Substandard parts, and the Company Admits to date of being faked. Rishaad recovery and risk, the imf warns the Global Economy is limited. Haidi President Trump says he will deliver his choice for the new fed chair within a month. We will speak with atlantas Raphael Bostic rishaad . Raphael bostic 9. 8 for theensus export picture for china. This is be to god we are expecting a 5. 6 percent read in exports in august, looking for a doubling of fat, reflecting early indicators on ther with pmis official level stronger than expected. On the unofficial level, slightly weaker. That should give us a picture of the Global Economy. The balances is stronger than five years ago. That is what we have at the moment. Looking for that data in the next hour or hour and a half. Hopefully. Always so surprised when we get those numbers. We are also getting money supply numbers from beijing, the pboc to release those between today and wednesday. Looking at ae little risk when it comes to chinese data, but also a breather, u. S. Stocks retreating from highs overnight. To one of speaking the key voices from the fed over the next hour. Lets look at how markets are faring. Not too many friday the 13th the jitters for asia. Falling. Kospi looking to snap a rally. The economy remains on track, but consumption remains a concern. Keeping an eye on samsung shares following thirdquarter profits at a record. Singapore following that gdp update, shares up. 2 . Were a highlight, growing at the fastest pace in 11. 5 years. Singapore dollar coming off of the session low. Markets were initially disappointed because they were hoping for a hawkish outcome from the central bank. Anz said the mas is giving tighten, buto there wont be any urgency to do so, so maybe april will be too early. Hanging on to. 2 tighten, that 78 handle as we wait on chinese trade data. The rba releasing its Financial Stability review, household debt, Housing Markets a top concern, and also Banking Industry risks, developing a topdown stress test for aussie banks. Financials unchanged this morning, stocks set for a third day of gains. , both a look at the topix the nikkei 225 and the topix sliding, but the amount of the is morer the topix severe, retreating from a decade high after a fourday run. We are at a delicate level fundamentally. There is nothing bad, but wariness over the speed of gains, so the rsi above 17. We had in seeing concerned that we are seeing gains too far, too fast for japanese stocks. There is still plenty of liquidity in the system to be had. Is what is keeping japanese stocks at those elevated levels. Rishaad again, look at that. Staggering performance. Thank you for that. Coming out, our exclusive interview with Raphael Bostic in about half an hour from now. It will be broadcast simultaneously live on Bloomberg Radio and on the web. A company that did that it than anticipated, all sorts of trials and tribulations this year, but the share price up 50 . Samsung profit Beat Estimates , lifted by demand for memory chips and displays. To 13ng income rose atlion, revenue met forecast 55 billion. Samsung posted record earnings in the second quarter. Shares have risen more than 50 this year. The kobe steel scandal in the hotline headlines. Lost a third of their market value this week and there is speculation the company may be ro khanna. Two rail operators say they found substandard parts, although they say there is no safety threat. European central bank considering cutting its monthly bond buying by 50 from january while keeping the program active for nine months. Reducing qe 236 billion a month is considered feasible by the the governors. Policymakers are split on the need to identify an end date for qe. Sporadic violence in barcelona as supporters and opponents of clashed. Untilgional president has monday to make his position on secession clear with majority prepared to use all legal measures to prevent the breakaway. With thek national day Prime Minister in thing he could take control of catalonia under the constitution. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi global policymakers gathering for the imf and world bank ought to meetings. Growing inequality seen as a potential threat to the Global Recovery. Warnings also posed by new technology. Kathleen hays is in washington for the meetings. We heard from Christine Lagarde speaking about tax reform, why . It is an interesting development. Leading into this, many policymakers focused on inequality, what caused it, how it can be alleviated. The annual report from the imf talked about how prosperity could be better shared by moving some of the tax burden more on the wealthy. Some have said, soak the rich to help the economy, i dont know, but the argument is clear. Inequality it wrote social cohesion and can slow growth. The roads social qiagen and can slow growth. They off the record have been saying that less progressive tax rates are not bad for the economy at