Hurting the economy. Retail sales and Hotel Offices tumble. Tourism from china sliding more than 40 . Shery later on Bloomberg Technology global link, we will talk about airbnb charting an unconventional path to the Public Market and how vcs are looking to disrupt the ipo business. Lets get you started with a quick check of the markets. U. S. Futures gaining 1 10 of 1 but this after we saw the s p 500 fall the most in about a month. We have the s p 500 finishing below its 50 Day Moving Average of 29. 48. Every sector turned to the red after we saw that we u. S. Manufacturing number appeared we had industrials leading the declines, not to mention banks moving lower as we had raising pressure towards the 1. 6 level. High volatility was pretty and the vix headed towards the 20 level as we have had october very volatile, if not the most volatile month of the year. That also having an impact on the markets. We are seeing u. S. Futures slightly higher at the moment. Lets see how asia futures are looking now. Paul yes. That is pretty unsurprising. It looks like we are shaping up to have a fairly ugly day on the markets. Nikkei futures unchanged but in australia, declines of more than 1 . New zealand has been trading for one hour, off a quarter of 1 . Both off ondia holidays today. We will have more on all of that in a moment but for now emma lets get the first word news with ritika. Ritika the Global Economy is showing warning signs as manufacturing is stuck in a slump. Exports falling and sentiment sliding. The u. S. Factories index and excitedly dropped to the lowest since 2009. South korea reported a fall in Consumer Prices and the rba cut rates to a record low. The wto cut its forecast for comments to the lowest in a decade. Toyota led the u. S. Auto sales rate last month but in a good way. Overall deliveries fell in september by 12 . Recording a 16 decline year on year. Automakers had to pay record 4000ives of more than last quarter according to jd power, automotive. The record 93 month sales growth streak has finally come to a halt. U. K. Prime minister Boris Johnson will lay out his final brexit deal on wednesday, warning the country will crash out of the European Union if brussels will not engage. Planelegraph reports his was seen in a special relationship with the eu until 2025, subject to customs checks at the irish border. The eu is said to be discussing a potential time limit on the backstop mechanism. President trump has reviewed fashing the fed, tweeting that jay powell and his team have let the strong dollar at a global disadvantage he continued his andaign saying the governor the fomc are the worst enemies. He says they dont have a clue. Pal is yet to indicate whether he will cut rates again this year. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul thanks. The Global Economy is flashing a clear warning sign with a wave of data showing manufacturing stuck in a slump exports falling and sentiment sliding. Garfield reynolds and Sarah Mcgregor joins us now with more. Numbers goten those released, we saw a profound reaction. The yields, dollar, stocks all down. How are we setting up her asia . Garfield asia will be more of the same. In asia come of the u. S. Dollar will actually strengthen against currencies. Asia is very export driven, very export oriented. So exports go to the u. S. , if the u. S. Manufacturing sector is doing this then that is bad news for them. It follows on some pretty poor pmis across asia. Also Industrial Production in south korea. I think japan. All ready lots of reasons to be nervous. That will hit stocks and currencies. As far as bond yields, they started backing up seriously because of what the boj has been doing to its market. Some talk of bond are beginning but the in my snuffed that fire out. Shery there are some issues, whether semiconductors in south korea or cars in germany. Does this mean we should be more nervous in those sectors of the market . Beeneld well, those have the centers of pain. In fact, there has been a fair bet of bad news priced in for semiconductors in south korea. Taiwan has been bit of a standout. It has been outperforming but it is quite semiconductor exposed so there has been some concern around that. Problemsas a lot more than automakers. The german industry has been on life support at best for two were three months at least. That was actually the clearest Early Warning sign. It is hard to see much capacity for picking and choosing your poison when it comes to germany. The hit on manufacturing coming from these trade tensions. We just have the wto cutting the global trade growth forecast for this year to the weakest level in a decade. As you can see in the chart, the volume of trade increasing by 1. 2 this year. 2. 