the s&p 500ll as heads into a period known for turbulence and potential records. >> the ecb has been blinding down bond buying. the current program may continue beyond march. anchor: google ramps up the pressure on it apple with a headset that goes head-to-head with apple. this is daybreak asia, coming to

you from bloomberg's u.s. and asia headquarters. 7:00 p.m. in after hong kong. i am in yvonne man. breaking news out of south korea. that is a fairly substantial beef there. yvonne: they did record a drop fall there. you're on your figures seen a beat up 1.2%. -- year on year figures seeing a 1.2%up it could keep the be ok accommodate it. we'll see how korea reacts to that in about one hours time. we are seeing stocks as well as the kiwi falling 71 u.s. cents for the

currency. australia, watch out for the gold miners in particular. it drops. precious metals getting pummeled here. 0.1% -- stocks down about 0.1%. uptick ofee an shares for the yen. there is no trading in china once again as the country continues to celebrate golden week. another look that we can expect ramy.e week, we saw stocks and bonds sold off once again. anchor: it definitely is a fed rate story and the fear of a potential height pulling down -- hike pulling down markets. to get more of this is josie joe.-

a what we saw there was spillover from what the ecb said about the fact that it could start tapering these asset purchases before the presumed end of kiwi in 2017. the u.s. market seeing a little bit more hawkish tone from the central banks and thinking maybe i need to be selling right now. when we getve dovish commentary from the fed. it has been on the hawkish side lately. that is what we have been seeing. anchor: definitely one in every four stocks falling off in the s&p 500. let us move to commodities. crudesaw that the stockpiles grew for the first time since august, something that would be increasing the supply, which drives down the price.

that is counter to what we saw last week, the spike in crude oil all owing the opec agreement that they are going to be cappinproduction. it is a tug-of-war, a one-day pullback, but the people i have been talking to, they seem to be pretty constructive on the energy patch going into earnings. the bar is set very low on an earnings-growth basis. yvonne: let us talk about some of the day's big movers. gold, right? >> we had barrett gold and newmont mining the biggest loser in the s&p 500, all down more than 8.5%. we are seeing hawkishness from central bank around the world. today, we had the ecb, people , rising rateld assets as more appealing than gold, the ultimate safe haven. elsewhere in movers, we have a

holding corp. that when a pretty big today. there is some presumed interest dr. black & decker and also pepper and snapple group. they own this, by brands. some stop depreciation there for dr pepper-snapple. yvonne: first word news with courtney collins in new york. >> the chief executive has apologized to australians, saying the bank has not always met the standards it sets out. shane elliott is the second head y's lenders.n while profitshat

are large, they are less than 1% of the bank's assets. singapore's property market is witnessing it steepest fall in about seven years. billionaire is one of the biggest real estate investors in southeast asia, but he said singapore is still too expensive. he told our southeast asia correspondent that prices must come down further to make things interesting. [laughter] >> it goes down to 20% and but i are many investors coming. david: >> we'll have more later in the show. and the vice presidential nominees hold their one and only debate later with three main tasks, defend their bosses, try to land a few lows, and avoid mistakes.

takeaine and mike pence the most high profile moments of their careers. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. yvonne. yvonne: thank you. the parent of hanjin group says it could not have survived without help from its creditors. for supply-chain disruptions. rosalind chin has been covering this story for us. the chairman playing a bit of a blame game here. >> this is the first time that the hanjin group has spoken in public about this issue. hanshinshipping --

hanjin shipping submitted to creditors. that was rejected. they said basically what they had offered in terms of a plan was not enough to get more help from them. they actually estimated close to 890 million u.s. dollars was and extending maturity rates on some loans. hanjin needs to submit a proposal by september 23. as yvonne mentioned, the blame game was going on. they said that the bank had halted support because the main

shareholder did not make any move to provide liquidity. the main shareholder of hanjin shipping is korea airlines. it is a bit of he said she said going on here. officials met with hanjin executives in august to set up a contingency plan. that plan was never established and that was partly because hanjin shipping said it could not share confidential information about its customers with the banks. so what they are saying is, it was done to hanshin shipping and handling shipping does not seem keen -- hanshin shipping did not seem keen to get that. korean airlines did come into help, get money in terms of loans to help ease the cargo disruptions. that was for about 60,000,000,000 won.

