Data likely to report a substantial fall in Second Quarter of gdp. It will confirm a first technical recession in 29 years. Raced shinzo abe after he set his plans. The backing of the ruling party. Voters have another view. Haidi we are just getting south korea Inflation Numbers crossing the bloomberg. Slightly more inflationary when it comes to consumer prices. When it comes. 7 to the year on your number for soft arena. Southxpectations korea. Beating expectations. 3 . The month on month number of. 7 . Betterthanexpected expectations. Cpi caore number year on year coming at. 8 . Continuing to edge up. Still shy of 1 that we are looking for. We are starting to see a recovery when it comes to domestic demand. The influence of supportive base effects. Hoping to lift the inflation somewhat. We have the renewed resurgence in virus cases in the letter half of the month, likely to be accounting for the fall. Energy costs still low compared to the previous year. They are picking up. That would have been at play. The bok said its looking at inflation to come in at about. 4 . Well below 2 targeting. This is better than what we had expected. Lets take a look at how we are setting up when it comes to trading. The u. S. Overnight, we had another session that saw fresh highs for the s p 500. The nasdaq more than 1 , finishing just short of the 12,000 level. At the, pretty flat moment. Chicago nikkei futures looking like the moderate upside of. 3 . Looking to a vote on the future of the leadership. 105. 93. Eeing the u. S. Dollar staging a bit of a rebound. We are starting to see the gains weaken. Crude holding above 43 a barrel. Annual the pentagons Defense Department report says chinas Rapid Military buildup is close to achieving the land, sea, air triad of Nuclear Delivery systems. Anthonys capacity of joins us with more. How concerning is this heavy emphasis on modernization . It is less concerning than meets the eye. The pentagon has been trying to sell the public on the notion we need to modernize our Nuclear Triad to the tune of about 1 trillion over the next 20 years. Modernization is needed. Much that a little they are talking about chinas arsenal when we are leaps and bounds ahead of them. They emphasize china in the next decade may double the number of Nuclear Warheads in its inventory. Less than 200, in the low 200s. For perspective, the u. S. Is 3800 warheads, russia has 4300. It is concerning, but china has never expressed a first use policy or willingness to use or even test icbms to scare the world. I would be skeptical. Haidi where there any major new themes that came out of this report . I saw a couple of new themes. One, they introduced their first stealth fighter. It was hidden in a couple of lines. That was it significant. They acknowledged for the first time in print that china has an active antisatellite missile program. They could threaten geosynchronous or lowearth orbit satellites. One of the most significant take aways was china wants to expand its base in east africa. That int to replicate places all over the world, from thailand to tanzania. That was a revelation and wakeup call for the u. S. , in terms of chinas might around the world. Sophie what does it mean for the u. S. s Nuclear Forces attempting modernization . Can you repeat that . Sophie what does it mean for the u. S. Nuclear forces given the prediction china is ramping up its arsenal . In the u. S. Is pursuing a new, 120 a dollars Nuclear Submarine program called the columbia class. A new be 21 bomber. We are replacing the missile that has been in the ground for 50 years. The u. S. Has been progressing at pace for good reasons. Those are older systems we are trying to put in place. But it is much separate from anything china is doing. This is more to go visavis with the russians, who are a great if that greater threat from the nuclear standpoint, compared to china. Capaccio joining us. You can get the stories you need in this edition of daybreak, including that story. Terminals. O on your its also available on the mobile in the bloomberg anywhere app. Lets get to Karina Mitchell with the first word headlines. Saluted the trump police force and National Guard during a controversial trip to wisconsin. He visited kenosha, where protests erupted after a shooting. The president traveled despite pleas from officials to tell him to stay away. He called for law order and sidestepped the racial issues that sparked the protests. He confirmed tiktok must sell u. S. Operations, saying the u. S. Should be compensated for the deal. He said it must happen before september 15, or he will close it down in the u. S. It remains unclear how the u. S. Would collect from the sale. And with new rules on the transfer of technology, any deal remains distant. The race to secede shinzo abe is heating up, with a secretary expected to announce his candidacy later wednesday. He has become the favorite after the Voting System was adopted that gives more weight to lawmakers over rankandfile members. He is winning support from across the party ahead of the former defense miniature minister. Global news, 24 hours a day, on air and a bloombergquint take, powered by more than 2700 journalists and analysts, im Karina Mitchell. Chief the u. S. Treasury says stimulus is urgently needed. The plans to reengage House Speaker nancy pelosi and indications from the market, next. Tesla is cashing in on its status as the most valuable automaker. Plans for a share sale of up to 500 billion. This is bloomberg. Isi do think the economy recovering very strongly. Let me just say, there are areas of the economy, nofault to Small Businesses or our workers, that needs more help to recover. More fiscal response is needed. The president and i want to move forward with more fiscal response. Let me just say the expiration of an enhanced Unemployment Insurance is what we are concerned about. The president and i do support additional fiscal response. We have been working hard to get a negotiated agreement on a bipartisan basis. We would like to extend enhanced unemployment and send out more Economic Impact payments. Those are both critical to the economic recovery. Haidi u. S. Treasury secretary Steven Mnuchins testimony to the subcommittee on the coronavirus. Fargosus is wells senior par 4 leo manager senior portfolio manager. In terms of the stimulus package, it feels the markets have moved beyond pricing. Is it already priced in . That islly feel part of priced in, but we have seen a very narrow leadership in the market, which is confined to certain type of companies, mainly internet related service and ecommerce companies. There is a myriad of other companies that reflect the underlying economies. I think it has not really been fully priced in. Haidi what about the election . We continue seeing u. S. Markets surge toward new highs. Part of the composition story with the heavy weighting by tech. We are now looking at the u. S. Election