Plus financial secretary. Were standing by for Election Results in argentina. The president is under pressure there. We will have the latest. Paul lets take a look at how things are shaping up in the market today. The straily just up and one minute ago. In as are coming online order in australia. Not a lot of action. Futures were indicating pickup of about a third of 1 . Futures for the nikkei traded out of chicago. They are looking slack right now. U. S. Equity markets are also pointing higher. Sytock global stocks back to the highest levels seen this year. Lets check in on the first word news. Su we begin with the california fires. Workingters are to contain blazes across northern california. This has forced the evacuation of 200,000 people. Homes have burned to the ground. This is driven by a windstorm packing 90 mileperhour gusts. Gavin newsom has declared a state of emergency with nearly 3 Million People without power as of sunday. The result of argentinas election is expected in the next few hours. Mauricio is facing pressure. This is on the back of an economic and currency crisis. The government is seeking to reorganize more than 100 billion in debt. China saying that parts of first part of a trade deal with the u. S. Are completed. Chinas ministry of commerce says the two sides have agreed to properly resolve their core concerns. Democracypro activists clashed with police again this sunday. This is the 21st straight weekend of unrest. Always fired at protesters. Bs atsters threw bom police. There was separation in the new territories. As was after up is the rally that drew thousands of protesters in central. In hong kong, the financial secretary is warning of the potential for negative growth as the economy reels for more than four months of unrest. Impossibleaid it is to rule out of the possibility rule out the possibility of a gdp combine decline. 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan. Shery the Islamic State leader is dead after a u. S. Sport for rases special forces id. D. C. Forto ross in more. How much of a Political Boost is this for the president . We would expect to see some boost in President Trumps Approval Ratings after the successful raid. Especially after the long and detailed discussion President Trump did about the raid. That was seen by millions of people. We have seen that when Osama Bin Laden was killed that it did not have much of a longterm impact obamas approval numbers. Osama bin laden was a bigger target and more wellknown target. I would not expect a longterm. Oost shery what does this mean for Islamic States now . Ros its a setback is a setback for the jihadist group. Of ainly in terms territorial threat, they are much smaller than they were a death of ago but the this leader could see retaliatory attacks. It could be a fresh motivator for people. The leader is dead but the ideology lives on. There are multiple attacks around the world. Seems like there is a core of supporters who are more than turned off. Are there any implications of impeachment inquiry for the impeachment inquiry . Ros i think this is a different land. Lane. Historically, it does not matter how well the economy is doing, it does not matter what other Foreign Policy moves are being made, once the is going on,rocess that is secondary. We have heard from democrats and adam schiff, the representative from california. There is no slowdown there. He has a very tight timeline he wants to adhere to. He basically said there could be public hearings in the impeachment probe. We know that more current and former officials are due to testify. One of the pieces we are looking at is whether any of them stopped. That has not been the case. This has been a steady stream of officials going up to capitol hill. Look for more of the same and to adam schiff and others specify some sort of sign went to get this moving forward. Ros, thanks. Was still to come, the results from argentinas president ial elections are due. Shery up next, it is a chaotic week. What to expect, this is bloomberg. Asia. This is daybreak i am shery ahn in new york. Paul i am paul allen in sydney. We have a Federal Reserve meeting and manufacturing of pmis around the world. Japan meeting on top of all of that. Lets bring in katrina. Thank you for joining us. Lets kick up with the doj meeting. Off with the bank of japan meeting. We are not expecting the bank of japan to announce any game chanting changing additional measures. They are not sure what they will do next. They are running out of policies based make meaningful changes. They will wait a little longer to see the impact of the consumption tax hike. That was introduced on the first of october. They will assess whether these policy moves are necessary. We have seen that very early preliminary anecdotes suggest that they have had not much of a damaging impact. They may not need to be so aggressive at this stage. Paul in terms of the aggression, the boj remaains tied to this. Or tryime to reconsider something new on the policy front . That is the key point. It is time to change the conversation a little bit and say the bank of japan has been very aggressive for the last couple of years in really trying to reinvigorate the economy and get inflation back to the 2 target. They have not had any luck. They have not been able to create that virtuous cycle. Maybe it is time to shift to whatever policy measures are available. Structural reforms have an important old to be playing rather than focusing so much on Monetary Policy. Labor marketability would be a good time to way to improve productivity. Central banks in asia are playing paying close attention to what the fed does to see how much room there have. The fed will go ahead and implement another rate cut. The financial conditions here in the u. S. Have really rebounded. It is nowhere close to where we were when the fed had to make a uturn in the last quarter of last year. How justified is the fed to go ahead and cut rates again . I think it is important to take a step back and understand what is driving the fed to cut rates. By last rate cut was driven concern about the outlook and that was the impact of the trade war with china. How it was impacting u. S. Economy and inflation. Those points remain. They had not improved materially. There is still that justification that the u. S. Economy needs that additional monetary support. That is why we are on the bandwagon for additional production. Reduction. Shery we are expecting another month of contraction. Pboc be morethe justified to take action . I think that is exactly right. Our expectation is that we will continue to see additional fiscal and monetary support coming from china and into 2020. We have seen that they are making small adjustments to the benchmark policy rate. We think they will continue to make those small cuts as well. The income taxed us to provide Additional Support and Infrastructure Spending as well. Not try to reinvigorate the muddlesbut to help it through this really trying time. We have had some encouraging news on the trade war front. When may they break above 50 and into expansion territory . Is sometime away. There has been improvement in trade tensions but the u. S. And tariffs arexisting remaining. The tariffs on china are very significant. The are continued drag on manufacturing export engines of china. I dont think we will see