Official approval. Speaksstanleys boss exclusively to bloomberg, warning the fed against cutting rates. Ive supported the latest fed rate cut and i suspect they will do one or two more. But then it is time for a pause. Shery more from that exclusive interview with james gorman ahead. Plus in Bloomberg Technology global link, aps incremental tweaks to the iphone lineup. We will ask if that is enough to lure buyers. Thats get you a quick check of how the markets closed in the u. S. A bit of a rocky session for markets. Gains and losses but throughout the session getting a bit of a boost. The dow up three tents of 1 . The s p 500 unchanged. Media reports talk about chinese purchases of u. S. Agricultural goods. Greato have not so optimism when it came to bail trade negotiations and those concerns wait on tech stocks with the nasdaq unchanged. We have Energy Stocks higher with oil fluctuating after the National Security advisor was let go from the white house. Lets get you started with a quick check of the asian markets. Sophie good morning. Futures across the region mostly higher. We will see if that shifts to a value versus growth. It may happen in the region. Plenty of catalysts that could drive sentiment, including china opening the doors to capital inflows. We do have a Cabinet Reshuffle from japan for all of this ahead of the ecb on thursday. Ahead of all of that, we have remarks from mark carney. As well as getting reports to provide growth. When it comes to the data docket, we have jobs data due out along with Industrial Outlook from malaysia and Consumer Confidence as well. Paul thanks. Lets check in on the first word news with jessica summers. Jessica while china is opening the door to soy imports from argentina as it pivots away from u. S. Farm products in the ongoing trade war. Beijing has traditionally preferred to import raw soybeans and process them on the mainland, but there may be hope for u. S. China soy ties. Chicago soy futures rose on reports that trade teams are working on a deal that would see beijing buy more American Farm products. The Trump Administration is set to be considering an executive order to crackdown on shipments of the opioid fentanyl. Sources say the move aims to pressure china to help the u. S. Fight its ballooning Prescription Drug addiction. Were also told the draft order would target four shippers using the u. S. Postal service but not ups or fedex President Trump has criticized china for not doing enough on fentanyl. China has removed another obstacle for Foreign Investment into capital markets. Two decades after access was first allowed. Global funds no longer need official approval to buy mainland stocks and bonds. Listing at 300 billion over all caps on overseas asset purchases. It is the latest push by chinese authorities to increase use of the yuan in international transactions. Across party group of u. K. Lawmakers says a possible solution to the brexit deadlock could be a hard border between britain and the eu in the irish sea. That would leave Northern Ireland effectively the only part of the u. K. Still aligned to eu rules. That is bitterly opposed by belfast and has been defeated before. Mark carney says the continued uncertainty is undermining sterling. Sterling volatility, as you would know, its at emergingmarket levels, decoupled from other events. Obvious reasons because it matters tremendously if the brexit outcome. Jessica global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Our top story this hour confusion over the fate of u. S. National security advisor john bolton. With President Trump saying he was fired, but bolton saying he quit. Whatever happened, the white house says they differed on many issues. Wti futures dropped on the news of the departure of a man considered one of the top hawks in washington. Our National Security editor bill fairey joins us from d. C. The reaction from the oil markets was huge with wti futures falling. What does his departure tell us about potential future policy towards iran . Bill john bolton had a long history of being a hardliner on iran long before coming into the trump white house. He was able to pursue that agenda with close access to president donald trump. There seems to be some optimism that perhaps with him gone, there would be one less roadblock to stump a day taught between the u. S. And iran. Perhaps not in immediate lifting of sanctions but at least the start of a process that is more akin to diplomacy than more. We have seen a lot of military tensions between the two sides in the last few months. There has been a lot of talk potentially about a meeting between President Trump and president rouhani on the sidelines of the u. N. Meeting later this month. Ish john bolton gone, that one less voice advocating against those policies. Paul less diversity of opinions in the room. John bolton reportedly often occupied a different position to mike pompeo. What does this mean for mr. Pompeos status in the white house . Bill mike pompeo stands a stride of trumps Foreign Policy agenda as the first among equals. If you look across his National Security team, besides mike pompeo, you have the secretary of defense who has only been at the job for a few weeks. You have a u. N. Ambassador who was only approved by the senate today. There is no permanent director of national intelligence. Mike pompeo is the only original member of trumps National Security cabinet and at this point, the most influential one going forward. Paul all right, bill faries, thank you for joining us