when it comes to october futures, showing it at futurest event in vix history. What does it tell you about the capacity for shock come november . There is a very large capacity for shock. I think in many ways, particularly the u. S. Market having gotten ahead of itself, in terms that we were in the clear with regard to the covid situation, and really assuming that by mid next year, everything will be back to normal. I think the recovery will come through, but it will be slower than people expect on a global level. Global growth will be quite tame and slow to come through. I think it is the pace of recovery that will disappoint the market. Election,ds to the that also could be a disappointment, with how the economy performs. Ofhie on the theme recovery, turning to asia. Earnings estimates in the region beginning to stabilize as of june. Where do you see the best potential for recovery on the earnings front . Particularly in the north asia region, geographically, we see some strength due to the fact you have so much technological capability in korea, taiwan, china. With regards to that, not only the it sector, but industrials, energy even, materials, to a certain degree. Thebank financials have potential to perform very nicely. Across a number of sectors. I think it is led by Industrial Production and that area recovering nicely. Also having evaluation support is valuation support is helpful. Sophie turning to india, credit losing some of their edge over stock dividend yields. Is it supportive for high yield in equities . Its interesting, the evolution of india, with regards to dividend yield. I find it promising. Its an area people have not focused on in the recent past. 2 dividend to yielding market. In the last few years, we have seen in a variety of sectors opportunities, not only real estate related, but financials, nonbank financials, and consumer area, industrial areas. I think the market is really coming around to dividend yield. The concept of a reeven was a new concept in the indian market. It is promising to us. Haidi what about china . As the u. S. China tensions continue, the tech war continues, as we get more interest and capital flows to Chinese Capital markets with the likes of the financial ipos, is in there a chance investors will be missing out . I think they will be focused on certain areas. China can lead, with regards to iot, 5g, cloud computing, that will be back up by taiwankorea. Having the entire supply chain across the country, localizing industries, there will be a lot of jobs, a lot of intellectual capital, and a lot of financial capital, as well. The best thing that can happen with regards to china is a broadening of interest by investors in a lot of different areas, not just purely i. T. Related. Haidi is it too early to look at stocks that have been beaten down in this pandemic . Absolutely not. Or investeds to the lens of dividend yield for many of our accounts. We are finding that leads you to good growth and goodquality companies, good corporate governance, all the things you would want. Dividend yields anywhere between 3 to 5 sustainable region, it is not too early. Theres a lot of opportunities. While there are a lot of headline risks, with regards to china, underneath that there are so many Interesting Companies and accessible both on the valuation basis and fundamental story basis. Turning to south korea. Policymakers pulling out all the stops with fiscal and bok support. Kospi trading. Health care has driven a lot of those gains. One of the most valuable companies this year in south korea. Is that sector looking attractive . The Health Care Space . Anything looking more alluring . I think they have had a really good run already. Biologics companies, health care related, in many other asian countries. We are focused more on cyclical stocks. Not only in the auto space, in industrials, energy, steel, theres a lot of interesting areas. Capacity,the expertise, and execution ability to be global players, which they already are. They do face a little bit of risk from being so globally oriented to where there is Global Growth and demand from that or not. They have the capability. Its an interesting market. Im glad to see it performing better. It should be a beneficiary, in a way, of trade tensions between china and the u. S. Alternative supplychain capabilities. We are fairly positive on korea. Sophie thank you. Joining us. Da dont miss the exclusive interview with one of chinas bestknown private equity groups. We are joined later. Japans ruling party adopts a voting structure that would boost the chances of shinzo abes top aide to take over. Have the latest. This is bloomberg. Haidi a quick check of the latest business flash headlines. Tesla looks to capitalize on its status as the worlds most profitable automaker by offering stocks to fund growth. It will sell up to 5 billion dollars of shares to manufacturing capacities. Its also building new facilities in texas and germany. It raised a 14 billion over the past decade through secondary stock offerings. Otto is considering a sale in shanghai that can raise up to 3 billion. It will be the first for the carmaker and add to the current listing in hong kong. A fallnth, they reported in firsthalf profits as coronavirus hammered demand in a new cars. Data suggests auto sales are climbing again in china. Sales in the u. S. Slumped in august. The fallout continues to drag on demand. Almost 22 moved down year on year, with truck sales falling 60 . Cars down 30 . Honda aims to strengthen its position at home. Sophie outgoing japanese the race to replace outgoing japanese pie minister shinzo abe , with his righthand man appearing to be the front runner. Stephen is tracking the developments and joins us from hong kong. Why is the list of contenders narrowing . It looks as though the Party Stalwarts are gathering ranks and saying we need continuity. It looks like the right headmanned of righthand man of shinzo abe has risen to the top. Still a couple of days away from the road. Race, as a three horse opposed to five originally. The former foreign minister and the former defense minister might be on the outside, even latter is seen as the more popular choice. It will not be the choice of the electorate. It will be internal Party Politics fight. As it is stacking right now, given the factions, the powerful factions, they are looking at continuity and picking the right hand man of shinzo abe. The reason i can say this is the ldp adopted an internal voting structure that gives weight to the more powerful factions within the party and limits the influence of Regional Party factions. The system essentially gives more weight to the party. If anyone had hopes for ishiba to be the dark horse and win on the coattails of his Popular Support among the electorate, he has very little power within the factions. Only 19 members within his own faction. Shinzo abe has 98 members. You are looking at the