a sustained return to 50 anytime soon. Absolutee seen exports cratering absolutely cratering. Just how dark of a place is south korea in right now . The problem with south korea is they are incredibly exposed to the Global Environment. The Global Environment is weak. Time, they have weakness in domestic demand. They have these two issues they are grappling with. The bank of korea has provided Additional Support. Anye isnt an outlook for sort of rebound or significant improvement anytime soon. We are not expecting cpi numbers out of south korea as well after falling into deflation for the first time amber ever. Where expecting that cpi is going to remain in the negative territory. The odds that the bank of korea will cut an additional 25 basis points are incredibly high. What they are trying to do is prioritize and stabilize domestic demand and try to prevent economy the economy from going down a darker and weaker road. Are we getting closer and closer not only in south korea to congressional Monetary Policy conventional Monetary Policy . In many places, not just japan, not just australia, we are moving toward a situation where Monetary Policy is reaching the end of its life. We do need to move on conventional measures. That is highly discussed in australia. The consensus seems to be that cachet gets to 0. 5 , we will move to other avenues. We will try to reduce the us trillion dollar and stimulate the economy that way rather than just the lower lending rate. It seems to be a new normal. Thank you for that. Joining us from sydney. You can get a roundup of the stories you need to know to get your day going. Yourberg subscribers, information is available on your terminal. You only get the news on the industry and then the assets that you care about. This is bloomberg. This is daybreak asia, i am paul allen in sydney. Shery i am shery ahn. s Election Results are expected in the next few hours. This is against the backdrop of an economic crisis causing mounting pressure on Mauricio Macri. We have seen this country stumbling from one solvency crisis to another in the past 70 years. This could be the ninth default. They are at risk of seeing another default. How significant is this election for argentinas fiscal outlook . You are right, this will have numerous ramifications for argentina. Not just from the currency front. 30 just the week of the primaries alone. Be carefullyill watching to watch out for clues of any further debt talks and any talks with the imf. Shery lets talk about the Market Impact of this election. We have seen stock ponds plunging after that august primary. What are the expectations now . We are about 40 minutes away from getting the first thats of official results coming in. Then we will have a stronger sense of what the margins will be between the two leading tenets. That will allow observers to know if they will be a fun of rounding in november. Markets in argentine will be watching for more clues about what the winners first positions will be. Paul politically, what has caused this turnaround question marks fernando tournament . Fernando seems to have come out of nowhere to become a president ial contender. What is driving the public . There are a few interesting things. The economy has been front and center in this election. We are talking about a country that continues to have over 50 inflation, rising poverty numbers. For many argentines, there is a . About whether president s Mauricio Macri has the ability to turn the economy around. Alberto fernandez is running a former president. Even though she has been known hasolarize argentines, she a very strong support survey. That seems to be one of the keys to help he was able to gather some grassroots support. Paul that is an interesting relationship. Fernandez was her chief of staff is his he is her she life president ial running mate. How much influence will she have on the future direction of argentina should fernandez when this election win this election . That is the question everybody is trying to enter. She is entangled in some legal cases for alleged corruption. She is also going through some internal family issues. Observers are very curious to asw whether she will be being Vice President as she was in her own presidency. Control,g capital intervening logistics, that is certainly a question that many will be looking at to find what the answer will be. Carolina, thanks. Educationline company fell sharply after in new york. The ceo said that he is unfazed by the tumble. Like the u. S. Dollar markets because they have treated us well. Returnas been a great for chinese and u. S. Investors around the world. That wer us, we think are doing trade related business. In education, i would expect it to be a very good way to connect the u. S. And chinese people. One of my last questions, what is your reaction to the opening price . It is 20 lower than the ipo price. Do you think investors are pricing in the right value . Zhou i fit we all price for the longterm. Getting to ipo is a stepping stone for us. It is a very good way for us to attract better talent, to be a more respected company. We think it is the right move. We are very confident in our plans. We think this is a very new starting point. Good starting point. He is undaunted by the debut as the Parent Company had says head says they are going to take their popular music streaming app public. At a time when the Management Team is mature and the company has a leading advantage on the market, we can make the decision whether or not it should go public. It is a tough market for mainland ipo. Shares of the Company Going public in china. Lets get a quick check of the latest business flash headlines we will be watching. Chinese bank stocks after the nations biggest stateowned banks report earnings as Economic Growth continues to slow. There was an 8. 8 increase in profits. Rose. Rofit bocom reported these numbers. Help for struggling small businesses. Offering 50 million. It could be the biggest purchase ever of the french brand, louis vuiton. This is bloomberg. Su this is daybreak asia. We start with President Trump who is calling on the world to continue fighting the Islamic State after announcing that its leader is dead following a u. S. Military raid in northwest syria. He is the highestranking terrorist leader killed or captured since Osama Bin Laden back in 2011 during the obama administration. President trump said the u. S. Is targeting his likely successor. In china profits earned by the biggest industrial firms are falling after the economy slows and factory deflation deepens. This from the National Bureau of statistics. Industrial profits fell 5. 3 in september in faster declines from the month before. Industrial production picked up some of the pressure on pricing continues to weigh on profits and debt servicing ability. The Chinese CommunistParty Central committee is expected to meet monday the First Time Since february last year. It is the longest stretch in four decades since china started its economic reforms. President xi will pick up where he left off, solidify his control over the ruling party including potentially reshuffling key leadership roles. In chile, a weeklong state of emergency will be lifted at midnight sunday. The country has seen its worst civil unrest in decades with thousands arrested and 18 people killed. Authorities are struggling to respond as protesters call for economic and political change. The president is planning a Cabinet Reshuffle in a bid to pacify public tensions. Looks set topasse continue after the main Opposition Labor Party made clear it will not back Prime MinisterBoris Johnsons bid for early election. Isors refusal means johnson certain to fall short of the two thirds majority of a house of commons vote monday. The e. U. Says it will announce by tuesday the terms of any brexit delay. 