♪ >> central bankers reaffirm their belief in the power of monetary policy, a fed hike still on the table. >> the decline against the dollar as the boj governor repeats willingness to ease further. government pension fund may go on a shopping spree after the value of its investment tumbles. outperforms its rivals in the first half. "daybreak asia".d salama

past 7:00 p.m. on sunday in new york. we are digesting what has been happening when janet yellen was talking about the u.s. economy being better than hiketed and putting a rate off the table, but stanley fischer coming in throwing her remarks into turmoil and we ended the week negative. yvonne: we saw stanley fischer changing the dynamic. toant to welcome you "daybreak asia" today. this will weigh on asian markets this morning. the kiwi dollar taking a breather thanks to the fed.

a stronger dollar could mean a tough day for energy and stocks. or i japan in for a comeback after governor kuroda's comments a september review does not mean a shrinking a policy. the yen near a two week low. incould see a 300 point pop tokyo today. an early look at what we can expect in the region. how do you think this will play out on wall street? ramy: we are very u.s. centric here. what has been happening with the fed speak, that is what everyone is looking at. it is something playing out in terms of fed fund futures. i want to show you the 42% fority of a hike,

september. this is up 10% from thursday to friday. the december meeting is now 65%. that is a jump from 57%. to somere edging closer kind of near certainty that investors are in some way fearing. that's why we saw the volatility in the markets on friday. with that, i want to head over to su keenan. talk us through what happened on friday and where we will be looking ahead this week. on friday. road yellen, her remarks, and remarks.ley fischer's take a look at how we close, a reflection of the mixed market. climbed.l, yields

the dollar, which had fallen ahead of stanley fischer's comments, rose afterwards,nd then oil climbed. look at some of the stocks likely to move this week. this is a company with a product that rivals the epipen. adamis pharmaceuticals. ramy: a pop from janet yellen, a drop from stanley fischer, walk us through the reaction and speculation. yellen's comments were taken as balanced and broad-based. she signaled the fed is closer to raising rates without going there. you have the markets moving higher. stanley fischer went there.

he said this is supportive of a september potential hike, meaning the september meeting his life. to how oneen as economist interpreted janet yellen's comments. >> she expressed that case has gotten stronger for a rate increase. that was the view of janet yellen-stanley fischer coming out again, not worried about the low growth. traders now see a better than 40% rate hike in september, better than 60% in december, and that has changed the story. back to the volatility, a lot of and participants are on vacation, soou seehat volatility likely to continue in

the coming days. the dollarsaw rebound, which means the yen weakness. what about governor kuroda's comments? adding to the view that central bankers will provide liquidity. he said they are standing ready to ease, if needed. that have the dollar holding at a two-week high. if you take a look at this bloomberg chart, you can see the dollar strengthening on news of a december rate hike, and that is where the market is right septembered between or the end of the year. yvonne: there was that initial whipsaw with janet yellen comments and stanley fischer, sending the dollar higher. now let's get to first word news. >> copper is expected to keep falling after erasing gains for the year last week.

traders have switched to a net short position. dragged lower by a copper supply storm. aventories have ballooned to 10 month high. chinese demand was at its lowest in july. as of friday's close, copper was down more than 2% so far this year. of deputy foreign minister germany is hoping the u.k. can not cherry pick the best of what is offered. he hoped the u.k. would formally declare intentions to leave soon. mitsubishi has aborted a test flight of its airliner due to problem's with onboard systems. there was a fault in the air-conditioning.

it was heading for washington state, but turned back one hour into the flight. the delivery date has been pushed back a fourth time to mid 2018. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you so much. our top story in asia, a giant government pension fund could be set for a shopping spree. what is this all about? we know the pension fund has investment targets. it looks like the fund would need to spend 53 billion dollars on domestic shares in order to meet those targets. take a look at this graph. stock holdings of the japanese pension fund fell 21% at the end of june. its goal is a quarter of the portfolio, so they are short of the soft target.

theyext chart shows that are short of their stock target, domestic and overseas, not to mention that they are actually over the target when it comes to need domestic on, so they to offload $56 billion in domestic bonds. those yields and japan's bond , they now have a weight of 39% instead of 35% to this means they could deviate slightly from their targets. so far from what we aearing from them, they seem intent on following those targets. take a listen. with 50% equity holdings, the earnings ratio may appear volatile as short-term, but in the long term, it is easier to achieve the profit target detention system aims for. we don't plan to change our

management style. they talk about this volatility in the short-term, and this is because their strategy has not worked out that well. of the result follows a $52 billion loss in march. there, lot of negativity but at least there is one positive for the japanese economy, it's famously low jobless rate. tell us about that. correct, three point 1% in june, the lowest jobless here is the995, but problem. hidden in the data is the fact that long-term unemployment 25-44, the prime jumped age, they have fivefold since the early 1990's.

take a look at this graph. this tells you there were 14.7 million male workers in that age lowest level, the in 48 years. it you might think that for women, the situation is getting slightly better, but the fact is that women are more likely to hold a part-me job, low-paying as well as the fact that a have fewer benefits. ramy: thank you so much. we will leave it there. in canada, a proposed a $.5 billion lng plan backed by petronas has been given a boost. the local aboriginal community had opposed the development, but has now signaled a change of heart if the location is moved. meet with local leaders and government officials in the coming days. with that, refining came to the rescue for sinopec in the first half.

