Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20171024

David einhorn says it is putting inadequate and dangerous products on the road. Betty not one to mince words, David Einhorn. May be it is frustrating him overall because it is an example of the stocks that had been lifting the market that he has not been a part of because he is a value investor. I wanted to show a chart for our which showsbtv 440, you how much value stocks have lagged behind. More than half, in terms of growth over the last year, behind the growth stocks, the. N. G. s, the tech stocks. Buy into stocks like amazon and tesla not the boring old value stocks. Yvonne he is not the only Hedge Fund Manager that has been lamenting this. Is he waving the white flag too soon, given the rotation we saw . We did see more buying into the value stocks like the financials, theyre are up 15 in september alone. Going the other way. Perhaps he is speaking too soon breaking outelds to 2. 4 percent. Could be adding fuel to the fire in this bank rally. Betty i would be curious to hear what the godfather of investing has to say about this, warren buffett. Meantime we have blowout earnings reports from major u. S. Industrials. Rallyeld the wall street along this tuesday. Ramy inocencio at the wall with the latest on the markets. This is where we stood at the close for today. The big thing to remember is, the dow rose 168 points, up 0. 7 . This is a new record. The s p and nasdaq closed up 0. 2 . Not records, but continuing to climb we have seen this year. Lets take a look inside the bloomberg terminal at the mmr function, the memberranked return functions for the s p 500 over the course of the last trading day. Look at the green, the bestperforming stocks. 3mst had to do with earnings, and caterpillar up 5 . For example, they got a big boost over the Third Quarter from the falling dollar. We know it is higher over the past three or four months. During the Third Quarter it had fallen as much as 4 . When they repatriated earnings, they got a bump. Caterpillar getting a bump in terms of revenue from overseas. A lot of it comes from emerging markets. General motors getting a big bump because of better sales for its suvs. Lets go to one more bloomberg terminal chart, g btv 394. Look at the tandem moves from caterpillar. Caterpillar is in white and the msci emerging market index is in blue. They have been moving together. This is almost parabolic over the past year or so. In large part, because of what is happening in em. From overseas. Es a large part, from china. Yvonne could be a good indication for some japanese construction stocks, as well. Lets take a look at how markets in asia are faring so far. Not seeing the exact type of optimism in new zealand so far, flat on the nzx 50. The kiwi could be sliding further after reaching technical levels,. 5906. We did see a choppy day for them dollar. Dollar. The fed thanks john taylor can make a good fed chair. At the sydney open, stocks up 0. 25 . Expecting price gains to climb back to 2 . 16th straight day on this winning streak, a recordbreaking one we saw yesterday. Looks like we can be continuing highrally on this abe after the landslide victory for the Prime Minister, 113. 94 for the dollaryen, just kissing 114. Kissing met gop senators to push ahead with tax cut plans. Republicans have complained to the president is not clear about what he wants in it. The spat widened between the president and senator bob corker. Trump called the senator incompetent, while the senators said the president was debasing the united states. The social graph this just as group come out the end aa cp the naacp, said they have seen disturbing incidents from africanamericans. They are alerting travelers, especially africanamericans, to be careful. Airlines couldan subject them to unsafe, discriminatory conditions. Spanish Prime Minister mariano crisis ining the catalonia. The socialist back tim come up there trying to crush the separatist movement. Party leadership is worried the crisis may escalate out of arerol if the catalans backed into a quarter, with no options besides secession. Inject more than 30 billion into statecontrolled lenders over the next two years, 10 times its previous pledge, as it seeks to spur growth. That includes spending more than 100 billion on road infrastructure. Indias economy is growing at the slowest paced in three years pace in three years. Reports from japan suggest shipment of the iphone x will be 20 Million Units, about half the number analysts have forecasted for 2017. The report says they are struggling to deal with technical issues. They have opened talks with other suppliers to make the problematic components. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers, this is bloomberg. Twice in a decade top leadership reshuffle will be complete today and may shed light on xi jinpings Succession Plans. It fell as the communist partys decision to elevate the president ial power, not seen in generations. Tom mackenzie is in beijing with more. We want to know, who were the most likely contenders . Betty tom tom it is still difficult to say, about 204 people on that list. Normally, 25 members one we are focusing on has been dealing with the trade relationship between washington and beijing. He may be elevated to the standing committee. Province. Rom a and another, an ally to theident xi and led up propaganda arm when president xi ran that province. Trustthe economic brain is staying on in the central committee, some say or suggest the economic reform plan will continue in line with what we have seen the last five years. We also saw a stepping down of a man who led this aggressive, Anticorruption Campaign by president xi. How much of an influence is xi likely to have, Going Forward . Growth at all costs, has that shifted after this meeting . Tom his influence is expected to last for decades. He has been elevated to this level, along with mao zedong. According to the Economic Framework he laid out, youre right to point to the shift. It has been described by some as a watershed moment where he has elevated the need to tackle inequality on the same level as the need to generate economic growth. The priority has been growth at all costs. Now, he has squarely put the focus on tackling inequality. In that sense, it is a shift. Inequality and pollution issues. We are that impact the state sectors and corporate said sector. We have heard from jack ma and the company wanda, they will build Business Strategies in line with this focus. That will likely impact potential property taxes. You may see levees in terms of environment and pollution aspects. Potential,ll concrete scenarios that may come about as a result of this. We also have a new focus during the speech and in the Party Opening up the market the foreign investments. Some have said, expected moves on that front in them the months after the Party Congress. Yvonne a big day in china, with that reveal in a couple hours. President xis speech, live here on bloomberg expected around 11 45 a. M. In hong kong. Lets bring in mark chilton, senior policy advisor and former head of u. S. Commodity futures trading commission. Studio. D us in our we talked about the narrative change, expecting economic reforms. But this is more about revitalization of national interest. How do you think is xi jinping forward with consolidated power will balance stability versus financial reform in china . Not with l. A. Piper anymore, but that is a good thing. Because i am unshackled from conflict. They say, do not talk about this or that. I am free to speak as i want. The president has a new lease on mice. On life. Not that he was not already powerful, exalted in china and around the world he is filling an important vacuum filled by President Trump in the u. S. , who seems to take a more isolationist approach and does not want to be involved in too many things. Although he is making his foray into asia, starting next week or it seems to me that