Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

And the indonesian president speaks exclusively to bloomberg. Widodo says no one wins in eight trade war. Of thea quick check market, futures gaining, but this coming after the s p 500 saw the biggest drop since august 23. Remember, that is when President Trump announced another set of tariffs on chinese goods, so we ,ve the s p 500 lower by 1. 58 with every sector lower, being led lower by energy and financials, with disappointing payroll numbers, less than expected, the august number also be a revised lower. Take a look at how futures in asia are trading, a little bit on the upside, up 3 10 of 1 . This, of course, after the nikkei fell the most in about a month and despite the fact that the japanese yen is at the strongest level in about a week against the u. S. Dollar, but sydney futures are down 1. 8 . This, continuing the fall after they saw the biggest drop since august on risk off sentiment in the previous session, kiwi futures at the moment down 1. 2 percent, losing ground for a second session and falling the most in three weeks. Remember, korea away on holiday for National Foundation day. Paul . Paul all right, lets check in now with first word news with ritika gupta. Ritika indonesian president not widodo says he will take sides in the trade war, introducing a wide range of reform with labor laws to let indonesia attract investment. He also said trade tensions hurts both sides, hurt both sides, and he must make sure that indonesia does not suffer from the fallout. We have toidodo make sure does not negatively impact our country. We have good relationships with the u. S. , china. Most important thing is that our National Interests come first. Ritika and you can catch more with our interview coming up. And Boris Johnson will suspend Parliament Next Week so he can lay out a new legislative program ahead of the brexit ondline, with mps returning october 14, also announcing his new brexit, saying he will make no new offers. Johnson is refusing to back down. Prime minister johnson let se, no doubt, what the alternative is. The alternative is no deal. And that is not what the outcome is that we want. It is an outcome for which we are ready. Two u. S. News outlets say an engineer at boeing filed an internal complaint, saying they had rejected a backup that might had alerted a problem involving the 737 max. They say boeing managers were urged to look at a system that could detect when aircraft altitude sensors were not working. They two of u. S. Quarterly reports, some beating expectations, up more than 5 in at ford. Mber period and fiat chrysler, they had anticipated drop. Pickups outperformed the Chevrolet Silverado by about 6000 trucks. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Shery stocks pushed to their lowest since august, and the dow has followed almost 600 points. Su keenan joins us. Even the 10year yield sinking. Dismal economic numbers. Su and technically, there were a lot of things going on for the s p 500, which is still up year today, and lets go into the bloomberg. It also broke below an important price trend average that was set back in august, so, again, if we can go into the bloomberg, the s p 500 again sending a signal that what we are seeing here is, perhaps, bearish momentum starting to build, and what the truck watchers say is a shifting momentum, that could mean and aat stock watchers say is shifting momentum. We also saw energy one of the big declining sectors along with financials. Slightly positive futures, so that is interesting, but we did close off the lows of the session, which is technically important. Lets go to the big movers, and note a big pickup in a homebuilder, coming in with very strong results, showing a big tick up in the number of orders, up 9 in the quarter, lennar. In it shows that the decline Interest Rates is actually a positive for builders of new homes. Note stitch fix, a big decline. This is a relatively recent ipo, number of analysts coming out with negative stories for this stock, even though they came out with Sales Results that were in line, but the growth with a lot softer valuation, and Delta Airlines taking all of the airlines lower, coming out with its estimate 14 annual expenses, keyith its estimate for annual expenses, and General Motors, we talked about how yesterday, there were disastrous results for the asian automakers, General Motors actually coming in with decent results, but there were concerns about gm and ford, as well, their numbers indicating a softening in the market. Paul . If we look at commodities, we have oil and gold going in opposite directions. Concerns about possible recession coming sooner than expected, economic concerns, and you also had bearish supply data here for the u. S. , so if we look at the fiveday chart, you can see a steady decline. Bigger picture, we are down significantly in the last two months. In fact, we are at the lowest in it two months, so that indicates that, as one veteran trader said, demand fears are overriding supply fears. There is a very big concern about the economy, two days of Economic Data here and also the wto cutting its forecast for commerce to a decade low. Check out gold though. This is great news for gold bugs and boosts the allure of gold as a safe haven. We are seeing gold continuing to trade near sixyear highs. Atfs at record levels. Su, thanks for, joining us for those updates. The eu is ready to slap tariffs onto products following a ruling on aircraft subsidies. Our reporter joins us from los angeles. You have been looking at the list. What is on it . Reporter retaliatory targets that the u. S. Is going to hit, a 10 percent tariff on large aircraft coming from a huge a 10 tariff on large aircraft coming from some countries, like france, and then there are some completely unrelated to aircraft, with tariffs on things like olives and cheese, and some machinery, pork. Init is a bit of a mixed bag terms of what the u. S. Is targeting, and what the ultimate goal is according to the trade office is to hit europe where it hurts in order to get them to the table for a negotiated settlement. There is another case coming up at the wtos year, we europe alleges that the u. S. Has unfairly subsidized boeing, so this is for the retaliatory tariffs. Sarah, President Trump seemed pretty satisfied. President trump it was a big win for the United States. You did not have a lot of whens a lot of wins with other president s, did you . They think i do not like the wto, and they want to make sure i am happy, because all of those countries were ripping off the United States for many years. Shery sarah, it was a large win, wasnt it . Sarah absolutely. I think they will be happy with the award it got from the wto. As you said, it is a record. That being said, to clarify what President Trump was saying there, the wtos main problem, i think, with the world right now in terms of tariffs is that the Trump Administration is putting up these protectionist barriers, National Security tariffs on steel and aluminum, the chinese tariffs, whereas the wto case, the wto system, the global trade system that everyone has set up and agreed to, that being said, criticism is how long it takes. This recent airbus case took 15 years, so there is criticism to be leveled on both sides of the debate. Shery sarah, were not the u. S. And the eu also negotiating a trade deal . Was that going on, and will that impact this . Sarah so negotiations are at a bit of a standstill, the u. S. And the eu agreeing last year to a trade deal, and hanging over the eu is this threat of auto tariffs that President Trump has to make a decision on or at least decide to delay a decision on by november, so it will be interesting to see how this case with the wto and the upcoming boeing case plays into those talks and what leverage the Trump Administration will try to get out of these do tariffs on eu goods. Trade editor,ior sarah mcgregor, with the latest tariffs on the eu. Deliveries,or tesla but they did not meet elon musks lofty projections . We will break down the numbers. Paul even disappointing u. S. Data cannot put a brake on the u. S. Dollar which remains at a twoyear high. This is bloomberg. Ery this is daybreak asia i am shery ahn in new york. Inl and i am paul allen sydney. Strength against the dollar, here is a look at the dollar yen over the past week. We are seeing this trend continues as long as global risk prevails. Nick, how strong is that yen going to get . Nick i think it will have a propensity over the next few months or even into the next year. We have seen sort of another hard knock to the markets, and we will continue to see flow into the yen. Crosses,aking of the one always closely watched is the aussie yen. I know you have a personal interest in this, as you are heading to japan shortly, but more broadly . Nick that really is a barometer of global risk, the aussie yen. There is further downside. We have got the currency being put in under pressure. I think there is further downside coming for the aussie yen. Shery analysts are turning more bullish. The chart on the bloomberg shows a Bloomberg Survey that now sees the yen now outperforming g10 nick, so at what level, are you factoring in a potential boj action . Think it will probably be more on the pace of the move rather than how far it goes. If it continues to grind higher, especially against the dollar, i think there are still good calls. Anday be a slower mover, the crosses may be a fast mover, but i think if we do accelerate 105. 