from washington, d. C. Onll to come, china opens up Foreign Investment. We will ask if overseas funds will bite. Shery next, treasuries extended. The recent fall back in the bond rally as investors weigh Central Bank Policy and trade war implications. This is bloomberg. Paul you are watching daybreak australia. Futures mostly flat after the s p 500 ended the day little changed, but the big rotation continues. Moving away from the high momentum stocks for a second day. Su keenan joins us now with more. Another day of big market moves. Su these are really significant. We saw the s p 500 and relatively flat but the big move and what have been the High Performers come investors are selling this to get more about value stocks. Take a look and you will notice Energy Stocks where the big movers. The russell 2000 again outperforming. This is the smallcap value stocks that a lot of investors are piling into. Lets go to the bloomberg and take a look at the rotation we are talking about. This is a major move that investors are getting into. There it is. Stocks in reversal. The high bit of momentum stocks that have been heavily favored in 2019. Many have doubled or tripled. They are the ones being sold off in this latest sector. We have been seeing this happen for several weeks, but we really got a jolt yesterday and the continuation today is clear. Lets take a look at the big movers. Roku, up several hundred percent yeartodate. It sold off heavily yesterday and again. Fannie mae, a different story. Up huge and down today as we get conflicting signals from washington. Another High Performer down and starbucks down under a review of its accounting and some questions by the fcc. Shery thank you for the latest on the markets. The u. S. Bond market september selloff rolls on. Treasury yields rose to the highest level in a month. Sam dunlap, senior portfolio manager. Great to have you with us. We continue to see yields creeping higher with this was this inevitable given how extreme positioning has become . Sam we think the positioning was extreme in august, especially as global recession fears pete and trade negotiations seem to be breaking down. Now there appears to be trade talks back in october and the data in the u. S. Is better than expected, this positioning is coming up extreme levels we saw especially in risk assets in the u. S. Shery we are having corporate to the u. S. , having a great time with that they lose of investment deluge of investment. What are we seeing in terms of the credit market . Sam the credit markets have been pretty well behaved especially through the weakness we saw in august and on those recession fears. Issuers really tapped the bond market and really circled the low yield traded last week was a historic record in the u. S. Not only is a record in issuance but a record in low yields. Those bonds come at a cost. A lot of Interest Rate risk for investors. When you have selloff like we have seen this month and in september, that Interest Rate risk becomes real. Paul has anything really changed . There is still concerns about global growth. Trade talks. Nothing has really happened. Even yourself says recession odds are rising. So, have we just seen a correction . Sam i think you have definitely seen a correction off the extreme positioning in the general trend has been lower globally. We are still seeing a significant rally in yields, particular from the powell pivot. The pbs news hour. Comment last october 10 year yields are down over 100 basis points. Even after the recent selloff. Global growth concerns are there, particularly the weakening manufacturing data spilling into the u. S. Concerns about trade globally slowing down. The u. S. Macro situation. Overall, the u. S. Consumer looks to be in really Strong Health and that is a strong point that we continue to hone in on as consumer strength in our opinion should weather the storm, albeit, some of the weakening manufacturing data is something to note and the curve shape is something we have been paying attention to. We think what is unique late cycle is the fed will enter into a unique midcycle easing campaign which should continue this expansion well beyond market expectations. Paul we have been talking a lot in the past few days about the strength of the u. S. Consumer, how it is keeping things ticking in the u. S. Just want to play devils advocate. Is there a risk as well because i am sure chinas trade negotiators have noticed the u. S. Consumer is the point of strength as well. Do you think there is a risk some pressure could be applied . Excellent leverage heading into trade talks. Sam there could be some weakness in the consumer, especially if you have weakness in the labor markets looking ahead. Investors andit where we focus, we see a lot of strength towards consumer credit. The consumer is in a much better position from a credit perspective. Even if you saw weakness, particularly in the labor markets, u. S. Consumer base credit assets we believe will perform quite well and continue to perform well, especially during some of the risk off environment we have seen over the last couple of months and years. Consumer credit is an excellent position, prickly areas like u. S. Residential mortgage credit. An excellent place to be in our opinion given the massive deleveraging we have seen from the consumer and general improvement of mortgage and credit, mortgage integrity in the post crisis period. How are you factoring in home prices at the moment . Sam home prices have slowed off the brisk pace we have