all and that trump tax cuts will help u. S. Workers. The imf is dead wrong they say. Tax cuts will boost gdp. Christine lagarde on bloomberg today when asked about this seemed to be trying to for some oil over troubled waters. Im not going to pass it judgment on the current draft for consideration by congress. I have done my tax reform is minister, and i know what those drafts go through. News points out, the imf looked at the u. S. Is a , focused on free markets, capitalism. Areconsensus is maybe they starting to shredded that view little bit. And the the imf potential imf chair raising the flag on china. Is that the usual things they point to, debt . Exactly. This drum beating loudly again, the imf particularly concerned about china, australia, and canada. Powell speaking said that emerging Corporate Bond debt is a particular worry, and he thinks this is the problem, the growth of the corporate debt, a worsening problem in china. This is 3276, a great chart. The white bars are u. S. Corporate debt as a percentage of gdp come to turkeys bars are china. It truly is moving higher, higher, and higher. The imf points out the growing weight of china and that it will soon surpass the size of the and that economy, proposes some risks, a sharp slowdown, so that is something they are focused on as well. Dot what are we hearing from Central Banks . Event,her pa parallel ,en bernanke presented a paper lau brainard ways income, raising issues around that. Mario draghi also on this panel talking about quantitative easing. Stopped and had a funny thing to say about a part of the paper that in bernanke you wrote. They laughed at the part on the sociology of criticism of qe, as you may imagine. I was thinking it should be translated in 19 language for the euro zone, especially for those who dont want to read english. You can see even mario draghi thatadmit that he hears criticism and push back on his policy of quantitative easing. Governor kuroda meeting with reporters ask about what it means for the boj. Always,it very clear as sticking with stimulus come heading for the 2 inflation target. Haidi far away from it as well. Thank you. Coming up, more analysis of the imf forecast. Also, its taxed squabble with the white house. Researchhe ing head of right after this break. This is bloomberg. Getting back to the imf. Ought to meetings underway in washington. Call for lagarde to policymakers to push through reforms and make the expansion sustainable. Lets get over to singapore now with rob carnell. We have heard from the equity camp saying this is the perfect scenario when it comes to support for growth, particularly asia. I feel like you may be more benign on the outlook. As you point out, it does indicate on nothing bad terms of policy missteps from a central bank or trade war between china and the u. S. Are those risks higher than what we are pricing in . It is hard to know what is being priced in at the moment. Some of those risks are binary and could be devastating. The way the markets are playing it is a binary risks, so lets price in the growth and extrapolate it ford and assume no Central Banks do anything crazy with Monetary Policy, and everything should follow. It will extrapolate forward and we will get a nice 20182019, everything is fine. Im sure there is something out there we are not thinking about that will make us rethink our optimistic view. With that picture, centralbank steady as she goes when it comes to tightening, trumpnorth korea more rhetoric of than action, some sort of tax reform, but anything would be a bonus. Are the levels of Global Growth we are seeing sustainable . Notets be honest, they are particularly high. Christine lagarde was pointing out in her speech that 2017 looks like the best year since 2010. The world was bouncing out of a Global Financial crisis at that point and growth rates are always going to look pretty high. It is not bad growth. It is synchronous ready much around the world. The comments about debt are still out there. There are things that can go wrong. There are more people coming out of the woodwork saying i am not sure at these levels whether it can be pushing higher. It would not take a lot to get people to think a be some sort of pullback is required. Be ofd there may pullback, and there is some talk of the ecb reducing its bond purchasing program. It is about time, isnt it . Absolutely. In connection with all the things the imf talked about with regard to inequality, and qe plays a role in driving inequality higher, for a region that has seen a long recovery where the inflation is nudging higher and unemployment rates keep falling, there is no excuse to be running emergency policy now. Oforry about this suggestion a lower for longer policy, whether they have cut dramatically the monthly mollifys and try to markets by pushing this out for a while, so that wont be ok, will it . 