50,hrough 104 or we may see some action from the ,oj, but then around the 99. 50 which is the 2016 low, if we get an accelerated move to the topside in yen, then we will see boj action, but until then, they may keep what limited ammo they have in their pocket, so to speak. They we continue to see u. S. Dollar grind higher, what about the strength of the greenback . We see the data coming out, underperforming market expectations. Will be aink there little pressure coming on the dollar, but given the overall Global Environment we are seeing, and the risks are onbably still sitting harder other geographic areas than the u. S. The u. S. , when you look back over the past year, they are probably sitting in a better position than other areas, and i do not think the dollar is going to fly to the downside, and that is why i think the crosses in the yen are the better trade, but i do expect the dollar yen to come off some. We have seen more over the past weeks and last night, but if we continue to see that, then the dollar will get hit. Paul donald trump was blaming the fed for the strong dollar. Was that credible . And secondly, do you think the u. S. Will intervene . Nick no and no. The dollar is still the global currency still, and it is not flying higher. We have seen President Trump criticize the fed for various reasons, but we still have stockmarkets sitting at alltime highs. We have got a relatively strong u. S. , and as i said, relative to the rest of the world, a relatively strong u. S. Economy, so i think the fed are in the right place at the moment, and from that perspective, i do not see the fed coming into intervene in the dollar unless something really, really dramatic occurs. Paul does part of the president s have something to do with the yuan . Do you continue to see that weakening . The u. S. China situation is a massive focus for him, and i think the risk is firmly to the downside at the moment for Global Growth, and Global Growth concerns growing, and as part of that, i can see china allowing the yuan to depreciate, and we we way watching we will be watching the dollar yuan. Shery the European Union ready to grant another brexit delay, and this is beyond october 31, a letter not signed by the Prime Minister. Any way that we can actually forecast where sterling is going when we do not know where brexit is going . Nick no. A very simple answer for that. I just see further volatility for the pound. Situation,y volatile a very volatile political situation. I think we could see it go either way. Boris johnson does seem to want to get out by the end of the month. That does seem to be the agenda and what he is pushing now. If it is a hard brexit, then i think there is a big downside for this sterling, even with the crosses, and we are seeing signs they do want to come in and play, and if they do look to negotiate a bit harder, maybe that could be something to do. If we do get that extension, and Boris Johnson is happy with it, and it looks like a deal can get done, i think that is topside for the sterling. The move we have seen on the back of this potential hard brexit could be reversed fairly sharply if it looks like a deal can be done and a deal to all faction, if there is such a thing. I think there is potentially massive upside for sterling. Shery thank you so much for that, nick. You can get a roundup of the stories you need to know to get your day going. Terminal, to your subscribers, also available mobile and with the app. You can customize your settings. That will be so you only get the news and the stories you care about. This is bloomberg. Is daybreak asia. I am paul allen in sydney. Shery and i am shery ahn in new york. Bloomberg has been digging into the tesla headlines. So the numbers look pretty good, but they were not as good as elon musk said they could be, so did he set himself up for failure . Reporter just last week, he sent in email to employees that said they had a shot at hitting 100,000, which would not have been, you know, sort of that far from where they were in the second quarter, but it was still a little bit out of step with where analysts were expecting, and it really sort of got everybody excited. Market stock reaction last week after the email went out. Knew that after he said email, that he sent in email, it was going to leak, which it did. We will never know whether the stock would have reacted this significantly had he not done that, but it certainly did not help matters here. Paul you really think markets would be used to that kind of behavior from elon musk, but anyway, how about the mix of sales . A lot of model 3s getting sold but not a lot of other vehicles. How is that affecting revenue . Bigg that will be the question going into earnings the next few weeks, whether or not the model 3 becoming such a significant share of the sales mix, whether that holds them back from turning a profit in the third quarter, as was the case in the second quarter. You had in that period a lot of excitement about the company hitting deliveries, a record, after a really disappointing First Quarter showing, but you saw, again, them losing money and sort of demonstrating that they had a real problem on their hands from a profitability perspective, because the model 3, the starting price is less than half of what you paid to take delivery of a model s or a model x, and that is bringing down the sales price and making profitability difficult for elon musk to achieve. Shery what will investors be watching Going Forward at tesla for the rest of the year . That one is a feature allows you to use your phone to summon your car to you if you are in a parking lot. Program,e autopilot they have been charging thousands of dollars for it for years, features that have not been ready yet that are selfdriving, and depending on sort of how they account for their ability to deliver on more features for some of the customers who have paid those thousands of dollars, they are going to be able to recognize revenue. That, plus regulatory credits could be a big factor in boosting revenue beyond what maybe analysts would be able to anticipate just looking at deliveries. Paul all right, thanks very much for joining us there. Lets just get a quick check of the business flash headlines. Microsoft is back in the smartphone race with a device that will run the android operating system. 5. 6 screens, and this is after costly writedowns. The tech giant still faces skepticism from some investors about a deeper move into the hardware business. Onry easing restrictions thirdparty app developers, reducing the priorities given to its own app when users ask siri for help. A new Software Upgrade will allow it to default to whichever app users typically rely on, a move that comes after apple faces scrutiny over how it competes with external developers. Paul a new head of japanese operations who is replacing chris hill to run a japan startup. He is the brotherinlaw of the former wework ceo. Its biggest shareholder, softbank, has poured more than 10 billion into the company. We have more to come on daybreak asia. Stay with us. This is bloomberg. This is ritika daybreak asia. Aesident trump lashed out at press conference at the white that heith evidence called joe biden and his son as stone cold crooked, and he accused adam schiff of committing treason. President trump i had a great call with the president of ukraine. It was 100 . You have the transcript, and then schiff went up, the chairman of the committee, and he made up language. Hard to believe. I think he had some kind of mental breakdown. Ritika the u. S. President is upbeat. Ani looks to advise at a deal that he says is acceptable. Is to ensurean gulf security and not deployed Nuclear Weapons. Violent unrest in hong kong sales, a fall in retail slumping 42 in august for mainland china. Year on year3 decline in the value of retail sales. The man of luxury goods plummeted by almost demand of luxury goods plummeted by almost half. And a warning if the Trump Administration goes ahead with tariffs, the wto authorizing duties against the european 15year the end of a dispute. It is supporting thousands of jobs in 40 states. Global news 24 hours a day, on , air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Shery a quick check of the market, nikkei futures gaining, this coming after the nikkei fell the most in about a month in the past session, and this is despite the fact we have the japanese yen at the strongest level against the u. S. Dollar in about a week. Of course, we are seeing those haven moves as we have another disappointing ecoreport with week numbers. Asx futures at the moment, 1. 