Acrimony. Washington says it is disappointed with its partners attitude. Yvonne a busy day for us. Lets start off with breaking news from south korea. Unemployment numbers at 3. 7 for the month of september. That is bang in line with estimates and slightly lower than the 3. 8 we saw in august. That was due to the weather conditions that impacted the construction sector. Things looking steady when it comes to the jobless numbers. The big news today is going to be how asia is sandwiched between two speeches with president about tax reform a couple minutes ago, and president xi at 9 00 a. M. Hong kong time. With President Trump, people are waiting to see, does he give us details . My things set yet in congress . Eager to hear about tax cuts, what they might be. At least we do not have to wait long. Yvonne i love how our live team calls it the calm before xi and trumps speech. We see records on wall street, despite that. Kathleen but shortlived. Cost 23,000. Riefly United Health care and johnson johnson, reporting, helped boost the dow. You can see it close 40 points higher on the dow, 0. 2 . S p 500 up fractionally, nearly two points. The nasdaq, lets call it flat. Yvonne were looking pretty tepid here in asia, as well. The direction of the dollar moved from the next fed chair to the nafta backfiring. Morning,r dollar this especially after the peso in Canadian Dollars surged. In terms of g10, weaker dollars,. 7172 for the kiwi as we await that Coalition Government announcement. Also flat on the nzx 50. For thesydney,. 7842 aussie this morning. We did see a retreat, copper oil closer to 52 a barrel. 21,380 for theg open. Ruling party heads toward the best National Election results in more than three decades. Dollaryen not going anywhere, 112. 17. Lets the caught up with first word news. Holding of u. S. Treasuries rose to the highest in more than here. Tojings holdings advanced 1. 2 trillion, an increase of almost 35 billion from a year earlier. That is the highest since july last year. Japan is the biggest holder of u. S. Debt. Republicans have dropped spending regulation that includes the 1. 6 billion President Trump wants for his Mexican Border wall. The bill would direct money to money where most illegal immigration happens and the wall along the entire border may be debated later. It increases the chances of a Government Shutdown before the funding expires on december 8. Latest travelps ban has been blocked and may end up in the supreme court. The hawaii judge issued a restraining order, dropping the banned from taking effect on wednesday. The central question will be, with animosity toward muslims the administration is almost certain to appeal. Maintained gains after reports Kurdish Forces have agreed to retreat from areas the iraqi army claimed. They have taken control of oil refineries, easing concerns about supply. Investors turn to the u. S. With forecasts of a fourth straight decline in crude stockpiles. The survey says inventory probably fell last week, while inventory likely rose. President xi opens chinas political important political event, expected to cement his grip on power. Will make the opening speech, giving the work report, which covers achievement since he took power in 2012, as well as his vision for the future. He is expected to outline Economic Reforms and touch on chinas global image. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. The u. S. Is easing up on its criticism of chinas handling of the yuan. They allotted beijing for measures in what they call the disorderly depreciation and for allowing the currency to rise against the dollar. Andy woods joins us. Seems it was a softening tone from the treasury. Does it put to bed currency manipulation label threat, threats, especially for china . It was a softer tone in the report. A lot of people were concerned the Trump Administration would crack down on its trading partners. Said, china is still on the list of countries to be monitored, as is japan, germany, south korea. That a lot of concern going forward, the Trump Administration could really crackdown on these countries. Kathleen there is a lot of concern among the mexican and canadian delegations about nafta. They are not giving up, they are sending talks into 2018. Autos have a lot to do with the disagreement here. Too early to say the talks have failed, but what are the odds of success . What happened today and where is this going next . The end of thes fourth round of negotiations that have been going on a couple months. Today was significant because they introduced the more contentious proposals the mexicans and canadians do not like. You saw some of the language in the press Conference Today heat up. Concern in thef Investment Community that the u. S. Would walk away from negotiations. The u. S. Is still negotiating but there was a lot of concern there is room for talks to break down. You will see a lot of volatility in markets because of that, going forward. Kathleen randy woods, thank you for joining us. President trump about to address the camels, giving his latest views on tax reform. Lets discuss what we can expect with bill rhodes. , if are you hoping to hear not expecting to hear, from President Trump . More details on his tax plan . It is great to be here with you. The president has said many times he wants 3 plus growth. What is veryays important to get to that number is tax reform. He has already come out and said Corporate Taxes will go down to 20 . He had initially said 15 , but modified that the 20 . He said to reduce the categories from 12 to 3 . He will also do something on the middle class tax reform. Not clear what he wants there were what he can get. How will this be funded . You have people like rand paul were very concerned about that, how this would be funded. People in the Administration Talk like the Reagan Administration did on the supply side. That if you get 3 plus growth, that will enable us to have less of a deficit and will cover the difference here in taxes. In other words, the tax reform of stimulate growth. The other thing that is important is to bring some of this money lodged a broad by Companies Like apple and others, somewhere between 2 trillion in 3 trillion, to bring that back under tax amnesty or tax arrangement. The big question there is, if that happens, will this go into investment or things like stock buybacks . This tax reform package is probably the most important thing the administration is working on at this moment. It has been quite clear President Trump made this red line on that Corporate Tax rate from 35 to 20 , which is nonnegotiable, in his eyes. But is it . We see so much contention when it comes to the elimination of state and local tax deductions. What can stay and what needs to tweaked . To be ofl there is the abolition state and local taxes and people still talking about the border tax, though not as many as before. These have to be worked out, going forward. It will be a very difficult process. But it is a must because they have not been able to do much of anything on health care. The president signed a decree the other day. The health care reform, obama care reform, has not