30 billion a month, may they get away with it. Even if they say we will keep it going until the end of 2018, i think that will be a shock and we could see the euro spike on that and german bond yields pushing higher. Rishaad there are other dangers here, arent there . Do you want to give me a clue . Longer, whatr for about being behind the curve at that point . I think if you look at a lot of Central Banks around the world and economies around the world, and we are getting back ,o this is death story again this is beginning to increase. You could make a similar point about the rba dilemma and what they need to do. Central banks are using low tolation to pass the buck regulatory authorities to do the hard work for us, but the longer you hold back from actually doing something which will slow your pace of credit expansion, and that means raising rates, snapback will be when it comes if you get it wrong. The longer you delay that come of the greater the probability of getting that wrong, so early action is better than no action at this point. Putting thisl be question to the atlanta fed president , but where is the inflation . Does it matter . It doesnt. I dont think inflation matters at all. I would not be in the majority, but i dont think inflation targeting is the right way forward at this point. It served a useful role when inflation was five. You could also argue inflation was coming down anyway. Right now is inflation targeting the right measure . Is 2 the right number . I think probably not. Look at the relationships. 1 is probably a sensible number. Haidi thank you so much for that. , the chief economist for the asiapacific. Coming up, j. P. Morgan citigroup kicking off earnings seasons. We take a look at the numbers, next. This is bloomberg. Earnings season is upon us. Banks, sharess. For j. P. Morgan slipped. First, trading revenue. Executives at j. P. Morgan, citibank, and bank of america warned of declines 15 to 20 . Btv 793. J. P. Morgan is in white, revenue fell 21 in the quarter year on year. Citibank in purple, revenue fell 10 , better than expected. A lack of volatility has been blamed for this. This time last year, in the aftermath of the brexit vote and the runup to the u. S. Election, but this year the vix is around 10. Lets take a look at loan growth. Btv 4136. We took the growth curves, falling or nearly flat. Fell from 4 to under 3 . Citigroup loan growth barely rose. Fargo, america and wells not forecast to move far. Before earnings, bloomberg calculations saw quarterly growth to rise 1. 8 . That would be a Fourth Quarter in a row of growth slowdowns. We also want to keep loan loss reserves in focus. Btv 4604. Analyst think more banks have built up their reserves in q3. 17 of 20 banks, up from seven in q2. This implies they are expecting more people to default on loans and credit card hills. They boosted their reserves by the most in four years. Lets rounded out and look at share Price Performance over the past year. This is btv 4726. Bank of america has seen a 60 return. 50 , but didseen fall 3. 5 thursday. Wells fargo has seen the smallest rise of just over 20 . Those are the four charts you need to know as we wait for bank of america and wells fargo earnings to drop. Latest outs get the of samsung, the latest earnings report, Third Quarter preliminary earnings estimate in spirit also, the open of trading in hong kong and shanghai. This is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing Xfinity Mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Kong. D 9 29 a. M. In hong what have we got . Not many tailwinds today. Confidence over the trump tax plans waning, engine during a pullback for u. S. Sex with u. S. Equities. Also in the mix, u. S. Inflation, u. S. Retail sales. Estimates,ng beating causing waves there across the asiapacific. I am Rishaad Salamat coming to you from bloombergs asia headquarters. Haidi i am haidi lun in sydney. All these weather issues will make it difficult for the fed to get a gauge of where inflationary pressures are. Are looking ahead to china trade numbers and money supply over the next few days ahead of the 19th party congress. Sophie taking a look at the moves in hong kong, declines of. 2 . Cap trading flat. At that right there. Take a look at the currency space. The offshore yuan with slight gains along with the onshore inn, its first weekly gain four. Today, watch chinese 10 year bond yields. They are closing in on a high, helped along by the rally in stocks. Jerome powell sounding the alarm around corporate debt. Warned emerging economies are vulnerable. Bond investors are more willing to take on longer want durations in the hunt for yield. Out how long it would take to cover the price. Shortertions are still for u. S. Corporate debt. The line in white is emerging markets, the line in blue is u. S. Corporate debt. The feds shallow hiking cycle is telling them it is not time to cut durations. Get to irvingets berlin. He had a song called lets face the music and dance. There may be trouble ahead. The International Monetary fund warning the Global Recovery complete. Eans saidtine lagarde expectations are limited by a lack of reform and disruption from technology. She adds the pickup in trade is good, but rising protectionism means clouds are on the horizon. Singapore has cut policy unchanged after thirdquarter growth smashed estimates. 