Protectionism is a drag anchor and governments are not doing enough. U. S. Agrees iran was behind the aramco attacks. Tehran denies that and warns of allout war if it is attacked. Shery lets get you started with a check of the markets in the u. S. We are seeing futures unchanged, after a mixed closed on this theres day. We have the dow moving more than 50 points. The s p 500 finishing unchanged. We had a boost earlier in the session coming from white house Economic Advisor larry kudlow sounding more optimistic on trade. Then we had another trump advisor hinting at 50 21 50 to 100 tariffs on chinese goods. Rising uncertainty on trade, not to mention the oecd cutting Global Growth forecasts. That led to our haven demand bonds rallying for a fourth consecutive session and the 10 year yield sitting at that 178 level. Not see how things are shaping up in asia. We are this friday, potentially seeing a muted start for asian stocks. Bonds drifting as treasuries nudge higher. Tensions will be on chinas loan prime rate. Expecting a cut of 10 basis points to the lp year. Slipping and banks track the drop in tokyo. This as the boj helped, while hinting at further easing in october. Plus today, we are watching for the fed to inject more cash to come calm markets. Paul all right, sophie. Lets check in on first word news with jessica summers. Jessica thanks, paul. France has repeated eu threats to repose tariffs on the United States. This as washington moves first in the longrunning dispute over aviation subsidies. In may, that abby to you ruled the eu had supported airbus, hurting boeing. The eu had already bought a similar brought a similar case accusing the u. S. For breaking subsidy rules with boeing. France as the u. S. Should understand the eu is ready to act. Theions are rising again in gulf with the u. S. Agreeing the attack on aramco plans was unquestionably sponsored by iran. Tehran warns any retaliatory strike by the u. S. Or saudi arabia would be met by allout war. President trump ordered new sanctions on iran, but remains noncommittal about any military action. Secretary of state mike pompeo ended a short visit with talks in abby debbie. I think it is abundantly clear, and there is an a normas consensus in the region that we know precisely who conducted these attacks, it was iran. Didnt hear anybody in the region who doubted that for a single moment. Jessica the Federal Reserve is to add liquidity to a vital corner of the funding markets for a fourth straight day on friday. That is amid signs the stress seen in the week is rebuilding. The new york fed says it will once again inject as much as 75 billion through an overnight repo operation. That follows liquidity doses of the same size on thursday and wednesday, and 53 billion on tuesday. The new head of the federal Aviation Administration has tested boeing 737 max simulator to get up to speed on the ground a plane and the controversy surrounding the agencys air certification two years ago. Steve dixon carried out a series of routine operations at a boeing plant in seattle. He says he expects to conduct additional test runs later. He offered no judgment on the max. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Shery the oecd is sounding alarm over the Global Economy cutting almost all of its economic forecast. Chief economist laurence boones spoke to bloomberg about the report after it was published. We are heading slowly towards lower growth. Largely due to the uncertainty that has been created by the trade conflicts. Our message relief is to hold this uncertainty and leverage on the rates which remain visibly low for quite a while to invest and get us to lift the world out of these low growth. Paul lets head to singapore. Day to have the milk and Asia Institute assignment the milken Asian Institute summit. Haslinda amin is there. Aboutda it is all navigating a brave new world. The oecd downgrading its outlook. Lets get perspective from william lee. Good to have you with us. That news first thing in the morning, downgrading its outlook. What is your take . Why is it worse now than before . William i think the oecd is catching up with every other forecast. There is definitely global weakness. The United States sees sign of weakness developing. Often not mentioned is the fact that there is a little investment going on. That is because of the uncertainty caused by the global trade conundrum. Haslinda no recession in the outlook. William its hard to generate a recession in the United States when consumers are doing so well and labor markets are doing well. The likelihood of consumers continuing is in question because without investment, you will not have wage growth and firms will start wondering, should we lay off people of customers will not be at the doors . That is something we should be concerned with. Haslinda lets take a look at the u. S. Deficit, fast approaching 1 trillion. Unprecedented, and environment that is outside a recession. How do you explain that . Without spam without what we are seeing now, the economy will be in recession. William everyone talks about the need for fiscal reform. Think about what is going on with the deficit. The deficit means it needs to be financed with debt. Right now, the world is clamoring for positive yield securities. We can finance debt in the United States by having Global Investors take on positive yielding securities. More importantly, beneath we need that pair the quality of fiscal spending has to be transformed so we have expenditures that boost product to video. Boost transportation. Haslinda we are looking for the fed to save the world. William the job of the fed is not so much to lower the cost, but not one executive says it is too expensive for me to make investment. Rather im not confident my investments will pay off. The fed has to be out there and say to the world, we are there to backstop u. S. Growth. We will do whatever it takes to backstop growth. Unfortunately, chair powell does not have that position gravity tout to command the consensus to generate a statement. The best he could come up with is we will do whatever it takes, but it may be a midcourse correction. That is not enough to generate the confidence. Haslinda no consensus so far, when it comes to whether or not another 25 basis point cut is necessary. Whats your take . William i think there is no harm in lowering rates just to provide the confidence im talking about so investors will say, i will put my investment in place now because i know my customers will be there. Chair powell has not been able to get that consensus. It has come to the point where what has used to be internal to the fed, is now dissented. That is one of the hardest things for a chairman to do, to rein back the public dissent. It shows that chair powell is probably one of the weakest shares of the fomc has ever had because all the previous shares have been able to generate that consensus that he has not been able to. Haslinda add to his headache is the rebound us. He has to pump in 75 billion, he doesnt even know whats happening. William as a former fed staffer, i have to laugh the fed has put itself into a place where it depends upon having reserves in the banks. They drain the banks of reserves by offering Interest Rates on reserves. The banks are shoving the reserves into the fed, and the fed is saying wow, why is it that there is no reserves available to be borrowed by repo investors . The feds job is to be last resort. It has always have that goal. The fed can fulfill that role. A oneshot solution that solves everything would be a permanent repo facility by the fed that says to the world hey, you need liquidity, come to us, repos. There is no suit no stigma to come to the fed. I encourage you to come to the fed. If they were to put that in place, i think you will see a lot of calm come back. Haslinda talking about it, are you confident they will act . And why not . William because i think that kind of dramatic change to the operations they put in place admits to the world he messed up. We messed up. What central bank is willing to say we messed up . Haslinda what are the risks now for the u. S. Economy . William i think the highest risk out there is the lack of positivity growth. The only way to get positivity growth back is to encourage technological development. And thats through Business Investment. Something both something Business Investment would be anything allow then allow ceos and cfos to say im willing to make my investment now, and not worry about the Global Economy. Confidence building measures, whether its on the fiscal side, Monetary Policy side, and more importantly, on the structural side. People have ignored that. We always said to every economy, europe especially, you need to get rid of this get rid of a structural rigidity. That has always been nodded to, and never implemented. Haslinda when will we see fiscal stimulus . It is about time, it should be now. William it should be now. It should have been yesterday. Germany should have implemented the stimulus to get them out of a recession and germany. China should have more fiscal stimulus instead of tax trusts. You see that china has not been effect of any using fiscal policy. They have to do stimulus in the way of