happened. We have nothing happening much on infrastructure at this point in time. Although there are a lot of plans to do that, we have not seen anything yet. I think the ability of this administration to get tax reform is crucial not only for the 3 plus growth, but also for the image of this administration. Yvonne if we do not get this Senate Budget resolution process through, does that mean tax reform is dead . Bill i think they will be able to get that through. You have all sorts of timing on the tax reform. Initially the secretary of the secretary said he hopes the spring he helps to get something by the end of august. Obviously that did not happen. Some are talking the beginning of next year. This is one where you see the president is going to extend his hand, his discussion and press conference with Mitch Mcconnell the other day really shows he is going allout to get the republicans on board. Because instead of criticizing Mitch Mcconnell, who by the way, i think as one of the toughest jobs in washington, he said, we are at peace, we will get this through. At least on that part they are starting off on a positive note. The president is giving a keynote address at the American Heritage association. Bill foundation. Kathleen a rather conservative, thinktanktype group. They are in favor of tax cuts on businesses. He was scheduled to speak around 7 10 wall street time, and will be taking the speech in full. Do not know how long it will last. I guess what i am wondering learned, iss trump trump Getting Better advice . He just had that war of words with bob corker, a prominent republican senator. In the past, he said not so nice things about Mitch Mcconnell and his failure to get the first version of the obamacare appeal through. What are you picking up and all your contacts inside the beltway . Is he wising up . Is the learning to get his way in washington better than he seemed to in the beginning . Bill the press conference or interview standing next to Mitch Mcconnell was a very positive note. It shows he knows he has to work with the leaders of his own party, if he is going to get this thing through. He may be reaching out to the democrats. But at the end of the day, he has to get his own party behind him. Yvonne do you think you will get meaningful support from the democrats . Bill he has been working hard on some of the democrats in the senate, to try to get three or four votes. I do not think he has given up on that. If it is reasonable tax reform, i think some democrats will go a long. Repatriation of these funds abroad, number one, they believe you have to drop the Corporate Tax rate. Whatrgument here will be, happens to the lower income tax reform . That is where i think it will be difficult. The other question is, how he is going to fund it. Kathleen difficult, indeed. The early analyses that have been floated in terms of who gets what kind of tax cuts, concluded that there are a lot of middleclass people who would end up paying more in taxes over the next five years. We always talk about the 1 at the top who would get pretty good tax breaks. That is a very tough sell and it rememberent i during the campaign when wilbur ross joined the Advisory Team and came to talk to us on our radio and television. He said, people like me will not get any tax cut. It is the middle class that will do well. What happens between that version of tax reform and what were seeing now between trump and his team . Bill President Trump still says that. He is talking about perhaps having to increase tax levels on some of the upper tier. It is not clear in that area. The corporate side is clear, the repatriation site is clear, what is not there is what happens with the middleclass taxes. That is clear because where does is support come from . The lower and middle class. 57 against, 37 for, that is a hardcore that supports him. He has to do something for that middleclass, particularly lower middle class. Kathleen some analyses have shown, this executive order to end the subsidies for health andrance on the copays other things that make it affordable for people that are lower income, what hit people in some of those states hard, the very people he says are part of his core. If he is depending on that court to get reelected, these are two areas where he has to find a way to get it done. Deficit, butn the a lot of republicans do not want to do that. Bill another issue is carried interest. We heard over and over again in his election speeches, he said he would do away with carried interest. It would be interesting to see what an effect what, in eff ect, happens. Yvonne lets see live pictures and d. C. Expected to give a major policy speech on tax reform. This is the Heritage Foundation, the annual president s club meeting, where he will highlight, hopefully get more details on this tax reform. More than just a taxcut we have been talking about, cutting the Corporate Tax rate from 35 to 20 . This is bloomberg. Kathleen still with us come on bill rhodes. Quite some pretty and interesting pictures coming across here. Yvonne they are zooming in, seems we are getting close to the president heading to the podium, the Marriott Marquis. Thisll be the place President Trump will be highlighting and making the argument for a dramatic cut in tax rate. This is the Heritage Foundations annual president s club meeting. There is a thinktank that helped write out that plan. We are looking at details. It has been very scant, so far. Apart from the nine page framework we got. Kathleen it is interesting we big speeches from the leaders of the biggest economies in the world, President Trump speaking on tax reform in washington and president xi jinping addressing china and the world to kickoff the 19th Party Congress. We have bill rhodes with us, global advisor. We should be hearing from President Trump himself. It is an interesting juxtaposition, isnt it . Trump was critical on china on the campaign trail. He comes to office, first thing he does, sits down with xi jinping, and boy, we are buddies now. Has this image helped xi jinping . Do the chinese care, has it hurt him, in terms of his stature . How do you view the relationship between these two leaders . Bill we will find out soon. One of the first visitors to china after the 19th Party Congress will be President Trump. They have a lot of problems, the south china sea, trade. One of the biggest is kim jongun. When he china to bring kim jongun to the negotiating table. The one who can do that is xi jinping. Only the chinese can do that. It was a do you think good idea for chinese to put an oil embargo against north korea . I just did an oped suggesting that is what they do. Theycut off the oil provide almost 90 of the oil and gas to their pipelines and to north korea. The first user of that is the military. If they cut that off, they will bring xi jinping xi jinping will be able to bring kim jongun to the table very quickly. That is what we would like to see. You make of this war of words between kim jongun and President Trump, but also Rex Tillerson and trump . And howm to be at odds they view diplomacy with north korea and how to approach it. We see a little