seen throughout most of the post crisis period. We have seen home price appreciation moving more in line with where we see wage inflation. Coming off the peaks that we saw in the yearoveryear basis in march of last year of about 6 is a brisk pace for home price depreciation. More in line with 2 , 3 is where we see wages today in the u. S. Overall, housing and home prices. We view them as a much more sustainable longterm trajectory, away from the boom bust cycles we saw during the crisis. Paul all right, sam dunlap, angel oak advisor senior portfolio manager, thank you for joining us. You can get a roundup of the stories you need to know in todays edition of daybreak. Bloomberg subscribers can go to their terminal. It is also available on mobile and the bloomberg anywhere app. You can customize the settings so you only get the news from the industries and assets you care about. This is bloomberg. Paul this is Bloomberg Technology global link. Im paul allen alongside sherry y ahn and taylor riggs. Lets take a look at the top global tech stories of the day. Taylor. Taylor thanks. We start with struggling videogame retailer gamestop. Tumbling more than 20 after posting a secondquarter loss in issuing a forecast that is far below analysts projections. Store sales are a key measure of performance and gamestop says they will go to the low teens this year, more than an earlier forecast of 5 to 10 . While disney is planning to sell, foxs entertainment asset earlier this year. The business creates free to play mobile games that didnt Marvel Strike force which raked in more than 150 million. Free to play games make money by convincing players the byproducts in the game. Upnet has games coming based on the avatar and alien movies. Mcdonalds is betting on automation to smooth the way at the drive through. It is by a startup that develops Voice Recognition technology for use in the Restaurant Industry to help speed up lines. It can create a machine that can take orders and read that them to kitchen staff. It is being tested in chicago with staff on hand to oversee operations and step in if needed. Those are the top global tech stories i am watching. Shery . Shery thank you. A big day for apple with the launch of new devices the annual product announcement. Among the items unveiled, three new iphones, a new apple watch and a low cost ipad. Lets discuss this with ivan feinseth. Great having you with us. How exciting a day was it for you as an analyst when you look at the apple event today . Ivan always good to see. They do a great job of showcasing the future of products. They continue with a good cadence of iphone introductions. The biggest thing is the services which is led by apple tv plus, apple arcade, the new apple credit card, an apple music, apple pay and applecare. The Growth Engine will be the growth of these services as apple monetizes its almost one billion iphone user base. The two bases are that the phones are not yet five g enabled, which means they will not have a 5g phone until this time next year. 5g will start to be available in a number of major cities towards the end of this year. The other disappointment is the 18 hour battery life in the apple watch. Because once you start to use that as a sleep monitoring device, you have to charge it at night. I do like like the growth of the services. Apple tv plus, i think they will get a lot of subscribers. Including the fact if you buy a new apple product including the ipad and macbooks. Shery let me touch on apple tv plus. This was interesting to me. It will be available november 1 but there are streaming devices out there including disney plus. What will this do to the market . Ivan i think the winner of the streaming wars will be disney. The disney plus service for seven dollars gives you an incredible amount of content. The disney plus bundle which includes disney plus and espn plus and the ad supported version of hulu for 13 pretty much gives you an incredible array of content. I think the loser will be right now the leader, netflix. You will have apple tv plus now. Disney plus. Hbo max coming from at t which owns time warner. An eventual launch of comcastnbcuniversal streaming service. You will have a lot of content available. I think disney will win because disney is just the king of content. But these will all drive the sale of mobile devices because you still need a device also, from tablets will benefit these streaming services. Taylor ivan, taylor riggs here. You talk about how the phone was a little bit of a disappointment because it does not offer 5g. We know huawei and samsung come of those phones already have 5g capabilities. Was the camera not enough to offset the lack of 5g in your opinion . Ivan not really. The camera features are nice and people use their phones more as cameras but these new cameras offer an incredible amount of functionality, but the casual user really does not take advantage of the power of the camera and the functionality. For most consumers, all they want is fast connectivity. Great crisp screen and functionality and durability. Those are the key factors. Is better than the iphone before and usually sells more than the iphone before. They really did a good job in pricing. They didnt increase pricing that much and they have some entrylevel price phones at 500. The most expensive one is the iphone 11 pro max at 1100. The cheapest one is 500. I think those price points along with the Trading Program they announced and the Monthly Payment plan will help to sell phones. Taylor when we