thank you very much. good stuff. let's go ahead to smartphones and google has taken its biggest leap into the $400 billion smart phone market. it has launched two new handsets and has developed an in-house for the first time. google has revealed other consumer electronics, including a headset and a speaker to take on the amazon echo. that is look closer at all of this with bloomberg reporter mark bergin. a big event. they are coming after apple for the first time. event, thing about this the key feature with the pixel phone, the new hardware, is the virtualt, google's personal assistant, mixed in with research.

that is a priority because it protects the core business for the goal, which is a search advertising. ramy: what about the home? >> amazon has put out this echo device a couple years ago. it was a surprise hit. core ofikes at the google competency. people use that to search for things, as a personal assistant. it is something google is coming to a little bit late. they feel the have a better technology behind it and can provide, make this from a niche market to a mainstream consumer device. yvonne: it seems like they are trying to get back at all of their rivals, when comes to oculus as well as amazon. is that one thing that sets them apart? >> it has not come out yet. it is hard to see right now. from what they have demonstrated, their ai personal assistant is a couple steps above alexa and better than siri, which apple has.

if they can ship consumer devices, it is not something google has been able to do historically. yvonne: thank you so much. bergin burden -- marc in san francisco. new growth concerns. his: our next guest gives view on how to take advantage of low rates and manage market risks. this is bloomberg. ♪

ramy: we are counting down to asia's first major market opens this morning. trading in sydney already underway, it down nearly 0.5%, following losses in the u.s. of about 0.5% as well. you are watching "daybreak asia ." yvonne: the reserve bank of india defied expectations by

announcing a rate cut. the new governor reduced the repurchase rate by 25 basis points to 6.25%. in australia, meantime, the federal bank left it cash rate unchanged at 1.5%. the governor's decision was widely expected. ramy one of the presumed bidders for airbag maker takata is making a push into japan. it aims to more than triple revenue for japanese automakers for $300 million by 2020. the ceo says he is considering the first manufacturing plant in japan at is looking to expand. he did not say whether key safety is bidding for takata. wharf provides fixed

line services to mainly corporate clients. worf says it is continuing to review proposals. finished intocks the red here on tuesday in the wake of reports that the ecb could start winding down its quantitative easing program. that is not all. let us bring in the head of microstrategy at green capital. we are in the second day of the fourth quarter. terminal.y bloomberg i want to head to the fed funds futures. is this more conviction or speculation as we see this? >> i think it is starting to become conviction. you have various fed members coming out a little bit more hawkish and reemphasizing the need to hike rates.

the ecb had their chance in september to be aggressive on qe. the market ignored that signal. this is the end of qe. the boj switched their qe2 target yields rather than the amount of bonds to be purchased. we are at the end of the qe love affair and the start of the rate hiking cycle. especially with tapering on the table. let us say a december rate hike does in fact happen. what would be your strategy? peter: i would pull out of some of the stocks that everyone rushed into during the search for yield. there was a flight to safety, bond proxy, dividend funds, utilities, low volatility funds. i think they got too rich, too expensive, are not going to perform the way people expected in a rising rate environment. i would be looking, what are the global growth opportunities? ramy: one stock i am curious what you're going to say on this, is gold.

tanking it has been paintin today. is this oversold? peter: i do not think so. things were overbought looking for too much negativity out of china, looking for lower for longer for too long. the strong dollar is going to pull some of his back. the global fear is going to recede. antsche bank may not be issue in itself, turn into a systemic problem. i think they were overbought. i think it is a little it more of an normalization. ramy: financials, the only spot in terms of the s&p factor. the boj specifically set their yield curve to set the banks. peter: the ecb appears tbe helping the banks. i am a big fan not so much of yield curves are banks, but what transaction volatility is going through there. bank refinances, libor.