numbers favor. King in ishibas haidi is it a foregone conclusion he will be elected . What are the implications should japan head to the polls for a popular vote sometime next year . Even before the race officially begins, three factions with a total of 150 five lawmakers have shown their support for suga. Suga is not in any group. Areones close to shinzo abe lining up in sugas camp. So it looks like it is as close to a foregone conclusion as you can get with suga rising to the top. As for policy, any new leader toeed to continue t convince the populace they are in good hand and convince markets of policy stability. One of the first decisions is when to switch to stimulating return to growth after all of these lifesupport measures due to the coronavirus outbreak. Any sign of a departure from the path could send the yen surging and stocks sliding. That could trigger a reevaluation of chinas outlook. We got a clear indication from secretary that reporters that the party needed to act quickly to avoid a political vacuum. It looks as they are stacking the deck towards the continuity candidate. Haidi we are hearing it is likely that. The theme of monetary stimulus is likely to be kept by abes successor. What about on the Foreign Policy front . What could we see over the next couple of years as he is replaced . Is continuity really the name of the game, as well . Thats probably the case. You are looking at continuity with the china policy and u. S. Policy. Shinzo abe was the first to go to the white house as a foreign leader and welcomed donald trump. They went golfing together and developed quite a report. It looks as though suga would continue that role. It may be for caretaker position, continuity for another year. Look at the political timeline. The ldp will likely have to pick its next leader in one year. You will get all of the party potential leaders building up their bona fides over the next years. That could include the wildcard, relations with china. And the general election will happen by the end of next year, 2021. Weather changes to the pacifist constitution, which abe pushed quite strongly, is probably less of an important issue right now, given the coronavirus pandemic. A lot can change in one years time. Haidi our chief north asia correspondent, stephen engle, with the latest in the leadership race in japan. Second quarter gdp figures expected to confirm the next in almost 30 years. More on that next. This is bloomberg. This is daybreak asia. Theres a new morning about the u. S. Economy, with considerable uncertainty ahead. Needamerica will continuous support from the fed and policymakers in washington as a as the economy tries to recover from the coronavirus pandemic. Seems to agree with the fed governor. He says the u. S. Economy extraly needs fiscal stimulus to rebound from covid19 and is in talks with the democrats over a release package. Relief package. He stopped short of offering specific proposals. China is warning relation with the u. S. Is facing difficult problems. The Foreign Ministry in beijing says ties are in a most testing time with the u. S. The embassy tweeted the u. S. Is resorting to every possible means to suppress chinas development. Relations between 10 and india are set to worsen with a new standoff under a disputed border in the himalayas. India has moved forces into the region, and responsive provocative actions by china. Beijing says it is taking action without giving more details. Have military commanders held talks and more discussions are expected in the coming days. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. In a couple of hours, the coronavirus has pushed australias economy into the worst recession in 29 years. Kathleen hays is here with a preview. What is the secondquarter gdp report expected to show . An economy with two quarters of negative gdp growth in a row is what we are expecting to see. It is showing the coronavirus has taken its toll. Its ruined this track record tralia spoke of for spoke of so proudly since 1991. You can see in the first quarter, you have that very small 0. 3 decline. China had already been hit hard by the virus. It is a major purchaser of australias exports. That already was slowing down. The Global Impact of the coronavirus was starting to show open australia. We will see bad numbers for residential, construction, consumer spending, business investment. Almost everything suffering from the impact of the lockdowns, the uncertainty for businesses, and consumers. We are expecting to see that number. We are also expecting to see in the coming quarter and even in the numbers themselves, a sense that even with the lockdowns in victoria, australias most populous they come others highfrequency data showing maybe the recovery is beginning. That is more than anything what we are going to be looking for. It is a done deal. All theay say, that is more reason to expect some rebound now in the second half of the year. Lets focus on the china factors here. How big of a threat are the intensifying tensions between china and beijing . China, australia is a major exporter to china. They depend heavily on chinas commodities. Saw the tensions building with the detention of the tv anchor, an australian citizen, two weeks ago. Now the latest news, chinas giving a further twist, with a key commodity or supplier from australia. They are halting early imports ain, and it comes after a number of actions from china visavis australia. The latest one against wine exports. China announced antisubsidy investigations into the countrys wins less than two weeks wines less than two weeks after an antidumping probe into the same product. China is using this vulnerability of australia, this dependence they have on china, to get some leverage in the widening rift between the two countries. It is a challenge for both of them and another potential challenge for australias economy, as hope to people see this recovery and new obstacles in the way. Much, kathleen hays. Next, we take a look at the is having coronavirus on the cruise industry. This is bloomberg. As we continue to make our way through this trading session , we are setting up for a mixed start after another recordbreaking session in australia. Lets get a quick check of the latest business flash headlines. Continental, planning to cut 13 of its workforce amid ongoing pressure from the coronavirus. The company says domestic operations will be hit harder. Some 13,000 jobs in germany, affected within five years. The ceo says the Auto Industry is facing the biggest crisis in 70 years. Exporteriggest oil posted a 92 plunge profit after crash and demand to crude and gas at home to the head from the coronavirus letdown. Oncg fell 50 during a comparable period. Blackstone bought a majority stake of bomble last year bumble last year. Bumble started in 2006. U. S. Futures, gaining round after a rally on wall street that has voices warning they are seeing a big