Regulation had choked off the bitcoin rally, the backocurrency has roared to life. I am haidi lun, coming to you hear from singapore. Betty i am betty liu from bloombergs Global Headquarters in new york. One day, bitcoin is dead, the next day, it is back to life. Make up your mind here on bitcoin. No recession at all when you look at the u. S. Equity markets. Let us will the boards here. Record run here, a. 5 years into the bull market, the sp hovering above that level. The dow higher by 63 points. The nasdaq gaining. 1 . As investors, the fed meeting on wednesday, and janet yellen this time, talking about quantitative tightening, right . Rolling back on the Balance Sheet. Haidi it is this idea that a quantitative easing has given birth to his 8. 5 year bull market as you say, it seems a little illogical or concerning that the market seems to see quite a bit of tightening. It is not going to have much of a negative impact. The big question going into the trading week was can the bulls and fresh impetus inspiration in a week voted with a potentially revolutionary meeting from the fed when they Start Talking about this unwind . We are still pushing fresh records. Take a look at the setup for asia because we are seeing potentially a bit of upside when it comes to the asian open as well or it this is how we are trading in terms of new zealand. The kiwi dollar at 7259. The u. S. Dollar holding that drop. Ofot of money coming out haven trade despite fresh concerns over north korea. Sydney futures up ahead of the open, up by. 1 . The aussie dollar falling, u. S. Ing under . 80 just looking for whether there is any signaling of a change in policy start there and just a roundup of how we are seeing futures shape up for the trading in tokyo. Japanese markets closed at the start of the week. Nikkei futures, pretty flat start to the opening, and that is how we are looking at dollaryen at the moment at 111. Betty let us get to the first word news with emma chandra. A emma a body he frequently derided during his election campaign. Earlier, he spoke to a committee on reform where he softened his tone, saying bureaucracy and mismanagement prevented the organization from achieving its potential. The president will meet to build relationships at the u. N. As he seeks to take on iran and north korea. Pres. Trump in recent years, the United Nations has not reached its full potential because of bureaucracy and mismanagement. While the United Nations, on a , has increased by 140 , and its staff has more than doubled since 2000. We are not seeing the results in line with this investment. Emma meanwhile, President Trump to xiby telephone jinping, aiming to step up the pressure on north korea. The leaders agreed to enforce u. N. Sanctions in the hopes of persuading kim jongun to give up his nuclear program. China has been a critic of u. S. Policy on north korea, saying diplomacy is the only way forward. Washington says beijing must do more to rescind its belligerent restrain its belligerent allies. An unprecedented threat to world trade. Lighthizer says the sheer size of chinas model creates a natural champion. He said he had many complaints from American Business figures. They are not designed to deal with an economy of such strength as china. In the u k, the brexit drama has turned another page with the foreign secretary hinting he may quit over policy differences with Prime Minister theresa may. The pm said his critical comments were unauthorized, and she remains in charge of the government. The whole Brexit Debate is frustrating britains partners with ireland saying the u. K. Is making a fundamental mistake. They need to move from the current position. I speak as a friend of the u. K. I spent much of my life in britain. I was in university, but i believe they are making a huge mistake at the moment in terms of their current approach to the brexit negotiations. Emma global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. You so much for that. You are all caught up today. Let us get a closer look at the latest record rise. We are continuing to see a respond tone aided in the session by a multibilliondollar deal across defense and the sector. Su keenan is here with more. Fire ine plenty of them. Su the strategists continue to talk about the resilience of the market. Some modeling shows even the event of war, historically, u. S. Stocks would show a rather abrupt bout of risk aversion and then recover quickly. You look at the green on the screen. No risk aversion insight. Let us go to the big movers. Making the chips favored by cryptocurrency favors. Translation, the bitcoin industry. Those things taken off. The third stock, doing really well. Up 182 yeartodate. It makes semiconductor devices. It took off. If us go into the bloomberg we can. G btv 9533, because all and is the title of the stock. How much higher can the stock market go. If you ask the average investor, which is what the Michigan Consumer survey showed, most consumers, a Record Number in stock marketee the going higher, and those on wall street would say hey, that is a contrarian indicator when the average guy in the street says it is going higher. Betty run for the hills then. Let us talk about the big deal of the day. The 7. 