6. 3 , on year growth of 4. 6 was well ahead of estimates around 3. 8 . It has prompted the central bank to drop a reference for its policy stance. Slowed,on inflation reviving calls for an Interest Rate cut. From a yearces rose earlier, below the median estimate in a bloomberg survey. Resultker than expected raises questions. The reserve bank of australia has delivered its semi annual Financial Stability report, saying measures are constraining borrowers but will strengthen the resilience of households and balance sheets. Housing will remain a core area of interest. Price growth has slowed. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad looking at samsung, trading down, better to travel then arrive sometimes. Profit at 12 billion. Put down to surging demand for memory chips and displays. Good number here. These are the preliminary figures. What was behind it . Is it sustainable . Strong memory prices are the biggest driver. We believe it is sustainable given there is limited new supply and we see Strong Demand in terms of mobile products and server demand. New supply coming up, so they have more sales from that as well. Rishaad it is the company most people think of as mobile phones. It is more than that. Should beplays, there some depreciation in the Third Quarter, but as long as apples new iphone launches on schedule, they can get sales from apple. Oledng is the sole supplier. People are positive on the new note eight. It remains to be seen whether they can compete well with the iphone, but note eight seem to be doing better than note 7. Will you be looking for in the full results . People will focus on the guidance in terms of shareholder return policy. Have been concerns that the company may cut back on Share Buyback given they have an aggressive capex plan. Would be the swing factor in terms of how much they can pay back shareholders given the strong cash flow and strong balance sheet. Coming up, we will be joined by the fed atlanta president Raphael Bostic. Iswill ask him when the time right to raise rates and get his view on the next fed chair. This is bloomberg. Welcome back. Stubbornly weak inflation is stoking debate about Interest Rates. The atlanta fed president expects inflation to drift towards target over the next year or so. And haidileen hays lun with us as well. Lets start off with this 2 target. Is it like waiting for godot . Seen is a a lot of tightening of labor markets. That will put upward pressure on wages. I think we will see prices move. We have done a bunch of research. The labor force her to suppression rate in those segments of the market usually the last to come back have started to pick up. We are at the in the of any sign of slack in the market. Rishaad when you get ,nflations a few months later thats what you are suggesting. Right. Rishaad will the fed go in december . I dont know. One of the things that i try to do in advising my colleagues is let the data tell me what the marketplace is. , there is the storms a lot of noise in the data that will come out. One thing i will try to do is go into the field and talk to people in my district and get a sense of how disruptive it has been and draw a conclusion about what i think they should do in terms of Monetary Policy. Thei i want to go back to inflation conundrum, that global Central Banks in the midst of this almost existential crisis working out where the inflation is. That inflatione doesnt matter anymore and that perhaps inflation targeting is no longer the most relevant way for Central Banks to set policy . Would you agree with that argument . I am not there yet. There is more to learn about what is happening in terms of inflation dynamics. Inflation is starting to pick up across the world. I was in singapore, and they were reporting they are starting to see more positive inflation. Toill be keeping an eye out see if that development happens in other parts of the world as well. A relative newcomer to the fed, you bring something others that you are the first africanamerican to had a regional bank, im talking about your expertise in housing. D, so you role of hu have a sense of housing, the mortgage market. You have a sense of being on board. Are you concern the fed could make a move and a direction that would hurt the very people who are the most in danger of getting priced out of the Housing Market even with small moves higher in rates . Of course that is something i worry about. Is of the things i have done to make sure that we think collectively about how our policy affects the entire range of the population. We serve all people