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. Paul thank you. Lets get more on what we should be watching. Adam haigh is with us. We have seen a bout of strength from equities markets but volumes not all that have been cracked up to be. Does it suggest a lack of conviction . Adam to the extent we dont see volume pick up. Even making the fresh alltime highs in the u. S. Which could eventuate, it begs the question if there is underlying things tilting people favor this chart shows it. We looked at the etf that checks trading hasand fallen back to levels we have not seen since midjuly. This happened at a time where we have a flurry of earnings from companies which continues this week. Pickup, youce of a feel there is not much else to prolong that. But the thorn in the trade thatons is incredibly people want to tilt in favor of risk and people dialed back the no deal brexit kind of stance. There is a little bit more on the table, the fed policy decision depending on how jay powell frames that in his press conference afterwards but we are the meeting in china with top level officials to see whether there are any clues that come out in terms of future policy and whether anything on the Stimulus Program will be released. Shery markets are breaking in a rate cut. Baking in a rate cut. This could be the last one. Ask andrtainly a big markets have moved back half of the aggressive pricing for more moves next year. Market 25 basis points pretty well baked in to markets. Next year a lot less in terms of easing policy than the market expected 546 weeks ago. It is about the tone five or six weeks ago. It is about the tone jay powell uses. Whether he is leaving it open or not for the market to feel like there could be further easing. There has been a few things changed since we last heard from developmentschina and also what we are seeing in britain with the brexit no deal repricing. It will be interesting. Whether it is enough for equities to take on another kick ,igher and bond yields push on it remains to be seen. Shery thank you. Adam haigh. Global editors. Global market editor. Rick perry has emerged as a central figure in the trump impeachment probe after the president said he asked for the ukraine call to happen. Kerry defended his perry defended his decision. The message was always the same, you got to have the rule of law addressed. You got to have transparency, you got to have the sanctity of contracts, unbundle this transmissiongas company if you want American Companies to feel comfortable. Get rid of the corruption we hear about day in and day out area that was the message both with and day out. That was the message with both president s. The president talked about corruption. Gas wasance on russian negative for that country. This gave them the option we had sign for youdy to with lng to go in through ukraine. It was a positive story from my perspective, having the president call zelensky and say we understand you are doing what you said you would do. Lets go forward. You have set the time and time again. Do you see somehow hung out to dry he said he told the republicans the july 25 call was your idea. I dont feel hung out to dry. It was true. I did call the president. I said you need to make this call. Everybody wants to talk to the president of the United States and be in the white house with a photo op with the president of the United States. You dont feel hung out to dry. I am doing my job. It is to sell american elegy. Ukraine was important. We have the opportunity to do that still. There is distraction with all of this going on. But this is a really important part of europe. Ukraine is the buffer. If the russians have the ability to come in and put the squeeze impact the it could rest of europe in a negative way. Do you think he is going to be impeached . Not at all. Truth of this is we work we were working on Getting Energy into ukraine and never did i hear the word biden, military aid. If there are folks that have heard that and Going Forward, stand up in front and give your testimony, but i have not seen anything that tells me the president has done anything even approaches the concept of a perk impeachment. You said you were not prepared to testify. You talked about the illegality. What needs to happen to get you to agree to testify . The first thing is the house needs to follow their rules and do what their rules require them. The rules are in essence law. Here is how you conduct an impeachment inquiry. What requires is a public vote. You are asking people to come and say here is what happened, but you are not willing to stand up and say i am for impeachment . That on its face tells you there is a lot of politics being played here. Paul u. S. Energy secretary rick perry. If you are a way of a screen you can find indepth analysis and the newsmakers on Bloomberg Radio, broadcasting live from our brandnew studio in hong kong. Listen through the app, Bloomberg Radio plus or bloombergradio. Com. This is bloomberg. Paul counting down to asias first major market opens this morning, seeing pictures here of seoul. Korean futures pointing higher, good month for the kospi, up. 6 despite the headwinds from competing trade wars. We will have Industrial Production and cpi numbers out this week. The nikkei opening at the top of the hour. I am paul allen. Shery i am shery ahn. Thirdquarterrs profit surged 88 thanks to higher sales and better cost controls. Joining us now is the rhp securities analysis analyst. Resultseat wall motors were reflective of the broader thirdquarter trent for chinese automakers or trend or was this a unique performance . It is a good indicator because it shows the whole trade of get back to normal. In the Fourth Quarter we are expecting the whole sector to come back to positive growth 2 , 3 . That is because first of all in fourthquarter 2018, the first we started to see doubledigit growth, and that is a low base. See020 we will start to early chinese new year. , it willinese new year bring up auto sales in the Fourth Quarter. I mentioned,as inventory levels got back to normal. ,ecause of the forces viously, chinese tax cuts 18 and 19 auto sales. In 2020 we may start to see auto sales come back to normal. Positive start to see auto growth in the Fourth Quarter. Of there is a good sign whole outer sector. Shery auto sales are correlated with the performance of the economy. If we continue to get chinese economic slowdown, how will that affect sales . That is under pressure because it is correlated with gdp growth. But because previously as i mentioned there were already two years of negative growth, auto sector is coming to the cyclical stage. We see clearly positive rose after inactive growth. ,urrently 2019 started to see set a relatively low base for future growth. China has been tightening conditions for auto loans as well area does that give you any concerns . As well. Does