Is out. China removes another obstacle to Foreign Investors. It is that time of year again. We have the highlights from apples new Product Launch, including a fifth generation of the watch. News out ofing south korea. The august jobless rates coming in at 3. 1 . Way belowy, estimates. Analysts expected it to come in at 4 , which would have been the fourth consecutive month of the Unemployment Rates coming in at 4 , but surprising the markets, 3. 1 , the lowest since 2013. South koreas august adjusted rate at 3. 1 , adding 450 2000 more jobs in august versus 452,000 more jobs in august. We have the passage of an extra 452,000budget in early august t could have lent some additional support, but still, the lowest Unemployment Rate since 2013 reallyin at 3. 1 is interesting, given the fact that we have seen some private Sector Employment weakness with the ongoing trade tensions between the u. S. And china, not to mention south koreas own issues with japan. A surprising Unemployment Rate for south korea. A 3. 1 rate. Lets get a quick check of our asian markets. Soph. Sophie kospi futures argentina at gains. Our hinting at gains. Are hinting at gains. President moon with relief given his call for Jobs Creation may be taken up by korean companies. We have other catalysts of note including china opening up the doors to more foreign capital inflows. We have a Cabinet Reshuffle due in japan. Nikkei futures marginally higher. The head of the ecb and fed how globalill shape policy may move forward with fiscal stimulus also in the cards potentially. Checking in on some other assets of note, i want to highlight the euroyen. Mizuho is calling for a bottom. Using options are seen to be limited. Checking in on gold, helping a fourday drop. Below that for the first time in more than a month. We have kiwi yields gaining ground up by 5 basis points. Paul. Paul thanks very much for that. Get you some breaking news on the bloomberg terminal now. Hit with a veryhit with sweeping demand for information from state attorneys general who are investigating bloomberg. Not bloomberg, google. We are bloomberg. Anyway, ordering google to turn over a wide range of information about its ad business. The states want information about googles past acquisitions of Advertising Technology Companies Including doubleclick and ad mob. Practices,tion pricing models, and the functions of the ad market. So a very wide range of demands from state attorneys general there, that are currently investigating google. People keep you across that story we will keep you across that story. First word news with jessica summers. Jessica. Jessica china is opening the door to 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. Chicago soy futures rose on a report that trade teams are working on a deal that would see beijing buy more American Farm products. China has removed another obstacle for Foreign Investment into capital markets. Decades after access was first allowed. Global funds no longer need buycial approval to mainland stocks and bonds, lifting a 300 billion cap on overseas assets purchases. It is the latest push to increase use of the yuan in international transactions. A crossss party party group of lawmakers say a possible solution to the brexit deadlock could be a hard border between britain and the e. U. In the irish sea. It would leave Northern Ireland effectively the only part of the with ll aligned continuedy says the uncertainty is undermining sterling. Sterling volatility, as you would know, it is at emerging market levels. It matters tremendously if the brexit for the brexit outcome. Jessica global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Shery returning to the u. S. Market action, the s p 500 ended the session little changed, making it look like not much happened, but the big rotation continues with investors moving away from the high momentum stocks for a second day. Su keenan joins us with more. We saw another day of massive moves. This started a couple weeks ago. Yesterdays move was so large that it forced another derisk in the market. Snapshot. You will notice Energy Stocks were among the big gainers in the s p 500 that was part of the big move. Also, russell 2000, which is where a lot of the smaller value ones are. It continues to outperform. That has been another trend. Lets go right into the bloomberg because we are taking versusat the stocks momentum trade, suffering the worst day since 2009. We are talking about the long short momentum strategy. You will notice this is the big move monday and it forced another 4 move in the strategy in this latest session. Lets go right to the big movers someake a look at roku, up 400 yeartodate as we started the week. It was down heavily yesterday some 400 yeartodate as we started the week. It was down heavily yesterday and in the latest session. Fannie mae down also for different reasons. A lot of conflicting things from washington. It was up 40 yesterday and 12 today. Starbucks down as the fcc asked questions about its revenue recognition policy, so the fcc, very busy of late, and that put pressure on them. Have seen oil futures plunge after President Trump fired his top security adviser. What is going on there . Su big move. You can see the moves in the middle of the latest session. We have a shift in policy, a lot of the strategists are saying, because bolton was very much a hawk in terms of the venezuela waivers, in terms of sanctions on iran. Look at the big picture of oil. It is causing many professional investors to shift their outlook. In addition, you have an opec member saying it will take falling 40 to 45 to spur more cuts than we already have. The bolton firing has brought a lot of comfort to those who are concerned about supply issues because of shortages in iran and venezuela. Paul su, thanks very much for that. Lets get some more on that john bolton. R President Trump saying he was fired after disagreeing strongly with many of his suggestions. Bolton contradicted trump on twitter minutes after the announcement, saying that he had offered to resign. Lets cross to washington now and our congress editor, joe sobczyk. Regardless of whether he jumped or was pushed, what was john bolton what does his exit mean . Had a fewwo men things in common. Skepticism of globalism and multilateral action. There are some significant differences. Bolton was very much a hardliner, one of the leading hawks in washington. He believed in a robust u. S. Foreign policy backed up by the u. S. Military. Trump, for all his tough talk, came into office promising to disengage the u. S. From various military entanglements overseas, including iraq and afghanistan. And he has been he was going to be pulling back from syria as well. This was one of the major differences with bolton, who had been advising against things like the negotiations with the anything to doh continuing the north korea negotiations. What it means for trump is it may be that he moves ahead more with his outreaches to some of those adversaries including north korea and russia. And even iran. Trump talked about being willing to meet with irans president , rouhani, to talk about some sort of new nuclear deal that would halt the development or forestall any development of Nuclear Weapons by iran. Diplomats say boltons departure suggests that a potential meeting between trump and rouhani later this month at the u. N. General Assembly Might be more likely as a result. So the president , who is fond of the dramatic gesture, and has he puts great faith in his personal negotiating skills, might be going out further with some of the u. S. Foreign policy, taking on his shoulders. Shery what was interesting is that h the announcement of his departure came minutes before a press conference by pompeo and mnuchin. Secretary pompeo was grilled about his relationship with mr. Bolton. What will it mean for the secretary of state Going Forward . Joe interestingly, about one trumps tweets, bolton had been scheduled to be part of that press conference. Him. Is a boon for he had clashed repeatedly with bolton over policies, procedures at the white house. Now, he stands as the main Foreign Policy advisor to President Trump, and he probably will get at least some opportunity to influence who trump takes to fill the spot, as though he could be maneuvered, an ally who is largely in agreement with him, who performs an essential role in the white house, coordinating stakeholders on Foreign Policy, including state department, defense apartment, et cetera this would help pompeo online the Foreign Policy behind him, and align the Foreign Policy behind him. Shery joe sobczyk, thank you so much for that update. Congress editor in washington, d. C. Thank you. Still ahead, apples latest gadgets are here. We will bring you the latest later in the show. Mccarthynext, mike joins us with his market outlook. He is sticking to what he calls the least worst option in stocks. This is bloomberg. Paul daybreak asia this is daybreak asia. This is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. Sophie with ecb mckee event risk for the week, investors are trying to gauge how dovish the central bank may be. A vigorous stimulus package. Cibc expects a 10 basis point cut with little or no qe and it is going bullish on the dollar versus the euro in that scenario. Mizuho reckons the ecbs easing options are looking seeing the common currency rebounding to 1. 