real, hard knock spending that improves investment opportunities. Thats the spending that needs to happen. Haslinda lets stick with china. What do you think is the biggest challenge for china in the minute in the next decade . William they are facing a problem in that they have stayed on prices that are not efficient. They are private sector is doing phenomenally well. China is at the forefront of some of the Hightech Industries that the u. S. Wants to be part of. Think about it. If you are any scientists who is in ai, where will you get data for facial recognition . It will be china. If you try to do that in the u. S. , you will be sued. I think china is at the frontier and much of the private sector is ready to go. What a needs are regulatory systems and policies that bolster the private sector and essentially, put aside those state owned enterprises. Base that has a power is among state owned enterprises. He must cater to that audience. I think the trick for the bureaucrats there is to try to allow the state owned enterprises to exist but meanwhile, free up resources and divert them more toward the private sector. Haslinda we are seeing a slow in china. Will it be more difficult for china to safeguard 6 growth . William 6 is the magic number, isnt it . Everyone worries the minute it goes 6 . More than 6 growth if you allow the private sector to take off. Is ayou look at the 6 , it composite of the slowgrowing state owned sector and a rapid growing easily 7 , 8 private sector. Haslinda william lee, it is a different world today. Thank you so much for your insights. Chief economist william lee, coming to you live from the milken asia summit in the lion city. Shery thank you so much for that. We have breaking news. Facebook now announcing that Mark Zuckerberg had a constructive meeting with President Trump. This was an unannounced meeting that took place today. We are hearing from facebook that President Trumps Digital Strategy director was there and also froms soninlaw, jared kushner. This coming at a time when facebook is facing scrutiny over its privacy and marketplace practices. This would be Mark Zuckerbergs first trip to d. C. Since he testified before congress back in april. He also had dinner with a group of senators tonight. Mark zuckerberg meeting with President Trump and facebook saying they had a constructive meeting with the president. Paul still to come, we will have more big names from the Milken Institute asia summit. Former australian trade investment ministers steven ciobos will join us later this hour. Ben jocalso speak with no and pimco vice chair, john students key. Dont miss those interviews. This is bloomberg. Counting down to asias first major market open this morning. We are taking a look at korean futures, which are higher at the moment by 1 10 of 1 . This coming after a great winning streak for the kospi which has gained ground for the past 7, 8, 9, 10 sessions. This is daybreak asia. Im shery ahn a new york. Paul time paul allen in sydney. Im paul allen in sydney. Trade talks have resumed paving the way for negotiations next month amid signs that they may edge toward interim deals. There has been a burst of conflict during conflicting rhetoric from two advisors paired lets get to our trade editor, sarah mcgregor. What is the rhetoric been sounding like it in the lead up to these talks . Sarah in the lead up to these talks, we have seen both sides trying to appease people and say we are making progress, we are going after an ambitious deal, but at least we are still talking. Michael pillsbury today. Upsaid the tariffs could go by 50 , 100 . Both sides want as much leverage as possible right now. It might be posturing to say that there is a whole world of pain out there that the Trump Administration could still level on china. I think what we do have to believe right now is the two sides are trying to talk. I think neither one wants an escalation. U. S. Companies are talking about how much pain this has caused them. They are obviously having to pay these important tariffs as goods come in. I think at this moment in time, we are led to believe at least they are trying to make progress and they are not necessarily talking about an escalation. Shery what do we know about the scope of the deal . Because we have heard everything from a limited trade deal to a very comprehensive one. Sarah absolutely. We reported a few days ago that the Trump Administration might trump confirmed this, in might be possible they agree to some sort of interim deal. They didnt give us officially details about that but perhaps it could include things like agriculture purchases, get the trade deficit down that the Trump Administration doesnt like, or other small things. We heard from Congress Secretary wilbur ross today, and he said what we have heard time and again from the Trump Administration, the number one goal is to address i. T. Theft, the allegations of it and to do big time reforms to chinas economy. The u. S. Believes makes it an unfair pilling field for its companies. It is hard to imagine how the Trump Administration could champion and interim deal as a big win. Shery sarah mcgregor, senior trade editor, thank you very much for that. The foreign minister of iran is warning of allout war if the u. S. Or saudi arabia launches a military strike on his country. Although iranat does not want conflict, it would not hesitate to defend itself. We are making a serious statement that we do not want war, we do not want to engage in a military confrontation. We believe a military confrontation based on deception is awful. We will have a lot of casualties. But we will not blink. Shery joining me in the new york studio is our middle east executive editor, riad hamade. Great to have you here. What do we know of where the president stands . I have seen so many conflicting rhetoric, everything from locked and loaded to the diplomacy was not exhausted. Where are we . I think we are in limbo with exactly what the American Government wants to do right now. You are absolutely right. President trump has sent what seems to be conflicting signals. What it does adjust, i think there is a hesitation on his part to take military action. We do have mike pompeo in the region talking to the saudis, the prime players in this, and we will see what comes from that. Mike pompeo has been more clear in his position. He seems to be very clearly pointing the finger at the iranians and seems to be suggesting maybe that he would argue for action. Shery we have heard the president seemingly open to a potential sitdown with rouhani during the u. N. General assembly. Where is that going . Riad it does not look like it is going anywhere. We heard that before these attacks. There was several moves that suggested that President Trump at least was may be interested in having that meeting. The iranians themselves were quite reserved and reacting. They made a photo op comment or they said look, we are willing to talk but it is not for a photo op. We are not interested in a photo op which they suspected is what President Trump was after. Is it possiblet, to see any path toward deescalation at the moment . Especially if you consider the drone was so successful, it is difficult to rule out seeing a reprieve. Riad it is really it really will depend on what mike pompeo hears from the saudis. They americans have made it clear that they want to hear from the saudis themselves, to hear what the saudis concluding terms of evidence on where these missiles actually came from. And it is also relevant to hear for them to hear what their allies in the uae are saying as well. It is clear the americans are not interested in going it alone. They want whatever whatever they do, they want it in conjunction with the countries in the region and we have yet to your a clear accusation saying these missiles came from iran. Shery super quickly, sanctions. More u. S. Sanctions. Where . Riad im wondering as well, because the sanctions on iran are really so tight. Iran is already suffering from the sanctions they are under. Im not clear on what exactly where there is. Shery what more they can do. Thank you so much here in new york. Plenty more to come on daybreak asia. This is bloomberg. Paul you are watching daybreak asia. Says theank head to fed move means theres room for more action. Speaking exclusively at the bloomberg India Economic forum, he said the fed decision will spur extra investment into india. Interest rates would mean better flows into emerging markets. One of india is among the most attractive destinations for foreign portfolio investors and others. Morenk this should lead to funds into india by way of fpi as well as some exchange. Why we welcome this, and we was madelcome, more about having a more liberalized Regulatory Regime to facilitate the flow. At the same time, i think as a regulator, we have to be also very careful in monitoring those inflows, and focusing simultaneously on the possible spillover effects at a later date, and to avoid any situation where there is buildup. We have to have focus. One focus is to enable the inflow of the front. And parlay, to keep watch over the possible you know, the s during thect reverse flow of all these fun. You talked about the diverse flows. In any reverse room leads leads to other rivers especially at a time when it comes to the global oil prices. We have seen the spike in oil prices. Think the, do you spark the price of crude is a concern for growth or are you worried about price of that . That would eventually lead to companies to raise to mystic oil prices. Movement duerrent to the saudi crisis, at the moment, they dont seem to so far as the range that has three oron the last four days, i dont think it has any it will not have any significance a Significant Impact on inflation. Based on what has happened over the last three or four days. How it plays out, time will tell. Shery the r. B. I. Commoner governor speaking to us at the Bloomberg Economic forum in mumbai. Coming up next, deflating the inflation in japan. The latest numbers are expected to show prices slowing. We will break the numbers next. This is bloomberg. Shery we are awaiting those Consumer Price Inflation Numbers and japan. In japan. We are getting the first batch of numbers. Rising. 