♪ >> no more surprises, boj officials are switching tactics and offering insight into policy. allows a court order first vessel to enter court. >> chinese anticorruption campaign nets a major suspect. >> volatility back in the markets. a big selloff in new york. "daybreak asia".d salamat

>> it is just after 7:00 p.m. here in new york. it was quite a selloff. surprise, the by dow down 400 points, no big cap lists other than uncertainty about where the market and the economy is headed. that is the carryover for you in asia. >> that's right. we are waiting for that last fed official to speak. you are right. we have had pressure from the fixed income space. really, there has not been one single catalyst. on friday morning, i was saying

to you, where's the volatility? >> a tight range, right? >> that's right. we are setting up for what could be a brutal session in asia. new zealand trading up at the moment. what we havet asx down,austria, sydney futures showing downside. and other currencies getting crushed as the dollar strengthens. andn, machine orders producer prices, downside for the nikkei as well. there are several markets closed today. no trading in singapore, philippines, and malaysia. given their weakness in emerging markets, perhaps that is a saving grace. part of the pressure coming through from the fixed income market and jgb's.

there is speculation over what the boj will do next. what has changed about this situation? 2014 halloween treat? what we are seeing in recent weeks as they may be walking away. last week, not only governor deputy, kuroda, but his highlighting the cost and benefits of boj policies using similar language, providing analysis on the negative rate tool, not to mention recognition of the danger of excessively low yields. j.p. morgan saying the boj communication strategy has changed in the past several weeks. what is the reaction we are

seeing? yield curve. the they warned the central bank may not like excessively low yields on that part of the curve. we are seeing some reaction. take a look at this chart. official signals, a steeper yield curve. yields see the 20 year back above 0.4%. have economic numbers out of japan today, machinery orders as well as inflation numbers. >> exactly. we are expecting to see more capital spending data out today, wholesale prices as well as machine orders. we are seeing machine orders month on month expected to fall 2.9%. that would be after growing 8.3%

the previous month, so take a look at this. it has been so exacting a little bit, up-and-down throughout the last six months. different story for wholesale seeing pp ie we are ceilin at 3.4%, less than july, but has been in the negative since april 2015. >> thank you. let's get to first word news with paul allen in sydney. hillary clinton is trying to dampen speculation about her health after abruptly leaving a ceremony. she appeared to stumble as she was helped into her official vehicle, and the pictures quickly made the rounds. later, she released a statement saying she felt overheated.

said she has been diagnosed with pneumonia and dehydrated. north korea is preparing for another nuclear test. its fifthcarried out nuclear explosion on friday, triggering a 5.3 earthquake. thereigence officials say is a high chance of a new test taking place. iran's national oil company has agreed to deal with sinopec to deliver a refinery. the contract is worth $1.2 billion and is part of the plan to upgrade iran's oil industry. iran plans to boost production to pre-sanction levels before capping output. focusing more on radar images than camera, the first attempt to convince critics it's a

semi-autonomous features are safe. autowill also design the software to disengage. tesla has been under fire since may involving a driver using autopilot technology. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. another date fish and china's anticorruption net caught her at the mayor and acting party boss of one of china's biggest cities the latest to be ensnared in the corruption crackdown. on that.ore how significant is this? >> it is pretty significant. he is the acting coming as party chief in tianjin. he has been basically caught in

probest of corruption for what the central committee was bribery or corruption. there is an editorial saying we don't know if it is an arrest. usually it involves attention if anyone is placed under investigation. anybody violating policy will be sternly dealt with. it is significant because he is a former subordinate of xi ofping, a former underling sends ang, so this message that they will go after just about anyone and not just the enemies, if you will, of president xi jinping. it was a year ago and august

when we had that large explosion , 100 65ort in tianjin people killed, more than $1 billion in economic losses. overs the mayor that solve this, so he must have had some protective umbrella at that time, but may be some other activities are finally catching up with him. we know next year is a big year for the leadership, reshuffle. what are the implications? >> it probably is a message being sent by xi jinping. next month, the central committee meets and there will be local officials jockeying for promotions. it is a highly politicized environment in china as they jockey for promotions. huang had been promoted, he

would have been on the ely 25-member politburo. has no partynjin secretary, no mayor, no public security chief. to be placedin under this dragnet of corruption. so tianjin is in a bit of hot water right now. name in the anticorruption campaign that continues. let's take a look at what wall street will be watching this week. friday, rough ride. what about this week? 2%it was a sharp drop, down -two .5% across major indices. it was almost as if there was a rate hike in the air. one strategist says a lot of people are positioning as if the

september rate hike is back on the table. utilities stocks were among the big losers. slightly better. bonds,a selloff in dollar climbing, and oil was a day for the bears. >> let's talk about the oil markets, rally to route, what is going on here? >> when you have the dollar moving higher, it does not help commodities as a whole, but there is a view that the supply drop we saw the day before, the biggest drop since 1999, that it was a one-off having to do with a storm, and that supply will come back and the glut will be in front of it. talk going on the with opec, it will not really

help prices that much. gold, looking at the correlation with the dollar. a special chart for you if you are playing along at home. blue is the dollar, gold is gold, and where you have the dollar coming off, gold moves higher, but we're seeing a strengthening in the dollar, putting a lid on the rise for precious metals. >> this week, retail sales will be a big focus, one big key data point. >> it tells us how the consumers are doing. we saw a rebounds and august, and stronger numbers will speak well for the economy. very important is a trio of reports, retail, inflation, and consumer sentiment, the final reports the fed will look at before they meet. the consumer price index rose at