15 against the greenback by yearend. Exit uncertainty. Brexit uncertainty. Paul lets head over to the cmc offices in sydney. Michael mccarthy is standing by to join us. I just want to start with your views on the trade war. You say the trade war is a gift that keeps on giving for President Trump. Surely, if he resolved it, the measure of success in the equity markets would be even higher than they are now, wouldnt they . Michael it has certainly become a muddier picture for him. As president bush ways a war on drugs, thewar on political advantages from that could be paralleled with the political advantages for President Trump out of an ongoing trade dispute. It gives him an opportunity to stand as a tough guy and defender of american ac interests. Those politics could keep it driving for many years to come. There is a lot of talk amongst traders about the level of the s p 500 at which those political advantages start to evaporate. We are nowhere near that point for the u. S. Shale market at this stage. Paul you still do like u. S. Equities markets, dont you . You call in the least worst option. The best house on a bad street. How much further do you think equities have to run . Michael i think that is the case for equities at the moment. The flood of money is still supporting markets. That investors are being forced into markets. The selloff we have seen in bonds is around potential ecb stimulus which has backed away and it makes it clear that this is the least worst option, the equity markets. We are seeing major markets breaking from previous trading levels to look like they are going to threaten the heights we saw it this year. That is the next stop for equities. How they perform at that point, once they have regained of those highs we saw earlier in the year, will be a key to the rest of the years performance. Shery in the meantime, we are seeing this massive rotation in the stock markets. This gtv chart on the bloomberg are allhow small caps of a sudden outperforming. Are we seeing a shift in this new trend . Michael i think so. Momentum trade was the only place to be from 2013 to 2016, but the three major Global Equity market shops we have seen since then show how momentum trade can turn around on its own peer once it falters, those bailing out increase the negative momentum. It means momentum is no longer the way to play and those Growth Stocks will suffer because of that. Reality is the support we are seeing for small caps and value stocks is a key issue for investors over the next 12 months. It is hard to buy stocks that are trading at alltime highs and much easier to buy those stocks that have not yet run with the market and that favors Value Investing stocks and smaller cap stocks. Shery let me ask you about sectors you like. Just in the past hour of bloomberg, we have obtained documents showing we are investigating google in the first place and now ordering it to turn over a wide range of information about its advertising business. As we head towards the 2020 elections, are we going to see more regulation talk around these big tech giants, not only in the u. S. , but around the world . And how do you feel about the tech sector then . Michael there are two key france for that tech sector. Key things for that tech sector. The other is the taxation of revenues. Recently, in the asiapacific region, but local governments are becoming more involved with the participation of their citizens in the global networks, and of course, that has ramifications for the bottom line. The multiples we have seen in those spaces is that they are not generating revenues. There will be targets for regulators and we are likely to see over the coming couple of years further tightening in hits and hits on the bottom line. Chief marketkets strategist, michael mccarthy. Thanks for joining us. So you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul in sydney. It was a big day for apple with the launch of new devices at its annual product announcement. A new apple watch, but lowcost ipad, and a bunch of announcements tied to the new services. Apple tv plus and apple arcade. As always, most people wanted to see the new iphone. This is the iphone 11 pro and these are the most powerful and advanced iphones we have ever built in a stunning, new design. Paul lets head to San Francisco and bloomberg technologys mark gurman. What did we learn about the new phones . Cook calls it a stunning new design, but that is not true. These phones look similar to last years models. They change the looks of the cameras on the back. They added a third camera to the a pro and promax, which is mouthful of a name, but functionality wise, very advanced. The thing is, however, i believe, new designs, new major capabilities like 5g, in screen fingers print scanners. That is what sells phones. The question is, how many of these new features will be by theto spur purchases average consumer . Shery what about the price . The iphone 11 is supposed to be cheaper. Mark they are doing that because they made a major miscalculation last year with be 750 price point for the iphone x are. Xr. They will be slapped with tariffs given the u. S. China trade situation, so i think they are banking on volume to offset that and any impact from that. Waul and you watch a ne watch unveiled as well. Any new developments or is it just incremental . Mark this is the smallest update to the apple watch since the product was announced at the end of 2014. The only real new feature is and always on display. It will be on in a lowpower mode. Other than that, they have done nothing except one key and is distribution. A little bit of history here. When you went to buy an apple watch previous to this model, you would have to buy them in prearranged combinations of cases, screen sizes, band colors, and materials. Now, they have the apple watch studio where you are able to build your own combination and buy it and i think that is significant. The big change is not new futures but the way they are selling these watches. Shery thank you so much for the latest on apple. Joining us from San Francisco. Lets get a quick check of the latest business flash headlines. Bangwo on bank an insurance agreeing to sell its portfolio for almost 6 billion. They bought a Strategic Hotel forresort from blackstone 5. 5 billion in 2016, but the property rush ended when beijing for 18control of anbang years. Paul saudi aramco is said to have picked banks for top roles on its planned ipo. Intense lobbying by some of the worlds top fuel makers. The giant is considering initially selling two separate one cent states. Shery Societe Generale is studying ways to save more than 650 million in annual costs tied to its operations at its parent headquarters as part of an effort to win back Investor Confidence and improve returns. The ceo is under pressure to go beyond existing cost cuts. They are planning to eliminate 1600 jobs in its Investment Banking unit. Natixis has hired a new batch of senior traders and managers in hong kong as it tries to recover from losing hundreds of millions of dollars of complex asian derivatives. Natixis had trouble in december after trades linked to volatile korean Financial Products went of 280iggering losses 280 6 million. James gorman is surprised with where rates are now. We will have more, next. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Jessica this is daybreak asia. The jessica summers with first word headlines. Confusion surrounds the departure of john bolton. He claims he resigned while President Trump insists he was fired. The notoriously hawkish bolton aft just minutes before scheduled Media Briefing on terrorism. The white house says he on the president have been disagreeing on many, many issues, with bolton advising the president against meeting the taliban. Huawei says the u. S. Will have to open talks eventually if there is to be any chance of a trade deal. Chief Security Officer andy purdy says he cannot imagine a situation where washington does not ultimately speak to huawei. The company is a focal point in u. S. China tensions and is sometimes seen as a potential bargaining chip. Washington banned huawei from u. S. Tech and wants americas allies to blacklist the company. Saidrump administration is to be considering an executive order to crack down on shipments of the opioid fentanyl. Sources say the move aims to pressure china to help the u. S. To fight its ballooning Prescription Drug addiction. The draft order would target foreign shippers using the u. S. Postal service, but not ups or fedex. President trump has criticized china for not doing enough to curb the flow of fentanyl. And the International Monetary fund about trade have reached a peak and are almost 10 times the level seen in previous decades. It says those worries could shave. 