5 , which is a slowdown for the month of august from the month of july. It is in line with expectations. Of headline inflation growth. 3 for the month of august. Core inflation which excludes fresh food, Energy Prices, coming in at. 6 growth. That is slightly faster than anticipated. It is also in line with the month of july. We have seen these negative pressures coming from fresh food and Energy Prices falling, not to mention some longterm policy factors such as lower mobile phone charges and reduced education cost. Needless to say, very, very short of what the boj wants to see with its 2 inflation target. Take a look at the japanese yen at the moment, not doing much. We have seen the japanese yen strengthen, leading those gains among g10 currencies as we have the boj Holding Steady on its policy. Paul lets get some reaction from bank of America Merrill lynch head of japan economics. Cpi numbers coming in pretty much in line with expectations. What is your key take away from this . Theres no surprises there. I havent looked at the breakdown, but im guessing that hotel fees which have been volatile played a part in the minor slowdown. I think actually zooming out and looking at the trend for cpi as a whole, the key take away is as much as these numbers will be disappointing for the bank of japan given the distance to the 2 target, japans inflation has been fairly stable and sticky at 0. 5 percent to 1. 5 despite no tailwinds from the fx. Entirelyhis is not an bad outcome that we are seeing. Paul although you mentioned the boj at 2 target, which is increasingly exasperating. I wonder, at what point is keeping that inflation target or damaging to boj credibility than just walking away from it . I think walking away from it would be much more damaging. Quite shocking for inflation expectations. I think the boj is playing the long game right now. They have given up on trying to meet the 2 target in a very short amount of time. Strategy to longterm of keeping financial conditions loose and letting the economy slowly, slowly heat up. It is going to take a long time. Is thatw, the problem we have fiscal headwinds in the way. It is not just the bank of japans fault, that we are getting this shortfall. Shery what are we expecting the boj to do though . It is not their fault about they need to do something if the economy slows down more, right . Or pricing inflation doesnt really meet their expectations. The deeper review that the governor wants, does that mean more stimulus next month . Izumi we dont think so, actually. I think you are referring to the fact that at yesterdays bank of japan policy meeting, one of the key surprises was not the bank of japan inserted this paragraph saying they are worried about the Downside Risk of the economy and prices and they will reexamine price and economic developments at the bet at the next policy meeting on october 31. They are two ways to interpret this. Opinions are divided among market participants. Some see this as the boj planting a flag and basically, it is inevitable that we will get an easing package centering around a rate cut. Our view is that it is not so clearcut. And it will depend on a lot of things including the market environment in these in leading up to the meeting. And what happens with these big oversight risks that the boj has been worried about, namely the trade war, brexit, etc. . The resistance to a rate cut as high. We dont think it will be very effective and refleeting the economy. Therefore, our view is that if things stay the way they are in the Global Economy and the Global Economy metals through, we will get smaller moves. Shery what if the japanese currency strengthens . We have seen weakness recently. We have Goldman Sachs and others calling for a higher stronger japanese yen against the u. S. Dollar. What level what the trigger at boj action . Think yeah, i do dollaryen is a worry for the jet for the bank of japan. It is hard to pinpoint what level, but i would say one level to look at is around 104. One of 4. 4 i believe was the most recent low we hit and law august in august. If you break that level in a sustained basis, there is not much distance to 100 which is the breakeven rate for japanese manufacturers. Therefore, 104. 4 will be the level to watch. Also saidrnor kuroda he wants to see a steeper yield curve. What are the difficulties posed to achieving that . Izumi one is that the shape of the curve in some ways and yield levels on the long end reflect expectations on those are struggling to pick up. The other is the sheer amount of a bond buying the bank of japan has already done. In order to steepen the yield curve, one the thing that boj has done is it has been tapering its purchases bond purchases, especially on the superlong space. 20 year plus, but also 10 year plus. However, if you think about the stock effects, if you think about the fact that they have taken so much supply of gdb out of the private sector, these small reductions in the flow of purchases will be incremental. And it will be very hard to steepen the curve on just those kind of operational tweaks. Shery less than two weeks to go for the consumer tax hike. How bad will it be . Will it be bad as back in 2014 . How long can we expect the impact to linger on cpi . Your secondswer question, the impact on the cpi will probably linger one year. In terms of the tax itself, i certainly hope it will not be as bad as 2014. Again, we are left worried about it because the tax hike is smaller, the tax on food will be unchanged which helps for low income household. And the government has put in place a lot of different measures to smooth out demand. We will see what happens. But we do not think it will be as damaging as 2014. Shery always great talking to you, thank you so much. Think of America Merrill lynch head of japan economics, izumi devalier. Time for first word news with jessica summers. Jessica thanks, sherri. President trump is continuing his criticism of the fed chairman. He says jay powell is safer now, but Interest Rates should be lower. The fed lowered rates for the second time since july. 25 whichut only by is not enough given other Central Banks have acted more aggressively. He told fox he is very disappointed with how, adding he does not know how to play the game. Sterling surged to its highest in two months on reports that European Commission president Jeanclaude Juncker thanks a brexit deal can be reached by the end of october. He told sky news he is doing all he can to prevent what he calls a catastrophic no deal brexit. Meanwhile, after three days of debate at the supreme court, britains top judges will rule next week on Boris Johnsons decision to suspend parliament. Latest offer of free cash for Eurozone Bank has fallen flat. It is a sign of how much liquidity is sloshing around the financial system. There is only one muted interest in an offer for three year loans for a rate that starts at zero and could fall as low as the negative deposit rate. 28 banks signed on for a total of 3. 4 billion euros. That is far below predictions of up to 100 billion euros. And a new report from Amnesty International accuses the Hong Kong Police of torture and if beating democracy protesters in custody. Amnesties says officers used unnecessary and Excessive Force in making arrests, beat one person for refusing to answer questions, and threaten to electrocute a man who would not unlock his phone. Hong kong police said it would not comment on individual cases. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Paul thanks, jessica. We are continuing our coverage of the Milken Institute asia summit in singapore. Haslinda amin is there now. We are going to be with top names here from the milken asia summit. Still to come, we are speaking with steven ciobo to take stock of the ongoing trade negotiations. Those stocks resuming in the u. S. Where are we in those negotiations . Deal or no deal . Also, we are speaking to christopher and his achieved global strategist. And a lot of gloom out there. Where are the right stop bright spots . Then, another one will join us for the outlook on further rate cuts. This is the man who says another 25 basis cut is coming before november, can we expect that soon . Economyhat and the coming up here from the milk and a summit milk in asian summit. This is bloomberg. Shery you are watching daybreak asia. Havechina trade talks resumed in washington. Trade is on the agenda for the official visit to the u. S. By australias prime minister. Lets head back to the Milken Institute in singapore. Haslinda amin is standing by with a special guest. Yes, with unique insight. Australiano, former trade and investor minister joins me from the milken asia summit. Good morning. Good to have you with us. And deal or resume no deal . A small deal is it even possible . Steven i think a small deal as possible. Politically, it is probably preferable. Like all of these things, it comes down to what is ultimately in the interest of the u. S. President. He is going to act in accordance with the u. S. National interest of course. But he also has a wary eye on what is happening in the lead up to the 2020 president ial election. The question i have a and asked repeatedly is does the president believe it is in his interest to have a trade dispute ongoing with china in the runup to the 2020 elections . Given the reliance of the Republican Party will have on, a lot of the states that have strong farming, agricultural, production, they are unlikely to want to whether an ongoing basis trade disputes that sees alternative supplies going into china and not from the United States. It has been great for countries like australia. But it is a challenge. Politically, that is not in his interest. I wouldnt be surprised if a deal is done. The real question is what is the quality of a deal that will be done . Will it be something that is going to be sustainable in the long term . Or is it going to be a bandaid on what has become a pretty big sore at the moment . Haslinda isnt it fair to say the damage has already been done . We have the imf coming up to say that growth will be cut by 0. 8 by 2020. The damage has been done, despite the fact that there is flack in the Global Supply chain. Steven i think its difficult to delineate one because from another and affect from cause. A number ofand respects, unique challenges. We are seeing a global problem around growth. We are seeing a global problem around productivity. Is that all a direct consequence of the trade dispute between the u. S. And china . No, of course not. Many of these were preexisting issues. I would argue they trade dispute exacerbated these problems and that continues to be a challenge, mainly for Business Investment decisions. As ceos have seen, having a look at how they will be putting capital in, manufacturing, supply chains, they are looking for alternatives because of the risk of this being in ongoing trade dispute. That nothing was standing, there remains globally, a lack of demand that is not firing the economy the way we would expect it to be. And then you see avenue a consequence of that and then you see as a consequence of that, continue depression on growth in wages and peoples standard of living. That is causing political angst. Haslinda what is the risk of u. S. China decoupling if there is no deal . Steven we are already seeing early evidence that you are getting substitution taking place. The most highprofile has been speculation recently of whether apple might shift its production from china to india. These are the kinds of Investment Decisions i was speaking about. Certainly it would be my view that many captains of industry would look at the most recent 12 month period and go if we will see a continuation of the last 12 months for the next 2, 3, 4 years, i think they would reasonably be expected to look at alternatives. Alternatives they view as a passing phase and we will have more neutral terms going forward, that i suspect they will say, we have weathered that storm, lets move forward. Haslinda the prime ministers heading to the u. S. What should be his priority . What can be achieved . Steven Scott Morrison has done an outstanding job. Just reelected for another term. Three years. A steaks going to have dinner hosted by President Trump and his wife. It really is terrific. And underscores the strength of the australiausa relationship. A strong relationship, multidecades now. I think for Scott Morrison, it will be a question of making sure australia and the u. S. Are in long step, but also trying to reduce the heat out of the trade friction between the usa and china. Make no mistake, in many respects, it has been good if you look at it in isolation. Good for production because we have been a substitute on issues like beef over the United States. Fromuntry wants to benefit global turmoil and global angst. Ultimately, it will be in everyones interest for this to be resolved. Islinda australia cannot dependent on demand from china. I think one of the great challenges i had when i was trade investment minister was trying to continue the education process of australia, is more than a cory. It is a saying we use. Global markets still see australia as being a resources play and being a pure china play. We are more than that. The invisible economy in australia is stronger than the resources sector. It is about continuing that education process. How much buffeting is there, there is a lot. Australia is in a position where we are in our 20 some of the continuous economic growth. Position, wetrong have to take necessary for. What we need to do is make sure we continue to evolve the economy to other forms that are required to keep us in strong positions. Haslinda optimism. I like it. Steven ciobo, thank you for your insights. You have it. Former australian minister for trade, steven ciobo, joining us from the milken asia summit. Back to you. Paul thanks very much for that in singapore. Lets get over to Sophie Kamaruddin in hong kong. You are having a look at jgb futures. Sophie jgb is expected to bear this friday. Futures nudging lower after the 10 year yields fell to 20 on thursday. That is the lowest level since september 10 after the boj held on rates and left the door open for more easing in light of external risk. Governor kuroda saying the boj has more room than the ecb which could be a bullish signal for jgb. The central bank has little choice but to tolerate this ongoing slight we have seen in yields to below 20 basis points. Considering the moves we have seen in global yields. Stagnancys data may add to the growing unease around inflation and looks to reexamine economic and price developments. Play. Xt meeting and Bloomberg Economics is in the camp that domestic demand is Strong Enough to take on the hit from a tax hike. Plenty more ahead. This is bloomberg. Paul you are watching daybreak asia. Lets get a quick check of the latest business flash headlines. Hong kong subway operator says the antigovernment protest have triggered a fall in passengers, cussing millions of dollars. The system regularly carries more than 5 Million People a day. It has caused damage estimated at 5 million u. S. Dollars. Shery lion air zigs is investigating a data breach that led to personal information of passengers on its malaysian and thai affiliates being leaked online. The malaysian unit said its a data was posted on amazon web cloud a surface and it is working with Tech Partners to find the source of the problem. Paul huaweis latest phone launch has fast 5g and hightech cameras, but it does not come with any license to google apps. It is equipped with an open source version of the android operating system but does not feature the google play store, which is the main way users outside china access android apps. The u. S. Trading session saw the major indices little changed, but two listings stored on debut. Both are enters Enterprise Software companies. Wellknown investor appeared su keenan has the story. We have been talking about this lackluster ipo performance, but not for these ones. Su along come these stocks which has been the hot ipo category. They restore confidence, at least for now, in the ipo market. Lets look at how both of these performed. Paying identity is the company within with presence in australia. They plan to expand into Southeast Asia. Data dog are out of colorado, data dog, another Enterprise Software company. They had gotten an offer reportedly from cisco for more than 7 billion before the ipo decided to reject that and go with the open market. Some are saying they have a valuation now between 8 billion to 10 billion. At one point they were up 50 . More midday right at the start but ended with a strong gain of 39 . Ping identity, also a strong open. It just kept going through the close. This is an area that has done really well. These are some of the rivals that also got a big boost. This was debuted, the prior year. 88 gain on its first day. Zoom technologies new relic are more direct rivals. Cloud strike, another reason ipo that doubled in the Cybersecurity Software enterprise. Down,f the stocks were perhaps concerned about the ascendancy of these companies. A very strong debut that underscores that there is an element of the ipo market that remains very strong. Degree does that strong trading debut recessive resuscitate and ipo market that has had an average year . That is a question that is still to be answered. Weworks ipo has been put on