in our and other parts of the world. I think about that a lot. Tryingthe things we are to think about in terms of housing that i have been interested in is making sure that when people get into homeownership that they do it in a sustainable way. That our policies contribute to that. We went through an awful housing crisis in the united states. In part that was because people got into homes they could not afford over the longer term. Hopeful that reaction has caused people to be more strategic and selective about when they get into homeownership and that it works for them over the longer run. You were also a professor of public policy. Im wondering about wages, income inequality. In the work you have done connecting it to your work as a Monetary Policy maker, what do you see as changing . I think the story has yet to be told on whether wages will eventually rise. I am concerned about income inequality. One of the first programs we have had at the atlanta bank was about this question and what do we do about it. Sure everymake person in the labor force has the skills that allows them to get the jobs of tomorrow. Economy and economic markets are evolving rapidly and technology is playing a significant role. Oureed to make sure all citizens are equipped to take the jobs that will be made available in the next several years. We are talking about this a lot and will start working with a job trainers, a new initiative on Workforce Development that i am hopeful will generate new ways to retrain people who find their jobs being displaced so that everyone can move forward and thrive in todays economy. Rishaad if you have fun employment at 4. 2 , that would normally constitute full employment, but members of the fomc are still saying there is slack in the labor market, why . Are a diversity of views at the fomc. You have reported on many of those views. We know for sure there is tightness when you see prices move in response to the increased production of jobs. Will take that as an inference that we are not there yet. Rishaad is Participation Rate what you look at . Data can go a a lot of ways and be interpreted a lot of ways. It is why we try to get into the field. Is a lot of diversity about what exactly the number should be in terms of full employment. What i would say in my viewpoint is that whatever you think the number is, we are moving close to it, and moving their rapidly. That should translate into upward pressure on wages. Ofdi d you think the danger a dovish fed and how that plays into asset prices, are you concerned about a potential asset bubble building . Concerned about whether policies are having have her us a fax. Focus on thef my real economy to make sure we are creating policies that allow firms reducing things and hiring wante, and consumers who to make longterm investments, that they are best positioned to do that. Has developments happen in financial markets, we look at that. My staff tried to give me some insight into what are the sources of growth in financial markets, and are a day things that we might be contribute into and need to take more consideration of in the months to calm. Forne of the Big Questions the Federal Reserve our the personnel changes, starting with the fed chair in february, the vice chair already gone. You are new to an organization, you see it with fresh eyes. What do you think administration should be looking for . I dont get to make that decision. Place that gives the president advice. Would say it is that it has been a pleasure to work with vice chair fisher and chair yellen. Both of them are smart, so theyle, inclusive, have made me feel welcome as a new member of the Federal Reserve. They listen very carefully to what everyone has said. I have really enjoyed working with them. I have worked with a lot of people with many different backgrounds and who ever the president selects to be the chair to fill the vacancies on the board, im looking for to working with them and we will find ways to Work Together to make sure our policies are maximally effective. Has said theari fed should not be raising rates and tell inflation is showing evidence. Fedbullard of the st. Louis in an interview today said he is concerned about the fed losing credibility if it starts moving with inflation so far away from the 2 target. It seems to me you are in the other camp now. I put myself more in the middle. The data tellet me the markets are not moving in responding in the ways i expect them to. Is these markets will translate into pressure on prices. That is likely to happen sooner rather than later. We have been talking about this as an institution for quite some time, that wage growth is imminent, upward pressure is imminent, so , butstarting with new eyes if the data tells me it is not here, i am happy to make sure that my recommendation for policy reflect reality. Rishaad what about quantitative tightening . We had easing going into the program. It . Do you perceive it has inherent dangers, just as easing did. It does on its face. We are cosponsoring a conference on unconventional Monetary Policy. Have been things we reflecting on is our plans for t is not nearly as dramatic as the entry. We will pull back on our repurchases at at very slow rate to begin with, maximum 10 billion a month, on a 4. 