8 to the downside, and we are seeing more pressure as the asx already fell the most since august. Take a look at the bloomberg dollar index, which is now Holding Steady after falling for the past two sessions. We also have a little bit more ounce slightly for every of gold, surpassing that level for the first time in a few months. Now, we have wti also continuing to fall for an eighth consecutive session, below that 63 a barrel level, as we continue to see demand concerns over an economic slowdown, not to mention that we also saw u. S. Crude inventories increasing. Paul . Paul all right, thanks, shery. Trading gets underway in asia with our Bloomberg Markets editor, adam haigh. Adam, the past few days, showing some issues in the u. S. Economy, or can any everybody be assured and sumption still ok . Peoplehere are a lot of kind of relying on the consumer continuing to hold up and continuing to support the trend of growth there, but as every data point comes out, and especially this week, not just in the u. S. But also earlier in the week in china and europe, it is painting a very tricky picture of how much Central Banks are able to support growth at this point in the cycle, and that is really what is worrying people, and it is starting to test Market Sentiment really fully this week, and this chart some of thegtv, bearish momentum starting to build into u. S. Equities, but you can make this case in a number of other equity markets around the world. Of course, china is closed, and south korea is closed, but we are looking for decent declines in both tokyo and hong kong, and what this latest data point, paul, has done in the u. S. Is added to the fears of how severe the global slowdown is, and, of course, the next data point up is on thursday, the Services Sector report, and then the monthly jobs report on friday, and you get a feeling if you get nonform e nonfarms payroll report, the treasuries market with people continuing to dial down their expectations for growth and also increase their expectations of how much the fed is going to stemto respond to try and the weakness that we are seeing in the economy, so fragile in the moments, and indeed, the set up for thursday looks relatively reasonably poor. Onry and not just focused the fed but Central Banks around the world, and in australia, even more talk about qe. What did they say . Shery, australia is one of the places that was able to avoid a qe during the last crisis, but now, it is very much part of the conversation and analysis, and the latest report of Goldman Sachs is going on the back of some of the analysis that the rba as done itself, and goldman came to the conclusion tot really, if the rba wants drive that back towards target without going back into negative rates, they will have to do some kind of quantitative easing, bond buying, around 200 billion dollars, and the expectation now after the low brought rates down to a record percentage earlier this week is that that continues to maybe half of 1 or even a quarter of a percent into that zero range, then you get a q8 qe Program Starting next year, and that is starting to become what a lot of people are expecting here. Of course, there is still a group of people who expect that will not be the case, and, indeed, Morgan Stanley were making the point yesterday there will be an increasing fiscal response from the government here, and that might allay some of the fears, and, indeed, may stop the rba from needing to go to qe. Adam, our Global Market editor, and, of course, you can find his charts on the terminal. As Profit Growth threatens an earnings slowdown and estimates of a u. S. Recession of about 35 , joining us from hong kong is the s P Global Ratings asiapacific head of credit research, and great to have you with us. Estimate,ession risk has it changed at all given the disappointing ecodata we had out of the u. S. This week . Week, but we raised the estimate a few months ago. As you point out, the indicators , which we point to a one in three chance of a u. S. Recession starting. Terry, is problem, that corporations are not preparing for that potential economic slowdown. We continue to see them binge on debt. How risky is this . Terry it is. You are quite right. We were surprised with the , things goingng in the lower than longer Interest Rate environment, putting on debt, one way to spruce up returns, but that said, of course, if youre going to slow down, what are you going to do with the debt . Earlier, thereon are fears that consumers are conservative, retail sales are down, that there is a real threat that you could over lever going into a slowdown. The is the risk opposed by growing debt pile, because i know, as you point out, low rates have kept it down, but is that going to persist forever . There is usually a time lag. My colleagues have done a study. When lowgrade debt or speculative lowgrade debt tends to build up before a downturn, there is usually a lack of anything from four years a lag of anything from four years, so credit quality, and that is first, and then there is some time before we see defaults spike, so the risk is being built up, but it will be for a little while yet. Paul in the course of your study, have you identified any particular sectors or countries that are at greater risk . Certainly, we see auto, capital goods, and, of course, retail, which we have been talking about for a while the country that has been quite latent is obviously china. That is a chronic situation. It has been building up or some time, for the past 10 years. The Chinese Government is trying to manage it. Hopefully, there are no policy mistakes that could trigger, but that is it. The Chinese Government still has a lot of lovers, given that china has a high savings rate. Shery what are the financial conditions looking like right now, given that we continue to see the Central Bank Actions around the world . Conditions generally are bumpy. Things are not surprising. The politics, as you mentioned, governments and regulators are taking action on Interest Rates and the money supply. The negative is, obviously, if you are doing this, then something is wrong, and economies are slowing. Businesses are turning conservative in terms of investments. We see manufacturing and trade coming under pressure. So the net, i would say it is a net slight negative, and there is more room. Though,e Central Banks have they reached or are approaching what they can achieve . What the world needs is a resolution to the trade. Good point. Is a there is some debate over, for example, what is happening in europe. Yes, we have had qe. Has that worked . Has that really spruced up growth . So there is quite a bit of debate about what the next step will be. In terms of the trade dispute, obviously, it will help sentiment, but we still have some issues. China is definitely slowing. Economists estimate that china will slow to on average 4. 