The key levels we are looking at, the bloomberg dollar index, hinting at a critical level. Sterling has not been at these levels since the beginning of may. Optimism of perhaps not a hard brexit taking place but a deal could be done. We will have a guest from jeffries and we will ask if there is too much baked in to pound. The euro gaining traction. Seven weeks highs we were at earlier with the euro. The Australian Dollar moving slightly to the upside. 86 for the aussie. Looking at new york as we get to first word news and su keenan. Tradeina is offering a olive branch that could survive rising tensions over the hong kong autonomy bills on capitol hill. After President Trump announced the sides had agreed, phase one of the deal, beijing going to tackle the forced tech transfers that are a key issue for the u. S. Makehinese government will sure of equal treatment in china for companies. Trump it will be one of the biggest deals. Now we are getting a papered out but they are getting it papered out but they are starting to buy farm products. Su the australian jobless rate was down as the economy added fulltime jobs, 14,000 positions compared to a forecast 15,000. The Unemployment Rate fell. 1 . The number of fulltime visions rose and parttime 11,000. The number lowers the case for another rate cut. Continues to rage in Northern Syria as turkey pushes forward against kurdish forces. President trump has urged restraint. Mike pence and mike pompeo flight to ankara for talks. President oregon has president duda one has rejected he wanted removed from kurdish control. Where the spanish Prime Minister is pledging after three days of clashes between police and protesters in catalonia. People asked for the release of people jailed during their independence referendum. They are considering moving the venue for the football match between barcelona and real madrid. 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 su keenan. This is bloomberg. David lets talk china stock. U. S. Lawmakers will move quickly on the bill supporting prodemocracy protesters in hong kong despite retaliation from china. Threats of retaliation from china. We have a similar draft awaiting vote in the senate which has support from both sides of the aisle expected to be a formality. It will get sent to President Trump. What is the latest on this . Reporter we dont know when they will vote, but they will try to rush through it. It is a formality. It is bipartisan support, republicans trying to hit china whatever way they can and some of the people have been doing it for years. This is a symbolic way to hit out at china in the middle of the trade war and mark support for the prodemocracy protests in hong kong. David carrie lam try to deliver her speech live in and there were disruptions. What does it tell us about her being able to deliver what she said . Majority, she will have a really difficult time pushing through her agenda. We were talking to people including lawmakers saying anything which requires money has got to go through the but theremmittee are a lot of administrative tweaks some of the policies, relax mortgage rules, ordinances, land resumption, she can do this without going through but anything that requires real money has got to go through that chamber. The prodemocracy camp will disrupt that as much as they can. They will play tricks like yesterday, citing a projector on her face as she tried to speak. We can expect things like that and it can be paralyzed legislative session. Rishaad asia government reporter. This jeffries chief Global Equities shortages. One International Newspaper today had this front page ,uggesting the capital flight people are going to hong kong from hong kong to elsewhere. Are you seeing evidence of this . Not really. We are stunned by the headlines because if it was occurring, you would see hibor rates surging. The latest hkma reports on posits in hong kong, it dropped slightly but not to the extent that was suggested huge capital out flow was occurring. Real Interest Rates are plunging into negative territory which is stimulatory. We have seen six to nine months mortgages and loans growing during this political protest. It seems at odds with some of get from thecan hkn and my hkma. In the camp that the current the proposals would some extent boost property prices. On the fact it is harder to get a mortgage is the real contradiction. Interest ratesal are pretty good for the Property Market here. The developers are probably reasonably wellplaced. Rishaad affordability is ridiculous. Is you stillon have to put up 50 of deposits before you buy. There is a lot of pentup demand to buy property. The property stocks and prices have not fallen that much during the last 18 to 19 weeks. We have got to get a sense of what has happened to the real economy. Certain parts have been affected going into recession. Others are immune because Balance Sheets are in good order. David the rally was incremental in hong kong. What is happening . There is a reassessment. Chinas economy is not doing badly. You look at the greater bay area index, that is starting to meet new highs again. We dont see any of the worries about capital outflows occurring here. People are perhaps repositioned for things to get worse. And the stimulatory measures coming in. They are conciliatory. They are designed to assuage the issues