Tiktok is said to be making contingency plans for a u. S. Shutdown, joining microsoft to challenge a bid from oracle. Australia winds up turning season like never before with a recession and record government stimulus. Lets get you started with a quick check of the markets. We are seeing u. S. Futures opening slightly higher. This as we had another record high in the u. S. With the s p 500 soaring for a fifth consecutive session. We have financial and real estate sectors being the biggest gains. We have banks benefiting. Treasury yields were higher. We had the yield curve widening. Powell chair jerome speaking at jackson hole, conveying a dovish and more relaxed approach. Higher yields leading to the dollar rebounding. U. S. Weekly jobless claims remaining above one million. Not to mention the economic gdp numbers contracting slightly less than forecasted due to oil prices looking like this. About 43 ag barrel. We had oil declining through the new york session as laura barreled into louisiana but largely spared the texas gulf coast. Still, talking about more than 80 of gulf Oil Production and one third of the regions Refining Capacity being shut down. Haidi still a lot of uncertainty to get through. Lets take a look at how asian markets are shaping up after that stock rally just continued in strength. This is what we are watching when it comes to new zealand. ,ew Zealand Stock Exchange markets will be reopening on friday. Course, weve had three severe attacks from offshore sources this week alone. Seeing ai, we are pretty stark picture. A bit of yenseeing weakness. The biggest drop in the yen in more than a week. We are just hearing that shinzo abe will be unveiling his plan for vaccines. That is recording to a report from the nhk. Also saying the government will secure a budget for vaccines. Bezer and astrazeneca are to the suppliers. We will be hearing an announcement this evening. Moree also waiting to hear details about his health situation. Theres been quite a bit of speculation and concern over the last couple of weeks. We are seeing a little bit of weakness as we wrap up this earnings season. Shery and our top story today, the fed taking a new line on Monetary Policy, letting inflation and employment run higher in a shift that is expected to keep Interest Rates low for several years. Our new statement indicates that we will seek to achieve inflation that averages 2 over time. Appropriate Monetary Policy will likely aim to achieve inflation moderately above 2 for some time. Shery lets get some insight from our Global Economics and policy editor, kathleen hays. Kathleen we are bringing in a special guest now, a former member of the Federal Reserve board of governors. Hes deputy dean for executive programs at the university of chicago and professor of economics there as well. We are calling this a major shift. Markets responded but the fed is talking about letting inflation rise above 2 . It has been impossible for the fed to even get it up to 2 . Does this make a difference right now . For the fed, it is a big step forward. I think right now it is not quite annan or miss step for the markets. They have to see whether this changes the way the fed operates. It leads to higher Inflation Expectations, that is going to make their job easier. Right now, 10 year yields went up, but not an enormous impact. Kathleen what do we think the fed is trying to accomplish with this . Theres so many people who are unemployed at this time. What is going to boost wages . What is their purpose in making this shift . Key things they want to do is avoid negative rate territory. A lot of Central Banks around the world are doing that. Alsoank of england is thinking about that. Jay powell said we dont really want to go there. If inflation is very low and unemployment is high, it is going to be tough to do much if inflation is low and expectations are low. They are hoping to move them up so they dont have to go to negative rates. Kathleen you can maybe change market expectations, but the regular consumer deciding whether or not they are going to buy a home, etc. , arent those the Inflation Expectations you need to change . Market expectations and average consumer expectations. One of the things jay powell referred to in his speech was some of the fed listens events they have. People, a panel of real not people with phds or hedge fund managers. Just real people talking about these issues. He said he found it really striking and i find it striking also. Your average person isnt thinking about the Monetary Policy framework. What the fed needs to do is not only change the framework, but the way it speaks about things, so it can connect with your average household. Kathleen what would be a quick example of that . What should jay powell say to people . The fed talks about inflation. Consumers,urveys of they are almost always dramatically higher than measured inflation. The average person isnt carefully thinking about