decline. Japanese stocks, set for gains. The aussie dollar, holding nearly twoyear high. The yield curve is flattening and the hong kong dollar is staying near the strong end of the trading been. We are on the lookout for more intervention from the Monetary Authority after it defended the peg this morning. Are keeping up Dividend Payments despite facing. Reat challenges our next guest says his company is likely to work out a deal considering their family name and reputation. Benny lamb. Ow is for could be on the cards hong kong . Restructuring is important for the company. I think this company is very famous in the cruise business. You if you are a tourist, should know this company. I think the key point is, correct business right now has suffered a big hit from the prices. I think the cash flow issues hitting the company heavily. The key issues right now are you have to work out of restructuring. Betteree the crisis get and get back to normal, the company will be ok. The best thing we see is maybe injections of new capital, that would be helpful. What other factors potentially satisfy creditors on a deal . Could we expect this expect big discounts . May be. Its possible. For the moment, under this nowis, what you are seeing , no moneyy stop going in. A few want to work out a deal with the creditors, the very important thing is to look at, is it possible to at least get half of capacity back to normal . That is what i think creditors are looking at right now. Is, maybe thing other new investments into the company, or [indiscernible] think that is a most important thing we have to be looking at right now. What is the likelihood of assets being put up for sale, given the nightclub sale . Think for the moment, it may not be good to sell it, because i think the price right now will not be a good price. Second is, for the moment, i it,k if you are looking at it will not be helpful. It will not be quite helpful for a company. The best thing is to keep the Company Existing and running in the next six months. Once you have a company on him, once the crisis gets better, think the cash flow will help to pay for the interest. That you can extend the low again. That is the most important thing you would like to see. If you are a longerterm investor, should you be looking at some of these very badly hit pandemic resultant stocks . Hospitality, retail, entertainment, theme parks, and the like . You need lots of cash flow to regenerate. For this moment, everything stops. We do have cash flow coming in. If theportant thing is, crisis gets better, the most important thing is the tourists have the confidence again to enjoy the traveling again. The Fourth Quarter as everything gets better, you still need three or four months before the company. Esets for the tourists think the i think the sectors are still gloomy. Companies that will have to keep the cash flow and reduce everything to try to make the company exist, still running, operating in the next six months. That is the most important thing you will see. U. S. Have seen the exceptionalism story continue when it comes to the equity markets. Toat is largely due the tech in position story. Is that something hong kong and china could look into, as well . Enthusiasmate more for Greater China markets . I think for Greater China use the ipos and second listings come to hong kong. The economy is very problematic right now. Everyday, you have lots of money in hong kong. We see the Hong Kong Exchange reactor is very strong. Money, it isthe very hot in the market is very hot. It is super attractive notinvestors coming in, only the primary markets, but also secondary market trading. Inht now, you see a lot this area. Benny lamb, appreciate your time. Still ahead, tesla makes the most of a plan to sell 5 billion in new shares. This is bloomberg. Has news of a share sale up to 5 billion. Su keenan has the story for us. This should strengthen his Balance Sheet. It should shore up the Balance Sheet and fund growth as they announced plans to double their factory count. A new Share Offering will dilute the valley of the shares. You can see it has caused the companys market cap to rise 12 fold in the month of september. It took effect monday, pushed the stock to alltime records. Tesla is nowhat r in value than every other carmaker on the planet, now taking advantage of Retail Investors frenzy for its stock. Raise moneyto buying, as much as 5 billion in billion in shares from time to time, this will allow it to statefunded. It is expanding with several factories and germany, in austin, shanghai. Analysts say this is a very smart way to make money for tesla. Some are saying this could because lets largest this could because lets largest this could be teslas largest equity haul, too. Raced about 14 billion over the past decade there was series of secondary stock offerings, which recently, in february, sales helped boost its cash. You can see its stock was nowhere where it was years ago to the mass market. The fact that it has this huge market cap paves the road among carmakers, entering a new level. Back to you. Thank you so much. In luxury car manufacturer has unveiled its newest and most technologically advanced model expected to hit the market in 2021. Spokeo of rollsroyce about launching the new car amid the coronavirus pandemic. Us. T is a moment for we are launching a new car. It doesnt happen too often. It is very important growth for the company. It used to be the most successful the entire the most successful car in the entire history of the brand and has been our best seller worldwide. We are well prepared with the ghost launch. We have thought carefully about this. The reason we are launching today is because i see personally quite encouraging signals from all over the world in terms of order intake for us. You might know that the majority of our clients are Business People running their own businesses, men and women. They are apparently a bit more confident. Yes, we have seen quite an impact from , but we are now back on track from covid, but we are now back on track in a way. To you think that was demand that was pulled forward, or pentup demand that does not last into 2021 . When covidsay it was have been in the beginning, we saw sharp drops in many markets worldwide, but they are all recovering. I would say the order intake is not only for the ghost, but also for the rest of the portfolio. For that reason, i am confident and cautiously optimistic about the next year. What is the relationship between financial markets, stock markets reward back, and demand for your car . Areou could say that we a certain indicator for an economy, if i may say so. When our demand picks up, and also the economy, particular stock markets, are also flying higher. A certain relation. It goes all back to the fact that our clients are Business People, businessmen and women running entities, businesses. Theres a certain connection. I would say it is