5 over the next 10 years, pretty serious, and the u. S. , of course, is in a cyclical slowdown, not too surprising. Europe, you could argue, is going sideways, so the backdrop is we have an economic slowing down. Tradehe resolution of the would help sentiment, but i guess the main issue is still fundamental, and that is the economic slowdown. Inl all right, terry chan singapore, thanks so much for joining us. Coming up next, indonesian dodo says heko wi will have sweeping reforms. Our exclusive interview, just ahead. This is bloomberg. Paul now, to a bloomberg exclusive. Widodoian president joko plans to deliver on some demands, including pertaining to labor laws. John. Ergs president widodo we compete against others, and complaints about labor law always labor law always are presented to me. We will work on these as soon as possible. I will talk to labor unions, discuss with them on how to revise the labor law, but without causing loss for workers. This is for new workers, so industries can expand, for investors can invest, and help create jobs, so indonesian children can work in available sectors. Laws willnew labor apply to new workers. The people will be safe with the current labor laws. That is thedodo direction we are going so that we can attract new investment and create more jobs. The direction is for new workers, so investors can feel more comfortable investing in indonesia. John is that your priority . Will you introduce that law before the end of this year . President widodo yes. Priority is labor law, but i have to talk to labor unions. Lawsll also propose 74 under the omnibus laws, so it can be simplified. Beestment lists will reviewed to attract investment and provide jobs. John if i am a new worker with the new labor law, will that mean the severance terms will be much less generous . Laws are the nicest firing in the world, sometimes getting 19 months of pay. What will actually change for the new workers . Will they be easier to higher, easier to fire . Easier toto hire, fire . President widodo they must be given room to enter the job market. Second, we have to address investor complaints. We have to address the law and get more workers. The market mechanism will increase pay. John you also have this negative investment list, which you also said you would fully open up 25 sectors, such as telecom, education, but that has not happened yet. Do you have a timetable to open up those sectors, where you can indonesia . Is in president widodo still in process. We will see the revision at the end of this year. For education, we will provide room for Foreign Universities to set up universities in special economic zones. Foreign hospitals with the latest technology will also be allowed but in special economic zones. Also, in the technology sector, we will provide room. We will see in the year end, we will see many sectors removed from the negative investment list to create more jobs. John the biggest thing in the Global Economy which hurts indonesia and the world is the , a disputedispute where people in South East Asia have to decide whose side they are on. Whose side do you feel as if you are on . Indonesia isodo in the middle. We want to get opportunities, because the trade war is not good for all countries. To takea wants opportunities but that the trade war does not negatively impact our country. We have good relations with both the u. S. And china. The most important thing is that our National Interest comes first. Indonesian president speaking with our bloomberg editor, john micklethwait. Proposing more investment. Why is that important now . Michelle well, really, threefold, shery. You heard them talk about how he would like to have indonesia be more competitive, and they have wantsaining winds, and he indonesia to have the same, and that has not always been the case with investor appetite, looking at indonesia and all of the hiringous laws, and firing laws and investment, so all of these things he has to tackle. Second, he is getting into a second fiveyear term starting this month, so you have the mandate and then the growth picture. He has been talking about what can boost growth and bring more jobs to indonesia. That has been his whole campaign pledge, and this is part and parcel of these reforms to make it more competitive and let the prophets trickle down to the worker. Addressing recent protests across the country, what is the outlook on that front . Michelle well, yes, across labor, investment, and some prime pieces of legislation, he has faced a lot of opposition on the labor front, some of the things you heard mentioned in the interview, and the easiest re workers, so a lot are working through the changes, proposed amendments to the laws. He is consulting with unions, but, again, the severance packages, they might be under review. Complex minimumwage laws. All of those things may seem as threats to labor. On the other side, a lot of things investors have been wanting. Joko has talked about tax cuts, and he would like to open things up to foreign ownership. That has been seen as unfavorable to local firms who may be protesting the idea that these Companies Might be as much as 100 foreign owned, so there is that tension there, and then lastly, the crime laws, there is a range of crime laws that he has had to delay, not so much an economic priority at the moment but, certainly, raising the ire of some residents, limits to lgbt rights and free speech and finally some punishment for sex outside of marriage, so some things that are really hitting some social rails right now, as well. The move Going Forward, joko says this is a democracy. They are free to protest. I have dealt with this, and they are free to move on. He says he is open to working with these entities and to figure out a way forward, you might see more delays as he tries to prioritize what is really needed now to boost growth and get the message out that indonesia is open for business. Inl all right, michelle singapore, thanks for joining us. In the next hour on daybreak asia, we will get more on jokos comments. We have more ahead. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery and i am shery ahn in new york. Lets get a look at the latest business headlines. Tesla fell short of the mark elon musk said was possible, should be more than 97,000 cars in the september period, exceeding the earlier quarter. However, musk said tesla had a shot at topping 100,000, and shares plunged. Blackrock has held women talks with others over blackrock has held talks as they look to expand operations in china. No deals have been struck yet, but we have been told one discussion point is a joint development of software, similar to another business that helps clients manage risk in their portfolios. Ceo larry fink is counting on this to drive future growth. Indias largest manufacturer of Flexible Packaging says it will invest millions over the next four years to expand of element of ecofriendly products. It says it sees a big profit potential in Prime Minister Narendra Modis plan to eliminate singleuse plastic. Hugeountry has a millennial population that drives global purchasing trends. Lets get a quick check of the market. Under seeing kiwi stocks pressure, falling for a second consecutive session. Also, this would be the biggest drop in about three weeks. We had the u. S. Falling with the s p 500 seeing the biggest drop since august. We had some disappointing numbers when it came to payroll numbers out of the u. S. , sydney futures also down 1. 8 . Nikkei futures though gaining 1 10 of 1 , this coming after the nikkei fell the most in about a month, and the japanese yen currently Holding Steady at the strongest level against the u. S. Dollar in about a week. Paul . Paul lets have a check in on commodities at the moment. We have got oil sliding a little. Texas,t 52. 49 with west if you factors at play, and obviously the u. S. Data, if you concerns about where Global Growth is hitting. We will get into that a little more in the next hour. Bold futures, meanwhile, continuing to rise gold futures, meanwhile, t doing to rise, reaching continuing to rise, reaching the 1500 level. A quick check of currencies around the region, as well. The japanese yen, no surprise there, continuing to show some strength. Butaussie dollar gaining overall continuing to slide against the greenback. Still the, the next hour of daybreak asia, we will cover what will likely be a volatile day. The open is next. This is bloomberg. Paul good morning. Asias major markets are about to open for trade. Shery good evening from bloombergs Global Headquarters in new york. Asia. To daybreak paul our top stories this thursday. Hong kong on it. Protests crippling tourism with retail sales collapsing. A severe economic decline. Boris johnson prepares to put his new brexit plan to parliament and is optimistic it will pass. Brussels says the proposal contains problems. Shery the indonesian president speaks exclusively to bloomberg. He discusses labor and investment reform and says no one wins in a trade war. Paul lets get a quick check of the markets now. New zealand trading for three hours now. Some weakness, not particularly surprising considering the week data we see it sought out of the u. S. The index declining for a second day. The nikkei off by 1. 