8grumman and billion purchase of orbital. That was big news today. Su they like to see deals of this size. Northrop grumman, a major contractor, now with their purchase of orbital hek. They are going to be a major space industry and nasa contractor as well. You can see the stop was moving higher, going into the purchase. Let us take a look at the intraday movements because typically, it moves down. Northrup only moved higher, as did orbital. Orbital, upor of along long for the ride. For a similar deal. If you go into the bloomberg, you can see this is a product revenue mix for orbital atk. Blue and yellow are defense and that is what Northrop Grumman gains in the deal. Wall street seems to love it. Haidi indeed. Quickly, well briefly rising above that for the third day. Again, falling back, failing to hang onto the gains. Metals on the move as well. What is the story we are seeing their . . Su a lot of veteran traders will say we have reached a psychological wall. We have not been above 50. That has proven true as refiners come back online. A lot of geopolitical risk has been shrugged off. Copper had a great run this year , and even with weaken the numbers out of china, it continues to move higher, and we andsome big moves in zinc some of thee other metals, which is contrary to what you would think. Betty thank you so much, seeking income on the markets. This relentless bull run in american equities has seen another milestone. We saw the s p topping 2500 for the first time. It is the latest notable mark in what is the second longest bull market in u. S. History. Joining us now to break it down is strategist christina cooper. Pull together this chart i have on the bloomberg, g btv 5079, and it shows you the power of these bulls. They brought the markets up to the 2500 level, but what is interesting is we have not had a 5 correction since brexit, which is why some people are getting nervous and others are calling this may be the most hated bull market because it just does not make sense. What do you say to this . Guest actually, i think that trumps deal with the democrats, the dealing he has done over the last two weeks, has breathed new life into the stock market. One of the big catalysts for the stock market last fall was the exactly. Would have a we congress and president of the same party, progrowth agenda, and everything would get done. Then, that vision started to deteriorate and disintegrate before our eyes, and i worry for a long time about how expectations were getting well ahead of fundamentals in that kind of environment. But actually, these deals he has been willing to work with democrats, i think, betty you are talking about daca, the debt ceiling. Funding the government temporarily. That suggests that actually he could get some items on his agenda accomplished and in particular, the progrowth agenda items. Breeds new life into this rally. I worry about valuation, where they are. But i am not as concerned as i was three or four weeks ago. Betty would you say that there is there is momentum, though, even if you believe tattooed for now is possible. It is not dead. There might still be something done. You see that momentum still behind the equity markets . Kristina the momentum behind the equity market that has been there since the Global Financial crisis has been created by the a verysthe fed has stork coming up, where it could start qe. I would suspect that is going to create some headwinds for the stock market. We will see. It is certainly a very thoughtful, slow, deliberate plan. My base case would be that it does not rock the stock market. It could create a headwind. Betty but why would it . Why would it create any headwind . It hasa only because such an impact on the stock market as the feds Balance Sheet was expanding. That wes to reason could see some impact in the opposite direction on the stock market as the fed decreases its Balance Sheet. The point is that it is unprecedented. We have never had to do this before. It is extraordinary when it comes to this. Is there a sense that markets, you know, are not pricing a potential bout of volatility . Goldmans maintaining their target for s p. That is still an earlier correction of 4 . Kristina you are absolutely right. This is uncharted territory. I would expect that even though the fed remains very accommodative, and frankly, Monetary Policy around the globe is quite, native, that we need to be worried about protecting on the downside, because we could see some part a stock market downturn. Not only because every day that becomesly continues, it more likely we see some kind of correction, but because we do have headwinds forming. Haidi what would you look at, an ideal portfolio over the next three to 12 months, as all of unwinding. Have investors saying 10 should be in gold or cash. Is that a little bit extreme or what would your positioning the . Kristina that sounds a bit extreme. This is an environment where we want to be very well diversified. Within stocks, we want to be diversified around the globe and we want to have a healthy dose of dividend paying stocks you within the fixed income we want exposure to a wide variety of sub Asset Classes because we are in uncharted territory. We do not know how specific fixed income instruments might , as i like to call it. We want a significant exposure to alternatives, which can offer Downside Protection just because they are not as closely correlated with equities and fixed income, so for example, commodities, gold, and other alternative some Asset Classes makes sense in this environment. We want exposure to risk assets, so we can participate if the stock market rally continues, but we also need to protect betty you mentioned earlier that if there was anything to worry about, you would be worried about valuations here in the market, right . What you like tech shares. Valuations,k about there are certainly overpriced stocks in that sector. If you look at the s p tech group, this has been the best performer come up about 26 . Why do you like tech . Kristina a few key reasons. First and foremost, revenue and Earnings Growth look good to the end of 2018. It is also a space that is probably more immune from the vagaries of the trump legislative agenda, so whether it succeeds or fails, the Technology Sector is fairly immune to it, unlike areas Like Health Care or if the structure often related areas in the stock market. In general, the growth is there. Revenue and earnings. Fundamentals are solid. Valuations relative to historical valuations within the tech sector are attractive. Stay with us. We now take a look at the stock markets. We will focus on the bond markets with you. ,ristina hooper staying with us talking about her fixed income strategy. Citigroup telling us how the u. N. Is forcing the pbocs hand. This, next month. This is bloomberg. Haidi we are counting down to asias first major market open