3 off Global Growth this year. 75 off Global Growth this year. They are most affected by the trade war uncertainty. The index is based on reports dating back to 1996. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Paul we are half an hour away from the open in tokyo, sydney, and seoul. Lets get to Sophie Kamaruddin in hong kong for what we should be watching. Soph. Sophie with yields continuing to march higher, things could get tougher for Growth Stocks. We have seen the shift in the u. S. But we have yet to see a turnaround in asia with value stocks underperforming growth nearly two decades. Taking a yeartodate view, we are seeing a slight reversal as some money moved back into the values late last week, so we could see this play out in asia. Shery. Shery thank you so much for that. Time now for a bloomberg scoop. Google is being ordered to turn over a wide range of information about its advertising business. Our antitrust reporter, david, has more in washington. At is not only details about its ad tech, but its acquisitions over the year. Yesterday, the state ags announced today are investigating google. They said they are looking at googles advertising business, but what we learned today, bloomberg obtained a copy of the subpoena that the state sent to google. Detailed, about 30 pages long, and it shows that the states are looking at essentially every facet of googles advertising business. Ad ecosystem that google controls from advertisers to publishers, and how they get delivered. So it is clear from this document that the states are taking a very detailed, extensive look at this business. And that there is potentially it potentially essentially, the core of bloombergs. Paul you made the same mistake that i did earlier. It is googles revenue, not ours. [laughter] paul i want to get to how important the ad revenue is for google. It really is central to everything. Is there a risk . We have some comments from Elizabeth Warren saying she might look to unwind this. How bad could this get for google . Probably one of the most outspoken critics fear in the u. S. , but really, countries all over the world are looking at this company. Australia and the e. U. One of the criticisms of google and its advertising technologies is that it is a sort of black box. It is opaque. You can see a lot of complaints from publishers that they are getting a raw deal from this system, and that, in part, has led to calls from people like Elizabeth Warren, who want to break up parts of the company and undo a lot of the acquisitions that google has made over the years that has led to its control of this market. Shery thank you so much. Our bloomberg antitrust reporter with the latest on google. With the clock ticking, a big wall street voice is sounding a note of caution. Our Global Economics and policy editor, kathleen hays, is here with what james gorman said in a bloomberg exclusive. He would not be the only one worried. Kathleen it is not that he does not support rate cuts. He is the chairman and ceo of morgan stanley, one of the most successful banks on wall street. He was speaking earlier today and he was asked about what you things about where the fed is going. Goseemed to be saying, ahead. But your tools are limited. Lets listen. Fed supported the latest rate cut and i suspect they will do one or two more. Pause tos time for a really absorb this. With cutting, it is one of the few tools you have got. What do we have if we have a real problem . Athleen the feds key rate 2. 2 , they are not that far from zero. Will they start doing the quantitative easing again . The bond purchases . We just saw the jobs report. A strong labor market. We see moderate growth. Although we do see this getting worse global slowdown in the economy around the world. Trade uncertainty. One more thing to take a look at. Lets jump in the bloomberg library. A lot of people looking at the new york feds probability of recession in 12 months ahead indicator. As you can see from the subtitle, it is an economic morning sign and probabilities. It got up to 33 . It is back down to 31 . So that is why a lot of people are worried and one of the reasons why the fed funds traders are betting that the chance of another cut are up to 100 . The domestic economy may look good now, but maybe the fed needs to be preemptive and get out ahead of it just in case. Paul what did gorman make of the big drop in bond yields and this yield curve that has been sometimes inverted . Kathleen for starters, very interesting. He was asked about yields and how they are affecting how he looks at the business. James gorman did not see this big 2019 blonde rally coming. Lets listen. James i would be very surprised of where rates are. Would bee 10 year around 3 and i was dead wrong. Kathleen one of the things i like about james gorman, he is with them to admit when he is wrong. He talked to us on Bloomberg Television before. He said i do not watch these daytoday moves in rates. To make one want more point here because people are advocating rate cuts as one of the things they are looking at. You have a big drop in bond yields. Library of charts, why is this so important . This turquoise line is the fed funds rate. We have the 10 year yield in yellow. We have the 30 year bond yield and purple. Every single one of them is trading below the fed funds rates. That anchorsrate, the yield curve, is higher than the third year bond still. Anyone you hear on Bloomberg Television pounding the table, this is one of the signals they are looking at. Obviously, james gorman did not exactly weigh in on that, but the fact that he does support one or two rate cuts, maybe he is looking at that, too. Paul kathleen hays, thanks very much for that. Still to come, china has taken a major step in opening up, scrapping the Foreign Investment stock and bond markets. Lets ask what this means for investors and beijings future plans. This is bloomberg. Paul china has taken another major step in opening its capital markets, scrapping limits on Foreign Investment in its stock and bond markets. Thats get over to beijing and tom mackenzie. Talk us through the changes. Tom this is a change to chinas qualified foreign investor program. It was set up almost two decades ago and it was one of the primary ways primary funds can gain access. For thoseuota or cap global funds in terms of how many bonds and equities they could purchase every year. Matt has been removed. It does allow Foreign Investors greater access to bonds and equity markets. Theres a couple reasons china is doing this. One of the reasons is to continue to attract foreign capital and the other is because they want to go some way to a greater use of the yuan in terms of the currency. In terms of the impact, Standard Charter says shortterm, you are not going to see a huge tick up in terms of foreign inflows. In terms of the number, 300 billion is the cap for this year, only 1100 billion has been used up so far. 111erms of inflows, billion dollars has been used up so far. It should improve the sentiment for Foreign Investors around chinas markets. It follows on from other moves tound four stand insurers have wholly owned or majorityowned businesses on the mainland. Shery the offshore yuan with a bit of upside right now. What is the move . Tom there has been reporting in the South China Morning Post that maybe china is prepared to buy more farm goods from the u. S. When they go over to meet and continue these trade negotiations in washington in october. And of course, we have had 15 Straight Days now where the fixing from the pboc currency has been stronger than traders have expected. So Commerce Bank saying sentiment around the currency has improved. It is a number of different factors that have led to something of a strengthening, a stabilization for the offshore currency currently at around 7. 11. Tom mackenzie in beijing, our china correspondent, thank you so much for that. Ratings saying traded disruptions and the threat of a Nodeal Brexit are darkening the economic outlook. The agency has announced across downgrades to their global forecast. Brian colton joins us from hong kong. Let me get started on china because you have also revised down growth for china 2022 5. 7 . Tom had explained to us all of these liberalization moves in the market not to mention we have seen china trying to support local growth. How much are you expecting these moves to help the economy . We certainly think there will be some offset, but the scale of the intensification of the trade war over the summer was really quite dramatic, so by december of this year, we will have an increase in the affective tariff rate on chinese imports to the u. S. , off 22 . It is almost a doubling of where we thought we were going to be in june in terms of the extra tariffs. We do not think china is prepared to use as aggressively as will be required in terms of policy to keep growth where it would have been otherwise. Yes, some additional using relative to what we were expecting but they are not going to pull out all the stops in terms of overseeing a massive rebound in domestic credit growth in order to keep growing. We think they will tolerate growth coming down to 5. 