appetite at the start of the trading weakness monday. Check out what is going on with indonesian stocks, joining the regional upturn here, adding to fridays events. The jci is trading at a record high. Shares are gaining over 1 , joining by the most since july. But we have for this mornings iskan survey, the nikkei 225 trading at august 2015 levels, but the topix is little changed dragging. Is we do have yields picking up. The 10 year rate is trading near a two month high. Last month the boj maintained the bond buying plan for october, despite the recent surge in yield, reduce in the pressure on the central bank. The asian bonds falling on the treasury today and gold losing ground by 1 3 of 1 , while the dollar is rising for a Third Straight session, gaining 1 3 of 1 , dragging on currencies in asian like the rupiah. Check out what is going on in the g10 space. Risingenback is against its fellow currencies. The euro, losing about 1 3 of 1 . Catalan leaders signal that they might declare independence within one week. The british pound is also on the td , but down 1 3 of 1 oday, continuing to drop after disappointing economic data. Gdp grew any slowest pace in four years. I am at the board to show you some early movers in asia. Goldman sachs says a rising competition amongst drugstore operatives will negatively impact sugi. Toshiba, that is snapping a two day clime. And nissan, it is the worst performer on the asian regional benchmark today, slumping after suspending new car registrations in japan. Rishaad thank you, sophie kamaruddin. Its a spanish political crisis which has barcelona facing off with madrid and heres paul allen in sydney. Catalonia saidn they could make a unilateral decision for independence by the end of the week after 89 of eligible voters backed the move. 761 people needed treatment after riot police attempted to close polling stations. The authorities in madrid for us is a cutie forces and said the controversial vote was a nonevent that never happened. There has been no referendum in catalonia. Today all spaniards have seen ever will of law is still strong and enforced, that reacts to those who want to threat it. Has writtenstate another shameful page in its history of catalunya. Sadly, this is up a first time. Too many times oppression and violence has been the response. President trump has stepped controversy by admonishing his secretary of state for wasting his time, attempting to seek talks with run korea. His tweets come a day after Rex Tillerson technology for the first time that the u. S. Has been directly engaged with pyongyang. The president has repeatedly said that military options are on the table. Chinas factory gate rose to a fiveyear high, indicating efforts to clean up the Financial Sector and the environment are benefiting the economy. The manufacturing pmi rose to 51. 7 a september from month earlier. However, the private Sector Survey slipped to 51 from 51. 6. Chinas central bank announced a targeted cut on the amount of cash lenders must hold as reserves for next year. The steps apply to all major banks, 90 of the city and commercial banks and 95 of rural. Commercial lenders. Foreign lenders will also be eligible if they meet the requirements. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. I am paul allen. This is bloomberg. Abe has had ao welcome boost ahead of his election as the latest Tankan Survey showed Business Sentiment remaining strong. Brett miller is in tokyo with the details. What are the reasons for this strong reading overall here, brett . We saw a lot of strength from large manufacturers in japan. Sentiment there has improved notably in that comes back to how well the Global Economy is doing. He saw that over the weekend with pmi numbers from china and exports. Point to aongly strong Global Economy and that is driving japans confidence. The weaker yen is helping a lot, underpinning exports to japan. What is interesting in the tankan, which we saw today, was improvement for Smaller Companies in that is a welcome sign for the government. Rishaad what might this mean for for shinzo abe and his upcoming election . Well, if we look at some of the opinion polls, abe himself was looking pretty good in relation to his main rivals. Sut when it came to abenomic there was a little bit of weakness amongst voters, so this should help. Fort we really need to see abe to perform are strongly is for regular japanese households to feel more confident. We dont have anything on that today. Rishaad but they are bound to be risks up ahead. What are people suggesting we should keep an eye on . That is coming back to how households and smaller businesses are doing. Exporters are doing well. What we need to see is them paying more money in wages, which is really what the bank of japan is looking for and what abe is looking for. That would get the virtuous Economic Cycle working better in japan. That is what we would be looking for next. Rishaad thanks for that, from miller. Feature. Ord on our new its the interactive function. Its on the bloomberg terminal. Thats the interview a short while ago on the latest Tankan Survey. You can also become part of the conversation by sending us instant messages on our shows. It is for bloomberg subscribers only. Check it out on tv. September 3, find a how chinas stock market find out how chinas stock market has moved from the back of the pack to being a star performer. We are breaking down the numbers. Thats next. This is bloomberg. Rishaad this is Bloomberg Markets. Im Rishaad Salamat in hong kong. Having a tough time of it today, falling the most in 11 months after temporarily suspending the registration. Shares dropping as much as 5. 4 . They are better off now. It does come we do see a topix bordering in tokyo, showing a bit of flatness. Some factories have not followed inspection processes agreed with the regulator with certain checks carried out by unauthorized technicians. Singapore listed warehouse gdp is to purchase the Logistics Company for 2 million. They beat out blackstone and gazeley, to piuck up which is in the process of selling insulted chinese consortium. They say the deal will not affect plans for privatization. On the up for 14 consecutive months now. High rollers continued to play. Had been for a 14 move higher in a bloomberg survey, they wanted to continue the old and we, generating more revenue than last year with tourism numbers seen rising. The proposed merger from indian mobile carriers and reliance coming occasions as collapsed. It is a deal ended by mutual consent, claiming legal and regulatory uncertainties. The merger would have createds india four biggest carrier. They will consider other ways to cut debt, including trading and sharing the airways. That chinese data over the weekend with the latest check on the factory floor. The efforts to clean up the Financial Sector and environment are not hitting the economy just yet. Despite indications in july and august that activity was cooling down a tad. Lets discuss this. Thank you for joining us. Pleasure. Rishaad what was your take . Pretty consistent. Trend ishe underlying that we are now seeing policy tweaks. The general consensus is the economy is on a steady growth pace as it restructures itself and is more dependent on consumption that investment. The difficulty when it comes down to analyzing damages before a long holiday break, before the Chinese New Year or the long golden rate and self, what extent to businesses breakdown activities for a shorter month or