this morning. U. S. D have a very strong stock continuing to push record highs. It has been holding about 2500. Nikkei futures looking like a positive start. Up by. 3 . Japanese markets have been closed in the monday session, seeing pentup activity. This is daybreak. I am haidi lun in singapore. Betty i am betty liu in new york. We were just talking about stocks. Lets talk about on. Bond market bowles pulling in s pulling in their horns. What it says about the start date details of that qt, quantitative tightening. With more,ys here and cap mean, there are not any big economic reports out of the u. S. , so it is the focus of the fed. Kathleen just waiting for the fed. We are looking at two questions. Rate hikes, not this month, but what about the rate hike half . That is what the fed could reveal. Let us start their because we know that no fed hike is expected when the fed wraps up the meeting. Is downce of a hike below 30 , so people are moving more in that direction now. Officialsecause fed seem to be pouring in that direction. Does that every three months. In a bloomberg survey, 75 of economists we surveyed said that no change in the inflation forecast is really significant because inflation is running so change. W, suggesting no will they change the dot plot . One of the 12 who see one more rate hike at least this year change . That is something people will be watching. People are pretty sure, after so signald officials sai this, good time to announce the apple data is a september meeting, and start the unwind in october. The bond market is apparently responding to the uncertainty we see. Btv 16. Managerssee is asset are sprinting for the exit, according to data from the cftc, the trading commission. Contracts oftheir the lowest of the year. Uite a move going on Bloomberg Intelligence of course saying the fed is going to have to learn to say go. Watching paint dry. The fed officials will be recently that this is not quantitative tightening. Quantitative easing is buying bonds. Quantitative tightening is you actually have to be selling bonds and not reinvesting the protein, he would say is what we are doing. We shall see. The bond market looking the bond market is already looking pretty nervous. Betty yes. [laughter] betty kathleen, thank you so much for that. Haidi let us bring back into the conversation Kristina Hooper to get her thoughts on the fed meaning and the implications when it comes to the treasuries market. Kristina, i just want to show throw out this quick chart. 4010 on the bloomberg. You have in the red those in the recessions. Qe2, and qe3. How expensive and extensive qe3 has been and how you imagine the unwind would be as well. What do you expect us to do to u. S. Markets and is it also another kind o spanner in the . Kristina my expectation another spanner in the works . Kristina what we are likely is the tradinged something so gradual and thoughtful. Especially since they allow themselves a little escape hatch in the plan they released in june, such that if Economic Conditions change enough, they for ae send assist qeing and continue to reinvest. That ise enough, thoughtful and deliberate enough, and there is enough think the hatches involved enough safety hatches involved. We might see initial hesitancy and concern on the part of markets. My big concern is i do not think the market is considering the other pieces of the puzzle with regards to the fed. Of seats open lot on the fomc. We have no idea really who will throw them. We have some idea, but not a great idea. Betty we only have a few seconds left. Do you think we will make it to 3 on the 10 year this year . Kristina no, i dont. [laughter] betty despite the direction we are seeing in yields all right. Kristina, thank you so much. Kristina hooper, thanks so much for joining us. Plenty more still to come on daybreak asia. This is bloomberg. Betty this is daybreak asia. I am betty liu in new york. Lun ini am haidi singapore. A quick look at the headlines. Sources telling us that were facts learned about wascompany says the breach not related to the had that compromised the privacy of 143 million users, but we are being told the breach involved the same intruders. They may face a criminal investigation into whether they broke Insider Trading laws when they sold shares before disclosing the hacks. Betty cbs has sweetened its bid. Administrators agreed in august to sell the company. News corp. Cochairman lockman murdoch and australian media mogul scored and made a rival bid. Creditors are due to vote today. Us is said to be on the verge of going bust as they file for chapter 11. That would send the largest toy chain to court, dealing another blow to traditional retailing, already reeling from store closures and the rising challenge from ecommerce. Toys r us has struggled to they loaded the company with dbet. Bidding for toshibas chip unit is proposing a special guarantee against losses that battleult from the legal with western digital. The unattributed report says the guarantee could be worth almost 450 million. Toshiba is aiming to finalize the sale of the chip business at wednesdays Board Meeting despite westerns opposition. Up next, bitcoin roaring back to life. Why even stringent chinese toulators are not enough give the cryptocurrency down for long. Just a few days. This is bloomberg. Haidi it is line 30 a. M. Tuesday morning over in sydney. Markets in sydney, 30 minutes away from the opening of trade. P. M. Here in7 30 new york on this monday. We kicked off a big merger monday. Markets closed higher, keeping the record run on the s p. Beautiful. Last days of the summer here. I am betty liu in new york. Haidi i am haidi lun in singapore. You are watching daybreak asia. Let us get you the first word news with emma chandra. Emma china has increased its holdings of u. S. Treasuries to the most in almost one year. An indication that is succeeding. Rose to 1. 17ing trillion in july, an increase of more than 19 billion from a month earlier. Japan owned 1. 1 one trillion. 1. 11 trillion. They want to give greater access