7. It is down from 6 since our previous forecast and that is a pretty big deal. Shery shery you are not expecting Interest Rate cuts. Are you expecting more rrr cuts . What about the fiscal side of things . Brian i think it will be more targeted. Maybe some measures focused on the consumer side. A possibilityr is there. The government have talked about the downside of Property Market speculation. It does not sound like a largescale Interest Rate cut which would reduce mortgage rates. We think more cuts, some recovery in credit growth, maybe some slight using to make it easier for local governments to issue bonds, to finance infrastructure, but it has to remain in the realm of a modest and restrained response because we do not think they are going to abandon the deleveraging program. Paul i wonder what you make of this announcement today, the move of the quota on foreign funds. Was that a largely symbolic move . Because the existing quota was barely utilized. Is it going to move the needle very much for china . Brian i do not think it makes very much difference in the mediumterm. They are continuing with the reforms despite being in the midst of this pretty vicious trade war. I think it is really all about the longterm of the capital account. Not very symmetric way. But they are pressing on with it. I think, you know, this is just a signal that they are not getting distracted by all this shortterm stuff. Paul lets sort of return to some of those growth forecasts. You see Global Growth using further but you do not see a recession in the u. S. I wonder which countries you do potentially see a recession for her. Where are the warning lights flashing . Brian what we have seen over the last 12 months to 18 months in the World Economy is the outsize impact of a slowdown in china on the broader Manufacturing Sector globally, but particularly, the euro zone economy. Within that, it is germany that has been most exposed because germany runs the largest current account surplus, has a very large share of exports in gdp, and one particular area of its industrial structure that has left it vulnerable to the weakening in global car sales as related to chinas slowdown, has , you know, auto sales have taken a really big hit on the german economy. Four point 5 of german gdp is also production. That has been the euro zone in terms of major global blocks not has been vulnerable. Obviously, that has continued to be an issue because we further downgraded chinas growth forecast and now, we have this new external shock to the euro zone potentially with a Nodeal Brexit in the u. K. We think if that happens, that could mock a further 0. 4 Percentage Points off the euro 0. 4 offnock a further the euro zone. Ge think we could be knockin another 4 off of that forecast for 2020 if there is a Nodeal Brexit in the u. K. Getting punched from every direction, the euro zone. Shery what are we expecting from the ecb on thursday . Brian the way they set of expectations, they have to deliver something pretty punchy. I think it is going to be a combined package of measures, not only movements on the deposit rate with some tiering on reserves to offset the negative impacts on banks, but also, we think they are going to restart the asset purchase program, Something Like 30 billion a month. Shery it seems there is a global picture of a slowdown in the Manufacturing Sector, but not only that, Business Investment in general. Here in the u. S. , for example, falling for the First Time Since one a 16, how troublesome is since 2016, how troublesome is the investment picture around the world . Brian what that shows you is that firms are not waiting until these trade tariff sanctions are actually kind of signed, sealed, and delivered, and the ink is dry. They are not waiting for that to happen before they scale back on that. Because of the uncertainty about the future relationship, Business Investment has fallen for five or six quarters in succession in the u. K. The u. S. Numbers have already slowed down. We have seen in china as well. This is an area of domestic demand that is closely linked to the trade threat, but in the u. S. Context, i still do not think that and the manufacturing slowdown is enough to drive a recession in the u. S. The consumer is resilient. The labor market is strong. We see a slow down. We have growth in the u. S. Slowing to 1. 7 in 2020. It was 2. 9 last year, so it is a material slowdown. We do not see it heading into a recession territory. We do not see the private sector having run up the sorts of unbalances you see before the u. S. Ons in the on top of that, the federal fiscal policy is still pretty expansionary, so i am pretty heavily discounting these signals of imminent u. S. Recession. Paul alright. Fitch ratings chief economist brian coulton. Thanks very much for joining us. Dont forget our interactive tv function, tv. They are you can watch us live, there, you can watch us live, catch up on past interviews, and dive into any of the securities or bloomberg functions we talk about. You can become part of the conversation and send us instant messages during our show. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Is is bloomberg. Paul a quick check now of the latest business flash headlines. Barclays is cutting staff at its fixed income business in japan as the ceo, jes staley, slashes costs globally to offset week profit at market unit. Weak profit edits market unit. The cuts are coming into effect in the past week. Posted a 4 fall on the halfyear income at 6. 5 billion in august. Shery struggling videogame retailer gamestop tumbled more than 20 in extended trading after posting a wider than expected secondquarter loss and issuing a forecast far below analyst projections. Comparable store sales are a key measure of performance and gamestop says they will slump in the low teens this year. That is more than an earlier forecast of 5 to 10 . At the belt and road summit in hong kong. Our anchor is there to give you a preview. It has been six years since president xi jinping ruled out hold out this belt and rolled out this rolled out this belt and road initiative. China has done some pr after International Criticism over opec financing countries that cannot pay down their debt. We have asked a lot of these questions about how the fundraising environment is at the moment, given the fact we are in the middle of the u. S. China trade war and a slowing economy and the elephant in the room, the political unrest in the city. For us is the off chairman of the indonesia investment coordinating board. Going to ask him what the role bri plays in getting more investment in tunisia at a time when the economy is slowing. Also, indonesia is not exactly benefiting from the u. S. China trade war. The president of the Asian Financial holdings is also the convenience of the executive council in hong kong,. We are going to ask him about hong kongs role in the bri and in an update on their role breaking the stalemate with protesters. We will talk about industrial development. Us. A ng talking with aboutsimon speaking to us simtechs play in all of that. Shery breaking news out of south korea. We are seeing exports rising firstear on year in the 10 days of september, really interesting given that this is coming after nine consecutive months of export declines. Right, lets turn to sophie in hong kong for a check of the markets. Soph. Sophie along with data from korea, investors have to weigh the jobless numbers we have got. The recovery was a surprise. We are seeing an uptick on the board here. When it comes to stocks to watch, we are watching komatsu in tokyo after demands for Construction Equipment fell. We are keeping an eye on asian app suppliers across the region. This after the new iphone lineup was revealed. Asahi group is on the radar on a report that it needs to reorganize the beer business with rising yields, banks will be in focus. Japanese lenders had their biggest rally since february 2018. This amid easing concerns over deteriorating profit margins. We are seeing the yield environment stabilize in japan and elsewhere across the globe. Banks may continue that. The topix gaining 7 by the close of the session in tokyo. We are keeping an eye on this and more with the open coming up next in tokyo, sydney, and seoul. This is bloomberg. Paul good morning. I am paul allen in sydney. As major markets are about to open for trade. Shery from bloombergs headquarters in new york, i am shery ahn. Sophie and i am Sophie Kamaruddin in hong kong. Welcome to daybreak asia. I top stories this wednesday, china removes another optical to Foreign Investors. Global funds no longer need official approval to buy mainland stocks and bonds. It is that time of year again, have a highlight from apples new project launch, including a fifth generation of the watch. Hostingnd hong kong is chinas fourth belt and road summit. We will hear from indonesias Investment Board chairman. First lets get straight to the Market Action in south korea, japan and australia. The nikkei up a third of a percent as we have lines to consider. Abe to shovel his cabinet and ruling party leaders. Themes we are watching in the stock space, deputies banks remain in focused after performing the best in 19 months. Bank gaugeics listed continue to rally the start of the session. Keeping arise keeping an eye on apple suppliers in tokyo and elsewhere. Korean upstarts will be in focus. Switching to checkin on the kospi head of the holidays. We will see markets closed on thursday and friday. Because be adding. 