7 next year. That is the forecast after a 3 gain in 2018 but at least it seems in one part of the market, the commodity sphere, soybeans in particular, there could be more trading going on coming from china. Sarah absolutely. Since this trade war began, we have heard everyone from the wto to economist warning that trade risks are the biggest impact for Global Economy. That is starting to show up in the data and in forecasts. We heard from the imf today which indicated it may lower its forecast for 2019 growth for a fifth time in october, later this month when it releases the economic outlook. That is really looking at this soft data. As you said, there is some hint right now, indication that china is resuming these soybean purchases and scaling them up. That is a good sign for the trade talks. If china and the u. S. Can come to some sort of agreement, a lot of people would agree that would be a good sign Going Forward for the Global Economy. Potentially a path of a little more of a recovery rather than a slowdown. Paul yes, sarah, im sure we remember President Trumps tweets a few months ago. Trade wars are good and easy to win. Does not seem to be shaking up that way. 10thn washington on the october, what is the best hopes . Sarah we know officials were in washington a couple of weeks ago preparing for those talks. China making these soybean purchases would be a good thing. We heard from wilbur ross that the u. S. Appreciated that move but a lot bigger fish to fry in these trade talks. I think we need to see the two sides meet, what they could potentially agree on. Can they come out with any sort of deal from these two days of talks or will things simply get worse . It would be impossible for them to make any progress. Shery thank you so much. Also thanks to garfield reynolds. Lets turn to hong kong, reeling after the most serious clashes since widespread unrest erupted in june. A demonstrator was shot by police for the first time. Sophie kamaruddin on the ground for us today and the Hong Kong Police commissioner calling it one of the most violent days the city has seen. What is the atmosphere like right now . Sophie yeah, you can see the remnants of the violence. Helmets on the ground, graffiti on walls and billboards. It beginning the afternoon as people gathered around an authorized assembly for the worst hit District Across victoria harbour. While we had tens of thousands of demonstrators expected in a peaceful march from Victoria Park passing along this route. By sometime, violence erupted on Hong Kong Island as well as to the east. Using petrolters bombs, throwing bricks, destroying public property including stations while we had police bringing out their arsenal of teargas, rubber bullets, batons and water cannons, leading to more than 118 arrests on the day. Charges including rioting. More than 30 hospitalizations, including an 18yearold student who was shot. The Police Commissioner said the officer acted within reason and lawfully, but the u. K. Foreign system secretary called the act disproportion and risk inflaming the situation. Police confirms six live rounds were fired, including to warning shots. Mess all right, so a real on tuesday. What can we expect today . Sophie on wednesday, as we have become accustomed we had traffic early morning. Street cleaners cleaning this graffiti and stations are to be open. Hong kong Financial Markets are to be opened as well. According to local news, we could see the 96 protesters charged with rioting being brought to court today. There has been calls for a general strike to be placed next wednesday but it is difficult to gauge how much participation there may be. Shery Sophie Kamaruddin from hong kong, thank you for that update. Still ahead, u. S. Auto sales hit the brakes last month, setting the stage for hefty incentives to clear older models. We will look at the rocky road ahead. Rba joins the the race to the bottom, cutting rates in its latest meeting. Philip lowe warns of more actions if there is a global shock to the system. This is bloomberg. Shery i am shery ahn in new york. Paul i am paul allen in sydney and you are watching daybreak australia. Ofecord low in australia. 75 after the reserve bank made a third cut since june. Our next guest says the cuts in fairly quick successions hurts the reputation as a policymaker. He joins us now. Here we are. We are deeper into uncharted territory, three quarters of 1 . The governor spoke after that decision. Lets have a quick listen to what he said. Importantly, the board also recognizes that Monetary Policy still works. It supports employment, jobs and Income Growth across the economy. Paul well, these low rates also refuel house prices and prop up equity markets so to what degree is the rba have a balancing act . Is it pushing on a string now . Guest good morning. I think the rba is doing the right thing given the outlook the domestic and International Economy in terms of easing Monetary Policy and financial conditions. It has only been to the Housing Market not seeing it lift the domestic activity but that is more of a supply issue rather than anything else. For us, it is a case of looking with the rba stated with the Forward Guidance being stronger. Driving the labor market to full employment which is getting the Unemployment Rate down to 4. 