about affordability and income disparity which is what the markets have been trying to price in. Rishaad is it too little too late what she has announced . Sean you could criticize the fact they could have done these proposals during the budget when they had that chance to do it and it was a lackluster is one of the biggest dangers, recession and job losses which normally are always incurred with a recession. Confidence eroded as well. Sean certainly the concessions book ofgned to help the the population. The worst thing that has happened interim of the the bulk of the population. The worst thing is the spillover effects. That was not in the numbers. Some of the capital from the banks in hong kong show they are starting to see business feelings and impairment urges picking up. The recession fears are more for the real economy and not necessarily for the Property Market. David we are moving into earnings season which will capture the three months we had protests and visitors staying away. What is your outlook . Disastrous fore the sort of hospitality, restaurant and retail trade. Golden week was an important part. The numbers suggest what we see from the earnings season now will get worse over the next quarter. Optimistic sign is we are coming into the Christmas Season which is a good season for expenditure, and to a lot of the bad news is getting reflected in the share prices. If anything, the best that has happened is rent has started to fall. The renter reversion cycle will help the margins we see would be onerous on retailers. Rishaad there are some holding out, evidence it is by no they would become widespread rental reductions. They are in certain Industry Groups but it is localized. Sean i think the reality is we will get a repricing sometime at the end of this year or next year where the markets and Property Developers start to have to put a different pricing mix on the rent because businesses are going out of business. Jeffries turns bullish on csi 300. Is it more or less bullish . Sean you went from modestly bullish to bullish. The reality is and in other markets, the csi 300 is led by defensive stocks. All of the staples have done well. Leadership, whatever next leg we have is not likely to be the same stocks. They are up two or three times the valuation of the overall csi 300. You look at the moves of stables versus energy, equipment in companies, they are setting themselves up for a huge rotation and we saw that flirtation with the s p earlier this year. Rishaad does this have an impact what is going on in hong kong on macau gaming stocks . Sean one of the interesting things has been since the beginning of this month we did see visitor arrivals in macau picking up faster. Year on year terms, they started to grow. There is a bifurcation in macau versus hong kong. It is not reflected in the stocks. Investors seem to have been polarized in what they are wanting to buy. Retailers in parts like the sportswear retailers have done well and are continually getting a bid. Other parts of the economy are finding themselves dissociated. What we have to point out it is not just china phenomenon. If you look at positioning and copper globally it is the most bearish ever. Versusole defensiveness the real economy being priced in, it is one of the most disparaging in the last decade. David we are almost ripe for a turnaround. Rishaad we will talk later on with the embattled chief executive prepares to field questions about her policy measures. That is coming up in 20 minutes on bloomberg. Withad you are back bloomberg markets. European leaders are gathering in brussels. Negotiations on a potential nude brexit deal. New brexit deal. Issues remain including irish border and the status after the split. Prime minister Boris Johnson said it is nonsense. It has been 2210 days since the initial referendum. Coming off sevenyear highs, the dollar and looking at this move, flip the graphic and the extent of the move up in cable and eurodollar, you can understand the biggest three or four day move in sterling. Sean darby is here with us from jeffries, chief equity strategist. Do i make the assumption the dollar will turn . Cable is a good example of this degree of risk aversion. The sort of beginning of september there was no probability of a brexit deal getting done. Positioning on sterling has been bearish. Suddenly we have the sort of big ships not only in currency market but guilds as well. If the dollar starts to come off, the degree of risk aversion is so polarized in some of these currency markets, particularly the pound. Rishaad is it really the moment a situation with a lot of optimism coming into sterling suddenly in the course of four days . Is it overblown . Sean there is a disparity between what the odds are being sort of the uks in terms of where we are with the brexit discussions and where we are with sterling. Out you had a cacophony of changes. Default the credit swaps for the u. K. Melting downwards. Had the irish stock market doing well. These are signs there is a more benign scenario starting to be priced into the whole discussion. It is not necessarily in the pound. Rishaad what will happen . [laughter] sean we wrote a report a couple of weeks ago called breaking the gordian knot. You have do change the rules. That is what Boris Johnson has done. He knows the Northern Ireland border