6 . The korean one is strengthening after an august hi. The first 10 days of the month gaining ground 10 on yearly basis per we continue to see weakness and chip simmons got jobhere in we also numbers falling to the 2013 low. Vice minister hong saying this is a clear recovery from the numbers in august. We will be waiting for gauge of Consumer Confidence for september from westpac and the aussie dollar ahead of that. And aussie yields with key rates caution ahead of the ecb decision kiwi rates ahead of the ecb decision. An firsts sting on were now with jessica summers. Thanks, paul chinas opening the door to imports from argentina as it pivots away from u. S. Farm products in the ongoing trade war. Has referred to import raw soybeans and processing them on the mainland but there may be hopes for u. S. Chinas soy ties. Chicago futures wrote on the trade the smpte that teams are working on a deal that would see beijing by more American Farm products. Huawei says the yuan will have to open talks eventually if theres to be any chance of a trade deal. Chief Security Officer andy pete says he cannot imagine a situation where washington does not speak to huawei. The company as a focal point in u. S. China tensions and is seen as a potential bargaining chip. Washington has banned huawei from u. S. Tech. And want amercos allies to blacklist the company. Americas allied to blacklist the coveted. Of folks party group say across policy solution to brexit could be crossborder liaison leaving ireland the only part of the u. K. Still aligned to u. K. Roles. That is bitterly opposed by belfast but has been defeated before. Bank of England Governor Mark carney says the uncertainties are undermining sterling. Of applehe founder supplier foxconn is a step closer to running for the presidency in taiwan. The islands main Election Agency was asked about the paperwork needed to launch an independent campaign. He is still to make a final decision on a run independent candidates must apply by next tuesday for chance to stand ingenuous election. Global news 24 hours a day and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Jessica i am jessica summers. This is bloomberg. Data ok from eyecatching from south korea and the last hour per south korean exports rising 7. 2 year on year the first 10 days of september. Chip exports fell 33 . Experts to china fell 14. 5 on year. So quite interesting. The first 10 days of september overall, exports rose more than 7 , given that we have seen the past nine months of contraction. When it came to exports. Also imports rising 3. 3 on year. Which if the trend continues to the rest of the month, it could actually mean we are seeing some rebound in domestic demand and the export picture overall. Strategist Mark Cranfield. This comes on the back of positive job less data, the rate coming at the lowest since 2013. I wonder what this means for investors and the markets, and that sometimes good Economic News does not mean great for the that it could also be less to meals and easing. Less stimulus and easing. I think korea would be happy to take any good news at all. In is been a tough year for south korea. You see it in the kospi index which has underperformed most of the major indices in asia. It will be released relief from that point of view. It will probably stop people being so bearish on the korean equity market. And possibly currency as well. At least we against a lessee there. It is a long way from saying it is a major turnaround in korea. It would need a couple more months of good data before people really start to get aggressively bullish on trip. Stopping the downside would already be in prevent. It may get people switching out of some of the more expensive markets in asia into korean stocks which have been relatively cheap compared to others. But it might just be a. What we bubble along toward the bottom of the range. Because as you can see in the data, shipments to china are still struggling, and chip sales general are weak. Karen has a lot of work to do before you can say korea has up a lot of work to do before you can say it is a really positive story. But it might the end of the bad news which is something at least. Paul lets talk about oil. We saw the price slip after President Trumps fire his National Security advisor john bolton, who was notorious Foreign Policy hawk. Overstatingaps boltons impact on oil price . Is probably nothing more than a kneejerk reaction. If you look at the performance of wdi crude for several months, it has been in a range trading not gone anywhere in particular, not too surprising given that saudi arabia is having trouble keeping everybody on board with the oil Price Reductions in the outfit. In the output. While it is hard to get people to the limits oil prices will not go too far. The fact that we had a change in minister in saudi arabia, could mean a new plan is coming out. That let more direction for the oh markets. Be close meetings will a watch to see what the saudis have in mind. In the short term, oil has been pretty much in a range and the fact that it is bumping around on headlines is not unusual at all. I do not think the season oil professionals will read too much into the fact that one of Donald Trumps hassan advisors has been pushed aside. There much bigger things to her about whether suppliers from United States are people exceeding limits. Theres a lot going on in the oil market, but nothing to how you it is a clear change of direction either way. Shery what about the direction for the chinese yuan, we have seen the Market Sentiment return or get better toward the currency now. Overnight we have had some positive stories suggesting china is going to buy some more Agricultural Products from the United States. It is not the first time such a story has been floated. We still have not speak in firm agreement. Still have not seen a firm agreement. Maybe we well in october. Maybe there will be more details people can get serious about. The data fixing for that yuan has been within a nine it range in the last four days. Theres no reason the fixing should move along way today from the range we have seen in the past few days. Pboc is trying to get some stability. It is pretty clear that when the offshore yuan got close to 720 last week, that was like an alarm bell going off for the pboc. Too much of a movement. So theyre trying to reduce the volatility again. All things point to the fact that they would be very happy to see a narrow trading range right through this month. Going into the national day holidays. Stability in that you want would be very helpful for them. Stability in the yuan would be helpful for them. I doubt there be anything from china to encourage speculation against that yuan at this stage. Going forward, if trade talks do not work out, Downside Pressure for the yuan would come back. Its inevitable if the chinese economy is going to weaken further, there will be an offsetting factor from the yuan. But that is something for weeks and months ahead. Right now, it will be a steady as she goes policy. And probably todays fixing will just reinforce that they do not want much volatility for now. Shery mike, how are you taking the latest news from china that theyre scrapping the foreign invested limits in stock and bond trading. Does not mean a great deal in the sense that that qfii quotas were not been fully use anyway rate so foreigners who are allowed to buy previously had not been buying as much they could. So increasing the limit in one sense does not change a great deal. If you think about the volumes of bonds which china will be issuing over the coming years, and the number of ipos going on, of course they will be very happy to see more foreign influence. Also china stocks and bonds are going into more Global Industries indices as well. The scope for foreigners to buy will be encouraged. Silly by the fact that they need to rewait their portfolios according to the global indices. Simply by the fact. It is encouraging to see chinas open to allowing more foreign money to slow in rate on the others dont expect it all to happen straightaway. It will be a gradual process. At least people have the comfort of knowing the next time they want to get involved in the Chinese Market what