Good. The uncertainty around the talks casts new doubt on growth. Robert kaplan says he is not sure the u. S. Economy can severe downturn. They see a power play to a new brexit deal. Gilts shery jump. Shery lets get you gilts jump. Gaining. 25futures percent after positive comments coming from President Trump on trade talks between the u. S. And china. Themism was already felt in regular session with the s p 500 closing. 6 higher. We had banks and automakers leading the gains. It did not hurt that we got u. S. Cpi members below expectations this morning, doing little to discourage Market Expectations that we could be more fed easing. The best performer on the markets today was the Energy Sector as we had wti rebounding from a two month low, gaining the most in three weeks after the secretarygeneral came out and said its members and allies, including russia, would do whatever it takes to avoid another oil slump. Lets see how markets are trading in asia. Sophie australian markets are open. Adding. 3 asx 200 while on see bonds are falling, pushing the 10 year yield higher by eight basis points this morning. Qb stocks are getting ground, up. 2 . This even as we saw manufacturing pmi contract for a Third Straight month, sticking below 50 as the Economic Outlook remains grim from new zealand. Japan and south korea prepare for talks in geneva on the wto dispute. The firstt a read for 10 days of october and we will be getting singaporean retail sales, expected to slow fromtrial output, also due indiana and factory output from malaysia as well. The Administration Delivering its budget 2022. Economists will be expecting a wider fiscal deficit. Paul. Paul thanks, lets check in on the first word news now with jessica summers. Jessica thanks. The Un Security Council has held a closeddoor meeting on turkeys incursion into syria amid widening criticism of the military operation. European ambassadors called on turkey to call off the attack while the u. S. Envoy refrain from joining the criticism. Erdogan, isident, threatening to spend send millions of refugees to europe. The dallas fed president has told bloomberg that it is not clear if the slowdown in the u. S. Will turn more severe in the face of weaker Global Growth and the trade war. Robert kaplan says the u. S. Is in a fragile place and could go either way. Growth slowed to an annualized 2 in the Second Quarter and is forecast to have further moderated in the third quarter. I think we are in a fragile period in year, which is why i am glad the fed has taken action in july and september but i think this could go either way. We could avert a more severe slow down but i think the jury is out. Weree policymakers divided on parts of the stimulus package announced by mario draghi. The account of the meeting shows some members of the governing council were ready to support an even deeper rate cut in exchange for dropping the idea of resuming bond purchases. Others needed to be convinced about lowering rates at all because of concern about adverse effects. Of relief. That is after a highquality, low stress exhibition game in shanghai. The Brooklyn Nets each of the lakers in front of a near sellout crowd, giving the league some respite after a week of damaging headlines and lost sponsors. The fallout from a tweet supporting the protests in hong kong has ruptured his ties to china and scenic face criticism in the u. S. Over its attitude to freedom of speech. And indonesia has found that almost 1 5 of the countrys working Palm Oil Plantations are illegal. Government inspectorauthoritieso identify the owners. The funding comes after the state auditor reported that 81 of indonesias Palm Plantations are breaking regulations. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Paul thanks, jessica. Lets get to our top story. Trade talks wrapping up in washington with initial signs pointing to a positive day one. The highlevel meeting was extended late into the afternoon and will continue on friday. Completed a we just negotiation with china. We are doing very well. We are having another one tomorrow. I am meeting with the vice premier over at the white house. And i think it is going really well. I will say, i think it is going really well. Paul lets get to our china correspondent, Tom Mackenzie, in beijing. Tom, progress report. How much have we seen so far . Tom from the president , he is sounding very up beat about how much progress has been made in these talks. Crucially, he will be meeting he in thehara liu white house. That is a Key Development and suggests there has been material progress in these talks. It is unlikely that the ohara he would bea liu meeting if there was not traction in the talks. We have seen the chinese agreeing to discuss this currency packed with the u. S. And in return, we are hearing that that would result in a freezing of additional tariffs that are due to hidden october hit in october 15. The u. S. Side has signed off on some licenses for huawei, which has eased some of the curves around that company. Some of the things that have moved in the last 12 to 24 hours, feeding into this optimism around the talks in the markets as well. It seems like it would be a mini deal, not this comprehensive deal that trump had touted previously. Shery what are the implications for both sides . Whenwell, Steven Mnuchin, he talked about this in february, said it was one of the strongest agreements ever, but bloomberg intelligence, our own inhouse team, suggests that maybe it will not have as great an implication for chinas fx policy as may be Steven Mnuchin had suggested and it may be more of a facesaving effort for the two sides to reach what they are describing as some of the deals. Where you get the core issues around intellectual property in tech transfer, ironed out at a later stage. In terms of what it might look like, it will probably mirror the kind of agreement the u. S. Came to with mexico and canada, which involves some of the previous g20 agreements on things like transparency, so maybe not as much in occasion as chinas fx policy regime some have suggested that it seems to move things forward. Potentially a mini deal. Shery on top of those tariffs, the u. S. Has implemented some other measures against china, including blacklisting tech firms, not to mention sanctioning some of their shipping companies. Do we know if beijing has any more demands towards the u. S. At this point . Tom we do know that the chinese have turned to the u. S. And said, look, can you move back and reduce these sanctions, end these sanctions on posco shipping . Cosco shipping . Usa the shipping companys involvement in Oil Transports from iran. The u. S. Had its own sanctions on iran. It had a major impact and froze it out of the Global Financial system so china is keen to get those sanctions lifted and that was one key demand. What a difference one week makes. Just on monday and tuesday, we were reporting on the blacklisting of these chinese tech companies, the travel bands. It seems like bans. It seems like the chinese are prepared to sideline those issues to focus on moving things forward in terms of potentially this smaller, more limited deal. Shery Tom Mackenzie in beijing. Thank you. Here in the u. S. , fbi agent have arrested two ukrainian men for u. S. Campaign finance. They are said to have helped Rudy Giuliani seek damaging information on democrats and are the latest characters in the impeachment drama. Breaking news editor Greg Sullivan joins us from washington. So what do we know about these two men and how they are connected to the impeachment inquiry . Greg these two individuals are actually not strangers to invest in investigators. They have had to turn over documents. Were arrestedhey last night at Dallas Airport with oneway tickets outside of the country. Prosecutors say that they committed to raising funds for an unnamed congressman, but in tryingght his help to remove the u. S. Ambassador to ukraine. They helped Rudy Giuliani as he sought to pressure ukraine to investigate joe biden and his son, hunter. It is those efforts that are at the center of the congressional impeachment inquiry into trump and these arrest will no doubt lazy scrutiny on Rudy Giuliani and possibly President Trump himself. The top democrat in the senate, chuck schumer, has called for Rudy Giuliani to testify in congress about these arrests. President trump speaking to reporters a short bit ago said he does not know these two individuals. Paul the impeachment issue aside, difficulties emerging on the foreign fun as well. President trumps decision to pull troops out of