the full basket of consumption. They are thinking about which prices changed. If you look at the three or four prices that went up last month, you get a higher inflation rate. Rather than talk about inflation the way they think about it, we get atfield experiments, what people are thinking about saying. Now from thee policy side. What does it mean to shift to inflation averaging, if you dont give a formula or a timeline for calculating the average . This whole thing seems pretty vague so far. A lot of different views on the fed. Is kind of vague right now. Broadly what they are trying to do is say, we are going to tolerate higher inflation. We are not going to give you any particulars right now. But just realize, if we make a mistake, it is going to be on the upside. I dont want to be like japan, where people worry that the bank of japan would pull back. Kathleen you were chairman of the committee on regulation of Banking Institutions during the Global Financial crisis. Jay powell is concerned about Financial Stability. Are you concerned about Financial Stability if you are going to not raise rates when inflation rises and keep the stimulus going . They want to make sure the economy is on a stable footing. One of the concerns they had when covid hit was this real shock turning into a financial shock. They want to try to get a firmer foundation for economic growth. They think that will helpfu. Kathleen are you in the camp that says there is going to be no rate hike for five years . Certainly when i left of the fed in 2009, i dont think anyone thought Interest Rates would stay at zero for the next five years or so. But i dont think rates are going up in the next year or two. Kathleen ok. Thank you so much. Heidi, interesting to me that randy is looking at Inflation Expectations and avoiding the views that kept inflation low in japan for so long. So many points have been made about what the fed did. Great conversation there. We have plenty more analysis ahead when it comes to jackson hole. Professor governor rajan joins us next. Shery we do have breaking news when it comes to trading or lack of trading in new zealand. It looks like the new zealand stock market has failed to resume trading. This would be a fourth straight day. Severe denial of service attacks from offshore. The new Zealand Stock Exchange says that markets will open as per normal on friday. They will be working to address the recent cyberattacks. It does look like disruption to trading has happened again. We will bring you the latest as we get more. Coming up next, walmart is jumping into the tiktok bidding war, teaming up with microsoft. A sale could come within days. The fairly robust australian earnings season is drawing to a close. This is bloomberg. Shery you are watching daybreak australia. Lets get a check on the headlines. President trump will accept the republican nomination, asking voters for another four years in office. He will be speaking from the south lawn of the white house, saying the u. S. Cannot trust democrats to handle the coronavirus. The president was ready to cancel his speech because of hurricane laura but will now go ahead. Taxed dent has also also attacked the nba, calling it a Political Organization after the Milwaukee Bucks led a walkout. Baseball and soccer matches were also postponed as players protested Police Shootings in wisconsin. Nba players have agreed to resume the playoffs. Protest, i know their ratings have been very bad because i think people are a little tired of the nba, but i dont know too much about the protest, but i know their ratings have been very bad, and that is very unfortunate, and that is not a good thing. Shery hurricane laura is weakening as it crosses louisiana. It has left a trail of destruction in its wake. The storm was one of the most powerful on record. Winds above 240 kilometers an hour, killing at least four people, wrecking buildings. Oil of the u. S. Gulf industry shut down as laura approached. The Korean Peninsula is cleaning up after a typhoon prompted north korean leaders to warn of impending damage. The typhoon came ashore with winds gusting, reaching north korea just south of pyongyang. Continue in the capital. Shery the battle over tiktok in the u. S. Is ramping up as walmart joins microsoft to challenge a bid from oracle. Tiktok ceo kevin burke quits after just three months and tiktok engineers are making contingency plans for a u. S. Shutdown. Lets get more from kurt wagner. Lets get started with microsoft and walmart. They have been collaborating in other areas. Why does it make sense for them to team up for this . Surprise a bit of a when everyone first found out that walmart would join in this bid for microsoft. But if you think about the way that commerce is moving online onto the social platforms, facebook and instagram, shopping in their social feed and around video, you can see why someone like walmart might want to be involved given how much