shorter week . Periodso includes a which is going to be shorter with the National Come his party having their meetings and in november, when production cuts are being planned as well. So, this plays out in the background and sometimes can stop numbers, but otherwise, i think the theme is still fairly steady growth underpinning the restructuring story. Rishaad it is also one, well, to the economy, you had the Large Enterprises versus these medium sized enterprises. Now, the move by the pboc tell us about the move by the pboc and their reserve requirement and what their intention is. Very interesting. You hardly see a centralbank signaling its intention one quarter ahead. I think it is also clever. If you look at china, the story is still there. The bank trending up. Rates are going up themselves, so they know rates are going to be higher this Time Next Year as well and that could hurt Small Businesses but it is i problem with a large firm itself. In essence, this is signaling to the banks that you should be supportive. Small businesses could be suffering from that. And that could undermine the recovery story of the china underlying growth story. Costs go up, so its a steady policy ahead of the higher cost of funding, as china plans to pull the lever on where the need to increase funding to, essentially talking about adding capacity on the productive side. Rishaad you are talking about the unproductive side being ithe stateowned enterprises. Well talk more about that. They have been incurred to borrowing costs filin have been expensive. Will the triple ratio work . Good question. On paper when you are talking about the possibility of adding Something Like 600 billion renminbi into the economy and trying to induce Smaller Companies to enter the formal lending sector, where they can be kept under the careful eye of a policy planner is really more sensible, prudent planning from the. Policymonetary standpoint. There are plenty of potholes ahead, though. Essentially, wha much will depend on what kind of Small Businesses we are talking about. Youre talking about businesses with a proper business plan. And is pretty straightforward, that we are seeing them having a better chance of receiving funding. Wellplannedy enterprise at the highest levels as they talk about restructuring the economy. China is opening the economy for its national competition. I see Financial Markets opening up as well. A lot of things are happening, all at the same time. And in an environment where the cost of funding is creeping up gradually. Rishaad it is the golden week, which has the potential to be very lucrative for macau. Indeed. Rishaad what is the impact of golden week, first of all on china, as we move to people traveling abroad now . You are talking about 517 million at least domestic travel. From a provider, it makes sense for those providing the services to be golden week ready. You talking about arrivals from china already very visible. In essence, you have got a week plus. So, many businesses are already being urged to be golden week ready as well. The potential is huge in terms of a multiplier. Arefrom a standpoint, they talking about a 100 plus destination, and singapore stands up there as a popular destination. I think the biggest casualty this year, or with the south korean economy, where it has suffered over the last year because of politics on that front. Say, it willould be the addition to the Services Sector from the multiplier standpoint coming from the hospitality sector, trading all , wasay down through malicious applying restaurant vegetables, for instance. Rishaad what i did like is the last bit. To theing it 250,000 shyam looking at 250,000 to i am looking at 250,000 to 300,000 chinese there this year. But really, in terms of places of interest, we are seeking a step up. Good stuff thank you for joining us today, seng wun song. Coming up, how china went from the regional laggard to the top performer last month. More details. This is bloomberg. Bloomberghis is markets. Im Rishaad Salamat in hong kong. Chinas benchmark index rose more than 3 in september. We are now joined from singapore. Well, i suppose the big question is, whats driving this rally in bangkok . The two main catalysts would be on a macro level. China announced two strong gdp numbers and the bank of thailand also boosted the 2017 Economic Forecast to 3. 8 , citing improved Economic Growth and also tourist arrivals. Im going to, bring up hr, 9565 on the bloomberg terminal. Im going to bring up a chart, 9565 on the bloomberg terminal. The index is climbing after recent highs we have not seen in years. Theres still room for them to go up in this brand new quarter. I am no expert, but if you were to look at the years, on the way back as far as 2007, whenever the s p index closes higher for the year, they are boasting doubledigit growth. Itre is a chance that if does keep rising, it could rise by a substantially mount. Rishaad what about emergingmarket equities in general . They have been one of the best rates this year, but have lost a bit of momentum as of late. You can also see that happening here on the bloomberg terminal. What is going on exactly . Just to take a step back, emergingmarket equities were trading at a hefty discount to their developed market counterparts, when donald trump was elected. Since then, there has been quite , upt of a rally, near 30 until midoctober. Now at this point, it seems like people might be thinking that the valuations are a bit too expensive and there could be a bit of weakness in the shortterm. The prospectsut for a rally, what are people generally saying about that . Divya that, so basically what they are seeing are the keywords kness totterm, the weai only happen in the shortterm, but they are still bullish in the longterm, when they think valuations could rise quite a bit more, particularly based on Economic Growth and also improved earnings as well. Rishaad thank you so much for that, divya balji, from singapore. Having a look at what is going on in the markets. We have various holidays, such as the chinese goldweenw week. A quick look at indonesia because this is a market as a record high. The jci up nearly 0. 5 . New records on the upside. Well, lets look at what we have got coming up for you. Us that has told bloomberg how the United States and china needs to Work Together to rein in kim jong un. What does he have to say about that . 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. Paul sentiment among japans large manufacturers climb further than forecast in september. Years. Hest in 10 the reading for nonmanufacturers was 23. Korean exports rose to a record. Shipments abroad rose, up 35 percent, during by demand for steel, semiconductor and petrochemical products. South korea is surviving the war of words between washington and pyongyang. Says the shifting of control of its terminal 2 a Chinese Company will be helpful. Trump Administration May tough in the framework for acquisitions, especially from china. More cracks are appearing in President Trumps administration. Plan wasrillion dollar announced for infrastructure, the president claimed that the deals do not work. Tinto says it has completed the first semi autonomous real journey rail journey. The trip was carried out with no driver on board. Ips are inof rios tr autonomous mode all that up until now there have been drivers in the cab. Global news 24 hours a day powered by over 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rashaad checking in on the market action. Markets closed. The ones open include tokyo. The jci in jakarta hitting a record high. Looking back at the chinese api or pmi numbers coming out over the weekend. Better than expected than the official ones. Tankan survey. Business confidence highest level in a decade in japan. The reserve bank of india and then janet yellen talk payroll numbers in the United States on friday. Lets look at the market. Sophie it is quite a bit for investors to digest to kick off this trading weekend. Asian stocks could be looking at a second day of gains. Volumes are looking somewhat subdued in that share market. Malaysian stock, losses. Markets, indonesian stock are trading at a record high. The indonesian bonds are one of the outliers in the bond space of the asian perspective. We do have the dollaryen trading, 113 level. We have the gain in japanese stocks today losing a little bit of ground. The nikkei 225 is higher by about 0. 