syria seems to be testing republican support for him. How is that playing out . Greg thats right. Several lawmakers from both parties have been critical of this decision. Even in his own party. It is a rare center displeasure from the president. In other scandals or controversies, republicans have been loathe to criticize him. Military with background are concerned that the u. S. Has betrayed an ally in the fight against the Islamic State group and there is concern for the region as turkey goes into the country. Lawmakers are taking probable steps here to push back. They threatened sanctions against turkey. Lawmakers are introducing legislation to put sanctions on turkey. One senator says he believes there is bipartisan, vetoproof support for such a move. Paul so theres pushback, but how does has it affected the president s thinking on syria . Greg it doesnt appear so. President trump actually speaking to reporters on that a bit ago and said he believes that American People do not want to see the u. S. Military involved in the regional conflict. And he said that while it is possible that there could be something very, very harsh coming on the sanctions front, his preference would be to see a mediating deal between the kurds in turkey, so it does not look like the pressure has changed his thinking on whether american troops are needed at this moment. Paul Greg Sullivan in washington, thank you so much for joining us. Still to come, Robert Kaplan urges caution. The dallas fed president explains why the central bank should take a measured approach to rate cuts in an exclusive interview. Shery up next, the pound rallied the most in seven months as the u. K. And irish Prime Minister say they see a pathway to a deal. This is bloomberg. Shery breaking news at the moment. We are hearing from the minneapolis fed president , neel kashkari, saying he will support the fomc if it decides on 25 basis point rate cut. This timing as he speaks to the wall street journal. He is saying he does not expect a recession but warns that it is possible. If the data continues, another rate cut would be warranted. And he does not see any major Financial Stability risks for now coming from the fed minneapolis president , neel kashkari. Paul. Paul all right. Lets get over to our hong to hong kong now and check the markets this morning. Sophie. Sophie after a choppy few days across assets, hopes of a partial trade deal in d. C. Has helped the offshore yuan recover, trading. 7, retreating from the hit early thursday. With the potential currency packed in the mix, bets are piling up in the Options Market for the yuan to rally. And check out the pound. Just slipping a cut from a twoweek high. It has surged the most since march on a possible pathway towards her brexit deal. They are willing to be optimistic. A pair down free trade agreement. Volsnuary 2018 high with higher. Shery thank you so much for that. Joining us now from singapore is the bank of America Merrill lynch head of global g10 fx strategy. Thank you so much for joining us today. We are hearing of a potential packed between the u. S. And china pact between the u. S. And china this week. What would that mean for both countries and their currencies . They aret seems that converging towards a deal. This is definitely good news. It avoids a further escalation. However, it is a mini trade deal. On what focus will be thatned with the tariffs have already increased. We will expect the deal to include a detailed timetable for implementation of what it will take actually to eventually reduce the tariffs. They remain high for now. Increase, buther the negative impact on the economy will continue in such a have implementation risks. Bottom line, it is good news if we do have a deal. We are not out of the woods yet. Shery what are the implementation risks youre talking about right now . Would expect steps that china will have to take to implement this deal, assuming that this takes place. Then, both sides will be able to reduce tariffs to pretrade war levels. Primarily addressing the u. S. On intellectual property rights, we have to focus on the details. How long this will take, how difficult, challenging it will be to implement it, to see whether this is feasible or not. We are talking about a timetable that will be just a few months. It will take much longer. Tariffsto acknowledge are high and affecting the economy. The sooner we remove these tariffs, the better. Shery what are the tariff risks for the pact. The best house in a bad global neighborhood as we see the economic slowdown what on the risks for china of agreeing to this . Thanos now, i think having a trade deal is good news for china as well. Its economy has been affected by all this uncertainty. Any details on the currency, i do not think, will be important in the shortterm anyway. Ratehave an Exchange Mechanism but we also have to say that trade tensions continue. This is what keeps the dollar strong. Trade policy protection actually supports the dollar, so for now, we do believe the dollar will remain relatively strong. Thats not forget, it is not only the trade tensions between the u. S. And china. There are trade tensions between the u. S. With still at risk. Paul it is not just the dollar that has been keeping strong in this environment of uncertain trade outcomes and weaker Global Growth. It is the yen, of course, which has been a powerhouse as well. Still, the yeny, remains undervalued. We do believe that even if we have a mini trade deal between the u. S. And china, the uncertainty will remain relatively high so we believe young will also remain strong. The only different currency that might be stronger even for the dollar, our forecast is in the next few months, dollaryen may drop down to 100. To equilibrium is between 90 95. Even at this level, yen will remain undervalued. A lot of risks ahead of us, so market uncertainty will still support the dollar and the yen, but more the yen compared to the dollar. Paul dollaryen certain to attract the attention of the boj. Do you think that there is a chance of intervention . Thanos this might be the level where the boj might get concerned. Up to this level, we dont expect the boj to do much. The boj might be concerned. Even at thisn, level, will remain undervalued. That would affect Inflation Expectations and the boj might push against it. There is still a lot until we reach these levels. Shery which are the asian currencies that could still outperform even if we get a stronger u. S. Dollar Going Forward . Now, a lot depends on trade, because of escalation and trade tensions. Affects have been under pressure. And actually, within the emergingmarket complex, the asean currencies are short. Assuming we get a deal, assuming we get good news on trade, then we have to look at current is where the market is particularly short. Won stands out. This is where positions are stretched. Given the short positioning, the yen should do relatively well in this environment, but again, a lot will depend on the details in the trade deal, which have been through a roller coaster so far, expecting a deal. We did not get a deal. Lets wait to see if this is fine and lets wait to see how far this mini trade deal actually goes, whether it really reduces uncertainty or is just one step in the right direction. There are still a lot of risks ahead of us. Paul we have had some encouraging signs. Encouraging signs on the brexit front with the Prime Ministers of britain and ireland saying perhaps they can see a path forwards on the irish border, so perhaps, given that encouraging mood music, what is your output for the pound . Thanos definitely, the pound is the currency with the potential to move the most in the nextthe. Obviously, we had some good news yesterday, but it has been a roller coaster. There are still risks. If you think logically, both sides should have strong incentives to compromise. If there is no deal, you get the whatr overnight, which is both sides are supposed to avoid. We remain optimistic, but so far, logic has not prevailed. If we have to say that if there is a deal, with respect to the dollar, it can appreciate above 130. If there is no deal, it can we can weaken below 110. There is a binary. They are in the right direction. Finally, we have some good news there that logic could prevail, but again, lets see if they come up with a deal. Time is very short. Paul all right. Liu he, bank of America Thanos vamvakidis, bank of America Merrill lynch head of global g10 fx strategy. And you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and it is also available on mobile in the bloomberg anywhere app. You can customize your settings so you are only getting news on industries and assets you care about. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. Lets get a quick check of the latest business flash headlines. The saudi aramco board is expected to proceed with its mammoth share sale next week according to people close to the dop of the oil giant is assessing feedback from a roto for cornerstone investors. One big name who will not be buying game is singapores holdings, partly over Environmental Concerns as it is trying to halve the Carbon Emissions of its portfolio. Paul the ongoing upheaval in hong kong will hit fullyear profit, despite 20 thirdquarter sales growth that beat estimates. It plunged 40 in august and september and needed growth in other regions to keep the quarterly performance. On hongstill bullish kong in the long term and says sales will recover. Do not forget, if you are away from a screen, you can always find indepth analysis on Bloomberg Radio, broadcasting live from our brandnew studio in hong kong. You can listen via the app or Bloomberg Radio plus. This is bloomberg. Jessica this is daybreak asia. I am jessica summers with the first word headlines. President trump says trade talks in washington went fairly well after a near threemonth pause. Negotiators will meet on friday. The president also said he will host chinese vice premier liu he at the white house. He cast some doubt on whether some kind of agreement can be reached, tweeting that china wants to make a deal, but do i . We may get a trade deal we are happy with, but china may see the United States is such an unreliable partner that they may structure us out of this market anyway, and that would be a shame. Jessica apple ceo has defended its decision to pull an app that track the location of Police Officers in hong kong. It said it received credible information from authorities that the software was being used to attack police. It was removed from the app store after apple flipflopped between rejecting and accepting it. The app developer dismissed the anyone. At it endangered the u. K. Is a step closer to dealing but knew brexit after talks between Prime Minister Boris Johnson and his irish counterparts. Sterling jumped the most in seven months as he said the two sides could now see what he called a pathway to a potential agreement with the e. U. The two met at a secret location in northern england. He said he believed a deal is possible ahead of the brexit deadline at the end of the month. I had a very good meeting today with the Prime Minister and our teams together. Very positive and very promising. That theyonvinced want there to be in agreement. That is in the interest of ireland and the United Kingdom and the European Union as a whole. I do see a pathway towards an agreement in the coming weeks. Jessica Japan Airlines has canceled 14 international and four domestic flights today as typhoon hagibis continues its path towards the tokyo area. It canceled hundreds more flights on saturday with ana grounding all its domestic operations for the day. Typhoon hagibis is said to make landfall saturday afternoon. You can track its exact pass on our terminal function here at hurr. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. More positive sentiment across equity markets get australia has been trading for half an hour. Lets turn to sophie for what to watch and markets. Sophie australian stocks this morning at a nearly 1 , set for the first weekly rise with Resource Centers clocking the biggest percentage gains this friday and bond yields jumping adding nine basis points. They see a trade deal remaining elusive. Flipping the board for stock movers sydney, cybg adding 9 on brexit optimism as it operates in the United Kingdom. Over in sydney, we are seeing aurora losing ground. Jp morgan has cut the stocks to neutral ahead of a trading update. The decision to sell the companys australasian cyber business, while it was the right one, it does expose it to more that is going on in north america. Top 24 rising as much as 8. 2 this morning after reporting a 94 increase in firstquarter net inflows with its platform growing at the fastest pace in the industry. Paul. Paul thanks, sophie. The head of the dallas fed is in favor of a nearterm rate cut but it does not mean Robert Kaplan is on board. Kathleen hays joins us with the takeaways from his exclusive interview with bloomberg. We saw golds move as kaplan spoke. What drove the reaction . Kathleen rob kaplan is neither a dove who will always vote for lower rates or a hawk. He says it will take a lot for me to cut them. I do not want to do it. When he spoke to bloomberg tv, he noted the economy is in a fragile period, and it needed, the fed could do more to avert a severe slowdown. Period, in this fragile he seems to say, if the fed is going to move now, it should move now. It is still going to have an impact. Lets listen. Now think moving modestly gives us the best chance to avoid a more severe slowing, and that is why i want to use the ammunition now, even though it means we will have a little less ammunition later. Tom you would think kathleen you would think of gold trader would like that. Cut rates now. Traders wasd gold Robert Kaplan also said he thinks the fed has to show some restraint while it tries to figure out what economy is doing. Listen to this. We have got so much uncertainty and policy uncertainty. I think it would be wise for us not to over telegraph where we are in the cycle. This cutting we are doing should be limited. Limited, restrained, and modest, and not the start of a fullfledged cutting cycle. Kathleen that will be news to some people. Fed fund futures, as you can see on your world Interest Rate projections page on your bloomberg terminal are still three quarters of a chance. You have to realize it might not happen unless we see her fragile recovery getting a lot weaker. We have inflation for the muted. Kathleen if you are looking for another reason to add to your list of why we should cut inflation, it has been on the weak side. That is what the market was looking at today. The main measure is the pce core, but they watch the cpi because the two numbers tend to move in tandem. And monthly numbers came in on the weaker side. Weaker than forecast for the headline for the core. I want to show you yearoveryear. Here is the turquoise bars yearoveryear. Look how weak they were. Oil prices have a lot to do with that. Oil prices yearoveryear, not so bad. It was supposed to be 0. 3 on the month. In the yearoveryear rate, just under 2. 4 . Used car prices is a big reason why the pullback. That could be a sign of weakening demand. Lets move onto to more important fed speakers two more important fed speakers. Neel kashkari is a doubt. He has been pushing for a 50 basis point rate cut. Downside risks are increasing. Really important, loretta mester, president of the cleveland fed, and has been a hawk. He said i opposed she said i opposed the july cut and september cut. She is saying she is getting concerned that the macroeconomic data may start showing signs that manufacturing is seeping in and weakening the overall economy so i think it is very significant that someone who has been in her position is getting a little more concerned. Shery especially as we see nonmanufacturing taking a hit. Kathleen hays, our Global Economics and policy editor, and staying with Central Banks, the ecb policy maker is playing down a report that president mario draghi ignored internal advice on last months stimulus package. He spoke exclusively to bloomberg, adding he is counting on incoming Christine Lagarde to resolve the bitter split that has opened up. It has some effect on the policy impact because of communication. It is such an important part of making Monetary Policy these days. But the same time, it is natural that there are different views and interpretations as regards to the Economic Outlook and also Monetary Policy stance. Of credita product culture and football teams, so i inue team play communication. If you are divided, you tend to lose games. If you are united, you tend to score and win games. There was more division with mario draghi not listening to advice from the committee. What does that mean for market . How should markets interpret . Itself was greatly exaggerated and misunderstood in the sense that the Monetary Policy committee does preparatory work, but certain sensitive issues are resuming q. Qe, resumingng asset purchases. It is for the governing council to decide. I find i found nothing