they are competing with amazon these days. They can essentially push some of their commerce efforts. In that way, it starts to make a little bit of sense. We likely to see given that there is still a great deal of uncertainty when it comes to this midseptember deadline. I think the change at the top was really important and notable. Kevin mayor had just joined tiktok from disney a few months ago. Kindact that he is leaving of signals that a deal is close, but also that theres a lot of stuff that still needs to be figured out. Who ends upn ultimately buying it. Theres a lot of very specific details that need to be worked out. A guess is that we will see handshake agreement in the next week and then from there it will be a lot of specifics that we need to check in on. Kurt wagner there, Bloomberg Technology reporter covering the latest developments at tiktok. Carsg up, chinese electric rocketed more than 40 higher on trading debut after raising 1. 5 billion in a u. S. Ipo. This is bloomberg. Chinese electric carmaker xpeng jumped on its debut in new york after raising 1. 5 billion in its ipo. We spoke with the Vice President and chairman. He told us the u. S. Is still the best venue to raise funds despite heightened tensions in beijing. Theres all kinds of risks with geopolitics, with market risk. At the moment, we believe this is the best venue to pursue. Talk about the demand that youve seen. Where is that coming from . What is driving that demand . The demand comes from all over the world. There is big Inflection Point in the capital markets, looking at the new energy. Wehink at this time, soacted all the top names we are very happy and proud. Ofwe are seeing nearly all the Chinese Listed Companies in the u. S. Pricing above the range. Is that a question of liquidity, of buying into the chinese tech story . China clearly has a theyattractive market and have been developing exciting technologies and Business Models. Growth, thezes the development of the technology, as well as our innovative Business Model that is slightly different from other parts of the world. I think people see this as a tremendous opportunity. You had a range of between 11 to 13 u. S. Dollars. Were you surprised by that level of demand . What is it enabling you to do . Is obviously a happy ending for us. We had high hopes and i think attracting the most investors is our goal. Valuation is just one of the parameters. That allows us to have a lot more flexibility. So all that, we can do much more. Raising 1. 5e billion approximately. Is rnd the front and center prior for you . Been one oflways the most important areas. Probably spend more money in rnd than other areas. Close to half of our staff is in rnd, which is different from the peers. Going forward, i think this is in our dna. Not only for automotive products, but also driving as well. Share do youarket expect to carve out in the medium term . Vigorously, we expect the top players in china will concentrate. Our view, it is going to be a more concentrated market. Top four tomaybe six players. We certainly hope to be one of those top players. Does this make you more of a threat to tesla . Company,is a good converting this auto market to a smart market. Productsiting to see with Real Technology for users to experience. That is changing the consumer landscape in china. I feel like together we can do much faster conversion. Weve seen a pickup in demand for electric vehicles in china. Is that going to be sustained Going Forward or is that down to subsidies . The subsidy has been declining as weve seen the last year and this year as well. More importantly, you start to see Companies Like tesla and others rolling out really technologically innovative products. I think that is driving the sale. Andpect the sales momentum e. V. Penetration in china is still less than 5 . Tell us where you see sales by the end of the year. Guidancet give you any , given we are about to list, but i think we have strong convictions of growth and we are havehopeful that we will exciting growth in our sales numbers. Shery xpeng chairman and Vice President brian gu speaking to tom mackenzie. We are now hearing from the dow jones that tiktok is asking for 30 billion for its u. S. Operations. According to the report, the two sides remain far apart on the price. When it comes to who is the front runner, microsoft and walmart, that consortium is considered the front runner. Sources telling the dow jones that twitter has also previously floated an offer. Question,n a huge what the valuation would be, and how complex it would be to gauge its american and global businesses, not to mention its revenue streams. Haidi we also have some breaking news when it comes to the situation on trading in new zealand. There have been disruptions to the start of trading for the fourth straight day. We have not heard directly just yet, but the new zealand stock market was meant to resume normal trading on friday. We are seeing a fourth day of disruptions despite assurances that the defenses have been strengthened. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. You are watching daybreak australia. Lineed is taking on a new when it comes to Monetary Policy, letting inflation and employment run higher. Policymakersys will now target inflation that averages 2 over time. Employment is a broadbased and inclusive goal. Grim. S. Has marked another covid19 milestone with the number of deaths topping 180,000. Globally reported infections are now above 24 million. France reported its largest number of deadly cases since march as the European Union seeks to avoid a new lockdown. Japan is showing signs of subsiding. India had another single day record of new cases with more than 75,000 infections. 60,000,es rose to pushing india toward the worst record. Relaxong is expected to some covid19 restrictions on friday, allowing dining at restaurants, beauty parlors, and some sports venues to reopen. Shery japanese Prime Minister shinzo abe will address the media later. Hes made two trips to hospital in the last few days, triggering speculation that he might be forced to step down. The cabinet secretary said abe will serve out his current term as leader. Haidi lets get a quick check of our markets. Asian futures are mixed with stocks in the region set for a weekly gain, but trading in new zealand disrupted once again and japan waiting on shinzo abes press briefing. The yen trading at 106 levels. From korea we are waiting on the Treasury Bill issuance plan. Switching to the chart here to turn to bonds, u. S. Real yields still in subzero territory. Higher rates in asia are looking more attractive. Depicted on the chart, we are seeing that yield gap stay wide. That has reduced the appeal according to jp morgan. 2020hing up the chart, shaping up to be the worst year for dividends globally since 2009. That has investors in hong kong turning to Growth Stocks after Companies Cut payouts this year. High dividend yielding stocks are trading at the cheapest level relative to the hang seng since 2008. Care,g up tech and health new billionaires in china this week. The debate continues over whether value stocks will get their time in the sun. Lets get a check on the terminal. We are seeing warnings for the u. S. Stock rally. Flippedaqs correlation to positive for the First Time Since 2018. A weird market as one analyst put it. Shery for more analysis on the risks that might threaten the stock rally, lets turn to gina martin adams. Always great having you with us. Some of the risks that sophie mentioned just there, not to mention the rally, and today we have a new Monetary Policy approach Just Announced by chair powell. How is all this expected to affect markets . Gina i think that we are lining up for at least a shortterm pause. We typically see in the three months after new highs, we tend to see the market gain slow anyway. There is historical precedent. Coincidence to that, weve got overbought levels starting to be recorded in several key sectors. The communication sector, the technology sector, and the Consumer Discretionary sector have recorded above 75. Some of those are more extreme overbought levels than weve seen in several years. There is a likelihood that we had a shortterm lip, but the consolation here is the low volatility. Volatility is still extremely low on the month and usually a low volatility august is followed by a low volatility september. You would expect the process to be relatively short and somewhat shallow as long as we are continuing to see a bit of economic recovery on the horizon. Haidi fiscal policy conditions aside, if you look at the earnings, are we getting a sense that theres been a number of beats because of how uncertain or low expectations were going into it . That is whatink happened. Expectations were tremendously low. We ended up with about a 30 decline in earnings. I would say the big surprise for companies wasnt the with the lowest expectations that beat the most frequently or to the greatest extent. It was the Growth Companies in technology and health care. Expectations werent all that low. Beat those expectations, producing earnings growth. Producing much better Revenue Growth than anticipated. This explains a lot of what the market concentration had been. Weve obviously seen growth continue to carry the baton in the market. Some of the megacap tech names continuing to concentrate leadership. That is supported by what we saw in the Second Quarter earnings season. Can we finally get some rotation into value . It is going to take some recovery in the economy to put a floor under the earnings basis for those groups. Shery in the meantime, how much has the dollar helped in terms of the bottom line . Gina it hasnt. The interesting thing about the dollar is, even though it is helping, and weve seen a drop in the dollar in recent months, that is not enough to really move the needle. At a time