1 . The topics, that is in trade being the topix is brought low by nissan. These stocks sliding after suspended car registration in japan. Tokyo,the university of that is lighting. Takashimaya is falling. Japanese retailers could be under pressure today at tourists iving during building week during golden week could be muted. Shares higher in sydney. Lease is on the rise after said buyanley the stock. Rashaad u. S. President donald trump telling his secretary of state that there is no point negotiating with north korea. A series of tweets. Rex, we willrgy do what has to be done. Remy is in new york. Is this a case of good copbad cop with trump and tillerson or does it run deeper . It is unsure. Some people are saying there is an overarching strategy for mr. Trump to be that bad cop and mr. Tillerson to be that good cop in order to keep pyongyang and north korea guessing. Other analysts are saying maybe the lefthand is not know what the right hand is doing and it seems folks are leaning more ard that end donald trump that donald trump is coming off secretary of state Rex Tillerson. Mr. Tillersons spokesperson had said on twitter that the president just send a clear message to north korea and that table buts are on the they should show up. They say diplomatic channels are open but they will not be open forever. It does seem like a contradiction. With these other tweets coming out from the secretary of state, it seems like they are trying to walk back with donald trump has been tweeting over the past hours. Rashaad this question im going to ask is irrelevant considering his form with this apparent undercutting of his secretary of state, does it give us a glimpse to what Donald Trumps end game may be . Some people are starting to posit the idea of the Richard Nixon insane madman theory. This theory was that Richard Nixon tried to act as insane as possible in order to keep his enemies guessing and enforcement it is something guessing and them to do what we want. Lets be realistic here, aside from the speculation, all residue leaves through beijing beijing,ads lead to where secretary tillerson was ever the weekend. The white bar, especially on the right hand side of your screen are chinese imports from north korea. They have been falling. The last time they were that low 2010. The pressure has been mounting on china and beijing has been agreeing to demands from the u. S. To pull back on its exports. The red bars are the imports of chinese goods into north korea. You can see those are not moving. It is all about funding pyongyang. This is where it stands right now. We have to look and see whether this pressure can continue and if there will be more missiles flying. There have been about one Missile Launch every two or three weeks. Looking ahead, north korea likes to stick to special day on the calendar. The founding of the communist party of north korea, we will see if something happens around that time. Rashaad former treasury secretary jack lew talked about howan nuclear deal and disgusting that will trying to rein in north korea is not helpful. He says that makes you look weak if it is not done in a smart way. The internet for mental Ballistic Missile system is an enormous the intercontinental Ballistic Missiles the is an extreme threat to the United States. Regimeso cut down the hecess to pay their army and t immediate sustaining center of his regime. You have to shut that down completely. The avenue to do that, you have to go through china. It is the supply line that gives north korea the food they need and the fuel. We have worked with china for years. It was important that last year during the Obama Administration, we Work Together. The Current Administration was able to get tougher sanctions again. As you ratchet up sanctions, you have to do it in a careful, thoughtful and analytical way. The way we did with russia. We were very attentive literally put the russians sanctions in place. We did not want to cause a recession in europe. We didnt want to the pressure on putins immediate circle. It is hard because they goes through china and in the end we want china to be collaborating with us. The problem is that north korea is such a unique economy. How do you ensure the efficacy of sanctions when the black market take such a big chunk of that economy . Is, think the reality without oil, even a black market economy would have problems. Without international transactions. North korea is not a country that produces very much. It has to have some external collection connection. The need for a diplomatic approach with china is very important. Correspondent former secretary of treasury jack lew speaking in new york. Coming up, the risks and opportunities for bond investors. Yields. H for real this is bloomberg. Rashaad back with Bloomberg Markets. Bond traders have been grappling with inflation. Economists, the jobs report, which economists predict will be week because of the weak because of the hurricane. How does the yield and this . Yellen play into in terms of the yield, one segment we realize that is the Asian Investment grade segment. When you compare them to some of the more developed markets. We like it because the fundamentals in asia remains strong. Theike it because technicals are very strong. Fow the investors need to o how the investors need to profileit has a lower than the u. S. Markets. Developmenteresting but for for the fed global Monetary Policy. Tha bank of ecb, canada, the bank of england, the rooftop they might hike as well. The centraly of bank has reduced. Some of the fear has dissipated or reduced. That could lead to some pressure in terms of yields. There could be some upward pressures on yields. Rashaad we were in unknown waters when we started off quantitative easing and we are in unknown waters at the start of quantitative tightening. What are the implications of the yield curve . Some are suggesting we will see a steepening. Does that mean the economy is better . Or is it just artificial . Recall, when the cost hated easing was ongoing, when the quantitative easing was ongoing, it flattened the curve. Be for bias is going to the curve to steepen. You have to have some economic development. We have a secret nice recovery. Recovery. D in the u. S. , there is a confluence of factors that could return appreciation. Theou look at underemployment numbers, when you look at the wage growth, there could be some inflationary expectations going to the u. S. The flattening of the curve was a consensus. There could be a steepening of the curve. Rashaad banks certainly like it. Is