we have to get rid of all of the fines and get those behind us. i think there is opportunity. yvonne: peter, you have quite a bit of risk when it comes to the banking sector. the pound hit that three decade low. it seems theresa may is a signaling immigration more of a priority. is this spelling a hard brexit in your eyes? peter: we had this brief window where brexit was off the table, no one was talking about it. that is when to cause problems within europe. europe, you have to be a little bit concerned about. i would be concerned about the big european banks and their issues they are. away from that, you come to the u.s. financial sector, and this can ultimately be good for smaller institutions. we have got to be careful, what is going on in brexit, what does that mean for global markets and equities? we have to pull back from the excesses of july and

august. yvonne: we are going to be seeing a healthy correction. when it comes to your strategy, when you look ahead to the u.s. election, both candidates could be leading to fiscal place. peter: i thi of nknee things we have been looking at is which candidate benefits from repatriation. we are thing both the democrats and republicans agree on it. cost of the repeat creation -- repatriation will be talked about. offshore --ge i think that is one area we are comfortable, that which ever side wins, the patriots and part of their policy. if a structure will also come into play. japan has been talking about it. that is a longer-term horizon, more like six months to a year

down the road. yvonne: as you talk about gold here, you obviously saw the precious metals really get,. do you think this -- really get pummeled. peter: i think that is a big part of it. the dollar is going to be a big part of it. there was this big tent up fear that the global economy was weak nt up fear that the global economy was weak. i think we have broken through some technical levels to see thatpressure in anything was a safe haven or safety trade as people get back to saying that we should be looking for real risk opportunities rather than defensive plays. yvonne: thank you. head of microstrategy. up next, indonesian billionaire thinks singapore property is too expensive. we will have his views, next.

this is a bloomberg. ♪

ramy: you are watching "daybreak asia." yvonne: i am yvonne man in hong kong. we are counting down to the opens in japan and korea. looking firm.an we will see an uptick at the open. signaling --s taking a bit of a positive or today, there could be speculation it has strengthened too far too fast. property market is seeing its steepest fall in about seven years in its longest onrterly losing streak record. a billionaire want to see further declines before he decides to buy in. i go down to 20% and then, i

think, there are many investments coming. >> indonesia recently implemented a very ambitious amnesty program. you think it is on the right track? and how successful do you think it can be? because of the uncertainty political, uncertainty of the economy in indonesia, so indonesia, they have a very big underground economy. no good intoess the tax system. this is one of the most weakness of the indonesia economy. i would like to say indonesian people very fortunate to have such a good proceeding. importanthis very

decision. he will benefit to the people, to the country, to the government because after that, will beaxpayers increased so big and then after will look atent -- income very a chinese saying, one you included in your book, that wealth is not pass three generations. right now, you have your grandson, the third-generation. how do you view the future of the company? >> when the family of the company did an alert about the changing of the technology, they are not alert about the changing of the politics situation, and situation,c economy

and then they are going to be -- about $2.2worth billion. is that an underestimation of -- family's wealth to market wealth? >> my memory is not so good. it would be an underestimation. a little bit. that was chairman mochtar -- speaking to have haslinda amin. the vice presidential candidate go head-to-head at today's right mergingtial debate in a, my home state.

this is bloomberg. virginia, my home state. this is bloomberg. ♪

yvonne: it is: 30 p.m. in hong kong. 7:30 a.m. in a -- hong kong. aboutmarkets close down 0.5% on the s&p 500. the fear of the rate hike in december is weighing on sentiment. i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. this is "daybreak asia." shockwave percent through markets. -- sent through market.

