President trump urged his former secretary of state to help the clients of lawyer rudy giuliani. Syria. Of airstrikes in u. S. Senators lead the growing criticism threatening sanctions in response. Shery lets get you started with a quick check of markets appeared u. S. Futures being pressured right now, down 1. 2 after that South China Morning Post report that there was no progress made between deputy level talks between the u. S. And china. We have seen stocks pair back some of those earlier gains in the regular session in the afternoon as we have gotten another report saying that china is trying to play down expectations of progress. The s p 500 managed to end the session higher after two sessions of losses, gained. 9 . We have cap and Energy Leading the gains tech and Energy Leading the gains. Members showing a little bit more worry and concern over the growing gap between Market Expectations on easing and their own projections. To the u. S. Turning cpi numbers out tomorrow. Lets see how markets in asia are doing so far. Bracing forould be a riskoff session with minister level talks to the u. S. And china reportedly to be cut short. But chinese delegation unable to persuade the u. S. To consider a halt on terror increases october october 15. Creases nikkei futures taking a tumble, 1 in chicago. South korea is likely to play catch up to the moves we are seeing to the downside. I want to jump into the terminal to show you some moves across assets. We have the offshore yuan trading weaker by. 4 against the dollar, trading back above the handle. The yen, given this riskoff mood, gaining ground against peers, trading at 107. 09. A move in treasury futures by 12 tics. It is set for a fourth day lower this morning. Lets check in on commodities that are reacting. New york clued under pressure, off one point 5 , falling below 52 per barrel. Gold gained ground, rising against the dollar. Paul. Paul thanks, sophie. Lets check in on the first word news now with ritika gupta. Ritika the latest fed minutes show policymakers were debating how far the rate Cutting Program should extend even as they lowered rates last month. The fomc met on september 17 and 18th and said members agreed that Downside Risks to the economy had increased since the july meeting. They blamed uncertainty at home amid the trade war and deteriorating conditions in the wider world. The fallout from the protests in hong kong is threatening to spread to apple. The communist partys flagship mouthpiece is the peoples daily and it has blasted the company for approving an act that tracks app that tracks Police Activity in hong kong. They say it facilitates illegal activity. Apple has been put aside for allowing itunes to carry a song that has become a rallying cry to demonstrators. The prime ministers of the u. K. And ireland are to meet later thursday for talks that could seal the fate of brexit. Boris johnson and leo bracco will explore whether they can get compromise over the irish border. The u. K. Is set to leave the e. U. In three weeks without a deal. Negotiations have stalled as the rival camps blame each other for the lack of progress. And italy has sold 7 billion of bonds, more than double its initial estimates, in its first offering of dollardenominated securities since 2010. Nation received orders above 18 billion, helping it widen its Investor Base by attacking the u. S. Market. Bloomberg data shows it is part ofthe offering, 2. 5 billion bonds and notes. Pg egling utility plummeted in they trade after a judge stripped away its exclusive control over its restructuring. The decision reverses an earlier ruling that denied bondholders a leading role in any turnaround. Pg e is preparing for the next phase of its unprecedented blackout across Northern California to ensure its inipment doesnt spark fires windy weather. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Thanks very much. U. S. Futures are under pressure after the South China Morning Post said washington and beijing have made little or no progress in deputy level trade talks. Lets bring in our china correspondent, Tom Mackenzie, and senior trade editor sarah mcgregor. I want to start with you. I have a report from the South China Morning Post that the deputies meeting went so bad, the principals meeting will be shorter. What more do we know . They will be cutting short their visit by one day. The deputies have been putting the groundwork in play ahead of meetings between liu he and his u. S. Counterparts. They have made no progress essentially. The fourth tech transfer was not notorced tech transfer was discussed. The only things they talked about, it seems, are agricultural purchases and intellectual property. And crucially, china failed to persuade the u. S. To agree to holding off on those additional tariffs, october 15, so it does seem that unless there is a radical change in tone from these two signs, and massive progress achieved in the next 12 to 24 hours, it does seem we are looking at additional tariffs. Then again, potentially, december 15 as well. Shery would it be fair to say that not much has really changed when it comes to the demands from both sides since the talks broke down in the spring . Sarah absolutely. I think we there were question marks even this week where the starting points were for the talks. Of course, they accused china of reneging on those commitments. The u. S. Wanted to go back to the text of that agreement, but china, as we have seen from reporting and our own sources, has said it wants to take those big issues like state subsidies and ip theft off the table and go for some low hanging fruit, so you know, i think the fact back going in,is there is not much progress being made at the executive level, it is not surprising. There is progress, once they sit at the table facetoface. Perhaps trump himself can intervene. President donald trump will be there tomorrow. We will have to see exactly how this plays out. It will be interesting to see the statements they release and if they are able to keep the talks going thursday and friday. Paul you mentioned the music heading into these talks. It was pretty dreadful. We have the blacklisting, the band, all sorts of other headlines as well. What was the intent here . It certainly did not look like the u. S. Was trying to set things up for a productive meeting. Sarah absolutely, at least the perception of it was that the u. S. Seemed to be sending a message to china that they have a lot more leverage than maybe beijing might have or, you know, they have plenty of sort of tricks up their sleeves, it seems. Of course, i think the Trump Administration would say that all of these actions that have taken place, like the subbands bans, it was acquainted a coincidental happening. It is hard to imagine they take place in isolation. Paul shery it seems china has big leverage as their fight continues over freedom of speech. What do we know . Issue, thisole whole controversy, added to the acrimony you have been talking about. You discussed the blacklisting of the companies, the proposals around reducing investment to focus on u. S. Investment in chinese equities, of course, but in terms of the scandal, that is adding to the bitterness for these two sites. You have seen them lose all of its sponsorship partners. We have seen Major Companies like tencent all cutting their ties to the nba on the back of ins scandal by the tweet support of prodemocracy protesters in hong kong and the nba have refused to apologize for that and they continue to face this backlash. This is a major week for the nba in china. They planned to have exhibition games in shanghai. Russian marks over question marks over whether these games will go ahead. We will look at the impact for the nba. They have 800 million fans. It is not just the nba that suffers, but china and its image on the global stage. You see this and the democrats, the republicans, and others in the u. S. Thes another sign of belligerence that beijing can stoop to when it tries to get its way on these issues. Shery Tom Mackenzie and sarah mcgregor, thank you so much on the latest for chinau. S. Trade talks. Wilbur ross will be speaking at an event in sydney later thursday. We will bring you that speech on bloomberg markets, the china open, so due to an in then. Do tune in then. Demandingn washington immediate sanctions. The