hold. Lets take a look at some of the recent ipos that were disappointing. Uber and lyft, the ridesharing services, multibilliondollar unicorns that disappointed the market and it. There is an ipothat is called se direct that was an absolute disaster, many say. It fell on the first day and has been trading below. Many say palatine is the next one that has the great chance of retort of restoring faith. Su keenan, think you for that. Markets opening at the top of the hour. Lets turn to sophie for what to watch in the markets. Asian stocks are facing a potential muted start to the session after the s p closed a changed. Investors are digesting Central Bank Decisions and we are awaiting entree talks between the u. S. And china. Trade conflicts have prompted the oecd to cut is Global Growth forecast as the Organization Says governments are not doing enough to prevent longterm damage. That concern is playing out around sentiment for indian assets. Forming a death cross on thursday without with outflows for a record quarterly exit. They have failed to support economic growth. The weakest pace in six years in india which has the r. B. I. Governor seeing room for a rate cut. The attention will be on the pboc as it is reluctant to catch a bond rally with a 10 year yield trading within its narrowest range in seven years. Market watchers will be hoping for a lower loan prime rate after the pboc cap to money market rates and medium lyra loans unchanged. It was set at 4. 25 . Forecasters penciling in at least five basis points amid anxiety that the po bc is behind Market Expectations for easing. Thanks very much, sophie. Before we leave you, exciting new function to tell you about on the terminal. It is friday after all, time for fun. Go. S rugby fans will know we are hours away from the kickoff of the Rugby World Cup in japan. If you go to this function, you can fill in your picks for the Rugby World Cup. This is not just open to bloomberg staff. Anyone with a terminal can do it. You can win yourself a bloomberg sweatshirt. Not only impress your set youre friends with your fashion sense, but your story of how you got that such a great fashion sense. Rugby go. This is bloomberg. Morning. D im paul allen in sydney. Asias major markets are about to open for trade. Shery im shery ahn in new york. Kamaruddin inmaruddin hong kong. Welcome to daybreak asia. Paul our top stories, trade talks resume in washington, paving the way for highlevel discussions next month. Some reports say an interim deal will be struck. The oecd has a new warning about Global Growth. It says rising protectionism is a drag and governments are doing enough. Shery the hong kong subway operator says antigovernment protests have cost thousands of passengers and millions of dollars. Ourll we have to do is put head down and ride through it. It is like going through turbulence. I just hope the turbulence is not going to be too long. They lets get right to Market Action in japan and australia. Sophie. Sophie the nikkei is opening higher by one third of 1 . The yen is Holding Around one a against the dollar. The governor is indicating a steeper yield curve is desirable. Jgbs are opening higher this morning, the latest and dacian latest inflation data feeds into concerns about a twoyear low. Korea, we have the cosby little changed after 10day event, the korean yuan on the back foot, trading at 1195 against the greenback. And there is export of the key korea, delayedth by japan, a key chipmaking material. The Australian Dollar is on the retreat with currency on course for a weekly loss, along with the kiwi dollar, further easing for both the rba and rbn. And extending declines at a december 2015 low. Paul. Paul for more on japan inflation and the rest of the top stories, lets check first word news with jessica summers jessica summers. Jessica speculation of additional stimulus in the next meeting in october. Prices excluding fresh food rose one half of 1 in august from a year earlier, matching japanese economists estimates. The key inflation gauge hasnt risen above 1 in years and is expected to remain subdued in coming months. France has repeated eu threats to impose retaliatory tariffs on the United States. That is if washington moves first in a longrunning dispute over aviation subsidies. In may the wta ruled the eu had a legally supported airbus, hurting rival bowing. The eu already brought a similar case accusing the u. S. Of breaking subsidy rules with bowing. U. S. Shouldthe understand the e. U. Is ready to act. Tensions rising again in the lf, the u. S. A graying the attack on aramco plants was sponsored by iran. Iran saying any retaliatory strike by the u. S. And saudi arabia would be met with allout war. President trump ordered new sanctions on iran but remains noncommittal on military action. Secretary of state mike pompeo had a short visit in abu dhabi. Clear, andundantly there is enormous consensus in the region that we know precisely who conducted these attacks. It was iran. I didnt hear anybody in the region who doubted that for a single moment. Sophie jessica the new head of the federal Aviation Administration has texted the boeing 737 max 8 simulator to get up to speed on controversylane and surrounding the agencys airworthiness certification two years ago. He carried out routine operations at a boeing plant in seattle and expect to conduct additional tests later this year. He offered no judgment on the max. Bloomberg daybreak asia. Global news, 24 hours a day on air, on tictoc and twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Shery a new report from the oecd sees Global Growth slipping to its weakest in a decade as the escalating trade war pushes momentum toward lows last seen in the financial crisis. Chief economist lauren boone spoke to bloomberg after the report was published. We are heading slowly toward lower growth, largely due to the uncertainty that has been created by the trade conflicts. Our message is to hold this uncertainty and leverage on the low rates, which remain visibly low for quite a while, for investors to get us to lift the world out of this very low growth. Paul that warning comes as policymakers from think of japan to r. B. I. Sound the alarm over Global Economy and signal more accommodation ahead. The trade war is high on the list of risks for margaret yang, market analyst at cmc markets. She joins us from singapore. We have margaret, encouraging signs ahead of the trade meeting between the u. S. And china, but at the same time we have a sometime advisor to the white house warning tariffs could just as easily go up between 50 on 100 , if President Trump feels things are taking too long. What is your sense of how things are going to go . U. S. And china trade negotiations, our team is pretty much divided among market participants. There are people who are very optimistic about a potential trade deal could be struck in october. There are also bearish views that it is going to be a longlasting standoff, and a deal is probably very difficult. Be a periodng to of peace and quiet on trade october 1, Chinese National day of the 70th anniversary of the new china. But the market volatility may heighten again in october, midoctober october, when the trade deals are back to the table. Deals arericultural most likely to be struck between the u. S. And china, and china is going to buy more soybeans to show a good, warm gesture. Deeper deeper concerns, questions regarding structural reform and intellectual property are going to be far more difficult. Paul is this the most critical thing to Global Growth at the moment . Revivalhard to see a for Growth Without a meaningful trade deal . Yes, exactly. We are seeing a big cyclical slowdown in Global Manufacturing and trade exports, deepened by u. S. China trade tensions and writing and rising tariffs. Although there was some progression in september, both countries put forward some tariff relief, but still, around half of chinas exports to the u. S. Are under 25 tariffs, and the impact is spreading across Southeast Asia and other economies in the world. So trade is really having a Material Impact toward manufacturing on growth. These problems need to be resolved before the cyclical slowdown can be bottomed out. On top of that, i think Central Banks have seen this trend and we are now back to the rightcutting cycle again. Many Central Banks around the world are cutting rates as well as pledging more money to after anothercb, round of qe this week. We will probably also see more monetary support from Central Banks. On top of that, more fiscal stimulus is also required, for example in china, the rrr cut early this week did help to make confidence in the stock market shoot high, and hong kong markets were trending down for a couple of days, so more fiscal stimulus in the form of tax cuts as well as Infrastructure Projects is needed to boost confidence. Shery what about the prime rate . We get a decision on this friday morning from china. Will a cut their do anything for the markets . Can you say that again . Shery the long prime rate. We expect the numbers this morning. What will that do to markets . Margaret im not really sure about that. For the pdos, the monetary poc p doc,he the monetary tools are going to release