issue is so contemptuous. You have to change the lookedtive of how it is at by both parties. The fact the Irish Government is supporting it, nobody out of the you is going to criticize it. The e. U. Is going to criticize it. Rishaad one vital component, the mother of parliament. Sean he has got a saturday sitting. They are not happy about that. If anything, that can deliver the brexit, this is what was needed. He needed to change the perspective of the border issue you needed to change the perspective of the border issue. David if we dont get a deal, does it mean equities and people think equities have peaked for the year, does that cement the view . Sean i would like to think it does not really. We have got such degree of risk aversion amongst investors in what we have seen inflows in money markets and government bonds, that a lot of positioning has been placed in for the hard brexit and no trade deal. The reality is when we are looking at the s p numbers coming out like netflix yesterday, Semi Conductor names, earnings numbers and global earnings numbers are looking good. So things are nowhere near as bad as sincerely as the pictures are being described. I appreciate it is not easy to do things during these times, but that is what the markets have priced is mystically in our view. Darby, now going back to the office on a couple of [indiscernible] rishaad i think three. Netflix delivering some good news with its latest earnings. But major challenges in streaming video. We are going to be going over their bottom line. This is bloomberg. Lets talk about netflix. The stock surged 11 in late trading after reporting betterthanexpected gains in the subscriber growth of the company. Different story for ibm which missed estimates. Rishaad su keenan, lets start with netflix. A bit of relief or was it really down to the idea they are producing shows which are popular outside the u. S. . Su a little of both but lets talk about the relief because last quarter was disappointing and people say it is good not great news. Lets look in the bloomberg weekly at what really put the stock over the top. The u. S. Subscriber additions disappointed but better than expected International Subscriber additions which goes those came in at 6. 3 million and that saved the day. Made up her smaller gains. Look at the after hours story, it was a one point up, still a healthy gain as the extended trading session went on close to 10 which will translate into a Strong Performance in the thursday session. Picture,ok at the big you will see where the disappointing earnings were. It was down 20 from the mid july high. A lot of subscriber numbers in the u. S. Has not been much to cheer about. There is concern about the cash about theoncern competition which netflix decide described as moderate. We have apple plus tv, disney plus, you have more streaming services from warner media, hbo from nbc. Eacock netflix has good catalogs but believes they will retain the crown. Subscriber gain for the second waster was, the second time 6. 7 million short of the 7 million projection. The shows, there is a particular ,atin show that is very popular spanishlanguage show that is popular not only in latin america but throughout europe and it brought on more international viewers. David ibm with the lowest estimate. What happened . Su a lot of it had to do with the red hat purchase. It did not offset declining sales and many thought it would. You should see in the afterhours it was down more than 5 . You look at the big picture chart and you can see this is a has done well under new management where your ceo is trying to make it a cloudbased future. There was the fifth consecutive quarter of sales shrinking at ibm. People hoped red hat would change the story. It did not. It was bought for 34 billion and the deal closed in july. Rishaad a quick look at the markets, moving towards lunch break, the position here. Companies making waves. Rakuten doing well as the Japanese Communications ministry allowed it to lower fees they charge for softbank. Going to be providing we work according to rescue financing. We have the upholding of a sentence. Details on the way. 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. Su it is 10 29 a. M. In hong kong. Imf, whichth the says Global Economic risks have risen and Central Banks reduced borrowing cost. They are calling for stronger oversight to ease threats to shaky expansion. The funds latest stability report says easier financial positions have supported Economic Growth but also encourage risktaking. Threats to growth and stability remains to the downside. We will be live at the Imf World Bank annual meetings in washington tomorrow. Our guests include the Asian Development Bank President and the Philippine Central Bank governor. Ating on to the 737 maxygen max jet, the latest investigation indicates potential evidence may not be what it claims. Weeks after a lien airplane crashed into the java sea, an Airline Employee gained photos that claimed to show a repair had been done the day before the disaster. The time displayed on a cockpit computer suggests the photos were taken before the work was carried out. The new animated movie abominable from remarks has sparked controversy in the philippines as it features a map that shows chinas Maritime Claims that are disputed by neighbors. A top Government Official is backing a boycott of all remarks films, joining vietnam, which has also raised objections. The movie is said to endorse beijings line that lays claim to 80 of the south china sea. 