president , erdogan, says Ground Troops are in syria after a wave of airstrikes on kurdish forces. Lets cross to washington, and joe sobczyk joins us now. Warning turkey that there will be more than sanctions if turkey ask inhumanely acts inhumanely. Have a decided what inhumane will actually mean . We have seen conflicting measures on syria. Joe the president gave no indication of why there is an when it will be crossed. He said, rather, without specifics, that the u. S. Would wipe out their economy. If the turks were to wipe out the kurds. But nothing about whether there whaty scale there for might take place. The president of the u. S. Is under pressure from some of his own allies in congress over his decision to give turkey essentially a green light to go in. U. S. Officials say, no, they intended no such thing, but the effect is that the u. S. Has pulled out its forces from that area, letting turkey go. It is something that has wanted to do for some time, because it regards the kurds, who have been a u. S. Ally, as a threat to their own sovereignty. Still some issues to drop here, seeing what the turks actually do. There is legislation being proposed in the senate, bipartisan legislation, that would impose sanctions on president erdogan, ministers,nd other officials of turkey unless the Trump Administration can certify that turkey is not a syria, so there will be number of additional steps taken. More proposals as well as we go forward. Aside from that legislation, has there been any other political pushback against President Trumps pivot on syria . Joe he has been coming under criticism from a variety of republican senators who ofically are a bit shy criticizing the president for fear of the political consequences. That. As broken the dam on some very strong allies of the president , including lindsey others, whoseveral have been very supportive of the president in the past. But this is Foreign Policy, and this particular policy of essentially abandoning the kurds has really struck a chord among lawmakers in washington. Shery joe, bloomberg broke this story just a few minutes ago. President trump urged a top aide to help his personal lawyer, rudy giulianis, client, from facing the doj. What do we know . Place when Rex Tillerson was the secretary of state, and according to people familiar with the meeting, the president asked him to tillerson, that is, to lean on the Justice Department a use up on a case involving turkish trader who was accused of trying to circumvent sanctions on iran. Tillerson refused. The sources say other people in the room, some of the people in the room, were shocked by it. He did not go ahead and make any effort to that, and the Justice Department continued with its prosecution of the case. It is another example of the president and the influence of rudy giuliani, who was also representing this trader in the case. Mixing some personal interest with potentially Foreign Policy and u. S. Policy. It is liable to create another congress, especially we areemocrats, and teasing out some of the reaction now. Shery joe sobczyk, thank you so much. Our Congress Editor joining us from d. C. Still ahead, pg e triggers its biggest ever intentional blackout to keep powerlines from sparking wildfires. What does this signal for the Energy Industry as a whole . Paul next, u. S. Stocks rose on optimism that the u. S. And china will make progress in trade talks despite conflicting signals beforehand. He iskudlow explains how navigating the unknowns. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Australian stocks are trading to the downside. Lets get over to sophie for one big mover. Sophie that is materials firm aurora. That would be the biggest jump since december 2013, when the Company Listed in sydney. This listed after it agreed to sell its packaging operations for 1. 7 billion australian to japan the palm paper. N paper. The deal to be completed by early next year. Overall the wants to focus on the bargaining unit as well as the north american business. Shery joining us now to discuss the Global Markets is main state Capital Management founder, ceo, and chief investment strategist, david kudlow. Ecodataeen the latest out of the u. S. Showing some downside when it comes to manufacturing and the nonmanufacturing services sector. Will this have an impact on how you make your Investment Decisions as we see more risks rising . David yeah, when we look at the risk to the market, it is really in the manufacturing sector. Members,t the ism Manufacturing Index and the services index. They have been deteriorating, and the Manufacturing Index has been in a recession for a while now, but both of those picking down. We look at the ticking down. We look at the labor market and the consumer, both positives for the economy. The labor market has been strong. Consecutive months of strong numbers. And an unemployment number for september that was the best and 50 years at 3. 5 . Economy inrds of our the United States is based on the consumer and the consumer remains strong as well. That could change with what is happening in the trade talks and the tariffs that hopefully could be avoided later this year. Consumers impact significantly in september and that was delayed from september 1. For now, as we look forward into the Fourth Quarter, we are looking at what hedges we need to have in place and portfolios for those circumstances. We have those mixed data. We are constructive on the market for now. And keeping those hedges in place. Shery tell us about those hedges. David so we think it is important right now. We still like secular growth stories Like Technology for days for this late in the bull market, even though september was good for cyclical stocks, valueoriented stocks, secular growth stories, technology, those are the place to be. But for hedges in your portfolio, there is an opportunity here with the fed lowering rates, with the markets globally bringing rates down, theres real opportunity in Real Estate Investment trusts that have done good in 2019 and 2018. They are interestrate sensitive and the fundamentals and real estate are very good. A lot of days and weeks and months, where we see red in our portfolio, and in our stockport are positive, outperforming the s p 500 this year. Another area that has done well, a good hedges since june is gold. I am not particularly a gold bug. A hedge in our portfolios part of for the past performance, gold has worked well as a hedge. With rates continuing to come down, the Interest Rate sensitivity, we benefit from as well. We have the same. We want to hedge against risk but not against making money, and those hedges have actually done as well or outperformed the markets, which are still doing well this year in the u. S. , so we can hedge our portfolio, diversify our portfolio, and not compromise total return. Paul david, you point out that markets have been doing well in the u. S. , but i am wondering how much of the credit for that can you park at the door of the fed . Is there a real test coming . I want to bring up this chart on the bloomberg, which Shows Companies guiding earnings lower. Now, the highest since 2016, so what are your expectations for when the rubber really hits the road with earnings season . David well, and that is concerned. We have two quarters of negative earnings growth. Earnings contraction. We are looking at a third quarter. Right now, consensus estimates are at earnings contraction on about 3 revenue growth. That just happens to be about the average beat that we get each quarter in earnings, is 4. 1 . I do not know that we will get that this quarter. We will end up about flat. But we typically do outperform, but either way, we are looking for the Fourth Quarter earnings and into next year for earnings to improve and we are always discounting the future. We might have another quarter of negative earnings growth, may be flat to slightly positive, but we are looking for earnings to improve as we move into 2020. As you said, the fed is on our side. That is the difference between 2018 and 2019. We almost had a hostile environment of the effect, certainly in the Fourth Quarter. Part of the massive selloff we had, 19. 