that give you any concerns . There is liquidity and also pressure from the auto purchasing loans. Whole market is slightly turning positive in this quarter, because the inventory level has come back to a relatively stable level. Inactive years of growth, there is a very low base. There is not much pressure from auto loans. Shery what about the electric vehicle segment . This is important for the chinese government. But we have hundreds of electric carmakers. How competitive is the markets or are we going to see consolidation Going Forward . The market is very competitive. We see slightly drop of the electric vehicle sales. Importance. Gic that will continue to push ev sales in the future and actually Technology Manufacturers and also the acms auto in the, manufacturers, they started to do evs. The competition is very fierce. Seen moretly we have effective jobs the auto manufacturers like byd. We believe they can do good evs and sales are good compared to like other automakers. The luxury segment is performing well. We have seen unit sales for bmw, mercedes performing strongly. Do you expect that to continue . Yes. We will see this. The luxury market is performing good because of the consumption upgrade in china. Localk for the manufacturers, they may see a little bit of pressure from the luxury markets. These luxury markets, they enjoy very good margins and can discountso offer like to continue to sustain their sales in the future. I think there is still room for the Luxury Brands continue to grow. Shery do you see paul do you see a risk of consumer boycott because of the trade war . China the because in ford and the cadillac are the two major brands in china. Cadillac sales is good. Ford has been weak for a long time. Not very much boycott because of the trade tensions between china and the u. S. On these brands. Thank you for joining us. Still to come, can hsbc ride the wave of turbulence in hong kong . A preview of thirdquarter results. This is bloomberg. Shery this is daybreak asia. I am shery ahn. Paul i am paul allen. Possible job cuts, new ceo and the slow down in hong kong all going to be in focus when hsbc reports Third Quarter results. Stephen engle here to preview the bank earnings. More cost cuts on the way . Stephen it is possible according to bloomberg intelligence. Could be upwards of 10,000, job cuts, not necessarily announced today but it could be in the pipeline. London,nt banking in Retail Operations in france and people familiar saying hundreds of workers in the middle east, north africa and turkey could be asked axed. That is one side of the story because the chairman believes the bank needs to improve return on capital and cost cuts are likely. They got a new intern ceo interim ceo. The previous one was ousted by mark tucker, john flynn. He embarked on operation project oak which was a costcutting procedure. This additional job cuts could be an extension of that project which was launched by john flint. 30 of the banks capital was generating returns of less than 1 . This goes handinhand with the search for a new ceo. Will we get any guidance on whether the interim ceo in august, will he be named the permanent ceo . He has been angling for that job as he has embarked on are taking mark tuckers marching orders for further cost cuts to heart. The other thing is to what extent is the bank feeling the pain from the hong kong protests, the slowdown being felt as a result of that as well as the u. S. China trade war . Shery what sort of numbers are we expecting . Stephen it is not going to be disastrous that it will be likely down yearoveryear. Likely to have fallen nearly 8 . That is the median or the consensus estimate of 15 analysts surveyed. You can see the shares area they have performed fairly well given Global Market turmoil out there. They have rebounded 10 since august when quinn was named interim and the other ousted. The stock is down 5 year to date. What else are we likely to get . Net interest margins remain resilient above 6. 1 with support of hibor. Kong, terry hong competitive. That will remain a major drag on net interest. Midday we could get those results. Shery thank you. Our bloomberg keep new chief north china correspondent. A look at the business flash headlines, indian bank stocks in focus after this bank posted lower than expected secondquarter profits because of a onetime income tax adjustment. Million. E fell to 98 on friday the state bank of india shares jumped the most in a month after it posted a bigger than expected secondquarter profit with net income tripling to 424 million. Paul china is allowing unsure investors to buy dual class shares traded in hong kong. The revised rules go into effect from monday, giving investors access to the likes of xiaomi and hong kong, shenzhen and shanghai. It is the latest move from chinese authorities to find ways to keep the countrys Tech Companies at home. Shery netties going to take app public. G music the music app has grappled with rising content costs as it looks to compete with Tencent Music which raised 1. 1 billion in a december ipo. It tumbled on the first day of u. S. Trade, the first the latest in a string of Chinese Companies to do so. Business the online which just went public will expand 100 times, 1000 times. We could provide the efficient and interesting study and experience for millions of households in china with our Online Educations innovation and service which is my dream. Paul lets check in on how we are doing on asian markets now. Australia trading for nearly an hour, the asx higher by. 3 . Wise tech, one of the performing companies after it spent most of last week fending off short seller attacks. New zealand, dont Pay Attention. That is fridays close to new zealand is not trading today. It is labor day. Comingnd south korea online at the top of the hour. The kospi futures are higher by. 4 and nikkei futures looking to post a modest gain of. 1 . Still to come, we are counting down to the results of the argentinian elections with the council of the americas Vice President. We have the market open next. This is bloomberg. Paul good morning. I am paul allen in sydney, where asias major markets just open for trade. Shery this is daybreak asia. Paul our top stories this monday, global stocks almost back to the highest ever of the year. Factors to watch out for this week. Pmi and decisions from said and doj. And the meeting of the year in china as president she president g heads a gathering of the top parties. Shery and we are standing by for Election Results in argentina, with the president is under pressure. We will be live in buenos aires with the latest. Ets get to the Market Action david and glass is in hong kong. How are we setting up a and south korea . David things are looking good. Open 4 10 of 1 of the upside. In japan and south korea, we are coming off a fairly busy earnings statement. China gets a lot busier as well. Three straight weeks of gains. Thate tracking a couple may have reason for caution. A couple markets close. New zealand, singapore, malaysia, and india are shut for various reasons. At type dollar china. 