longterm luke willet he longterm liquidity. To seeif we continue further easing, weather here in the u. S. Or across asia, what will that mean for the strength of the u. S. Dollar, emerging market currencies and emerging market stocks eventually . Margaret very good question. Cut, wey after the fed saw a rebound in the u. S. Dollar and unwinding activities happening across global equities, because this division was largely deceptive this decision was largely disappointing. It is a hawkish cut that fed members themselves are divided cuts are needed down the road by the end of this year, given a strong job market inflation,ld u. S. And solid fundamentals. The fundamental date that does not warrant more cuts by the end of this year, and there could be more, one or two cuts down the see thet year, so we do for mosts been strong of august and september, even though the fed has cut rates twice this year. This is partly because markets want to see more cuts by the fed, and also there is a diversions between fundamental performances between the u. S. And the rest of the world. Basically, the u. S. Economy is stronger than china, japan and europe. That will lead to a tendency for traders and investors to buy more dollars and let go of emerging markets. In the past couple of months we have seen emerging market access, currencies have largely underperformed the u. S. Crude oilhave volatility this week, of course geopolitical tensions with iran. How is that going to effect markets in asia, given how reliant they are on oil imports . Margaret crude oil is the key product of the week. Theaw that about 70 of push up on monday has already been reduced because saudi arabia can resume activity very quickly and on the u. S. Side, President Trump did not comment on any military action on iran after the attack. So geopolitical tensions and the elements that support crude oil is now subsiding very quickly, and the Oil Price May soon come back to the normal level to reflect the supply and demand relationship. At this weeks d. O. E. , commercial data from the actually shows an increase, another factor pressing on oil prices. You, margaret yang, thank market analyst at cmc markets. Still i had, our exclusive interview with the reserve bank of india governor, talking oil and the fed. Paul up next, another exclusive, the ceo of hong kongs Transit System tells bloomberg how they are trying to ride out protests and attacks on stations. This is bloomberg. Shery you are watching daybreak asia. Longrunning antigovernment protests in hong kong are hitting trade, the economy, and the subway system. After months of protests, protesters have disrupted train service, smashed windows, lit fires outside stations. Npr says passenger numbers are down. Estimates of the cost of damage at stations may reach 5 million u. S. Dollars. To add to their troubles, a train derailment, the mtrs first such incident while carrying passengers. Chair spoke to yvonne man exclusively. How worried was he about these issues . Yvonne he says it is a huge challenge for the company and hong kong overall, and not what he was expecting when he joined the group in july. Since the protests began, they have been taking it on multiple fronts, not just with chinese estatebacked media by protesters as well. It is hard for them to win in this situation. He tells me he doesnt want to get into politics. The priority now is to rebuild the company image. Knew or expected mtr could become a target. All we had to do was put our head down and ride through it. It was like going through turbulence. I just hope the turbulence is not going to be too long. Yvonne have you seen passenger traffic to come down since protests began . Racks yes. Since the movement, i call it, we are seeing sort of a gradual decrease of people using the system, for the following reasons per one, once people go home they may not have the mood to come out again on the weekend, because of all the protests in different places. People would prefer to stay home. So we are seeing sort of a downtrend of people using the system. But again, i want to mention the mtr system on a daily basis, moving millions of people, i think we are responsible for about 40 to 50 of public transport movement of the population in hong kong. So henceforth, we just continue to think about, what can we do better to make sure we continue to move the people around. Yvonne fitch cut your credit rating, moodys downgraded the outlook from outlook for mtr to negative. Mtr dependence on Hong Kong Government as a concern. How do you hedge your risks now . Racks to mtr. G kong is home we will have to continue to do our job, and make sure we provide good service. This is the core business of the core market mtr has to be in. So in spite of all the challenges, we will continue to work hard on it. Back to your comment about the rating, yes, it is not good news to mtr, for sure. But i am just hopeful the situation in hong kong will improve very soon, but at least we at mtr at the Hong Kong Community can Work Together to get back to normal. You can look at a chart of violet as since the begun in june or july or so. Yes, they have been hit, mtr shares down close to 20 . The time when protesters rated the chambers, and it has underperformed over the last two months. The stock hit as well. Paul you did ask the chairman how he was hedging their risks, but he skirted around it a little bit. Can you shed any light on the derailment . Yvonne he says at this point hong kong is still going to be part of the core business. Fitch did say the Financial Impact of the unrest will be limited and they still see solid demand when it comes to the public, and multiple revenue streams. One of the key things they are is one of hong kongs big landlords. They still reportedly plan to release new Residential Projects to boost the housing supply in the city. They also operate overseas Railway Links in the u. K. , australia, sweden the like, so there are those other ways they as mitigate the risks, and for the derailment, they say they still dont know what happened here a couple of days ago. They are not ruling out any possibility under waiting for the investigation to conclude. Man in hong kong, thanks very much. There is plenty more to come on daybreak asia. Stay with us. This is bloomberg. Paul this is daybreak asia. Im paul allen in sydney. Shery im shery ahn in new york. Lets check the business flash headlines. Alibaba finds a perfect sentiment perfect investment in a taiwanese set up, alibabas biggest on the island although terms have not been disclosed. It is an augmented reality venture that specializes in a software that allows Online Shoppers to see what makeup would look like before buying it. Paul san franciscobased Food Delivery Company postmates raised 225 million in private capital, after announcing plans to go public. To move sees valuation rise 2. 5 billion, ge capital winning a seat on the board. Tech companies are seeing more enthusiasm for private business than public. Shery Software Provider data dog jumped on its debut after betting it could do better as a Public Company than accepting a buyout from cisco. Shares surged as more than 10 million, 3 billion higher than the market had set earlier for the ipo. Companies waste to bundle their Software Performance online through simple dashboard. Paul the foreign minister of iran is warning of war if the u. S. Or saudi arabia launch a military strike on his country. That although iran doesnt want conflict, it will not hesitate to defend itself. I making a serious statement that we dont want war. We dont want to engage in a military confrontation. We believe a military confrontation based on deception is awful, would have a lot of casualties, but we wont break. Go to Senior International editor Jody Schneider in hong kong. The Iranian Foreign ministers warning comes with a denial iran was involved in the saudi strike. What is he saying . In the interview, he said iran was not behind the strike on saudi facilities. He put it in an interesting way. He was referencing the hootie rebels the iran half and rebels, he said they claimed responsibility he couldnt say for certain that they did it, but he said they claimed responsibility and that he knew iran didnt do it. That of course is very different than what the u. S. Had said. Mike pompeo, u. S. Secretary of state, said he had high confidence that iran was behind the strike. And saudi officials with whom mr. Pompeo met earlier this week they are they think, unquestionable the iranians were behind this, but neither was saying they actually want a strike. Paul what is the latest from what the u. S. Is saying about the responsibility, and what might happen next . Pompeo, after he went went to thedis, United Arab Emirates and said he has collected evidence and information that will help decide what response to make. At the same time, President Trump has been talking about sanctions rather than any action. And nationally, he had tough talk about the locked and loaded , if necessary to respond, but lately he has more been talking about sanctions, his latest set of tweets about this was that there should be tougher sanctions on iran, and that the u. S. Would be going that route. The u. S. Has heavily