president xi is doing so many good things to address inequality, and particularly this belt and road initiative. It is so exciting. Betty compared to the u. S. Yvonne compared to the u. S. And we have not heard much about infrastructure. Bart i was talking about highspeed rail in the u. S. , said you have to go to an Amusement Park and ride the screaming demon or something. Betty good to see you over there in asia. With the president about to arrive in asia and particularly in china, i am curious. We have seen so much in the last 12 months about trade tensions with our asian counterparts in particular in china. What do think President Trump needs to deliver . What do they need to get out of their relationship when he makes his trip over there . Bart hi, betty. I think not stepping in it would be a good thing. Not talking about destroying any countries and not making crazy demands. Help usy, will you here, but we will mess you up on trade. Some sort of levelheadedness would be a good thing. I speak with a lot of folks, not just in the states but here. I gave a speech yesterday. Even republicans, President Trumps party, are fairly embarrassed of some of the things going on in some of the dialogue. I am just hopeful he can represent the country in a dignified fashion. If he can get something, particularly with north korea, that has to be above Even Economic issues related to trade he has to focus on. Thene to bring you back to chinese markets, we have not recovered from what we saw in 2015, the botched reform. There is boom and bust in the stock market. You mentioned than that china blew it when it came to regulation. How do you see things now . What is the right prescription when it comes to china and how it could open its markets . Bart it is a great question. By and large, chinese regulators have been good. They blew it a couple years ago when they tried to put Circuit Breakers on, a command and control balance china has to deal with. How much do they regulate the stock market . What is the right thing . They placed the Circuit Breakers that really messed up markets. Yvonne are they still gun shy when it comes to implementing more reforms . Bart they are. A great example is what they did a few weeks ago with stopping the trading of Digital Currencies. And a few weeks before that, disallowing initial going offerings, the icos. What china is doing what is hong kong, promoted here in hong kong, is be riskaverse. They have the belt and road and all these things in their economy Going Forward, everything looking great, 6. 8, 6. 9 gdp, better than they predicted earlier in the year. To me, they do not want to risk it with having Digital Currencies go south on them. The Reputational Risk for china is more important now than ever. Betty we are going to talk more with you in a moment, not just about china, but a specialty of yours, regulation and tax reform in the u. S. Withll talk all of that bart chilton. In the meantime, donald trump asking republican senators for a show of hands on the next fed chair. More on his secret straw poll, later in the hour. Yvonne that was unusual. Businessut teslas model, what David Einhorn had to say about elon musks leadership. This is bloomberg. Betty this is daybreak asia, i am betty liu in new york. Yvonne i am yvonne man in hong kong. And bob corker have intensified their feud, this time, over taxes. After calling the president to stay out of the tax reform effort. Donald trump said bob corker cannot get elected dog catcher in his home state of tennessee. And bob corker said it was an untruth from an untruthful president. The twitter feud really became the headline here today during this lunch with gop senators. It was a very interesting day on capitol hill. I would say it is unusual, but this is the new normal. Trump were feuding, with interviews in the press and on twitter. Hill,came to capitol corker was in the room, and it did not come up at all. Perhaps both were restrained on their part. Moments after the lunch ended, senator flake, from arizona, said he was stepping down in 2019, was not going to run again. He gave a very impassioned speech on the floor, saying he was disappointed with president ial leadership. It was not a day for gop unity. Does this help tax reform . We will see. It may not heard it, but i do not think it will help it at all, because now you have two senators not big fans of the president , who are totally untethered and do not have to respond to an election in coming years and be more principled ut one what they want about what they want to see. If these guys do their own thing, you have a lot of other players, and this whole thing could fall apart. Republicans are banking that this is what they can get done this year. There is a sense that health care sales, they were not able to get big, legislative accomplishments done. But if they get Health Reform it could be a nice christmas present. They are going to unveil the bill on the house next week. Through six or seven steps before he gets to the senate. Betty politics. Once you stop running, then the truth comes out. Our discussion with bart chilton, the former head of u. S. Commodity futures trading commission, also senior l in theto tom dashel senate. You have seen all the wrangling, i know you are a veteran in washington. Do you think tax reform is nearly dead . Bart 0 chance it is getting done this year. I do not know what they are smoking 0 , cannot see it. Maybe a month ago i could have gamed it out. If i were smoking something. But i do not see it. Betty why . Bart a couple reasons. There are all these controversial issues, pesky policy stuff like 401ks, and what are the levels . The numbers are really tough. The president and republicans are trying to do what they did with health care that did not work out so well because they tried to do it on a partyline basis. As was just reported, the republicans only had a two seat majority. But if they did with the president talked about earlier on, trying to meet on the middle in the middle, democrats want tax reform. They could get 65 or 70 out of 100 votes, instead of trying to get 50 or 52. You know people in the last 20 minutes, four or five senators that will probably vote against it. I do not see it happening. Betty you do not see it happening, but the president , a lot of political will on his part to get it done. Steve mnuchin continues to say we will get it done by the end of the year. Why do not believe them . Bart they are pollyannaish. I hope they are wrong, i want tax reform. They wanted to do repeal and replace obamacare on day one, a 1 trillion infrastructure bill. They are wrong. Odds, i just do not see it. If i worked up there for 12 years i worked up there for 12 years. Going onl you what is there, what you reported about the bickering and High School Bullying backandforth and the speech by senator flake, that is a big beetle. It is one thing, that tipped at being in the chamber and senate and saying those things about how the president is not truthful and hurting our democracy by a member of his own party, that is really serious and significant. Yvonne corker flight, are they just the minority . Or is this the sense the gop is self sabotaging . People listening to those two . Bart i do not know if they are the majority, but there is an undercurrent, a silent majority of senators who feel the same way. But what are they going to do . This is their leader. A lot of them are up for reelection, despite the president acts like this, he carries a lot of weight. A lot of these senators, 10 of them, are up for reelection. They may be faced with primary challenges of they are not towing the line behind the president. Former advisor steve bannon has been urging. Run against these guys that they do not step in lockstep with the president. It is a dicey circumstance. Yvonne he wants to bring in challengers to the incumbents, of course. When it comes to what the gop can do, everyone is circling april 1 as next years deadline for tax reform. What can they do from now until then to change the course of it . And taxrid of state reduction does not enough to pay for it at all. They do nott have the actual proposal, it looks like about 6 trillion and they are only budgeting 1. 