Negative situation when the trading day gets underway. That is a long way off for the moment. Nikkei feeling it. The hang seng, lower. Shanghai feeling that down drop. Lets get to those moving parts. The u. S. 30 year treasuries, levels we have never seen before. 1. 9. The whole curve is below two into the u. S. We have stronger than expected fors fixed gain. Is the message still continually one where we are seeing them sending this message out that the yuan is not a oneway bet . 11 days of declining. The new Zealand Dollar on track to go down to 62 u. S. Cents. Confidence to come out earlier on in 11 years. We will be hearing what is going on. We will be talking to this San Francisco fed president mary daily later on. U. S. Dollar against the pound, here we go, we have the have the last headline. We will have five weeks of that parliamentary debate. Some are saying they are trying to stifle a deal on brexit. Effect, thees in most viable option, i guess the most embedded on option right now. 1. 22 for the pound. Heres to furred work first word news. Su we begin with argentina. The country is again banking on the imf to stave off default. The fund is in one a satirist to decide on a new package in more than 5 billion added to a record bailout last year. Argentinas reserves plummeted more than 10 billion in the past month. This as policymakers tried to shore up the peso after that stunning political defeat for the market friendly government. To italy now, the Prime Minister has been given a mandate to form a new government after days of stop and start stop talks between the Democratic Party and the movement. His earlier coalition collapsed when the antiimmigrant league was in support. Markets welcomed the news but the democrats remain unhappy, and planes to reinstall luigi demaio as deputy premier. Volcano has burst into life. Stromboli lies to the north of sicily, the home of mount etna, and has been sending huge plumes of ash and smoke into the sky. Planes were deployed to drop water on wildfires that were sparked by burning lava. It is one of the most active volcanoes in the world and the eruption comes 12 months after another blast earlier killed a hiker. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Rishaad we go to treasury secretary Steven Mnuchin telling bloomberg that the possibility of long bonds is under serious consideration. In an exclusive interview, he said he anticipates taking advantage of favorable conditions. The bond market with a spread between the five and 30 year treasuries widening. David yep. Lets talk about the prospects. Joining us on set, head of fixed and fixed income. This has been talked about for a while, issuing bonds for longer than 30 years. We saw a very good appetite from the market last week when the germans tried to do the 30 year. What do you think . What would be the appetite of the market young 30 year treasuries . I think there is a demand there, otherwise we would not see it competent. David good point. I think when you look back, the whole yield curve, everyone is talking about it being inverted. 2017,ou look back in tightening the rates, it went into a hiking mode. It is a very natural reaction. About started wondering hiking the rate too early. Have from lastwe year is the trade war. When the trade war comes, we see the yield curve inverted. Everyone knows when the yield curve starts to invert, it is probably 12 to 18 months ahead of recession, the leading indicator of a recession coming. It tells me people are worried about a recession coming. And the trade war is not good for anyone, not for the u. S. , china, or the global economy. That is why people are rushing to a risk off mood. Coming from life insurers and people like that who can do that. Do you really want to be borrowing money with of that length of time . Because he probably will not get that much in terms of appreciation. Jin correct. It depends on what you want to have. Actually, you are paying for the high bonds. If you put that perspective into what the usa u. S. Is thinking , still you get paid a something. 10 andpe, you are buying giving 50 to the borrower. That is the choice you have. I think that is why. It has driven it yvonne what is your take on the collapsing yields we have seen already . Have a bond traders gone crazy or do you think the fed is behind the curve . Jin i tend to agree with the market. I think the signal from the market clearly shows people are worried about the World Economy. The trade war, the china slowdown, too much leveraging in the system. It probably think takes a long time to have people are talking about the u. S. Getting out of rates. I think that is a worry. It probably is driven why investors are buying a low yield. David could it happen yvonne could it happen, though . Rishaad all bets are off, arent today . Yvonne San FranciscoFederal Reserve came out with a note, they were looking at japan and said negative rates have not helped, and has caused expectations to go down. Jin personally, i do not think that will happen in the u. S. Maybe im wrong. But i think the pricing in the World Economy because the u. S. Dollar is a reserve currency globally. Compared to the end. They end. The