more consensus this week with Rex Tillerson talking about, we are going to continue diplomatic efforts until the first bomb drops. If trump comes to asia, what is the signal he has to bring . A little bit more of a strategy versus just talks right now. Bill i agree with you. Basically, they are trying to talk kim jongun to the table. That that is not going to take. I know korea very well. The only way you will get him to the table is what i said. You have to do something radical, other than war. And that is the cut off the oil supply, and the only one who can do that is xi jinping. Kathleen we are going live to washington where President Trump is said to give a major policy speech on tax reform. We can see him heading to the podium for what we hope are more details on tax reform. Here is President Trump. Thank you for that wonderful and dynamic introduction. [applause] i because of that i heard they had to make this room a lot larger, quickly. Thank you, very much. Dedication and leadership and devotion to our country has been spectacular. We appreciate it very much. I would like to begin by providing a quick update on our economy. Many peoplenk too in this room will be upset. But the stock market hit today 23,000. High,s an alltime record so congratulations to everybody in our country. It is an incredible honor to be here tonight to celebrate this really wonderful foundation. Just a few months from now, you will mark the 45th anniversary of this esteemed institution. For nearly half a century you in the fight to defend and preserve our great American Heritage. Few people have worked harder to protect this heritage than ed n iece, a fearless protector of our constitution. Where is ed . [applause] ed. Trump thank you, and mrs. Thank you. [applause] pres. Trump that is a very popular couple, i must say. I want to express my deep appreciation to the great steve moore, who is with us tonight. Where is steve . Steve has been fantastic. We have been working long and hard together. We are thrilled to be joined by distinguished guests, including joni ernst and congressman ron desantis. Ron . Is wrong thank you ron, for everything, and thank you, joni. Finally i want to express walton,e to kay james, and the staff and scholars at the Heritage Foundation. Thank you very much, great job. [applause] everyone here tonight understands a core truth. That for america to have confidence in our future, we must have pride in our history. Inherited a we have special legacy of freedom, culture, law, traditions and values. Named theization is Heritage Foundation because you understand that our glorious heritage is the foundation of everything we hope to achieve. You understand that Human Progress must be built upon a Firm Foundation of timeless truths. These truths are immortalized in our founding documents. Our most important truth our founders understated was this, freedom is not a gift from government. Freedom is a gift from god. [applause] and that is why we are here tonight, to rededicate ourselves to the defense of our godgiven rights. Kathleen still with us, bill rhodes. President trump starting off his remarks tonight on tax reform, welcoming the audience, setting the stage in a big picture way. We will be monitoring this. As soon as he starts getting more into the speech where he tells us what his plans are for tax reform, we will take this full on again. In the meantime, bill, want to get back to you. We are also waiting for president xi to speak in china, kicking off the 19th Party Congress. As important as tax reform and all of President Trumps plans are to him, equally important to xi jinping. A difficult position for the president of china. He is already going on the path. He has already become the core leader. Is this about who is the next leader, will there be any new initiatives that come out of the Party Congress . Bill i think there are a couple things pending. We have to understand this is the most important political event in the world this year. Much more so than the elections in europe, because this is the worlds secondlargest economy. As far as Major Economies, the fastestgrowing. This will set the tone for the next five years are perhaps more, in china. There are some people that think the tonal be said for more than five years, when president xi speaks. Also, we have to remember, he is party secretary. He has both of these titles. He will be naming them next Standing Committee, which is now seven, it was originally nine. One of the rumors is, he may reduce it to five. The real question is, whether he keeps his close lieutenant, his biggest ally in the party and in the Standing Committee. Person, axtraordinary , biggest premiere in the history of china, the one that got him into wto, started the banking system. Zheng is a troubleshooter. He cleaned up the province. We used to see him regularly. And then he became the vice premier of economics and finance. Opening upeat one on the system. He is now the corruptions are. The big story there is that he is 69. And the understanding among the party elite is, that once you reach 68, you have to retire. The feeling is that xi jinping does not want gong zheng to retire. The real question is, what happens with gong zheng . And another rumor i have mentioned on your program on several occasions, is whether he upped or increased in power to a position like the premier, which is held by right now. There is a growing consensus that gong zheng will be asked to stay on. It opens the door for another five year term for xi jinping. No one has had that since mao zedong. How should President Trump of you a leader like president xi jinping . We saw the speech in dev hosts was talkingre he about free trade. Could xi jinping after this Party Congress actually rise to that world leadership arena . Bill you always ask good questions and this is a key question. This sort of crowns him, once he gets through this. He will then be a leader that of time behind him. The chinese economy continues to grow. But that does not mean there are not a lot of problems in china. The economy has many problems. The debt is more than 280 . It has grown substantially, continues to grow. You have bubbles and property and real estate. Including a number of Zombie Companies that need to be closed down in areas like steel, coal, and shipbuilding. Chip building. Hopefully xi jinping and his ofmier all take a page out the book of the one that restructure the Financial System. Closing Zombie Companies. Longerterm growth for china, this is necessary. Also you have the shadow banking area, which is growing rapidly, still unregulated. It is very important that be taken care of. Some people feel it is only 87 of the total gdp of china. Now he has appointed a new head , who says he is going to clamp down. The peoples bank of china, which is, to me, the best institution in china on the financial side, has done what they can in this area. But the responsibility for regulation of the Financial System, is with the cbrc. They have a securities and insurance regulator, but that is the key one. Yvonne even before this congress we are dealing with the xi jinping that is already a