5 . That means further rate cuts are more than likely as the rba does want to get there. The question is whether that comes in november, whether that happens next year and what degree we see them start talk more about unconventional Monetary Policy to drive that growth rate higher. Rba does nothe usually cut in isolation. When do you think it is going to be . Are we looking at february next year and when do we see qe . Isry the question really about how the data unfolds between now and november. We are looking towards the resale retail sales figures. Consumption has not been playing its role like it had in the past. For a long time come of the Australian Consumer was willing to spend even though wage growth was not great. You have seen that turned. You have seen that leverage weigh on the consumption outlook even though you have the support for Monetary Policy and a little bit from fiscal policy in terms of the tax cuts. Of beingate of case dependent on outlook consumption and international factors. As the risks easiest, the rba should keep pace. It makes it more difficult for the rba to hold through next year. That pushes out currency the wrong way. However, i dont think the rba months to rush in terms of where it is going with rates and it does not want to go into qe. It is hoping the federal government will actually step up and do more fiscal policy, but that may not happen until next year which is some time away. Shery what do they need for australian stocks in the meantime because we saw them surge the most in a month after the rba rate cut, but than the earnings outlook does not look particularly exciting at the moment . Kerry absolutely. I think what you will see more in terms of the equity Market Outlook is being dominated by still the trade narrative but the growth concerns are now feeding through. Manufacturing, Business Sentiment survey have been weak and there is concerns about whether they will flow through the services sector, employment around the world. It is a Growth Outlook weighing on equity market right now. Given that multiples have expanded so much around equity markets globally and in australian market, it is a case of saying you are at risk of paying a lot but not a huge not of earnings as revisions go down. It is not exciting to think about equities right now given the prospects in given the fact multiples can expand that much more to keep prices higher. I think equities are likely to be range trading for a while as we see more clarity around the macro outlook and that comes down to what happens with trade which is such a big uncertainty. Shery we are now continuing to see this Global Manufacturing slump. Whether it is the ism number is we saw in the u. S. This chart showing manufacturing has taken a hit, whether it is in china or germany. When it comes to investing trends, do you steer clear of some of those specific sectors that could take a bigger hit from this manufacturing slump . Think there is a word of caution around these indicators because what you are seeing in terms of global pmi numbers is a little bit of a stabilization and some of the countries that are much weaker, that is feeding through in terms of economies being hurt by this trait outlook particularly germany. A few of other factors to consider. For us, we are thinking about the sluggish Growth Outlook. Allocation is a bit higher when everything is looking a bit more expensive and you have a lot of negative bond yields around the world. It is a case of thinking of the more defensive regions and sectors. Moving away from those three cyclical ones such as autos and thinking about how you can position income in this environment and the defensive nature and portfolios in terms of having a quiet quiet quality bias as well. Paul jp morgan Asset ManagementGlobal Market strategist kerry craig, thank you. Still to come, later this week on bloomberg tv and radio, guy johnson speaks with the chicago fed president Charles Evans in madrid. Do not miss that live conversation. This is bloomberg. Shery we have breaking news. We are hearing from the Japan Coast Guard saying north korea appears to have launched a missile. We know the u. S. And north korea are starting Nuclear Negotiations again. This was confirmed by the state department. This will happen within the next week, but now we are seeing north korea appeared to have launched a missile. We have seen north korea stopping Intercontinental Ballistic Missile tests during the Nuclear Negotiations with the u. S. But not necessarily the short range Ballistic Missiles that have been launched in recent months. Paul this is Bloomberg Technology global link. Lets take a look at the top global tech stories of the day. Taylor thanks. Apple closes in striking distance of a record of optimism about the latest iphone. Tim cook told the german newspaper that iphone 11 sales have had a strong start and he could not be happier. Apple is more at 17 from an august low and 2. 5 below an alltime closing high rate about a year ago. Sony is slashing the price of the Playstation Game service as competition and online offerings uses up. The service will cost 9. 99 a month and there is top selling titles like grand theft auto v. The game pass for microsoft starts at nine dollars and . 90 month. 9. 