Equity markets are higher and higher. The fed and the boj coming through. How do we phrase this . Where we go from here . Dust of the few minutes ago we were talking about how the boe and the bank of canada raising rates in the fourth quarter. Requiring it to throw the conversation for next year. Have a look at this chart, the question really is how much can the likes of the boe and the bank of canada, given how strong their currencies have become, continue to follow the fed on its current rate policy . At what point does a policy notngthen, and become inflationary . Charts, whatat the it shows you is financial conditions in the United States in the bottom part. They are still fairly loose, and what that means is that despite the fact that you have a weak u. S. Dollar and currencies like the pound trading at fairly strong levels, it is not yet creating conditions where you would actually see disinflation coming through. In other words, there is scope for a lot of these big Central Banks will have been looking to raise rates being able to do so. Because there is room to rise, for now. That is a good chart to follow, of course you of course. All of that of course, has led to the spread of money coming back into the asiapacific. We will get a better indication of how much that is impacting the markets as china opens up. Sophie, tell us how markets are tracking at the moment. Taiwan is up to tens of a percent, and equity rally continuing across asia. Japanese markets are catching up, nikkei 225 is up 1. 3 . The currency is holding fairy fairly steady. Is set to regain its strongest level in two years, after capping its west week since april on friday. Expectations of a snap election is positive for japanese stocks and it could lift hopes for higher Government Spending according to japanasia securities. Sydney, the asx 200 gaining. 04 , and that is the benchmark, tracking the rise of this metals like copper and aluminum and oil as well. Crude is back above the 50 barrel level. For now, that currency is holding. Ahead of the rba Meeting Minutes which are due out later today. The pound sterling as well as the loony, we had the comments come out denting the pound overnight, but it is now rebounding, gaining point 02 . On ut what is going check out what is going on with the dollar, resuming losses for a fifth session even though the taiwanese index is at an april 1990 high. We are observing swings in the Malaysian Ringgit, it fell earlier about 2 , the biggest drop since august 2015. Thisted to highlight what trader is forecasting, he sees the Malaysian Ringgit falling, on expectations of a weaker yuan. Michael avery anticipates that emerging markets will have a more difficult time over the next 12 months than the have seen in the past 12, for now, emerging markets, have managed index. B higher on the the em index has reached levels rallying at levels that we have not seen since 2011. Sophie, thank you for the Market Update you read a lot more lots more to talk about. The first word news is here, Stephen Engle to read stephen President Trump making his address to the u. N. General assembly. Frequently derided organization june his campaign but he soft and his tone a bit saying bureaucracy and mismanagement has prevented organization from reaching its potential. He six to take on iran and north korea. The unitedt years, nations has not reached its full potential, because the bureaucracy and mismanagement. One the United Nations on a regular budget has increased, or 140 , and its staff has more than doubled since 2000, we are not seeing the results in line with this investment. Meanwhile, President Trump spoke by telephone to president of china, resident xi jinping, aiming to step up the pressure on north korea. Agreeing oners enforcing sanctions. A critic of u. S. Policy on north korea, saying that diplomacy is the only way forward to read the United States say beijing must do more. Top tradeents negotiator has hit out at china, describing it as an unprecedented threat to world trade. He says of chinas model creates andnatural competition distorts market, saying that he has received many complaints from American Business leaders. Bloomberge telling that equifax learned about a major hack in march, a must five months before the date it has publicly disclosed. The company says the march breach was not related to the hack that compromised the privacy of 140 million users, but we are told that that reaches involved the same intruders to read at the same time, they say that the investigation into whether senior officials wrote trading brokehen they sold trading laws when they sold their shares after learning about the hack. I am Stephen Engle, this is bloomberg. David steve, thank you for that update. Of the feds latest meeting, the markets are under pressure. The feds latest meeting, the markets under pressure. We are joined by kathleen hays. This, bondell me markets have been under pressure in the absence of no big economic reports out of the u. S. , why are we seeing this much pressure on the bond markets . It is because the september to have which seemed been put on the back burner by the bond market, the benchmark about 2 . Sing just now it is back over 2. 