yen. Nightmare to get a natural rate. David which brings us to this part of the world. If people think the u. S. 30 year is a lot of money, i dont you go to china . You get 3 . Jin correct. Im very glad you bring up this question. Actually looks at, especially on the yield side, not the high yield, but at least a decent return. Problem in china is the government is trying to lower the rates because Everyone Wants that. In china, there is a lot of liquidity. The government and pboc want to help the economy. , they had a new pr to raise it again. It raises the objective to help the real economy, to get cheap funding. The mechanism, the credit transmission in china is somehow not broken, but not very effective. To makeing their rates borrowing less expensive, it only helps the big companies. Small companies or for private owned enterprise, it is not a question about how expensive it is. There is no way they can borrow. Thats a problem. It,atter how low you make it does not help the problem. Problem toal address the real problem for the government, for the policymaker, is to launch some sort of qe. Qe, they buy fiveyear, tenure year, or mortgage bonds. David china version of qe. Peopless will start wondering what you mean. Jin it is buying corporate bonds. Directly targeting for corporate bonds. Pboc or policymakers stepped in to help to restock. Yvonne and i guess there is so much interest when it comes to these just one of your Top Investment strategies. Foreign investors are diving into this trade. People say there is a lack of information. You can still go into these big cities, go with an infrastructure focus, but these areas are still not immune to default. How do you avoid these risks . Investment. Big orically, it is a unique situation. First,u pick it, i think there is a public default and the bond. That has a lot of strong itfidence when they buy because they have never seen anything like it. So far, never. That is the first thing. Second thing, i think sometime down the road, we may see default. That is what the government wants to have, to bring pricing into the system. The differentiation becomes important. Which region you pick. Trade of people bloomberg. Com [indiscernible] area, shanghai, or beijing area. People are trying to get companies from reaching that. David looks like we have a jump up point for the next conversation. We didnt even get to talk about panda, and the kung fu bonds. Thank you so much, China Industrial security had a fixed income. Coming up, we are talking with the San Francisco fed president. Johnson up next, boris setting the stage for the brexit. We will assess the implications of that. This is bloomberg. There will be ample time on both sides of that crucial october the 17th some some at. Ample time in parliament for mps to debate. Eu to debate brexit or and the other issues. When parliament does meet on his timetable briefly next week, the first thing we will do is attempt legislation to prevent what he is doing. Secondly, we will challenge him at some point. David ok. We are set up for the cup location. Latesta Boris Johnsons move on brexit, sets up a showdown with lawmakers and has triggered this wave of criticism. He is planning to stifle the no deal debate by suspending parliament for five weeks next month. Rishaad Jodi Schneider joins us , a pretty dramatic thing here. It means the deadline for brexit, oxo october 31, remains intact if less time debated. This is the thing. This is what people are pointing to. The reason is because it is not necessary, no clear reason. He is saying there is ample time to debate. We are looking at 14 days roughly. Jodi his reason for doing this ostensibly is because he wants to come up with a new legislative plan that will make take him a month or so to bring it to the parliament. Of course, what the critics and analysts are saying is that this is a way for him to be playing a game of chicken with that october 31 deadline, essentially coming before parliament two weeks before with whatever deal he has which will be my deal or no brexit, because there will not be enough time to do much else. The question is whether people who oppose him can do anything about it. They come back september 3 for a short period before this long recess. Will they be able to do something in the parliamentary sense about being able to come back and have longer debates and will they be able to come up with another plan . Even though there is a majority in parliament who oppose a no deal brexit, they want different kinds of things. Thats the problem. Some of them want a referendum, others want another plan. Yvonne some are saying the motive behind it was also to prepare for a general election. How plausible is that . Jodi that is the other issue. Who knows. Can they come together . Calling,re some including the labour party for a noconfidence vote in Boris Johnson which could further complicate things as we move toward the october 31 date. The other question is what about the eu . What do they want from this . Clearly there has been a lot of concern that what happens if you have no deal brexit. Now what with those two weeks , with the eu be able to negotiate something . David and what are