5 for the s p 500, and this time last year, the Fourth Quarter of 2018, and that almost, like clockwork, when the calendar changed from a january 4, the fed turned devilish. It has been and remains. We have had two fed rate cuts and expect another one in october and maybe one more before the yearend. That is liquidity for the market. We say it is questionable about what it means for the economy but we know it is hard for the stock market to fight the fed. It is beneficial for stocks and for bonds. Sol david kudla, thanks much for joining us today. Plenty more to come on daybreak asia. This is bloomberg. Paul lets get a quick check of the latest business flash headlines. American airlines has abandoned any hope of using the 737 max plains this year and is following southwest in dropping the jet from its schedule until at least 2020. Americans canceling 140 flights a day with two dozen max aircraft unable to fly. The carrier warned the grounding would trigger a reduction in thirdquarter pretax earnings. Shery boeing is facing another round of grounding, but this time for an older version of its 737 max planes. More than 5 of older 737 jets were found to have cracked where s wheregs meet crack the wings meet the fuselage. The faa called for global inspections. Of course, if you are away from a screen, you can also listen to us through the Bloomberg Radio app. Bloomberg radio app plus or bloomberg. Com as well. This is bloomberg. Ritika this is daybreak asia. I am ritika gupta with first word headlines. President trump is embroiled in new controversy with sources saying that two years ago, he pressed Rex Tillerson to intervene in a Justice Department criminal case. We are told the president wanted tillersons help in dropping action against a gold trader who was a client of rudy giuliani. We are told tillerson refused, arguing it would constitute interference in an ongoing investigation. Trade talks are set to resume in the coming hours with china said to be open to a partial deal if the u. S. Eases up on its terror threats. Tariff threats. Negotiators are not optimistic about the agreement to end the rumbling trade war, they would accept a limited deal as long as upcoming tariffs are called off. China would offer concessions on farm purchases whilst not giving in on major issues. The nba is on the ropes in china, having lost almost all its major mainland in the fallout from a tweet supporting hong kongs protests. Is the latest to distance itself from the league, joining chinas top sportswear maker, and a leading smartphone brand who have already canceled their nba titles. Preseason games may be canceled. Turkey says Ground Troops have moved into northeastern syria after hours of airstrikes against kurdish forces. Local Television Shows coming under attack. Widespread in for condemnation. President trump had initially indicated the u. S. Would not oppose the attack on a traditional american ally but has since threatened to wipe out turkeys economy if it wipes out the kurds. The latest fed minutes show policymakers were debating how far the rate Cutting Program should extend, even as they lowered rates last month. The fomc met on september 17 and 18th and the minutes say members agreed that Downside Risks into the economy had increased since the july meeting. They blamed uncertainty at home amidst the trade war and deteriorating conditions in the wider world. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Shery. Shery thank you. Australian markets have been training for half an hour now. Lets turn to sophie for what to watch on markets. Sophie checking in on sydney stocks, the asx 200 just extending wednesdays decline ever so muchly. Industrial tech and financials help things to find some support. The aussie dollar off by. 2 , falling on this dampened trade optimism. Aussie yields under pressure here with the 10 year yield at about 87 basis points this morning, and the aussies sad fate fourth session of losses. The positives are fitting for the currency. And the upside is looking capp by the ongoing the easing of the rba. Given the trade woes, i want to highlight the offshore yuan, jumping to the terminal, if we could. It is losing steam as we are seeing an erosion of trust between the u. S. And china had of the Ministry Level clocks taking place in d. C. On thursday with nodeal. The offshore yuan hovering around 7. 16 against the dollar. I want to highlight some stock movers around sydney. They are selling the packaging unit and the company is expecting to return 1. 2 billion australian dollars after that sale, but a biofarma company is giving back some of the 60 top. Highlight ato Mining Company losing 10 this morning after seeing a key processing component has been taken off line at its gold in mali, which may impact output. Shery we turn now to the latest developments at pg e. Shares plunged in late trade after Court Rulings on this restructuring and that came as the Company Prepared to cut power across a swath of Northern California. Su keenan is watching this. Can we say that this is essentially a win for pg e bondholders . Su yes and no because there is uncertainty. It is an unprecedented power outage. The court ruling certainly adds complexity to a bankruptcy decision. Lets see the way shares reacted after hours. You know, parties for the bondholders, which included pimco and activist Hedge Fund Elliott management, did win a decision. You can see shares from 27 . A very big drop. That is because the judge essentially stripped pg e of its right to restructure and recover from bankruptcy. Take a look at the way the stock traded in the regular session, and for the past couple days, it has started to rally in a very big way as investors seem to shift into the utility. A still has a lot of value as public utility. I want to give you the big picture to give you an idea of the wrath ride pg e has been on. You see the steep drop where it filed for bankruptcy and reorganization after being found that its powerlines had liability for the huge wildfires at the time, and that resulted in some fatalities to manage all the liability that it was encountering. It filed for bankruptcy. The fight is over the reorganization plan, which again, the bondholders appear to have won this latest round. The shutdown of power, which began earlier today and continues through the evening in three phases, has put Northern California somewhat in chaos. Everyone agrees they want to avoid these kind of wildfires. There are conditions right now, high winds that could result in wildfires. The way it is playing out is still an unknown. More abouts some some of that chaos you described. Those are going to have a huge impact, the shutdown on homeowners and businesses, isnt it . Eight hundredrom thousand businesses and homeowners, up to 3 Million People impacted. Lets look at the area of Northern California we are talking about. Part of the chaos is in advance of this blackout. The actual businesses, school districts, and residents, did not know and did not get a lot of information on who would be impacted. We do know that San Francisco and silicon valley, for instance, would be spared, but areas such as berkeley and other areas of Northern California valley, aren napa implanted by the blackouts. What you are looking at are some of the fires that occurred last year and the year before that resulted in the bankruptcy. Now, wineries, which are in the napa Valley Northern area that will be impacted, actually are going to need some generators, but there are some pointing out that there will be a silver lining. They are going to do a little later than normal harvest that could result in a lot more fruitful and balanced, more flavorful wine. That was one of the estimates. In terms of insurance losses, we probably will not see great losses. In terms of the loss of business at the end of their issues, the estimates are that it could be anywhere from 2. 