the company outperformed domestic energy rivals as its fuel making business helped it to whether cheap crude. run us through these numbers. that's right. sinopec, the world's biggest refiner, seeing its downstream business offset its crude production, which suffered greatly from the drop in brent crude, which was averaging 30% lower in the first half than we saw the previous year. the billion yuan profit in first half. that is down 22% year over year, but you have to look at it sequentially from the second half of 2015. profit doubled. was the worstit since 2002 and the second half last year. supply costs are cheaper for the benefitednd they also

greatly from this new law that came into place where the chinese government prevented the gas stations from basically lowering the prices too much when crude falls below $40. they put of floor on the pop prices, and that helped out the refiners. we have seen crude prices rebound. would this change sinopec's strategy? >> i think they will stick to refining. they were fine nearly double as many barrels a day than the next ,iggest refiner, petro china 4.6 7 million barrels a day refined in the second -- first half. has said it plans to boost refining by 3.5%. sinopec is the number three explorer after petro china and so it still has exposure

to the prices, but will emphasize the refining going forward. it is their bread and butter and what kept them in the black in the first half. ahead, theking e-cigarette battle heats up in japan. how it could get the tobacco industry a lift. ramy: janet yellen says the case for a rate hike is strengthening. what does that mean for the markets at the start of a new trading week. this is bloomberg. ♪

yvonne: we are counting down to asia's first major market open. japan futures looking like this. we could see a bump in stock prices after the dollar rebounded and the dollar-yen near a two week low. watching "daybreak asia" . ramy: a quick check of the

business flash headlines. chrysler ceo sees samsung as a potential partner. sergio marchionne declined on whether they are in talks. sources told bloomberg that samsung is keen to buy some or all of the operation with an interest in its lighting and entertainment systems. we have a good relationship with samsung as a supplier and a potential strategic partner. what i did say yesterday was has beenopportunity looked at by other people. in justno interest settling it. it has strategic value to us. agricultural bank of china posted second-quarter profit gain of .5% on the back of increasing bad loans. net income rose, beating estimates. pared down its bad loan

buffer by 3% and announced it will sell a $12 billion of securities over the next three years. an escalating battle between apple and spotify has musicians in the crossfire. spotify has retaliated against musicians who introduced new material exclusively on apple music by making their songs harder to find. spotify has been using such practices for a year. spotify says it does not alter search rankings. yvonne: that battle ramping up indeed. janet yellen's address will be on investors minds this week. great to have you here in the studio. have we gotten more clarity out of janet yellen? >> she had said what she had to say. she told the whole world that we

are getting close. she did not repeat what her lieutenant said, it would be awkward. the u.s. is getting closer to rate hikes. september is possible. at the latest. i think the economy is doing fine with the small exception of investment. consumption is strong, the labor market is strong, the housing market is off the charts strong. is on target, wages are up, so everything is moving moderately behind the curve. yvonne: i want to bring in the fed fund futures. of a 2016 the chances rate hike job, particularly september. next month,% for and december, nearly 55% chance of a rate hike. this is more of a hawkish give it?

markets have not believe the fed all year. the fed came out nine months ago and gave us the first hike, then they laid it out, a hike per quarter was the expectation through this year, but then something happened to financial markets and they backed off. then brags it, and the fed backed off. economy hase, the been doing just fine. every time they back off, they get further and further behind the curve, so it is not a hawkish move. it is saying we have to pay attention to the real economy and knock get freaked out by financial market shenanigans, which is all they are. yvonne: at jackson hole, we did not get too many calls for a radical approach to stimulate growth. they seem to stick to the playbook, hoping for the best

from current monetary policy conditions. my senses that they are natural and-called just rates potential growth is considerably slower than it used to be. down,tion in the u.s. is 0.4%. that puts potential growth in the u.s. below 2%, being the sum of productivity growth and labor force and working age growth. is below 2%,ntial and we have been a 2.2% for the last six years, so that u.s. has been about potential for the last six years. market is getting stronger, employment coming down, core inflation moving up over the last year. core cpi is above the fed

target. the fed keeps talking about wanting to hit their target. core cpi is above the target, would you talking about? they have some catch up to do. ramy: we are only a couple of months away from our elections. analysts have been talking about how they don't think a rate rise would happen in september. we are getting near that 50-50 mark. where do you lean on this? what the u.s. elections come into play? >> i don't think they will come into play. i think this week's labor market report is far more important than the elections. to fed goes out of their way save the elections don't get in the way here. every four years we look at it and then discover the elections don't play a big part in this. it will be the labor report. a dud, september is less than 50%. plus,get 170, 180, 200

it's more likely to get a move in september. ramy: thank you very much. struggling with earningut 2017 maybe it point. the details are next. this is bloomberg. ♪

ramy: this is "daybreak asia". has reported a drop in first-half sales, the first since 2011, blaming china and terrorist attacks in europe. revenue fell to $1.8 billion, missing estimates. more disappointment for prada. >> you are not buying enough prada it seems. years of stagnant sales,

adding to the list of luxury brand struggling, revenue down 15%, $1.8 billion, missing estimates. earnings down, but less than what analysts were expecting. hasnumbers show that prada been hit harder than other luxury brands. it's prices are not competitive. they are wearing -- way too expensive. it has been slow to invest online. prada is underperforming across multiple regions. china,n hong kong, macau, something more than 20%. t is a huge drag for the company. after the terrorist attacks in france, belgium, turkey, not surprising that been falling,ave becoming a poster child for what is going wrong with the luxury sector. being an product

illthe first half, but w there be angels in the second half? optimistic,ny is lineessing issues, on sales expected to double. it says it is focusing on the needs of individual markets, strategic price points. it is also expanding social media activities and digital communications, so the management says 2016 is a turning point and it will return to growth from here. signs of already rising demand in major cities in china. after all, both of you would know that one can never have too many shoes. there is always room for another pair. ramy: i suppose so. i do not have any prada. thank you so much. up next, the end of the wild east.

investors run for cover as regulators crackdown on speculation. this is bloomberg. ♪ hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business.

>> session lows. roiling theher markets. we will see how that plays out here on monday. >> it is a seven: 30 a.m. monday here in hong kong and 30 minutes away from the first major market i'm in the region and yvonne. >> you are watching daybreak asia. let's get forced world news.