6 . In australia, we are weaker as well. We have that staggered open in australia. You can expect that number to change dramatically in the next few minutes. In the meantime, lets check in on the first were news. Word news. The largest Investor Initiative battling climate ,hange says after two years most have not met international targets agreed to in 2016. Only 9 of the companies are meeting requirements. More pressure is needed to push corporate to cut their net ssions to zero by 2015 2050. He wont take sides in the u. S. China trade war. In an exclusive interview, in his hometown, he said he will use his second term 20 it is a wide range of reforms including changes to labor laws to let indonesia attract foreign investment. Trade tensions heard all size hurt all sides. Indonesia wants to take opportunities so that the trade war does not negatively impact our country. We have good relations with the u. S. , china. The most important thing is our natural interest comes first National Interest comes first. Catch more from our exclusive interview in about 20 minutes. Stay tuned for that. U. K. Prime minister Boris Johnson will suspend Parliament Next Week so we can lay out a new legislative program head of the budget brexit deadline. The suspension will last 60s. Johnson has announced his new brexit plan, telling the eu he will make no more offers. Brussels says there are problems with the plan. Hes refusing to back down. Alternative is no deal. That is not an outcome we want. It is not an outcome we seek at all. Let me tell you. My friends, its an outcome for which we are ready. Of unrest in hong kong have triggered a record falling retail sales. 42 in has plunged august. Demand for luxury goods such as jewelry and watches plummeted by almost half. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. U. S. Stocks hit their lowest level since august as fears mount of a looming economic slowdown. Dow allaq, s p, and fell more than one type 1. 5 . Manufacturing indicators slumped to the lowest in a decade. Lets bring in our mliv strategist. We are already seeing some followed on asian equities markets. What kind of a day are we in store for . Pretty ugly one. Nothing much is going to help asia today. The worst thing from asias point of view is now that the u. S. Markets are fully embracing the downturn we are seeing in equities here. European markets had a pretty awful day as well yesterday. Hope whenes always wall street was outperforming the rest of the world. They seem to be caving into the back bad news. That is disconcerting for investors around the world. There is no are to hide now. The danger in america has started to turn more negative. American investors are looking at that. They fear where it goes. Markets, thereve are some sectors of the rates market that are looking for as much as 75 basis points of rate cuts for the end of the year. Thats pretty remarkable. That would suggest we almost get the fed to do Something Like a panic cut. That is not the base case for people. The fact that people are even considering such a deep cut Interest Rates suggests the fear factor has really gone up in america. Also seeing a big steepening in the american yield curve as well wish which suggests investors see deeper rate cuts ahead. The situation turning in america for the worst is a negative signal across the world, especially for people in asia. Shery what does that mean for the u. S. Dollar . We are now seeing a weaker dollar, under pressure. Could that help emerging markets . Not in the initial stages. It will certainly offset some of the pain, if the u. S. Dollar does turn broadly negative from here, it will offset a bit of the currency pain for asian markets. We are not going to see huge appreciation of asian currencies or other emergingmarket currencies. Big will happen is that the currencies, the euro, the yen, those are the ones that will really benefit if the dollar starts to turn down. People who go to the most liquid markets first. They want to be in currencies they can easily get in and out of. That will benefit the g10 currencies before any other markets. You will get a disconnect where g10 really outperforms emergingmarket currencies in initial phases. Maybe further down the road, emerging currencies can catch up a bit. That wont happen in the first stages. People will want to go into the most look at places they can. The euro could be one of the major beneficiaries in that respect. Shery thank you so much. Our mliv strategist joining us from singapore. You can follow his commentary on the market live blog. Getting market run down in one click. There is expert analysis from bloombergs editors. You can find out what is affecting your investments right now. Is morningstar director of Asian Equity Research. For more on these market moves we are seeing. Mark telling us that there isnt anywhere to hide in asia. We could see more pain in the days to come. Could we see some valuation discount arise in asia that could be attractive in this time of pain . Yeah. I do think so. What we are looking at morningstar, we have shares now in asia that are about 0. 9 times to our overall share value of the largecap index. Think that shares in the region are slightly undervalued right now. Nearterm risk on the macro side of the picture is to the downside, overall slowing growth. There are pockets where obvious valuations are already reflecting that risk. Shery we saw the hun sen index just plunge as we continue to see the street protests in hong kong. Sectorse any appealing in the city for you right now . Yeah. We look at what the hun sen has done since before the protests started in midjune. The worst performers are largely from the real estate state. Space. We have a couple banks in there. If you take those stocks alone, you have stuff like carry properties. These are overall quality names with decent assets. We would actually look at our preferred pick. Protests they could be more prolonged. Once that clears, these other names that will rebound the most, having fallen the most. The other thing to notice with the slowing growth overall, we are expecting Interest Rates to decline. That does sort of help over the longterm picture for residential assets in terms of properties. The other thing, the other part that has been down sharply has been infrastructure. I think the potential for Interest Rate cuts actually helps this infrastructure utility name. Paul in terms of hong kong, we sayinge president xi that its his intention to unify all of china. Talking about a severe decline in hong kong. It sounds like you do see a buying opportunity in certain sectors there. Is there a risk that you would be catching a falling knife, so to speak . Yeah. The question we still have is for its difficult to pinpoint for how long the protests are going to continue and what will end them. The motions are very emotions are heightened. The has to be a trigger point that is normally violent before the end. We still subscribe to the belief that china will prefer to have the Hong Kong Government resolve this issue. We still think thats the route that will be taken. In regards to 24 7 and the situation there with the one country, two systems, that really depends on where china thinks its going to be in 24 7. 2047. We actually believe that its a hard likelihood that the one country, two systems will be lotnded unless there is a of success in the market reforms that president xi expects to put into place. Paul i want to return to a point you made earlier about bank valuations. You see some appeal there. You have some concerns about Growth Prospects as well. We do. We think the main risk is slowing level growth. A lot of that is to do with the trade war. The china slowdown overall. Extent, we have factored into earnings forecast. The flip side of the situation is obviously, if there is a trigger because of the u. S. Beginning to slow down, is there a trigger for a trade agreement . We think this would allow Risk Appetite return. Shery the shanghai composite has been rallying this year. We are talking about 17 gains your today. The Chinese Market is away on holiday. The chinesean market has more room for upside, we could see more policy moves to support the economy. At morningstar, we take a longerterm view. Overall, we would still prefer the consumption story in china for the longterm. Growth is going to be more shortterm policy related at this stage. We actually think there are opportunities in some of these. Tencent is in a we continue to like, as is alibaba. We do like that still for longterm growth. Ones we initiated is a name that we like for the Growth Prospects it has through its own market shares in a Consumer Electronics space but also through its ownership of Industrial Robotics names. Broadly, we see a sore equity market. Taking heavy hit on some disappointing u. S. Data. There is