99 a microsoft is using ships in its azure cloud service, confirming a shift away from intos semiconductors. Companies have become major purchasers of service chips and turning to act as accelerators. Those other top global tech stories i am watching. Shery thanks. Silicon valley is looking to disrupt the ipo business. Venture capitalists and Corporate Executives are meeting tuesday in the tech hub to discuss whether the system for Public Offerings is still working. This after a year of many of the biggest deals flopped. One possible are tendered of direct listings. Joining us to discuss is sonali. We know the tech startup usually has a traditional ipo route so what are the benefits of this direct listing . Sonali in a direct listing, it is not that the bankers and a group of small investors set the price, which typically is below what they expect to be treated at. A direct listing really sets the price. It starts trading the next day. The company does not raise any money in a direct listing so they have to be able to survive without the need to raise money. With that said, they like the fact venture capitalists in particular, that the market sets the price. Taylor talk to me about the type of companies that will direct list versus ipo. Bigger Name Companies we know of that can have Better Success . Sonali that is what they say. What happens is the need to raise money but the other thing is wall street serves as a Big Marketing machine. They are research analyst, bankers go around to different investments. The bigName Companies that dont really need that sort of marketing can go off and do a direct listing themselves because investors will already know who they are. If you look at slack for example we had to do a lot of explaining. They already started to kind of negate the idea that they needed to be kind of a big wellknown tech company like airbnb. Shery talk to us about airbnb because this is a huge company and they are going to go to the Public Market, not ipo traditionally, but next year. Sonali next year, they are planning shery going to the Public Market. Sonali something interesting. Sequoia is an investor in airbnb and mike morris has been vocal about the ipo process. Airbnb is well over 30 billion in valuation so it is a very large company, again with a big brand name. Theres a lot of excitement about the ipo they will be choosing indirect listing instead, according to our sources. That is most likely what they will be doing. Taylor do we expect direct listings to take up a greater percentage versus ipos . Sonali Silicon Valley wanted to these direct listings because they wanted to avoid the ipo pop but we are seeing something we have not seen in many years. We are seeing some ipos fall in the first day of trading. That is quite rare. We are seeing here, they want to get rid of the pop by the ipo market is a very large market. People are not expecting it to go away overnight by any means. This a lot of private equity of those companies. It will be greater but not taking over. Shery great story. Thank you so much for that. That is Bloomberg Technology global link. Do not miss Bloomberg Technology 7 00 a. M. In sydney, 5 00 a. M. In hong kong, 5 00 p. M. Anin new york. This is bloomberg. Paul beautiful wednesday morning in sydney. 8 30 a. M. Market open, might not be so beautiful. Futures pointing lower more than 1 after we had some pretty disappointing factory numbers out of the u. S. Equities, yields on the u. S. Dollar all sink. It looks like we are setting up for a pretty rough ride for markets today. Shery it is 6 30 p. M. In new york. You are watching daybreak australia. Lets get the first word news. Ritika the longrunning protests in hong kong taken in increasing toll on the economy with retail Sales Forecast to decline for seventh month in august. The unrest with visits from hasland china down 42 devastated shopping and the hotel industry. Retail sales may have fallen 14 from a year ago and Hotel Occupancy rates at 66 from 94 . Crowds gather again at the start of golden week, gaining revenue last month with the lowest level in a year as casinos are battered by economic and geopolitical troubles. Gross revenue was 2. 7 billion in september and they were expecting business to strengthen in the second half as it kong. Ue unrest in hong china has given the upcoming trade talks a lift by agreeing to buy a million tons of u. S. Soybeans after beijing issued more waivers for import tariffs. State owned and private Companies Purchased about 15 cargoes. The move may help a more conciliatory bid between highlevel officials when they meet next week in washington. The u. S. And north korea have agreed to revise talks in the coming days, building on a vague agreement by President Trump and kim jongun at the Demilitarized Zone in june. It is not clear when or where the talks will take place or what will be on the agenda. Talks comes with north korea reported to have fired another missile. The coast guard in japan gave no other details. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Lets get a quick check of the markets across asia right now. We are seeing Downside Pressure for key vstoxx falling 3 10 of 1 . This is coming after three sessions of gains. The asx 200 aussie futures down more than 1 at the moment. This coming after the asx 200 surge the most in the month and the aussie dollar hit a one month low after the rba cut interest rates. Now futures, downside price. Nikkei futures change at the moment but this is coming after the japanese yen surged to the strongest in a week against the u. S. Dollar as we had those very weak u. S. Manufacturing numbers. Lets get more on what we should be watching us trading gets underway in asia. Adam haigh is with us. How has this u. S. Factory data played into the hands of the bond bulls . By looking at fresh lows for treasure really yields. Adam we are not that far off if we look at the lows we hit a few months ago. It is just adding to