-- first world news. >> the bank of japan has reiterated that it will boost stimulus if needed. the governor said he has ample room for additional easing. strategyevealing its and the governor's comments signal it won't reduce a stimulus program despite growing doubt about it effectiveness. the world's biggest pension fund may go on a shopping spree after the value of its investment tumbles. the investment fund would need to spend $50 billion in domestic shares to be typical of having -- its goal. fund also has room to offload some domestic bonds, which are above the level it wants to hold. the world's biggest refiner has been hurt by cheap oil.

a decline inced profit. china's energy companies have suffered this year. 48%. saw profit fall by -- itc says he continues sees this continuing. news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. >> thank you. let's look at how the age and markets will likely react to the weekend's events at jackson hole. a bit of a mixed picture coming through from u.s. markets. you can see the asia adi index was lower by about .5%. new zealand is pretty flat there but if we have a look at the

futures, you can see a mixed picture. the weaker yen listing japanese ventures. it through inf sydney -- we could have a bit of a flat. new home sales from australia for the month of july. 8.2 month, they were at percent. also looking out for hong kong retail sales for july. they were down six point 5% in june and we are still seeing quite a bit of weakness coming through in terms of sales from mainland chinese tourists and indonesia releasing monetary supply but looking like we will have a bit of a mixed day. the chance of a september rate hike back on the table and we are expecting quite a bit of volatility in asia markets today.

in terms of the specific stocks you are watching, what should be on our radar? >> still earning season in australia. we have had the airport coming through this morning. it's full year profit up by almost 21%. an energy producer in australia hiding its four-year 17 profit although it has come 2016.h with a loss for we are understanding dimarco will release the probe into the dim disaster in brazil last year. we could see some weakness coming through when it opens from bhp. sinopec coming through with its numbers. watch the casino stocks in hong kong as well and product coming

through with its fall and earning sales, slipping on that week luxury demand we talk about so often in asia. currencies.on to talking about the yen, the boj come out with statements. we saw some weakness there. >> we continue to see his little downward pressure on the yen at the moment, off by about .10%. getting closer to that handle over the weekend, that little bit of downward pressure likely to give an upside to japanese equities. commodity-based currencies are also a little lower. this was very much about dollar strength. >> let's stay in japan and the phrase is to forget helicopter money. the big of japan may target things closer to the ground now with speculation it may fund infrastructure projects when policymakers meet next month. jodi schneider is in tokyo.

from thise ask september -- expect from the september meeting? governor's comments over the weekend in jackson hole were interesting. to say there is no doubt there is ample room for more easing. he said in all three dimensions, which means further asset purchases perhaps as action on the negative rates introduced in january. in terms of asset purchases, analysts are telling us that we may see things- like rail projects and hospital projects that are financed by local governments in some public corporation. money going through that way ,ather than helicopter money which the governor has said the bank won't do. his comments this weekend seemed aimed at some analysts saying the bank of japan is running out ofpolicy room in terms

further easing. these comments seem to go directly against that. >> the boj says it will be undergoing a comprehensive review but how can that possibly affect their policy action moving ahead? the review was announced at the last meeting in july and it is one they have not done for sometime. they will be reviewing their policy for the past three years. analysts are telling us including in a survey we did that they expect the review could lead to further easing, that it certainly won't be something that would get in the way in the governor's remarks at jackson hole seemed to underscore that the bank may act and that this review will not be an impediment to further action. >> how does inflation and the price target play into this? >> that's interesting because as you saw last week, prices are

not -- they are still very far from the 2% target. mentioned the target, having to raise inflation expectations so low inflation and the fact the prices are still so far from the target may be a further reason to act. i think that is another way to read those comments from the weekend. so much.you switching gears to china now. it launched more than 700 investigations into price swings on the stock market according to official microblogs of the exchanges. we are talking about 774 probes in two months. they're really stepping up when it comes to regulation. >> they are basically looking a lot more closely at the world stockmarket movement and the --

they want to dampen speculation. look at last summer. this is quite public. the chairman has been in place in february and identified a need for tough markets. -- the shanghai exchange microblogs has said they are extending its division ii brokerage reports as well. that could move share prices. the shanghai composite has advanced 0.7% since july 26.

8% the two months before that. >> a lot of recovery there but overall, the chinese markets are still struggling to go back to the levels we saw since that $5 trillion stock. activityailing this heard recovery? 80% of the volume is made up of retail investors and those are investors who want a quick profit or my see a quick loss. they are the ones who may be filling out. this is when orders are placed to create the illusion of demand. they can move markets by bidding for shares at higher prices or

lower prices. they want to crack down on this kind of thing. like the chinese authorities aren't concerned about stock markets alone. where are they looking at now? did pledge to curb asset bubbles. it does look like they are bondg to crack down on markets and real estate. last week, there was speculation . trying to pullf the screen down only bond markets and cut down on excessive leverage. there's also speculation the government is trying to contain risk in shadow banking by limiting lending from p or two p or platforms from individuals and companies. peer-to-peer. >> thank you very next, betting

on an opec freeze. our next guest says he's not optimistic that will happen. we will discuss that and more next. this is bloomberg.