when Revenue Growth is falling, nondomestic Economic Conditions extremely weak, even in great times, youve got to get a much bigger move downward in the dollar to see results. I would expect you might actually see it in smaller cap stocks. What we tend to find is, when the dollar starts to decelerate or decline from a period of strength, it tends to indicate some form of risk recovery. Usually recoveries and risk tolerance benefit small caps and value stocks from a sentiment perspective. I think that will likely overwhelm any true fundamental earnings impact from what has been modest dollar declines. Gina, all right, appreciate your time. Gina martin adams there in new york. Coming up next, australias earnings season has highlighted the widening golf between winners and losers from the coronavirus pandemic. This is bloomberg. Haidi you are watching daybreak australia. Lets get the latest when it comes to trading in new zealand. The new york the new Zealand Stock Exchange, rather, being disrupted by what is assumed to be another connectivity issue. Failing to resume trading on friday despite the operator saying there would be a normal resumption of trading. We are seeing that disruption now for a fourth straight day. Lets turn to australia. Lowests plunged to the in three years. That is a made a flood of government stimulus. Lets get some analysis from jeffrey morgan, head of australia research. Talking about this in a u. S. Context, how much is this the fiscal and Monetary Policy settings that we invest in, but also that earnings expectations were so nonexistent that you are bound to have a few upside surprises . Weve certainly seen a range of sectors doing better than we expected. I guess the topic is Consumer Discretionary. Sector,e stronger surprising our analysts by about 3. 5 . That being said, it has not been anything like the u. S. In terms of earnings doing better than very pessimistic expectations. I thought going in we might see a better run. We are kind of running at a negative beat ratio. Probably more in line with the longterm average. The beats have come in certain sectors. I think that speaks to this issue of the winners and losers. Jason, i want to take a look at the underperformance of the asx compared to the u. S. And broader asian markets. Now picking up pace as well, falling short of stocks underperforming this year. Does that mean theres more potential to catch up or does the relative lack of tech and growth names proved to be a detriment given that weve seen the bulk of the rally run overseas . I think that is definitely a factor. When you look at the composition of our market, financials continue to dominate alongside materials. Whenlip that on its head it comes to the proportion of the s p 500 that is tech. That is definitely a factor behind our underperformance. The banks in this environment and other environments are battling against the Interest Rates environment, which is incredibly low. And a critical drag for us in australia is what weve seen happen in terms of dividends. Weve been writing extensively on this. Australian corporates have taken a step to be much more conservative in this pandemic. See weve cut dividends by 30 to 35 on average across you taket, whereas, if the world as a comparative benchmark, the cuts have been more like 15 . Our market is very income heavy. If you take out that support and you take out that strut, which is income, it has led to a lot of offshore money leaving australia. In my view, the catch up will have to come from a more confident corporate australia. Through this result season, the dividend picture, on our measure , weve seen 17 companies upgrade dividends. Nearly 50 of companies have seen their dividends forecast downgraded. It doesnt feel like an income driven catch up by australia is really on the horizon anytime soon. Shery on the coronavirus pandemic, we have right now the latest headlines on the victoria state cases. Newew virus debts and 113 virus cases. You have soopic, much uncertainty out there. When is the right time to get to those havenots, like banks and travel and brickandmortar retailers as well . Pastthink we need to get the end level for restriction in victoria, which is next month. I think that is a really important step forward. At some point, we need to see broader reopening in australia. In australia, we are dealing with a very fractious environment, where the federal government and the State Government are reopening borders. For trade tocal revive and reemerge within australia. Pretty active dialogue between federal and State Governments to bring that about. Occur, we areat seeing better numbers in victoria. I think that is what begins to see a picture. 