talk about services, the watch was the standout. Not only the introduction of the watch five or the drop in price on the watch three. How nervous our competitors like fitbit for example . Ivan i really think garmin will dominate the small wearable market. They have an incredible array of fitness trackers and smart wearables that start anywhere from 80 and go up to 2500. Many of the garmin watches that have battery lives that go from a few days to a few weeks and offers a tremendous amount of gps functionality, fitness tracking. Smart wearables will be the focus point of health care. Health monitoring, fitness monitoring. The wearable market will grow significantly. I think the winner is going to be garmin. Shery we talk about all these new products from apple, including the iphone 11, the ipad, apple tv plus. How much do all of these matter in the broader context of things as we continue to see this trade war with china . Ivan well, the trade war does negatively affect apple right now because they do assemble a lot in china. First, President Trump did give right now consumer electronics, which is tablets, phones, laptops, a break. The tariff that went in effect on september 1, those will not go into effect until december 15 with the possibility that they do come to some trade terms. I dont think we will see a trade deal for the end of the year but i think we will see some concessions and some tradeoffs because both the u. S. And china are motivated chinas economy is getting hurt and the u. S. Economy could be hurt. President trumps possibility of getting reelected really is based on a strong u. S. Economy. Taylor 200 billion of cash. Do they make an acquisition . Ivan if you look at the fact they will need content for apple tv plus and they have already invested a lot of money with this new show morning news with Jennifer Aniston and steve carell. Stories amazing with steven spielberg. They will need a lot of content to content with disney, netflix and other Upcoming Services like hbo max. Shery ivan feinseth, thank you so much. That is Bloomberg Technology global link. Dont miss Bloomberg Technology 7 00 a. M. In sydney, 5 a. M. In hong kong, 5 p. M. In new york. This is bloomberg. Paul 8 30 a. M. Wednesday morning here in sydney. We have that market open 90 minutes away and futures pointing a little higher by a quarter of 1 after what proved to be a rather mixed finish on u. S. Equities market. Im paul allen in sydney. Shery im shery ahn in new york. Lets get the first word news with jessica summers. Jessica confusion surrounds that a parser a former White House Security advisor john bolton who claims he resigned while President Trump insists he was fired. The notoriously hawkish bolt left minutes before a scheduled Media Briefing on terrorism. The white house says he and the president had been disagreeing on many issues as bolton advised the president against meeting the taliban. Will opens the u. S. Talks eventually if there is any chance to a trade deal. The chief Security Officer says he cannot imagine a situation where washington does that ultimately speak to huawei peter the company as a focal point in u. S. China tensions and sometimes seen as the potential bargaining chip. Huaweiton has banned from u. S. Tech and wants American Allies to blacklist the company. The International Monetary fund says concerns about trade have reached a peak and are almost 10 times the levels seen in previous decades. It says those worries could shape three quarters of a percentage point off global imfth this year a new indexes the americas and asia pacific are most affected by the trade war uncertainty. The index is based on reports by the Economist Intelligence unit dating back to 1996. The founder of top apple supplier foxconn a seemingly a step closer towards running for the presidency in taiwan. He seint aides to them islands main Election Agency to talk about the paperwork needed to launch an independent campaign. He will make a final decision on a run, but independent candidates must apply by next tuesday for a chance to stand in januarys election. Global news 24 hours a day on air and on twitter. Powered by more than 2700 journalists and analysts in more than 120 countries. Im jessica summers. This is bloomberg. Shery Morgan Stanley had james gorman has warnings for the Federal Reserve. Proceed with caution on future rate cuts. His comments come as markets cement bets on more easing from Jerome Powell and recession fears mount. He spoke to us about how he sees the Global Economy holding up. James at one level, we have record low unemployment. We do still have global growth. The u. S. Economy, the most important economy in the world, is performing strongly. China is still performing strongly. Europe is obviously mixed that it has been mixed for two decades now. At one level, the fundamentals are quite strong. At the other level, the sense of confidence, there is not confidence and inevitability we are the end of the cycle. Statistically, there is a recession every seven years. 