5 billion for a two day outage upwards of 6 billion if it goes to a five day outage or longer. Again, pg e and not certain how this is going to play out. They are doing in three phases and they did delay the second and third phase because the winds died down earlier in the afternoon, but that is the story from here. A very fascinating development, completely unprecedented. There has never been this kind of power outage in Northern California and some are saying this actually could be, an almost annual event because of the ties that were determined between the powerlines in the wildfires in the past two years. Paul all right. Su keenan, thank you very much for that. Is has continued continuing to drift lower from its september spikes, despite the mounting geopolitical stress in the middle east. Bob dudley told us why he thinks the markets are shrugging off the concerns. In what aramco did restoring facilities and fixing things and getting flows back up very, very quickly, and at the same time, announcements of stores levels around the world, u. S. Said they released if needed, it just calmed everything down quickly. I think the markets are generally in balance. I would not say there is so much oil around the world. A little bit of economic slowdown of course is happening now. Opec class are doing a good job at regulating the price. So i think the world is healthy when you do not see the suspects. Are you worried that you spend so much of your career rehabilitating bp that it might just be fruitless given the space we are in now with the climate debate . Royalere in london, the Shakespeare Company decided to drop bp as a corporate sponsor. What is your reaction to all of this . Bob this new environment will create lots of opportunities for companies that adjust to it. People want an instant solution on everything. Our investors want us to do lots of different things. We will be like other companies as well as, leaders in the space. The Energy Companies of the future, we call them oil and gas do wind, solar, biofuels. We have thousands of people working on that. Bp has lots of opportunities. What is your advice to the incoming ceo . What is your advice to the incoming ceo . Bob he will be focused on the fundamentals are bring your team along together, which he will do. And then, it is just going to have to and he will do it great just be really dedicated to the job. Bp has a great reputation around the world. I am really happy. Passing the baton on. No drama. [laughter] companiesl and gas are not complying with the paris climate agreement in the sense that they are not taking on the omissions or accounting for the emissions of their customers. Do you think that is something bp will consider in the future . Bob we continue to drive down the Energy Efficiency of our products. We do that with fuels, we do that with lubricants. We have not set a target out there. When people say this, they talk about two different things. The Energy Efficiency of your products. Some people want you to put an absolute number out there. Scope three is defined in several different ways. We are on that path, and we want to make sure when we set a target that we are really clear on it. Do you consider the omissions of your customers, do you take those into account as well . Bob japans on how you do it depends on how you do that. A family of four comes into a petrol station with a small car to drive to birmingham. Something comes in a big suv next to them to fill out. We are not fill out. We will not say we will not sell it to you because your Carbon Footprint is out of line. This has to be Consumer Preferences and markets before we can actually say an absolute number. I dont think that we are different than that. Some companies are actually taking on the emissions of their customers, accounting for those emissions. Bob i think you are dictating who you sell to in the future and it is unknowable. Talking about gas really being demonized on the coast of the United States and in europe. Some climate activists are misguided. What is the risk to your business . Lots of world will need gas. I hate to see it shut out of markets where it is going to be the only way of reaching the climate goals. I spent a lot of time with this. The world has turned its back on nuclear, the ultimate renewable. We need as much renewables as we can in the world, but the only way to get there with gas, we need to clean it up. And then, you sacked in the wild out a hydrogen economy, carried a lot of it by natural gas, which the Hydrogen Molecules qt carbonized it. That is the future. I am optimistic we will get there. Bob dudley there. Still to come, we will be joined by j. P. Morgans global head of Corporate Banking from shanghai and we will discuss the impact of trade war is having on business. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Each year, the jp morgan cfo highlights the challenges and opportunities for corporates across the region. Bloomberg television again has exclusive access to the events and Stephen Engle is there. . O how is the mood stephen we have so much to talk about. Lets get right to it with our first guest this morning from the jp morgan cfo asiapacific cfo treasurers forum. We have the global head of Corporate Banking. Thank you so much for your time today. What should be foremost on investors minds as we approach 2020 . Lots of volatility are in the world. It will be volatility out in the world. Low unemployment. Not being able to pass on these extra costs. The margins are squeezing. High corporate debts. Altogether, some weakness is there. Then, you get the trade war, which has hurt growth both in the u. S. And china. Down thereally slowed sentiment in the world, the willingness for companies to invest and to do capex. Growtht will take. 5 of off Global Growth. Stephen they have been optimistic. Has beencoldwater poured on that. A new report saying the deputy level talks youll but no progress. Those reports are unsubstantiated, however, because they do not have an attribution to who is making that assessment, so we do not know necessarily until the highlevel talks begin. But what are you hearing from your clients . How concerned are they that this will be a protracted it has already been a protracted Stephen Stephen dispute. A protracted dispute. Sjoerd it is not going to resolve the issue. We see clients living with this tension. We see a shifting of supply chain and we see people moving there. You know, to try and be more resilient to any of these sort. F trade problems shery do you think a scaledback deal is better than nodeal . Stephen that will bring some peace of mind. We have more trade tensions than less. You see that not only in china and the u. S. , but overall, a rise of nationalism. Some of these critical importexport channels. Stephen how is it impacting what jp morgan wants to do in china . We have heard jamie dimon talk extensively about wanting a whollyowned unit here in china on thee jp morgan logo skyscraper and the like. We got a march approval for u. S. Securities. Joint venture to get majority control. By 2020, by next year, you could apply for 100 . Does the trade tension make you have pause . All. En sjoerd not at china is a onceinalifetime opportunity. There has never been a place that is so big compared to our home market. We are leaning forward in terms of investing and current trade dispute is changing nothing to that, so we want to be on the ground. Adding people and adding capabilities. Having your own Security Firm is part of that. Stephen being onshore would be more beneficial than not. Sjoerd onshore in all countries all relevant countries. That is our view on life and mission in life. We want to Service Corporate set to business around the world and from out of companies and clients of ours, china is hugely important. We want to service them here with all the needs they have. Stephen what is your clients Risk Appetite now . Sjoerd globally, it is less. That is what has been shown by the significant reduction in capexx. And respect to china emerging asia, this part of the region is growing the highest, two times the speed of Global Growth, 2. 