what is becoming a series of weakening data points, not just in the u. S. But earlier in the week in europe and some weaker services and factory numbers coming out of china earlier in the week as well. It is an incremental part of the story which will probably add to those people who were thinking this rally in treasuries has gone a little further to go. Look at the testing of multiyear lows when we open in australia, we should get yields ,oving of a similar magnitude 10 basis points looks pretty reasonable today. For equities, as you have been outlining come of the sentiment is pretty weak that there is a set up that is probably at least at the center. And then you get into the tariffs of whether there is a few people wanting to buy the dips on an intraday basis. Ands a very clear narrative risk starts to push things further. Shery another narrative that has been building up has been the upside risk for the japanese yen given all of these uncertainties around the world. Why are Morgan Stanley and jp morgan liking tokyo stocks . Adam in a sense, it comes down to that old argument of valuation discount on offers to Japanese Equities relative to what you find in the rest of the world. There is some credence to that argument. The chart shows it pretty clearly, seeing it on the library. Japanese equities have traded a discount for a number of years now relative to both themselves but also to their global peers. Some of the points being made are around the idea of improving return on equity. The improving situations of the Corporate Governance landscape and the capacity and the wants of companies to buy back stock and issue dividends and more shareholder friendly environment. That is part of a longterm shift. If you believe that on the longterm, buying something at discounted valuations with longterm story intact clearly makes sense. That is the core of their argument. The flipside of that is you have a lot of global trade tensions continuing. Japan is very exposed to that and already struggling domestic economy in many areas. That is really the flipside but if you want to buy that valuation argument, these guys are saying you should get back in. Shery thank you so much, adam. Staying with the markets, auto stocks took a beating in latest session as the first round of september Sales Numbers sound the alarm bells. Initial u. S. Numbers looking pretty bad and suggesting hefting incentives will be needed to move cars off a lot. Sus has the details. How bad were the numbers . Su worse than expected and there are concerns that gm and ford which reports their numbers later on wednesday could also be far worse. The 12 decline that was expected. You can see they were all down on the anticipation of these declines. Nissan has not rated get on the numbers. If you look at the declines themselves, they are many in the double digits. Toyota down 16. 5 . Nissan down more than 17 . Is this the big decline everybody has been talking about . The total collapse in car sales which could be dealers who are struggling with these type Profit Margins could be squeezed even tighter and these incentives that have been used throughout the past couple of years move the cars will have to be doubled down on to get those cars off a lot. What we are seeing in these latest numbers also are the older models continue to be the hardest to move models. That was borne out in this latest round of members. And mercedes have increases on the luxury end. In posted a 6 gain september and were sadies at a 4. 8 . Bmw beating mercedes by 34 cars in the tight Sales Numbers so we did see the luxury end which is different than the general carmakers who had very difficult septembers. What do these results mean for asian makers . Su nissan, which let the declines, even though the declines were less than the big drop that was expected, clearly showing signs in the post carlos ghosn era, the company is struggling. Again, their decline was not as bad as feared but it shows that the deliveries increase 18 . Of 21 . Steeper drop if we go to toyota, its all sales down more than 16 , even with its namesake. Lexis dropping and other top noted brands. Deliveries fell for almost every model including the bestselling crossover and camry sedan. Honda had a rough september. The concern here is that this is the beginning of the end for the ride that the automakers have had. We are seeing decreased demand for a lot of the autos and what it is going to take to move them off a lot. It could be much, much heavier incentives. The average incentive in the september period was an average of 4100. So that is really going to continue to put pressure on these stocks. It is about how gm and ford report on wednesday. Will they actually beat the decline that has been forecast . That will be interesting to watch. Paul su keenan, thank you for keeping an eye on that story. The chairman of three house committees say they expect full compliance from secretary of state mike pompeo as they investigate President Trumps dealings with ukraine. Pompeo has said lawmakers will try to bully the staff and the big position are not feasible. Lets crossover to washington with joe. Where do we stand now . Joe we have an exchange of intimidation by both sides. The secretary of state did not completely reject the idea of any of these employees of his giving