113 new cases in victoria. Jason, appreciate your time. Jp morgan head of australia research. On the topic of earnings in australia, a payments provider has seen its stock fall more than 200 this year. I spoke earlier with the cofounder about how the pandemic has accelerated trends. I think it is a combination of those aspects you mentioned. Prettyaccelerate with good growth rates. As a result of covid, we have seen compounding effects. The first was this rapid shift to online. Tookaw growth rates that 10 years previously to take place. That shifts impact away from credit to debit cards is very strong. ,f you saw the latest numbers credit card had 21 . Debit cards had positive growth. Peoplethat result in moving. Weve been talking about the fiscal cliff and what happened when we get the physical aspects of the support we are seeing removed. Is it feasible to see this level of spending when you talk about unemployment in australia and the u. S. Is it inevitable that you see that come down . One thing this pandemic has taught us is that we dont really know what is around the corner. We see a huge amount of data in real time and we see retainment rates. See repayment history and keep our finger on the pulse as it relates to retail, we are still growing quickly. In the u. S. Alone, we delivered we only launched into the market two years ago. It is going to be a natural growth. Outside, we stay as close to the numbers as possible. Haidi it has really eclipsed expectations of regulators. Are you concerned about the review and whether that will curtail your natural pace of growth . I think what weve learned is that regulation is a core part of our business. To engage with the regulators, to communicate and explain to them the way our product works theaturally our product is opposite of a traditional credit solution. From outside, it is about how we make sure that our product is understood by all stakeholders. Haidi do you have a priority when it comes to expansion beyond australia . Youve got readymade infrastructure. Youve moved into canada. You are in the u. S. As well. What is your priority . I think the priority was getting the u. S. And the u. K. Right and proving that an Australian Business can go global. Now that weve partnered with some of the biggest global brands, gap, lululemon, many others, the ability to go global h those Retail Partners from us, it has been, how do we continue to work with these regional partners to take us global . A naturala, that is part of our success in the u. S. , and many of our brands have strong presence in southern europe. So i think weve got a Good Foundation to keep expanding internationally. Haidi still to come, a turning point for corporate australia as investors revolt over the Sexual Harassment scandal that triggered the reservation the resignation of amps chairman. Haidi australias Pension Funds use their influence to demand Higher Standards from the corporate sector. The criticism of amps handling of a Sexual Harassment scandal. Bloombergs matt burgess joins us now with the story. What happened . How have these big funds in australia been exercising their importance . Is a huge move that has happened over the past week. A titan of the industry resigned. Another director also resigned. He was demoted. Basically,ere in july, he was promoted to ceo of amp capital despite having been financially penalized over a Sexual Harassment complaint. The amp australia ceo also abruptly left without explanation. Reports that that was for inappropriate conduct. Is essentially a from less than four years ago. Back then, the ceo was disciplined, but he kept his job after being cleared of claims of drug use during a years long extramarital affair with a coworker. Movement has swept the world. Basically, he failed to comprehend the demand of longterm investors and good governance. Have we seen something similar when it comes to rio disruption of Aboriginal Heritage sites . We are seeing something similar there. It has been a busy week. , the destruction of culturally significant heritage sites. The chairman said that the investors were onsite with that, but that wasnt exactly correct. Penaltyy saying the which essentially amounts to a fine for what has been described as profound systemic operational governance failings, destroying australias history, that lacked appropriate accountability. Fundalias largest pension has held the chairman to rethink that penalty. This is a gross failure of governance that has happened in australia and by large institutions and Institutional Investors are no longer being quiet about it. Shery matt burgess, thank you very much. We will have plenty more coming up. Former r. B. I. Governor professor rajan joins us to discuss the feds inflation pivot, plus, we speak to a casino operator about the impact covid19 has had on their operations. Daybreak asia is next. This is bloomberg. Haidi good morning. We are counting down to asias major market open. Shery welcome to daybreak asia. Asian futures are mixed despite wall street record ralley as the fed policy shift, oil slight at hurricane laura weekend. If u. S. S set for operations, a race for a deal sees walmart joining microsoft to challen