a faster pace and august, so another positive development. jamie dimon will be in washington, d.c. at the economist club, speaking on a range of topics, including the big election as we count down to the final days. >> thank you so much. still ahead, japan shows growth last week, but what will today's factory out put data reveal? we will look at all those numbers for you this morning. protectionism and international trade relations. we will be talking to the u.s. chamber of commerce. this is bloomberg. ♪

ok, we are counting down to asia's first major market to open this morning, japanese futures looking like this. a carryover from the plunge we saw on friday, down over 1%

futures are indicating. it is a stormy looking day shaping up in tokyo. you are watching "daybreak asia" . >> storm clouds gathering for the markets. let's get a quick check of the latest business flash headlines. minister hasme repeated his call for debt relief, saying the country need stability not collections. opinion polln showed his government trailing conservatives. they allowed inspectors do in athens this week after warnings from eu lenders that greece has again fallen behind in reforms demanded by creditors. china's security regulators says the country needs a futures market that reflects the broader economy. cuffice chairman of the cfr says it is aiming to speed up the opening of its commodities market. he says the regulator is

promoting the regulation of a futures market. they will push forward with pilot projects for other commodities. packard betting on copy says that looks for new areas of revenue, planning to announce new machines for corporate customers on monday. xerox and canon dominate the market, but hp is hoping the more of that $55 billion business. businesses with opportunities in southeast asia. all of this plus trade between the u.s. and asia with the u.s. chamber of commerce is vice president head of international affairs. problemever been a trying to convince companies that there is a huge opportunity in asia. ,t is all those in washington

those lawmakers, trying to convince them that trade is good with asia, so what you doing right now to do that? all, i am in hong kong because you are right, what is going on in the asia pacific in terms of growth is substantial and significant, and it is where u.s. companies need to be. survey demonstrates that, 70% of companies surveyed thought their exports and their profits would increase in the asean region in the years ahead. all in all, we have to engage this region, meaning having the right trade policies in washington and knocking down barriers in the region. >> would you say the president's trip has been a success? it is always

important for president obama to be present in the region and for u.s. leadership to be here. i thought the trip proved to be instrumental in getting us real results. president obama and xi jinping talked about the bilateral agenda, climate clearly on top, but it did not reach a satisfactory conclusion in terms of bilateral trade. we only made incremental progress. the hard work is in washington on tpp. ifhouse speaker ryan said all the issues were ironed out, which orrin hatch is said was almost too conclusion there, ryan said even if we work all

this out and it is presented, it will not pass this year. >> i think it is too early to close that option. thereality is we are in fourth quarter, the first week of the nfl season and the united states, this is the fourth quarter, not the two-minute mark, but we have to make progress. there needs to be substance driving the debate rather than politics. that requires some breakthroughs between the congress and the administration on issues. i still think we can get it done. it is in our economic interest. there are 18,000 tax cuts available to eliminate tariffs , so thefacturing goods united states will improve market access for farmers, improve access, so the economic imperative is clear, but there is also a security imperative. the united states has to show leadership in this region, and the best way we can do that is to pass tpp, bottom line.

concerns you about the various outcomes of the november election? isyou think donald trump talking the talk when it comes to a hard-line stance against trade partners like china? >> we have had this before. president bill clinton ran on a tough trade message and an anti-china message. we know what happened. we don't know how donald trump would govern, but the chamber of commerce has been clear about not only his stance on trade, but also hillary clinton stands, which is that it is unacceptable. america needs to lead from the front, not the back. when it comes to trade, we want to set the rules and the standards. this is what our allies are saying in the asia-pacific region. others arelies, but watching and saying they will not get their act together, then we will cut other deals, and so

those deals are not as comprehensive or have the high standards the u.s. has in tpp. isis hard to say what trump about during a campaign season, but regardless, we have to get it done now and act for america's security and economic interest. shrouded bys still uncertainty. this is one of president obama's central policies. what is president obama's legacy? >> it is a mixed one in the region. you look at the forecast for 10-15 over the next years, and half of it is in the asia-pacific region. at the same time, we have not got tpp done. this is something the president and the american business immunity want badly, and we have to get it done. done, butll get it

the backdrop of elections is not an easy one. the views of both candidates is not conducive to creating the right environment, but we are dedicated to moving this forward. >> an interesting few weeks ahead, thank you for coming on. great to chat with you. next, the collapse of hanjin and impact on competitors. this is bloomberg. ♪

>> you are watching "daybreak asia". i am betty liu in new york. shippingnjin bottleneck has eased after a court order allows the first vessel to enter port. this ship was able to dock after

the court order. >> that's right. it offers protection to hanjin shipping that protects non-us companies from creditors. it has been able to unload its cargo of consumer items. b map, youat the consume in and see the port and greece isthe hanjin unloading right now. 's lawyer said there were four ships waiting to dock. it will pay cash to service those vessels. is an objection from two terminal operators. enough money to pay for fuel to leave the port. these were overruled by the judge.