6 trillion. People should be wary when they hear dynamic scoring. When someone says dynamic scoring, watch out for your wallet. That means what we do will be so gangbusters great, it is going to add revenues to the federal coffers and we will not need to worry about the deficit. We have about 820 trillion debt 20 trillion a debt right now. Republicans ask like act like they will be fiscally conservative, but are now saying, we will use this dynamic scoring. I wrote a book about scam artists and when they talk dynamic scoring, watch the heck out. Betty a red flag to you, bart. I am curious, being you are a long time veteran in washington, what do you make of the speaking out that we have really never seen or rarely have seen . Bob corker and now jeff flake. What do you make of them is speaking out of turn to their own party and criticizing the president so harshly . I think it is the degradation of the american democracy. We will kick back, we are resilient. I have worked on capitol hill for so long, i am probably part of the problem. This is a time when people like neil andmeal tip o Ronald Reagan could work together, after 6 00 they could hot a hot Party Together toddy together. Those it can work across the aisle, there are a few of them left, but they are a minority now. I worked for Senate Majority leader tom daschle at the time. You try to get a yes with the votes and work across the aisle. Yvonne you say they dont look at deregulation, that is actually happening, and israel. How much are we seeing their . Bart you are seeing a little deregulation. I had a lot to do with writing frank. F god frank dodd is u. S. Financial sector stronger than any other sector around regulations, it actually helps confidence and markets. ,vonne thank you, bart chilton former commissioner and washington veteran. This is bloomberg. Yvonne a beautiful fall morning here in hong kong. We are 30 minutes away from asias first major market open. Betty looks like a nice morning. It is 7 30 p. M. In new york where markets shaped up nicely for the bulls. Another big run in the u. S. Markets. I am betty liu in new york. Yvonne i am yvonne man in hong kong. Youre watching daybreak asia. China named its most senior political body leader, cementing president xis grip on power. They will guide china for years to come. It is the climax of that communist Party Congress that wants to make china a global world power by 2050. President xi has strengthened the countrys charter. The new zealand Prime Minister has announced her lineup, with the new finance minister. He is a former deputy leader of the party. Dollar she is proposing raising the minimum wage and adding full employment rbnhem r b and that the z. Falling into line with the european union, chancellor Philip Hammond is set back from previous demands for an urgent deal for trade to continue as usual for two years after march 2019. The e. U. Has long held that a transition can only be agreed to as part of a final deal. Reports from japan suggest initial shipment of the new iphone x will be about 20 Million Units this year. That is about half the number analyst had forecasted for 2017. The report says apple is struggling to file technical issues. Have open talks with other suppliers to make the problematic components. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers, this is bloomberg. Counting down to major market opens in the asiapacific. Lets get the latest with Sophie Kamaruddin. Star u. S. Stocks back to records, especially the dow, with a decent and good earning reports overnight. Risk appetite getting a shot in the arm. On forooking risk equities, Solid Earnings from the like of caterpillar, seen as a bellwether for global growth, hinting toward recovery. We have that as we braced for Central Banks pulling away the punch bowl. Gdp from the u. S. And south korea due later this week. I could be more evidence of that expansion. A strong thirdquarter could n. Sh the ye it is still on the defensive, low that 114 handle. Futures in tokyo and seoul, lets take a look at what we are seeing. We are seeing hiking. Could have been nikkei 225 make a run for the 22,000 level. Agenda,n the economic we are waiting for inflation data out of australia. The aussie little changed, what is going on . Sophie the aussie is looking vulnerable ahead of those cpi numbers after a threeday drop. You can see that on g btv 734. Bm in my research remaining bearish on the currency, given the dovish rba and a hawkish fed, creating tradewinds for the aussie dollar. The rba does see inflation to be within its targeted range. Thirdquarter cpi may have crept higher at 2 on a yearly basis. That is the bottom of the rba. Lower Commodity Prices increases, a stronger increase cannot be ruled out for cpi. That is causing them to forget about a run. We had quite a few levels of resistance, the 50 day moving 4verage among them at the. 797 level. A quick check of aussie shares. The benchmark gunning for a run at 6000 points, rising a second day, gaining zero point 2 , led higher by materials and energy stocks. Financials up 0. 33 . The latebreaking scandal. Companies seeking talks with come industry regulators. There are talks thursday and friday. Betty the earnings season in high gear around the world. Donald trump reigniting the next fed chair. Toomberg news has learned janet yellen may be a stronger candidate than previously thought. Kathleen hays is here for more. She seems to have impressed donald trump. Kathleen i am not surprised. Torres, heby craig has covered the fed forever, and jennifer jacobs, hats off to you guys. I love their beat on this story. Advocate ins only the white house may be the person who matters most, donald trump. Several people familiar with the matter said she was impressive in her oval office interview, making clear to the president xi wants to keep her job, said no preconditions for a second term, offered suggestions for the vice chair that were welcomed by the trump team. Janet yellen impressed the president for sure. We had a story about the meeting of gop republican senators. The president asked them, who do you want to be the next fed chair . We know this because senator scott from South Carolina came out and told the good news about this. So. P did not say so and taylorator scott said got the most hand raised in this poll. John taylor is seen as more hawkish than anyone else besides kevin warsh. This is adding to this sense of, there is a lot of time and energy. Not just in the markets, but at the white house. Wilbur ross, secretary of commerce, said donald trump is taking a lot of time. He is taking this decision seriously, here is what he said. There have been discussions with a lot of us. I am not going to Public Comment publicly until the president makes his public determination. Ofre were a wide variety people to give opinions and rationales. Kathleen one more point, one of the difficulties for janet yellen, she is a democrat. She is not super political, but that is her affiliation. Maybe that is one of the toughest things for donald trump. No matter how much he likes her, he is safer with a republican. That may sit well with republicans. This new fed chair pick, is a going to make that much of a difference in the bond markets . Kathleen first part of the question, one fed chair when they are fully staffed, there will be 18 other members on the committee. They do not do this alone. For the bond market, if they continue Janet Yellens policies, it is not a big deal. A bond guru tweeted this afternoon the moment of truth has arrived for the secular bull market. He is looking at not just the fed question, this story about the poll favoring taylor, but may be tax reform. Look at g btv 508. You are seeing a lovely chart, yellow line, 2. 