depositions to congress but he called the schedule for them unrealistic. The Intelligence Committee and the Oversight Committee all wanted to have starting tomorrow, a series of closeddoor depositions from members, from state Department Employees who were mentioned by the whistleblower who detailed the alarms being raised by trumps president. They are at a standstill but we do know this special envoy for before thel be going committee and close doors tomorrow and there has been a deal arranged for the former Ukraine Ambassador from the u. S. To testify later than she was originally scheduled. It is unclear whether or not any of the other depositions can be scheduled. Shery the chairman of the house Intelligence Committee adam schiff was also saying we could hear very soon from the whistleblower himself or the congress would so where does the inquiry go now . Joe they are still negotiating with the whistleblower. They will hear from the Intelligence CommunityInspector General on friday. But they have been very close lipped about the negotiations with the whistleblower. His attorneys, his or her attorneys has been very careful to try to avoid unmasking the whistleblower and setting the limits to when and where this will take place. There has been some expression of willingness so it probably will happen but when and how is not known yet. Shery joe, thank you so much. We have more developments on the breaking news. South korea now confirming that north korea has fired an identified projectile. Fired towards the east sea. Nhk reporting that japanese officials saying there is no direct impact from the north korea projectile on japan. We are hearing from the joint chiefs of staff of south korea. We have seen the Japan Coast Guard also said north korea appears to have launched a missile. We know the u. S. And north korea are again resuming the Nuclear Talks in the next week, according to the u. S. State department. There has not been any Intercontinental Ballistic Missile test since these Nuclear Talks have been going on between the u. S. And north korea, but short range missile tests have been going in recent months. South korea now confirming north korea has fired an unidentified projectile. You can get a round up of this story and more on todays edition of daybreak. Bloomberg subscribers go on your terminals. Also available on mobile on the bloomberg anywhere app. You can customize your settings so you only get the news on the industries and assets you care about. This is bloomberg. Shery welcome back to daybreak australia. Fx volatility has been relatively low the past few quarters but that may be coming to an end. Our next guest says the aaroera for complacency is over and Companies May soon pay the price. Great tos now is have you with us. Some Companies Already paying the price. What are you seeing . We are seeing continuous volatility and increasing volatility in the currencies. It is not just dollar against everything but it is intracompanys. They are really getting hurt. You are seeing the largest move in august and the largest currency. The companies that are not acting accordingly and not doing good active liquidity management and Risk Management are really going to get hurt. People need to be on top of it and it is doable. Shery which are some of the companies you are seeing as winners of this volatility and losers . Wolfgang we are looking at the ones that are proactive and understands this. Japan, for example. Companies like that. On the losers side, you have people less proactive that may not have adequate of liquidity management. Apple and boeing. You have the ones that are majorly impacted in china with texas instruments. 44 of the revenue from there and they are trying to manage that with pricing but they dont have the price elasticity. Volatilityall this happening, what is the best way to hedge . What are the companies doing it right, what are they doing . Wolfgang they are the ones looking at what their exposures are and know how to read that properly. What is very interesting, this is part of the increasing active liquidity, it is really the way the governments will start coming out with electronic currencies. That will mandate what companies will be able to do quicker. No more today settlements, now it is immediate. How do you manage that process will be a change. The fundamental reasoning, whether it is currency, cash, they need to have access to that data and they need to be able to manage that. The core values, having visibility for the data. You say the u. S. Is making a big mistake by not developing its own digital currency. Is that the reason why . Wolfgang i think that is a mistake and you are seeing a lot of governments doing it and quite frankly, the chinese are coming out with are we going to launch an electronic yuan . Or in early 2020. That could be a game changer that could be as monumental. Maybe even less than a euro. Liquidity inome the chinese currency increasing significantly at the detriment of the u. S. Dollar because it will be faster and cheaper. The way the chinese are doing it with alibaba, etc is going. To be pretty interesting. Shery what will that do to the internationalization move beijing has been going on for years . Wolfgang it would increase the liquidity significantly more. The value of it is not going to be significantly changed. They will still be driving way past seven to maybe 720. From a volatility point of view, it will be equal or worse. The increase will be worse because people can react faster and they will. Shery what do you expect when it comes to the level of the chinese yuan that has surpassed the seven level . Do we expect more stability . Wolfgang i dont see it. It is really not be predicting, i am talking to a lot of ceos and cfos around the world. They are concerned about this. They are very proactive about it, japan as well. I was in london yesterday and most of last week. All of these ceos and cfos are saying we need to understand it. We cannot bet on whether the chinese currency will go back under seven or go to 7. 