the chart on bloomberg will show that world container index shanghai to l.a. benchmark rates, and that is spiking in the last few days. rivals benefiting in the short-term. boost 2016es could net profits. about the financial health of korean airlines airlines?c >> the key thing is trying to get cargo off ships and to customers. shippingy after hanjin puts a big stake in the port of long beach, california as collateral. it runs that in collaboration with the mediterranean shipping

company. >> the latest on hanjin. it is finally coming to dock. the winners and losers of brexit,

p.m. and wes 7:30 will start the week lower. that looks like the calm before the storm. it is 7:30 a.m. here in hong kong. not bad in terms of the rain. it is looking pretty dire out there. i am haidi lun in hong kong. you're watching deeper and asia. let's get to the first alert news this morning. havee bank of japan's to its tactic.

they had sifted through's peaches and media urine is i think rituals and recent and their aging.re of the openness will come when the boj releases a comprehensive review on september 21. china's anticorruption campaign unleashes a new suspect. he was under investigation for violations of discipline. it included last year's violent chemical explosion that killed scores of people. the tangent shipping bottleneck easier to navigate. is finally in support and is

unloading cargo. they translated $15 billion worth of cargo and has agreed to provide this much in love. over four -- 400 journalists, this is bloomberg. >> quite a lead from wall street. we start a brand-new training week. -- this is what investors -- investors woke up to friday. that concern is is there and one way? the index is down 2.6%. guess who else is back? it shows a rating and this break

of the trend is likely to get something 90 two markets. it was one for eight days but that was back in 1995. what does that mean? we are going to seize them downward pressure as the look at the pressure. he is normally quite dovish but inare looking some downside japan of horse. -- of course. in sydney, a big fall expected air. -- there. this is the mind survey. coffee, we are

expecting a bit more downside. it is going to try and change korea -- north korea following that attend on friday. >> what stocks are you going to be watching? is one.: samsung they are telling its customers not to charge its own but also to turn them off to this fire risk. its biggest shareholder and then -- be looking at the results. these health care stocks were a little weaker. he said he really likes australian health care stocks. risen.star has was a look at how

the markets are shaping up this running. the bond market off complacency was shaken on friday. here we see the u.s. 30 year had suffered its biggest selloff. highest yield since june. is it over? justin hayes is looking into this for us. i think the fed finally made its point. it started in jackson hole went janet yellen says they have strengthened. eric rose has given a couple of lately and he spoke again on friday.

risk oflking about the waiting to long wage data is starting to. -- pickup. that probability of a hike was 22% and jumped up to 30%. that had been downthat probabil% and has jumped at percent. -- up to 60%. tolooks like it is trying prepare the markets for a general rate hike. you want to go ahead and an canease rates, you communicate that is coming. have to make people understand that is coming and they should mentally and financially

compared for that. >> former federal reserve president saying that he would hike now. be in the minority. -- he would be in the minority. >> other officials are going to be meeting later on monday. to? -- who doon we pay attention to? >> the president of minneapolis that is on too big to fail. governor brainard will be speaking. all these conspiracy theories. seek.t know, we will is that the hike in

september if unlikely. only 17% of economist are looking for a fight so you would be an characteristic. >> why our bond traders rethinking this concept? >> it started on thursday. they said they could discuss at the meeting. bone, itat the german rose to the first time since july and japan of horse is worried about a reassessed. he says markets are we understanding it.

>> britain will now be worst thlentghs -- deepen with countries. >> i'm taking a look at this and they reckon that japan, china and hong kong stand the most to gain from brexit. it will be a long drawnout affair. we know that the u.k. is leaking development in asia. china, hong kong and japan are at the top of the list.

>> what are the direct links between the u.k. and asian is it breaks down> into a couple of areas. one history. -- one is trade. there are big links between finance in asia. shanghai direct investment. japan is a big partner for foreign investment. areas andthe kinds of -- bloomberg intelligence reckons might be for asian economies benefit from brexit.

>> thank you so much. top five.aking the will take a look at house in a poor is being called the most stable city in asia. this is asia. ♪

>> you are watching "daybreak asia". i'm betty liu in new york. and i'm haidi lun in, call. -- in hong kong. singapore has been named the most is the animal city in asia. we different top cities around the world on various grounds and singapore taking asia's top on -- spot. commutes are hurting his social ranking. we talk more about the ranking.

what metrics are you judging these needs by? -- cities by? >> good morning, heidi. ont gives us an indication to how we judge socially and on economic performance. what we do is look at some indicators at how sustainable the city is. haidi: comparing cities in asia is like comparing apples to oranges. what are some of the ways that you could repeat that experience across other cities? >> the first point to make is that it is not trying to be an elite ranking of cities. there are lots of indicators we can pull out. the things that are exceptionally wrong the prophet. -- is the profit. he actually does pretty well in

some of the other areas. hours andlong working income in -- inequality. as singapore grows, that is something you need to watch out for. haidi: in terms of the other end of this act drum, we have other cities at the top of the rankings. fact andan interesting actually many of the city very well in one of the three pillars. some cities are doing very well ross three. if we look at what has happened ,n the past three decades certain things have been left behind. whether it is tackling environment for access to water sanitation, as economies growth

quickly the gap in which poor is highest. see that gap -- do you see that gap closing at a rapid pace in the years to come? >> asia has always been pretty good. they have been leaked rocking technology -- leapfrogging technology. prized inis highly asia. we are seeing learning and the development. i see that gap closing for the rapid. -- rapidly. when you have to rapidly developed, it is quite a challenge. that is something we will face up to. we've seen it happen in the past. bangkok is now a walkable city.