powerful leader. He has done quite a lot with the corruption campaign, gotten rid of thousands of corrupt officials. He has strengthened farreaching reforms in the pla. Basically controlled all the information that goes into china right now. Does a change in the Standing Committee give him that much leverage to implement economic reform . Not is a leader they did care about economics or finances until this year, when he shuffled the regulators and brought about this deleveraging. Bill i would go back to one of his earliest appointments, actually, reappointments, when he kept a governor at the peoples bank of china. He was due to retire three and a half years ago. That was a very true move. It was to consolidate power. He wants to move on a number of Economic Reforms. And that will be the challenge i laid out. We will have to see if that is the case. Certainly, he is one for economic reform. I got to work with him in his various reforms. That is what i am looking for in the second period, and it is necessary for china that that happens. We are waiting to see if donald trump gets to some more specifics in his tax reform speech. He is speaking live tonight. We are waiting for president xi. In terms of china in the region, japan, south korea, does that enter into any of xi jinpings Standing Committee thinking . Is that a byproduct of Everything Else they do . You mentioned President Trump going to asia. It is obviously a big deal to him. Depending on who you talk to, a lot of asians hope the u. S. Will maintain a strong stance in the region. Whereas china is often nervous about that. How will that play out for these two leaders . Bill that is one of the challenges. In addition to talking about kim jongun, they will be talking about the south china sea, and trade. Biggest allies in the region are japan and south korea. South korea is under threat. Japan is coming up to an election which they think will be difficult for abe. But now it looks like he will win. When you take a look at where it is, it is one of the most contentious areas in the world today. Our relationships with japan and south korea are key, without a doubt. As you look at other issues around the world were waiting for President Trump, president xi, mag i just throw in, turn the table a bid and ask you about what is going on in the u. K. . Mark carney went before parliament today. He gave this broad sense they were ready to hike rates. He says he wants a strong brexit. Maybe overshadowed by these other things. In europe this is a big question. How do you see the bank of england moving ahead . Do you think it will be a hard brexit, do you think they will fail to get a deal . Very lucky to is have mark carney as governor of the bank of england. He has tremendous experience he brought from canada and has handled the situation since brexit very well. I had a chance to talk briefly with the chancellor, the finance minister, hammond. He is optimistic they will be able to retain the importance of london. This is one of the key points a have to face, because london is the Financial Center of europe, without a doubt. Willber of Financial Firms have to relocate in massive numbers to mainland europe. This is one of the big challenges that exists, as to how they execute on brexit. The bank of england has to be prepared with their rule and monetaryle policy to make sure this is done properly. Cut you offave to because we are going back to live pictures and president in d. C. Talking about tax reform. Lets take a listen. Pres. Trump you will be taxfree. [applause] we are nearly doubling the zero bracket. And we substantially increased the Child Tax Credit for working families, which so many people want, including my daughter, ivanka. Americans precious time and money we are simplifying the tax code. Under our framework, the vast majority of families will be able to file their taxes on a single sheet of paper. [applause] in addition to simplification, the other pillar of our tax plan is reducing our sothat weusiness tax, can restore america so that we can restore americas competitive edge. It is 60 higher than our average economic competitor. This is a giant, selfinflicted economic wound. That is why we will cut the Corporate Tax rates from 35 all the way down to not more than way below our average competition out there in this very competitive world. [applause] first Small Businesses that file taxes as sole proprietorships, we will cap the top tax rate at a maximum of 25 . [applause] pres. Trump it is a tremendous reduction from what it is. And i will tell you, it is the biggest reduction in taxes in the history of this country. [applause] for the more than 30 million Small Businesses in america, our plan cuts their top marginal rate by about 40 . This will be the lowest cut income tax, for small and mediumsized businesses, in more than 80 years. [applause] pres. Trump to maximize job creation for least the next five years, we will allow our companies and are manufacturers to expend the full cost of equipment in the year they buy it. One year, it is written off. [applause] want to go makes me immediately back into business. [laughter] and yes, were ending the horrible and very also known astax, the death tax. Finally, we are going to bring back trillions of dollars currently parked overseas. You look at the money that cant come back into our country. I have been saying for years, it is 2. 5 trillion. Democrats want it back, republicans won about, they have for a longtime. They have never been ever to make able to make a deal, lack of leadership. We are putting that in our tax plan. I think it will be over 3 trillion, or substantially more than that. I have been saying 2. 5 trillion for many years, it is a lot more now. Nobody really knows the answer. I think it is substantially over 3 trillion that will be put that to work and our country, not some other country. Our framework provides a one time a one time low tax on profits currently sitting offshore, so this money can come back right where it started, come back home to america, where it belongs. Believe me, we could use it in this country. Manyeded so badly for so things, including infrastructure, which we will also be doing. Penalty. Liminate the we will have to do the future earnings. My council of economic advisers change, along with a lower business tax rate, would likely give the typical American Household around a 4000 pay raise. And that is money that will be spent an hour economy in our economy. Our tax plan will ensure the company stay in america, grow in america, and hire in america. People from our welfare to work, from dependents to independence, from poverty to total, beautiful transparency. Which is why we need the help of the Heritage Foundation and everyone here tonight, to get our tax cuts through the house, through the senate, and to my desk for signature. [applause] pres. Trump so you have got to call up your local senator and do not give him a hard time. It is going to be hard getting the democrats because they are obstructionist and they vote in blocks. But if we get the republicans we need, which is virtually every single one of them, because that will