Sydney. Welcome to daybreak australia. We are in our away from the opening of the markets. Good morning. For thegood morning japanese Prime Minister, shinzo abe, and looks like he might get a super majority going into the elections. Upsaw nikkei futures going half a percent. The yen at seeing the lowest in half a month. 114, getting close to the 113. 90 is where were at. Abesexpectations that gamble has paid off, and looks like he is secure the super arerity, and the markets interpreting continuity when it comes to this ultraloose Monetary Policy, as well as flexible fiscal policy. Lets get over to yvonne man, who is in tokyo. Victory byis is a default. Were there any surprises . Pretty much deja vu again. Forcing a split to what we saw in the 2014 election, but it is a potential come and looking more likely to be a landslide for shinzo abe, with the 465 seats for grabs. We are seeing the ldt and its Coalition Party coming out with 460 five. Out of the a close second, a little bit of a surprise, the Constitutional Democratic Party at about 54 seats. The other party, 49 seats. The tokyo governor calling it a tough result. It was projected she would perhaps not gain as many seats as she did on sunday. She did apologize while she was at a conference in paris saying this caused unpleasant feelings for people throughout this campaign. Despite the landslide victory from shinzo abe, we heard some humility in treating this win with humility. Knowing there are still some who have a harsh view of him, as well as ldt, and perhaps the have learned from his cronies and scandal earlier this year. That she wasesting not in japan during this. It will be interesting to see if we could learn anything from that platform. The majority,h what does that mean for his economic plans . The loose Monetary Policy we know, look to negative Interest Rates, right . Thene right, but there is super majority, will he make this constitutional reform more of a priority in exchange for reform . That had been crucial for him. It will still be a tough sell in revising article nine. You can, they are still quite split because japan is quite split for this issue. Even if he has the two thirds majority, he still has to put this toward a national referendum. Its not an overnight success, so to speak. Will he be using up his Political Capital in pursuing this as opposed to more politically tough reforms . Is he going to implement this consumption cell stack sales tax in 2019 . Say, what the polls do analysts say about the economy about whether he can handle that . When we saw i push from 5 to 8 in the consumption sales tax, we saw some problems. Inflation is expected to pick up by 2019. Some say perhaps 2019, the sales to 10 might 8 not have as big of it take of an impact as previous tax hikes, but you dont know. 2019, we will see growth slow in japan. The infrastructure boost for parent for the Tokyo Olympics good start to fade. Not to mention, the boj could be facing more pressure when it comes to unwinding qe. Is jury is out, but if he serious about pursuing more of these reforms like labor reform, getting more women to work, more thisly care, child care, could have won it comes to Labor Productivity and could help some could help, some economists say, and offset the sales tax hike in 2019. Haidi is this scene as an element of continuity with abe staying the course . He has one of the better relationships with President Trump. Does this set up japan and south korea in a more steady way to deal with north korea . Absolutely. He has basically campaigned on the selection on fears over north korea. He has been using that as Political Capital, i guess you could save your the handling of north korea throughout these political tensions has been beneficial to shinzo abe. We have seen him bounce back from the cronyism scandals, with his hardline stance on pyongyang. Also, his cozy relationship with President Trump. Hisentioned in a rally that partnership with President Trump is to a point where he can pick up the phone and the president on pretty easily on urgent matters. Hes trying to push forward on the u. S. Japan alliance. It looks like he is ready for a couple more rounds of golf with the president when he visits. Month. Ts next haidi voters had to break the bad weather to vote. What is the latest on the thai phone . The typhoon . Yvonne heavy rain and wind gusts when we were heading to work today. The good news, it has weakened from the category two storm as it made its way from the south. We have some plans, toyota canceling shifts at its plants. Airlines, Japan Airlines canceling hundreds of flights. Ana also. Overall, we can see more cancellations as the rain comes through. On the also weigh turnout. According to some tallies, we saw the Second Lowest turnout on the selection since world war ii. The worst was 2014. Usually when given low turnout, the lbre favorable for t. Haidi yvonne coming to us from tokyo as we try to assess the outcome of the national election. Shinzo abe has potentially secured a super majority. A professor. Great to have you. We talk about this potentially being a victory by default for shinzo abe. Largely due to political disorganization in his opponents. Does it really matter . Does he come out of this with a stronger mandate . There are some interesting messages. The public and voters in japan are clearly divided between the idealist and pragmatist. Representsnds pragmatism. Winner in thegest selection is the constitutional one and 50they took seats. Its an idealistic party, they would like to protect