>> we're counting down to asia's first major market open. japan's futures looking like this, up by little more than 1%. -- you are watching daybreak asia. japan's plant plans to enter the gulf energy sector by applying a layer of protective coating. says terms are still being negotiated and any deal is not expected before the fourth quarter. they say the gulf and india will be the fastest growing regions in the next five years and hopes to expand 10% and holy in those

markets. clerks -- >> last week, ana said they had been discussing issues with the engine makers since march will start three planes suffer trouble in flight and turned back on one engine only. what are low-budget horror film from sony has ended suicide atop theree week run box offices in north america. don't freeze cost $10 million to make and it ranked in more than $26 million over the weekend. of $12 million and has made a total of 280 $2 million since opening a month ago. time to look at what we will be watching this week. tuesday brings us a crucial new

measure to japan's economy. this will give us an idea of whether the government for -- attempts to get people to spend money is working. prices continue to fall. >> india releases second-quarter gdp is wednesday. the annual expansion at 7.7%. that is the best growth among major economies. leadership at the r.b.i. provides fresh uncertainty. what we also get a check on china's manufacturing sector. recent numbers have indicated some resilience in the economy but economists are forecasting a slight slump this time with the official pmi expected at 49.9. a figure below 50 means a contraction. we are washing president

putin's today eastern economic forum. minister will be there as will the korean president. the two nations are locked in a theitorial dispute over .slands >> competition heating up in japan's e-cigarette market. philip morris released new devices within a month of each other earlier this year and they both the user shift in these new products. brian, this is some interesting stuff. walk us through what is happening in japan. japan tobacco inc. to look more is introduced vapor products, a little different than e-cigarettes. they had taken off as you pointed out almost from nowhere to nearly a $4 billion market and it reflects trends in smoking behavior in japan. 20% in smoking

levels among adults. it seems like they see this as an ongoing trend and they want to switch every consumer? do you think that is possible? and see.l wait i think health concerns over smoking are real and well known. the market does seem to indicate a huge amount of demand. japan tobacco had trouble getting its product out to consumers fast enough earlier this year so they suggest there's a lot of pent-up energy for these kinds of products. >> something that could be a potential game changer. thank you so much. we have plenty more to come here on bloomberg television. you are watching "daybreak asia." ♪

>> you are watching daybreak

asia. minutese now just a few away from the opens in japan, korea, australia. >> let's check in on how commodities rallied after a report that jackson hole. gold ended its longest losing run since may. our next guest says commodity prices will remain volatile. a senior commodity strategist, daniel. what we're looking ahead to about 30 days from now, "-- now, opec and oil. >> it has certainly been so for a successful exercise, talking up the market as they had it i suppose it highlights where they see prices in the market. certainly when we saw the crude oil price fall to around 40

dollars a barrel, there was genuine concern regarding the level and in relation to where they saw the market. clearly talked it up and it has been successful. way the market has performed over the last six months particularly just prior to their last meeting, it is significantly tighter and i think they were genuinely concerned about the prices falling despite that tightening in the market they have seen over the past few months. >> we are looking at a pop from the april timeframe of $40 a barrel. right now, we are are around $47 a barrel. since august 8 when the news first came out about his potential freeze, oil has come up about 14%. what kind of markers are you looking ahead to to guide us through the next four weeks?

interesting.ly we are coming up to the maintenance period in the u.s. and that could weigh on prices in the shorter term but certainly from our perspective, we still see u.s. supply falling in the count.se that has raised concerns with investors and it potentially poses some -- lessons the speed of decline we are expecting to see but it will be a decline nonetheless and i think that in conjunction with potential outsideons and closures of the u.s., we think the market should move into a deficit in the third quarter and that will provide some strong support. >> let's look at the major players in terms of opec and non-opec member countries.

iran of course last week said they were going to be open to potential talks and the last time we were talking about this iraq scuttled that. what do they have to gain and lose? ofi think the likelihood them actually agreeing to some kind of production is relatively low but in saying that, the isels they were reaching very high. certainly in the case of enron, the stumbling block last time. they are not far off the targets they set for domestic production there. certainly i suppose raises the possibility that we could see them come to some sort of agreement. while i don't think it's likely. the market is potentially pricing at a slightly higher probability that that could be the case. morem wondering if opec is

bark than bite here. we are to see this pop of 40% in the past few weeks and it is sort of achieving what they may want with these other countries. them obviously are suffering more than others. we have heard from saudi arabia and the like that even at $40 a -- clearly some of the smaller producers are suffering at the moment and that will certainly keep the pressure on those major producers to at least not completely oversupply the market. you think the fed could possibly add more pressure to where we are going to go with oil next? >> sorry, i just missed that. any take on janet yellen's

comments at jackson hole? will that possibly weigh on this recovery we do see in crude? >> i think it's an overriding concern for us certainly the way the u.s. dollar will trend now in the next six months could certainly make or break commodities. certainly from a fundamental point of view, a lot of the commodities are out of the woods so if you saw a stronger u.s. dollar, that could really weigh on markets but initially, they have taken it relatively well. we saw oil just stabilize here but gold has really struggled under these conditions. for the moment, i think it is wait and see. there isn't any ford of clear direction from our point of view from jackson hole and that will

keep prices relatively volatile but in a relatively tight range -- tight range. seems likeper, it they have been stuck in a rut. do you see this to be a big drag on prices for copper? certainly in terms of investor appetite, it is but when we look at the market, we don't see a huge wall of supply hitting the market. we're obviously getting some projects coming online. outside of that, there is really and in theh on meantime, a relatively there in -- barren time of disruption. if you do see some of that start to recur in the second half then

i suppose the commissioning of those projects starts to roll over and we see production relatively flat. >> thank you so much.