ledity and telecom shares the to climb. -- the decline. the chairman of hanjin shipping has made his first public comment sent its failure, saying it could have survived with help. he told the parliamentary hearing his company was forced to file for receivership what creditors cut off financial support. hanjin had almost 3% of the global container market. google is taking on everyone from apple to amazon and they as it releases a new smartphone, your headset, and speakers. .t want to rivalry iphone the devices cost about six hundred $50 and $770 and feature high-resolution displays, 12

megapixel cameras. in vr, google is trying to undercut facebook oculus with its headset that is much cheaper. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. yvonne: a look at how the asian markets are shaping up, let us go to shery ahn. we see someee if movement in asia today. yesterday, the asian benchmark index finishing unchanged as we saw those headwinds coming from wall street. the local market being boosted by a weaker yen. shery: right now, we are seeing some weakness in the markets that are open, also coming from states. we are seeing that wall street finished in the negative across the board. being aoctober

astorically known for being turbulent month for markets with the s&p 500 seeing some of the biggest swings historically, but we'll see if there is upside to, in october, a favorable month for stocks. new zealand falling for a second consecutive day. asx falling0 -- the . the rba leaving the cash rate unchanged. take a look at futures right now. some weakness in asian currencies boosted the nikkei yesterday, with the yen losing six consecutive sessions. the kospi has been boosted by a won.er ramy: we talked about commodities making major moves, especially with gold.

goals.let us talk about first, let me take you through some moves and what is happening in oil as well because we are seeing a huge rebound after some decline. that coming from news that u.s. crude inventories actually fell in that of rising, fell more than 7 million barrels last week that of writing, at the economist had expected. the wti gain almost 1% right there at $49.14. now,s just interest right taking some of the appeal from gold, which of course, plunged below 1300 for the first time since june, plunging the most in three years, right now is gaining around 0.1%, but remember, it has fallen for six consecutive sessions. with gold now losing its shine, who is actually gaining? take a look at this chart.

the one getting right now is another precious metal. that would be palladium, using car pollution control devices. they climbed 20% in the third quarter and on friday, we saw the metal closing up the most expensive in 11 months, relative to gold. they settled at 697.75. we'll see what happens to gold as we see potential fed rate kites this year. -- rate hikes this year. remy. ramy: interesting stuff about palladium. august sales coming in a little bit better than expected. the imf is warning of new risks for the week local recovery saying that a potential terror for could make things worse. su keenan joins us in studio. , youhe word about concerns raise your tariff, i raise mine in a tit-for-tat passion could

hurt a fragile economic recovery for the mobile economy. in fact, the issue there, latest projections similar to their last productions for global growth. it is 3.4% next year. different story for the u.s.. .ake a look at btv chart the imf downgraded its forecast for the u.s., saying it will go to 1.4% next year. it is down from the production in july. they see 2.2% next year, it cut down from a 2.5% forecasted growth just month ago. it is interesting, while they see emerging markets exiting recession and stabilizing, what they are saying about the advanced economies is less than glowing. they see sideways growth. take a listen. >> we project global output growth at 3.1% in 2016 and 3.4%

in 2017, the same as in early july, shortly after the united kingdom's brexit vote to leave the eu. within this broad outlook, however, we have slightly marked down 2016 growth aspects for advanced economies, while marking up those in the rest of the world. prospects for 2017 are unchanged for both country groupings, relative to july. su: the comment came in as they gave their latest update to their outlook for economic growth. so the all right, reduction for the u.s. in terms of their growth forecast for the imf. have some to say about their outlook for brexit as well and it was relatively positive, right? su: positive in terms of the recovery. at the time, cataclysmic demise was projected for the u.s. and world economies. take a listen as to how they think things played out. >> in the event the market response after the first day or

so to the brexit vote was much more favorable than i think anyone would have anticipated. the markets stabilize fairly quickly, and have they not, that could have generated a much more dramatic downside, not only for the uk, for europe. all in all, i would say that what is happening is consistent with one of our scenarios and the one that we are much happier to have seen turnout than the alternative worst scenarios. su: here is what is important. kind that comment, they are saying there still is a risk factor. there are two risk factors. one is that as the vote has played out, the british deciding to exit the european union, it have highlighted a fraying consensus about integration. the other factor they say is a