5 times the u. S. , four times the speed of growth. Peoplell be a place for to invest, including in china, where clients are trying to be more on the ground so they can produce locally. Stephen do you see that this is going to be a protracted fight, something that will not be resolved in the next year, may be what some of us called vinny normal the new normal . Sjoerd many of us are it would be resolved before the u. S. Elections because we thought it would be beneficial for the u. S. And china to resolve it quite quickly but we have learned that the issues are deeper. And i dont think anyone sees a clear, clean path out so i think we will have to live with a smaller deal, but still with some limitations in place. That will linger in the background. Stephen you are based in the middle east, in dubai. A number of flashpoints there as well with the tensions in syria, with the saudiiran tensions, what has happened in iraq, the tensions in southern iraq, a big oilproducing region. Could this be the flash point the oil markets right now . Sjoerd i have been living there for seven years and we have had geopolitical issues throughout these years. They flareup from time to time. I think they are manageable not to be honest. The biggest thing is oil. With Global Demand slowing them down next year, oil will come under pressure. It is beneficial to some countries, but for that reason, it is not necessarily helpful. There is the economic transformation, particularly in saudi, but there will be less money to support that. Stephen how about quickly on the fed . They seem to be split with the latest minutes being released. Would progress on the trade front lessen the pressure to cut further . Sjoerd i will qualify that with saying i am not an economist. I am floored by the change. Last year, 10 . We were worried about rate hikes. Today, 1. 5 , and we are talking about how many rate price, not whether there are rate cuts. Listen, if the trade war has an impact on Global Growth, and we definitely believe that, it will be an input to defend. Stephen sjoerd leenart, thanks so much for having a site your conference in shanghai. Have a great next couple of days. Cheri, going to send it back to you. More coming up in shanghai. Shery looking forward to it. Thank you so much. Tune in for more exclusive interviews from the jp morgan forum in shanghai, including the chair of Global Research and china ceo we are getting japans august core machine orders slumping 14. 5 year on year. The estimate was for a fall of around 8 . This would be the biggest drop in five years year on year. This is a leading indicator of investment. We are seeing august orders slumping 14. 5 . Even a bigger slump than what was expected. Also, we are getting the factory inflation numbers. Ppi, year on year, contracting 1. 1 . We are now seeing three consecutive months of factory inflation. Year for thear on month of september contracting 1. 1 , which was in line with estimates. We will have plenty more coming up. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. A Company Announced faster than expected growth, brushing off the impact of the protests in hong kong. Third Quarter Sales rose almost 20 . Despite the drop in Chinese Consumer spending in hong kong, the group made up for it with improved sales in europe and the u. S. Paul american Videogame CompanyActivision Blizzard is facing an online backlash and calls for a boycott after one of its units punished a player for supporting the protest movement in hong kong. They banded the player from its grandmasters esports competition for a year and withheld his prize money after a hong kong protest sloping during a webcast. Shery is moving production out of china for all of its Health Trackers and smart watches to avoid u. S. Tariffs on imports. It is not the only American Company shifting operations to cope with the trade war. They are looking at mexico, malaysia, and vietnam as future manufacturing hubs and they also consider moving operations back to the u. S. Markets open in tokyo and seoul at the top of the hour with korea coming back from a holiday. Lets turn to sophie for what to watch and markets. Sophie. Sophie nikkei futures are under pressure. Looking like a classic riskoff day in the making in the wake of the report slashing cold water on enthusiasm. Treasury futures are jumping. A three to five basis point drop. Japan, we will be gauging reaction to machinery orders, which slumped more than expected, 14. 5 year on year. The government is maintaining its use that that may add to be glum outlook with the tech bellwether. Watching asahi. The winners of the nobel prize in chemistry. Much more coming up on the next hour of daybreak asia. The market open is next. This is bloomberg. Good morning. Good evening from new york, im shery ahn. Sophie and Sophie Kamaruddin in hong kong. Im Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Our top stories this thursday, trade talks return. Negotiators will meet. China may be exempt from partial deal. The partial deal. President trump urged the secretary of state to help the client for rudy giuliani. Against the hong kong protest to eat. We have japan and south korea coming online. Sophie . Food for thought for the boj upcoming meeting. The nikkei 225, little change. Up gaining ground 2 10 of a percent, rising this morning. , traders jgb 10 years focusing on 30 year options amid wariness of the boj. Lets check in on korea, back from its off of it day holiday. Alphabet day holiday. It is back above 1200 against the dollar. We will keep an eye on samsung today. It is to announce a 13 trillion investment. Plus, the south Korean Industry Ministry released their data for the third quarter. Lets check in on the shift for us a stocks. Up for tenths of a percent. Aussie stocks. Up for tense of a percent. 10ths of a percent. Aside from that, Australian Investors will have the data to consider this morning. A quick check on other assets, checking in on the s p, off by about 2 10 of a percent, easing the earlier drop. Futures up about 12 takes this morning. Were seeing a 10 year treasury yield also off by about two basis points this morning. Yuaning in on the offshore , earlier bridging 716 against the dollar. 7. 16 against the dollar, now trading at 7. 15. They could allow the offshore you want to break through. Paul thanks, sophie. Lets check in on the first world news. First word news. President trump is involved in a new controversy, pressing the secretary of state to intervene in a Justice Department criminal case. We are told the president dropped action against the gold trader who was a client to rudy giuliani. , arguing it would cause interference in an ongoing investigation. The nba is on the road in china, having lost almost all of its major mainland assets from a tweet supporting hong kongs protest. The partner is the latest to did since himself from the league distance himself from the league. There are fears that preseason games in shanghai and shenzhen may be canceled. The fallout from the protest in hong kong is threatening to spread to apple. Fl communist partys agship has blessed the company for an app, tracking in hong kong. Apple has already been criticized for allowing itunes to carry a song that has become a rallying cry for demonstrators. Policymakers were debating how far the rate Cutting Program should extend even as they lowered rates last month. Members agreed the Downside Risks to the economy have increased since the july meeting. Homeblame uncertainty at and a terrier rating conditions in the wider world. Deteriorating conditions in the wider world. And, talks that could seal the fate of brexit. Will explore whether the two sites can find room to compromise, especially over the irish border. The u. K. A set to leave the eu in just three weeks without a deal. , they arens stalled blaming each other for the lack of progress. Global news, 24 hours a day, onair and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Sherry we are now hearing from south koreas trade ministry that south korea and japan will hold bilateral talks on the dispute on october 11th. They will hold talks in geneva, where there are port restrictions with the wto south korea. Filed a complaint with the wto last month on three key materials. One undere the korean a little bit of pressure. While the nikkei is up 1 10 of a percent. Staying with trade discussions, and the u. S. In china, we are top levelg discussions will proceed as they as planned according to sources speaking to bloomberg. This, of course, after the report that there was no progress in the discussions and the delegation will be leaving the u. S. Early. Lets bring in the chief asia correspondent. We are now hearing from sources that toplevel talks will proceed thursday as scheduled. This point what is on the table . We dont know it has been growing ever tense. We do know it has been growing ever tense. It spilled over into the human rights arena. Had the ongoing tensions in hong kong, the nba. All of that will point to at the very least a lot of stress on broader china relations that may not necessarily lead to a