gete need, we that largest tax cut in the history of our country. And you will see things happen like have never happened before. Employment, we will have jobs, we will have Companies Moving back into our country. And we certainly will not have companies leaving anymore, that i can tell you. So get your senator, call your congressman. I do not think you have to call ron. Most of them are good. I think were going to get there. Is incredible. Lets give our country the best Christmas Present of all, massive tax relief. And speaking of christmas, yes . You want to hear it . Speaking i am talking about Christmas Presents. I will give you a bigger Christmas Present. You will be saying merry christmas, again. [applause] pres. Trump you go to the stores and they have the red walls and the snow and the sleigh, but they do not have merry christmas. Merrythem to say, christmas, happy new year, happy holidays. President trumps speaking at the Marriott Marquis at the Heritage Foundation of the president s club meeting. We will give highlights from what we have heard. Saying the heart of the plan is tax cuts for every day americans. He says the business tax rate is a giant, selfinflicted wound. We have been calling it the biggest reduction in taxes in the history of the u. S. Also talked about the Corporate Tax rate, wants to bring it down to 20 for Small Businesses. Also wants to cap it at a maximum of 25 . O ending the s state ending the estate tax. Did stress he thinks it is a substantial amount bigger than the 2. 5 trillion we have estimated. He thinks it is over 3 trillion. Also talking about how the money should going to infrastructure as well. Lets bring back bill rhodes. He joins us from new york. I dont think we heard too many details. What was your take away . Bill more or less what you said. We discussed repatriation, the 20 rate. He emphasized the small and mediumsized businesses reducing it by 40 . One thing he said we have not heard recently, reducing for the lower middle class tax returns to one page. That will be interesting to see. Just the way he presented it, was very well. But there is really nothing new. The question is, the one you asked earlier on, is the ability to get this done in a timely fashion. Commentsicating by his on christmas that he wants it done by the end of the year. The point we discussed earlier about reaching out to the republican party, his session with Mitch Mcconnell, all of this indicates he is counting on the republicans to bring the bacon home, not the democrats. Although he is still hoping some democrats will come along. Kathleen ending the estate tax is nothing new from donald trump. However, it is always been contentious. The arguments for both sides are strong. Hurt bysinesses can be this. On the other hand, it is the kind of thing democrats and some americans might say, that does not help. If i understood correctly, he the profitstake they made overseas back to the u. S. , is going to mean for thousand dollars a year for american workers. Although, they will pay people higher wages. There is no guarantee. We do not know what they will do with that money. Sell . S still a very tough we did not get a lot of new details. The plan is not fully hammered out. I just dont see where the speech gives him that much momentum because it does not seem to have sweetened the deal the between people who will say, what is in this for me . Bill but i think he has put everything together. Under repatriation the question is, where will that go . He wants it to go to infrastructure. We will have to see if that works. First of all, he has to get the money back. There is no doubt that on the socalled death tax, that the democrats feel very strongly on this. They will oppose it. The question is, can he get enough republican votes to pass it . That is why i am saying, what he is returning to remember there was a period when he was reaching out to democrats, bigtime. To he is reaching out republicans with the hope he can bring a few democrats along. He did not give a specific date. He was talking about christmas, that indicates he wants to do it by the end of the year. Yvonne he wants to give a Christmas Present to the americans. Thank you, bill rhodes. He will stay with us for the next segment on china. We just are President Trump wrapping up his speech at the Heritage Foundation. This is bloomberg. Yvonne lets switch gears to china, our focus on beijing with partyent xi opening the congress. He will be opening the address in just over an hours time, delivering the work report. That lists achievements that took power in 2012, economic and military reforms. Chinas imagen abroad. Investors will be watching for indication of who might succeed him in 2022. Lets get more from haidi lun in aging. All this is a very political event. But there are economic implications, as well. Whether we expecting from xi jinping this morning what are we expecting from xi jinping this morning . Saying ithave been seems to be a week where he consolidates his considerable power. What he does with that mandate will be key to markets, going forward. There will be reforms, more appetite when it comes to getting reforms in place. The background is a sense of political pageantry. About 2300 members dissenting on the capital. They will decide who runs china over the next five years. In thethat culminates Standing Committee of the most powerful man in china. That pageantry will end toward the end of the week with him walking on the red carpeted stage. If he does consolidate his power, his power is affirmed and enhanced. To tackle these painful stateowned enterprise reforms acquired, overcapacity issues, while maintaining stability via employment levels that are key . Also talking about deleveraging. We have Bloomberg Intelligence predicting debt to gdp ratio will jump to 330 by 2022. Is there going to be appetite to do more on that front . We will be watching whether that 6. 5 growth target gets dropped. Ago wed a couple days can look at 7 growth in the second half. Hugef these issues come a issues, not just for china, but globally. Investors looking at these Financial System reforms. It is very much a week of big picture. A lot of political horse trading and the groundwork has been laid. Kathleen haidi lun, thank you, joining us live from beijing. We will be taping president xis speech live around 9 00 p. M. Wall street time to read we will have final thoughts from bill rhodes, founder and ceo of william rhodes. He is also an author. There is a new section on the eurozone. China, final thoughts what is important . Di brought up an important point, where the economy is growing. When with Zhou Xiaochuan he made that comment in washington. They will announce the thirdquarter growth on thursday, which will be part of this pageantry of showing how well china is doing. If not 7 , probably close to it. Most people were predicting it would be close to that a few months ago. That is all part of it. Needs to remember there is growth in debt and the need to reform our there. Majork if he is put in a position, it will be worked on in the coming years. Kathleen bill rhodes, thank you senior viceus, chair