24. That is a very important resistance or support level, depending on whether you are looking at price yield. It has not been broken since 2015. This is the fibonacci level, as well. If this breaks, it opens the door to more selling. 2year note sales, a big deal. Was week, maybe that is not surprising. Manufacturing picked up in the u. S. And europe. The defender rate hike chances have fetched up almost it he 4 . It is a very important consideration for the bond market. There is a lot going on. In the background, how fast the fed raises rates will be a longerterm factor. Yvonne we have been talking about these thresholds for the bond markets for quite some time. We will see if it sticks at 3. 4 . Still with us is bart chilton from the trading commission. I have been thinking about this for weeks, the fact that president has talked about high how high the stock market is, has patted his back over it. Is there a better chance on what the market is expecting . Bart you might think so. We keep getting new records. We had more investment in u. S. Stocks last week than in the last 18. 7. 5 billion. It is hard to argue with success. There is some reason to say, why would you change horses midstream . Is he is correct some a she an obama person, chair yellen. It seems to me the president , anything with a tinge of obama he does not like. He said he had a good meeting with her and really liked her. I hope she stays, i think she has been doing a fantastic job. These jobs are not partisan jobs, they are partisans, not democrats or republicans. I would not put my money on her. I think it will go to john taylor. When you look at jay powell, when he was being confirmed for being a fed governor, he had 23 republicans vote against him, including the chair of the Senate Banking committee, which would hold the hearing on the new fed chair, and mitch mcconnell, the republican majority leader. That does not speak well for him. I think it would be taylor, if i had to put my money someplace. Yvonne what would taylor look like with that role . Could he be more dovish or hawkish than yellen . Bart more hawkish. By the harshed conservatives, the house financial conservatives Financial Committee chair. I think it would be more conservative. Then comes in, whether or not you want to change policies. That tax or former we talked about earlier, had it gone better, i think it wouldve been gary cohn. At this point, i think he will be in the administration. Thanke extent, think gosh for that. He is sane, and we need that. Betty any chance of blowing up the equity rally we have seen so far . Bart i do not think so. The fed chair will ultimately be confirmed and they will have fireworks and drama and you guys will talk about it and i will talk about it. I think it is really tax reform. Markets of already built in the tax reform is going to happen, even if not by the end of the year. If captureme from goes away to health care, it could take a terrible tumble. I am not saying a huge crash, but they could take a step back and catch their breath. Betty a lot of people talk about the fed chair in relation to monetary policy. Remember the fed regulates the financial industry. I am curious, looking at financial regulations, which the trumprolled back, white house, very antiregulation. How do you think someone like a taylor, which you are betting on, will regulate the financial industry . Bart there is only so much latitude they have. They do have some. In particular, do you remember the controversial thing, volcker rule. It separated Investment Bankers who could not bets for their own book, because that became a problem several years ago. Folks at the investment banks were populating various funds from their investors and taking an opposite position. We fix that with doddfrank. Differentth five regulatory agencies, including mine. It would be nice to get it rolled back. Think itpoint, i do has helped the u. S. Be stronger. People have more confidence in our markets because we have these regulations. Ridiculously with the previous overthecounter market with things like credit default swaps. We are doing better, investment banks in the u. S. Are doing better than in europe. Contrary to what a lot of people think, that is because we have strong, solid and efficient regulation. Betty do you think now is the time to roll some of those back . Bart i do not like rolling them back, i like tweaking them. They need to be living, breathing documents. The regulators need to be looking around the corner, be nimble and quick. Oft is not really the mo regulators. They need to see what will happen in the future and how to accommodate that the fuel our democracy. Far. Has not happened so i am optimistic it will happen in the future, but i am not going to put money on it. Yvonne we have to talk about bitcoin. I have a chart to show our viewers about how quick it is taken bitcoin to reach the 100 billion valuation and gotten to this club when you look at the likes of amazon. It has been four times faster than apple, bill gates, car sales in the u. S. Does it feel like global territory to you . Like my former agency should be sending investigators out. I think it is potential manipulation of price. Do not get me ronk am i think Digital Currencies are important. The underlying blockchain is changing the entire financial payment. Yvonne you could argue real estate or stock market, this is just a drop in the ocean. Bart it is, but when you look at volatility take what has happened in the past month. From 4800 3500 it is a roller coaster ride no one should want to be on. Until we have parameters on these Digital Currencies, it does not have to be full throated regulation, but something, something that ensures investors are not going to take it in the chin. They will have a hard time getting going. Elective date a lack of regulation is kryptonite. The cure for that is appropriate, thoughtful regulations. Chilton, former head of the u. S. Commodity futures trading commission. U. S. Stocks may be trading near record highs, but Goldman Sachs says investors still need to because this. This is bloomberg. Betty this is daybreak asia, i am betty liu in new york. Yvonne i am yvonne man in hong kong. A strong earnings report. Says current Market Conditions require caution from investors. Despite a base of solid economic todays sentiment reminds them of conditions in 1997. Our clients are interested in our perspective on markets. One thing to remember, no question it is been quite a rally. You can look at 1997 as a data point. Wide you compare it to 1997 . I do not want to. A lot of sentiment people had about the markets in 1997, they have today. It is an interesting time because you have this base of solid economic growth, but the cycle has been running a long time. You have to invest cautiously. They are focused on tax reform, what is going on with economic growth, regulation. It is part of the discussion with clients. But again, one of a number of topics. We will watch as everybody does, see how it plays out in coming weeks. Betty that was David Solomon, cocoo ofoh Goldman Sachs. What did you make about what companies are thinking about tax reform . It is part of a conversation, something clients are thinking about, but not holding them back. That to me echoed what marty chavez said earlier this month. Bank of america is talking about this, j. P. Morgan. What is important is not holding back, not terrorizing companies. Betty bart chilton thinks there is zero chance of getting tax reform done. I think with the banks told us earlier when we were looking at the singularly, yes, deals would be started. When you are pulling the tax rate to 20 , back from 35 , that certainly would be helpful for any Company Looking to grow. If there are other factors happening. You saw David Solomon talk about that. Certainly would help on the margins but i have not heard a lot of things saying, absolutely, that would bring the deal flow high. Yvonne if we do not get tax reform, doesnt matter for the banks . Seen themthem loses steam since september since september. Laura we saw a knockoff affects, with Health Reform not happening. Some people think it would help the banks more than tax reform, if those things do not get going, that could be a big trouble. Some regulations could be rolled back administratively. I think there are a number of things people looking at markets, bankers, theyre looking at and saying they would not get those things. For stock market traders that could be a bigger issue. Betty a lot to watch for these banks. Our bloomberg banking and wall street reporter, laura keller. A feature we would like to bring to your attention is our interactive tv function. And see previous interviews, dive into securities or functions we talk about. This is for bloomberg subscribers only. This is bloomberg. Betty this is daybreak asia, i am betty liu in new york. Yvonne i am yvonne man in hong kong. Caterpillar scored after raising the bar on sales and earnings and beating it. They are predicting sales of 44 billion for the third consecutive increase in annual forecast. Atrdquarter sales came in 11. 