it artificially being steepened in japan, does this mean the economy will follow . Japan is a very particular they. Talking about intensity of the central banking policy being adjusted. Bank of japan is the last of the ultraaccommodative Monetary Policy. They are hoping for what you describe. The Monetary Policy and the economic recovery will follow. We are seeing some of that going on. The economic environment in japan, it is actually quite ok. The problem going into next year and we are in the last trading session and people are going to think about what strategies to put on next year, clearly the bank of japan Monetary Policy is not sustainable in the immediate term. The bank of japan will have to deemphasize further the quantity of the purchases they do on a monthly basis. Simply because, it is not sustainable to carry on at the current state. Areaad final question, people be complacent about Monetary Policy globally . Risk of some of that, especially when it comes to the shape of the curve. Factors a confluence of that could lead to a steepening of the curve and potentially some upward pressure in terms of the yield. The is what we like to do Investment Grade segment. Complacency and i think this is going to start to play out in this quarter and in the early part of this year as well. Rashaad great talking to you. Have a great day. He is from iron ridge investments were used the making a, softbank push into Asset Management. Details on the way. Rashaad this is Bloomberg Markets. They wanted to expand and Asset Management to create a financial arm that will house its vision fund. The assetin management business in particular . He is ambitious in different directions. He has built a reputation investing in telecom, technology, satellite, but he had dabbled in Asset Management in the past. Setting up an acquisition fund, the Largest Technology Investment Funds yet. They also bought fortress. What sources are telling us is he has much bigger ambitions. He would like to build up that pod of capital to control. He could be larger or smaller depending on the market opportunities. The industry is going through some changes. Returns have been low for some of these firms and there are opportunities for them to make accusations and then assemble an interesting portfolio. Rashaad the question is what is the fund likely to invest in . What sources have told us is they are in talks with some of the Asset Management funds in the industry. Exactly whichr one of these they will move forward with. Being as the history of patient with some of these has the history of being patient with some of these. He has a lot on his plate. He control sprint. He is trying to get a stake in uber in the middle of this tumultuous clash between its founder and its board. Rashaad how will the activities of the Asset Managers behave, will it be complement or diverging from a division fun . D . It is very much a work in progress. When opportunity would be to make these acquisitions, acquiring some firms outright and he did get some states in some of the existing asset firms. There is the possibility he could build up another fund that would be similar size, but something similar where they can go out and make investments on their own. There are opportunities that he sees as promising. Rashaad thanks for that. A luxury home in hong kong setting a record for sales even as authorities try to cool down the worlds least affordable market. 520 hong kong dollars. Thats 67 million u. S. Lastng the market set november. Records up for a 17th straight month in july. That is hong kongs longest winning streak since 1993. Angie has the top stories of the day. Kongerage property in hong needs 18 years of salary. We also talked about real estate in singapore, a lot of people need help when it comes to that hot Property Market. But not one malaysian billionaire. We talk about that when we come back. We are also talking about confidence. Investors big confidence. Confidence in japan, confidence in china, we have official factory gauge coming in at a fiveyear high. The Tankan Survey coming in. Angie it is almost 11 00 in hong kong. Im angie lau. Welcome to Bloomberg Markets asia. Shinzo abe says Business Sentiment hits a 10 year high and a new poll has him favored to continue as Prime Minister. Nissan falls the most in tenmonth after halting car registry in japan because some factories have not followed inspection rules. In catalonia, backing independence despite widespread police violence. Leaders say it is another shameful pagein the history. Well, a lot of asian markets are on holiday today, but it is still fast and furious when it comes to market news. Lets dive into our bloomberg chart,ng up chathis because this is the news that has investors, when it comes to japan, liking this news. We have japans diverging Business Opinions actually converging. Saysatest Tankan Survey confidence has improved to the highest level in a decade. This agitation 0 yieldoda and the and the fiscal stimulus when it comes to abe, whether or not is snapng ahead of a election, it shows that confidence has not waned. It is curious to see how that is playing out in the markets. Right now lets get first word news with paul allen. Paul separatist leaders in catalonia said they will make a unilateral declaration of independence by the end of the week after 89 of eligible voters backed the move. Global Health Services say 761 people needed treatment after riot police attempted to close polling stations. The authorities in madrid praised the Security Forces and eaid the controversial vot was a nonevent that never happened. President trump admonished and secretary of state for wasting his time, attempting to seek talks with north korea. These tweets came when they after Rex Tillerson it knowledged for the first time that the u. S. Has been directly engaged with pyongyang. The president has repeatedly said military options are on the table and continued, save your energy, rex. We will do it has to be done. More cracks are appearing in Donald Trumps administration. The same day, the president was telling lawmakers those types of deals do not work. Private investment in infrastructure was a feature of the president s election campaign. Two women that pleaded not guilty to murdering the halfbrother of north koreas , 25yearold any 29 world have gone on trial. They say they were tricked into doing so, believing it was a television frank. They could face the Death Penalty if convicted. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Angie a lot of markets are closed in asia, but for those that are open, lets check on the markets with sophie kamaruddin. Reporter asian stocks are set for a second day of gains. We were talking about that convergence we see with tankan. The nikkei is gaining. 1 , but the topix is looking to fall for a second day. You have shares in sydney leading the rise in the region here, also Trading Volume is somewhat subdued in sydney. Are mostlykets higher, it decent monday, except those are colum trading at a record high. The last quarter came in at a record session. Asian bonds, they are catching a bid while most other asian debt is falling. Yieldseeing u. S. Bond continue to climb, this by inflation data indicating bond traders are focusing more on this potential for Kevin Worsham being named the new fed chief and he is considered more hawkish than janet yellen. A thirdar is rising for day here. Asian currencies also on the rupiahday, you have the falling. Forecasted to go 0. 