risk is u.s. presidential candidate donald trump and his "put america first" campaign. it could impact trade wars and the economic integration taking place and a source of pride for the imf. that is one of two risks, brexit and trump. yvonne: the white house presidential candidates hold their one and only -- vice presidential candidate hold their one and only debate. bloombergsg in reporter in virginia. have a lot of objectives here tonight, possibly more for thanthan -- for pence kaine. >> that would be incredibly

difficult. there is not as many people watching thidebate as watched last week debate between trump and clinton. for pence, it will be to change the narrative. trump is appears to be losing the race. we have seen a number of polls that show him behind. his debate performance made it a bit difficult for him to have that strong performance that he had hoped for. toluse: for kaine, it is to keep the momentum going in favor of clinton and to show himself as a presidential candidate, show himself as someone who could occupy the oval office along with hillary clinton in january. ramy: trump is known for his tweets. he says he will be live tweeting his events. how much do you think it will be about him rather than mike pence or tim kaine? toluse: we are expecting much of this debate to focus on trump and the fact that he will be tweeting during the night is going to increase that.

a lot of the statement he has made over the recent weeks have offended people, including mexican immigrants, muslims, women, and we can definitely know there is a lot of material that tim kaine is going to bring up and try to put governor pence on the defensive, make him defend the comments of donald trump has said in recent weeks. i am pretty sure a lot of the news coverage will focus on the live tweeting donald trump is going to be doing. he has had a knack for garnering headlines over the last week. most of them have been negative. he is going to try to change the narrative by lyft weeding the debate -- live tweeting the debate. thingsefinitely keeping interesting. he has 12 million followers on his twitter profile. toluse for us. we will have the vice presidential debate tonight.

yvonne: that is going to be want to watch. also, what's twitter as well, and bring the popcorn. what is behind matt, next. this is bloomberg. ,hat's what is behind that next. this is bloomberg. ♪

yvonne: we are counting you down to asia's first major market opens this morning. japan futures looking pretty firm, up by about 0.5%. you're watching "daybreak asia." i am yvonne man in hong kong. ramy: i am ramy inocencio in new york. with persia oil and gas will boost output at three field along the border with iraq.

iran put the deal together within a week of securing major output concessions from saudi arabia at the opec talks in algiers. japan is facing the 18th major storm this year with yvonne: typhoon java watering southern islands. flights.anceled japan has suffered this abysmal late-summer weather and consumer spending may have been hit. jpmorgan says car registration fell last month. has thrown down the gone on to spacex, saying it gauntlet to spacex , saying it will win the race. it was responsible for the first stage of the mighty saturn five, the most powerful rocket ever built, which ultimately fired craft to thepace tha

man. it is sending shudders through markets around the world. kathleen hays is onset. the fed president is talking about it. >> let us put this in perspective. threea mester, one of the , said the market and economy are right that ebay tight even now, even in december. that is not what the markets were expecting. jeff zucker times and today -- .eff lacker chimes in today inflation is rising, jobs are growing. unemployment holding in at 4.9%. the fed, he said, needs to act

now to prevent it from getting too high and have drastic moves to raise rates later. jeff lacker said he would have dissented in september as well. he dissented when he was a voter last year in september and october to raise rates. as you recall, the fed did raise that key rate in december. this key rate should already be at 1.5%.-- we might be at 1.5% now. lacker and mester are both looking at the job market. .> they are saying inflation there is this inflation rise. and take a back in look to see what inflation is doing right now. the fed's key measure of

visually is the white line, which has gotten up to one point 7%. what has gotten closer to the 2% level, core cpi year-over-year at 2.3%. that is not the fed's official gauge. there isnt to say that a concern about inflation, you can see it. aher sellers saying quaid minute, look how long those inflation numbers were so low. minute, lookit a how long those inflation numbers were so low. they are worried about financial excesses. are is where the hawks coming from. that chart tells a real good story. yvonne: i think everyone has been looking for december as a rate hike. until your interview with loretta mester's, signaling