4 billion, higher than expected. Caterpillar reported increased demand at every place it does business. Under attack. The company put dangerous products on the road. David einhorn is shorting tesla and betting the share price will fall. He said elon musk makes bold claims about progress despite production shortfalls, vehicle defects, and recalls. Their stock has risen nearly 50 this year. May be right that a lot of investors are really betting on this disruption of tesla. They are betting on elon musk, the big bowl personality founder. I want to pull up a chart that shows einhorn might be right. Take a look at g btv 2434. It shows you the cash burn, which has been soaring in the past few quarters. Negative Free Cash Flow of 1. 2 billion. Perhaps the Short Interest is seeing a bit of a pickup. 756. At g btv they are looking at what jim chanos said, structurally unprofitable. He would not give up the shorts until they make progress. We see a little pickup when it comes to Short Interest for tesla. Betty it is betting against or for. I think people who want to go to mars that do not know how to bet on it, they are defined tesla. Much more on daybreak asia. More about the china Party Congress. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing Xfinity Mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. 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. Yvonne it is 8 00 in hong kong, live from bloombergs asia headquarters. Top story, earnings have been increasing global optimism, seen lifting asianpacific markets today. China prepares to name its most senior ruler, further cementing president xi grip on power. Betty i am betty liu in new york. It is just after 8 00 p. M. Tuesday. President trump a new push on tax cuts. He also held an informal poll on the next head of the fed. Policy could flipflop in south korea, questions about campaign promises. Yvonne we are looking ahead to the Party Congress, that big reveal for president xi and his committee. Askingstion we have been the markets is, is this a make it or break it moment in the bond market . Take a look at g btv 8717. We have seen this rise up in yields overnight breaking through the 2. 4 threshold for the u. S. 10 year yield. Wonder, when it comes to the choppiness of the volley, the threshold. Inhad all this uncertainty d. C. When it comes to tax reform. There was all this speculation about who the next fed chair will be. It seems the gop senators think it will be john taylor. Betty it is interesting, i think this chart illustrates well that conundrum or confusion around the markets. You saw that today and the reaction to jeff flake announcing he would not run again as arizona senator. We saw the dollar react negatively to those headlines. The bond markets harley moved on this hardly moved on this. You wonder how much is baked into this market and why Bond Investors see things differently than stock investors. That is adding to the nervousness or confusion in the markets on where we are headed and how much is priced in. Yvonne lets get to the latest with the market open. Optimism here in the asiapacific. Sophie given that optimism helping the markets get a shot in the arm. We are waiting into the reporting season in asia, should have highlights shortly. Take a look at the open in tokyo, nikkei 225 gaining for a 17 today. The stocks are at the most overbought level in 21 years. It does not look like the momentum is slowing down. Aussie stocks rising a second day. Shares from seoul extending gains for a fourth session. Take a look at currency markets, outlier,n won, that helping a threeday boon ahead of the gdp data due from south korea. Not much movement, the dollar holding on to its overnight climb. The yen is steady, near a threemonth low, eyeing the 114 level. Is reason we might seem 115, the friday report on u. S. Economic expansion coming in strong. In the bond market, a slight retreat in u. S. Bond yields we had a 10 year rate climbing toward the 2. 4 level. Keep an eye on twoyear treasuries. That potentially could be a driver for bullish dollar sentiment today, which is helpful for asian currency movement. Lets take a look at what is moving early in tokyo. Financials and material stocks gaining over 1 . We are on the lookout for earnings reports. The robot maker is a winner in automation. Lets show you how that stock is moving, early on in the session. They have been the beneficiary of the abenomics. Komatsu, waiting on numbers. About 1. 6 for canon. Their results of outpaced analyst estimates for some time. Thank you so much, Sophie Kamaruddin with a look at the markets. Lets get the first word news of paul allen. Trump has met gop senators to encourage them to push ahead with tax cut plans. House and Senate Republicans crafting the plan complained the president is not clear about what he wants in it. The gap widens between President Trump and senator bob corker. Trump called the senator incompetent and corker said the president is debasing the united states. The naacp has issued a travel advisory concerning american airlines, said they have seen a pattern of disturbing incidents reported by africanamerican passengers. They are alerting travelers to be careful when booking and boarding flights from american airlines, saying there is discriminatory and unsafe conditions. Spanish Prime Minister Mariano Rajoy may lose support leading the Opposition Party after the crisis in catalonia. The socialist act him after the independence referendum. But there are plans to crush the separatist movement. The crisis may be out of control if the catalonians are backed into a corner with no options other than secession. Injecting money into statecontrolled lenders, 10 times the previous bench as it seeks to spur growth. That is on top of earlier stimulus plans that include spending more than 100 billion on road infrastructure. Indias economy is growing at the slowest paced in pace in three years. Rigging hearings in australia have been adjourned until next monday. The news comes after westech and nab wanted to pause for more talks with the regulator. The hearings began at the start of the week. The banks were accused of rigging the rate. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am paul allen, this is bloomberg. Chinas twice in a decade top leadership reshuffle will be complete wednesday. It may shed light on xi jinpings Succession Plan and follow the communist Party Decision to elevate the president to eight position of power not seen in generations. Themackenzie is covering last day of the Party Congress. How are the events likely to play out . They are unveiling the bureau in just a few hours. Tom that is right, the big unveil after that historic moment yesterday with the enshrining of president xi, elevating them to the same level as mao zedong. Now shifting focus to the question of the day, which is, is he going to unveil it a successor . 