5 percent for the month. Goldman expects the bank of thailand to remain on hold throw the rest of the year and the ringgit, that is losing ground for the sixth session in seven. It is also under pressure because of the software oil prices. Brent, retreating from the 57 handle. G10 space,ck, in the the dollar is rising against its major peers today. The euro, expected to snap a today vent. And the pound is extending his drop after a series of disappointing economic data. Lastly gdp grew at the slowest praiseworthy u. K. In four years in the second quarter, so the dollar getting a nice lift this monday. What and how it impacts the bank of england could be doing. Thank you for that, sophie. Lets talk about this space right now, but specifically intel p a, where shinzo abe has had welcome news but tokyo, wherein shinzo abe has had welcome ms. Thinews this morning. Kathleen hays has more. Kathleen lets remind our viewers that the bank of japans the mostrvey is comprehensive, most influential Business Survey done in japan. Investorstched by and policymakers at the boj. The sentiment among large manufacturers, a very important part of japans Business Community and the economy, the sentiment number hit a 10 year high. Lets jump into the bloomberg new. You can see the turquoise line and the white line on the lower part of this screen making the big move up. The sentiment for big manufacturing hit that 10 year high, 22 from 17. Outlook jumped from 15 to 19. The red and purple lines, that nonmanufacturing sentiment. Sin other words, services. For the sentiment it was unchanged at 23. We had the outlook rising just a little bit. Small businesses though, they had quite a nice gain in outlook,t, and the and that is important because Small Businesses are such an important part of the japanese economy. Buts it on the screen, according to bloomberg intelligence, that is where most of the jobs are right now. Another thing we have watched very closely in the survey is fixed investment. Lets take a look at that now. What you will see at the far right hand side of the screen is that far righthand bar, it was a 7. 7. It had been an eight the previous quarter. It fell a little bit in the Third Quarter and it was supposed to rise. A very important number according to capital economics. They wanted to know that after the Tankan Survey came out that right now you can see the most pronounced Capital Investment shortage since 1991. They are setting of the japanese economy for more investment. Its integralnd they feel good about it. I want to talk about china here because we got big news on the economy, and from the pboc. Is there a connection between the two . Mixed signalsot on the purchasing managers indexes that we got out over the weekend. S. Want to show you the u manufacturing pmi, 52. 4. Its the purple line not the purple line, excuse me. Its the white line. And the turquoise line is the pm i. 52. 4,in index came in at 1. 7. Rom 52 50 signalsove growth. So, bottom line, growth is holding. Bloomberg intelligence says it is still in the comfort zone, as far as the pboc and the Chinese Government are concerned. Even so, the pboc came out with a targeted lending plan. They will cut the banks required reserve. This will apply to 90 of city commercial banks, 95 of rural lenders. The cuts will range from one to 1. 5 . Says this is not a policy change, but a structural adjustment. People are saying the pboc is trying to mention that growth keeps on during the second half, that it does not start slowing in the second half and the parties congress is being held. They are sending a signal to the bank to start lending now. Developmentsting out of china. The pboc, taking steps to make sure it continues to hole up, even as they continue their deleveraging. Angie it is that fine tuning we often see from the pboc. Thank you for that, kathleen hays. Still ahead, nissan chairs go into reverse after it suspended vehicle registrations in japan. We are going to take a look at why. But next, separatist leaders indicate they could declare independence as early as this week after the weekends referendum. How will markets react . Find out. This is bloomberg. There has been no referendum in catalonia. Today all spaniards have seen our rule of law is still strong and enforced and response to those that breach it, that reacts when faced with those that want to subvert it. The Spanish State has written another shameful page in the history of catalonia. Sadly, this is not the first time. Too many times oppression and violence has been the response to catalonias aspirations. At least today the entire world has seen that on the one side we have violence and shame and on the other, democracy and dignity. Foreignatalonias minister there as the regions leaders say they need to make a unilateral declaration of independence by the end of the week. Is the yield of the cognos is advisory. How are markets reacting now . It feels pretty sanguine. They just committed suicide and they are sanguine about it. As far as the markets are concerned, it is a blow, but the most important part, because we have to put it into context, they can declare all the independence they want. The European Union is not going to go against spain. Spain is a sovereign state. Catalunya is just a province. They are seeking help from the European Union. They can declare of the independence they want. Im totally against it. Im relally very upset. Angie personally . Politically . Economically . Why . First, they want independence, good. Spain has its own electricity, water, medical supplies. No airplanes can fly into and out of barcelona. They are independent. Lets see how you are going to deal with that. They are going to go back into spain and seek help. You cant have it both ways. The second point is spain is a huge, colossal democracy. 47 Million People and catalunya is just 7 . You cant go against the constitution because you feel you have been wrong. This nonsense about independence the scots plated by the book. Scotsependence, the played it by the book. Completely different things. Catalunya sibley wants unilateral independence. Angie yes, but they represent spains output. All very naive, irresponsible and stupid for them to think they will be an independent state. They cant. They wont. Angie when i say sanguine, im looking at bloomberg. I want to take a look at the spanish spread as it compares to the german bund. The first red circle here was when the government ready to its own test collection agency. Thats where we saw that. Greenne was when, this circle here, was when the chief prosecutor ordered a halt to the referendum. The second green circle is when police were ordered to seize the ballot boxes. The red circle was when they raided the area. Check it out now. That is where it was before. I have no idea how markets have any idea of the passionate views on independence. The state cannot afford it. It is states that cant afford it. Well, they are going to find some kind of a solution for this is a kind of chicken game with the spanish government. So, they give them a little bit more. Angie is this a brexit scenario . What is this going to do for the euro . Euro, as i said, it comes at a bad time. Results out ofc france and germany. We dont want anymore di visory assets. The catalunya citizens want to remain in the European Union and not be a part of spain. You have a peculiar situation whereby you want to break apart a very important european state and at the same time, you want to be a part