2 0 , it seems like there is just a subtle shift. Few days forast example, when we look at world interestrate projections, you , theee that the odds now chance of a hike on wednesday, are about 2 , nothing. If you go to the december meeting, you can see that those the chance calculations are over 50 and they had been over 30 just a few weeks ago. What we are going to be getting out of this meeting, among other things, is not a rate hike, but over three months there will be an update to its economic projections. So, what will be focused and when it comes to that . If inflation has been running below target, one point 4 versus 2 , when we look at the fed up eating these forecasts, you have to say, will they cap their forecast . No. The Bloomberg News survey says they will keep it just like that. Up from 57 a couple of weeks ago. Will the if inflation is so will they change their mind on a rate not . This is the kind of thing that on to traders i think, are beginning to wonder about. Interesting as well, the ceo of guggenheim big Investment Management firm in new york, talking ond Bloomberg Radio earlier, says if the fed goes ahead with the series of rate hikes, he says that will be enough to start pulling the rug out from under the u. S. Economy, keep capital flows among u. S. Corporations and cause a recession. If that happens, it could be good for that market, but now there is a lot more uncertainty, over just whether where the u. S. Fed is, and where it is heading. It might be a bit more possible, and that is what people are waiting to the. Whether it comes through in the policy statement. David this uncertainty you alluded to, should i be nervous about that, kathleen . Kathleen how can we were nervous . Why shouldnt been nervous, because we know that the cpi takes up last week, and a lot of think this a lot of people think that we do not have to be worried about inflation, congress has a temporary debt ceilings fixed in place, and the fed is seen to be doing what they have been signaling for a long time, unwinding the Balance Sheet by letting the proceeds roll off. But look what has been going on in the bond markets, just the last week or so. If you look at this chart, what youre seeing is a look at how Asset Managers are slashing their 10 year futures position ahead of ahead of the fed meeting. Fact, they took their long positions in 10 year futures contracts,4,000 leaving them net long by only 45,000 contracts. It is the least bullish on 10 years in year. Is it nervousness about the Balance Sheet and how it will roll through markets . We do not know. Fact, kristina hooper, wasnt Bloomberg Television a couple of hours ago, she is the Global Markets strategist, and she seems to go along with it. Here is what she said. My base case is that it will not rock markets. That what we are likely to see is the fed successfully orchestrate something that is so gradual and thoughtful. Especially since they have allowed themselves a little escape hatch in the plan that they released in june. Economic conditions changed enough, they can seize and deceased there quantitative easing for a while and continue to reinvest. It is very true that the fed is already laying out a potential unwinding of about 10 billion a month, david, it is slow and gradual. They can certainly adjust. Someone else saying that the fed will learn and make adjustments along the way, as christina suggested. Also, asian Central Banks are joining in, the bank of japan making its decision hours after the fed. The Philippine Central Bank as well, and the bank of indonesia, they still have to cut their rates. So a lot will be going on with Central Banks for the next couple of days. We are definitely going to be watching the Central Banks. Theleen hays, wrapping up situation for us. Still ahead, we will talk about there actually any hope for a peaceful resolution to all of this . Plus, she thinks the synchronized environment where looking at here, hsbc head of toa strategy comes on next talk about their approach to investment in the region. Coming up next. This is bloomberg. David this is Bloomberg Markets asia, im david ingles in hong kong. Let us get you caught up on the headlines, a change at goldman sachs. The bank has named Ken Hitchcock asian region. That he is a 25 year veteran of goldman. Todd will become copresident of the asiapacific region. There is a proposal of a special guarantee against losses that might result from the ongoing battle with its partner, western digital. Toshiba says it could be worth up to 150 billion but it is aiming to file a sale of the chip business at wednesdays Board Meeting despite opposition. The end of and europe, toying with the idea the end of an era, this company set to be on the verge of going last. Going bust. The Court Dealing another blow to traditional retailing for toys r us. Toys r us has struggled to raise its fortunes since a buyout a decade ago loaded it with a massive amount of debt. Of ane could see the end era this week, with the fed expected to announce a reduction of its Balance Sheet. Investors do not seem to be bothered, look at the record s p 500 monday close. The eight gauge of Global Equities is still on record and if you look at the markets in the asiapacific, asia has a 10 year high. One of the markets that performed low is taiwan. Why are we calling this a mc harmer song, you cannot touch this eight mc hammer song . It speaks to the fact that it has been a very good couple of months for asian equities. We seem to be breaking out of the slumber that occurred in the summer. To talk about this, is our next guest, from hsbc. My question is with equities at these levels, what is expensive . What is not expensive . What is the risk, reward at the moment . At the beginning of the year, asian equity markets actually performed the global and this rally is predominantly driven by the sterling recovery. We continue to expect a third upside in the asian market because of the fundamental