at citigroup. Thank you for spending the hour with us. Thank you for joining us. Keep it right here. Daybreak asia continues. President xi live at 9 00, coming up. This is bloomberg. Were live from bloombergs asian headquarters. Welcome to daybreak asia. The top stories this wednesday,. Ajor speeches he will offer his vision at home and abroad. Is depending on more of the same. It is just past 8 00 p. M. On this tuesday. President trump says americas business rate is a self inflicted wound. Once again, short on details. Is a currency manipulator. To beijing as he kicks off the 19th Party Congress and it was interesting with President Trump. We did not get a whole lot of details once again, but the markets on a policy or as well. I guess that means we will have to spend a lot more time watching this coming out of washington. The two houseat representatives can come of with. Theres still a lot of dissension. President trump has laid some big things out on the agenda. Rhodes saide bill the 19th Party Congress is the biggest political event of the year, bigger than the european elections. Lets hope we get some details. Relatively calm out there. Taking time to assess the global stock rally. And therefore, the repercussions on the market. There saying slight gains their today and as trump delivered his major speech on taxes, we did. Ee the dollar rally continue you can see it barely budge as we spoke today. Dollarrbaugh said in the overnight. This is extending past the deadline. Mexican peso is fairly steady and the yen is pretty much in a holding pattern. Inside,s for japan also but you dont see anyone want to take position. Admit speculation of a victory, but some are questioning the optimism because they say all they will likely stick to the same programs. The relative strength index for the topics now at or about that 80 level. Also, higher than what we have seen of late. Case, take a the look at what is going on for japanese japanese small caps. Outlast what ever may be running strong this level in 24 years. Thank you very much. Now its get to first word news. Gains. Has maintain Government Troops have taken control of oil fields and refineries. Investors now turn to the u. S. A Bloomberg Survey says probably fell while gasoline stock prices probably rose. The bill would direct money to areas where most immigration happens along the entire border later. Chinas hoping that the u. S. Treasury rose. Holdings advanced to 1. 2 trillion. That is the highest since july of last year. Remains the second holder secondbiggest holder of u. S. Debt. Eliteeting of the party is expected to cement her as power to it she will make the opening speech. He is expected to outline more reforms and touch on chinas global image. Im Paul Allen Paul allen, this is bloomberg. Itshe u. S. Is easing up on on chinas handling of allowing the currency to rise against the dollar. Donald trump speaking and repeating some of the things he wants to see, not really giving us a broader idea of how that will come about. We are ready him we are bringing in the merck editor jodie snyder. Do we really get that much . Got what we have come to expect in the tax reform plan talking about how this will help corporations lower the rate which very few corporations actually pay, but it would lower to makend also, trying the case this would help ordinary americans. They would get a pay raise as much as 4000 per family. This is what he is stumping for. He is pushing very hard for this plan. He did not take the replacement of obamacare on the road that much. Giving speeches almost every week. Theme, its current was interesting as well. It really hasnt materialized. On the campaign trail, he made a lot of that as candidate. It was the one of the things he was going to do on day one outofthebox and now they are just on a watchlist. He has been very careful not to offend china and his Upcoming Trip to china. He actually cited them for preventing disorderly disruption. He needs china. Right now, he wants them as a partner on north korea so he is being strategic here and not to try to defend. He does not want to offend them to request it has been over 20 years since anyone has been labeled a currency manipulator. Only violated one of the things so maybe that is not so much a surprise. When we look at what is in the mix right now, it has a lot to do with north korea. It is a hugest elephant in the room. Where did the powers that the stand on this as they get ready to meet again . Provocationsa has lately. Eard from them yesterday i think that President Trump, while he has had fiery rhetoric on north korea also realizes that he needs to be into contact with china on this. China has been trying to tamp down the rhetoric and calm things, but they have not gone oil. R to cut off the so many things going on. We have not talked about the travel than which was basically rejected by federal judge in hawaii. I want to talk more about sean spicer. He is back in the headlines, said to be questioned by Robert Mueller steam. They are talking to everyone they can. We have not heard a lot of it lately, but this investigation. Roceeding or two centuries the investigation continuing. They want to talk to anyone who may have had knowledge of meetings that could have shown any kind of collusion by the russians in the campaign so they are talking to everybody in people who have let the administration are big targets for them to talk to. The tver has been making rounds as well with latenight shows and award shows. Thank you. Government editor here in hong kong during coming up next hong kong. As the rose largest provider of shared workspace, ivana links toexpand to ivana plans expand to asia will give the opening address and expected to list the achievements coming in 2012. On chinasalso touch image, including trade and infrastructure. Observers will watch for any there is a lot of moving parts here. Definitely. The devil remains in the details. No idea when little get details in terms of structural form. To take a step back, this is political pageantry. You have members coming into the 200 selecting people that will be directing china for the next five years and on top of all that, the question is whether he will further consolidate. He is in designated correlator which he alluded before where does he go from there . Is reallys and that going to the in terms of Everything Else that is going on here in beijing, we are seeing pretty strict security. When no that is going to be a combination of looking forward to the next five years, but also of the things some of the achievements of his tenure to request standing drones and banning hotair balloons tenure. Banning drones and banning hotair balloons. Get to and askto some reform. Year. Owth to the 7 this it make political sense to enact bolder actions . The question is once he has this affirmed power, what does he do . I guess some are more promarket reform and say the windows really closing in terms of he has to take on some of the china upforms and said for longerterm growth. They want to double the size of china. That ties into a growth rate of a lot of and that is economists and distractors will they it is increasingly less of it shouldnt when it comes to the amount of lending. On the other hand, there were some policy missteps. A violation u. N. And thats an shock waves globally. It was largely criticized. Which capital outflows took months to get under control during the also had a rise in the fall of the chinese equity market which kind of suggest that some of the difficulty in large and there with his power is going to trade carefully and try about some of these reports with the overall goal of maintaining stability and keeping his power. We will see you back in about 45 minutes. Just picking up what i mentioned, are we going to see a cautious approach after congress once he does consolidate that power . He have the political leverage to rock the boat . If you look at what you said the past five years and some of the reform he has been doing hes year, it is quite clear is not a strong believer in the free market. You look at the enterprise reforms. See production which index to gain the power sector. Think a 6. 