5 trillion portfolio. It will take a long time, but that is because we want to make sure as policy moves through that we understand how the market is responding to it. Dont want that incremental tightening to shift the economy require more dramatic policy or be counterproductive. You are here with the Hong Kong Monetary authority, which tells me we have a dollar peg. Perhaps it is also acknowledgment that the fed is more outgoing, outward looking, than it used to be. What you guys do affects the world. Fed has longof the understood that we interact with the rest of the world. We are not on an island. We have an International Finance division in washington. My staff who on are routinely overseas and engaging with policy makers overseas. We cosponsor or conferences with people here in hong kong. , so the canada, europe perception about us as being very inward looking is a little off the point. Rishaad i said you are less inwardly looking, more outwardly looking. We definitely are going to engage in the International Space and make sure our policies are not detrimental. Youi what do you see when look at china and what the pboc is doing . Indications of the pboc picking up certain tools and adapting them to china, but how do you rank what they are doing in terms of Monetary Policy . I dont have a strong opinion on what they are doing. My first job was just to understand the u. S. Economy and some of our closest partners. I will look at that more carefully in the months to calm. What i want to say though is that i think from what i have seen that the monetary authorities are cross the world are talking to each other a lot and trying to make sure our diminishdo not the impact of any of them. Just came fromo china. They are having these conversations and i am looking forward to learn their thoughts on it so i can have a better opinion on it. Saw the impact during the taper tantrum across asia and the war of words from the reserve bank of india saying the fed cannot do this without better communicating. I want to talk about the unwinding. Go on. One of my messages at this conference was all Central Banks need to be much more clear and our communications and take extra steps to articulate what we are doing it, why we are doing it, and what our in the goals are. It is fully consistent in terms of what you are talking about with the taper tantrum. Tightening,ative the markets did not respond in a dramatic way. Sign of aat is the successful implementation of a communication policy to make sure the markets understand what we are doing. About banking regulation, another role you are taking on . The Treasury Department put out a report last week about revisiting regulation. In your experience in public policy, are you on board . Should regulations be rolled back . What is needed now . First, i dont have a decisionmaking role. That is something the board does. Im looking forward to working , to givenew vice chair him intelligence about what i am seeing in my district. The Regulatory Environment is always evolving and changing as the Banking Sector and economy you golf. I have often described regulation and all these things has a pendulum swinging. To the extent that swing has gone a little too far in terms of activity, that is something you have to look at. How the relaxation will look like does matter, and i will be informing our folks would my thoughts on that as they become crystallized. Dont have a fed speaker every day, but there seems to be a lot of noise out of the Federal Reserve right now. Im hopeful it is not the case rishaad it was not like this with ben bernanke. Different is in a position now. The nature of policy has put us into the daytoday policy space and that requires a different level of engagement from the institution. People are not saying they are hearing too much. They want to hear more. To say this, i think there is useful in this and really talking clearly about why we are making the decisions that we do. Rishaad thank you so much for that. Thank you for popping in. Federal reserve president of atlanta. Coming up, chinas latest trade data. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Announcer from our studios in new york city, this is charlie rose. Charlie bob cheevers has been at cbs studios since 1969. He has covered the major beats and washington including the pentagon, white house, congress and state department. For 24 years he was the anchor of face the nation. He retired in he has eight emmys 2015. And has been named a Living Legend by the library of congress. His latest book is called finding the truth in news. Deluge of i