♪ reaffirmedbankers their belief in the power of monetary policy with a fed hike still on the table next month. the yen maintains its decline against the dollar as governor kuroda repeats his willingness to ease further. china's seen as a booming market for electric cars. may pull theations plug on industry startups. to "daybreak asia".

happy monday to you. i am yvonne man. on the back of those janet yellen comments, we are watching the open. >> good morning. the waiting is over. we heard from janet yellen on friday. now we will see how investors react to those hawkish comments. a 42% chance of a september rate hike, up from 32%. you can see a pop on the nikkei in the open in response to the weaker yen. janet yellen's comments pushing the dollar higher and the yen weaker, holding at a two week low against the dollar, so a very solid start in japanese equity markets. it is reversing that 1.2% drop on friday. it is expected to be a ball a time of session, and we were

looking at a diversions in asian equity markets. we are seeing more pressure in korea in early trade, the kospi down by .5%. no economic data to drive markets there. there has been a little pop from bhp billiton, up over .25%. we understand that the mine in bral will lease the findings of its probe into that disaster a 2015, the joint venture, so little upside, but more to do with commodity prices. elsewhere, downward pressure from some of the other companies. new zealand still holding on to slight losses. it came through with earnings last week. we will be watching auckland airport, higher by .5% on the

open. this after it reported a strong rise in revenue for the full year. we will watch reaction in emerging markets, because we are hearing they are the markets most affected from janet yellen's comments. you could see some downward pressure coming through today and emerging-market stocks and emerging-market currencies. a quick look at commodities at the moment, emerald pressure coming through in the gold price, investors not clinging to safety at this point. we are also seeing the crude price sold off as well. 1%, holding above $47 a barrel. weakness,se yen, giving boost to japanese 101.85, butlding at

a volatile session as you would expect a day. plenty of reaction expected on those janet yellen comments. for the u.s., markets started moving as she spoke. su keenan has more on this live from new york. a volatile session on friday. su: big swings having to do with lighter volume. yellen's remarks were viewed as broad-based and balanced, although signaling the ready to raiseas rates. it was taken as dovish, but afterwards stanley fischer signaling that the september hike was on the table. a mixed close. yields climbed. the dollar falling ahead of the stanley fischer remarks, but rallying behind it, and oil

trimming a weekly decline. amazon.com said to be close to introducing music streaming. pen scandal is in the spotlight. mis pharmaceuticals expected to be a stock on the move. yvonne: janet yellen took stocks higher, but stanley fischer brought them back down, so walk is to the reaction and speculation. su: the speculation on janet yellen's marks, everyone was looking for clues as to how quickly the fed could move, she pointed out they were ready to raise rates. listen to how that was perceived. change. a little more she has expressed the case has

gotten stronger for a rate increase. i see it. is how itle stronger was perceived. then stanley fischer came in and was a lot stronger in pointing out it could happen as soon as september. traders picked up their bets that there is better than 40% ,dds of a september rate hike better than 60% by december. stanley fischer's comments that sent the dollar rising. we also heard from boj governor kuroda. what did he have to say? su: he said nothing to bring it down. that theto the view central bankers will remain a, dative. he said he is ready to ease policy further if needed. yvonne: su keenan live from new york. thank you so much. now let's get to first word news. copper is expected to keep

falling after erasing its games for the year last week. says prices will be dragged down lower by a supply storm. inventories monitored have ballooned to a 10 month high. chinese demand was at its lowest in 17 months in july. as of friday's close, copper was down more than 2% this year. minister -- foreign german foreign minister hoping the u.k. will think again. he said negotiations will be difficult and britain would not be allowed to cherry pick the best the block has to offer. u.k. woulde ua formally declare its intentions soon. sinopec, a 22% decline, net

income down to $3 billion. china's three big energy companies have all suffered. petro china fell 98%. global says it sees the oil glut continuing and prices low. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you so much. our top story in asia, japan's government pension fund employ as it could be set for a shopping spree. they are ready to buy more. >> they are. they could be buying more. right now, they have this investment allocation target. the fund has room to spend $53 billion on domestic shares alone, so what that mean a rebound for stocks in japan? we don't know yet. the fund did say on friday that

domestic stock holdings had decreased to 21%. is a quarter of the portfolio, so take a look at this graph. shortre short of the target in domestic and foreign shares. the only asset class where they are overbought is domestic bonds. falling bond yields boosted their weight to 39%, above the 35% level they seek to hold. they do have room to be a bit off from their targets. from what we are hearing from the pension fund is that they seem in tent on keeping those targets. take a listen. with 50% equity holdings, the earnings ratio may appear volatile in the short-term, but in the long term, it is easier to achieve the profit target the pension fund system aims for. we don't intend to change our management style where the

assets are regulated stable interest and dividend income. the fact he's talking about volatility and the short-term is because this strategy has had challenges lately following that quarterly result. long beenn fund had 52 billion dollar loss for the fiscal year ending in march. yvonne: a grim outlook there, the japanese economy has a famously low jobless rate. >> that's true. the lowest level since 1995. take a look at this chart. you can see that not only has the unemployment rate steadily years, but the more jobs have been available for job seekers. the job-to-applicant ratio increasing slightly. hidden in this data is the fact

that long-term unemployment among men in their prime working years has jumped fivefold since the early 1990's. take a look at this other graph. an overall increase in the workforce, we are seeing 14.7 million male workers between 25-44 years old in june. that might sound like a lot, but it is the lowest level in 48 years. female workers have been .ncreasing it might look great from the outside, but it is more likely women will hold part-time jobs, low-paying and fewer benefits. thank you so much. up, j.p. morgan says investors need to take on more risks. we will be joined by a fund manager next. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries.

this is bloomberg.

yvonne: a quick check of the latest is this flash headlines. sees samsung ceo as a potential partner for its auto parts unit. sergio marchionne declined to comment. earlier this month, sources said samsung is keen to buy some or all of the operations with an interest in as lighting and entertainment systems. >> we have a good relationship with samsung as a supplier and potential strategic partner. thati did say yesterday is the opportunity is an opportunity that has been looked at by a variety of other people. we have no interest in just selling it. it has strategic value to us. agricultural bank of china posted second-quarter profit gain of .5% on the back of increasing bad loans.