it looks attractive, i can come in with a much larger size than they could have done, they do not need to apply for new quotas. In that sense it is encouraging. But it will not happen straightaway. Paul alright Mark Cranfield and singapore. Thank you. Still to come, as the u. S. China trade war rumbles on, we find out how apple and huawei would cope if they had to make Smart Phone Technology on their own. Eugenias fabon victorino, tells us where she think economies are headed in an uncertain environment. This is bloomberg. Ain environment. This is bloomberg. Shery i am shery ahn in new this is daybreak asia. York. Paul i am paul allen in sydney. China scrapping limits in its stock and bond markets. Is it just embolic or is there more to it than that . T just some bolick echo since 2002 was the only way that Foreign Investors could access chinas market. Over the years we have seen the stocks connect market set up between hong kong and the mainland market as some investors have chosen to use that route. Of course the big question here is what is the impact as scrapping a limit that was only a third use in the latest measures. I think theres a lot of answers there. First, it is about cutting red tape. Foreign investors now do not need to go seek these approvals or that can civilly register and make those investments. It is also about, it comes at a time when china is looking for those china cap foreign capital info as payments are to be headed into negative territory. It is also about agencies responding to this very high toel of strategic intention deepen financial opening. Theres a lot going on there. Essentially this is about Street Lighting processes so china is, theyre intent and mitt further opening up the market. Paul what does it mean and the greatest of things. Shery when it comes to liberalizing the markets of china and how does it compare to total Foreign Investments right . Ow according to the latest figures weve seen one hunter 111b ofon of the the qc quotas being used where the cap is at 300 billion. So these are not insignificant portions. This tells think comparison we think about chinas 13 trillion bond market and 7 trillion stock market. As far as initial reactions, we futuresthe china a 50 rise as much is your. 6 yesterday after the announcement was made. Shery thank you for that. From beijing. Also with esses eugenia victorino, seb. Move to scrap limits in its Foreign Investment markets, housing if get will these be . In the near term theres not much in terms of capital inflows of expect. Having said that, it is a longterm or structural move which is very much in line with the capital liberalization efforts that have already been rolled out in the last for years. Even so, when youre taking out the qc quotas, this would help sentiment considering most Foreign Investors are now underweight chinese equities and. Ssets there still continue inflows into the equities and bond because of the increases in index weightings. Overall shortterm, not much, longterm it should beef this should be supportive of sentiment. On the chinese yuan these days, we continue to see improvement in market views where you see that you want headed and what might mean for more expert oriented stocks . Pboc isly now that the really capping volatility, i would expect that you want would be trading at a range of the next few weeks, but i would expect that yuan would end the air at 715. Having said that i am not taking out the risk that it could overshoot considering the risk sentiment could reverse, if theres a breakdown in talks in october. Paul how about the potential for more easing in china . Web already seen rrr cut how close he are you watching the new lpr benchmarked for the decision on the tips of her 20th. For the decision on september 20. Im closely watching it but would expect the Monetary Policy transmission would be limited. The lpr would only affect new loans priced in. The balanceat sheet, new loans are 1 of the balance sheet, therefore would have a limited impact. Having said that, i would already start expecting improvement in the transmission mechanism but it is still far from being an efficient transmission. Is yourom china what outlook for the rest of emerging asia . In seymour central bank easing is more baked in, is there race for up to the bottom going on . Clearly, there already some Central Banks are to cut and yet they had to cut in the last few months. Also economies that would have more space to cut which would eat into the yield pickup that had already been established in 2018. Really that supportive of their currency. Im expecting more downside or some downside to merge in the philippine peso and also more downside in the inr. Those when it comes to easing policies, we have seen the bank of korea preempt some of the moves and we are now seeing more positive data including those first 10 days of september export numbers. Now rising more than 7 . The un apartment rate following the unappointed rate falling to the 2013 low. I wonder whether the Unemployment Rate falling in korea to the 2013 low. Offsettinge any data moves we expect from Central Banks . I think it is still too early to think the korean economy has reached the bottom. And my view the south korean economy is the ground zero the trade war, much more than the pain of china because south korea entered the trade war at a weak position, not only fighting the fires external demand but demand. Estic up until now the support from domestic demand is coming from government spending. Consumer spending is not strong is quite weak. We seeingre consumption stronger the asian economies . We see these nubbers on the manufacturing side and investors more worried that it will filter through to the consumption side. Consumption ast i would consider the last month standing at least for some of the other asian economies. However when you look at what is already happening in the investment decisions, even for domestic demand driven economies like india, indonesia and the philippines even investment their slowing. It would only take the consumption to slow down for a real slow down. You mentioned earlier you see ongoing resilience in the but you see weakness in the other Southeast Asian currencies. Definitely. Bhat isoint the thai what some managers consider a safe haven. Some of our conversations have pointed to it as the asian swiss he. Continuedcause of a currentaccount surplus but also the fact that there is a limited financial the thai institutions to recycle this surplus. Which is different from the currentaccount surplus economies in taiwan and south korea at which have been able to recycle their surpluses. Therefore there is a well of money that is going into thailand which could be supportive of the currency. Thanks so much. You can get around about the stories you need to know to get your day going in todays addition of a daybreak. Liver subscribers go to dayb on the terminal and it is a valve on mobile in the bloomberg anywhere app. You can customize your settings say only get news on the industries and assets you care about. This is bloomberg. Shery this is daybreak asia im. Paul im paul allen and sydney. Agreeing to sell its luxury Portfolio Hotel to the asset management. In hotels from blackstone 2016. At the property rush when beijing seized control of the company and jailed the chairman for 18 years. Korea banks and Jp Morgan Chase spirit aramco has has informedramco lenders following lobbying by some of the top dealmakers. The giant is considering initially selling two separate 1 stakes on the two dow moves talk exchange before considering an overseas listing. Societe generale is studying ways to save more this etc. 50 million in costs is tied to its operations at its paris headquarters. It is part of an effort to win back Investor Confidence and approve returns and improve returns paid the ceos under pressure to go beyond existing cost cuts. Section is already planning to eliminate six teen hundred jobs menu in its Investment Banking unit. Still to come, apple pulled out all the stops at his product events that but willing to iphone at any price Anthony Price drop consumers paid we will have the details and commit it. In a minutes. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Jessica this is daybreak asia. I am jessica summers with the first word headlines. China has removed obstacles from Foreign Investment to decades after his first allowed. Global funds no longer need official approval to buy stocks and bonds, lifting through had a billy dollar cap on overall asset purchases. It is the latest push by chinese authorities to increase the use of yuan in international transactions. Confusion surrounds the departure of former White House Security advisor john bolton. Who claims he resigned while President Trump he was fired. The notoriously hawkish bolton left minutes before a scheduled Media Briefing on terrorism. The white house says he and the president have been disagreeing on quote many, many issues. Bolton advising the president against beating the taliban. And the International Monetary fund says concerns about trade have reached a peak at are almost 10 times the level seen in previous decades. It says those words could shave three quarters of a percentage point off Global Growth this year. Says the index americas and asia pacific are most affected by the trade war uncertainty. The index is based on reports from the Economist Intelligence unit, dating back to auntie 96. 