broader trade agreement. At the same time, there has been a consistent signal. There may be some middle ground for a narrower trade agreement on some areas. Perhaps on the purchasing of goods, for example. And perhaps on some Broader Market gestures. A breakthrough deal is certainly quite low. Sherry what has essentially changed since the talks broke down in spring of this year . The discussion points. Releasing to have moved that much. Dont really seem to have moved that much. What is happening here, both , the have the position u. S. , of course, pushing a hawkish trade. China has its own red lines and beliefs. At the same time, the trade war is at the cost of both. A lot of observers think that perhaps both sides are keen on some timeout. That if china can bring something to the table, delaying an increase of tariffs this month, we have another increase of tariffs do made this month mid this month. If they can make a deal, they can take some pressure off the economy. When itg of a winwin comes to the purchase of u. S. Goods. Nothing has changed, per se. No one expects anything to be julie resolved as we head into the u. S. Election cycle. China relations continue to get more complicated. The questions i means the question remains, whether or not a midterm truce can be made. Paul none of the big issues have gone away. There are plenty of small ones i keep piling on. That keep piling on. The nba difficulties in china, apple embroiled with the concern of maps showing Police Movements in hong kong. The song on itunes. It is possible to separate out a broader discussion about trade with the growing censure. Growing sideshow. The underlying theme since the beginning of the trade war is pure trade related issues versus National Security, versus human rights concerns, and of course, on paper, the u. S. Commerce Ministry Officials say the move against the Tech Companies accused of human rights, that is not linked to the trade war. It is portrayed as a National Security issue. It is hard to know if they are all separated or part of the mix. Trumpt comes to president and his ability to cut a deal, there is the potential to give and take on certain issues. Most of the focus is really on whether or not there could be progress on the merchandise side of things and maybe progress on the Market Access or opening of chinas economy for foreign competition. None of those are going to resolve it this week for anytime soon. Paul the chief Asia Economic correspondent, thanks for joining us. The u. S. Commerce editor there u. S. Commerce secretary will be speaking in sydney later on thursday. We will bring you that speech live on bloomberg. President trump is embroiled in a new controversy. Sources are saying he press the former secretary of state, Rex Tillerson, to intervene in the Justice Department criminal case. He wanted tillersons help and dropping action against the client of rudy giuliani. Looking to less about the details of that meeting back in 2017 . What can you tell us about the details of that meeting back in 2017 . Peoplerding to several familiar with this meeting, it occurred in the oval office in 2017 when President Trump asked thensecretary of state tillerson to help persuade the Justice Department to look into, to try to drop a case against the surrounding turkish gold dealer who was being prosecuted on several charges in new york related to evading iranian sanctions. Those with the charges. According toeting the people familiar, that took place in the oval office, the president asked him to help process Justice Department to take action against, to help a client of rudy giuliani. Rudy giuliani was that the president s personal lawyer at the time, but he is now. This raises all kinds of interesting questions as there is an impeachment inquiry into the president s actions on the july 25 phone call of this year to the president of the ukraine, asking him to help investigate President Trumps rival, joe biden. Political rival. There is a lot of questions here about the meeting. One of them is, did the president really understand what he was asking here . Was he trying to sort of test the limits of president ial powers . Sherry you mentioned the concerns with ukraine. This also related to concerns about the president s relationship with turkey and president erdogan. What do we know . Been secretary of state tillerson said he would not do this. Venturesd and told the the then chief of staff about it. That is important to note. It does raise questions about the relationship that the president has had with the turkish president over the years. At one point, the president was present for the release of the gold trader. This was before he cut a deal. At that point, he was pressing for that. This comes as President Trump made the order to remove troops, the u. S. Troops on the border of syria and near the border of turkey. That has not really concerned a lot of people on capitol hill about that move and whether President Trump is effectively allowing the turks to have an incursion into that area, syria. Lots of questions raised here. We have not heard from the president about this. Sherry joni schneider, thank you so much for that. Still ahead, we are joined to assess the impact on the blacklist and other chinese tech firms. Paul we are back live in shanghai at jpmorgans apex cfo and treasurers form. We are joined by a guest, next. This is bloomberg. This is daybreak asia. Im sherry and in new york. Paul im paul allen in sydney. Stocks are fluctuating. Lets check at what is happening in tokyo this morning with Sophie Kamaruddin in hong kong. Sophie the Clothing Store operator is raising is raising. I want to highlight the shares rising after the honorary fellow won a prize. Bloomberg sources maintained that thursday highlevel talks in d. C. Will continue as planned with chinas vice premier for meetings. Sherry thank you so much for that. Jpmorgan is helping their six annual apex in shanghai today. Lets head back there for more exclusive access. Stephen engle is there for us. Steve . We have the terror of Global Research for jpmorgan. Thanks so much for having a fear. The chair of Global Research for jpmorgan. Thanks so much for having us. Importance should investors globally looking at these talks for progress . Miniybe they can get a deal, not a comprehensive deal, but a narrow deal on a couple of issues. I think there is [no audio] an area where maybe china agrees to buy more Agricultural Products like they have done in the past. , if donaldhe u. S. Ofmp is willing to let go that lever, the no more tariffs. The chinese also have the existing tariffs that can be rolled back, the National Security issues that have come up. There is a broad range of issues. I think immediately, we are looking at the agricultural purchases and exemptions they have talked about going through. What should investors be looking for or bracing for in 2020 . Stories, as the big the rising geopolitical risks and deterioration of business, were looking at manufacturing numbers and expansion lows for september. The global has collapsed. Has collapsed. Capex has collapsed. Dominate fed going to the dialogue . Or is it going to be the impeachment proceedings . What is going to be the narrative . Is it going to be u. S. China . Easing,u have seen in total, we are looking at 22 Central Banks in easing mode across developing countries and emerging markets. That is one central theme underpinning the market. The supported asset prices, how much is left that can be done, Monetary Policy is a question. Balancel resume the sheet expansion later this month. When theythe boj in the next meeting, as well. There is less pressure on the fed to cut further. I think the progress is going to be comprehensive. I dont think that alone does it. We have to continue to look at the numbers. There is Downside Risk to the 1. 