november. >> i was getting ready for that interview. you have to raise the rate now if the economy remains strong, what about november? if the numbers hold up, she will be voting for in november rate hike -- a november rate hike. takegure they can probably that into consideration as a secondary factor. there is no press conference scheduled for november either. would be fed rather wait another month? the rate hike august for december at 61.2%. just a couple weeks ago, they were backed up to 52%. let us jump back into the bloomberg. a simple chart tells the story about the volatility, this rate hike odyssey. chancew there was a 90%

of a rate hike coming into the year. fell off.et they have gotten pretty high by midsummer. what do you get, the main jobs report. it is up 38,000. ecb brexit vote, and you go back down to those very low levels again. brexit vote, and you go back down to those very low levels again. we are up to 61%. as our bloomberg intelligence team in the u.s. point out, there is no smooth sailing on these rate hike expectations, or what actually happened. an important fed speaker is going to be coming up. charles evans said we have headlines crossing the water. take a look. at 7:40.oken he is a big of.

dove.ig he maybe counters what the doves have said. the online payment platform backed by elon musk. we will speak with the ceo and cofounder, next. this is bloomberg. ♪

ramy: you are watching "daybreak asia." i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. stripe is opening up. the platform allows companies to process transactions using more than 130 currencies. apple,ses linked to android, and samsung. stripe launched in singapore

ust two weeks ago. let us talk to the cofounder. congratulations on the launch. asia, quite a big market for you. how big of an undertaking is this for stripe? >> this is a really significant project for us, and something we have been working on and thinking about for a long time, we started with sort of, investigating how to best launch in japan starting to years ago. ago.o years this is a long-term project. it is not something where we can directly transpose in the u.s.. --have two have significant adaptationnificant to market. we are ready to launch it. yvonne: we look at the differences in offering in the u.s. versus asia.

competitors ind the mix in japan. central banks are not exactly welcoming anyone seeking to transfer funds internationally. contrary, wehe have seen a hugely enthusiastic and positive response from businesses across japan. stripe enables, and part of your question about what is so unique about what we are doing here, we business in any japan to accept more than 130 currencies. when you think about that from a japanese perspective and from the standpoint of the technology companies based here, that makes them more effectively able to address the global market, to increase sales of japanese products and japanese services on a global stage, and to remove one of the most significant impediments to being able to sell to consumers in europe, the u.s., and really any region that they want to expand to or to

seek out. when you look at this from the standpoint of what can best accelerate and enable the growth of the japanese technology sector, this is one of the most common thing things you could undertake. ramy: i want to ask you about consumer behavior in the u.s. in the western world. it is a lot about credit. in asia, it is cash centric. how are you adapting your strategy there? patrick: card penetration is highlly quite here. across different asian market, dynamics infering terms of consumer behavior and so forth. that is changing quite quickly with the sort of rapid rise of the smartphone and the growth in electronic transactions. in japan, card penetration is really high. consumers are very experienced with e-commerce transactions and so forth. bringingt this as not

a new behavior to japan, but building a better if a structure that enables japanese technology companies to influence new business models and expand to growing markets. ramy: where is your next expansion? patrick: cannot comment on that just yet. we are excited to expand to singapore. it is a thriving hub. in japan, the beta through substantially -- grew substantially faster than we expected. weare excited about the sway of new markets across asia. we are not ready to mount any new friends just yet. fronts just yet. ramy: all right, plenty more still to come. yvonne with asia's first asia market opens just minutes away. waiting to speak

in auckland. that vp debate coming up in just

♪ >> future losses across the as talks unsettle investors. >> even so, hong kong has been the hottest market recently. that trend is seen continuing. >> chairman hits out at creditors, saying they could prevent a shipping line from hitting the rocks. >> vice presidential candidates ready to go head-to-head. we are live at longwood university in virginia. >> of this is the second hour of "daybreak asia," live at

bloomberg's u.s. and asian headquarters. is jt after 8:00 a.m.. 8:00 p.m.ust after here in new york. we did close down half a percent. the fear of a december rate hike , we will see where that goes. fears of the ecb might be tapering sometime soon, weighing on markets here as well. how are they looking? a little bit mixed at the open. we are seeing that the nikkei is boosted by a weaker japanese yen, up .3%. it has surged the last two sessions. down 6/10 of 1% despite a weakening korean won -- yuan.