that was not the case of years ago and. haidi: speaking of walking is, new york is the one. -- consider one. showing fore a poor an advance. -- advanced city. well -- do cities well around the profit killer. -- pillar. crimeare some issues like that need to be tackled. i know new york is a great example of having public transport but we also look at environmental factors like energy consumption. gasoline.d cheap

america has an opportunity in the coming years. haidi: very interesting. zurich is the number one overall. graham, thank you so much. up next, need the japanese carmaker -- meet the japanese carmaker that is choosing form over function. and inflation numbers. this is bloomberg. ♪

>> we have that breaking news coming out from japan. let's get to sherry for more of those numbers. shery: i am a little bit the price right now at these numbers. and werowing 4.9% expected it to fall in july. it is less undergrowth than we saw in june.

form -- machine orders. they are beating estimates rowing 52% -- rowing 5.2%. share prices are falling more than next active and we are expecting it to all but it is still falling last than in june. 36% --it is falling 3.6%. estimate machine orders beating estimates by a lot. the data may help give an explanation on why japan's 80 -- gdp growth was only 7%. 2.1%an -- impressive

growth during the year. we are seeing is businesses holding tight to their cash on to spend in this environment. yen is strengthening 14% in the past year and also strengthening again today. take a look at futures markets and we are expecting it to tread negative territory. the futures are unchanged at the moment. now at 102e yen is spots. a bit of a mixed picture today. haidi: for sure, we will be waiting to be how the market take that beating. thanks so much for that, shery ahn.

testingl start ridesharing service is in its home market leader this year. the taxi operation will be launching an expecting -- expanding its. -- please. -- fleet. spiked is to get 300 car 120. -- car spiked 2020. combineany will also sales operations. the country is changing its electric car strategy to take the game to tesla. improve newll models. the broker says premiums may fall more than percent by 25th

teen. -- 2015. insurers need to access the impact of automation on the business as carmakers the technology. it accounts for almost 50% of local transit. history --auto in industry change the way cars are made. one small company is stopping that trend. they are known for custom-built cars. we went to the factory to get a look at how the cars are so special. ♪ it has to be. it has to be cute, it has to be adorable. there are many cute cars on the street hours are different.

hours are different. he uses his own hands. we cut off the body and front expand its length. it is a nerve-racking job and only if you crafts and -- a few craftsman do this. they need to understand the quality spirit of the vehicle. of course you can depend on machines and robots but here is not only the quality of the technique that communication between staff members. i must admit we have low

productivity. the more time we spend, the better product can make. we take extreme attention to detail. it is not cheap to put the emphasis on detail but it is worth it. haidi: lipstick a look on what we're watching in asia this week. we will look at first quarter earnings from talk to deal. steel. the company has been switching its vocus -- focus to china. china released in industrialized numbers. this time around, economist expect to eat a slight. -- improvement. it is going to be a major

release for the markets. tech companies are gathering japan or the game show. it is ahead of the launch of sony's playstation. game makers will also be on watch at nintendo's blockbuster announced that super mario is heading to the iphone. more ways to be addicted to your phone. the formula one circuit is back. hambleton -- who is hamilton just two points ahead. the one of the grand prix's so hard. that is it for me. your training week is just starting in asia. orders isose machine

better than estimated. >> we are accelerating towards the market open. we are looking at the return of

♪ life, japan machine orders/expectations, producer prices fall again. samsung the wrong note, offs owners to turn phones immediately due to risk of fire and explosions. china's anticorruption campaign nets an official once close to president xi jinping. liveme to "daybreak asia"

in hong kong. we are streaming on mobile and bloomberg.com. asian market reaction to the aggressive friday selloff on wall street. juliette: it wasn't such a great picture on saturday. the dow off by 2%. 2% as the asia index off well as the china-u.s. index. volatility is back. it shows that the vix was above 15 for the first time in 44 sessions, so breaking out of that trend. investors wondering if this was a one-day blip or is anxiety to stay. back for now, and

that's what we're seeing in the asian early session. have a look at the selloff. down by 1.8%. we are expecting upside from korean defense stocks, especially as south korea wants to engage with north korea regarding that nuclear test on friday. japan off by 1.2%. did see a pickup in machine orders, but the nikkei off by 1.2% as the yen strengthens by a third of 1%. playingommodity prices into the australian market come off by .4%. get a business survey that gives us an indication as to how the economy non-mining sectors are performing. new zealand has been underperforming, down by 2%. there are no stocks in the green

today. one stock we will be watching it samsung electronics. falling 5% in early trading after it issued a recommendation to halt usage of the note 7. exchange orunced an $25 gift card. that scandal continue to play out for samsung, the stock under pressure in the early session. a mixed picture from the japanese open, leading indicators of capital spending beat and missed estimates. hugely volatile gauge, machine orders, but what are we seeing? shery: it is a volatile set of data. it has been erratic the last six months.

in april, it plunged 11%. 4.9%, analystsew expecting it to fall 2.9%. given its volatility, you have to take these numbers with a grain of salt, not to mention that the number grew more than 8% in june. ppi numbers more insistent, falling by 3.6% august. the reality in japan is that companies are holding tight to spending because we are seeing sluggish demand and a stronger yen. the yen has been stronger by 14% in the past year. newill see if the boj's communication strategy is scaring away from trying to surprise the markets and will calm markets and get the yen

down. iswhy do we expect the boj changing the way they communicate? j.p. morgan chase thinks they are adopting a different communication strategy. last week, when governor haruhiko kuroda and his deputy highlighted the cost and benefits of boj policy. they used similar language. they talked about the negative warningl as well as about excessive low yields on long-term maturity bonds. we are seeing them to be more open with the markets, not surprising given that we saw these there he volatile moves that were not intended by the boj. december, equities tumbling, yen soaring after they tweet their policy. it was perceived as more easing, then it turned out it wasn't.