in general true for highend luxury goods. , is there a distinction depending on where you are . One area where that is strong . That is stronger . We saw first pick up in the asian markets. Asian markets came back really strong for our business after the sharp drop of covid. Probably due to the fact they are in the meantime far more used to covid, how to deal with it and tackling. While other markets are still on the upward trend and will still take some time to come to our levels. Olde these when these levels are reached, that is hard to predict, but trends can be seen worldwide. What has it been like managing a car company during this period . Whats it been like operationally . What has been going on within the factory . When has been happening within the supply chain . Have you had to lay people off . Do you think the company will be smaller or bigger Going Forward . Walk me through what its been like inside the business. I can tell you it is positive news. Of course, we shut the company for a couple of weeks after covid hit us here, but we reopened first in the u. K. On the fourth of may. Where also bringing our second shifts in next week and we have not laid off a single person, which is quite unique, i might say. We were in a lucky position not to lay anybody off. The reason for that is, order intake looks good, and also, i dont want to lose any one of our experts here. Rollsroyce ceo speaking to us. Lets stick a look at how we are shaping up for the asian session. Lets take a look at how we are shaping up for the asian session. Rally, continuing to drive the s p 500 to a fresh high. We also have the nasdaq gaining 1 . Shy of the 12,000 level. A little bit more muted when it comes to the asian session. 1 higher when it comes to trading. New zealand, sydney, features of 7 10 of 1 . 1 . Utures of 7 10 of nikkei futures in japan are up half of percent. Printbetter than expected and consumer inflation in the previous hour, up by 1. 5 one point 1. 25 . The market open, almost upon us. This is bloomberg. Welcome to daybreak asia. Wall street set more new highs. The u. S. Election is currently priced in as the worst a vet risk in history. We take a look at our balance of power with the u. S. And russia. And, undermined trust in the hong kong police. Lets get a look now at the open in japan. Where seeing the nikkei 225 adding. 4 . The yen is Holding Steady below 106. Suffolk bancorp ace limited see limited in pact. Impact. South korea, we are waiting for the ministry longterm fiscal outlook for 2020 through more support from policymakers. The cost become adding 2 10 of 1 of this art of at the start of cash trade. Inflation data, out of south korea this morning. Cbi accelerating for a Third Straight month on higher food prices. Heidi . We are bracing ourselves for what is going to be an ugly secondquarter gdp sprint. We are looking at expectations like a 7 contraction for the quarter. The aussie, going from strength to strength. Just a reminder, we are seeing gains in the aussie out of 11 of the past 12 rba Monetary Policy meetings. The rally continues into the rest of this month. We have expectations from a lot of banks. Something as high as an 80 handle potentially by this year. Where also watching the dollar weakness story. Saw a cautious rebound. We are starting to give up some of those gains. Taking a look at new zealand, we are seeing the equity session see modest gains, as well read are hearing from the man the rba governor, speaking later this hour. With the next flush with an explicit push to lower yields. Recovery powered emerging markets currencies and equities. Weakened to a twoyear low. Lets take a look at asias part of the equation. What are your expectations on the dollar side of things . Is the weakness likely to continue when you take a look at thevolatility going into election and the prospect of an uneven recovery from the pandemic . Think the u. S. Dollar is one of the key drivers for the asian market. We remain comfortable at this point in time. We all know that asia tends to do well when the u. S. Dollar is weak. Right now, the u. S. All the should remain on the weaker side for three reasons. The other markets should remain narrow. The u. S. Growth is likely to recover slower than other regions, compared with asia. There is still uncertainty about the u. S. Election. Overall, they are saying the u. S. Dollar should remain on the weekend said on the weaker side, good for asian equities. You mentioned the u. S. Election, because we are looking this being the most risky event in history. In terms of the implications, would heard from bank of america saying investors may not be pricing in a potential decline, if we do get the risk of the pushing the u. S. Dollar higher. Is there a risk we are misjudging what the dollar could do close to november . I think the u. S. Election is certainly one of the key risk factors for asian markets as a whole. A thing for us, many things can happen before november. It is very hard to predict the outcome of the election. Clearly, next years impact will have an impact on our investment universe, china. For china will not change, whether trump continues or the democrats take over. For us, we would like to focus , the trendsctable in china. As far as the u. S. Dollar is theerned, if you look at dollare rate, the u. S. Should not be supported at this current level between deficits. Combining these fundamental factors as well as the ongoing uncertainty, we are saying the usl it should remain on the weaker side the u. S. Dollar should remain on the weaker side. Given the dollar depreciation, we have seen the yuan gain ground, trading at the highest level in a year. This chart highlights the valuation for china stocks. We are seeing the premium of shares over hong kong listings at the highest level since february of 2016. Expensive by 43 , compared to the historical 20 . Give us the case for the chinese shares and which sectors are most appealing to you. Indeed. Asia is one of the most interesting areas. Theres a few reason for that. The economy recovery is on track. In terms of right now, chinese properties are really able to deliver on the earnings. Next year, the expectations remain. The overall picture is very strong. Key drivere other deathbe the breasts and of the market the breadth and depth of the market. I think all these would provide forry vibrant universe stock to choose the quality Growth Stocks there. Overall, the macro picture, the earnings picture, as alyssa stock market itself provide a very good picture for investors. Us. Reat to have you with we did just have some breaking news a significant loss, the first annual loss in the Global Financial crisis for the australia wealth fund. The future fund, losing it in the 12 months ending in june 30th. Was the allocation highest in three years in preparation for a challenging and volatile environment in the future. Saying they need to be more strategic