15 chance of recession but it does not have to be. Australia did not have a recession for 28 years in a row. Why do you think there is so much pressure on the Federal Reserve to continue cutting rates . James because the economy is slowing. The job of the fed is to balance Monetary Policy with Economic Outlook and fiscal policy. They should feather rates when the economy is getting hot. Their job is to raise rates and slow it down. Ive supported the latest fed rate cut and i suspect they will do one or two more. Then, it is time for a pause and really absorb this. The problem with cutting is it is one of the few tools youve got. If you give it away to easily, what do you have if we have a real problem . I want to go back what you said a minute ago, squaring the different elements. Especially businesses that seem more cautious with a consumer that is not showing much signs of caution at all. How do you square those things that you talk to your customers and what do you see out there that could help explain that dichotomy . James we are in the bit of an echo chamber. If you are a business leader, you go to Business Leadership meetings. We all talk to each other. A little bit of it is we must be at the end of the cycle. The fed is cutting rates. We have had an inverted yield curve which has been highly predictive of a recession. There is some hard evidence that things are more likely to slow down that accelerate at this point. I dont think there is no doubt. As executives, the job is to think about Capital Investment over multiyears. You would be prop prudent and be cautious at this point consumers are not experiencing that. Housing is starting to recover. Consumer credit, apart from student loans, is in very strong shapely read the consumer Balance Sheet is still very strong and that is why it is lagging the corporate Balance Sheet and corporate attitude is. Paul that is Morgan StanleyCeo James Gorman speaking exclusively with bloomberg. Lets get some analysis on what we just heard from the interview. Adam haigh is with us. Prudent to be cautious. Central banks should not give it away too easily. That is the theme. Adam gorman is really explaining the balance that policymakers are facing. Especially when we think about going into the policy tomorrow from the ecb and next week from both the fed and bank of england. It is finally poised at the moment. The point about over delivering or going to hard to come into as the fica cycle starts to end is a theme we have heard from a number of central bankers. We heard it most recently down here from adrian orr in new zealand. They decided to be slightly more preemptive by going 50 basis points and then settling in wait to see how things play out. The market is priced pretty well for at least another two, three cuts. 50, 75 basis points from the fed. What you are seeing now is a little bit of the unwind of some of those bets at the moment because we have that huge bond rally over the last 12 months. Particularly in august. Over the last couple of days, yields are certain to pick up again and you are getting a sense that maybe things moved a little too far and a little bit of a positioning element as well. Clearly, potential banks of the moment, it is a tricky situation and the fed does not want to risk going hard. Shery stick around because we want to talk about those tricky situations with china with policymakers taking another major step in opening the capital markets. Scrapping limits on Foreign Investment in the stock and bond market. Lets go to Tom Mackenzie who joins us now. We have seen this limit for almost 20 years. Now they are scrapping them. The timing seems interesting. Tom, it seems we dont have you at the moment. That was Tom Mackenzie in beijing, updating us about chinas scrapping Foreign Investment limits in stocks and bonds. We are talking about the caps that have been in place for almost 20 years. Lets turn back to adam and talk about how this could affect trading. We have heard this will really not have much impact on capital inflows given that the qe system in place right now, only two thirds of the cap is actually being used. Adam . Adam yeah, bear in mind, it is clearly a significant shift. It is a continuation of what we have been hearing from china for a number of years now and the process of making efforts to liberalize their capital markets. It puts more onus on the currency and move towards more freely floating currency. Clearly, as you said in the points related which stood around 300 billion, not all of those are being taken up by people who have allocations. Gore was a Spare Capacity to by assets in china. The last couple of years, a few other developments with the hong kong stock connect assist which allow direct trading of equities north and southbound into mainland and back into hong kong. The bond Trading Platform is similar. With the inclusion of chinese domestic bond securities and Global Indexes over the last recent months and further development towards that, it is part of a greater move. There is significant in this move we heard over the last 24 hours. It might not have a huge amount of impetus in terms of what you are going to see in the it justrm, but longer, means global asset allocators will have to think more and more about how they are going to be allocating more money into china. Paul i want to get more analysis on those removals of the limits with you. Suggesting,ery largely symbolic but also a Bloomberg Opinion piece showing it smacks of desperation. Is the truth somewhere in between . Adam that is probably the best way to describe it. It is symbolic of course. Tom adam has pointed out there are additional steps china has been taking to open up the capital markets. Or indeed, the changes in terms of ownership, bond banks and insurers having majority ownership on mainland china. It is part of chinas attempt to slowly, gradually open up the capital markets. They would say it gives some way towards that, but in the near term most people dont think it is going to trigger significant