of the European Union. Angie are really good points as to why more people should care about this, including markets. Stay with us, Andrew Ferris. We will be focusing on the latest of element out of Donald Trumps white house. This is bloomberg. Angie this is Bloomberg Markets asia. Donald trump told Rex Tillerson there is no point in tried to negotiate with north korea. He did so in a series of tweets over the weekend. We are joined from new york. It is interesting that tweets are how they communicate policy. Yeah, its strange. Angie . I say that facetiously. Is this a case of good copbad cop . A lot of people have been throwing this idea of good copbad cop out there. T to be honest and they somehow donald trump has operated during his presidency, it seems analysts believe it is not any overarching strategy that mr. Tillerson and mr. Trump are saying, hey, you be the good guy. It seems like mr. Trump is as he likes to do, speaks off the cuff and is doing so again this time. The secretary of state himself Rex Tillerson was in beijing, talking with reporters and saying, listen. We have three channels out to pyongyang and we are propbing the lines of communication. There would be little reason for him to say that and the for donald trump to backtrack saying, mr. Tillerson, you are wasting your time, calling him by his first name, rex. We are going to do this our way and get the job done. It is a clear undercutting of mr. Tillerson. If mr. Tillerson was taken by surprise, that might be the least of the surprise. With that said, all roads do lead to china and that is why mr. Tillerson was there to train triangulate a strategy to see if they can stop north korea from continuing to send missiles over japan, over the pacific and possibly to the United States. Angie thank you for that. Lets head back to Andrew Harris right now, still with us. He brings up a great point. The u. S. And china are very closely and deeply tied. Lets dive into our bloomberg right now. It shows you what we are talking about. The eu. Has overtaken when it comes to china trade. Eu is that total trade with china, that white line. You can see in the bar chart, that deal, of treatment china, eu. Ieking out over the guess why that is important is this solid entanglement politically and economically as well. Andrew lets not forget the political campaign, china was the number one enemy. They were the guys that manipulated the currency, stole dealhe jobs and doing a that china is going to be really hard. It is a little bit irritating to say, that is what he says, but not what he does. He is the president of the United States. You cannot be doing this kind of this, that copgood cop, is what i say, but not what i do. It does confuse the issue. At the end, he is being phased by people that very much do what they say. It is a flat line. Very direct a very straightforward what china has been saying about the United States and trump seems to be moving around. Angie the market has gotten ahead of itself when it comes to giving trump credit for tax reform. Andrew the issue about the tax reform, once again, i dont want to be antitrump. I am sibley trying to understand on the basis of what he is already said he was going to do. Obamacare was going to be abolished and that would release 1 trillion u. S. Over a 10 year period, which was to be given away in terms of tax cuts, but it hasnt. The market said, we kind of like what we see with the tax reform, but the question is, who is going to pay for it. It is time that the fed has clearly said, we have increased Interest Rates four times. That is the other thing, what will the fed do. They are going to increase at the timees again the deficit is likely to increase, assuming that the Congress Passes the tax bill and on the basis of what has happened with obamacare, i do want to my breath. Interest rates will be given a next to boost. At the time, trump said, i am not very keen on interestrate policy of the day. Angie we are also scratching our heads over whether or not we will get that consistency. If yellen either remains in place or if she will be replaced. Andrew unless it is a political appointment, there is a guy called john smith. As soon as you point me i will start cutting Interest Rates and it is not going to be the case. It is most unlikely the fed will reverse its position. They will say, we have a new guy and we will start cutting Interest Rates or freeze. The fed is on an uptake. Itie were going to leave there. Andrew ferris, always good to see you and get insight into the market. That is Andrew Ferris right there. Lets take a look at the afternoons business in tokyo, what a one of the few markets that is open. It is golden week in china. Lot of tokyo, we have a japanese shares gaining, even though we saw one of the top decliners, nissan motor company, dragging on the broader benchmark topix. Technology shares, also providing support here, but nissan, one of the big stories here as this carmaker weighs heavily on the topix. They suspended new car registrations in japan. We also see the yen remaining weaker against the u. S. Dollar. The tankan Business Survey showed a gauge for large manufacturers climbing better than expected. The latest from japan. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Sentiment amongst japans large manufacturers climbed further than forecasted during the september quarter, the Tankan Survey up from 17 to 22. The reading for large nonmanufacturers was 23. Chinas official factory gauge rose to a fiveyear high, indicating that efforts to clean of the Financial Sector and the environment are not yet benefiting the economy. The manufacturing pmi rose to 52. 4 in september from 51. 7 earlier and beating expectations of 51. 6. However, the private sectors survey slipped to 51 from 51. 6. Chinas central bank announced the targeted cuts and the amount of cash lenders must hold. This applies to 90 of city and commercial banks and 95 of Rural Commercial lenders. The cuts will range from 0. 5 to 1. 5 , depending on how much business banks conduct. Foreign lenders will also be eligible if they meet the requirements. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Sophie kamaruddin. Asian stocks are looking mixed with several major benchmarks closed today, given holidays in china, hong kong and south korea. Australia is leading the rise in the region, while the topix is set for another day of losses. 