the same thing with negative rates in january. analysts thought they were running out of options. they are trying to be more open. take a look at this chart here . we are seeing a steeper yield curve today than a month ago. the line in white, the 20 year , sort of above 0.4% reacting to caution from the central bank that it may not be too happy to see the excessively low yields and they may prefer to see significantly positive rates in the long maturity bonds in that part of the yield curve, so many people expecting the central bank to be more open and have more of a dialogue with markets. >> that surprise we have been looking for may be a thing of

the past. that's right. thank you so much. let's get over to paul allen in sydney who has first word news. hillary clinton is trying to dampen speculation about her health after abruptly leaving a ceremony for 9/11. she appeared to stumble as she was helped into her vehicle. the pictures made the rounds on social media. later, she released a statement saying she felt overheated. her doctor said she has been diagnosed with pneumonia and was dehydrated. north korea is preparing for another nuclear test. it will take place at number three tunnel in the north. the north carried out its fifth nuclear explosion on friday, triggering a 5.3 earthquake. intelligence officials in the south and u.s. say there is a high chance of a new test. iran's national oil company has

develop ah sinopec to refinery. worth $1.2t is billion and is part of iran's plan to upgrade its oil industry after sanctions. iran plans to boost oil production to pre-sanction levels before considering joining a proposal to cap output. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. another big fish caught in china's anticorruption net here the mayor and acting party boss of tianjin the latest to be ensnared in the corruption crackdown. we have been on this story for a long time. this is a big fish, a tiger. >> he is the acting party chief. the hierarchy of chinese

municipalities, the party chief is the boss. he is also the longtime mayor. the acting party chief has been a senior official in tianjin for 13 years. he also worked under xi jinping. this is one of the highest-ranking officials to be caught, one of the highest to have worked under xi jinping. he is being investigated for discipline. statement, disciplinary violations, euphemism for a multitude of corruption violations, including taking bribes. saying, anyone who violates party discipline will be sternly dealt with no matter who it is, no matter what post. they probably had a bit of an umbrella of protection last year here at in august -- last year. in august, they had that massive port,ll at the tianjin

killing 160 five people and causing $1 billion in economic losses. a lot of people lost their jobs and were blamed, local level officials as well as executives, but he was acting party boss at the time and not disciplined. however, his luck might have run out now. haidi: you have to wonder what happened, which change. there is a high level reshuffling and party leadership next year. this is a message to other cadres across country as they jockey for position. we have the central committee meeting next month, where we will get groundwork or next transition of power, shuffling of leadership. we won't have a new standing committee, new politburo. promoted he had been to permanent party boss, would

likely have been a serious candidate to be on the 25-member elite politburo. that will not happen now that he is being investigated. tianjin is in a pickle right now. they no longer have a party secretary, a mayor, public security chief, so there will be shuffling there as well. haidi: extraordinary story. >> a poster child for the investment-led growth for the last 30 years. tianjin has built so much over the last 20 years. haidi: the anticorruption dragnet continues. next, some steep losses for asian markets. all stray off by close to 2%. japanese stocks lower by 1%. we could be setting up for a week of pain for the market. we will discuss that next. this is bloomberg. ♪

haidi: a big session on friday on wall street. what else traders will be watching this week during rough ride on friday. what we looking at this week? >> will there be more pain? two point 5%, down across the board on all major benchmarks. it was as ifay there was a rate hike in the air. we had hawkish sounds from the fed members and europe. one of the most influential says funds, double line, time for rate hikes ahead. you saw a downturn. the ones that moved lowers were utility stocks, telecoms. financials did better because of the view that interest rates are ahead, but check out the market snapshot.

oil,r higher, bonds lower, a day for the bears, a big reversal from the rally on the plunge in supplies. there is a view that the plunge will be short-lived. you on gold.rt for it shows the correlation of all commodities and the dollar, let you see it really with gold. ,s the dollar was weaker gold began to soar. as you talk about a rate hike sooner than later, it will cap the advance of gold. haidi: we are looking ahead to the rest of the week. given that we are scrutinizing the data that comes out between now and the fomc. what about retail sales? of a trio inport front of us, mainly because it speaks to the strength of the consumer. inlysts do expect a rebound

spending in august, and they say that strong data could show the consumer is back out there buying things. were two other reports, consumer sentiment and inflation. these three reports will be the last ones the fed look set before they go into that meeting, so a lot of scrutiny there. ahead, jp morgan ceo jamie dimon will speak in washington on a range of issues. a lot of investors might be interested in what he has to say. back to you. haidi: get some rest before your trading week starts. this aggressive selloff on friday that is continuing in the asian session. great to have you. there was not one single catalyst. was it a few remarks from a fed speaker, pressure in fixed income?