more data coming out later in the week. U. S. Jobs numbers on friday. The you have any concerns that the numbers are starting to point in a worrying direction in the u. S. . Yeah. I certainly do. This is something weve mentioned as a risk for some time. Is,fact is that the market the numbers are beginning to catch up to the concerns on the corporate side which is basically, corporate have been easing back on spending. That is beginning to show, obviously. The fact is that the Consumer Confidence was the next item that was going to be impacted by that. Because we are seeing that weakness in Consumer Confidence perhaps start to creep in, that is one of the factors we are more concerned with overall. Paul morningstar director of Asian Equity Research lorraine tan. Think for joining us. Still to come, or from our exclusive interview with indonesian president. Including his plans for major reforms. Shery up next, new york fed president John Williams see signs that the economy is slowing. This is bloomberg. Paul this is daybreak asia. Im paul allen in sydney. Shery im shery ahn in new york. The selloff of global risk assets is caring through to asian markets after disappointing u. S. Data. Bloomberg opinion columnist dan moss joins us now from singapore. Bad news seems to be proliferating right now. Where is all of this headed . Shery, this is headed towards a more pronounced downdraft in the Worlds Largest economy. On the policy side, this is inexorably leading to more cats, quite possibly more cuts in Interest Rates, pipe quite possibly as soon as the meeting in a few weeks. The idea that the fed may cause is pretty pause is pretty unsustainable, in light of recent data. Getting John Williams seeing signs of the economy slowing from a pretty strong pace. Take a listen to what he had to say. We are seeing signs of the economy slowing somewhat. We want to get Monetary Policy positions to keep the economy growing at a sustainable pace. Shery how likely is a recession in the u. S. Right now . Heres the funny thing. Its critical. Its poorly understood. In most countries, a recession defined as two consecutive quarters were gdp contracts. In the United States, a recession is determined by a group of eight economists under the auspices of an outfit in massachusetts called the national and we are. Nbr. National bureau of economic research. They meet and exchange roads notes. They look at a number of things and then a year after a recession begins, they will issue a piece of paper saying, we determine the peak of thevity was x, therefore economy is in recession. They told us the economy had been in recession since late the previous year. There was a 12 month lag. Its not as simple as gdp shrinking for two quarters. It is important to understand. Are Central Banks other than the fed responding more quickly and more effectively . They are certainly responding more quickly. Historically, the fed has set the pace for both easing and tightening globally. That is in large part a reflection of the sheer size of the u. S. Economy relative to others. That is being chipped away. The strength of the dollar as the World Reserve currency. As we have seen in this region, india was first out of the gate with an Interest Rate cut in february. Others have followed in quick succession. China was easing an array of policy last year with those reserve ratio cuts and a couple of targeted tax breaks. The fed is not necessarily leading the cycle. Thats a big historical shift. Paul all right. Pinion columnists dan moss when the economy slows, companies and consumers are less oil. That is driving prices. Asia Energy Editor joins us now from tokyo. Oil is now down for an eighth straight session. Is this trend set to continue . Yeah. Theres a lot of bearish sentiment in the oil markets right now. West texas intermediate is trading around 52 a barrel. Brent is right around 58 a barrel. These are the lowest prices since hourly august. Early august. Theres a surplus in inventories. The u. S. Government said yesterday that u. S. Inventories rose by 3. 1 million barrels. That is much more than analysts were expecting. Total inventories on a seasonal basis are above the fiveyear average. That is really the primary factor driving prices lower right now. Its a significant turnaround from where we were a few weeks ago after the attacks on saudi arabias oil installations. Those facilities much faster than people anticipated. They brought supply back and we are where we were a few months ago. The sentiment in the market is very bearish. Hearing that opecs middle east output has fallen to the lowest levels since january of 2017. How much will this help in supporting prices . Is it about all the other supplies, especially in the u. S. Now . Been driven by u. S. Supplies. Theres a lot of concern about underlying Global Economic growth. You have these numbers from the u. S. Yesterday, u. S. Payrolls in September Rose less than expected. August gain was revised lower, suggesting a possible recession in u. S. Manufacturing. You have the u. S. China trade war overshadowing everything. Theres a lot of concerns about weaknessonomic growth feeding into concerns in the oil market. If you have a Global Economic slowdown, that reduces oil demand. Those two factors along with supply overhang is driving sentiment and Oil Prices Lower right now. Shery thank you. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg competitors subscribers, go to your terminal. Yours so youize only get news on the industries and assets you care about. This is bloomberg. Shery this is daybreak asia. Lets get a quick check of the latest business flash headlines. Gopro slumped after the company cut forecasts and said shipments would be delayed. The scaledback revenue projections and expects growth. Gopro says it will launch a new series of products in the Fourth Quarter that will boost profitability. Investors are worried. The stock is down 30 in the past year. Shery apple is easing restrictions on thirdparty app creators. Currently, siri defaults to apples own apps. Any Software Upgrade will allow it to default whichever users rely on. The move comes as apple faces group me about how it competes against external developers. Back in theoft is smartphone race with a dual screen foldable device that will run the android operation system. Screens. 5. 6 inch giant still faces skepticism from some investors about a deeper move into the hardware business. Still to come, ongoing protests in hong kong keep shoppers at home. We will run through them numbers the numbers. Thats next. This is bloomberg. Sometimes your small screen is your big screen. And with the Xfinity Stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. Download your dvrd shows and movies on the fly. Even record from right where you are. Keep what you watch with you. Download the Xfinity Stream app today and get ready for Xfinity Stream tv week. Watch shows like south park and the walking dead october 7th through 13th. President trump has lashed out at democrats and news media in a wideranging, angry press conference at the white house. He labeled joe biden and his son as crooked without evidence. He defended his conversation with the ukrainian leader and accuse the House Intelligence Committee chairman adam schiff of committing treason. I had had a great call a great call with the president of ukraine. You have the transcript. And relate a call that didnt take place. He made up the language. Hard to believe. He had some kind of a mental breakdown. The president of iran is upbeat over europes attempt to ease the crisis over the 2015 nuclear deal. He says he finds the proposal accessible. The plan calls for the u. S. To lift sanctions on iran, allowing it to expect export ill. Oil. It is required not to pursue Nuclear Weapons and help in shoretel security. Airbus is warning that american jobs will be threatened if the Trump Administration goes ahead with tariffs. 7. 5 billionrized against the European Union at the end of a 15 year dispute about state aid. Airbus says the components in its plane come from the u. S. Supporting 275,000 jobs in 40 states. Outlets say. S. News a boeing engineer fired an internal complaint alleging that maker rejected a Safety System to cut costs. They say boeing managers were urged to consider a Second System for checking airspeed that could detect when aircraft sensors were not working. Boeing told bloomberg it doesnt comment on internal complaints. Day two of u. S. Auto sales reports. For to be expectations. Chrysler sales were basically fat flat in the quarter, better than the anticipated drop. Ram pickups outsold the chevrolets by about 6000 trucks. Pakistan owes china more money than it does to the imf. Islamabad will have to pay beijing 6. 