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. Im su keenan. This is bloomberg. This is the scene at the moment as we see chief executive carrie lam coming into the chamber after her disastrous attempts trying to address it just under 24 hours ago, interrupted twice. There are probably prodemocracy people following her, chanting. , the economy has entered a technical recession in the third quarter. She is going to be perhaps announcing further changes in the way they are addressing underlying issues which have been behind the protests in the territory. David suffice to say, based on what you alluded to yesterday, the double disruptions, twice when she started to address parliament, that is probably what we might get your out of the grilling she is expected to take from lawmakers as she begins this question and answer portion of this policy address, which she outlined yesterday. In the meantime, shares are continuing to rally in hong kong, up 1 on the hang seng index. Rishaad just outside the Legislative Council building is our reporter, sophie kamaruddin. Tell us what the scene is, what the atmosphere is like, and what is likely to be the main bones of contention. Government workers and lawmakers have been passing through police and security checks as they enter the government complex. Chenur ago, we saw tanya making her way. Earlier, she and her fellow held as prodems press briefing in which they question carrie lams legitimacy to govern. Middle ground will be difficult to reach. Wednesdays drama was very symbolic, forcing carrie lam to deliver her speech by video. Today we might expect some disruption, but there could also be attempts by lawmakers to take this opportunity to grill the chief executive on her policies and handling of the clinical crisis. As to what could be the main focus, we can expect lawmakers may address what they perceived to be the shortcomings of her 200 plus initiatives in tackling the economic woes that have befallen the city. We can expect she may also be questioned about why she chose to skirt away from political issues such as Electoral Reform. Oppositionhad an lawmaker questioning by the chief executive did not address investor and business confidence. Take a listen. If. President , members members continue to refuse to sit down if it looks familiar, it is familiar to what happened yesterday, but these are live pictures. They are interrupting proceedings right now. They are speaking in chinese, but they are saying all five demands were nothing. Rishaad five demands and not one less. Members also some are asking carrie lam to step down, which is one of the demands. People have been told to silence, the ones standing. Ejectione one possible taking place. Rishaad you were just david you were just looking at pictures of eddie chu, the lawmaker who got the most votes. You are looking at a lot of the prodemocracy legislators yelling, five demands, not one, not less. We understand that is still the scene, if it looks familiar. Giving her the inability to talk and had to abandon attempts to address the chamber at that stage and resort to a video of her policy address. Thats the scene at the moment here. Tempers and passions running very high in the territory. We have had protests on the city streets since the beginning of june, becoming increasingly violent as well. Violence, but there is certainly some how can we say . Hijinks. Lets have a quick listen. Shout,embers continue to we are not able to continue. Claudia, please leave the chamber immediately. Rishaad thats what we have. We will be hearing from felix chung, who will be with us a little while on the program, giving his views. He is going to give us an idea what is happening with the hong kong economy. He is really talking about a possible positive deal and what it could all come down to at the end. Hong kong markets ignoring this for the moment, david. Understand there are two lawmakers that have now been ordered to leave the chamber. One of them is claudia mo, which you might have heard a couple of seconds ago. Another being ordered to leave as well. I believe we can listen in. [speaking chinese] david sophie is still outside where all this is taking place. Sophie, based on what we just witnessed and what we had yesterday, it does seem that whatever carrie lam outside outline yesterday, it is going to be increasingly difficult to put this through and get funding for the measures she hopes to put into place and hopefully solve some of these problems in hong kong. Sophie despite her enjoying the majority when it comes to seats dems, asuse, the pro you can see, are proving they can create gridlock. That means getting support for her initiatives is going to be even more difficult. Getting funding approval will also be difficult. In the pipeline are 12 billion worth of relief measures that are still waiting on approval. The finance committee was meant to begin deliberations, but over the past week, we saw filibustering during sessions led by lawmakers such as tanya chen, which led to those sessions being derailed. Middle ground very difficult to find one opposition lawmakers are questioning her legitimacy and ability