businesses saying . Jodi businesses have not wanted the no deal brexit. They have been concerned about that in terms of the economic effects and the chaos that could occur because there are so many Unanswered Questions about how things like trade and Even Movement of people and companies and things would occur. Business has not been happy. The pound did not do well. Based on this. Although the euro did not do well either. Much, jodi, think is so jodi snyder, Senior International editor joining us in hong kong. Ahead, us coming up the president from the philippines heading to a big a visit into china, south china sea. Also offshore jig gambling will be in focus. We will have a preview coming up. This is bloomberg. Rishaad we are back. This is a look at the business flash headlines. Malcolm resorts delaying a 1. 2 billion u. S. Dollar deal. It is after an inquiry of the australian company. It is on hold. 60 Business Days after the completion of the process. The delays have slowed to the biggest shareholder. They tried to quit the company after a series of setbacks. David caesars is dropping its pursuit of a license for a casino in japan saying it will we towards Current Business style with el dorado dessert resorts. Having the potential to the largest gaming market. It is keen on tokyobased, the bay area, and potential dove element. Development. Rishaad Corporate Market smashed expectations. Beating the forecast. Samestore sales around the world fell 3 , twice as bad as analysts projected. It had fallen since the street protests began in june. David high Energy Giants yvonne high energy giant is looking for the middle east for partners as rivals such as indias alliance raised a sign up with the region oil producers. In an interview, the president and ceo told us what he is looking for in a potential deal. At some countries, because of saudi aramco . [laughter] some of it looks like that. Maybe we need it in some countries in the middle east, because we need to have the asian markets. How soon do you expect to announce the possible partnership . I think in the next one or two years. In terms of the ipo of retail, and a lot of talk and numbers out there. Can you shed some light that is more definitive . We want to expand it in china and asia. We have more than 1800 stations. We have more than 280. Than 2000. E that to asiaxpand rehab,es, like the new and singapore, and china, japan, asia countries. That is why [indiscernible] we have one step, we have shaken up everything around it already. The next step will be filing in the market. We need time to do that. [laughter] and then that within the next three months . Six months . I think next year. Next 12 months . In the next few months. Yvonne that was our interview with the ptt president and ceo speaking to haslinda amin. Lets look at the markets. Earnings in motion. The likes of petro china, as well as sai. Everything from your energy makers, Property Developers to the autos. We are taking a look at the earnings reactions. The likes of china. That stock has been falling today after we saw the first half net profit sell. Lets look at the board and see what else we are watching out for. We have been watching air china because it is not just with the weak economy, but when it comes to the other side of things, hurting the airlines. David we have come from 702, 717 on the arent sure rates. Lowest level since 2008. The headline is 11 Straight Days of weakness against the dollar which actually is a record losing streak. Lets take our bloomberg chart to show you the move up. The upper up to move up a couple days ago into where we are. Two days seven days of strong fixes if that does not solve the problem. You see where the tariffs are, you understand why the currency needs to adjust weaker. The other big news we had this morning was Steven Mnuchin talked about dollar intervention. They will not do it now. They may consider long data bonds. That led to the steepening lastminute in the five 30s. Giving back that to reflect it. Down 1. 3 basis points. Rishaad absolutely. You mentioned market assets. Perhaps it is affected by risk as it risk appetites, and other foreign debt. That would be eight in recent years. Lets leave you with the imperial palace as we leave the nikkei, offer their lunch break. Off for their lunch break. First word headlines, we start with wayne osiris, relying on the imf to stave off default, a new package of 5 billion, accurate adding to a record bailout last year. Argentinian reserves plummeted more than 10 billion in the past month as policymakers try to shore up the peso after a stunning defeat from the market stunning defeat of the marketfriendly government. Brexit turns another page. Prime minister Boris Johnson secures the queens permission to suspend parliament ahead of the split. He will shut down the commons for a full month. That will severely restrict opponents from opponents of a no deal brexit to debate. Johnson says it will be manageable, but critics say it will mean a severe f to the u. S. Economy. To the u. K. If economy. It is profoundly undemocratic at a christ at at time of National Crisis. It is profoundly undemocratic to shut parliament down from doing its job at a time of National Crisis like this. Cathay pacificng is the target of the latest protests in hong kong, demonstrators demanding the rehiring of workers fired for supporting calls for democracy. Crowds gathered at the headquarters of squire group, pacificscathay. Argest shareholder Cathay Pacific fired at least seven employees since the protests began. They asked me to leave. I was very hurt couldnt help my colleagues again. Now iam confident that will just change my role. I can still continue to help them, and tell everyone what is happening. I will tell the truth. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. This is bloomberg. David lets talk politics. The philippines president is visiting china, the disputed waterway will be high on the agenda when he meets with the chinese president later. Shery s trip come rishaad his trip comes at a sensitive time. What is the main focus of the trip . The main focus, the fifth trip in less than three years for president duterte is to show the philippines population that it is pivoting towards china and that is bringing back economic gains to the philippines. Three years into his six year term, so far he hasnt been able to show that yet. David one bone of contention, we had the pivot, but we have tensions regarding all these islands and disputed land in the south china sea. Is between five Southeast Asian countries and china. Over the last few years, chinas aggressive actions have raised tensions, particularly with the philippines and most recently with vietnam. When dutere came to power three years ago, he tried to downplay those lowndes those longstanding disputes and hope of a better relationship with china, but recently china increased incursions into waters that the philippines claims at its own and that International Law recognizes as philippines waters. Vicki times for d tricky balancingduterte, between china and his own people. David and setting a sign that ruling on the south china sea, has the pivot worked economically for duterte . There have certainly been some games. Certainly after he came to office at his first trip to china in october 2016, the Chinese Government lifted warnings on tourism and bans on philippine imports, particularly from mindanao, where the president comes from and chinese tourist numbers are way up, and some of those exports, mangoes and bananas, are doing well as well. So on the economic side, trade could make, duterte an argument that times are better. There is also hoped there would be a lot of Chinese Investment in the philippines public infrastructure. So far, that has yet to pan out, partially because it is hard to do infrastructure in the philippines for anybody, including china. You could say this warming up that china hasnt worked, because we have still seen chinese warships around philippines waters. Geopolitical tensions have ratcheted up. To change hisave strategy . If you look at the philippine population, it is strongly against accommodating china in the west philippine sea. Oppose the approach the president is taking. But roughly 80 of filipinos support the president. So while his approach to china is not popular, it is not affecting his overall popularity, though in some senses he is not as is not under as much political pressure back home as one would expect. But i dont think hes going to radically change his approach to china, particularly because he has put so much of his own personal, political stake behind this pivot china. David one of the issues that many people, at least when you talk to locals, especially in metro manila, is the issue of goes ambling, poe pogos, enlighten us on what that means and where does this go after this trip . Philippine Online Gambling organizations. And since china has banned Online Gambling in china, there has been a movement outside china, not particularly to the philippines, to set up these Online Gambling sites targeting the chinese market. They argued there is now up to two hundred thousand chinese working in the philippines on these online sites, gambling sites targeting china, that beijing has asked the philippines to close all of them down. But given theirs benefits to philippine real estate and fees there is benefit to philippine real estate and fees gos, it to these po would be difficult to stop that. China is on the side of stopping gambling in the philippines, and the Philippine Government is on the side of slowing that down. When we look at this trip as a whole, what can he really come back with . Ideal comeback list, and what easy going to actually get . Isi think what he wants further Significant Movement on some big Infrastructure Projects his administration has identified for chinese funding, that so far have been delayed. There are large ones like the mindanao rail system that is important. So if he comes back without Serious Movement on those bigticket items, his critics back home will get louder. One area to watch, they are negotiating a joint exploration deal for energy in the west philippine sea. If they move toward some kind of agreement there, that raises very difficult constitutional issues in the philippines. So this trip would end up being more problematic for president