billion himose $7.6 a beating estimates of $6.7 billion. the bank paired down its bad loan buffer, but will sell $12 billion in tier two securities over the next three years. betweenommitting battle apple and spotify has musicians in the crossfire. spotify has retaliated against musicians who introduced new material exclusively on apple music by making their songs harder to find. spotify has been using such practices for a year, one source said. spotify said it is not alter search rankings. markets trading in the on the backend of janet yellen's comments. a mixed picture, but japan getting a boost and equities this morning, up more than 2% on the nikkei 225, the dollar-yen paring back gains after janet yellen spoke, talking about a

possible rate hike in 2016. governor kuroda saying he is vowing to continue easing. down, the asx 200 down a similar amount. my next guest does not care when the next fed move is. let's ask why. all this chatter and whipsaw, it doesn't really matter what the fed will do? >> rates will simply normalize. we need to see a time when interest rates go up in the u.s., whether september or december, it doesn't bother me. got matters is how far they and what that will mean for the long end of the care of, incredibly low at the moment. low bond yields converted into equity markets that are very bifurcated. defensive equities are on high multiples.

in asia, the equities i consider defensive run 810 times, quite expensive -- run 18 times, quite expensive. seeing is interest rates and bond markets are having a profound effect on equity markets. --nne: did you get in the any indication of future rate hikes? >> i think the fed and janet yellen have said they are still data dependent. what i see is a bond market sheing me -- he is saying is uncertain about the path of rates, and the bond market is very certain. yielding 1.5s are percent, and incredibly strong story for what the bond market believes. i think that is quite sanguine and slightly worrying, inflation at expectations contained within that. we will see where inflation goes. we have seen five years where every major commodity price is

half of whate -- it was. i'm not a commodity bull, i just think they can flatten out around these levels and there will be more inflation then we have seen. yvonne: you mentioned treasury yields, historic lows. stocks trading at record highs. what does this mean for you and how do you find income? >> we can buy cheap stocks that are very low price relative to dividends or we can by companies that have defensive earnings. the second category is quite expensive now. by companies with depressed pes, banking stocks, oil and gas sector. we are much more interested in the value category. moree have a lot value-oriented stocks, by which i would mean for example a

quarter of our portfolio is in banks and other financial stocks. these stocks would benefit from rising interest rates. is depressedbility now, but they are valued for that depressed profitability. we think things can get better for those stocks going forward. yvonne: we do see lower interest rates, particularly in asia. cashu think some of these rich companies should continue to boost dividends? could they be creating more shareholder value? we have not seen a lot of value created merger and acquisition and asia. some companies are good at it, but not many. in auld be looking for larger holdings of stocks where we think the payout ratio could increase substantially from where it is now. for example, some of the stocks , or even hong kong

throughout the region. i think payouts in asia are not as high as they are in many other parts of the world. quite a lot of our companies pay 30% of earnings, and we would see opportunity for greater return to shareholders. yvonne: some markets are repricing that given that we could see a rate hike in 2017. could you see some of the biggest winners post-brexit as some of the losers. japan could see a boost. nd right now,tre particular emerging markets? a regime ofeen in falling rates for 5-7 years. and we see more nominal growth, we will see a major shift in which equities do well. defensive bond equities have done well. in a stronger environment, we

expect to see better performance from the banking sector and more cyclical areas. yvonne: you are steering away from the classic defensives, telcos come utilities. we only own those where we see a value case. for example, 20% of our fund is in korean and chinese utilities, telecoms, and toll roads. these don't get valued like australia and utilities. there is a worry on what will happen with the regulatory front, so stocks trade cheaper than developed markets, so we see a value case. yvonne: where do you see dollar going? >> upward pressure on dollar and a marginal downward pressure on developing and emerging-market currencies. it's not to the extent as we saw in 2013. they are quite close to fair

value now, but the u.s. economy is healthy. monetary policy will gradually normalize, putting upward pressure on dollar and downward pressure on currencies. we hedge currencies in our portfolio. our portfolio is hedged back into u.s. dollars. denominated or hedged into dollars because we worry about the downward pressure and the volatility of owning asian currencies. investors, large part of your volatility and asia comes from the currency, not even from the equity market, and we like to hedge that out. yvonne: thank you. in a moment, hitting the brakes, new rules threaten startups in china and may hit some billionaire investors. we will talk more about that next. this is bloomberg. ♪

pulle: new regulations to

the plug on many 200 plus companies that make up china's electric car industry. the government imposing strict standards on technology and could cap the number of manufacturers. our asia autos editor joins us now. interesting story here. china has been promoting electric vehicles as a strategic priority. why are they tightening rules now? the chinese government has been promoting electric cars as a strategic priority to reduce air pollution and to reduce its reliance on energy imports. in the last few years, it has decided to create a new class of manufacturing permits, giving them to companies outside the traditional auto industry. the rationale for that is the hope that this non-automakers

can create innovation and also provide a challenge to the traditional automakers. what we are hearing now from senior executives at the state backed auto association is that the government is considering limiting the number of licenses to 10. if you consider there are 200 new companies developing some electric car models, a quota of 10 would mean most companies would fail. weeding out the week, it sounds like a big wipeout. in terms of the broader sector, a lot of money pouring into the vehicles based, particularly startups. how frothy is a getting now? >> depending on who you are asking, either very frothy or very optimistic here it the backdrop is the chinese

government is putting a lot of subsidies and financial support to get the sector going. government subsidies can account for 60% of an electric vehicle sticker price, so it is a big incentive for companies to produce these cars. analyst whoed one told us that there is a bubble and he even compared to the frothy nest we saw during the d ot com bubble. some of these companies do not have the technology. they are just putting together financing. once they run out of cash, it is game over quickly. yvonne: joining us live from singapore talking about these new regulations expected to pull the plug on many of these 200 was companies and weeding out the week when it comes to china's electric car industry. thank you. it up, more about china.

ons time it is the crackdown speculation that may be keeping investors on the sidelines. more on that. this is bloomberg. ♪

hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business.

yvonne: good morning. it is eight 30 a.m. in singapore. -- 8:30 a.m. in singapore. the haze has cleared a bit. you are watching "daybreak asia" . ♪ yvonne: let's get to first word news. the bank of japan has reiterated its pledge to boost stimulus if needed. governor kuroda says he has ample room for additional easing.