705 in the course of partial progress to phase one that gives you an indication of 12827. Showing thatta shorts increasing. Clientsding to their they are undervalued and uncertainty, trim the positions. Lets look at the bloomberg chart. The first could see golden cross in three years. If weeks of gains, something to watch. A lot of earnings coming out of this market. Already feeling busy. The lets check in on first word news. The chinesewith communist Party Central committee, expected to meet monday for the First Time Since february of last year. The longest stretch without a since china0 years started economic reform. The president is expected to pick up where he left off, solidifying control over the ruling party, including potentially reshuffling key leadership roles. Hong kong prodemocracy activists clashed with police again sunday. It was the 21st straight weekend of unrest. Againstired tear gas people who had disrupted traffics. Through petrol bombs at a police station. Saturday night, separate clashes in the New Territory after a peaceful rally that involves thousands of protesters. Hong kongs financial secretary is warning of the potential for negative growth this year as the economy reels for more than four months of protests. Sunday, it was that it is impossible to rule out the possibility that four year gdp will decline and that it is looking difficult to achieve the forecast of zero to 1 growth. Northern california, firefighters are working to contain blazes across the northern part of california. They have forced the evacuation of nearly 200 that 200 thousand people. Homes and at least one winery have burned to the ground driven by the windstorm with 90 mileperhour gusts of wind. California governor has declared a state of emergency with nearly 3 Million People without power sunday. The brexit impacts impasse is set to continue after the labour party made clear it will not back Boris Johnson bid for an early election. The refusal needs johnson is almost certain to fall short of a two thirds majority in the house of commons vote monday. The eu is proposing to extend the deadline for brexit 53 i three monthst by three months. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Results from argentinas president ial elections are starting to come in. The interior minister says Opposition Leader is in the lead with more than 65 of votes counted so far. Carolina joins us and buenos aires. We knew after the august primary that fernandez might be the winner. What do we know so far about the margin of the three margin of victory . Votes are70 of the 47 . Ed and fernandez has remembersults hold, that to win outward is 45 points. But it is too early to say. What is most impressive is that macro seems to have gained 10 points from the primaries. He has had an intense campaign argentinauring around and having largescale events. It seems to have paid off so far. Shery this was a really unlikely candidate. And his vpcenterleft would be the former president. Tell us what sort of government we could expect if he wins the election. Carolina will probably be looking at a more interventionist government. They have been campaigning on boosting Consumer Spending and government cutbacks that have been part of the program. Program argentina has with the imf. He has been saying he is not to default [indiscernible] difficult to see how the plan would materialize. Paul if fernandez wins the election, and on the current vote count it looks like he is on call to do sore do so, is he heading for a showdown with the imf . Says theythe imf has are willing to see what the economic policies will be at the negotiating table. But we know so far that they have not made any disbursements that thele, so given countrys Foreign Service has been foreign steadily since the primaries, it will certainly be a priority for whoever takes the helm of the government to resolve the matter as soon as possible. A carolina keeping an eye on the election. Esults in argentina fernandez is currently in the lead. President trump says the Islamic State leader is dead after u. S. Special forces raised northern syria. He was the highest ranking terrorist leader captured since Osama Bin Laden. Lets go over to Jodi Schneider for more. Now that the leader is dead, the is trump saying about fight against the group . Jodi touting this and going on television and giving details of the raid that killed the leader, President Trump and said the u. S. Is out. He says they expect others including russia, turkey, iraq, and syria to take up the fight, as well as the kurds. He said while thanking them for their assistance, he said that the u. S. Is done and the secretary of state said the u. S. Will do the special kinds of raids when necessary but leaving it up to others to continue to fight. President trump did not tell nancy pelosi or other congressional leaders about the raid that killed the leader ahead of time. Is that normal . Jodi it is not. What is known as the gang of eight, the leaders of the house and senate of both parties, including the leaders of the Intelligence Community almost always given a headsup when Something Like this happens. President did not do that this time. Received some criticism for it. Adam schiff who heads the House Intelligence Committee of democrats said while applauding the action and saying a ruthless killer has been taken off the world stage, he at the same time said President Trump should have let them know. Saids comments when asked he did not give them a heads up because he was worried about leaks. So there was a political element to that. President trump also said this was a more important to raid than the one which killed Osama Bin Laden, who of course was the mastermind of the 2001 terrorist attacks under president obamas watch. Politics. It of shery how much Political Capital will this give President Trump . For himis is a boost after a lot of criticism about taking the troops out of syria a few weeks ago, which led to turkeys incursion and really putting the kurds who have been. Ighting alongside us of theves them a boost successful raid. We are here in some criticism from russia who had been thank early on and then said were not sure it happened that way, but im sure we will be hearing more about this. Now, this gives trumps a it gives trump a boost. Jodi schneider, thank you so much for that. Still ahead, hsf bc releases there Earnings Report and we look at how hong kong protests are impacting the company. Paul and we will get advice on the asian bond market from the National Australia bank. This is bloomberg. Shery this is daybreak asia. In sydney. Paul allen we are keep an eye on the spread between two and 10 year treasuries as it widens. Treasures are seeing a more aggressive fed evening. Green joins us now from hong kong. We have been watching this for a very long time, particularly because of the correlation with the recession risk. Do you see the risk starting to ease . Lorna we certainly see it has been easing as the decreased risk around the u. S. China trade tensions and brexit have been helping to fuel the more positive market town and to contribute to the rise in u. S. Treasuries. This has been a very positive development for bond markets globally and has been encouraging investors to become more active in the space. Bloombergof the terminals showed the pile of negative yielding debt around oil. Around 13 trillion. Do you think the fear trade saw the pile in the negative yielding debt was overplayed . Lorna it certainly was contributing significantly to the piling in two negative debt to negative debt. Town helps fuel the easing