duterte, then a benefit. Malcolm, we talked at length why the philippines needs china. Why does china need the philippines, or does it . Malcolm it needs the philippines pursuing the policies the philippines is doing now. Before, the philippines was a front line state organizing International Pressure against china in the south china sea, with some effect, including the 2016 ruling that invalidates chinas claims under the chinas claims. Under the duterte administration, they pushed that aside and are not following the path china wants, joint development between china and other states, private discussions about territorial maritime disputes. So you could argue in one way, china has been able to flip the philippines on the south china sea. That is probably pretty big win that now vietnam is suffering from, because now vietnam is the frontline state against china in the south china sea. Malcolm, thank you. Malcolm cook, senior fellow at isaac institute joining us out of singapore. Look at a move that caught apples attention. This is bloomberg. We are back on Bloomberg Markets. Plans to sell online devices in india after the government eases rules for Foreign Companies doing business is doing business in india. David laws that force Companies Like apple to source 30 of their production locally have been eased. Apple has been lobbying for this for years. We will start with the basics. Who are the big winners from these changes . Good morning. An interesting announcement yesterday from the government. We have seen over the years, foreign erect investment rules gradually relaxed. We had specific announcements. The restrictions on coals and on coal and Contract Manufacturing were scrapped. That is going to help businesses ore bhp in Coal Production new investment coming into mining. On the other one is single brand retailing, particularly Companies Like apple. So local sourcing rules have been eased. That will allow manufacturing, and apple has already announced it will start in india soon. That will be able to begin. Interestingly, the rules now allow for Online Retailing to take place before an actual brick and mortar theation is set up in country port apple following the announcement has already said it is going to start online sales of its iphones in india. Then that will be pretty soon. Why is the government doing this now . We know the government is slowing, but what prompted the change . Een it is a combination of reasons. The Modi Government has made it part of its campaign to bring down the ease of doing business in the country. Foreign businesses in particular have been lobbying, as you said, to ease some of these restrictions over the years. So it is part of that ongoing plan. It is interesting that it is coming at this point in time, when we do have an ongoing trade war. We have seen businesses changing their supply chains. We have seen lots of investment coming into Southeast Asia, countries like vietnam, malaysia, thailand, winning over some of those supply chain movements. Thesethink india, with kinds of moves, is also trying to win some of that investment pie. India has certain advantages. Base. E got a lowcost wage costs are low. We have a big labor force. There are a number of restrictions on doing business in the country, so i dont think we will see a flood of investment coming into the country yet, but this will go in some way to support and cushion the economy going forward. Nasreen, ill Southeast Asia economy editor, thanks, live from singapore. ,e are watching suzuki strengthening ties between toyota and suzuki. Rishaad that aligns their very much. In the spotlight we go to david coombs. Carmakers hope to get out of greater collaboration . David well, at the first level you have suzuki gaining access to toyotas Key Technology in the hybrid and electric vehicles. That applies immediately in europe, where they will the selling a couple of toyotas best models. Gives them better geographic distribution. Geography is the key as well to what toyota gets out of it. They will have access to suzuki dealerships and will be rebadging vehicles in india and africa, markets where suzukis small compacts have done very well and they have established a strong brand there. They will be selling toyota cars under that brand. Going ahead, it is all about technology. All the carmakers in the world are trying to amass scale to reduce per unit costs of developing a taunus and electric vehicle technologies, alternative vehicle technologies, as we move away from the internal combustion engine. So this gives them more scope from doing that, gives them a broader range of models these technologies can be put in, and it makes their Dealership Networks around the world more efficient, by allowing them or opportunities to rebadging vehicles. David and the main risks . There should be some. What are the biggest ones . The history look at of automotive alliances, they havent dolls wheeze they havent always lasted. Suzuki had a Long Alliance with with volkswagen because it fat that ultimately foundered because the two companies couldnt make their cultures work on an ongoing basis and that ended up falling apart. Toyota has also had alliances that have fallen