outlook remaining positive. The Second Quarter earnings season reflected pretty robust growth momentum, especially in those sectors which are sensitive to the cyclical recovery. Companies which will benefit from structural reform progress in the region. It is a synchronized rally, a global synchronized uptick that we have sin, but at some that we have seen. Of thesepoints some markets look expensive, does india look expensive to you . For example . Then asia, we have seen evaluation looking more stretch, in india, we have seen a stage of unimpressive rally what a party is happening there . Relatively rich, however, india delivers the softest eps growth in the region, and we expect the high growth momentum to extend into 2018. Originalstronger than Earnings Growth and india, which is expected to surpass the valuations going forward. Structural reforms remain positive and in the region, we see attractive value in china and singapore, especially with strong earnings upgrade in china which are driven by cyclical , whichy in those sectors benefit from the supply side reforms including the materials, which have seen improved capacity outlook. The overcapacity problem has been easing. The profitability of Chinese Companies has improved, so we see Investment Opportunities in the chinese financial sector, technology as well as energy sectors. China, 85 right now is the index level. Do you have a target for this . What drives it . You mentioned some things like supplyside reform, the dust does that mean you are looking at things like cement for the strongest structural Growth Potential of the i. T. , health care, energy stocks, continue to provide the pop for the ms year china msci come a china. We have seen pretty strong earnings performance in the insurance sector and business driven the development of new Wealth Management products, and a rising consumption by the middle class. This bodes well for the earnings outlook. The earnings are improvement but the data suggest that we might have seen peaks chinese growth. Does that affect yours these this . Those that affect your thesis . Guest we expect to be moderate in the first half, and the thesis is driven by the recent environmental policy tightening in beijing and other regions, head of the Party Congress that is coming up. The Manufacturing Sector recovery is chat is still going on in china, and more importantly, i think the enhance profitability of the chinese soe is going to help earnings extend further into 2018. Will continue the conversation, i want to get your thoughts on the debt markets and india and asia. We will see what happens. This is bloomberg. David this is Bloomberg Markets, and David English and hong kong. They continue our china our chat with the head of Asia Management at the hsbc. I am very curious, do you like indian and indonesian debt . Why . Guest we remain positive on indonesian and indian credit. The fedsthink that binding of qe will and the rally at these markets. Those markets remain very well supported by the improving Macro Economic fundamentals in the region. Asian Central Banks, remain accommodated and the latest Interest Rate cuts in indonesia and india, continue to provide do you think will get more rate hikes from those banks . Guest bank we expect the Monetary Policy easing will continue and indeed, will continue to provide pretty attractive carry for fixed income investors. With global Central Banks staying relatively dovish, and the liquidity environment still pretty supportive for asian credit. Of canada andk others might raise rates next month. You see that resulting in outflows out of asia . Bank we continue to see diverging global monetary balicy, and the boe and the r are expected to raise their Interest Rates later, and in the region, the asian Central Banks are still facing pretty limited invasion threats, and the growth agenda, will continue to dominate Monetary Policy positions. With favorable policy. This is going to support asian credit. David on that note, will leave it there. Behind head of Asian Investment strategies at hsbc. Thank you. The markets are opening soon. Are just under a minute away from the open of market here in hong kong. China has been a window washer, i see. It is probably a good idea to be out there, it is a bit humid. Said, markets are hyping hot here in hong kong. Have a look at my chart, 28,200 is now your level on the hang seng index. Were looking at this, there we go. We talked about how some of these markets like taiwan for example, a 27 year high for the philip ins, which will also be opening in a few minutes. It is the philippines, which will be opening in a few minutes. That is a record as well. It is the bestperforming market in the Asian Pacific market this quarter, and nearterm target of 28,000 588. 28,588. Let us see how this all plays out, we are down about 31 points, 35 changing of course as you see there at the top of your screen. Theher thing to mention, philippines as i mentioned is also having a rally. Sophie will bring you that news in just a moment to read and we have breaking news from australia, the meetings have been removed released from the last meeting. They are keeping their cash rate on hold at 1. 5 , and the minister saying that the rba as x growth to continue. We have seen some great improvements in the unemployment rates, and the rba says solid growth and employment are good by they need to balance the risk of high household debt. We know that inflation is very weak here in australia as it is in many parts of the developed world. We also have the rba saying that there are