5 growth that was locked in during the plan is there any kind of way he could maneuver or soft and that target . That is for sure. I think he would be willing to accept lower growth. Cuttinght now pollution and capacity. They want to do that. Get six point 7 or even 8 this year, the gross we needed to hit the longterm and the next three years we only need 6. 3 . I think it is certain to us will see below 6. 5 the next three years, but that does not mean they will go for that restructuring. I want to come back to this. This is more about state control and not about free markets and what that means for so many aspects whether you are a Chinese Company or a tech connie tech company, they have to. Ell 1 to the government the strongest leader possibly since mao. What is this mean for the economy and investors . Has it been so successful that we will accept Chinese Capital for at some point is this an issue . Medium term,r the it will not be a bad idea. If you have a more controlled approach, and it made by more stability. You look at the Chinese Government. Their ultimate goal is not to maximize the best longterm growth, it is to maximize the challenge of social stability. If you have a controlled approach which means they reserve the right to intervene ,n the market is a c necessary intervened the market if necessary, capital controls is necessary, this reduces the chance of a disaster in the very short term. In the long run, we do not know. In the next three years if we have stability, i think one positive is the consumption could continue well. And the discussion what would you say they are looking at is the biggest risk . The thing that is most troubling in the next five years to maintain this growth, stability . Think in economic terms, it is about Financial Leverage. The Financial Leverage makes the whole system quite vulnerable and if you have liquidity shocks, things can go wrong very easily. Risk,er to contain that we do expect the Chinese Government to continue this deleveraging, with more measures, with more tightening after congress. At the same time, we think the pboc will be there to provide enough to make sure the system continues to run, but the financial which is actually the main reason we expect growth to slow. Good to have you. Come hereenty more to. N daybreak asia this is bloomberg. A quick check of the latest is is headlines. The Justice Department opened an investigation into its data scandal. One executive told bloomberg the company may have been taking data for more than a decade. Than 7spend more billion for travel trips. Wants Artificial Intelligence to learn about travelers wishes. A veteran investor steps away from two companies after making controversial comments. He has been a frequent guest of bloomberg and elsewhere and is known for contrarian views. Here. P it right 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. Beautiful morning out of or. It looks so pretty, i wish i was there. We finally got some cold chilly, but sunny autumn weather. Lets get right to the first word news. Told robert hasnt muellers team interviewed sean spicer on monday. Spicer left the white house at the end of august after Reince Priebus was forced out. President schultz latest travel ban has been blocked in may the again. Why the judge issued a restraining order on wednesday. The essential question will be animosity towards muslims is a reason for the order. Were told officials are ready by december sewed trade talks can begin as soon as a decision is preceded to make. Russell saying the u. K. Has still not enough details. Twitter will introduce new measures she used the site to name and shame allege sexual offenders. Will twocy former executives have been chart fraud over the place allege accountinglow standards and Company Policies to accurately record assets. He says is no truth to the allegations. Ofs a great to pay a fine 36 million. A fineas agreed to pay of 36 million. Thank you. Today, monumental speech for President Trump in china coming up in about half an hour. Japan. Seeing here were seeing japanese stocks reach that. We do have some skeptics were the gains we are seeing around he isction, saying troubled by this is the leading off a win would still a question on what the outcome my when it comes to the Market Outlook so japanese stocks continue to rise despite technical flashing. Event undetermined by the rumblings and the want is resuming gains for a seventh day. Th korea avoided being avoided being labeled a currency manipulator. The 60lding around handle for now and the loonie is climbing as nafta talks disappointed dollars. It is slow for october. Commodities, we are seeing oil areb, but base metals sliding from this threeyear high. As you can see, a breakdown of the city share market. 5900. 4 ched the 5900 level. Adlave utilities like energy advancing for it is perhaps in reaction to australia ditching it Clean Energy Plan so although barely a whisper of volatility. Again, thank you as we continue this trend. He is running us live this morning. We have talked about how this is going to be a political event, not so much market moving as we have seen in the past. Welcome from a very wet tiananmen square. As he pointed to, we will get that speech just after 9 00 local time. He will recap over an hour of his speech. We will probably hear him talk reforms andlitary role of the party as well and some of the economic achievements. We will also framework the policy for the next five years or where china goes between now and 2022. We are not expecting detailed policies. Things like continuing to rebalance the economy and yes, financial risk. As you say, this is very much a. Olitical event more controlled and has been in many years and this is key for president she and his law. Will be president tackle International Challenges or will he leave north korea to one side . It would be surprising if he directly address north korea, but there will be a section talking about foreign policy. Have lost tome kinsey. His back. Looks like he is back. Itll be interesting to see how clearly he defined that. Hes very intent on seeing china play a