21996. Administrations sense be considering an executive order to crack down on fentanyl. To help pressure china on to fight its ballooning Prescription Drug use. Also using the u. S. Postal service but not ups or fedex. President crump trump has criticized china for not doing enough to restrict coleus. Global news 24 hours a day and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am jessica summers, this is bloomberg. We are getting breaking news out of south korea. Shery the government is going to file a debbie too complaint against japan today. This on those export curves coming from japan as Prime Minister shinzo abe tightened concerns of hightech materials needed to make memory chips and display panels for south korea. We have seen both countries, south korea and japan removing each other from a list of nations giving preferential treatment in trade or now we are seeing south korea escalating that dispute and filing a wto complaint against depends export curves today. We have seen that south korean won this week trading near the strong us in five weeks against the u. S. Dollar peered this as we continue see risk and moves around the world. We are going to continue watching the south korean won and the kospi as trading continues. The kospi at the moment true gaining 6 . For more on the broader asian markets, lets turn to Sophie Kamaruddin. Inhie we are seeing much the way of Market Reaction for south korea filing against japan onthe wto. Will keep an eye key customers. We are seeing the kospi gain ground up 2. 2 on the people of a today holiday and south korea. And as you noted that karin won trading a heist in five weeks. We are seeing more optimism around south korean stocks from credit suisse, which has raised the outlook to overweight from neutral. Today we had jobs data coming out from korea peered the jobless rate improving, falling to the lowest rate since 2013. This ahead of the finance mr. Hong holding a meeting on revitalizing the economy. We also have export data to consider, which show a continued contraction in chip shipments. In tokyo we see that nikkei ad. 4 and banks extending their rally amid this yield rise we have been seeing. Lets check in on bonds. We are seeing yields continue to climb you see the aussie tenure yelled gaining six basis points this morning. Keeping a close eye on the front end of the jgb curb on report that the doj is considering cutting rates further the boj cutting rates per further. Extractedbigger than expected drop in u. S. Stockpiles. Exit on a jumps market the of john bolton. Paul as the u. S. China trade war robles on, the idea of a total technology diversion is starting to gain traction if it comes to that, how with the likes of apple and wally manage if they had to make all this Smart Phone Technology on their own . Lets take a look at how they stack up in terms of selfsufficiency. Its the biggest matchup in the world of trade war tech. Silicon valleys most famous export versus the Company Whose names can actually be translated as chinas achievement. Its time for kickoff. Starting with the operating apple, absolute control oversight u. S. Huawei is still dependent on googles android. Its harmony os has yet to smart card. When it comes to apps, apple is sitting pretty in its fortress protected by an army of loyal users. Chances of sparking it about the mutiny to harmony are slimmer than its phones. Thanks to the trade war its latest model will not have access to license google apps. Both Companies Design their processors. There were line others to do production. A drop. Is they need to go to korea for memory and storage. Sk hynix and samsung provide the bulk of their needs. While way is trying to take a lead with its own nano memory card but not enough to claim a victory here yet. Samsung againeed for its display. And japan display force less he wants. Also getseds help and help from chinese better boe technology. Another stomach. Huawei stages a comeback and conductivity. It already announces 5g modems. Whereas apple as had to buy intel Cellular Division in a step toward designing its own 5g chaps. Huawei also edges and honest emily, as apple outsources most production to china. While both companies late hadley on time partners, huawei , is going diy for smartest phones an election lines. At the final whistle is hard to call whistle at the moment. It will have good extra time to see if one of these text giants can truly god alone one day. Can go at it alone one day. Paul lets get more on it huawei and apple drive herself sufficiency. Too Big Technology dies going to extra time, as we heard. Who will be the winner . They cannot be any winner. No tech company can be self sufficient in terms of jogger fee. The modern Tech Industry in terms of geography. The modern Technology Industry built on cooperation between the u. S. And china. In huawei case, they cannot really sell smartphones without googles android os which it is prevented from using. In apples case, it cannot really sell iphones it is not making them in china. 99 are made in china. Shery lets talk about apples Product Launch today was there anything you saw among the upgrades that the android formalize him Android Phone makers are not already offering . Is a tricky thing to judge with apple. With hardware implantation, no peered mobile cameras, three cameras on the iphone pro and cameras on the f11, that is been done. Some with four or five cameras. Sophisticate a camera system. But with apple the tricky thing is to judge how it implement set. Apple has the first veto cameras already and has done a lot of upgrades. It is also doing a new night mode. ,nd is doing you processing about called deep fusion to prevents it here. So it is really about execution. To improve its photography. Paul iphone Sales Numbers earlier this year. Do you have any body how they have been doing . Just ahead of apples event, analysts from idc released figures for apple sales. Iphone Sales Numbers are going , down to things like the iphone x, one of the priciest iphone. The success for, the iphone x as makes apples upgrade cycles longer for customers. People might have previously bought an iphone every couple of years might be thinking about it over longerterm now because it is because they spend that much more on the initial purchase. Shery tell us about the apple watch. That got updated. We had a guest earlier on the show from tigris financial saying there were not happy with the battery life. On the apple watch, actually they did make an improvement. They made the apple watch, awash act like a watch was onscreen showing the time without gesturing. Apple claims it is keeping the battery life the same. The issue with smart watches they are so small and watches fit and fish and you cannot fit a large battery in there. Efficient so you cannot fit a large battery. Apple is going for more luxury so there is a titanium apple watch and one made out of ceramic. Shery thank you. Our bluebird tech editor from tokyo. We are live at the belt and road summit in hong kong. Yvonne it has been 2013, 6 years since xi jinping rolled out the belt and road initiative. We will be exploring where are we now, how has that evolved and how these in for structure projects changing after he saw International Criticism of a back financing, the debt concerns and some economies. We have a lot we have a whole line of guests. President of the asia financial holdings. On the insurer side and how they manage the risk involved when it comes to geopolitics. And also terrorist type of risks as well along the belt and road initiative. Also talking about the latest in the hong kong developments pair is a top adviser to carrie lam. What is the governments next step to breaking the stalemate with protesters after three. Onths of demonstrations then we hear from a corporation, because itself the worlds leading industry developer that helps plan smart cities along the mekong region and southeast asia. And the opportunities they are seeing from the belt and road initiative. Finally, the cofounder and ceo of we lab, a hong kongs homegrown online and mobile letting platform. We are asking him what is the play when it comes to belt and road and a course their belt there virtual bank in the city. Paul you mentioned some of the criticisms the belt and road has faced in terms of opec financing and some of the smaller economies getting into this debt trap. Has china done enough to change the narrative around that could assist him . Around that criticism. You have seen efforts, you mentioned some of these less wealthy economies like kenya, pakistan who are unable