to govern, calling for her resignation. Happening, there is still a lot of questions about how effective her policies will be, even with the emphasis on the economy, housing, livelihoods. There is 5 billion hong kong dollars carved out for did for transitional housing. The question, will that be enough to address the housing crunch. There is also the controversial Artificial Islands planned that was included in this policy confidenced business that was not considered in her outline. This is something claudia mo questioned with us. Conditions have been worsening, expected to deteriorate further, and has not attempted to stem that. This week, banks working with the Monetary Authority to provide more funding into the economy, which Bloomberg Intelligence loan demand was already slowing before the protest. What is today, october 17 . Exactly two weeks from now, we should be getting what carrie lam told us yesterday, a confirmation the economy has entered a recession. You look at these measures of business sentiment, everything from hospitality to retail to Financial Services to catering to tourism, a lot of these tourist related industries are negative, and these are business expectations. Rishaad this is carrie lam. My policy address to the citizens checks off the policy address that has already been uploaded. I have also explained the main points of the policy address. I am happy to take questions from members at this moment. Leave the chamber. Well further members of legco being asked to leave the chamber after drowning out carrie lam with their shouts of five demands, not one less. Also a body of them calling for her resignation once again, which is one of those five demands. That is what we have at the moment, against the backdrop of the measures she announced regarding housing. We have seen housing stocks in p. Ng kong moving 2. 1 u david two Straight Days of sharp gains, about 4 of over that time. Assuming those measures get put in place, lets start with that, by hong kong property stocks. We are just getting an update that now five members are being asked to leave or kicked out of the chamber as we speak, which makes you think, this is supposed to be a question and answer and she is supposed to take questions, hard questions, on some of the things she mentioned yesterday. If the opposition is getting kicked out, who is going to ask tough questions . That is something to ponder. Rishaad i think we should let things settle down a little bit and go to a break, because on the other side of the break have felix chung, a member of legco, joining us, and have a reporter looking at the Property Market. Keep it here as we come back to these scenes in a couple of minutes here in hong kong. This is bloomberg. Rishaad this is bloomberg markets. This is the view of what is happening in the Legislative Council. We were expecting carrie lam to take questions and answers following her policy address yesterday. She has been shouted out by five members at least, being kicked out of the chamber now. Focused only to be some of the property policies she was announcing yesterday. We can get more on that. Someone is here to talk with us about the announcements she has made on property. The hang seng Property Index is now up by 800 points on top of the 850 we had yesterday. I think that has largely to do with the relaxation of mortgage policies, so now buyers can pay just a 10 down payment for homes valued as much as 8 million. The previous cap was just 4 million. Policy wouldficant be receiving 700 hectares of land in a new territory, twice that of new york central park. They wanted to be more Public Housing. Other measures, including more transitional housing for those waiting for Public Housing units, as well as the presale of subsidized housing. Rishaad there is this talk of reclaimed land on an Artificial Island as well, which may take years to construct ultimately. David it takes years it takes years for these Public Housing measures to be realized. Rishaad what we are really talking about is housing being one of the root causes of these protests. Signhing is, is there any that these measures will pacify the protesters . So, because one calculation yesterday from mortgage brokers, in order to be eligible for the new mortgage around one has to earn 57,000 hong kong dollars, more than twice hong kongs median income. Carrie lam herself said this policy is targeting professionals. The young protesters, we all know they are students, young graduates. It is very unlikely for them to really benefit from the policy, so i dont think protests are going to end anytime soon because of the policy address. David who has one million hong kong dollars sitting around for the 10 down payment . If you can find an apartment. Rishaad there is another prodemocracy legco member holding up a placard at the moment, saying carrie lam was meant to be holding a q a session with members of the Legislative Council. This all going on at the moment as they have been shouting for five demands, not one less. One demand is the resignation of carrie lam and asking her to step down. We have someone from legco with us. David felix chung is with us, a legco member, a pro establishment law member. As we look at these live pictures, arent you supposed to be there . Have you been thrown out . Because i am invited to be discuss to come everything