tensions and has seen investors become more active in u. S. Dollar space. Certainly for time we saw that investors were pretty much waiting on the sidelines and there was a significant window around new issuance from borrowers and it was really those windows that were driving issuance threat the year as negative headlines impacted market sentiments. We have seen that there has reduction ina 26 issuance in u. S. Dollar bonds from aipac followers, particularly in the regulation formats, bonds that cannot be sold to u. S. Rates. This decrease has been driven by that sentiment. Ofot of investors at times negative News Headlines have been moving into treasuries as a safe haven, away from credit. Shery and we continue to see the growing dollar debt issuance coming from asia corporates. Corporates how significant a diversification element has this been for investors . Lorna a very positive development throughout the year. With lower power and cost, it with Lower Borrowing costs, it has been motivating and this has offered greater diversification to many investors. We have been seeing more supply coming, in particular from emergingmarket asia and really we have been seeing more coming from countries like indonesia, india, the philippines, thailand, that has been offering more yield to investors and giving them more options within the credit bond space that were not necessarily they were in the past. Having said that, we have seen that a lot of the strong demands for the higher yielding bonds has caused the spreads to tighten significantly over the course of the last six to nine months. These bonds or maybe not presenting as much value as they were earlier this year. In particular come in china, we credit spreads compressed significantly. For example, where we continue to see a lot of value in the china property space with a number of issuers being active this year, making the best of the 16 of all issuance out of china. So the spreads have actually moved 50 basis points tighter since the end of march this year because of this yield from investors across the region. So maybe not as much value in the space as there was earlier this year. Shery how could a potentially stronger u. S. Dollar change the strategy . Will potentially impact emerging markets. The weaker dollar has been buoying the strong we have seen in the space. Certainly, the stronger u. S. Dollar has been seeing more borrowers from the region come in issue u. S. Dollars, giving more diversification to investors. From where we continue to see the most of the value in the u. S. Dollar space is in small assets. We have been seeing a number of borrowers taking advantage of lower Interest Rates and coming with seven or 10 year transactions. That is really offering additional yield to investors and is where a lot of the value is and has been over the last six months. In addition to this, we have seen quite a bit of issuance in the hybrid and Capital Space with many borrowers coming to twoet with tier transactions. While this is partly driven by a regulation globally, this is also driven by the facts that there is very Significant Investor demand for this type of product. Yield, yourms of the see some value in australia right now. Lorna absolutely. And the investor grade space, australian credit pays more than similar in other parts of the globe. So we see the Australian Investment grade is trading 10 basis points wider than the equivalent to the u. S. Dollar market. When it comes to issuance in u. S. Dollars and traded dollars australian dollars, investors are picking up more in terms of yield by buying australian credit. At the end of the day, you are buying credits that come from a very strong jurisdiction with a strong Regulatory Framework and you are getting 10 to 15 basis points pickup for singlea and similar names versus sectors in other parts of the world. This is where we really see strong potential Going Forward. In addition, in new zealand, we are seeing new regulations be implemented by the world bank of new zealand and these will require the new zealand banks to hold more capital Going Forward. Themwill effectively make 16. 5 ontter ratio of the equivalent basis, which will make it one of the strongest is banks in the world. However, because they are owned by australian banks, they will be limited in terms of any raising of lift, which will effectively mean they will continue to trade wider than the australian counterparts, but more strongly capitalized. So i think this is a great story in terms of risk return elements and certainly something to watch Going Forward for the rest of the year into next. Shery lorna greene, thank you so much for your insight. Get a roundup of the stories you need to know to get your day going. Bloomberg subscribers go to tv. Also available on mobile in the bloom woke bloomberg anywhere app. So you onlyizable get the information you care about. This is bloomberg. Paul this is daybreak asia. Chinese Online Education company fell sharply on the first day of trading in new york, becoming the latest in a string of Chinese Companies to struggle on the u. S. Debut. The ceo told us he is unfazed by the initial tumble. Our Parent Company has always been u. S. Listed company and we really like the u. S. Market, because they have treated us well and middle east has returned a lot of return on u. S. And chinese investors all over the world. Think we are not doing trade related business, so education, i would expect it to be a very good way of connecting u. S. And chinese people. What is your reaction to the opening price . 20 er than the only lower than the ipo price. I think we operate for the longterm. Getting to the ipo is an exciting step for us and a very good way for us to attract better talent, to be a more respected company. We think it is the right move and we are very confident in our plans, so we think this is a very new starting point. Paul that was the ceo speaking with bloomberg. Lets get a quick check of the headlines. Offering 15 billion for tiffany co. And what could be the biggest purchase ever of the owner of louis vuitton. A nearly 22 premium on product closing price. The jeweler is evaluating the deal. No guarantee an agreement will be reached. Shery Chinese Bank Stocks are being watched after the biggest fade on lenders in Third Quarter warnings. Even as Economic Growth continues to slow. Point increase in profits. Profit rise and net income of 2. 4 million. Coming up, more insight on the argentina election. 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. This is daybreak asia. Lets start with President Trump, calling on the world to continue fighting Islamic State after announcing the leader is dead following a u. S. Military raid in northwest syria. The leader becomes the highest ranking terrorist leader killed or captured since osama bin 11 duringed in 2000 the obama administration. Obama1 during the administration. Trump he was a sick, depraved man, and now he is gone. And died in a vicious and violent way as a coward, running and crying. , a more than weeklong state of emergency will be lifted on sunday. Worstuntry has seen the civil unrest in decades with at least 18 people killed. Authorities are struggling to respond as protesters call for reform. Is planning a Cabinet Reshuffle in a bid to pacify the public. In china, the first phase of a trade deal with the u. S. Basically completed. There was a call friday between the chinese vice premier and Robert Lighthizer and steve mnuchin. Chinas ministry of commerce said the two sides agreed to properly resolve. At profit is earned by chinas biggest industrial firms are falling as the economy slows and inflation deepens. Fell 5. 