inflows. What china is trying to do is trying to attract more foreign capital. Also, to move up yuan towards a greater role in terms of the internalization of the yuan. The Bloomberg Opinion piece is talking about, its not a little bit like desperation from the chinese. Most looking at this saying longerterm it is broadly positive in the context of the move china is making to open up capital markets. In terms of the quota, you are of 300 111 billion out billion so far which points that this is shortterm, but longer term could be broadly positive. Shery to your point on the yuan, we have seen a bit of upside for the offshore. Tom we have had a bit. 15 Straight Days where the fixing by the pboc has been stronger than traders expected. You do have, according to the likes of commerzbank, suggestions or belief in the market that the currency is starting to stabilize in terms of where it is heading. Depreciation is likely to continue according to most economists but it will be gradual. We have news from the South China Morning Post suggesting china is prepared to offer to buy more Agricultural Products from the u. S. When they go to that meeting in washington if the u. S. Agrees to soften some curves around huawei and maybe hold it back on some additional tariffs. It seems to be that there is some momentum in the trade talks. That has proven positive for the currency. The fixing helps, 15 Straight Days of strongerthanexpected fixing. Shery Tom Mackenzie, thank you for that. Also thanks to adam haigh. Coming up next, more on commodities, traders and analysts expecting a new picture of agricultural forecast this week. Why some are bracing for the worst. This is bloomberg. Paul im paul allen in sydney. Shery im shery ah in new york. Investors will get an update on the state of markets this week and there is a rumble going in the corn market of hedge funds and analysts take opposite views ahead of a key u. S. Report. Sophie has the latest on that. What is the story . Enthusiasts,orn the attention will be on harvests this thursday when the u. S. Department of agriculture releases its report. An analyst expects the agency will be aggressive in cutting its outlook to below the august estimate. If the harvest is indeed affected by heavy rain. Analysts have expected that to happen. The last few months, the usda delivered an outlook for a bigger harvest. Hedge funds are betting that scenario will come to pass again, increasing their bet on corn for a seventh straight week. This as the foreign market has been super volatile in months. Corn futures in chicago not far off from the record low we reached on friday. The downturn sparked by the shocking forecast by the usda in august. The contract plunging the most in six years. Corn futures did rise the most in three weeks on concerns and trade lines fueling price swings. Soybean futures rose the month on speculation china will boost imports in u. S. Farm products. China also looking to argentina to meet demand. Paul thanks. The month of u. S. Crop report is closely watched by the markets. It is only focus on the u. S. And nothing only game in town when it comes to agricultural data. Vast amounts of information from all over the planet, providing its own view. For example of why corn prices have plunged 23 in the past three months. The founder and ceo joins us now from boston. Sarah, thank you for joining us today. The last time you were on bloomberg, you said the forecast for corn crops was not good and following the background from sophie, it is fairly safe to say nothing has changed . Sarah thanks for having me. Actually, a lot has changed. Company, we harvest large amounts of data but we also generate our own predictive models. One of the big changes that has occurred in the last month in our models is actually for the first time, about two days ago, the yields forecast for basically what will be the estimate that will come out in a couple of days, surpasses the usdas yield estimates from last month. We are now at 170 bushels an acre. Last month, it sent markets tumbling down, the fact the usda did not adjusted yields down from 169. 5 bushels an acre. Conditions have significantly improved for the corn crop. There was a lot of delay in planting but the actual yields of what has been planted, they dont look that bad, according to our forecast model. I think there could be some potential interesting units coming out later this week. Paul all right. More broadly, what has your data picked up visavis the trade war and the changes in harvest there . Sara i think the trade wars office lee much more of a soy conversation then it is on corn. The trade war also needs to be analyzed in the context of african swine fever which is spreading across asia. Myanmar,ountry, asf was discovered in august. Just yesterday, discoveries were made in the philippines, making it the eighth country once the u. N. Verifies that. Obviously, african swine fever has drastically reduced the pig herd in china. Has increased the price of pork. Led to a substitution of ticket, but also soybeans that are typically shipped to china are fed to pigs so what you are seeing is a shift of importing pork. When you look at this in the context of trade war, exports of pork from u. S. To china are an alltime high regardless of the trade war right now, as are exports from brazil to china. This will be an Interesting Development to watch because the spread of african swine fever in a country that essentially consumes over 50 of the worlds pork is a pretty large instance. Shery