extraordinary in this sequence of events. There is so much pushback against negative rates. There seems to be a governing council that is split. Do we need an urgent policy review . I think it is an important issue to discuss and i think it is something Christine Lagarde, the next president of the ecb, well decide. A review ofed our Monetary Policy framework. I find it important to analyze longterm. Interestlower rate of the population aging out of conditions and environment of the Monetary Policy. And what kind of conclusions should we our mandate is in the e. U. Treaty. Definitione, to the of our price stability target. I would find this kind of discussion important, and it would also enhance a common understanding of our monetary communicationrove by the governing council. Paul bank of finland governor speaking to francine lacqua. Dont forget, if you are away from a screen, you can always find indepth analysis and the days newsmakers on bloomberg from ourw broadcasting brandnew studio in hong kong. You can listen via the app or bloombergradio. Com. This is bloomberg. I had a very good meeting today with the Prime Minister and our teams together. Very positive and very promising. Bothnow convinced that want there to be an agreement. That is in the interests of ireland and the United Kingdom and the European Union as a whole and i do see a pathway for that towards an agreement in the coming weeks. Paul that was irish Prime Minister leo varadkar after meeting Boris Johnson and striking some optimism after what was said to be some constructive discussions. Joining us on the phone, the professor of economics at dartmouth and former external member of the bank of englands Monetary Policy committee. So some encouraging words there from the override code after leo varadkar after years of nothing happening. What happened with just three weeks ago . I agree, that was kind of optimistic, although we have not heard what the basis for agreement is. The speculation in the English Press that may Boris Johnson bent his knee the question is, somebody has had to give somewhere and we are not clear who that is to it obviously, if boris does it that, could he passed such an agreement through the house of commons . Theres still many days to go and we will probably be talking on this endlessly, but think it is on a saturday to come, for the third time ever, the parliament will meet and decide essentially whether they will agree to it and whether there will be an extension. Probability is there will still be another extension. Maybe this is progress. It is the first of the good news for many, many months. Paul that irish border question has been a major Sticking Point. What does an irish border that is acceptable to all sides look like . Dublin onm headed to november 7, and i am going to drive up so i will find out what that looks like. I mean, the crucial thing is, when you do that, there is no border there. I mean, that is the big deal, and the possibility of a hard border is really the thing that is holding these talks back, and the top that perhaps there will be institutions several miles back from the border, i mean, that is a border. It is remarkable, when you go there. I was there in the past when all the troubles were there. What has happened is the lack of border has brought peace in ireland. Nobody wants nobody really seems to want to get rid of that, so he Sticking Point is what do you do about northern ireland, how do you keep that flea border open . The problem free border open . Wantroblem is, the spots independence. S want scot independence. independence. If you find that, you might have lots of problems in scotland and wales. Does mumblings to say that there are rumblings that more may want it, too. Shery you just wrote an opinion piece that the u. K. Is already in recession. Why . Danny well, the data i like to data filesreally around january 2008 and told us there was a recession. Purchasing manager indexes, the bank of england engine scum of business and consumer scores. They have really been flashing red for quite a long time, and the problem, it turned out, in 2008, was that revisions were the things that showed us when recession was, particularly in the Second Quarter of 2008, in july 2008, we got a number like this of plus. 2 for the Second Quarter, and then, the data went into remission. We noted the answer was. 7, so i think what happens for a turning point is the authorities get it wrong. They are too optimistic as the economy turns down. They need to look at other indicators. If 2008 is anything to go by, inry one of the indicators the early spring of 2008 are flashing again now. If we look back at the data we were looking at today, you did not know it until a year later that the u. K. Had entered the worst recession ever, so i think you should not read too much into the gdp data. You should look at these surveys, and they are all flashing, saying the u. K. Is in recession. That is what i wrote in the guardian last week. Shery does that mean the bank of england should be doing more at this point . Danny i think it probably does. I think that the first indicator of that is probably the biggest talk on the Monetary Policy committee. Michael sanderson, who voted for rate several times, actually few dayseech a ago saying he thought the next move was down. Youll probably see over the next few weeks, especially if you see more on the brexit front, the answer is that the mpc is going to have to at least get ahead of the game if it could. Spotted the mpc had not the recession was coming six months after it started. Some of us had, but the majority of the committee had not. Shery governor mark carney has ruled outgoing subzero. Talk about that being a little bit unnatural. Brexit, is a nodeal will that be a scenario that the boe has to look at . Danny it is foolish to rule it out, especially as other Central Banks around the one, the ecb we know recently cut from. 42. 5. 5 point we dont know if mark carney will be there. We know there is some talk he might have to stay on for a while. I dont think you can rule it out. There is a lot of leeway for the central thing to go pick could they cut further . For the central bank. Could they cut further . You have to have the central authorities doing things. The chancellor of the exchequer has to pass things the house of parliament. Actually, it is certainly unclear that they could do that. They do not have a majority in the house of commons, so the pressure on the central bank is probably going to be the new chancellor may not be able to actually get anything through the house of commons, so i think it would be foolish to rule it out. Mark carney, often times in the past, has given Forward Guidance. Listeners around the world realized that Forward Guidance did not work very well. I am not saying you should go to negative rates right now but you certainly should not rule it out, and we will have to see, but the problem is, there aint many arrows left in the quiver on the Monetary Fund or the fiscal from with Interest Rates still so low. Paul dartmouth professor of economics, liu he. Thanks as a danny blanchflower. Thanks as always for joining us. Do not forget our interactive tv function tv. ,there you can watch us live, catch up on past interviews, and dive into any of the securities or bloomberg functions we talk about. Plus you can become part of the , conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. You can check it out at tv. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Apple is defending its decision to remove a controversial mapping app in hong kong. Ceo tim cook has released a memo saying the Company Received credible information from authorities indicating the software was being used maliciously to attack police. Lets get to tokyo and our asian tech editor, vlad sotloff. Tell us about this app. What does it actually do . Vlad the act in question crowd source is information about Police Activity within hong kong and provides people access to know about it. The app developer says this is to help people avoid areas of confrontation. As you know, hong kong has had protests going on since june. They keep going on. They keep getting more violent and risky for innocent passersby, so the app was developed, arguably, to let people avoid those confrontation areas and just get on with their lives as normally as possible. Shery so how does that exactly break apples App Store Rules . Well, apples contention, and it is also the hong kong authorities contention, that the act is being used maliciously app is being used maliciously, targeting individual Police Officers for retribution and targeting, again, innocent bystanders in areas where others can look and see and just know that there is no police coverage. Of right, vlad savoie vlad savoie of, savov, joining us. Fallen 8. 