why does return to volatility in such a strong way? >> these things build up over time. if we go back when people thought rate hikes were off post-brexit, volatility dropped to low levels, so almost anything can spike these at certain points. people are always looking for reasons. we wereast week, talking to people who were saying there is no volatility, volumes are as they are. d you see opportunities now? >> absolutely. everyone is focused on the short-term. -- if we go back to february, people were worried about commodities, rate hikes then. we have also had quite a few changes. one important one has been around reporting season. this year, we have seen quite a few companies do better than anticipated. havethe last six years, we

had a particular environment in asia, underperforming the u.s. market, earnings down, rich cultures low, and people have been crowded around defensive, high-quality names, so the question is are we starting to change that trend we have seen for six years? , we will seetility more events like that. we think it is the underlying change that is more important. haidi: do you think the pressure in the fixed income space will have a correlated effect into equities? is a question a lot of people are thinking about. the underlying premises rates going up will be bad. my starting point is that if rates go up and we look at the commentary around this, it is because the u.s. economy is doing better. there is a lot of evidence , things aredges

starting to improve, and if that is the reason we are seeing an increase in rate expectations, that is not a bad thing for equities. i am not a fixed income person. if we will see more inflation, better growth, that is not a bad thing for equities. haidi: you see a win-win situation. liquidity-driven rally or a recovery-driven rally. >> i don't think it is ever quite that simple. if we see evidence the world is getting better, wage growth is starting to spread in the u.s., fiscal stimulus is starting to result in a better environment, then that is an environment when the curve should steep and and equities do better. a is an environment in which cyclical assets could see a better future from low expectations. haidi: we've seen pressure on

emerging markets, high-yielding currencies, the aussie, do you see that playing out? >> there will be volatility around that. if we start to see or have expectations the fed will high, interest rate differentials will open up and put pressure on emerging-market currencies. the base case that is a negative thing is not the right way to look at it at the moment. it is a flight to quality, a concern that risk is coming off dramatically. if the u.s. economy is doing better and that's why rates are picking up, that is not necessarily a negative for asia. we have seen that as we've gone long. emerging-market currencies have been resilient through these phases. haidi: what do you like at the moment, an ideal portfolio? >> it is tougher now. in february, you had a lot of i you wish and support -- a lot of valuation support.

what does your ideal portfolio look like? assets that are cheap, not highowned, and don't have interest rate sensitivity, things like financials, but we think it will be long duration assets. as rates pick up, the earnings you are paying for will be worth less going forward, so we think looking for under owned, cheap companies where things are getting better, and from a very low base. haidi: how do you feel about china? you talk about that premium between valuations and earnings. >> again, this is where you need to break asia down into its components. saidng back to what you about an ideal portfolio, you want some cheap assets in china and you also want to look for indonesiad assets in or india, where you have a large structural growth element and can use fixed asset investments

to grow their economies. those assets tend to be undervalued relative at this stage. keepinghe market portfolio managers and investors on their toes at the moment. leaving it there, but great to have you. next, regulatory filings show yahoo japan was one of 50 parties who registered an interest in acquiring yahoo! before it was bought in july. we will have the details up next. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. tesla updating autopilot technology. it is the third attempt to convince critics that it's semi-of taunus features are safe. tesla said it designed the auto steering software to disengage. for ahas been under fire fatal accident in may involving

a driver using the autopilot technology. as itting on copiers looks to new areas of revenue. it is planning to announce new machines for corporate customers on monday. dominate theon market, but hp is hoping the move will help it make more of that $55 million business. they will make a greater push into 3-d printing. as it turns out, yahoo japan made a play for yahoo!, but the approach was rejected. the proposal offered a merger of equals, but yahoo! said the terms were not compelling. why make an offer at all? >> it was really interesting. , a lothad been in play of buyers circling. word of this did not get out at all. the most likely reason is that

it was an insurance policy or hedge just in case the most on, droppeder, veriz out. there were five fits for yahoo! ranging from $3 billion to almost $5 billion, and this came izon at $4.8w ver billion. haidi: with the deal have benefited them? lot, the face of it, not a apart from the fact you could two major yahoo! properties together under one umbrella. biggest problem why yahoos board rejected the yahoo japan bid was that it probably would have involved a tax hit owing to the number of alibaba shares that yahoo! own and would essentially have to be brought generating u.s. and

taxes, so structurally it did not make a lot of sense. strategically also, it probably did not make sense either. what does this mean for yahoo japan's operations? well it see further diversions? gence.er japan is the ebay of japan, a major auction site, a very strong, traditional internet portal where a lot of people still go to for their news, mail, and other information and tools and services, so it is obviously the brand name for softbank's broadband and wireless services. the businesses were already moving apart, so a merger in many ways just did not make a lot of sense. haidi: all right, fascinating

stuff. thank you so much for that. ,p next, the latest from hanjin cargo being unloaded. this is bloomberg. ♪

♪ it is 9:30 a.m. in tokyo, 30 minutes into the trading session. it has been a painful one. take a look at that, the nikkei 225 down by 1%, the yen holding strong at the moment. reflective ofion the pain we are seeing across asian markets, tracking that aggressive selloff on wall street on friday. you're watching "daybreak asia". ♪ haidi: let's get over to paul

allen in sydney with first word news. the top stories this hour, the latest economic data from japan delivered a positive surprise, machine orders rising 5% in july, economists had been expecting a 2.9% fall. the data came as the boj appears to have quietly ditched its tactic of surprising markets. boj watchers have sifted through speeches in recent weeks and have found they have offered far greater insight into the central banks thinking than previously. samsung electronics plunging, poised for the biggest two-drop. u.s. and korean users were urged to turn off their notes seven smartphones and stop charging them due to the risk of battery fire. sam son has announced a recall of 2.5 million phones that have been shipped, an estimated cost of $1 billion.