greater role on the global platform. Of course the u. S. China relations are key. It is setting the stage for that. There are domestic challenges as well. Domestically and internationally, the challenge is about four president she for president she give us one of the domestic challenges you would say is at the top of the list. Stateowned enterprises, i dont think there would give much detail on that. Really, we would get the details [no audio] tom joining us from beijing. We wait to hear president gigi pink president gigi and trade balance. We continue our coverage. Im just going to pick up or top left off. He was talking about leveraging and we have to talk about chinas corporate sector wants to pay down those bills. Look at how much debt china has racked up over the course of the past 10 years. At the end of 2016, it is this 160 of itbreakdown going to corporate. Purple is also thanks so will he talk about deleveraging . Will he talk about growth in the rebound and in financing, that we will have to wait and see. A lot of investors keeping a watchful year for that. Atntime, lets take a look 2592. The chinese new and is in yellow here and over the course of the past. Actually u. N. Has weakened can by about 9. 7 and i put this in context with exports because it has lifted chinese exports and we can see it has risen on par with that. About 9 if you catch that in yuan. E u. N. Chinese said they wanted to praise beijing for keeping the u. N. Under control and also making sure it strengthened against the us dollars. You have to look at what is happening here from the start of this year through where we are now, it is strengthening by about 4. 2 three with that said, looking ahead, this is my third terminal chart. Not a good number in chinese e. Rge lor stands where the yuan right now. Could that be a cause for currency manipulation . It is a source of tension for the u. S. And china. Impact of that could have an impact on what is happening between the u. S. And china trade deficit. Obviously the trade deficit is billion u. S. Dollars. Its u. N. Does weekend over the course of the next year, that could have a not. We have not seen that come to fruition and then applies there will be i will leave it back to you kathleen as we continue this one ofe of what is day chinas national Party Congress. Very helpful. Thank you very much. Speech. Bring the just ahead, our first interview with shared space startup we work as it pushes into asia with backing from softbank. Chris lee joins us next. Judy this is daybreak asia. The Worlds Largest provider of shared workspace is in asia. Europe are based we work is stepping up expansion abroad as well as korea. Christian, thank you for joining us. The big question is how does we work in asia . What is the strategy there . First of all, thanks for having me on. It is great to be here. Recenta, the most administration was brought into help drive innovation and Health Companies get to the next level of job creation and help more santos laroche and this is the type of environment that we can help create. And healthng that companies expand and innovate and bring them together in a way they can collaborate. Every market is different in asia, but there are thousands of copycats, in particular in china as well. Permission a they are hard to pin down or some companies. What sets you guys are . We started with a global. Latform for creators it is the space in the design, but a big part of it is community. What we want is people to feel the energy and theyre able to collaborate with different companies, local players, but importantly we can help those with their Global Expansion plans. It is not just space, it is the communities. Else is doing this at a global scale. I would like to ask about india. It is a large place to be doing business. What is it, how does it work and told that approach take you other parts of the region . Really, what you see across his driving local partners and local Management Teams are it youre seeing that in china where we have a full team there. In india, we have a similar structure. As we were looking for where we , they aren entrepreneurs so they join together to expand all across a stronghelp build Management Team. Many more to come and we think it is something that can help us all across asia. Who are your big competitors in india . Dont think of ourselves as having competition in that sense. Not just space, but a Real Community of more than 150,000 andunities so of course india the scale we will get to in the things we bring in terms of immunity and a sense of being connected to other people. Theres no one else doing that on a global scale like we are. How important is it to have a local partner . And otherlar in seoul areas of Southeast Asia . Incredibly important. One of my main roles is helping local Leadership Teams and great local partnerships. We are really excited about thethe team he is built on sideal side and marketing and help get a global playbook executed. What are some of your plans in Southeast Asia . Announced japan, china, korea, etc. Want all those Major Economies across Southeast Asia. He will see us very quickly start to expand in those countries with local partners and the local Management Team out of singapore and driving that into those local countries. Live from seoul, we will continue our china coverage a couple minutes ahead of the presence speech. You are looking at live pictures of beijing right now. This is bloomberg asia. We are minutes away from the opening of chinas communist Party Congress. Taking live pictures in beijing, lets get to willamette more analysis. Weve been talking about any mention of economic reform. That is not what this is all about. This is all about political leverage. Politics and it was in his report. He is going to make a wide range covering everything from developmentcultural and even hong kong and taiwan. The number one question is whether or not they will point a successor. Becauselso curious already compared to mao in terms of how powerful he is, you has a lot of grams. What is an issue that is going to be discussed around the scenes . Is looking make sure like the ultimate power now for china. He is set to emerge stronger actually from isgress, but i think he planning to gain a majority which is the parties top decisionmaking party and perhaps going to have it enshrined. We all here what is the signal to send to the world. Shake thereally parties in china . We have no idea whether she may or may not appoint a successor. He might keep his options open for the next five years and then momentum he will likely stay on for another term. It could be five years down the line. I think this option is very wide open. Is there anyone that could arise above the ranks. He is a rising star and there is another person. The choices, we dont know yet. When the moment comes, we will know. At to the fromines, that is it daybreak asia. Keep it right here. This is bloomberg. President xi jinping is expected to become chinas most powerful leader. I am haidi lun in beijing. You are watching our special coverage of chinas Party Congress
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