with everybody rather than just sitting there, because i am not going to ask any question anyway. David why . Well, againe because you invited me to be here. And i think there are more questions you are going to ask me here rather than just sitting there, because i know that will be a mess in the chamber. David thats exactly what we are seeing. It is a mess right now. Rishaad felix, you obviously hurt the policy address yesterday obviously heard the policy address yesterday. Is it enough to win back the hearts and minds in hong kong and what more needs to be done . I think many people have certain expectations of the policy address, because we think the crisis we have right now needs to be settled as soon as the policynd we hope address might have some plans how to settle the crisis. Unfortunately, i am pretty disappointed there. Is oned housing supplies of the key things in hong kong and people are expecting the government is giving us more than, more houses more land, more houses. This is more longterm. Rishaad the meeting has been suspended, carrie lam walking out of the chamber. Carryon. This is expected. Of course, the supply of land and housing from the policy address is more longterm. Sayinge government is they are going to use the land resumption ordinance with cooperations with the land developer or landowner, and it is five years. We get that. We get the land in five years and start to build the houses. David it is going to take a long time. Seven to 10 years. David and we have to wait for prices to come down after that. As we look at these scenes, it is now suspended. You are pro establishment. The policy address yesterday, do you think she has made it worse . It wont make it worse. David the tensions, i mean. It wont make it worse, but it wont make it less. People are expecting the policy address might have some proposal to calm the situation down, but unfortunately there isnt any. So whats next . David right. So whats next . We need the government to make some proposal. For example, about a month ago she initiated a dialogue between her and the general public. Very ugh it was not it helps a little bit. Unfortunately after that, she says she was going to new another one, the second one, third one, fourth line. Two weeks later, she launched a law, which escalates the tension again. I dont believe she can have another dialogue soon. Felix, the thing is, you said you need more diversity in legco. Sophie kamaruddin was suggesting i ask you about that. That is one aspect. What would you do, if you were chief executive, to quell this . Abouttainly i would think to set up an independent investigation inquiry, which has a consensus from the public. Almost over 70 of the general ,ublic, no matter which side all have the same thinking of doing the investigation. Rishaad what about the other demands . Is there any wiggle room . Of course, the five demands. The first one already done, the retreats are built. One,econd one, the easiest the independent investigation. David as a neutral observer, the question i always get is when people look at the five, they point to the independent inquiry that you are in support of and they always ask, why is that so hard to deliver . You said on the others, pro establishment. Among your peers, is there actually support for that and why is that so difficult . That,ust talked about over 70 of the general public rishaad what about 70 of legco . Basically from pro establishment members, they do support that, but there are some concerns about targeting, not just targeting on the police. It would be content, which we can discuss, about who to investigate, whats the main purpose, are we finding solutions, watch the way forward for hong kong . Rishaad what about the other demands, felix . Think that involves the beijing government. Beijing certainly is a stakeholder. Still, we can start the conversation again, start the discussions, whether we should start from the framework which we have five years ago. Adjustable,thing flexible . We can discuss that. David is there a sense that since this began, based on the people you talk to on the mainland, that beijing may be willing or more flexible when it comes to the topic of Electoral Reform in hong kong . Whatever that may eventually be. I think the beijing government is looking at the hong kong situation very seriously. I think the beijing government will eventually make some concessions. I dont know when. That will certainly help the situations. Rishaad universal suffrage is right off the table. She has to answer to two masters. Whats the view from beijing on this . What are they thinking about what she can and cant do . Beijingnk right now will leave her to clear up the situation. It seems the situation is , soing worse and worse maybe beijing will just give her a final chance. Suddenly beijing might make the decision to get another one to pick up the job. Rishaad thats one of the other demands, isnt it . Felix, thank you so much. Im sure you are going to go back to the chamber now. You probably knew it was going to be suspended and thats why you decided not to go, so maybe things will continue later on. Taylor i am taylor riggs in san francisco. In the next hour, netflix beats projections for the third subscriptionsew falter. More on the latest earnings. 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