north korea is reported to be preparing for another nuclear test. it will take place at number three tunnel in the north. nucleared out its fifth explosion on friday, triggering a 5.3 earthquake. in thegence officials south and u.s. says there is a high chance of a new test taking place. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. forn stocks tracking lower the third straight session at the start of this trading week. investors are waiting for the final appearance of a fed official before the september fmo see meeting -- fomc meeting. >> we are seeing selling coming through, and volatility was high in u.s. markets. we are watching that in asia as well. by overew zealand, off

1%. we are awaiting this final speech from a fed official, thought to be quite dovish. if she does signal hawkish then the market could certainly start to get prepared for a fed left off. down 1.8%,he kospi well, butares doing downside coming through. japan had that strong read on showingorders, ppi deflation on the factory floors, the nikkei hurt by a stronger yen. that weakness and commodities is weighing into the australian share market. in the new zealand market, there is only one stock in the black. most other stocks coming under

pressure, new zealand off by 4%. some other stocks we are watching, samsung down by 5% at the moment. it is the biggest two-day loss in five years. pressure,an air under one .4%, giving a lifeline to hanjin shipping as the biggest shareholder. we are seeing upside in defense stocks and south korea, particularly as there is news north korea could plan another new test. having a look at the australian health care stocks under pressure. you how much risk off there is in the market, because normally they are quite defensive. have had broker upgrades from morningstar for a couple of those stocks. finally, the japanese bond market, we are seeing yields and negative territory.

an interesting story from the bloomberg today, a man who picked the bond rally in 2015 says this is a misunderstanding by the market and we are expecting a little bit more of a surge in these yields, but still remain in negative territory. haidi: thanks for that. shipping bottleneck has eased after a court order allow the first vessel to enter port did the failure of hanjin -- enter port. hadfailure of hanjin stranded $14 billion worth of orders at sea. it was able to dock after the judge granted bankruptcy protection. protects a non-us company from creditors in the u.s.. one ship has docked, and it is expected to leave the port of long beach early morning l.a.

times. -- l.a. time. greece has cargo of electronics, footwear, furniture, it is coming off that ship. hanjin says there is enough money to pay for the ships to unload. hanjin was granted bankruptcy protection over an objection from two terminal operators. while this is going on, shipping rates have been going up. according to the world container index, shanghai to l.a. benchmark rates are now over $1700 to ship a container. rivals are getting a benefit in the short term. ratescrease in freight could boost net profits for this as $760 million.

the boost in rates is probably short-term. the increase in profits is probably more like $200 million. haidi: but hanjin is getting assistance from korean airlines. >> it is part of the group which owns hanjin shipping. korean airlines will provide $54 million to hanjin shipping. it is also the biggest shareholder, and this money will help to get cargo off ships. all these efforts to get cargo off ships and stop problems with the supply chain around the world. korean airlines will only do shipping putsjin up its stake in the port of long beach as collateral. funds are part of more than $91 million that its parent hanjin group said it would put up. the other mommy comes from a

group -- money comes room a group that had asked the south korean government to provide $91 million in lows. what is moving the shares today? news that they are offering $360 million of cheap loans. haidi: all hands on deck, if you will. the bond markets complacence the -- complacency over stimulus was shaken friday. take a look at what the u.s. 30 year has been doing, the biggest two-day selloff in more than a year. that is the highest yield since june. is the global bond rally over? let's start with the u.s. we finally managed to catch the

markets attention, but how? >> as steady stream of speeches and remarks suggesting to the markets that we want to raise rates and are heading in that direction. it started with janet yellen in jackson hole, and she said the case for a rate hike had strengthened. stanley fischer said everything she said in her speech was consistent with one if not to interest rate increases this year. president of the boston fed spoke. he is known as being more dovish, yet he said there is deathly a case building for gradual rate hikes by the fed, pointing to wage pressures. that could lead to more inflation. let's jump into the bloomberg. our world interest-rate projections come the odds of a september hike are now 30%. a couple of22% weeks ago. december hike, up to 60%. it's been a long time since we have seen anything that high.

theformer president of reserve bank of minneapolis spoke to bloomberg and said the federal reserve is deftly trying to get the markets ready for an eventual fed move. nothe federal reserve does want to surprise people in the marketplace, so if you want to increase rates, you can try as best you can to communicate that that is coming and to try to make people understand that that is coming and they should mentally and may be financially be prepared for that. in fact, he said that if he were at the fed right now, he would be voting for a rate hike next week, but he thinks he would probably be in the minority right now. fed speak moving the markets, more of it today. what do you expect? >> let's run through the speakers. the blackout starts, the last day when fed officials can speak before that meeting.

is going toart speak today, president of the atlanta fed. theas been upbeat on economy and has spoken for the possibility of at least one rate hike. if he continues to push in that direction, no surprise. president of the minneapolis fed will speak on banking. he will not give us any clues. , whose board governor speech was announced late last week, she is dovish. what if she sounds hawkish? there is a conspiracy. that it will be the fed trying for theverybody up stronger possibility of a september hike. , a september like is unlikely in large part because there is only 17% of the economists saying the hike comes in september. it would be out of character for the fed to surprise people that much. haidi: we are looking forward to those speakers.