5 year on year. Chip exports down 27 point 2 . Been in doubledigit losses for the longest time. Imports dropping year on year, but the focus right now on the export numbers. It. 5 year on year and we know that south korea has seen 10 months of export contractions already. Ships falling in the double digits and we watched south korea closely because they can be a bellwether of where trade is going in the region. Top ofarkets open at the the hour as well as tokyo. Thats turned to sophie for what watching market. Sophie gauging reaction to those painful numbers from south korea, exports dropping in the first 10 days of october, but otherwise, it could be a modestly feelgood day as treetops are set to continue. Asian stocks could clock the first weekly rise in four. Jgb futures marching lower. Investors may remain sidelined despitesolid option. Jgb futures continue to stay in a narrow range after an attempt to break the top side of that range. For stocks to tokyo, industrial. Obot maker electric in view orders dropped 13 in the most recent quarter. And the president warned of a delayed recovery in semiconductors. As tokyo braces for a typhoon that has rained on weekend rugby 513 domestic flights affected on saturday. We are watching takeda. They want to raise 1 billion to cut debt. Shery a quick check of the latest business flash headlines. We are hearing that sap has appointed two george ceos to take over from bill mcdermott, who has announced he is stepping down after leading the company for a decade. He will be replaced by Jennifer Morgan and current coo kristin klein. It comes off the back of their quarter profit that topped analyst estimates, signaling renewed momentum in the companies transition t companys transition to cloudbased computing. Business in the city has been substantially this is negative. 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. Paul asias major markets are about to open for trade. Shery i am shery ahn. Sophie i am sophie kamaruddin. Welcome to daybreak asia. Paul our top stories i think it is going really well. The u. S. And china revive talk negotiations and will meet again friday. Mr. Trump says day one was good. Uncertainty around talks casts doubts on growth. Robert kaplan is not sure the u. S. To avoid the severe downturn. Shery japan is bracing for a new typhoon. Prix could one grand be hit. Lets get straight to the Market Action with sophie. Haslinda tokyo stocks are gaining ground. Tokyo stocks and the nikkei watching for a reaction to a recent bout of earnings. Set to rise after it announced job cuts and plans to shutter convenience stores. Checking on the yen, 108 set for a weekly loss. Jgb investors are hesitant to add the the 10year is negative. Checking in on the kospi we have gains of korean stocks despite the drop in october exports for first 10 days, 8. 5 you 8. 5 lower. It is not dampening the enthusiasm so far for seoul stocks. The korean won trading below 1190 against the dollar. Looking at antipodes. Adding, and asx 200 the aussie bonds are playing catchup with treasuries and 10year yield are off jumping nine basis points. Kiwi stocks are gaining ground, the kiwi dollar on the up k manufacturing pmi. Contract, number contract activity for a Third Straight month. Paul lets check in on first word news with jessica summers. Reporter the uns Security Council has held a closeddoor meeting on turkeys on turkeys incursion into syria. They asked turkey to call off the attack and refrained joining the criticism. The turkish president is threatening to send millions of refugees to europe if his country comes in for undue criticism. Agreeing to a new brexit deal after talks between Prime Minister Boris Johnson and his irish counterpart. The sterling jumped the most in seven months as the two sides could now see what he called a pathway to a potential agreement with the e. U. They met at a secret location in northern england. They believe the deal is possible ahead of the brexit deadline ahead of the month. Meeting a very good with the Prime Minister and our team together. Very positive and promising. I am now meeting with the Prime Minister and our team convinced both ireland and britain want an agreement in the interests of the United Kingdom and European Union. Towards anhway agreement in coming weeks. Reporter Japan Airlines has canceled 14 international and four domestic flights as a typing continues its path to tokyo. It is canceling hundreds more flights saturday with ana grounding all domestic operations for the day. It is going to make landfall saturday afternoon. You can track its exact path on our terminal function here at hurr go. The National Basketball association is breathing a sigh of relief after a high quality, low stress exhibition game in shanghai. The Brooklyn Nets beat the los giving a respite after damaging headlines and lost sponsors. The following from a treat supporting protests in hong kong rupture the nbas ties to china and seen it face criticism in the u. S. Over its attitude towards freedom of speech. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Talks wrapped in washington with signs pushing one. Ing to a positive day the talks extended into the afternoon and continue friday. Mr. Trump we completed a negotiation with china. We are doing well. We are having another one tomorrow. I am meeting with the vice premier at the white house. I think it is going really well. It is going really well. Curran. Ets go to enda if we in fact get a little deal, what will the implication be . Week ofearly after the noise we have had in the relationship, you would have to say a positive signal from washington the fact that President Trump thinks the talks are going well and the vice premier will meet in the oval office. If we do get some kind of agreement, we dont know what but if we get some partial truth, you would have to think it will help lift sentiment in both countries. Both economies are showing signs of weakness related to the trade war, certainly in china. Our colleagues report a weak Manufacturing Sector and the export sensitive sectors. Together you would assume a boost to markets and sentiment and perhaps new expectations of at least in the yearend the trade war which will not get any worse from here. Shery how significant with the currency pact be . Draws skepticism. We know the Trump Administration has been critical of chinas Exchange Rate regime. They say they cheapen the currency deliberately to help exporters. China doesnt agree with that. The big question is what can they really agree on . China has committed to things through the g20, not to cheapen its currency and there are cantions on how much they really do to prove they are not intervening. There questions on implementation and practicality. If there is agreement on the currency at least it will soothe markets and point to the fact. Hat the yuan could be stable that in itself is a tonic for martin market sentiment. In terms of the currency, where can we expect to see the yuan ahead of the next few days as this deal gets hammered out . The currency is politically sensitive but one of the biggest drivers is the u. S. Dollar. So unity keep an eye on the dollar and the fed story to get an eye on where the fed where the yuan will go. Talks going to fall to the floor tomorrow and we go back to terrorists, back to tariffs, there will be pressure on chinas currency. But the central bank in beijing has been consistent. They are not in the market for a big devaluation and they will not push the yuan any lower. They said pushing it through seven would not be a big deal. That is how it played out. Broadly speaking the overall view is the yuan is under pressure. There is pressure because of chinas underlying fundamental but i dont think anyone is expecting a classic emerging markets devaluation. Chief Asia Economic correspondent, thank you. President trump said those talks could go very well. That is stoking optimism about a deal. Editorv amateur garfield joins us now. We have seen interesting reactions well these discussions have been ongoing. Reporter treasuries and bonds in general are looking very nervous at the moment. Not just because of the u. S. China talks but because of brexit which the apparent progress set off a major move higher. That helped to send bond yields higher and treasury they were already going higher