20. We need to have to understand how to address this. Potentiallyre ceos preparing for a strong japanese yen because we see these calls on the long yen . Wolfgang in japan, you have seen them kind of behind digitization. The government said by 2025, they want all these corporations to be digitized. Really being up to par. They have this initiative where they have been a little behind but i have been amazed at the energy in japan. We spent a lot of time Walking Around tokyo and see more companies, but it is amazing the Energy Behind it and saying we want to do this. They are very proactive towards really understanding it because they know to your point, that is looming. You have a stronger yen. Shery pretty positive on those japanese stocks. Thank you for joining us. If you missed any part of this conversation, tv is your function. Catch up on past interviews and watch us live. Dive into any of the securities or bloomberg functions we talk about and become of the conversation by sending us instant messages. This is for bloomberg subscribers only. Check it out. This is bloomberg. Paul oil search has appointed the head of the alaska business as managing director to help the billiondollar expansion of gas projects in pop in new guinea. He spoke to karen wolf about his strategy. Fortunate to have them very involved with the company. Still managing director until next year. Will be involved with the company as an advisor through august, still be involved with us as we go through the process of advancing the lng projects. In regard to the companys direction, we have some great products in new guinea and alaska. The focus of the company will be delivery of those projects. It is a continuation of the same strategy. Your relationship with the government is really key. A better deal for the resources project. Are you willing to make compromises . Arean the projects operated by exxon. The project has been a significant success and we will see material revenues and money coming into the country Going Forward. I think the reality is the discussions with exxon will be important and everyone is focused on an outcome that is mutually beneficial. Role ofbe playing the mediating and being in the middle of it between all parties. Paul where do you see that started . Exxon and the government with talks going with the gas plan . Keiran the conversations are going on as we speak. The parties are focused on an outcome that is mutually beneficial for all parties. Paul a final Investment Decision for the lng project not due until 2021. It looks like a slippage. Is this political turbulence . Keirna a lot of work has been done on both of the projects. A lot of the engineering. These are not greenfield projects. The expansions of existing projects. Still looking at the same startup timetables. We are confident that it will still be maintained. Paul lets get a quick check of the latest business flash headlines. Four Payment Companies that joined facebook is said to be having second thoughts. Visa, mastercard, paypal and strike are increasingly undecided about signing libras charter, worried about maintaining relationships with regulars. The company oversold the expense. Ceo has survived this by scandal that saw a longtime confidant leave the bank. An internal memo seen by bloomberg that says the shadowing of the former executive was deeply regrettable and has hurt the reputation of switzerlands second largest lender. Saying there is no evidence he knew about the plan. Won certification to fly drones under regulations to airlines, allowing it to expand airborne deliveries. The faa has given the courier permission to use drones at hospitals, universities and campuses which is a major move forward. The aircraft promises to reduce carrier costs as the surgeon online commerce increases demand for online deliveries. Shery in the next hour, tim strathmore joins us to discuss the state of u. S. China relations and the ongoing impact of the trade war. Paul that is almost it for daybreak australia this morning. We have trading in new zealand to come. Undergoing in a couple of hours, off one third of 1 . In australia, set up for declines of more than 1 after the disappointing factory index read from the u. S. Markets lower. All the action coming up in a moment on daybreak asia. This is bloomberg. Under one hour away from market open in australia, japan and south korea. Shery good evening from new york. To daybreak me asia. Paul our top stories this one day, warning signs are flashing. The World Economy sounds the alarm as new data shows manufacturing exports stop