to pay down their debt. There are a lot of questions about these billion dollars worth of denver structure projects. Can ashley make money . Where the able to deal with them or can they make money. Has shifted from the big items to focus on some of the smaller items, manufacturing and bridging gaps with smes and building up vertical supply chains. It is a corrective course to sustain the belt and road initiative. You look at a laser used to bill a vocal credit vocal critic calling it death trap diplomacy. They are now supporting this belt and road initiative. They were able to renegotiate their project. You see efforts chinas trying to offer. We will see if it will be enough. Shery thank you so much. Tupelo Capital Management says the u. S. And china could come out of the trade war in a better state than when it all began, more highlights from our exclusive interview with the ceo and founder ahead. This is bloomberg. Morgan stanley chairman and ceo says its ok that companies go public at valuations lower than previously estimated. He tells bloomberg it is a corrective mechanism in the ipo market. He spoke to blumer at an event to club a business school. Massey ate to carol an event come to business go. It is making people more realistic about valuations of these unicorns. A lot of reality has gone into the system. Its ok. This is what the market does. The market in the long run gets it right in the short run you find opportunities. Shery at the same event we ofke to the ceo and founder two blow Capital Management. She says the u. S. Tupelo Capital Management. She says the u. S. And china could come out of the trade war the better. Is a fraud situation. I hear from friends and colleagues on both sides. They are both equally grieved. I think the way it works out is nothing beijing realizes it was going to go this far. I think they certainly do not want to have a tiananmen square. It is very different world we live in was social media. They cannot have that. So they have to find some facesaving way to begin to come to call the crowds. Crowds. He i think the be for the devon traders have is more with the Hong Kong Government then beijing. We can work with carrie lam and she can begin to negotiate on the three other conditions that protesters set up there is potential to work through some understanding. Is their role for folks outside of hong kong and outside of china. There has been pushed among the protesters to involve the United States. I do think theres a role. Not day job i am also on the board of asia society, which is the foremost Nonpartisan Group trying to bridge u. S. And asia. We have been very busy talking to both sides about the issues. Waysthef we can find chinese are big on face predict not be he blade agent. And theres a way they cannot be humiliated. If theres a way they can continue to stay with the one country to systems, some control controlg kong over hong kong but not with a heavyhanded this have seen, i think there will be a solution. Business leaders and investors are talking increasingly of a decoupling between the United States and china. Playing spent decades, the senate china in many ways coupling the United States and china in many ways. Do you wear that could become a reality echo . Many think it will be one when one lives. I am still a believer it can be one when one man. Can be two leaders both win situation. We have two leaders under pressure. Xi has as hethat is paying the long game. He believes the longterm future of china is conditioned upon china retaining economic, put a call and not a silly military but your plug power. Military butarily geopolitical power. The question is that the economy crumble before he can achieve this. But he has many levers which are not present in america. He has been pulling levers. His moving more liquidity into the system. He is getting some of his companies both multinational and chinese to begin to try to do more investing in the economy. He trying to be more Capital Investment in back into china. If you missed any part of conversation, tv is your function on the bluebird. You can catch up with part conversations. Also become part of the conversation, send us instant messages during the shows. This verse describes only. At bloomberg. Paul this is daybreak asia i am paul allen in sydney. Shery i am shery ahn in new york. Treasury futures higher. Sophie this morning we are seeing yields stabilized somewhat. They have been taken we have the tenure about the 1. 7 handle and the tear not far behind. Refreshment recession peers easing. Carpets pinched himself on cheaper borrowing costs. We are waiting on the ecb decision. That could be the moment of truth. Very much so. A big part of what is going on as you see the chart we have up for you is the way that you have these waves of extreme buying, extreme declines in yields throughout august. That really set the market up for the potential for correction. That potential has been well and truly realized. Some factors as you mention playing a role. Some of is your classic positions squaring. This is kind of the bond rout we have to have. Another thing that is played into it is the trade tensions have eased. I do not know we have had much of the way progress. But we have not had much in a way of heated rhetoric. Which is welcome. Then theres going to the ecb in particular, the first of the big banks. There has been divisions shown within the ecb, so the question is can super mario in his final takeus appearance can he the bold steps he was indicating he wanted to. If he does not, bonds are quite vulnerable. Sophie and we are seeing big news in the short end of the curve, what is happening there . Big moves. That got really extreme. In particular, there have been a lot of flow into eurodollars, into the really, really short and. Those have backed up event and that has set up a cascade across everything with two years feeling that because they are more closely aligned to what is going on with eurodollars which are trying to track so closely where they think the fed is going to go. Sophie you pointed out this is a correction given the route we saw on august. Perhaps not a turning point. You have some strategists sang we could see a top out in yields at 1. 75 or 1. 85. That would make sense with the way things have gone. If you look at the longer term trend in yields, treasuries and global bonds, globally have been pricing in a lot of economic pain from the trade war. That a coming pain is still there. It sort of flowthrough gradually. I tend to think of tariffs as being similar to Interest Rate moves. It takes six to 18 months for the full impact to work its way through the economy. Unless of course they go away. In with the progress we are having, where talking about talks about talks about talks. It looks like were some distance away from even any sort of resolution or hopes for resolution. That makes, what would 75, 1. 8 is about where your top out, mario really surprise for the downside of bonds. I would expect that roulac to remove that rally to resume. Sophie stephen hong kong. See you in hong kong. Paul breaking news south korea will file a wto complaint against japan curbs on display manufacturing and materials. What more do we know . We are thin on the details now but what we do know is according to local media reports the south korean government is holding a briefing as we speak or how the briefing this morning about its plans to file a complaint to the wto to resolve the situation with japan. The gist of this move as we know now based on local made a report, is that ultimately south korea wants to renegotiate with japan about its stance regarding these export curbs. Ultimately hopefully to remove these export curbs that came into effect for our seo materials like you mentioned a few weeks ago. Japan has been sturdy on its stance. We have to see how japan responds to this move Going Forward. Materials shery we are seeing the nikkei rally for fifth consecutive session. How this affect trade . Andhat has been a positive negative forces for japan suppliers and korean suppliers. The upside for some select korean suppliers is that if the esper curve continues it could benefit some of the korean suppliers who can supply these components instead of japans japanese suppliers. But there has been a lot of challenge about that. So we have to see market response. Shery will continue watching that. Thank you. I japan stocks reporter joining us from tokyo. Thats it from daybreak asia. The china open is next. We are covering, shanghai, and change and. This is bloomberg. It is 9 00 a. M. In beijing, shanghai, and singapore. Welcome to Bloomberg Markets china open. Thee are counting down to open of trade in hong kong and mainland markets. To your top stories this wednesday. China removes another obstacle to Foreign Investors. The global funds no longer need official approval to buy mainland stocks. Signs of optimism in the trade war. Beijing may step up purchases of u. S. Farm products. W
comparemela.com © 2020. All Rights Reserved.