2 inofits september with a much faster decline than the month before. While Industrial Production picked up from a pressure on pricing continues to weigh on profits and debt service inability. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery new zealand markets are away on holiday. Lets get to David English in hong kong. David this is why we do not have a fourth little tile. Freemark three markets are up and running. Volumes are not there yet. A lot of earnings in japan. One quarter to 1 higher on the nikkei 225. Japan is looking at a 14 day rsi. Noting theres worth south korean currency almost a proxy [indiscernible] back income space on the of what we saw friday and treasury adjusting higher as far as yields are concerned. At the all country index. We are close to the points from regaining the high of 2019. A lesser extent in japan. The week ahead for the asiapacific. I mentioned a lot of earnings coming through. Key data points. Pmi numbers out of china, thists out of korea, and essentially will confirm what many have said and recession is already in place in hong kong. Important meetings out of the boj. I have the fed in there because it matters. Very quickly, a snapshot. Earnings season in the asiapacific. Of 1100 companies have reported so far that it has not been stellar or disappointing, just good. Focus when it comes to the chinese market. Vote counting underway in argentina as the president ial for the president ial race. Washington. S from the interior minister of argentina just gave his latest counts. 65 of votes counted. With 47 against 41 . If the trend continues, we could see fernandos presidency. How significant is the election for argentinas fiscal outlook . On one level, it is very significant. On another level, the markets have already baked this into their expectations. There was a primary weeks ago where the results from today previewed. Ially so a lot of people were anticipating this result and until the vote is taken, it still remains to be guaranteed. Going forward, we have to see what president elect fernandez decides to do. But i think we can anticipate a reversal of some of the economic plans, probably bringing back some subsidies for consumers and renegotiating some of the debt and trying to get inflation down more rocket more rapidly. Bity tell us a little about the legacy. How much was he hurt by a going and turning to the imf . Eric this was a controversial move. Some say he did not have much choice. He took over an economy was really on the ropes and had to take some dramatic steps to try to restore it to growth. He had to remove subsidies. Argentina was basically bankrupt and did not have the money it was spending. So he tried to install Austerity Programs and pullback government spending. At the end of the day as the economy did not recover in the way he hoped it would, he went to the imf for a major loan package. Argentinae history of and the imf is controversial and there is a political cost of doing it. Work out asdid not well as some were hoping and anticipating and that contributed to the Election Results today. Shery viewers looking at the election counts, that would be together for a change of his party and people are awaiting the results. Tell us a little bit about what happens to mullen monetary and Economic PolicyGoing Forward in argentina given that we are expecting the Central Bank Board to meet after the results. The Interest Rates have been hiked up to about 60 . Eric that is right. Inflation remains a real concern in argentina and i think the central bank is aware of that. There is an anticipation that the new government will be more willing to spend, will reduce the Austerity Program of the government and will try to toegotiate with imf to try take away some of the conditions and loosen up some of the terms. This is all speculation because the elections just happened today and we will not know until votes are in. But i think that is what a lot of people are anticipating. Shery chile has been one of the Success Stories in south america and yet protests continue. Beenorm package has introduced and they want to reshuffle the cabinet. Why has it not been enough to end protests . Eric this has taken a lot of people by surprise. Chile has been the star. Consistently, social Economic Indicators higher than others. The economy and Political Class that seems to be managing well over the years. So why would trillion people go to the streets in protest . Theeems to be why would chilean people go to the streets in protest . It seems to be heading to school work, looking for a job, looking for a raise, and the citizens have been told there economy is doing really well, but may be their personal circumstances have not increased as rapidly as they have wanted so they are looking for the expectations they have had as middleclass growing, the economy to be met and with the governments have not been able to do that, they are expressing frustration and saying we need a change of course, we need to do better. Shery when it comes to the micro economy, perhaps no one more in touch with the pension reform being passed finally. Be foritive will this the government, and what is next . Eric from the investment community, it is a positive step. Something that has eluded governments in brazil for years and been a necessary step to really get the economy back on sound footing and i think people have reacted favorably to that. If you are a pensioner in brazil and you have to work for several more years to get your benefits, you may look on it with less favor. But i think it will be a positive step for the brazilian economy. We hear that the minister has said the next step is tax reform, another major initiatives in the brazilian context. And need to address taxes consolidate them and make them more efficient. And will be a difficult politically fraught effort. The president is going to have to pay some Political Capital to get this passed. If he is able to do so, we will be a major step forward for the brazilian economy. Shery lets head over to bolivia. My family has not been able to leave their house for the next week. Massive protests. Why are we headed . Is a eric bolivia country a lot of people do not Pay Attention to, which is a mistake. It is in the middle of south america and the country is really important. What we have seen is an election in bolivia from a week ago that many people suggest the current president has worked to try to steal through fraud to prevent going to a second round which observers think he might actually lose if it goes to the second round. So he has declared himself the victor and the International Community and International Leaders have called for a second round, which is constitutional in the bolivian context. Society ina divided terms of class and geography. Those who do not support morales are not going to look favorably at the result. They are arguing for the second round and there is going to have to be a political accommodation going to the second round is probably the way to do it. Shery morales has been in