because of the trade optimism. There is a lot of really bad Economic News baked into yields for treasuries and other instruments around the globe. They are looking very sensitive to the idea that you might have some sort of a little deal in the u. S. , easing of tensions. We have brexit which i mentioned. Although this would not have an immediate direct impact on markets, but india and china, president xi and president modi, they are meeting today as they tried to thresh out their own trade disputes which have held back plans for a 16 nation asia region trade accord. And japan and korea are meeting in geneva to talk under the wto dispute resolution. If we could get a step back from of plunge towards the cliff protectionism, it will boost the outlook for Global Growth. Potentially, equities. Shery we are seeing the reaction in equity markets across asia. Are we expecting this momentum to continue given the friday talks are still on . Showed, as yesterday the mentum only left as long as the next tweet. Something outtake of china or the u. S. Which casts doubt on whether there is a little deal were whether they can agree on Enforcement Mechanisms or how they monitor any currency pact that might occur. You would see equity bulls turned tail and run. Unless that happens, there is no reason why we should not have the account growing higher in stock levels. Us. thank you for joining you can follow more on this story and all of the days trading on the markets live blog. That is mliv. You can get a rundown in one click and there is commentary and analysis from expert editors. You can find out what is affecting your investments right now. Lets check on the markets now. Tokyo, thisng in one rising 5 , the most since december after its earnings report. Firsthalf sales grew at home and above, chinese stores. Pening south korean sales were sluggish but profits were weak for the period. Retailing if we could, the stock is gaining ground after posting a 5 rise in annual net profit. Bloomberg intelligence expects the higher sales profits in china. 7eleven operator seven and i gaining on plans to restructure which you will see it with 1000 it will close 1000 unprofitable 7elevens and cut from other units. Shery malaysias government releases budget plans friday. We will discuss about the plans investors and rating agencies. Paul Stephen Chang gives his strategy for the ups and downs and cycles of trade related volatility. This is bloomberg. Is bloomberg. People want to stay nimble and they realize there could be and alicy pronouncements time. With that amount of uncertainty they are not cutting back their business, but they are putting new projects on hold. The other thing is watching carefully if there is a broader slump. Into 2020,et questions around trade and economic question, you will see more of that on the International Side of the business instead of domestic. We have seen some softness in china and asia as well as exiting europe. The traffic has come down. A part of it is currency, not just economic pressure. Chinas trade deficit is double digits. Now the current account is heading for zero and lower. Dollars. Running out of china needs interim trade deal just as bad as bad as trumps presidency. Shery some bloomberg guests on the ongoing trade war, renewed trade talks in washington but there are still a lot of factors in play. Optimism is growing, with the negotiators meeting in washington, but traders are bracing for volatility three lets see how her next guest is positioning himself. He is a Portfolio Manager with pimco in asia. Great to have you with us. We are seeing volatility rise in the trades treasury markets. This chart showing how the volatility has surpassed that of equity markets. How do you position in this environment . The bond market has been a volatile time. We see volatility in credit markets and in rates market spiking up in the past couple of months. Very low yields generally. For us we are still looking at the market with in a central scenario where growth can stay positive or it will be entering into window of weakness. U. S. Growth is slowing down close to 1 over six to nine months. Closer to home in china we expect growth to slow. Policymakers will not actually be pursuing stimulus as they might have in the past 10 years. This is sort of the backdrop of where we will position ourselves to look for lower rates coming out from the asian markets, china, where we expect rates to gradually come down, especially given the central bank tried to improve the transition mechanism with more marketbased rate and it will percolate into the broader bond market. Shery we have experienced global credit markets performance since 2016, seeing a great uptick. Is it expected to continue and how does it affect the risks over credit quality . Stephen the issuance has picked up. We are looking into a year of record issuance from the asia dollar credit standpoint. This year we are seeing highyield issuance in the first half of this year. We expect a second half to slow because from china there will be certain photos coming into quotas coming into play. Standpoint, we have seen a lot of inflow that absorb this kind of supply. The second half with the supply being less, we think the market can absorb and i just the new issues. You have some that are cautious on Corporate Credit risks. Where are they building the most . Stephen in the u. S. In particular we are underweight the generic credit. You look at this from a the index is expensive relative to historical valuation. However we see a lot of individual opportunities coming up with volatility which are new issues coming out that could offer decent concession. In asia if i look at the investment grade, it would be a generic beta, and the spread of Asian Investment grade would be roughly in line with the average. For that, we have not identified too many identities. Opportunities. But the spread is statewide for u. S. Equivalents. The spread of asia highyield about 180ex level is basis points above u. S. High yields. So for the kerry standpoint an individual issue picking standpoint we have identified quite a number of interesting things in our portfolio. How about a duration standpoint because you see this in yielding developing markets existing for some time . Of duration,erms what we have from a firm standpoint have favorites in u. S. Duration site because it has ramped side because it has room besides europe which is in negative territory. From asia standpoint we see room for that to come down. China, which i mentioned, we see scope for rate cuts to come through. They have not done much from that standpoint. With that improvement of the transmission mechanism we can see rate cuts over the next 6, 9 months. Kind of a new loan prime rate and the median term facilities. Other parts of asia have been lagging in terms of the rally compared to the Global Developer bond market. We see that come down especially with inflation quite a nine. Shery how close is the quite benign. If we do ine fact see a downturn . Stephen that is the most relevant question we are asking ourselves. Asia in particular from a government standpoint, the growth in credit versus gdp debt, is now restraint. If we look at more on individual Company Level which are issuing in dollars is where we have exposure, the credit metrics are also going in the right direction meaning they are having some deleveraging and the interest coverage is on the rise. For that we are not detecting major issues, so we will identify specific areas where we think of those will remain in place. Paul pimco Portfolio Manager, thank you for joining us. You can get a roundup of stories you need to know to get your day going. Bloomberg subscribers, go to dayb on your terminal. It is available on mobile. You can customize your settings so you only get news on industries and assets you care about. This is bloomberg. Shery this is daybreak asia. I am shery ahn. Paul i am paul allen. Lets get a quick check of business flash headlines. Two joint ceos to take over from the other who is stepping down after leaving the company for a decade. He will be replaced by the president and the currency 00. The appointment comes off of the back of thirdquarter profits. Review renewed momentum. This one posted disappointing quarterly growth after slumping i. T. Demands. Over 1me climbed 2 to billion but was lower than estimated. Bloomberg intelligence sees a difficult road ahead for them and their rivals. The i. T. Sector is try to keep up with multiple challenges and changes in client demands. We will bring you results