5 in gdp growth number in the u. S. It is not a recession. We think the next couple of quarters or Global Growth is going to be week. Weak. That is across the board and also looking at asia. Is hong kong on the radar . Should it be . Businesses continue to operate as usual. As normal in hong kong. This has been enduring for a number of months. It is definitely on the radar with a number of other geopolitical issues. Brexit, for example. The european trade discussions, also, with the summit in the coming weeks. How is it affecting flows in your perspective . Capital flow, human capital, corporates moving corporates moving capital . I dont think it has had a effect on capital flows. Capital flows have actually been pretty strong because of the negative yields. You take a look at the global government bonds and one third of it now has a negative yelp, two thirds of europe has a negative feel, yield, making the European Market look more attractive. We will talk about europe, we have not talked about the risks for brexit. Thanks so much. Back to you. Coming up in the next couple of hours, we will have for jpmorgan china ceo. Paul thanks very much. We will have more from the jpmorgan form in shanghai. Dont forget, you can always find indepth analysis on Bloomberg Radio and broadcasting live from our brandnew studio in hong kong. This is bloomberg. Paul thats get a quick check of the latest business flash headlines. ThirdQuarter Sales rose almost predictions. Nalyst Louis Vuitton and Christian Dior had great performance. Sherry Activision Blizzard is facing an online backlash and calls for a boycott after punishing a player for supporting the protest movement in hong kong. The Entertainment Company band the player from his competition for one year and withheld his prize money after he shouted a hong kong protest logan during a webcast. Protest slogan during a webcast. Production out of china to avoid tariffs. Many companies are shifting operations. Tile is looking at mexico, malaysia, and vietnam as future manufacturing hubs and consider moving operations back to the u. S. Next, japanese retailers are kicking off earnings seasons. Seasons. We will ask what to expect upon raising headwinds. Stay with us. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Sherry this is this is daybreak asia. The Un Security Council estimate later thursday to discuss turkeys incursion into northern syria. Troops on out have not as turkeye border came in with widespread condemnation. President trump indicated he would not oppose the attack on a traditional u. S. Ally, but will destroy turkeys economy if they wipe out the kurds. Chineseclose to the team say negotiators are optimistic about agreements to end the rumbling trade war. They would accept a limited deal as long as upcoming talks are called off. Offer concessions on farm purchases and not give in on major issues. President trump is an is embroiled in new controversies, having press the secretary of state, Rex Tillerson, to investigate a criminal case. A drop in action of a client of rudy giuliani. They refused, claiming it would cause interference in ongoing investigations. Than double their initial estimates, in the first nominated securities since 2010. Badly indebted nations received orders of of 18 billion, helping by tapping the u. S. Market. Bloomberg data shows this is of five andoffering 30 year bonds. Pg egling utility plummeted after a judge stripped away its exclusive control over restructuring. The decision reverses an earlier ruling. Pg e is preparing for the next phase of their unprecedented blackouts across Northern California to ensure equipment does not spark fire in hot, dry, and windy weather. Organizes inld cup japan and will hold a press conference in a few hours to outline plans for this weekends matches. See, a typhoon is due to hit the tokyo area on saturday afternoon just as the games are due to kick off. The organizing committee may change the timing and time and venues of the game to make sure they can go ahead. Global news, 24 hours a day, onair and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Paul . Paul lets check in on what is happening on the markets now with sophie in hong kong. Sophie asia stocks are being led lower today by south korea. Kospi, off 1. 6 after coming back from a public holiday. Underrean one is also pressure, while the yen is gaining. Is also underwon pressure, while the yen is gaining. Taking a closer look at the offshore yuan, recovering, coming back about half of the losses triggered by the latest report. The u. S. China talks are to proceed as planned. Futures have paired the earlier gains up about 86. Tenyear year bond futures are back into retreat. A record high of 99. 17. Rising on its earnings. Highlight the sliding in sydney by the most since june, it may lose parts of their contract with 7eleven. Paul japanese retailers are kicking off earnings season. Headwinds originate from the recent tax hike deliver shortages in the ongoing trade tensions. Ey reported earnings in the period. Lets get to our reporter in tokyo. What are the impacts . Reporter compared to the last sales tax hike in 2014 rising 5 to 8 , earning so far earnings so far indicate a muted response to the tax hike. Their Home Appliances sales rose about 40 year on year in august. We may see a boost from that in this result. Sherry we just heard in the past hour from south koreas trade ministry it will be holding talks with japan. Given japans export curve, is that having an impact on japan . Reporter when it comes to the south korean boycott, they are boycotting the japanese goods and products. That can have in fact on south korean business. Impact on south korean business. Analysts have cited south korea slowing sales with price target cuts implemented recently. We may see that play a factor in reports later today. Paul our Retail Companies dealing with japans labor shortages . Are they pushing up costs at all . The labor shortage remains a major concern for retailers in japan amid the aging population. When we think about Convenience Stores in japan, they operate 20 47. 247. They have been taking steps to counter that. Has been cutting costs and underperforming stores. Investors seem to be responding fairly well to some of the efforts. The stock prices of all these Convenience Stores rebounded from the april lows, when labor shortages was really on their minds. Sherry thank you so much for that. Dont forget if you are away from a screen, you can find indepth analysis on Bloomberg Radio broadcasting live from our new studio in hong kong. Listen via the app or bloombergradio. Com. This is bloomberg. Out of japan, relating to the world cup, organizers have called off the match between england and france due to happen on saturday due to the approach towardshoon hitting tokyo as we speak. That match between england and france will be off. Havemeans england will not game time for two weeks by the time they play australia. That should be an interesting game. No other word on the same the other crunch match on sunday. It will be very disappointing to everyone if that were to be canceled. Highlevel u. S. China trade negotiators are set to meet in washington on thursday for talks, working on an october 15 deadline, when the u. S. Is set to raise additional tariffs. We are now hearing from the white house that they are not aware of any changes. The vice premier may travel plans made travel plans. Perhaps, there was no progress at the trade delegation will be living leaving soon. There are ripples across the market. What are we expecting when it comes to trading in asia . I think what we are expecting for the next day or two is more trading like we just had. Talks, got some president was saying that china once a trade deal more than wants a trade deal more than he does. The markets want a deal more than president xi or trump. The u. S. Or china can at least take some of the heat building between the relationship in the relationship between the two countries. The demeanor is that the trade talks will go ahead. It is moving markets quite strongly on a risk on side. We are seeing reports that indicate the talks will not bring much in the way of success. They are sending things back down. There will be a lot of back and forth. Trade at your own peril is the mantra, even more so than usual in the next 24 to 48 hours. Paul a profound example of that was u. S. Stocks closing higher, then bad news. Futures trading weaker. Storms. Had so many fall surprising . Icularly there was also young q4, pur, whichs yom kip sucks some of the Trading Market out of new york. Even without that impact, you are right, you would want to be careful about committing too much. When the situation is the way it is. The expectations, the actual process has been and tone been toned down. We had the nba tweet