11 45l be unveiled around beijing time. You have to look at the order in which these come out, these officials come out, that will indicate their rank. Elevating his allies not just to the committee, but to the polit bureau. That will give us indication as to the policy agenda, who will be addressing it. An idea as to the reform agenda and their certainion toward policies. A couple names that have been flagged in the runup to the Party Congress, potential successors. Those are names to look for. Trustntral economic brain will be staying on the central committee. We also heard the anticorruption down,ould be stepping keeping in line with the retirement norms, when they reach this the age of 68. Yvonne when it comes to the economy we have seen new emphasis when it comes to equitable and balanced growth. How significant is that change . And theyas been noted have described it as a watershed moment because we heard president xi outlining this desire to have more balanced growth in his speech. You had it really baked in. This focus on tackling inequality. The same level of importance as growth. 1970s, the process is in china, the focus had been on driving growth at all costs. Now, a very significant problem. There will be indications for the crack down on pollution. Tariffsee increased around environmental issues. In terms of issues of any quality, we heard from the big titans, that they will start to hone their business to keep it in line with thinking. The businesses have a responsibility. You may see a focus on things like welfare. The implications could be wide. We may also be seeing a softening of the growth target. That could be pointed to, possibly as early as next year. By chinaelcomed watchers inside and outside of the country. Something of a straitjacket, when it comes to tackling chinas debt pile. Yvonne thank you. We look ahead to the speech from president xi, announcement from the politburo live on bloomberg. That is expected at 11 45 hong kong. Leadership changes ahead, with the statexi, binding in military together. Does this concentration of government concentration mean good governor government . Targeting 2 trillion in assets but 2030. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Betty i am betty lou in new york. They will cement president xi jinpings grip on power. Our next guest said xis strategy will see some cadres. Is that a way of ensuring Good Governance . Our guest joining us from shanghai. You are with us last week to preview the Party Congress. Now we are on the last day. Before we get what is to come in the next few hours, what did you make of what we saw these last few days . I think we have seen the andculation of good vision a reality, which potentially undercuts that. If we go back to last wednesday, looking at the report, we saw xi jinping outlining the vision of a modernized, green, inclusive, balanced growth. When we look at the reality of what is still driving growth, even in the Third Quarter, we see many of the old tools, state intervention, credit. On the one hand, we are looking to see if this finance if they are going to be walking the walk about what growth looks like and what the drivers are. The other big takeaway, xi jinping really doubling down on the role of the party. The party governs everything. Trying to understand what that means for investors is what we are going to be scratching our heads about and contemplating the next six months or so until the government meeting next spring. Betty what do you think it means . I do not take an optimistic view of what power concentrations typically mean for economic policy. Especially if we are looking at what has been driving china successfully over the past three decades. It has been a diminutive nation of power and empowering localities, a little more of an experiment so policy and opening up. Are talking about concentrating power not just in the upper echelons of the party, but reinserting the party much more forcefully into stateowned under prices. We are talking about the rise of the National Security agenda in beijing. Were a foreign investor watching what would happen next, i would be hesitant to expect xi jinpings discussion of markets playing a decisive role will come to fruition in the next five years. Yvonne it is tough to put that all in one document. Seems a little contradictory. It is interesting. Putting his name in the charter, does this mean universally there is a genuine support for president xi . Or are there pockets of discontent within the leadership and in society itself . Again, this is a known unknown. Not everyone in the 80 million strong communist party thinks xi jinping has the one correct unchallenged perspective where china should be headed. The real question for us looking at it from the outside, where are there opportunities to be speaking truth to power in china . Imagine if you are a government minister or part of a thinktank, or are lower down the line, are there opportunities to stick your hand up and say structural reform is not the correct policy . Sometimes that was written into the constitution. It is a sacred policy. I worry we are seeing a diminished space for contesting and discussing policy options, moving forward. Historically speaking, that has not led to good outcomes. Heard from the pboc governor warning of this moment. We hear so much of these views with xi, not a whole lot of discontent. Where does it fit in that spectrum . That moment, can it be avoided . Jude that is a good question. Thesenotable he is making fairly Public Comments as you saw on his way out. It is like senator bob corker in the u. S. Taking swings that trump when he is not up for reelection. Thes not a good time when only safe time to be discussing systemic risks in the system are about when you are about to step down. He sees some significant risk holding up in chinas economy. It is notable we do not hear much discussion of that over this past week when we had the delegates here. It is primarily a celebration of everything xi and the party has done right. If we take an objective look at where china stands, great opportunities for china, especially in terms of global leadership. But they have significant risks, debt accumulations, problems in the real estate market. If we look at their more regional perspective, it is conflictly facing ration on its back door with north korea. I hope it does not drown out a discussion of the thorny problems facing them. Betty there is so much talk about xi jinpings leadership is going to rise or has risen to the level of what we saw from mao zedong . With all due respect to xi jinping, it is a little early to tell. The amount his predecessor was able to achieve in the decade and a happy was formally in iner was quite staggering terms of pushing through incredibly meaningful and tough reforms on the economy, standing s with theed relation u. S. We have not seen anything that as aisen to the level that others were able to do for china. What xi jinping can do in the next five years is blame others, the buck stops with him, it is time to see if he will be a fundamentally transformative leader, or just able to put his name into the constitution. Yvonne we appreciate your insights. Wrapping things up before the end of the Party Congress. More big guests on china throughout the day. Julia Evans Pritchard will join bloomberg this morning. John burns from the university of hong kong will be with us as president xi is set to review the standing committee. This is bloomberg. Yvonne the Singapore Central Bank chief says there is no urgent need to regulate cryptocurrencies. Illegal activity surrounding the must be stopped. Our guest spoke to a Haslinda Amin about the risk of the digital money. Wanting to separate it from Blockchain Technology, you take them two currencies on its own. Our attitude is, keep an open mind. There has been