later. Saudi aramco will give final approval to proceed with the mammoth share sale. The oil giant is assessing feedback from a roadshow for cornerstone investors. One big name who will not be that iss singapores over Environmental Concerns as they are trying to get rid of Carbon Emissions in the portfolio. Shery the ongoing upheaval in hong kong will hit for your profits for this company. They are still reporting near 20 thirdquarter sales growth which beat estimates. The Group Hong Kong sales plunged 40 in august and september. They needed growth in other regions to keep the performance. They are still bullish on hong kong in the longterm and say sales will recover. If you are away from a screen you can find indepth analysis and the days big news makers on Bloomberg Radio from our brandnew studio in hong kong. Listen by the app, Bloomberg Radio plus or Bloomberg Radio. Com. This is bloomberg. Rg. Eporter this is daybreak asia i am jessica summers. President trump said trade talks went very well after a near threemonth cause. In pause. Negotiators meet again tomorrow. Atwill host the vice prayer the white house. There was downcast whether some kind of agreement will be reached. Saying china wants to make a deal, but do i . We may get a trade deal we are happy with but then china may see the United States is an unreliable partner that they may structure us out anyway. That would be a shame. Reporter the dallas fed president told bloomberg it is not clear if the slowdown in the u. S. Will turn more severe in the face of weaker Global Growth and the trade war. He said the u. S. Is in a fragile place and could go either way. Growth slowed to an annualized 2 and is further moderated in the third quarter. Time are in a fragile which is why i am glad the fed is taking action in july and september. It could go either way. We could avert a severe slowdown but the jury is out now. Months ecbtes last meeting show people were divided over the stimulus package. The account shows members of the governing council were ready to even deeper rate cut in exchange for dropping the idea of resuming bond purchases. Others needed to be convinced about lowering rates at all because of the concern of adverse effects. Indonesia has found almost a fifth of the countrys working Palm Oil Plantations are illegal. 19 of the operations are working without official permits. Authorities are trying to identify the owners. The finding comes after the otherauditor reported the 81 of indonesias Palm Plantation are breaking regulations. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Paul lets check in on what is happening with the markets. Sophie regional bond yields are higher. Korean twoyear jumping 12 basis points. The stocks are gaining ground, first weekly rise. The yen is set for a weekly drop as you round out a choppy week around trade lines. The kospi rising 1. 2 earlier and the korean won looking firmer. Now looking at one stock mover of note in tokyo. I want to highlight this electric group after they fell after slashing their outlook. Orders for robots and automation served as a bellwether. Orders fell 13 for the recent quarter. 26 . In china dropped customers include huawei. Twopound is slipping from a week after surging the most since march after a possible pathway for a brexit deal. That has seen pound bulls austenitic pound bulls optimistic. Banks are not taking any chances as they boost liquidity to make sure they are not on the wrong end of a trade. Shery lets stay with that optimism is the brexit saga. I had a good meeting with the Prime Minister. Very positive and promising. Convinced both ireland and britain want an agreement. It is in the interests of ireland and the u. K. And the European Union. I see a pathway towards an agreement in the coming weeks. Shery the irish Prime Minister after meeting Boris Johnson. Jodi schneider joins us from hong kong. Weeksweeks ago three to go until the deadline. Is there hope for a deal . Hopeter there is some after that meeting between the irish premier and Boris Johnson. They met for 2. 5 hours, took a walk outside the country home where they were meeting. Signals are positive they want to make a deal and see a pathway. That is just the first hurdle. They would have to get that through the e. U. Then parliament and theresa may, Boris Johnsons predecessor, failed three times to do so. Can they make this deal and then sell it . Ticking. Is october 31 is the deadline. Boris johnson says the case is leaving that day even without a deal and also he will not seek an extension. The e. U. Is willing to make that extension but he will not seek it. Parliament says he needs to. The deal would alleviate other concerns. The question is, is this positive signal enough to get them there . Shery what do we know about the irish backstop . Way they need to find some not to have customs checks and the irish border, the land border with the u. K. What can they do on that issue . Boris johnson did not want that irish backstop which theresa may had. He was concerned it would give the e. U. Too much leverage over tyingk. , and it would be the u. K. To the e. U. Indefinitely. Irish times is reporting Boris Johnson is coming closer to irelands position. We dont know the details, just that there is a pathway but it would almost have to deal with that key issue. How difficult is it to satisfy the needs of the irish, the u. K. And the e. U. . While a pathway has been identified, there is more steps for this to clear. Jodi that is right. Ireland being for this would be important. You would need 28 members of the e. U. To sign off but if ireland sent we like this, we can live with this, it would go a long. Ay to convincing the rest the e. U. Has to approve it, and that it needs to go through parliament. We are talking about less than three weeks before the deadline. Have an extension. Boris johnson saying he doesnt want one. It is a lot to get done in a summitime, but the e. U. Is coming up. Presumably they would have to craft of the deal. That is a week. It is a short time. Paul thank you. Flights are being canceled, real travel disrupted as real travel disrupted. This storm is expected to make landfall in tokyo saturday morning. Two Rugby World Cup games have been called off. This may affect the formula one grand prix. Our reporter is in tokyo. Lets start with the Rugby World Cup cancellations. What is the reaction . David reaction has been disappointment and tears from italian players who were denied the opportunity to play in new a sad day it has been for will rugby. The first cancellations in the tournaments history. Rugby is normally played in rain or shine and in harsh conditions. It has been hard for fans to get to grips with this but we have to bear in mind it is one of the biggest storms on the planet to hit this season. Probably the right decision for organizers to cut those games which were scheduled tomorrow. It remains to be seen what is happening sunday. The biggest one is japan against will decide who progresses in the quarterfinals and scout canceled in scotland. The stakes are high. Organizers will make a decision on the games sunday morning by which time the storm will have passed and they will be able to assess the damage and whether they can proceed. When japan was awarded the Rugby World Cup, they knew it would be a typhoon season. Why was there no land be . Plan b . Reporter that is a good question. They did continue best consider contingency plans like going to other venues or changing the time but they decided with such sort notice it would be hard to implement those without running risks of travel players. Also being able to do it consistently across names so it is fair for all teams. They pass over that but the question is, they knew this game would be played during typhoon season but we were quite late in the typhoon season. Normally the brunt is in late september. It is very rare for tycoons to make, particularly of this size to make landfall in japan at this time. It is bad luck. Shery what question is will this raise about next years olympics in tokyo . That is right. The livex will be in tokyo in august, which is extremely hot, oppressive and humid summer. There are serious questions actually over the welfare of athletes, spectators, volunteers, who will have to cope with extreme humidity and heat. Organizers will have to take mitigating steps against that which i believe they are doing with providing ice and water and shade and holding the marathon at dawn. They have a huge task ahead of them, bigger than the Rugby World Cup. This would be a manmade disaster if things turned out badly and people did suffer from heat exhaustion which already happens every summer in tokyo everywhere every day. It is a difficult time of year. They have a big challenge ahead of them. Thank you so much with that latest on the Rugby World Cup. Potential implications for the tokyo olympics. Vice president mike pence, speaking at a campaign rally. This is the First Campaign rally for President Trump since the impeachment probe began. Subscribers can continue watching at live go. Group offind a big entries later today and some of the events you may have missed earlier. This is bloomberg. G. Asia. This is daybreak i am paul allen. Shery i am shery ahn. Malaysia announces a budget plan on friday. The Government Faces a choice between the skull consolidation or ramping up Fiscal Consolidation or ramping up what are economists forecasting . Sophie malaysia has been able to have its deficit since 2009 with a goal to reduce it to 3 3. 