add to the chaos. The uncertainty and underneath s all, this growing ureness that we will not get some sudden entrance remission the situation. Thebest we can hope for is but he says anything nasty, and the tariff increases due for dont take place, but you dont get some sort of catastrophic breakdown, then you can build on that towards some sort of deal at some stage. The does and some very optimistic, but that is probably the best you can realistically hope for considering the way the two sides have been going backandforth. Some of the rhetoric has gotten quite heated, there have been a lot of once opened wounds opened that will take a lot of time and effort to heal. The question is whether anybody will make a start on that effort. Paul indeed. Expectations very low. Thanks so much for joining us. You can follow more on this story and the days trading on our blog on the bloomberg. You can get a market rundown with one click. You can find out what is affecting your investments right now. Lets turn to one story related to the trade talks, the blacklisting of a number of chinese Tech Companies by the Trump Administration. Targetedem says being by the u. S. Will not have important effect on their production. Effect onrtant their production. Not much of an impact, why is that . Think they have been expecting this for almost a year and preparing for it. They have done a few things. They have built up the inventory. Also, even before the trade war started, they have been viewing the supplychain relying less and less on u. S. Components. The two factors together allowed them through this difficult it, and there will be a lot of revenue and profit impact on the company. There is an opportunity here. Do you have a price tag on hik vision . About 43 r b. The shortterm impact will be smaller than investors generally assume. Most of the competitors of hike kvision are not as well prepared as they are. The dynamics may turn out to be favorable to hikvision. Sherry we have seen the huge impact blacklisting huawei has done to the company. Can we make a comparison with these companies with what happened to huawei . My overall assessment is, the surveillance industry will be with thehan the impact highend smartphone industry. The components the industrys need are quite different. There is a lot of lowend components that are replaceable, that is not the case for huawei and also the time that hikvision had was longer. I dont know that much about impactsbut hikvisions will be smaller. Sherry we have seen, for example, the plant ipo. Planned ipo. They need financing as well. I dont think it will go to the extreme, but if you look at vision,ership of hik declining over the last 12 months, the impact is already there. People realized the impact is smaller than they originally assumed. Some may come back. Point, lookings at Companies Like hikvision, there is an ethical question, as well. Do they provide security or tools of oppression . I think that is a quite difficult question. With the company said is, they are only providing the Maintenance Service to the project. Because they really care about advocating toward the company, they are willing to pull out from some of those projects. The company also said no matter they did to avoid the situation, it does not think that from the u. S. , they are really interested in what the company is saying and doing. I think these are two very different things. Sherry we talked about hikvision. Are their broader implications when it comes to chinas Artificial Intelligence aspirations . Yes, i think there is. The impacts are quite different. Hikvision, they want to provide camerasilities within and servers. They can use the ai chip made by huawei. If a company, other smaller companies, are using a cloudbased as a solution and need more of the training gpus, the have a more difficult situation. They have a more difficult situation. Trend, so theeal impact will be smaller going forward. Sherry great having you with us, thank you. That was a Senior Research analyst. You can get a roundup of the stories you need to know in todays edition of daybreak, go to your terminal, also available in your mobile. You can customize your settings so you only get the news on the industries you care about. This is bloomberg. Sherry this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. Losing major mainland sponsors in china after a tweet supporting the hong kong protests. Sophie. T more with adopting ajing is policy towards the nba, and not the position for the late, given we have a game tonight between the lakers with the lakers in shanghai. Allegedapologized for misgiving. What is at stake here . It is a really high stakes situation for the nba. Obviously, the lake invested a lot of time and energy and years in china developing the market. Now you have a market bigger than the u. S. With hardened fans of basketball and the nba. All of that is at risk now because of a tweet from an official from the houston rockets. Yao ming used to play for that team and is a very famous basketball player in china. At this point, it has been basically what people might describe as a real pr nightmare for the nba, really bad ming, especially during the preseason push in china right now. That is up in the air as to how it will play out. Sophie lets look at the other side of the coin. We saw a rally in Chinese Companies linked to the mainlands the mystically. Domestic league. What is a telling you . Some companies in china dont necessarily have something to do with basketball, but have shareholders invested in the chinese basketball league. In that case, there is speculation that investors might generate that within investors, it might generate more interest in the basketball league. They will start turning their interest back to local basketball. So, it is probably going to be shortlived, but for now it has been a pretty good story for those companies. Sophie this ultimately comes back to hong kong. We have seen the risk of recession even more so. For hong kong, the economy has had a very precarious situation for months now since the start of the protest in june. The Second Quarter gdp numbers were negative for hong kong quarter on quarter, and expectations for many over the last three months is that the thirdquarter results of going to be negative, putting hong kong in a technical recession. What this means for the rest of the year is, it is probable that growth for the year for hong kong will likely be flat or very little. The question now is, not necessarily hong kong will go into recession, but rather how that will be and how long it will last. Sophie think you so much for that, the processor reporter here in hong kong. Sherry lets get a quick check of the latest business flash headlines. American airlines abandoned hope of using their 737 max 8 lanes this year and a are following southwest in dropping the jets from their schedules until at least the start of 2020. American is canceling 140 flights a day with their 2000 macs aircraft unable to fly. Max aircraft unable to fly. It will create a reduction in pretax earnings. Paul boeing is placing another round of groundings. Jetsthan 5 of all the 737 were found to have cracks where the wings make a few cilic the the fe meet fuselage. Sherry indonesias private airline is moving towards ipos. The airline began preparations for an offering early this year and is targeting about one billion u. S. Dollars. Investor appetite has already spurred 40 firms to go to market this year, setting the exchange. [no audio] Paul Marco Rubio wants the Treasury Department to review the leak. They accused the company of censoring content. Tictoc dismissed that claim. Saying they adhere to u. S. Laws. Before we head over to bloomberg asia, we have the nikkei off one third of 1 . The kospi, weaker. Sherry lets check on futures, continuing to see pressure on u. S. Futures, down 8 10 of 1 while the offshore yuan continues to weaken. We had more reports on the trade talks coming up between the u. S. And china on thursday here in the u. S. That is it from daybreak asia. The china open is next. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of Wireless Network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Be in the Supreme Court . For there other justices saying they were happy to see you there . Oconnor was the most welcoming