she could surprise. to leave the eu could set up some winners in asia. britain will now have to deepen links to countries in this part of the world. who stands to gain the most and why? >> china, japan, hong kong are the three. existinglooking at trade links from the u.k. and asia. we are at very early stages of the frexit process, but already the u.k. government is sending delegations across asia to drum up interest in new trade deals. they were in india last week. contenderis another to cut a new trade deal with the u.k. there is some talk of opportunities for countries in asia.

china, japan, hong kong are at the top of that list. even though they can actually negotiate anything until article 50 has been triggered. what direct linkages exist between the u.k. and asia? of the obvious ones, .irect trading, sale of goods then of course there are the financial services, a huge export for the u.k. ando, hong kong, increasingly shanghai, so again, we see them doing well there. tourism is another angle. when you put all that together, china, hongntioned, kong, japan.

it is an interesting case. if there are opportunities in nature, it is not universal for all. it will be a long and complicated process before we see fruit being born from any trader with the u.k. days, but very interesting as to who the winners and losers may be. we have plenty more to come. we are looking at a lot of downside to asian markets at the moment. tokyo down by over 1%. sydney off close to 2%. on friday is driving sentiment, a lot of uncertainty ahead of the fed and the boj meeting next week. plenty more to calm. you are watching "daybreak asia" . ♪

flash the latest business

headlines, china says the country needs a futures market that better reflects the broader economy. the vice-chairman of the cfrc says it is aiming to speed up the open of the market. it is promoting the creation of futures and will push forward with pilot projects for other commodities. the greek prime minister has repeated his call for debt relief, saying the country needs stability not elections. opinion polls show his government is trailing conservatives for the general election next year. due inlow inspectors are athens this week after warnings from eu lenders that greece has once again fallen behind in reforms demanded by creditors. witnesses toked share videos and photos of the rocket explosion to try to find out what went wrong. elon musk made the plea on his twitter account, where he called the incident the most difficult

and complex failure in the company's history. the falcon nine rocket was engulfed in flames minutes before a prelaunch engines test, and the cause has not been established. open, all four. finalists were wearing japanese labels. how do these brands pull ahead of the traditional big hitters? they picked some rising stars for one thing, but the other established stars, the dominant players in the game, roger federer and others, they have had bad seasons this year, battling injuries, and they did not make it too many of the semifinals, so that hurt there.

adidas, they lost their big star , andy murray, two under armour, so they have not picked the best names from the up and comers. the japan companies have. a trend that will continue, japanese brands and join the spotlight when it comes to tennis? we can expect to see a lot more exposure in the future. you can expect a come back with big wins. plenty people are expecting better things to come down the line. deep bench as well.

they also have a deep bench in the women's game. yonex has both winners of the u.s. open now. asics, you never know when they will break out. what a weekend it has been for yonex. thank you so much for that. up next, turning stereotypes around when it comes to japanese cars. this is bloomberg. ♪

haidi: hyundai will start testing car sharing services. the taxi operation is expected vehicles across five cities by 2018. the car sharing service will kick off in guangzhou. the aim is to get to 300 cars by

2020. bmw planning a major restructuring of its executive board. company will also combine the marketing and sales operations for the bmw and mini brands. the electric car strategy to take the game to tesla. self driving cars may lead to a dropped in insurance costs. may fall bymiums 40% as vehicles become safer and widely adopted. insurers need to assess the impact of automation on the business as carmakers embrace the technology. auto insurance accounts for 50% of global premiums according to aon. we know japan's auto industry arechanged the way cars

made, setting standards for cost efficiency and effectiveness. is known for its handmade, custom-built cars. we went to their factory to get a look at what makes these cars unique. ♪ >> our priority is design, not cutting-edge functions. it has to be cool, cute, adorable, just like fashion. there are many cool and cute cars on the streets, but ours are different. he is now using sandpaper to smooth the surface of the car after putting together two separate bodies. he uses his hands to check the surface is completely smoothed out. it takes time. we use machines, but we have to use the human touch to make sure the end. and front the body

and extend its length. he is now smoothing the joint parts. it is a nerve-racking job. only a few craftsman can do this. we depend heavily on craftsmanship. our people need to understand the quality and spirit of mitsuoka vehicles. on machines and robots to mass produce cars, but here it is not only individual techniques, but communication between staff members is crucial. i must admit that we have low productivity. the more time we spend, the better product we can make. topay extreme attention details that automated machines can't. it is not cheap to put the emphasis on detail, but i think it is worth it. haidi: let's take a look at how markets are trading in the asia-pacific.

it is looking like a brutal day in this part of the world. the nikkei 225 off by 1%. off session lows, but still passedthe baton being from the selloff on wall street on friday. thselloff inver fixed income and what central banks can will do, fomc and the boj decisions are next week. we also have china data coming through. we will be watching for that to indicate how the stabilization is going. take a look at the losses on the asx, down 2%. that does it for me on "daybreak asia". "trending business" is up next. negativity,ot of the s&p down by almost 2%. were looking at that and what

are they pricing in. scare withhealth hillary clinton, how does that change the mood on the markets? is it a case where political gridlock is being priced in? also looking at north korea after that nuclear test friday. what does it mean? we will look at ethical investing. boards with the diversity do better than those that are not diverse. find out why. ♪

♪ rishaad: it is monday, the 12th of september. this is "trending business". i am rishaad salamat. ♪ rishaad: right. taking you to tokyo and beijing this hour. smashinghine orders expectations. blockagen shipping eases as a u.s. court allows vessels to enter port.