7 billion as loans mature over the next three years. Pakistan racked up loans to bridging worrying finance cap. They approved a Bailout Program later this year. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul thanks. U. K. Prime minister Boris Johnson has unveiled a new brexit proposal that is already receiving criticism from eu officials including the president of the european commission. He made his case at the conservative party conference. Let us be in no doubt of what the alternative is. The alternative is no deal. That is not an outcome we want. It is not an outcome we seek it all. Let me tell you. It is an outcome for which we are ready. Paul lets go to our Senior International editor Jodi Schneider in hong kong. Less than a month to go before the brexit deadline. What is Boris Johnson signaling about a deal . He is signaling policies much more ready to do a deal with the eu. His language has changed a little bit. He is still saying hes prepared to leave without a deal if necessary, as we heard. He is saying now that he wants to have a deal, he will try to eu a deal through with the and coming weeks. His deal may have just enough concessions to the European Union to keep them at the table and may be able to squeak through with just enough votes in parliament. That will depend on what hes able to negotiate with the eu. He is still saying hes prepared to leave on october 31 but he is signaling much more willingness to negotiate. Obviously, he will have to do that because theres a lot of skeptics in the eu including the president s comments yesterday. That they are not sure that this contains enough for what they need to get through them. It will go through parliament. This will kick off a twoweek time of negotiations with the European Union. Shery Jeremy Corbyn says the proposal is worse than theresa may steel. Theresa mays deal. What are the chances in parliament . He does not like this deal. Why this may be able to squeak through parliament is it does not contain that contentious i respect stop proposal irish backstop proposal. Basically, itas separates Northern Ireland into its own regime. They would require customs checks, which neither ireland nor the eu like. It would not have land border tax. There are some who say, including eurosceptics, that this may work better than that backstop. Getting it through the eu will be the problem. They dont like this proposal or those customs checks. They worry about this whole set up. They may be willing to negotiate on that. Boris johnson has signaled he may be willing to negotiate as well. Shery thank you so much. Our Senior International editor. The economic pain in hong kong is intensifying with retail sales posting a record crunch as the escalating protests cripple tourism and spending. Our chief north asias correspondent has the latest. How bad were the numbers . Anybody whos been on the street during the protests can tell that so many shops are closed, especially on october 1. Shops were closed all day long on october 1. This is a key shopping date. Its a golden week in china. Normally, mainland shoppers come down. This is a jewelry and watch shopping luxury hub. That status for hong kong is under threat right now because of the protests in the drop in mainland tourists. Mainland tourist numbers fell 43 in august yearoveryear. As a result, the value of retail sales fell by the most in a month. This is the economy that is built on Financial Services but also these retail sales are vital. Those tourist numbers from mainland china, if they are dropping off, if individual travel is down, retail sales are going to plummet. That goes back to the base effects while. How can small to Mediumsized Enterprises survive in the worlds highest retail rent market . They need relief on rent if though shoppers are not coming in. Some interesting comments coming overnight from the likes of kyle bass, the Hedge Fund Manager and founder of payment capital management. He is saying hong kong faces a severe economic decline. He is betting on a breakup of whichng kong dollar pick has underpinned this hong kong economy for more than three decades. In fx reserves will worsen september, he is saying. In the next 1218 months, Capital Investment will flee. We will see fx reserves worsen over that time frame. On that point, i want to bring up comments from the incoming chief executive of the Hong Kong Monetary authority. He says, his key priority is to andtain monetary stability the foundation of that monetary stability is the u. S. Hong kong dollar pick. What about the government response more broadly with lowend unrest . More measures are being considered, right . I would hope so. I would think so. That the government would be exploring every option right now on the table, especially after october 1 which saw some of the most violence in the fivemonth long debacle that this has turned into right now. We had more than 1400 rounds of tear gas fired on october 1 alone. Up until that date, there had been 3100. More than half of the total before october 31 october 1. Shot in thester chest by a live round from a Service Revolver of one officer. Six total live rounds were fired. This is definitely escalating as the angst on the streets is escalating. The patients of Police Officers is waiting as well. We have a number of different reports from local media. Bloomberg news is still trying to get confirmation on the number of these. Activelynment is imposing a curfew to contain the violence, according to the papers. Officials believe the curfew is an effective way to limit people from gathering. The junior Police Officers association is calling for tougher emergency powers, warning that the police force cannot deal with the problem alone. That goes into the bigger question about the possible invoking of the emergency provisions ordinance, emergency regulations ordinance. The last time that was invoked was in 1967 to contain the riots that were happening in the city then. Those are sweeping powers. Me thatrnment telling september 12, the government doesnt have to invoke all the powers that that would bestow upon authorities. They can pick and choose. One of those could be a curfew. She admitted to me that invoking these powers have a number of legal ramifications. Also, another local media ban ng that they might im not sure of the legality. It would invoke some law to ban facemasks. It would be easier to identify those who perpetrate crimes. Paul chief north asia correspondent Stephen Engle in hong kong. Still to come, indonesian president says he will introduce sweeping reforms to labor laws and open up the economy to foreign investment. Our exclusive interview, just ahead. This is bloomberg. Shery we are seeing the nikkei falling by more than 2 and the topix mulls matching those losses. This is the second consecutive session of falls for the japanese stock markets with the nick a month. This coming off of the japanese yen being at the strongest level against the u. S. Dollar in about a week. Breaking below that 107 level at the moment. Those losses in the japanese market accelerating at the moment. We are seeing the asx 200 losing more than 2 . The kiwi stocks losing for a second consecutive session. Lets turn to our bloomberg exclusive. The indonesian president aims to deliver on some of the major reforms investors have been demanding. Among the obstacles is the nations labor laws. Bloomberg editors and chief andor in chief spoke to him asked him if he will actually reform those labor laws in the six was of interview. Exclusive interview. We compete against other countries in attracting investment to create jobs. Complaints from investors on labor law are always expressed to me, especially for the laborintensive sector. They expressed the need to supply licensing. We will work on these two as soon as possible. I will talk to labor unions, discussed with them how to revise the labor law. But without causing loss for workers. This is for new workers so industries can expand, Foreign Investors can invest, and help create jobs so indonesian children can work in available sectors. Were will only apply to the new lawsrs, new labor lonely apply to new workers. It will be safe with the old workers. Thats the direction we are going so that we can attract new investment, create more jobs. The direction is for new workers so that investors can feel more comfortable investing in indonesia. Is that your priority . Will you introduce that law before the end of this year . Yeah. Priority is labor law. I have to talk to labor