you were telling us a little bit about how this has changed the supply chain system around pork. How long will it take for it to have in these markets and for a comeback to happen in these economies where swine fever has already struck . Sara it is really a three to fiveyear problem. We are not looking at any of this disappearing anytime soon. You actually see this reflected in the stock prices of some major food companies. If you look at jbf in brazil, the Worlds Largest meat processor, it hit an alltime 10 year high recently. Within china, Smithfield Group which is a u. S. Company and essentially still owned by a chinese company, Companies Like that, their stock prices are starting to reflect this three to fiveyear window as opposed to a six month or 12 month problem. Because there simply is not enough, there arent enough pigs in the world today to actually make up for how much is being lost. There will be a recalibration of the entire supply chain, including potentially many large shifts into new types of proteins. You see this reflected in the price of chicken in china. It is now at a fouryear high. Typically, pork is by far the largest consumed protein but you are starting to see in uptick in things like poultry consumption. Chickens need very different mix of feed. I think you will start to see a big recalibration and that will last three to five years. Shery all of these issues take me to my next question on global Food Security. The World Bank Numbers project 70 increase food demand by 2050 which is you cannot really feel what that would actually be like. Oft does it say in the sense where the Insurance Markets are, where financing is for the Agricultural Industry at this point and what else needs to be done . Sara i think one of the things we have seen, including in the u. S. This year with the floods is we need a complete rearchitecture of the Financial System around agriculture. Agricultural markets today operate and only function because of very, very heavy subsidies and backstops by governments into the Financial System. You dont have the large commercial lenders, even in the u. S. The jp morgans of the world have very tiny exposure to global act markets. Jp morgan Balance Sheet is less than 1 billion. I think we need to start rethinking how this financial Architecture Works in a much more globalized manner because a lot of these architectures were set up in the 30s essentially when everybody was really focused on internal domestic consumption. China has started to really tackle that and really started with their last fiveyear plan around how they have chose to define Food Security. They said selfsufficiency in grains and absolute Food Security. The idea of Food Security not being have to produce the food themselves but rather they have to diversify their supply chain to really Global Standards such that, in christ in case the trade war breaks out, have other alternatives versus having one to one relationships for a very particular crop. You start to see an uptick in relationships in agricultural markets between china and the black sea region. Russia and ukraine have become powerhouses. You start to see these big kind of shifts in terms of relationships. I think that means you just need a new financial architecture to go with that. Shery those a very interesting insights. Thank you for joining us today. Sara menker. If you missed any part of that conversation, tv is your function on the bloomberg. You can dive into any of the securities or bloomberg functions we talk about. Become part of the conversation by sending us instant messages. This is for bloomberg subscribers only. Check it out. Shery i am shery ahn in new york. Paul im paul allen in sydney. You are watching daybreak australia. Lets get a quick check of the latest business flash headlines. Saudi aramco is said to have banks including Jp Morgan Chase for top roles in its planned ipo. Aramco has informed lenders of their selection following intense lobbying by some of the worlds top dealmakers. The energy giant is considering initially cilic two selling two separate states on the davos Stock Exchange before considering an overseas listing. Shery senior managers in hong kong as it tries to recover losing hundreds of millions of dollars on complex asian derivatives. Bringing in senior figures. It hit trouble in december after trades linked to volatile products, triggeringproducts, td provisions of 286 million. Paul barclays is cutting staff at its fixed income business in japan as the ceo slashes costs globally to offset its unit. It is parting ways with several units. The cuts coming into effect in the past week. The Investment Bank posted a 4 fall in incomes to about 6. 5 august. In shery august. Shery plenty more in the next hour. We will go to the belt and road summit in hong kong and speak to the indonesian board chairman. Paul that is almost it for daybreak australia this morning. A quick check of the markets. Trading in new zealand is underway. Seeing some weakness, off 4 10 of 1 . Off 4 10 of 1 . Futures in sydney looking a quarter of 1 higher. More to come in a moment. This is bloomberg. This is bloomberg. S bloomberg. This is bloomberg. Paul good morning. I am paul allen in sydney. Selina i am Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Sydney. We are under one hour away from the market open in australia, south japan, and korea. Paul our top stories this wednesday, did he jump or was he pushed . Paul confusion surrounding the departure of john bolton. By the way, washingtons is out