the constitution and are focusing on the constitution as its core issue. This will make it very difficult to become a National Party in to lay develop a Security Strategy that balances with the constitutionalism. All they came away with a big win because they are pragmatic. At this stage, there is no alternative to the pragmatism. Opposition parties need to find a way to make that security equation work with their ideals. Haidi what does he come out of this with in terms of a stronger mandate . He talked about the second sales tax, it struck me as all it is a when the firste one was so disastrous beard list it with geopolitics for spirit what policies disastrous. Lets start with geopolitics. Stephen lets start with north korea. How to denuclearize the peninsula. Is a strengthening its alliance with the United States and coordinating with the United States, also it is for donating regionally and globally with the yuan but done harsher sanctions with the you in to put down harsher sanctions. I think this is been appreciated in the Regional Community and also japan. With a rising china and its behavior in East China Sea and South China Sea. Japans preference under Prime Minister abe and arguably under previous Prime Ministers is to tie the relationship to the build states more deeply, more coordination and corporation between the lines. What we have seen from abe, reaching out to countries in Southeast Asia and asia, the amount, the philippines and australia to form strategic partnerships. These are nimble relationships that are not a military reliance but away japan has been building capacity, providing interoperability for countries to the consumption more smoothly with each other. Function more smoothly with each other. He needs this to push back against the assertiveness of the chinese military. Haidi it was interesting, one of the things the chinese president said, he spoke about the actions in the South China Sea as one of the achievements of his first five years, and he was talking about the idea of boosting the military and creating a superpower some of the strongest nation in the world by the time we get to 2050. Do you expect that we have these key political events this week, the tensions will continue with china, and that plenty more countries in the region might have to start picking sides . Stephen unfortunately, i think that in regional relations, they are related to domestic politics. What happens domestically in the chinese context. Few reasons. R a the chinese president is arguably the most powerful post civil war leader in the chinese context, apart from perhaps mao zedong. Slowdown in the chinese economy, continued corruption campaign, and this is manyade president xi friends. We have an fire mental issues, a growing social and economic gap. Its putting pressure on the Chinese Government. Looking at relations Going Forward in the region, dont think it matters so much what happens out of tokyo or hanoi or middle of, but what happens in the chinese political domestic context. There isis pressure, competition, if he feels insecure, its unlikely he will take a more conciliatory approach to the countries and politicians that have been used by the Chinese Government for political purposes, such as abe. I want to switch to abenomics. It is working,s, three quarters of consecutive growth. But of course, there is inflation, if you can call it that, or lack thereof. Low to negative Interest Rates. I want to hop on the bloomberg terminal, 5909. Negative Interest Rates. This is a great look in a 3d graphic formation of where Interest Rates have gone to the negative over the past five years from 2012 to 2017. How much longer can we go . We expect it will go further with abe, but this is not helping a good part of the economy. That is true. Lets take the big picture. When we look at cities like tokyo, osaka, they are beneficiaries of abenomics, low Interest Rates allow for building, creating more businesses, allow for citizens to buy property. We see loose monetary funding allows for japanese businesses to export abroad. We have seen the greatest wage increase for parttime workers, slight increase for fulltime workers. You have painted a broad picture. But the rural areas are not being affected. We see a rush of young people leaving rural areas. Andinfrastructure is old, the economies look much like the economies of the 1970s, uncompetitive and an productive. And unproductive. Abenomics has to do more. Dynamism to take the of the urban areas into the rural areas, they have to build infrastructure, attractive places for families to move in and raise families. At this stage, i will it has been effective in doing that. Theres probably no policy that will arguably make that happen. The centersaka are of opportunity, employment, education and the japanese context. This over centralization is complicating abenomics in rural areas. We will have to leave it there. Thank you very much for your thoughts and analysis. The conversation on japan continues, we will have some very big names on Bloomberg Television coming up. In about an hour, former bank of japan for member a former bank of japan board member, and we speak with Asia Societys diplomat in resident. Hes a former u. S. Secretary of state for east asian affairs. Dont miss our interview with the former japanese vice minister of finance. Stay tuned. Lets get the first word news with roslyn. Catalonias separatist leader says spains control of the region is reminiscent of a dictatorship. To allow direct rule to madrid. They have until 10 00 a. M. Monday to make the the pin their position on independence clear. New zealands Prime Minister says she believes in the benefits of free trade and will pursue new agreement. She is indicated support for the Transpacific Partnership and intends to cut down on foreign property speculators. She is new zealands youngest Prime Minister and the most useful leader in the world. She was elected three months after taking control of her party. The morning post says many as five members of one of chinas committees may change when the Party Congress and since week. The up with the the new lineup will be revealed next week. Chief the says chief banking regulator might be named the next pboc governor. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks. We will be live in beijing later. Who may take over at the pb was pboc, asvernor, governor . But first, janet yellen defends the fed unconventional methods. This is bloomberg. The race to be the next fed trumphas not been won, as praises his short list of candidates that makes it clear he is not made up his mind. Donald trump spoke to fox business and he said a lot of things, it was a long interview. Anything we didnt know . Taxleen a lot of it was on reform, he asked a lot of things anybody would ask. He is broadly speaking about five people, jay powell, janet yellen, and of course john taylor. What he said was exactly that, i am looking at a couple of people, im also looking at janet yellen, i like her a lot. Three people in total he says he is looking at. Also, a couple of others. Presumably, the three he is looking at, powell, yellen and taylor, and the other two are kevin warsh and gary cohn. Asked about , he says it isor in my thinking. A couple of other things are in my thinking, too. Treasury secretary Steve Mnuchin is pushing for powell. Mike pence likes taylor. Wall street thinks powell is the most logical. Its look at 3203. Throughre predictive thursday. You can see mr. Powell is in the lead, warsh and yellen have gone down. Taylor is down, as well. I cant help but think that after trump has mentioned, when we get the latest results from the betting websites, we will see he has moved up a bit. Taylor is sparking a bigger bond selloff in howell. It would be saying a 10 point drop in yields if taylor gets chosen rather than jay powell. Haidi we talked about john taylor widely perceived as the most hawkish candidate, is this a good enough reason to not give him the job . Kathleen thats what everybody is suggesting. There was a terrific story about this on the bloomberg this weekend, look at it. They pointed out that given he has talked about fed policy, he might have to make a hard pivot. You, 917. Er chart for it is the taylor rule that makes people say this. At unemployment and inflation, he says the fun rate should be at 3. 75. Slightly different coefficients brings you to 2. 5 . He is also been a vocal critic of said policies. I think maybe the biggest question for his potential to be fed chair is the question, has he been snared by his own rule . Many bankers, many fed people, think the rule is too rigid. He goodder if compromise with other people, could he collaborate . I think he could, but this is a question. When the fed started doing qe and mortgage bond purchases, he might them, and more than rising Bank Reserves amid all of the steps they took a drink it Great Recession could boost inflation. One more thing, a lot of conservatives republicans, led by an ipo center, want to get rid of it yellen and change the fed direction. I think that is the camp that might be pushing more broadly for john taylor over powell, but powell is considered a safe choice kind of like yellen. Haidi thank you. That is one of the top stories of the hour. Kathleen hays in new york. 20 more to come on daybreak australia. This is bloomberg. A quick check on the latest business flash headlines. Pinto holding talks with indonesian groups about its exit from gold and copper mines. They are keen to sell part of the operation. Were also told there is no guarantee the talks will advance held itsnoble group shares from the Stock Exchange on friday, and its oil unit is being sold. Urgently. S cash a deal may be announced later monday. This is ahead of what is being called a major transaction. Next, elections have rattled the markets. Why the promised minister needs to win over investors. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Is 9 30 a. M. In sydney, markets open about 30 minutes. Teachers are looking positive, a positive start when it comes to the nikkei trading. Up just about 1 10 of 1 . I am in new york. You are watching daybreak australia. Lets get the first word news. The dollar yen weakened to its lowest in more than three months as Prime Minister shinzo abe pertains a super majority in parliament. One twong coalition thirds of the vote. Partners one at least 300 310 of the 465 seats in play. The fledgling party of hope one about six he seeks. 60 seats. A powerful storm is hitting tokyo this morning after drenching much of the country on sunday. It is a category 2 system. It is projected to weaken as it makes landfall, what to bring driving rains and floods. Taylor has halted work at plans, and toyota has halted work at its plants. A hard brexit would not be what some fear. Britains divorce from europe without an agreement remains a possibility. Subjectit would mean a to the terms and conditions of the world trade organization. In Bloomberg Survey of economists said the ecb will hold on percentages to 30 million next year. Its waiting for inflation a