as they pursue longterm return. Lets turn to one stock corp, risingank to the highest levels since august 31 after the surprise decision to add the stock to the nikkei 225. Lets turn to Karina Mitchell for the first word headlines. The fed governor says there is considerable uncertainty ahead. Telling the Brookings Institution that america will need continuing support from the fed and policy members in washington is the economy tries to recover from the coronavirus pandemic. She said Monetary Policy must pivot to accommodation. That u. S. Uchin says economy urgently needs extra fiscal stimulus to rebound from covid19 and is in talks with the democrats over a release package. Relief package. Mnuchin said parts of the economy need additional support, however, he stopped short of offering specific proposals. The race to succeed. Shinzo abe is heating up with the secretary, expected to announce the candidacy later wednesday. He is seen when he support from across the party. A chinese professor has been sentenced to 18 months in a u. S. Prison after being convicted of trade secret theft and economic espionage. He was charged in 2015 and a crackdown on chinese theft of and the best of intellectual property that continued under the trump administration. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Still ahead, we take a look at a europe of people a year of upheaval in hong kong, as alyssa governments as well as the governments response. Coming up next, china is close to joining the u. S. And russia as a Global Nuclear power. We take a look at the implications. This is bloomberg. A quick check of the latest business flash headlines. s australia australias Sovereign Wealth Fund is holding more cash, after. 9 , its first annual fall since 2009. The chairman says the cash allocation is the highest in three years and they are for a challenging and volatile environment in the future. Amex business cards will start paying the changes in november. I am say expects to reopen another couple hundred cinemas in the u. S. This week with the best majority welcoming moviegoers us we meaning more than 70 of the companys theaters will be back in running. Cash back and running. Back and running. Shares jumped more than 12 and excel the trade. President trump has spent 65 million since 2018 between the merica Great Committee and the Republican National convention. Joe biden and his supporters have spent 33 million over the same time. The pentagon is warning that china is close to achieving Global Nuclear ability. The nation is capable of deploying Nuclear Weapons on land and that see. At sea. How big a deal assist Nuclear Triad . It is is this Nuclear Triad . It is a big deal. To deployllow china Nuclear Weapons conceivably regardless of what anyone else wants to do. Because when you are going through your sort of defense out options, and you have that mask it ability, it is hard to shut all of that down at anygiven time and in hypothetical wargame scenario. Theres a fair group of people who believe that both the u. S. And russia have that capability and its been a stabilizing factor over the last many years, the other one could still deploy, and you want to prevent any sort of miscalculation. China joining a group like that would represent a landmark ability for that country. Im wondering what the implications are for the more hawkish military voices saying this means america really needs to invest in modernizing its own Nuclear Forces. Think theres two things to think about i think theres two things to think about their. There. These folks are trying to get the United States to invest in more and more expensive military options, including additional r d. That does not necessarily mean putting money into conventional forces on the ground, but more money into technology. Youre talking about asking boeing, to be, developing more things. When you hear that and you are putting your market had on, you should be thinking about contracts. Say,econd thing i would there has been a large plate for hawks to talk about building of the u. S. Capacity in terms of these smart kind of weaponry. And so, you are talking about, as chinas abilities rise, there will be a call for the u. S. To spend ever more money in this direction and make sure it does not get to equalizing. View, equal is falling behind. Even if china doubled its the uglier arsenal by 2030, it still trails a u. S. And russia its Nuclear Arsenal by 530, it still trails the u. S. And russia. 2030, it still trails the u. S. And china. Youve got enough that it doesnt matter who is wanting anymore, because everyone has already lost. If you can only blow it over to us, the world still blows up twice, the world still blows up. It is weird to ask who is best in this, because everybody loses if anybody tries to actually figure it out on the ground. These rising political tensions between beijing and washington will also be playing into the vaccine race and the distribution of any successful according to Johns Hopkins. My concern is that some much about the differences between the various vaccines, but the Delivery Systems once they are available, online, and ready for use. People talk about the situation with china, that they are afraid if china produces the vaccine first, china will withhold it from the u. S. Im less concerned about that. Im more concerned about the n iny of the vaccine o the first place. Second place, i would be afraid of the degree in which the Delivery System would be able to fill demand. Mccance ofhat decisions that would be made in terms of this riveting the willne will worldwide be a political decision. Right now, u. S. China relations. Necessarily put the u. S. In a particularly good spot. You make a good point about the distribution. What are you most word about what are you most worried about . The refrigeration, how you get it to the people . Is at the infrastructure is it the infrastructure . It is things like refrigeration, it is things like the poor Regulatory Framework in a place like china. Theave seen this throughout t local the vaccine, tha governments and laboratories, local Industries Working on combating covid, they dont like to give bad news to their superiors. As a result, they often times dont want to give bad news to their superiors, so they give them what they want to hear, and of its not effective, in this case with the vaccine not being effective for there are more allowable numbers of bad samples orhin a particular batch something along those lines, they would pass those along and hope that nobody notices. We are thrilled to have you here today. I guess theres no time to talk to you on cambodia. But i would switch east to taiwan and the tensions there. Do you believe that the hong kong process of the last 90 days will have an effect on taipei and their relationship with beijing . I think the answer is yes. The question is, what is that relationship going to be . Given the Just Announced trade agreement with taiwan yesterday, i think thats going to complicate matters. Increase tensions on the one hand, but might also jumpstarted u. S. s relationship with taiwan, which has been moribund for some time now. I dont know what effect is going to have on hong kong. Andrew mertha there, from Johns HopkinsPublic School of health. Daybreak to come asia. This is bloomberg. At a couple a look of the movers we are seeing. Amp, holding at the moment. It must almost three quarters of their value since the start of 2018 after a series of leadership scandals. The chairman. As well as a sexualharassment scandal. We are seeing upside in this session, up by over 5 now after bankers reviewed its business. F holdings. Ng ioo that insulation institutional placement this morning, raising 734 million australian dollars. Where watching stock reaction to the nikkei announcing some replacements. Replace a company on the nikkei 225. Softbank was already in the gauge. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Im Karina Mitchell with the first word headlines. China is warning relations with the u. S. Faced difficult problems. The Foreign Ministry of beijing and washington says ties are in a most testing time with the u. S. The embassy tweeted the u. S. Is resorting to every possible means to suppress chinas development. President trump has confirmed tiktok must sell its u. S. Operations, saying the u. S. Should be compensated for any deal. He repeated a sale must happen before september 15th. Re, he will close the video or, he will close the video app in the u. S. Any deal remains distant. Relations between india and china are set to worsen. With a new standoff under a disputed border in the himalayas. India has moved forces into the region, and responsive provocative actions by china. Beijing says it is taking action without giving more details. Local military commanders have held talks and more discussions are expected in the coming days. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Lets take a look at the new galaxy fold 2. What are the kind of changes and tweaks to this new foldable phone . Is it more likely to be a success . The third foldable phone and the Second Generation of the galaxy full. Galaxy fold. It made significant upgrades. The front screen is enlarged to the size of a conventional smartphone. The display is made of glass. Despite the changes, the company cap the price nearly unchanged at about 2000 kept the price nearly unchanged at about 2000. Why is this phone important to samsung . Are there any changes to the strategy . This is the most luxurious and expensive smartphone for samsung. Means if the market continues to grow, it will raises revenue and boost business it will raise revenue and boost business. The market overall has been and notlateauing demand doing well, especially in this pandemic situation. Mightare rumors samsung integrate note categories in the future and added into the fuld and add it into the fold. Will there be any impact that we can see on business . Was the prosecutors we see prosecutors indicting indicting samsung leaders. How does it look on the leadership side of things . Operate the group even when lee was accident. At a time when there are changes in industries and tensions, and risk, it will be more difficult to make major. Ecisions we are of course hearing from the rbn, saying the are aiming to ensure they are best suited for new zealand, of course. Most Dovish Central Bank has put negative rates on the table. The Monetary Policy goals have not changed, but they could include the likes of negative rates as well as an extension of more quantitative easing. Saying policy is to remain effective and be operated saying the rbn is preparing a package of extra Monetary Policy to be ready to use if needed. We are looking at that rally in the kiwi. The kiwi dollar could receive a little bit of an excuse for a breather from this speech, but expectations are for that rally to extend into the mediumterm. We will continue to watch that, orr, saying the policy at least regrets approach the policysetting. We continue to watch and listen live. Lots more to come. This is bloomberg. A new survey in hong kong suggests police trust public trust in the police is collapsing. This, after new security laws werent posted by china. We discuss what this means for hong kong. Thank you so much for joining us. We are marking two months since the National Security law was enforced. The police have said there is zero tolerance for illegal acts and Enforcement Actions will be taken accordingly. Is a police force in a position to maintain law and order and work towards restoring Public Confidence . I think so. Because if you look at what has been happening over the past the public order situation in hong kong is not looking well. Obviously, there is an urgent need to establish a National Security law that will empower the police with the necessary in hong kong. With this new department and expand the police hours, is this enough to provide enforcement area where are more things needed . In a selected major case, they will handle the case. Hong kong police are not able to deal with any securityrelated cases , beyond the capability of the hong kong police. s government comes into play, this will security inintain hong kong. Jason brutalre seeing a vicious ago with political protests that resulted in instances of perceived police brutality, which field more fueled more protests. Why do you think hong kong has lost trust in the police force . You are only seeing one side of the story. If you look at the situation, there havest year, been socalled peaceful demonstrations, people exercising their freedom of expression, etc. Intoof them turned damaging public property, causing serious injury to innocent bystanders. This could have very serious consequences. And on a major thoroughfare, also blockading the airport, all illegal activities, so irresponsible. But you also have situations like the incident in july of last year. You had police seemingly and discriminate leah trackin attacking people. Is it any surprise you see surveys showing hong kong is losing trust in the police . And is it a problem that police are trying to fix a problem that needs a political solution, not a police solution . Well, the last years july event is being investigated. A few arrests have been made by the police. , the situationit not described by many social media or media, also when you say distrust of the police, it is only by those people who are more in the public disorder situation. The majority of the people on the streets, what peace,nt to have is being able to go to work, go to School Without being interrupted. They want to be able to make their own judgments, make their experience their own opinion without being attacked or fired on. There have been people hurt or killed by people in the public order situation. Questionk to your about trust, i fully