the boj is reviewing its monthly policy strategy, and the common signal it won't reduce its stimulus program to fight growing doubts about its effectiveness. the boj meets on september 20. the world's biggest pension fund may go on a shopping spree after the value of its investments tumble. japan's government pension investment fund would need to spend more than $50 billion under mastech shares to meet its goal of having a quarter of its portfolio and stocks. the fund is said it was at 21% at the end of june. the fund has room to offload domestic bonds. aborted the test flight of its domestically designed airliner for a second time due to problems with onboard systems. it returned after a fault in the air-conditioning.

it was heading for washington state, but turned back about one hour into the flight. mitsubishi says the plane will be fully inspected, but will not fly to the u.s. today. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you so much. asian markets dragging lower after janet yellen's speech, but a weaker yen is boosting japanese equities. let's look at how the early asian session is looking. >> have a look at the regional index without japan, seeing losses coming through. that is reflected in the kospi. australia's market having a similar loss. new zealand is flat. index close lower by 1% on friday, but the weaker yen

giving a solid boost to japanese equities in early trade. governor kuroda's comments as well, so we are seeing buying coming through. you can see some stronger performers, mitsubishi chemical and you, hot motor up by 6%. motor, both up by 6%. earnings season and the australian market, downside pressure from me of the gold players. gold continuing through its losses. coca-cola and other retail stocks looking good there. still holding onto losses from friday, down by 4/10 of 1%. andill be watching sinopec prada when they open. the companies that have reported c is outperforming the

topics. aach energy came through with 588 australian million dollar loss. it is expecting to break even in 2017 following the merger with drill search. auckland airport has strong numbers coming through, revenue up by 13%, underlying profit up by 21%, so some upside there. having a look at the yen, this will be the major driver for asian equities. it is weakening more an early trade. it is breaking through that 102 handle against the dollar by 2/10 of 1%, a two week low against the dollar, so certainly janet yellen's comments having a big boost to the u.s. dollar, which is saying yen weakness. also, weakness and other

currencies. the aussie dollar down 4/10 of 1%, 75.31. yvonne: the bank of japan has reiterated its pledge to boost stimulus, if needed. he hasr kuroda does says ample room for additional easing when he addressed central bankers in jackson hole. jodi schneider joins us live from tokyo now. what did you make of this? what clues to do is give us for the boj meeting next month? >> his language was interesting, wasn't it? basically by saying there is no doubt there is ample room for further easing and all three dimensions, so that means the asset purchase program as well as the negative rate program introduced in january. analystspurchases, says we may see the purchase of

bonds from local governments and corporations that invest in things like trains, hospitals, rather than the direct investment and fiscal spending via helicopter money, which governor kuroda has said the bank will not fund. one other interesting thing about the comments this weekend was the fact that he was so direct about saying all three dimensions, seeming to try to quiet analysts, some of whom had been saying that there really is no more policy room for the bank of japan to continue easing. he was saying we have plenty of options left. certainly we are seeing the markets relieved on that. how will the comprehensive review do at this meeting, how with that affect policy action here? this review, which was

announceat the meeting last month, will be the monetary easing policy. economists we have spoken to expect it will be more likely there will be action next month given the policy review. that this won't be a way to stop further easing. comments from governor kuroda at jackson hole seem to underscore that, that the review will not get in the way of further action. yvonne: inflation and price targets? how does all this play into this now? yes, inflation is far from the 2% target. cpi fell in japan for the fifth consecutive month. governor kuroda mention this, the need for there to be stable inflation and inflation expectations to be heightened, so another clue that given the

need for this in the target is -- the prices are so far from the target, that could be an important clue about additional easing next month. yvonne: thank you so much. meantime, china's three biggest airlines to see losses of more than $1 billion from currency swings this year when earnings are reported over the coming weeks. our aerospace reporter has been going over the numbers for us. what results are the markets focused on here? they will look closely at the forex translation loss. they had the big loss last year because the devaluation of the yuan. the chinese carriers have been ining efforts to raise funds

the domestic market to bring down their debt levels, so we will see firsthand whether this has been successful or not in the earnings this week. when it comes to asian airlines, they have been facing when it comesion to the gulf and low-cost carriers. how is that affecting chinese airlines? they are creating some competition rather than being hit by competition. have been aggressively expanding their international flights, and that has given a lot of competition to the closest neighbor, cathay pacific. because they are competing with the same market, and making it attractive because prices have come down. they have leverage in order to do that because fuel prices are so low.

obviously they are facing competition, but at the same time, they are putting competition to others. bringing up the competition i guess, so what should we expect for the second half? >> second half will have to look closely at what they continue to do. whether they bring down their foreign debt level, which a lot of people are looking at closely considering currency has devaluation this year. whether they will continue to do their fundraising raising program in the domestic bond market. the other is whether they will withnue aggressive moves international routes, giving more competition to cathay pacific. specificngs will be and focus for a lot of people in the second half. yvonne: thank you so much. laterairlines coming out on this week. meantime, more earnings. refining came to the rescue for

china's oil and gas giant sinopec in the first half. the company outperformed its rivals and its fuel making business helped. run through the numbers. this is a cushion, i guess you could say. the refining was given the predominant explores like petro , they had their worst half-year results on record. sinopec, most of its business comes from refining, so there are supply costs lower. their main revenue comes from .efining, 19.9 billion yuan it is more than double the last year, when they posted their worst profit gain since 2002. it follows what we saw with

petro china and cnooc. averaging $41 a barrel in the first half, down 30% from the same time a year prior. yvonne: we do see a bit of recovery in crude prices. how will that affect sinopec's strategy? >> they will stick to refining. they will increase refining by 3.5% in the second half. they have a great advantage over petra china. -- 4.6fine point point million barrels a day, double what petro china was doing per day. boostc also getting a from this new policy that came down from the government in the first half that when prices come down to $40 a barrel, there is a floor they can't go below, so that has helped to boost margins. quote an analyst, sinopec

continues to be a defensive play china's big three oil companies as its refining exposure puts it in position to benefit from a low crude price environment. petro china has barely inked out a profit. thank you so much. up next, demand falling for luxury handbags, and prada has been hit the hardest. that is next. this is bloomberg. ♪

yvonne: the latest business flash headlines. inquire as to supplier of protective coatings. the president says terms of being negotiated. any deal is not expected before the fourth quarter.