power for over a decade. We have so many elections including uruguay, but we are going to have to leave it there. Thank you so much for joining us, eric. If you are away from the screen, you can find indepth analysis and big newsmakers on Bloomberg Radio broadcasting live from the brandnew studio in hong kong. Bloomberg radio plus or bloombergradio. Com. This is bloomberg. Shery this is daybreak asia. Hsbc reports thirdquarter results monday and there are reports the lender will seek job codes and offload their friendship retail bank. And protests in hong kong might have heard their Wealth Management income. Us in hong kong is francis. Thank you so much. They all the challenges seem to face it, this chart on the bloomberg showing analysts are the most bearish on hsbc stocks since the Global Financial crisis in 2008. Are they right in being this pessimistic about the company . Francis this is a very challenging environment. Ceo was forced out after the Second Quarter results and now they have to yield a big acts. It was rumored they would have to fire Something Like 10,000 senior management, many in the Investment Bank area got forced out because they did not yield a big axe and forceout the high paying employees. I think that is coming. I think the general consensus is hsbc will report a decline in thirdquarter profits by about europeuse a slowdown in and also the challenging environment in hong kong. Hong kong has been in turmoil since june and it is not good at all for business. Optimistic about hsbc now . Shery perhaps given some of the challenges we have seen a one month in hong kong average around 2 . What would that mean for net interest margins . Hsbc willt would mean earn more money. Hovering at 1 . So they are earning much less money on the redeposit. They loan at the money to other banks at 2 . The problem is that the core profit, the net margin, will not increase by that much. I think it will remain at 3 or already quite good for international banks. But for hsbc in hong kong, i think they will report a decline eventually because of the slowdown in business. Shery when you look at hsbc, and what unit does it make sense to you that they actually carry out the cost cuts and staff cuts they are planning . Francis do not forget that europe accounts for maybe 20 of 50 of the staff europe would in certainly help their bottom line. But the other side of the coin is when you make deep cuts in your staff, your future business will be hurt because it will not gain any new business because there are fewer people to get business. Point theyanother have to look at. You do not streamline by so much that you hurt your business prospects. Shery we are seeing the acting ceo as one of the people running for the top job. What sort of head of the bank would he be, and what he be the right choice instead of bringing in someone from the outside . Francis i think he is the right choice. Andnswers to the board carries out the deep cuts the board demands. For operation, they need the deep cuts because it is not earning any money. Quarter is much too high to justify hiring somebody high paid employees. This turn long will around he has been carrying out take . We heard this is the era of greed [laughter] in 2007. Already 12 years ago. [laughter] maybe he will have a one year probation, if not, they will fire him again. Shery thank you so much for joining us, francis. The ceo giving us an outlook of the hsbc thirdquarter orderings and we are earnings we are expecting around noon in hong kong. You can turn to the bloomberg in a couple of hours when hsbc tv go to getto commentary and announcements from bloomberg experts. Coming up next, europes richest man is looking to move to the u. S. With what would be his biggest deal yet. We will tell you all about the bid for tiffany, next. This is bloomberg. Ofry this is a live look argentina, buenos aires. We continue to see the election counting. We are hearing from argentina that the Opposition Leader, fernandez, is ahead of current income is meant by 48 to 41 . This would be with 84 of votes counted. Live pictures of buenos aires as we continue to see the Election Results trickle in with to 41 . Z ahead by 48 fernandez is the central left theaign strategist and won august primary. It was foreseen he would achieve victory in this election. But it is the margin of victory that is key as we continue to see the results trickle in, argentina has stumbled from one crisis to another in the last 70 years. So investors very much looking forward to what fernandez in termst could bring of fiscal policy. Tiffany offered to buy for 14. 5 billion dollars, according to sources. Bid bye evaluating the the french group that owns louis vuitton. Richard chan joins us. Why would lvmh want to acquire tiffanys . Them, they aret a big Luxury Company in the world and own a huge number of brands like dior. Theany fits perfectly in gap in the portfolio. Tiffany is an american brand and lvmh does not have any major american brands. It is also a very big jewelry has a high and lian Shirley Julie jewelry brand but they do not have one like tiffanys. Getting tiffanys would really help put them in better stead with competitors like the owner of cartier. Tiffanys would fit perfectly into the gap of the portfolio and so it makes a lot of sense. Shery how would this help tiffanys and what happens now . That is the big question. What we have seen in reports, activities is likely to reject the bid because it feels the price they are offering is undervaluing the company. Lvmh is offering 20 above the share price but lower than the peak share price in july of last year. What we are likely to see is tiffanys mate reject the initial offer but we expect negotiations will continue with serious aboutmh diversifying into the u. S. And building up u. S. Business to hedge against the global and Political Uncertainty and trade uncertainty happening in china, which is a big market for lvmh. He has become close to donald trump and opened a leather factory in texas. So i think we can expect the push into the u. S. Will continue even if the initial bid is rejected. Shery thank you so much with the latest on lvmh and tiffanys. Lets get a check of the latest headlines. China is allowing onshore investors to buy shares traded in hong kong for the first time. The revised rules go into effect monday giving investors access through the stop connect program between hong kong and shanghai. It is the latest move to find ways to keep the Tech Companies at home. To take theirng unit public after the new york debut of the education arm. The music app has grappled with rising content costs as it looks to compete with Tencent Music, which raised 1. 1 million in a december ipo. Latest in a string of Chinese Companies to do so. That is it from daybreak asia. Market coverage continues with the china open in minutes. This is bloomberg. Welcome to Bloomberg Markets china open. David we are counting down to the open of trade this week for hong kong and the chinese mainland. Lets get the are top stories. Chinas top leaders are set to meet as the economy slows and a trade war with the u. S. Drags on. But president xis mind may be more on politics than the economy. Tom protests in hong kong flare for the 20 thirst 21st weekend in error. The citys economy may shrink this year. David and President Trump gets a Political Boost