support the idea that police in any city in the world must have the trust of the people. From what i have been able to gather, most people in hong kong maintain their trust with the people. Theou are talking about specific public order situation, where the police ask you to exercise their rightand use their lawful force to maintain the public order situation, if they think they overuse or power, their force, etc. , they can always send their complaints. I think the legislature and the police are all held accountable and responsible. Accountability is one of the issues right now. I should clarify the incident where we saw the white shirt storming and the indiscriminate attack happening. That is when we saw the biggest fall in trust with police. There also has not been any prosecutions for that. When people are not held accountable by the police, there are no Public Prosecutions for things that were done, is it surprising to you that that results in the satisfaction in dissatisfaction . It is not surprising to me at all. If you look at whats been happening in hong kong the past it is a very professional police force. They have a daunting task, not only to deal with the public order and vandalism situation on the street, they have to deal with the aftermath, like what. Ou have repeatedly mentioned it is a daunting task to deal with the domestication in order to get the right people. So far, the police, we understand some media reports that police have made arrests. Committed a crime, let the police deal with it. Action hasat Police Questions about the protests and only 21 officers have been reprimanded, has there been do accountability . What have you done differently . It is not fair for me to comment on that, because i am not in the situation, i dont have all the details. All i have is from the media, the mainstream media, social media. Unfortunately, most of the time, people only defend one side of the story or the side of the story they would like to watch. I am a person that believes in the law. I believe in organization. I believe in structure. The commission of police is held accountable for the running of the police force. For any of the Police Officers or doing their job properly beyond their Legal Authority or excessive power, etc. We have a system in hong kong to do with the. Is notpolice force handling the properly, the Police Commissioner will be held accountable. What room is there to improve the structures and systems that govern the police . Amnesty international noting in a survey that it does not fit the purpose. Yes. I heard that comment. , ther as i understand system of police in hong kong looks well for hong kong. In any system, there is room for improvement. With time, with experience, we can always get a better system should there be a need to improve the system. Im wondering what you would have done differently if you were the commissioner handling the events of the past year. Well, again, i will refrain from commenting on that. Again, because i have been retired for almost 10 years. Information i gather from the media and from the newspaper, etc. , i think the police have done a really good job. And they are dealing with a public order situation, im talking about a Massive Public order situation spreading over a long period of time. It is a daunting task for any police force in the world. If you look at the hong kong along, it has been officers are and able to fulfill their duties. Ith the best of their ability wouldwer your question, i think the same. Timeally appreciate your with us today, the former hong kong Police Commissioner. We will continue to bring you all voices from all sides of the debate about hong kongs future. Lets take a look at what we are hearing from the rba governor adrian o governor, Adrian Adrian orr including a package that includes the of rates. Of saying the challenge to understand the debt and the duration of Economic Impact of the two pandemic is still in play. When it comes to the kiwi dollar, this is not really the weakness that governor orr would be hoping for, reaching the highest level since july of 2019 recently, including broad u. S. Dollar weakness and b it has for new zealand . Debt, new zealands driving gains in the kiwi. More to come. This is bloomberg. Lets get a quick check of the latest business flash headlines. On the sales in the u. S. Slumped in august as a fallout from the coronavirus continues to drag on demand. Down 22 year on year with truck sales falling 16 and cars down 13 . Tesla aims to capitalize on its status as the worlds most profitable automaker by offering up to 5 billion of shares over a period. The company has raised 14 billion over the past decade since the secondary stock offering. Considering a shares a sale in shanghai up to 3 billion, such a move will add to the companys current listing in hong kong. Eelys new data suggests sales are climbing again in china. Front runnerslds when it comes to developing a covid19 vaccine is falling behind its rivals. Bloombergs Global Business is with us. Tor how has this kind of unraveled . It was the First Company in the world to Start Testing their first Coronavirus Vaccine candidates on humans and publish that data. There was a lot of talk about the data that was set up by in the racerneys for a vaccine. The candidate is also being developed with the chinese military. Ansino is also appealing to investors. Results were not as promising as the other initiatives out there, from the likes of moderna and the much warranted Oxford Astrazeneca candidate. Cansinos tie out with canada will have long times with canada, that is where the can comes from their name. Held up on the geopolitical front . Cansino was supposed to send a vaccine candidate to china for the crucial phase 3 trial, the last stage of trials that a vaccine goes through. It is typically very extensive and takes some time. The aim is to really are in out any decisions to see if they really work. Iron out any decisions to see if they really work. Beijing didnt approve the shipping of the shipment. Of course, that triggered a lot of speculation about the vaccine problem for big geopolitics. You have canadachina relations at an alltime low after the problems with the huawei cfo. Out on theht lose real import of the canadian side. Putting them behind other agencies already embarking on that stage. M obrien, thank you so much. Coming up, more on the tension between beijing and washington with Cornell University associate professor of government, jessica chen. Plus, we talk about the outlook for markets with the head of na strategy, when dealing wendy liu. For Bloomberg Markets china open. This is bloomberg. It is 9 00 a. M. In aging and shanghai. Welcome to our markets china open. Im yvonne man. David im david ingles, we are counting down to trades in hong kong and here on the chinese mainland. Tiktoknt trump confirms must sell its u. S. Operations and says the u. S. Should because