sanctioned sanctionsdy, and new would not seem to have much more than a marginal effect, given how many sanctions have already been put on the economy of iran by the u. S. Jodi, they also talked about a potential coalition of nations against iran. That was coming from secretary pompeo. Do we have any more information on that . Jodi we really dont. In the last day or so, mr. Pompeo and President Trump have been seeking to have more conciliatory statements. President trump, very different than his locked and loaded statement the other day, said this may not end in a peaceful way, but he also at the same time, by using sanctions rather than further tough talk, seems to be going for a nonmilitary response. Jodi schneider in hong kong, that you so much for the latest on iran. We talk about we talk to the Dimensional Fund ceo next. This is bloomberg. Turn the economy does down, that a more extensive sequence of rate cuts could be appropriate. From the indian point of view, any cut in Interest Rates would be better flows into emerging markets. Head is right to say we are more inclined to additional easing that at the last meeting then at the last meeting. I think all Central Banks realize that if it prevails or goes on and goes on, there are beingve effects, rates negative. We would not be looking at looking we would not be looking at using negative rates. Those would not be at the top of our list. Strategy andve a the ecp under the presidency of kristin lagarde, but personally i see no reason to change our inflation data. Shery policymakers from around the world on the future of Monetary Policy. Summitead to the milken in singapore. Haslinda. Monetary policy is well and good, but what is more important are markets and goals. Chen,peak to peng Dimensional Fund ceo. You say it is about market signals. at dimensional we focus on longterm drivers of returns that exist in the market. When we say market signals, that means the information contained in a market price tells us a lot returnsng term expected and the drivers a longterm drivers of longterm returns. Those are the things we believe deliver results over the long term for investors. Haslinda what market signals are you looking for . Peng there are a number of them, and these market signals were first discovered by academics in the 1960s and 1970s and continuing ongoing. They are a sickly deciding what the market price is telling us about longterm returns. For example, there are a few in the equity markets, smaller companies, smaller market Cap Companies tend to deliver higher returns than Larger Companies over time. Relatively lowpriced stocks tend to deliver higher returns than higherpriced stocks, and more profitable firms tend to deliver higher returns. These are well documented by Academic Research over the past decade. Haslinda whatever fundamentals they are right now, there will always be assets to buy in every market . Peng we believe so. That is part of the belief that the market is a great mechanism that sorts through information, whether it is Company Fundamentals or Macro Economic information, it reflects in the market almost instantaneously. So that market price reflects this information, and to the price tells us, what are the higher return securities that investors should focus on. Talk about the equity market, how about a fixedincome market . What signals are you seeing . Peng a fixed income market is similar to equity markets, there are longterm drivers of the expected returning system, and that is reviewed in the market price. In other words, in the yield curve that gets priced, and specifically we focus on two of them over time. What is the term of the bond, how long the bond is, the duration of the bond. The second one is the credit quality of the bond. These are drivers of longterm returns. Askinda that leads me to how your portfolio looks, and over 30 years since the company was formed, what have your returns been . Ing our company was founded 1981 and has been in system for 38 years. The philosophy since day one has been focused on longterm drivers of returns. That hasnt changed over the past 38 years. We are able to deliver very good results for our clients, across all of our strategies, both equity and fixed income. In our equity strategies, we invest in 40 plus different markets. Our strategies are very diversified, lowcost, scalable, and low turnover in most cases. End and the fixed income space, we invest in 20 plus different markets, and in a very similar fashion, lowcost, scalable and transparent. Haslinda how do you view commodities . Peng commodity is a specific investment. We have investors that invest a small amount, relatively speaking, into commodities. And we do have these commodity strategies bill for those investors. It depends on the need of that important ad how role commodity would play in their portfolios. Haslinda how do you risk . And related to that, what is your play on gold, often seeing as a haven play, against risk . Peng risk is a very important topic. If you look at longterm returns, risk and return often come handinhand. Risk is almost inevitable when you are dealing with investment. We think the more important thing is how you define risk as an investor, and secondly, how you deal with risk over time, over a long time. We believe the right way to do with risk is to understand your risk appetite, and built of the right portfolio that fits that risk appetite, focused on long term driver returned, control your costs and control the things you can control, instead of worrying about other factors other factors such as gold and so forth. Haslinda investors look at the low rate environment and decide whether decide where to park their money. How do you consider where the feds headed, do take that into consideration . its important for us to understand a lot of these environments are fed decisions, so to speak. This information gets reflected in the market price in seconds. So the market price already contains information, and for investors, we believe it is better to focus on what i said before, these longterm drivers of returns, and control what they can control rather than secondguess the market, what the market is going to do, what the fed is going to say this morning or tomorrow. And those get reflected into the market already. Haslinda we would have to leave it there. Fascinating. Chen, Dimensional Fund advisor. Yous interesting when put fundamentals aside when making investments. Much, haslindary amin at the Milken Institute summit in singapore. Lets get more on the markets from sophie in hong kong. Sophie it looks like a muted session this friday with treasuries trading steadily, asian markets edging higher, the cost be looking little changed after a 10 gay get after 10day gain with consumer stocks the biggest drag. The kiwi dollar, extending declines by one third of 1 . The currency is set for a weekly loss along with the Australian Dollar amid these easing bets. I want to switch out the shifting the aussie amid policy expectations, reversing the months uptrend the months uptrend, Technical Support around the 73 level of the aussie yen after the doj held on rates, easing further after a soft jobs apart. We have bets on foreign 80 chance for a rate cut in october. Toch for the aussie yen recap its decade low of just under the 70 handle. Checking on movers, movers in japanese game developers. Square enix is extending gains from its 2018 high, and its partner is surging over 13 this morning after downloads for their joint game dragon quest exceeded 5 million downloads. This stock is jumping over 18 this morning, the most in about five months after its fta designation was approved for a therapy treating traumatic brain injury. Shery thank you. Lets get first word news with jessica summers. Highest intoing months on reports the European Commission president thinks of brexit deal can be reached by the end of october. He told sky news he is doing all he can to prevent what he calls a catastrophic no deal brexit. Meanwhile, after three days of debate that the supreme court, britains top judges will rule next week on Boris Johnsons decision to suspend parliament. The ecbs latest offer of free cash for your his own banks as fallen flat, a sign of how much liquidity its sloshing around the financial system. There was only muted interest in the offer for three year loans at a rate that starts at zero and could fall negative. 28 banks signed on for a total of 3. 4 million euros, far below addictions of up to 100 billion euros 3. 