8 but20 and the malaysian finance minister warned it would be challenging to do so with means fiscal prudence which is expected today after the deficit hit 3. 7 last year. In the target will be 3. 4 next year, maybe even less ambitious, expected to be relaxed to 2. 2 according to economist. This could maintain the countries Credit Rating countrys Credit Rating. U. S. China trade spat. No new levies are expected to be announced. There could be subsidies in handouts indicated by the Prime Minister last week as part of a pledge to lower [indiscernible] in malaysia. Joining for more on this, me have esther lai, that ra how do they get this mix right between fiscal prudence and not derailing the economy . Er it is a difficult time with budgeting especially when growth is slowing down. The government will be extracting a balance between growth and keeping to its commitment to consolidation. , firstwth of this year half 4. 7 , slower compared to the 4. 9 growth that was achieved in the same time last year. And this year we are expecting growth to be slower at 4. 6 . Even the globe slightly lower growth trajectory we expect the government to focus on measures to support adjusting and giving the cost of business, lowering in and in terms of industry 4. 0 and to help be 40 and and 14 address the cost of living issues. From the magistrates perspective it will be typical in terms of wanting to raise revenue and for the government, the finance minister has said that will be no new taxes. What we are expecting is there will be widening of the scope of and also in terms of keeping spending in check, what we observe is that for the first half of this year there are good trends. You look at spending here and on pensions, that is capped kept within the budget. We see a drop in the spending of 11 . The first half of this year the deficit was between 2 billion which is one of the lowest in the past five years. For the government to announce that the target will start next year, that is a step in the right direction from budget treatment management perspective which would bring about savings of about 7 billion. That can be used for more reductive spending to support the sector in order to generate better jobs. In terms of striking a balance with Fiscal Consolidation, the finance minister has said keeping to a 3 deficit would be challenging. I think the finance minister is [indiscernible] about the situation and recognized in the growth challenges. To strike a balance we are expecting a mounting deficit of 2. 2 . Crude we have seen wti gaining ground, jumping the most in three weeks. It continues to advance. Malaysia . Is impact will it have a Significant Impact given how dependent they are on energy . All prices will be a risk factor to the budget. There is a dependent, high dependence on oil and gas revenues since the abolishment of the you strip out the special dividends this year, 22 of revenue is linked to oil. Besides oil another risk factor to the budget Going Forward would be if there is escalation of a trade war, to extend that. It would result in a single global slowdown. Tax revenue would be affected and there would be a greater necessity for more stimulus measures and that might result in a widening of the rates. Paul more stimulus. How about from the gate the bank . More easing . Esther it depends on the growth as well as how that feeds into the domestic economy. The bank said it will be data dependent. Ofy are forecasting growth 4. 5 , lower compared to this year. Not going into the recession. But then again, mobile uncertainty is on the rise. Geopolitical tensions, there is no end to brexit or the u. S. And china tensions. It remains to be seen but there is greater probability of a cut if growth underperforms significantly. Lai, ram rating services, thank you. We have an interview with the malaysian finance minister in kuala lumpur monday. That is a 15. Gasquet 15. This is bloomberg. Shery key events, brexit crunch week at the end of the month deadline looms, Boris Johnson will lay out his legislative agenda in the queens speech. Willdnesday carrie lam give her annual policy address when the Hong Kong Legislature resumes its session amid the ongoing protests. Friday we will have key chinese data in the form of thirdquarter gdp. Early indicators pointing to further weakness with growth expected to slip to 6. 1 . The data will be released after potential u. S. Tariffs on tuesday. U. S. Banks will report on the earnings front. Tuesday is the big day with goldman, j. P. Morgan, citibank and wells fargo all due. Paul thank you. Lets talk about apple. Defending their decision to again approve a controversial mapping app in hong kong. The ceo said the company credible information from authorities indicating the software was being used to attack police. Lets bring in selina wang in basing credible in beijing. The app first was all right, then it was banned, then it was all right. Why has it been so difficult to get right . Enda we have seen selina this is a crowdsourcing app which give indications where protests and Police Activity are happening in hong kong. Apple that after allowing it to run for a few days it had confided with local authorities who gave critical credible information it was being used to target individuals maliciously in areas where police were not around as well as to threaten police. The creators of the app hit back hard saying there is no evidence of this and critics have said it is another example of apple capitulating to the Chinese Government at the expense of free speech. There is a lot at stake for apple. Greater china is its largest market outside the United States and it is not the first time we have seen apple make moves like this. A litany of apps have been deleted from the store in china to comply with chinese censors including news apps and virtual private networking. The economic might of china is what is playing into apples latest decision. Shery this also coming on the heels of the nba controversy. Navigating chinas influence . It is becoming harder for companies to juggle the political risks at home and abroad when it comes to operating inside china. It is not just apple. Blizzard, zara, companies appearing to be on either side of the debate. The nba is a prime example. A single tweet wreaked havoc for a company that spent decades building its presence in china with more than 800 Million Viewers last year. It puts these companies in a loselose situation because they are either at risk of losing fans or customers in a case of apple in one of their largest markets or they run the risk of seeming to cave in to chinas demands at the expense of western values. We did see a cascade of Companies Cut ties with the firm, tencent, sportswear companies in china trying to distance from the company. Is there is evident rising nationalism in china and beijing will continue taking a hardline zerotolerance policy when it comes to western companies appearing to question what it sees as sovereignty. Shery selina wang, thank you. That is it from daybreak asia. Markets coverage continues as we look ahead to the start of trading in hong kong, shanghai and shenzhen. Paul that is it for me. Haidi stroudwatts will be back in the hot seat in sydney monday but thank you for your company. China open up next. 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. Beijingt 00 a. M. In and singapore. Im Tom Mackenzie its not 00 a. M. Lets get to your top stories today. Time to talk. U. S. And china revise all negotiations and President Trump says day one is good. Kaplan saidobert hes not sure the u. S. Economy can avoid a severe downturn