unions. We will propose 74 laws under the on the this laws licensing can be sympathized. Simplified. This will provide jobs. If im a new worker getting new labor laws, does that mean the severance terms will be much less generous . Indonesia has some of the nicest firing laws in the world. You can sometimes get 90 months of pay. Will that change . What will actually change for the new workers . Will they be easier to hire and fire . Year, there are 3 million new workers in the job market. They must begin in room to enter the job market. We want to address investor complaints. We have to revise the law. We hope more investment will create Competition Among companies to get better workers. Market mechanism will increase pay. You have this negative investment list which you have also said that you would fully such as25 sectors telecoms and education. That has not happened yet. Do you have a timetable to open up those sectors where you can fully by companies in indonesia . Still in process. We will see the revision in the end of this year. For education, we will provide room for Foreign Universities to set up universities in special economic zones. Foreign hospitals with the latest technology will also be allowed but in special economic sound. Also in the technology sector, we will provide room. We will see in the years and, many sectors are moved from the negative investment list to create more jobs. The biggest thing in the Global Economy which hurts indonesia hurts the world, the u. S. China dispute. I suppose that is a dispute where people in Southeast Asia have to decide whose side they are on. Whose side do you feel as if you are on . Indonesia is in the middle. We want to get opportunities because the trade war is not good for all countries. Indonesia wants to take opportunities. The trade war doesnt negatively impact our country. We have good relations with the u. S. And china. The most important thing is a National Interest comes first. Thats the indonesian president speaking exclusively with bloomberg editor and chief in chief. Lets bring in been plans, director of the think tank Southeast Asia project. I want to start on the president comments on foreign direct investment. They plan to open up 25 sectors. This has encountered opposition domestically in the past. How difficult is this navigation of the tight rope . We have to ask to keep questions. To committed is he really pushing ahead to the sorts of foreign investor friendly reforms . What sorts of opposition is he likely to meet from vested economic interests within indonesia . Domestic business groups, Civil Servants and other officials who want to walk back these sorts of reforms. Term, hek at his first made a lot of promises about opening up the economy to foreign investment. We didnt see too much delivery. We are not sure if thats because of a lack of commitment or the resistance he was meeting. Probably a combination of both. Paul you mentioned walking back reforms. Theres no guarantee that after his second term ends, the Regulatory Environment would change again. How much of a risk of that is that for Foreign Investors . If you are going to invest in indonesia directly, it has to be a longterm game. This is a big, diverse country. Ministries dont agree with each other on local policies. I think you have to have a long game in indonesia. You have to look be aware that the be aware that the regulations are going to change. In cant put all your hopes the words of a politician promising to open up. The other point is that in the first time, he focused a lot on pushing Stateowned Enterprises into the economy and giving them big advantages. Giving them some of the best project contracts. These very pragmatic. I dont think hes ideologically bothered whether that comes from Foreign Investors or the state sector. Investors andgn news channels that he wants foreigners to come in and he gives a different message to the domestic audience about the importance of putting the state sector first. Shery he does not need to seek reelection anymore. Does that mean he cannot push harder on his reforms can now push harder on his reforms . Im not convinced thats the case. Thats an argument he has made before. Theres a lameduck factor. Given that he cannot be reelected in indonesia, people are looking about at the next election, just as it might be true that hes unburdened, theres a risk that power starts to ebb away from him as Political Parties and powerbrokers start to realign for the next election. It doesnt make too much difference. Whatest guide we have for he will do in his second term is what he did in his first term. A mixture of some investor friendly reforms but a lot of prioritization for the state sector and quite a muddled policy, like what we have seen from previous indonesian governments who want foreign cash but find it hard tackling investor residents. They want to make sure they support the domestic sector, too. Shery how has indonesia performed compared to other Southeast Asian companies countries . Given all of these trade tensions. One of his frustrations has not been indonesia has seen by many manufacturers as an alternative Protection Base as they have been living out of china, either because of the trade tensions are rising waves rage costs. Indonesia isnt that attractive because of the labor laws and the infrastructure and regulations. Indonesia is economy driven by domestic demand and the export of unprocessed commodities. It is not set up as a trading economy in a way that shielded indonesia from the trade war. It shielded indonesia from the global plan from brexit. It has had the most able gdp growth of any country in the world since 2002 because of this different economic structure from the likes of vietnam or malaysia which are trade focused. The president there also pointed out that indonesia has an incredible 3 million new jobs every year. How challenging is it to absorb that number of new workers into the workforce every year . How critical is this labor reform package . I think it is really important for indonesia to answer the jobs question. 3 Million People joining the workforce every year. Its a big, young country. That brings a lot of demographic advantages. There is risk their if you can find adequate work. One of the big problems is the lack of solid job creation. People are working in the informal sector. They are not getting job benefits or job training. No one really wins in that situation. If you look in the last few weeks, weve had students protesting across the country. That has mostly been about liberal democratic reforms, i suppose he would say. Theres a question about economic frustrations in indonesia for young people. The president hasnt knowledged he needs to answer this question. Does he really have the willpower and political ability to push ahead and do things that are really difficult . Opposition,ted with hes a guy who normally likes to go for consensus, not confrontation. He usually steps back, in the good sense, but also sometimes in a bad sense when reforms are unnecessary. Wait and see if hes willing to push ahead on his commitment or if he backs down in the face of the inevitable opposition from trade unions and the like. Paul thanks so much for joining us. We have plenty more ahead. Stay with us. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Tesla has set another record for quarterly deliveries but fell short of the mark elon musk said was possible. It shipped more than 97,000 cars in september, exceeding the 95,000 and the earlier quarter. Must have told staff that tesla had a shot at topping 100,000 for the first time it time. Tesla will report earnings at the end of the month. Indias largest manufacturer of Flexible Packaging says it will invest 500 million over the next four years to expand its development of ecofriendly products. It says it sees a big profit in the plan to eliminate single use plastic by 2022. Paul quick check of the markets. Pretty ugly out there. Japans nikkei off by more than 2 . Same story in australia. New zealand weaker by 1. 3 . Stay with us. This is bloomberg. David so if you have a 54 perspective decision, does one of the justices go to one of the others and say, why dont you change your mind . Jus. Ginsberg [indiscernible] david you have gotten attention for your exercise routine. Jus. Ginsberg when it comes time to meet my trainer i dropped everything. David many people think the court is very clinical. Jus. Ginsberg people have that view because agreement is interesting not interesting. Disagreement is not. Would you fix your tie, please . David people would not recognize me. Just leave it this