apart. It becomes very complex when you have these massive automakers forming alliances with competitors who are not just competing with toyota itself, but are also competing with others. Keep in mind, toyota also has big alliances with subaru and mazda, to other japanese carmakers that also compete with suzuki. And what seems quite simple now in terms of rebadging two models in africatwo models and suzuki selling a couple of toyota models in europe. What about when they revamp those models . What about when toyota might decide to discontinue one of those models, or come out with a new platform for those models . It becomes more complex going ahead, and these alliances have a way of getting difficult, also from the investor perspective. Which carmakers is the winner here . It is very difficult to suss that out. Mccombs, thanks for talking about those collaborations among automakers per lets get live pictures now from shanghai, the world ai conference underway right now. Ma, ceo of mr. Tencent holdings. There, elon musk is also talking about the countrys ai ambitions. Lets listen. This aive launched literacy program, which is very yesterday at the exhibition. Today we are talking about connectivity and the infinite possibilities. Looking back on the ai in the past year, we have a lot of highlights, a lot of new development in terms of ai research applications. Ai lab covering fundamental research to application. We have also a frontier robots,ion lab covering quantum computing and iot networks. We will build an engine of technology for the future, ai application research. I want to share some opinions. Ai is general use of generalized to specific purposes, so it is making this progress. This is the inevitable trend in the next stage, a very important is human intelligence plus Artificial Intelligence and we are moving toward autonomous ai. Human interference is becoming less. Machines have a greater ability to learn from the environment. Starting in 2015, our ai lab has as oneed our goal, which a lot of international champions. Also, together with our game team, our ai does not rely on human experience. It can learn on its own. It has professional competence. We aremovings mom moving from specialized to generalized ai, an important step. Ai,an be a test ground for and it is the ultimate challenge. It is an important step in ai. Ai can analyze and decide just like humans and execute more complex and difficult tasks. The universe has a number of articles 10 to the 80th power. The goal has more complexity and the number is 10 to the 20 south the 20,000nd to power. The 20,000th we are a leading player in ai. We have accumulated strong algorithms. Our ai has a very strong brand. Ai is integrated to Different Industries. I, the government will bring ai plus. We cant have an intelligent society. I am optimistic about the ai industry in china. In the next decade in this industry, we will experience growth. Cannd Different Industries create smart manufacturing, health care, security and retail. Tencent chairman speaking at the ai conference in shanghai, talking about the company as well as chinese ambitions when it comes to Artificial Intelligence, but a big lineup they are today in the city, elon musk in a panel with jack ma. More tliv to get expert analysis and check out those panels in shanghai today. San francisco fed chair mary daly with an exclusive interview coming up in the next hour. You want to watch that. This is bloomberg. Rishaad back with Bloomberg Markets as we checked business flash headlines. Wont feature google licensed apps. It will be the first topline firm since the company was blacklisted by the u. S. And forbidden from training with american partners. Killts say it will interest in the huawei found outside of that while way fault huawei phone outside china. Apple no longer has to source products locally in india. Something apple has been doing for a long time has been lobbying for for a long time. It will be interesting to see u. S. Futures one we have gdp numbers coming out later on today. If wegoing to be enough, see 2 enough as economists are forecasting to change expectations, because the market is still pricing in that the fed is going to cut multiple times this year . The dollar china offshore, there we go. This bright despite a stronger fix, still pushing toward multiyear lows. Its almost 10 00 in in ring bangkok, it 30 this is a look at our top stories. More pressure on china, the yuan facing an 11th straight decline. A deepening slowdown this month. The name is bond, ultralong bond. Those are a possibility to lower the cost of paying for ballooning u. S. Debt. India changing the rules to attract Foreign Companies. Apple is ready to launch online sales in the coming months. This is Bloomberg Markets. We are coming to you live from bangkok. We will take a look to see if easing is impacting the demand for luxury product development. We will talk to a ceo about Luxury Real Estate in china, becoming a top market for the company. The impact of the strong bond versus the yuan and if it is impacting chinese demand. To Monetary Policy in the united states. Fed policymakers increasing the need for more rate cuts and san frci