excessive hype as people see it merely as an Investment Vehicle that will rise in value. That is a negative push toward cryptocurrencies. They have potentially good applications, in particular, use cases. It is not so much a cryptocurrency or its value that is important, it is application it is use. Can they make payments, for instance, cheaper, faster, more efficient, for Migrant Workers that send money back to their villages . If it is going through Blockchain Technology using cryptocurrency, could there be benefits . That ought to be the question, not whether or not it is going up in value. Do you see a need to regulate it soon, given there are murmurs out there that singapore could be an attractive place for , given the lack of regulation . I think we have all taken the approach the currency itself does not pose the risk of regulation. We look around the currency and decide what regulation would be suitable. Theexample is, cryptocurrency intermediary we would expect the intermediary to have antilaundering controls. It is a known fact cryptocurrencies are quite often abused for illicit purposes. We want antimoney laundering controls. Those requirements are around cryptocurrencies. Haslinda you talked about having to be aware of illicit activity. Has singapore done enough to ensure and safeguard its reputation as a Financial Hub given what we have seen recently . Regard do you think singapore has put in enough asset measures in place to deal with the . Ravi it is a moving target. I think they have done a fair amount, and they need to continue to do more on that front. As we become more successful, these risks are going to grow. I think our effort so far have been reasonably good. This is happened to virtually every financial sector. I think we learned from those past experiences. The Risk Management [indiscernible] haslinda do you think singapores reputation has been hurt . Ravi reputations get hit when bad things happen. But they also thrive, depending on how you respond. Instances you mentioned, did hurt our reputation. But in the way we responded to it, it has enhanced our reputation since. On,nne that was ravi men from the Monetary Authority of singapore. Lets look at markets trading in the asian pacific. Up another 100 points after 16 straight gains, the longest winning streak on record for the benchmark, on this abe high after a landslide victory. The highest levels in 21 years for japan. Strong earnings from the u. S. In the wall street session, fueling things. Continuing to feed this global, synchronize growth. This is bloomberg. Take a live look outside the Sydney Opera House this morning. Looking beautiful down under this morning. The aussie heading lower here as we see Inflation Numbers just crossing the bloomberg. It looks like its a mess when it comes to the cpi. 8 10 of 1 . 4. 8 andhort, rising going for a 2 . Likely meeting give on. That increasingly views there. Someone at the central bank that can go either way. Lets see the market reaction. We are seeing some moves. Check out what is going on with the aussie dollar. We are seeing it come down about. 33 after holding fairly steady. It is now trading at 7751 u. S. Cents. It has dropped for a fourth session here. Earlier, we were highlighting that bonds were signaling a miss by the forecast and it has come to pass. 2 . Iwi dollars about this inflation out of australia. Rising. 2 . Elsewhere, you have the cost be, and the nikkei 225. The topics is trading at july 2007 levels on course for a 13th day of gains. Earnings very much focused with politics out of the way in japan. It anticipates the earning will be the catalyst this japanese stock rally going. One of the best gainers on the topics is one of the biggest contributors, in fact. It has jumped to 2000 levels after they beat estimates. Isharma company, that falling after its preliminary numbers mixed forecast incited a big drop in overseas royalties. 7. 5 , a came in below estimates. Industrial machinery. Very much at center stage. Industrials youre getting a boost from caterpillar. Considering new sections sanctions on myanmar. There is no question atrocities have been committed. Barred visits from former and current myanmar leaders. China names its most senior political lettuce with president chichi pings clip on grip on power. , its theng committee climax of the communist Party Congress and outlined plans to make china a mobile power by 2050. Is putnt xi alongside chairman mao and paying. The trimester has announced a cabinet lineup, naming finance ministers. Hes the finance spokesperson and is a former deputy leader. Try to run an interventionist government, proposed raising the minimum wage and adding full employment to the mandate. One after brexit. Stepping back from previous demands for an urgent deal allowing trade to continue as usual. Opec was said to be working on an exit strategy. Theyre likely to endorse the threat next month ahead of the meeting, even if they negotiated the intention of production cuts until the end of 2018. Global news 24 hours a day powered by more than 2700 and 100 20s in more than countries. Im paul allen. This is bloomberg. On oil nowlk more Holding Gains in the opec reports. The declining u. S. Gasoline stockpiles. Take a look at the price now. 52. Y around how important is this data . Good guy to what may happen with the government figures. They always have to have a bit of caution. There is disparity between the two figures. If we look at it, we take a declining it would be a good thing for the market. Traders will use that perhaps tonight, but look forward to what happens with the official data tonight. For a better guide on what is happening in the market there. Confusion ofof what is going to happen in november. They could also be discussing an exit strategy two. How do you score that . The exit strategy will be very important for the market. What is next . What happens after. The extension that they have been talking about it has been will flag to the market. Whether the end of 2018 seems to be the case. Theyre thinking about life after the cuts. Happen and the group is back in the market at the same pace which they took it out. The market will probably take that as a step by opec. What are we expecting out of the Inventory Data out of the eia that is due wednesday here . The forecast that we have from analyst will differ slightly with what we saw to the api. The analyst estimates have about 3 Million Barrels decline. Crude stockpiles would be an extension of the declines at the moment. If you look at the fiveyear still 70supply is Million Barrels above that fiveyear average and they are trending lower. Havee gasoline side, we analyst forecasts and increases here. Theres a bit of disparity between the two. Willhing that the traders be looking out for the u. S. Supply, u. S. Supply seems to have halted the trend upwards and is starting to plateau. That will be a good thing for the market. We will be watching those numbers. South koreas president is finding Nuclear Power is a complicated issue as you might backed. The administration is scrapping plans to build new reactors. Up on anothergive place to halt the construction of two facilities after opposition from locals. This. Explain where does this come from . The campaign of shutting construction of two reactors under construction. Number five in number six. The reason for this is, when you spend on construction, there was little opposition. He ordered the government to put forward pulling to see with the citizens not about continuing construction. Wanted to continue construction of these two reactors. To go back on their promise. Any of the koreans didnt want they wanted to finish these reactors. Most of the respondents also said that they dont want to extend beyond that. Is this decision popular with the public . At think it goes both ways. This decision is popular with those that live in the area. Its a major project and brings a lot of jobs. There are a lot