4 billion euros, far below predictions of up to 100 billion euros. Accusations of torture and beating amnesty protesters in custody in hong kong. Critics say officers used extensive force, beat one person for answer for not answering questions and threaten to electrocute one man for not opening his phone. Hong kong police say they dont comment on individual cases. President trump continues his criticism of the fed chairman. He says jay powell is safe for now, but Interest Rates should be lower. The fed lowered Interest Rates for the second time since july, but only a quarterpoint, the president says that is not enough. He told fox he is very disappointed with powell, adding he doesnt know how to play the game. Global news, 24 hours a day on air, on tictoc and twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Thanks, jessica. Still to come, more on central cuts next as powells rate mean more inflows to emerging markets like india. Our exclusive interview is just ahead. This is bloomberg. Shery this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. Shaktikanta das says there is more room for rate cuts. Speaking exclusively to bloomberg at the india form, he says the jay powell move will spur investment into india. Interest rates, inflows toring emerging markets, indias one of the most attractive destination for foreign portfolio investors and others. This should lead to more inflow to some into india, extent by way of fda. And while we welcome this, and we should welcome, mention was moreabout having a liberalized Regulatory Regime to for telus eight to facilitate inflow of funds. But as a regular tater but as a regulator, we have to be very careful monitoring the influence and focusing simultaneously on focusing on possible effect at a later date, and avoid any situation where there is a buildup. We have to have a twin focus. One focus is to enable the inflow of the funds, and overlel also to keep watch duringe adverse effects the reverse flow of all these funds. Any inverse leads to some sort of inverse, especially when it comes to oil prices. We have seen recently a spike in global oil prices. From where you stand, do you think the price of crude is a concern for growth, or are you worried about right stability . Higher prices would eventually lead Oil Companies to raise domestic prices. Shaktikana for the Current Movement as far as the saudi so far theoncerned, range that has happened in the last three or four days, i dont any Significant Impact on inflation. Whatgoing based on happened the last three or four days. How will it play out . Time will tell. Shery the reserve bank of india governor Shaktikanta Das speaking to us exclusively at a bloomberg event in mumbai. He does sound optimistic in that clip, but how would that translate to policy action . Kathleen, its interesting. Yes, he was optimistic and he has to look at growth in the economy and inflation. It is interesting what he said about capital inflows. He asked he appeared exclusively with bloomberg, but he said fed rate cuts will encourage flows to emerging markets, important for india laster because outflows were one thing that forced the rba be to cut rates the rba to cut rates aggressively. But there are concerns that fed cuts now could cause capital to flow out of india, into u. S. Bonds, weakening the rupee, so that is maybe not a done deal yet. As for oil, india is very dependent on imported oil. And Oil Price Spike could boost prices, boost inflation and hit peoples pocketbooks, cutting spending and investment. The big picture for governor das, weaker growth and prices in india that could add up to a rate cut. When we see price stability maintained and our inflation well below 4 as expected in the next 12 months, there is room for a rate cut, especially when growth hasnt slowed down. That is one target which has been given to us. The main target is price stability. And keep in mind the objective of the requirements of growth. A rate cut,room for you heard him. They are going to assess prices, the economy, and make a decision at the meeting. Paul how compelling is the argument for a rate cut next month . Theleen lets jump into blueblood library. When you look at the chart showing slowdown in growth in india, a year ago gdp was at 8 . In the First Quarter of the year it was at 5. 8 . It felt a 5. 0 in the june quarter, a sixyear low. Consumption got hit hard. Investment was weak or there is a lot going on. In addition to the trade war and all the uncertainty it causes india needs structural reforms. The government has started those, there is more to go, that is whatever but he says right now about the economy. On the other side, they cut rates. Lets go back to the Bloomberg Library and look at inflation. The headline number at inflation on inflation has got to 3. 2 percent. Look at how high it was a year and a half ago. That is why the previous governor, patel, was raising rates so much. Over, ands taken these rate hikes were necessary because the rupee were falling. But the rupee stabilized, the economy slows, inflation comes down, rate cuts have been occurring this year, three so far, and now you have this point where you have inflation still below target, very weak gdp growth i just showed you, and to think a lot of people are saying high odds, especially after what das told bloomberg today, that we will see another rate cut in october. Paul kathleen hays, thanks for joining us. Lets check business flash headlines. Mtr kong subway operator says antigovernment protesters triggered a fallen passenger numbers and cost millions of dollars to the system that regularly carries more than 5 Million People a day. Attacks on stations have caused damage estimated at 5 million u. S. Dollars. Shery lion air investigates a data breach that led to personal identification of passengers being leaked online. The malaysian unit says the date that was posted on an web cloud service, and it is working with Tech Partners to find the source of the problem. Paul huaweis latest phone log shows hightech cameras but no license with google. The phone is equipped with an open source version of the android operating system that doesnt feature the google play store, the main way users outside china access android apps. Up next, stimulus chasers in pdoscount down to the latest prime rate. Reaction to that and more, coming up in the next hour. This is bloomberg. Shery this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. China traders disappointed by a lack of policy rate cuts and now shifting to a new gauge of borrowing costs hoping to see a lower prime rate. Friday, ourthe pboc china rates reporter linda olivia joins us from shanghai. Olivia economists expect a five basis point cut to the prime rate, which means it will fall to 4. 2 . This is a sign the reserve requirement cut that took effect this week is in fact bleeding through to borrowing costs. 800 million yuan of liquidity would be released through this, but Analysts Expect the rate to fall by that much because this will lower bank profitability. That is because the pboc costs for them for funding is still unchanged. Shery we have seen overall liquidity conditions improve this week, especially with the recent rrr cuts. Why is this important . There is also increasing data of the slowing economy. We have seen a lot of data and recent weeks that shows august was really a slow month for chinas economy. And even though the since hasnt donehe pboc much more than tweak some of its policies. It hasnt embarked on that strong stimulus that the market had been expecting. And this week itself, we saw the pboc skip a chance to lower mediumterm loans. It also kept money market rates unchanged, even after they fed cut rates thursday. The markets had been expecting more, and a signed they would be easing monetary conditions going forward, and the lpr, even though it is not a policy rate, is assigned we could be seeing easing conditions. Paul thanks for joining us from shanghai. Lets get a preview of what to watch later this morning. Pboc is expected to lower the loan prime rate after the bondff this week, rally styling and tenure trading in the narrowest range in seven years. We are also keeping an eye on high ask, rose to a high this week, at risk of forming a triple top around 11,000 points. This is after rising from rising 5 from mates august low, the chipmaker prompting a boost to the gdp forecast to 2. 4 after keeping its key rate unchanged for 13th quarter. Key events are investors will watch next week. An ipo from its asian unit on monday, the scaledback deal is a boon for hong kong as trade tensions royal markets. Paul tuesday the marquee debate at the yuan General Assembly begins. Topping the agenda, u. S. Iran relations, although the chances of a sideline trumpet between President Trump and irani and president rouhani have weathered. Also on the watch list, a bilateral between President Trump and shinzo abe wednesday after a trade agreement was announced this week. Shery a trio of trade decisions top the eu decision. We may also see action in the philippines after the governor flagged, one could come as early as this month. We speak exclusively to him later at the milken asia Summit Institute summit. That is it from daybreak asia. The start of to trade in hong kong and shanghai. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. It is 9 00 a. M. In beijing. Welcome to Bloomberg Markets china open. Im tom mackenzie. Yvonne im yvonne man. We are counting down to mainland markets. David lets get to the top stories. Paving the way for highlevel discussions next month. Some reports on an inner room deal would be will be struck. Yvonne a new warning about Global Growth. This as rising protectionism is a drag anchor and politicians are not doing enough. Tom the hong kong subway operator tells us the antigovernment protest have cost thousands of passengers and millions of dollars. All we have to to
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