1 . Ikkei 225 is gaining we do have the dollar gaining ground against all g10 peers. Em asian currencies are extending last weeks selloff. You have maintaining losses, even as inflation came in better than forecasted for september. We do have higher crude prices feeding into the inflation, but we have crude on the back foot. And brett, back below 57. The rupiah, that is extending losses after the weakest weekly drop in november. But indonesian stocks are rallying, despite foreign outflows and shares in malaysia are falling today. That is weighing on the ringgit. A last look at the g10 space. We have the greenback beating its peers and the aussi trading unders, and the kiwi is pressure as leaders discuss a government. Angie lets look at nissan shares right now. We are taking a look at a threeday chart, but this is what happens, that huge dive down. Shares trading near a four month low. Now it is office intraday low, but still, this is what is happening. Nissan has suspended vehicle registrations in japan because of potential inspection problems. Lets get more from tokyo. What is going on with nissan . What went wrong here . Well, they had some inspections that were reportedly carried out by individuals who did not have the proper certification. That is what the regulator is saying and that is what caused nissan to suspend those registrations. They say it affected about 60,000 vehicles. Is at stake than right now for nissan. Well, as the shares show, this raises questions about the brand. Inspections are a huge issue as vehicles become much more complex with the taunus driving technology is coming on board. Electric vehicle technologies coming on board. This is a real focus point for brands, in terms of quality. And any lapse like this offers the prospect that it could widen. If you recall, mitsubishi motors, which nissan has taken over, the initial problems had to do with some of the inspections. And it blossomed from there. Once they looked into the inspection process, they found further problems. That might not be the case with nissan. This could be a very simple matter of not using certified personnel for the test. But if it goes beyond that, it could mushroom and that is where the shares are selling off. Angie it could mushroom unless nissan response effectively. Have they and what have they done . Some people might say it is pretty dramatic to hold registrations, but that is what they are trying to do, trying to get in front of this. They have seen this story before, where they are accused of not acting quickly enough. Automakers, when any kind of question is raised about the inspection, they have to do whatever they can to show they are willing to take dramatic steps to care of the problem. Angie we will leave it there. Thank you so much, live out of tokyo as we watch nissan tumbling by the most now in 11 months. Lets talk about the white houses longawaited tax framework. It was unveiled last week and there are accusations it was designed to benefit the wealthy. There he come persist gary cohn persists that lower revenue is made up for by higher gdp. Byif you could grow the gdp 1 , we could paydown 3 trillion of the deficit by a 1 change in u. S. Gdp. Over a tenyear number. So, we are very excited about our tax plan. We think it is stimulative for u. S. , by bringing American Companies back to america and hiring american workers. You must agree that this would hurt revenues for the u. S. Government in the shortterm. Even under the reagan tax friendly lost over 200 billion in revenue over the first four years. We are putting incentives in place for businesses to be brought back into the United States. Yes, this will cost them money in the beginning, but like every company that has ever been felt in this country, you invest upfront to create greater returns over the longterm. We as a country how to make an investment. We have to invest in ourselves. We are creating a tax plan that encourages you to invest in the future of our country. Lets talk about how you will get this done, how you look at this through the congress. Something you are proposing is curtailing deductions for stay and local taxes to pay for some of these tax cuts, so we dont go too far into the red. Already we have mr. Ruskin saying we will have to make some accommodations for some of the members that come from higher taxes. He is included in that because his own district take Something Like 3. 5 billion introduction deductions. Will you have to modify that . Our plan at this point does not allow for deductions of state and local taxes. We set out to achieve a couple main goals. Number one was lower rates for everyone. Number two was simple of vocation. By creating simplification, we were trying to get rid of all the loopholes and all the deductions that mostly wealthy people use. Angie that was President Trumps top Economic Advisor, gary cohn. Coming up, oil lived with a bounce in its stride. This is bloomberg. The learning process of selling and since consortium the deal will not affect plans for a private station. The proposed merger of indian mobile carriers Alliance Communications and aircel has collapsed. Alliance said the deal ended by mutual consent, blaming legal and regulatory uncertainties, high financing and intense competition. The merger would have created indias fourthlargest carrier and reliance says it will consider other ways to cut debt, including trading in sharing its airways. And of the last quarter on something of a tear, on a continuing rally, but the question is whether that enthusiasm can survive. Joining us right now is the founder and chairman of jbc energy group in singapore. It really looks like above 50 a barrel, it mighrt have continued that trajectory higher but there is a lot of headwinds when it comes to pricing in the Fourth Quarter. What are they . You are right. There was good support to bring prices higher. You can name hurricanes or say the referendum. That has been very helpful. But when you go forward right rather call it normalization. Gasoline is coming off the peaks. Ows and to talk about it iseveryone recognizes somehow strong, but it does not have enough fuel to go higher. Lets talk about supply as one of the pressures here. What is happening with opec and nonopec. Will we see a and extension of cuts . Case is they continue the cuts until the end of next year. The current agreement is until march and we will assume they look at t to maintain the cuts until the end of next year. The market is significantly oversupply. If they maintain the cuts, the market will be a little bit balanced. Its a bit long on the total liquid supply for 400,000 barrels, but that is manageable. If they dont cut, the market would test the lows again, but we assume as a best case, they will continue the cuts. Angie but what about demand here . Isnt the better than expected factory output gauge at a fiveyear high out of china is at the Global Economy with the reflation story, isnt that accommodative for demand for crude oil, doesnt not help matters . Bit. Has helped a little three months ago, the discussion was whether opec had to deepen the cuts. Currently this is not the topic it is only about extending the cuts. What has happened in the last three months, there was significant revision to the upside. Those really have surprised for the upside. Currently, this years demand growth is 1. 6 million barrels. The increase in demand has been a oneoff factor. It is not expected to be higher than 1. 3 million barrels. Which means overall, the market is showing signs of recovery. But that does not necessarily mean this will be a winning streak for next year as well. Angie absolutely. And of course the geopolitical tensions of the region. We still have to keep that in mind, right . The kurdish independence, tha storyt is not over. It is not over, but the way they played it was very gentle. I think they wanted to make is to follow gesture that basically the will of the Kurdish People is for independence. At the same time, they are signaling these are the entrance cuts for negotiations. If you look at it, we had a similar referendum now and spain. It was a little bit more hectic, but in the kurdish region, you would say yes, it is going to be there, but at least the head of the Kurdish Regional government wholet escalated the thing. It is something that will come down the line in the next year o r two. Angie lets dive deep into our bloomberg now as we take a look at the wti and brent spread. We had harvey, irma, maria. I mean, all of this did a number. We have seen some recovery, but what impact do you think moving forwraard did that have on the that, and whether or not recovery will be elongated, or if it was a short one . First of all, the impact on the absolute price of oil was partly there, but not really significantly. You can see it in the spreads. The u. S. Market sees a bigger discount right now against brent, because we have a n increase supply out of the u. S. The u. S. Cannot absorb all the crude oil being produced domestically, so they are pushing for exports. Those exports are not going as smoothly as you would imagine. Whatever the bottleneck severe, there is a disconnect, which makes the spread widen. The u. S. Is not the best indicator for Global Oil Demand and global prices right now, but you will see more and more u. S. Crude oil going to asia. Angie very quickly, where do you see crude oil going by year end . In brent. 