of folks in the area that will benefit and be very happy with this. In other partss of the country that are not immediately being impacted by construction, but they want to see nuclear gone because they see fukushima and what happened in japan and they dont want that to happen in their country as well. He is sticking with what the public wants. The people have spoken and they said they want to continue construction. , with abe,teresting he wants to start more reactors. How to south koreas stance under their Energy Compare with japan and other nations around the world . Japan, like you mentioned, wants to restart Nuclear Reactors and it makes about 3 of the energy mix. Byy want to be 20 to 22 2030. Thats a bit different. South korea wants to phase it out. At countries like taiwan or germany, for example, they want to phase out nuclear immediately. Taiwan is are a close to south korea and has a goal of ridding the country of Nuclear Power by 2030. That is an extreme case. If you look at a country like china, china is building the most reactors of any country in doubling,and nearly upping their entire Nuclear Capacity by 60 by 2030. So south korea kind of fits in the middle between where, you know, taiwan would spend and japan would spend. They will get rid of it, but it will take 60 years. Its a long time. Thank you, stephen, bloombergs asia energy reporter. The ceo of saudi arabias Sovereign Wealth Fund says the timeline for achieving the 9 annual growth role, that exclusive interview next. This is bloomberg. This is daybreak asia, im betty liu in new york. And im yvonne man in hong kong. Toyota is having production issues scaling back investment by 30 . It will reduce expenditure in the facility to shed 100 million from 1 billion capacity to 100,000 units. We at a make decision after pressure from President Trump and assists insists there is a longterm shift for building cars in mexico. Reports of japan suggest initial shipments of iphone x will be 20 Million Units this year, half the number analyst had forecast for 2017. And thenical issues authentication feature. Components. Ers have saudi arabia has plans to spend 500 billion to build a city that is entirely on energy. Prince hamed made the announcement saying the city is intended to be an innovation hub. Come from the sovereign wealth front which the conference chairs. Ahead of the country we spoke wealth fund, exclusively with at the future Investment Initiative in riyadh. 90 locally, we have domestic. Lesson than 10 international on deployed investments. I think this number will continue. Remember, we have cash first and we grow in the portfolio. Between 20 and 2025. About 20 or 25 . If the investments that they have today. Its basically all liquidity. In one project, we can use the as the baseroject for it to be delivered. And had you plan to lever up and how much leverage are you using . We just hired a new head of treasury and corporate finance. And that is part of the mandate. Hes going to be with us. The questions that we will be asking and hopefully have a better answer. Times, ortime, two less . I think it will be way less. We have also made investments in other companies, not just saudi arabia. It is not only uber that has done that. 28 of Theand Company that did not get the immediate attention. Think it will continue if we see the opportunities, definitely, it will continue. We have a good process and the pis. Governments and process their own people. The number of people in 2015. They will be bringing in all subject matter experts. From new york, everywhere. But, at the same time, we are more comfortable. Big companies right now. Ceo after erik schatzker. Edition ofn todays daybreak, bloomberg subscribers go to tv. The industries, this is bloomberg. This is daybreak asia, im yvonne man in hong kong. Betty im betty liu in new york. A quick look at the headlines this hour. Cutting the annual forecast as they continue to deal with the fallout of a boardroom that ousted the ceo. 6. 5 7. 5 sting growth in revenue in march and 7 rise. Rms versus the analysts were anticipating before the ball before the fall, they had 9 annual revenue growth. It is 11. [indiscernible] the static differentiation will in technology and it will break software. Facebook and new privacy regulations across the eu after an advisor to the top courts decide that police have authorities in the country where user is based. Watchdogsays national would be able to take direct action when they suspect something illegal has taken place. The european bases in ireland. Taz under attack from activist company putshe dangerous products on the road. Shorting tesla and continuing to bet the share price will fall. Elon musk makes bold claims about progress despite production shortfalls. Vehicle defects and recalls, the stock has risen 60 so far this year. Caterpillar soared after raising the bar on failed earnings and beating it. Onis projecting 2017 sales 24 billion, the third consecutive increase. , higherdquarter sales than analysts had expected. And above the level year earlier. Every place it does business, it is really that china story that continues. I want to read one quote from the ceo who said asiapacific saw strength across the region. China continues to be this bright spot and a surprise to the upside. Lets bring that quote on the screen. Interesting, yvonne, it is a classic case of the current ceo kind of getting the benefits of what the former ceo put in place. A had their china strategy back in 2010. And we saw the commodities collapse, the oil price collapse, everyone thought perhaps they were going into china too early and it looks like they are finally paying dividends for the new ceo and for the company itself. Everywhere they have done business they see, interesting to see what kind of plays into this in the china theme overall. Btv 752 and it really does track that caterpillar stock with what we see in china when it comes to the producer prices. The stock price, sales here in the region. Caterpillar writing this wave here of all these Companies Buying up a lot of construction equipment, increased Capital Investment by its customers, so certainly we could be seeing how long it lasts, but it continues to see this resilience in the chinese data. Ofo if you look at the likes komatsu in japan really benefiting from these results here today as well. Betty a quick correction, that was the cfo quote that made those comments. Israel in china it is real in the u. S. That is why we saw the markets rally here. Yvonne over to china, we will take a look at what is going on. The next company of Bloomberg Markets, it will be this congress, this big reveal. Rishaad louisville be discussing this with julia evans with a view from capital pingmics here because xixi tightens his grip on power, what does it mean about these structural issues. They expect a plantation of planned reforms and it will fall shy of addressing chinas deep structural problems. In the global investors, we have a global strategist neil duane who will be here in london to talk about the euro, central message willd what the ecb be sending out on thursday, at least. And we will get some clarity on when they have that. Yvonne extensions and cutting the bond purchases as well. Rishaad it does seem to be. And looking at Global Markets as a whole. And last but not least, going over to tokyo because there is a motor show going on. We will be talking to Mitsubishi Motors coo. That is daybreak asia. Back to betty. Yvonne looking forward to that. That is it for daybreak asia and a market coverage continues with rish and haidi. 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. Rishaad 9 00 a. M. In hong kong and singapore. 9 00 p. M. In new york city. Haidi this is Bloomberg Markets asia. Rishaad earnings in the asiapacific. Nikkei 225 rising for nikkei 2h straight day. Now that is uncharted territory. Haidi preparing to name its most senior rulers. The nations most powerful leader in deca