it will be the fastest growing .egion in the next five years airways has canceled dreamliner flights because of engine problems. corrosion and rolls-royce turbines has prompted a check of all airplanes in the fleet. it has not discussed the issue with the engine maker since march. suffered trouble in flight and turned back on one engine only. suicide squads run. morede that money back and by raking in more than $26 million over the weekend. tocide squad was relegated second place with ticket sales of $12 million and has made a total of $282 million since opening. more than 700ched

investigations into price swings on the stock market. in -- why are they doing this now? at movementsooking to dampen speculation on stock markets in china. , the regulator there, says they are cracking down on speculation and want to dampen it. brokers have been open since july, 38 accounts halted. csrc has beene around since february, and he has emphasized the need for a tough stance. have published cases of what they call abnormal trading. according to the shanghai exchange microblog, also looking at brokerage reports, which

.ould move share prices wil shanghai composite has advanced 7% compared to 8% in the two months before that. yvonne: when it comes to this curtailing activity, it could dampen the recovery, which we ve not seen the level since that $5 trillion stock route. 80% of the volume is from retail investors. it is mom and pop investors who are in it for a quick return. if we take away some volatility, the swings will mean smaller returns. this is what people are saying. sources are telling

us more traders are sitting out. curbing speculation could take a hit, but could also make chinese stocks more attractive to global investors and money managers. arguments toe stronger regulation and china. the shanghai exchange had highlighted spoofing, where you are saying goals made to buy a stock, then canceled before it is executed. , thewill influence people price being artificially high compared to what it should be. there are some arguments that there should be stronger regulation of what is happening. is tough action, more than 700 probes in the last two months. it goes beyond the stock markets as well. what else are they concerned about? down onwanted to crack asset bubbles, and it looks like they are widening the areas they

are looking at. real estate prices, bond markets. last week, we reported that china started auctioning 14 day reverse repos. wase was speculation that because they wanted to squeeze the bond markets and cut excess leverage there. the government is also trying to contain risk in shadow lending by limiting lending from peer-to-peer. in that way, china squeezed down on that, so all these areas indicate the government does want to tamp down on speculation. yvonne: all right. thank you so much. for more earnings, prada reported its first drop in first-half sales since 2011, blaming weak demand in china and terrorist attacks in europe. $1.8 billion,o missing estimates. more disappointment for prada.

, two yearsppointment of stagnant sales on the back of the lowest profit in five years. prada struggles, revenue down 15%, earnings down, but less than analysts were expecting. the number say one thing, prada has been hit harder than other luxury brands. a couple of reasons, it's handbags are way too expensive and slow to catch on online. as a brand has underperformed across multiple regions. if you look at sales in hong kong, china, macau, they have slumped more than 20%. are fewer there travelers after terrorist attacks, all weighing on sales. fallingares have been the past six months. it is not in a good spot right now. yvonne: certainly not, so what

are the chances of prada recovering in the second half? >> it is upbeat. it says it is addressing all issues, online sales expected to double over the next two years. the number ofse categories that offers online, in particular shoes. it says it is focusing fully on the needs of individual markets, price points, expanding social media activities, also digital communications. it will return to growth from here. there are signs of rising demand and major cities and china, but one month does not make a trend, so we have to wait and see. yvonne: maybe we need to make a shopping trip. thank you so much. next, and tobacco competing for a share of japan's e-cigarette market. we will go to tokyo for what has become a booming industry.

this is bloomberg. ♪

yvonne: competition heating up in japan's e-cigarette market. phillip morris and japan tobacco release new devices and see users shifting to these new products. vapingks like

could be the future for japan? >> it does. philip morris and japan tobacco introduce products earlier this year. to market has jump fivefold $4 billion. japan is joining other major developed countries in moving away from traditional cigarettes because of the obvious health risks. risks, but when you take a look at these products globally, it seems like they have not been tested widely enough by independent scientists. what that affect where this boom is going to go or where the trend is going to go? >> at the moment, there is no ngientific consensus that vapi nicotine is entirely safe, although the who has come out and said it is probably safer than combustible, traditional cigarettes where you are inhaling all those toxins.

isnne: talk about if there thesef a health concern, companies are unveiling new products. are interesting, cylinder-like devices, a container of nicotine is heated, then you take in the vape from that. younger japanese are falling in love with the product. there is a huge demand. japan tobacco for a while could not get its products out to consumers fast enough. aonne: all right, seems like game changer as some analysts vape.called these vape' "trending business" is up next. looking at the oil

price as it comes to ages biggest refining companies. we will have a look at that. the trading day getting underway at the bottom of the hour. also, apple and spotify, musicians caught in the crossfire. y retaliating against musicians who debut music exclusively on apple's platform. in 50 minutes, were meeting to the cofounder of a dating site called coffee meets bagel. it is an interesting one. that is "trending business". ♪

♪ it is monday, the 29th of august. this is "trending business" with me, rishaad salamat. ♪ rishaad: live in tokyo and singapore this hour. mixed messages when it comes to the asia-pacific, a rate hike is coming. the boj vows to expand stimulus if necessary. government pension fund may go on a 50 billion dollars shopping spree after its investments tumbled.