50 to 55 angie ok, kind of around the levels we are seeing now. A little to the upside, maybe. Johannes benigni, joining us out of singapore. One feature on the bloomberg we want to bring to your intention is our interactive tv function. You can find if you are a bloomberg subscriber. You can dive into any of the bloomberg functions we talk about here. You can become part of the conversation by sending us messages during our shows. Check it out at tv. Jack lew says the trumpet ministrations discussion about the says the trump administrations discussion about north korea is not helpful. Sometimes being tough makes you weaker if it is not done in a smart way. Nuclearevelopment of a weapon is a tremendous threat to the United States and to the whole world. If sanctions are going to be effective to change their behavior, it is going to have to really cut down the regimes access to resources to pay their and immediate sustaining center of his regime. That means you have to shut it down completely. The avenue to do that has to go through china because north koreas only connection financially to the world is the supply line, that gives them the food they need and that comes from china. We have worked with china for years. It was important that we were last year during the Obama Administration to Work Together to put separate sanctions in place. T tougher sanctions in place. I believe that as you ratchet up sanctions, you have to do it in thought for a way a. Attentive to potential consequences with russia. We did not want to cause a global recession. We did want to put pressure on putins immediate circle. This is a case where it is particularly hard because it goes through china and in the end, we need china to be cooperating with us, and we dont want to turn a north korea problem into a u. S. China problem. Angie also the problem is north korea is such a unique problem. How do you ensure the efficiency of sanctions when the black market takes a huge chunk of the economy . The reality is, without fuel even a black market economy would have more problems. Without access to International North korea is not a country that produces very much. It has to have some external connection. For aow, i think the need diplomatic approach here with china is very important. Angie former u. S. Treasury secretary jack lew there, begin a shery ahn in new york. The area around the singapores Central Business district is attracting some of the most wealthy from this region. How it became so hot. This is bloomberg. Angie this is Bloomberg Markets asia. Rising last quarter for the first time in four years, confirming recent signs that the Property Market is rebounding. An index tracking private residential prices gained 0. 5 from the previous three months. A jump in sales and developers aggressive bids, stoking optimism that the Property Market is making a comeback. Singapore is also attracting foreign Property Developers interested in office space, and they are willing to pay a premium. Lets find out just how much that is. But get more from our chief International Correspondent for southeast asia. What is going on there . Haslinda call it anticipation and the promise of a bustling new office district. The promise of higher rents. Singapore could be an alternative for Financial Companies looking to relocate. Remember singapore is going big on syntax and wants to be a syntech hub. Its providing all sorts of incentives for startups. Like you said, they are willing to pay top dollar. Paid 1. 2 billion, a record amount, for a piece of land, road. All bigname developers, they have been putting a lot of money into the outskirts of singapores Business District because of that reason. Angie Foreign Investors are drooling over that land, but Singapore Developers are staying away from the bidding. Why is that. Haslinda there is concern about developers. Some say there could be an overhang in the office space. Singapore singapores they can office space is still rising. That could smell bad news. As it stands right now, we will see a fresh supply of office supplies. Even british conglomerates. And right now, if you take a look at the rent in the Business District, there is still 25 lower than before the financial crisis back in 2008. If rents are not picking up in the prime locations, why should the outskirts be doing well . In a way, you have to question all the optimism that is happening. Of a lets top residential prices as well because this Hong Kongsingapore fight continues. Here in hong kong it would take 18 years at a Median Income to afford your first home. Whatsit like in singapore . Both cities are trying to enact property curbs. Its not really helping. Haslinda the property curbs are hongeally working out in kong. In singapore, property prices have gone down for the last few years, showing those measures to and right are working now, given the property prices have been maintained low levels, there is talk in the market that perhaps these measures should be removed, but if you speak to the likes of the authority of singapore, which implemented those measures, they say it is not the right time to remove those measures yet, precisely because the levels have not fallen low enough. So, lets see where they go in the coming months. Aadie like i told rish earlier, i will be working until i am 96 if they want to afford a home. Live out of singapore, haslinda. That just about does it for us this hour, but Bloomberg Markets middle east is coming up at the top of the hour. Dubai, whati t do you have for us . Reporter the cracks appearing in u. S. Credit, the private equity boom, and the evolution of gulf capital markets. We are also going to be chatting all the details on the latest geopolitical hotspot emerging. Im not talking about qatar for once. I am talking about catalunya. Thats all coming up on Bloomberg Markets middle east. Angie looking forward to it. Lets take a look across the region right now. As we take a look at the markets that are open, japan is open. These on is one of the biggest laggards though, as it puts pressure. There is a situation about questionable inspections and they stopped vehicle registrations, causing investors to flee that stock. But across the region we have got south korea, japan and also china sorry, not japan, but hong kong and china all closed for market holidays, as we keep track of how the markets are doing. That does it for this edition of Bloomberg Markets asia. Lets leave you with a live look at the beautiful hong kong harbor. It is a market holiday here today, but we are seeing gains across the region. Bloomberg markets middle east is next. 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