.9%, andone, down another down .5%. do have thosee aig performance services indexes beating estimates. but still, being below. most sectors trading in the red. we will see where asian stocks go from here. yesterday we had asia's benchmark index unchanged. weaker local currencies, helping japan and korea. but those headlines -- headwinds coming from wall street. and the selloff in the u.s. markets. seeing?are we >> we have seen the japanese currency weakening for the past sessions. it is right now unchanged.

but remember, it is headed for its first annual rally in five years. now we are just hearing from a hedge fund called gcibut remembr its first annual rally in five years. management. we could see the yen pushing backwards against the dollar in just a few years, as we have seen the boj withholding from adding monetary stimulus and failing to end deflation. another asian currency of wanted to take a look at is the key we dollar because it is losing ground for third consecutive session. on change it 71.84. insaw more weakness below the early session. that is pulling that kiwi dollar. we have to keep in mind that given the dollar's strength, which has gained of the most in three weeks. that will give some pressure to asian currency. >> thank you very much. let's head to u.s. presidential

politics. tim kaine and mike pence start their one and only vice presidential debate in the next hour. they will be looking to defend their respective bosses, while attacking the others. bay, inovering the virginia. kevin, how much will be about kaine and pence, and how much will it be about their bosses? >> i think the governor pence will try to contrast himself to senator kaine. but tim kaine will try to make governor pence answer for the comments donald trump is made repeatedly throughout this campaign cycle. at the same time, you will see governor pence try to force senator kaine to answer for hillary clinton's trustworthy numbers. they say they will judge this as a successful debate performance if they are able to get for the first time the clinton campaign on defense because candidly, for

the past week, what we have seen is a trump campaign manager not been able to recover following the first presidential debate. >> we have heard these candidates being described as america's stepdad, mike pence calling him a conservative republican. what do they want to hear from the candidates tonight? first and foremost, i think voters will be looking to see whether or not both of these candidates will pass the commander-in-chief test, should if they woulden, have to become president. they are a heartbeat away from presidency. and the interesting thing, a similarity on both campaigns, they were largely chosen in part because they are boring. and some are not going to overshadow the top of the ticket. were tellingthey me, they do not expect governor pence to be an attack dog of sorts.

they think is measured demeanor, coupled with donald trump's bombastic rhetoric is something that will be more appealing to convince independent voters. but again, this has been a really, really rough week for the trump campaign. trump may be wanting some miles on the debate. thank you so much. he has live from farmville, virginia ahead of that vp presidential debate. we have live headlines. charles evans speaking in new zealand. he is talking about how he is not sure, nobody knows when the fed will raise rates. he says rates may well be changing soon. but he doesn't see a downside risk. pricesg the focus toward , the fed's should undershooting employment just to lift inflation. let's have a listen. >> averaged around 220,000 per

month. incomesins have raise and voting confidence over future job prospects. lower energy prices and accommodative monetary policy have provided additional support to the wherewithal of spending and households. all of these factors should consider -- raise consumer spending. and interest rates will remain quite low for some time. i also expect improved performance from two sectors that held growth back during the first half of the are, inventory investment and is this capital spending. i expect inventories will bounce back, they typically do. this is because investment has been week. it has declined two of the past three quarters. there is a good reason for this. the rising value of the u.s. dollar against many foreign currencies has been an optical to manufacturers with an international presence. low oil prices have held back drilling.

we did not know we had so much energy in the u.s. until recently was all the fracking and reasonable at high-energy prices, but at low prices, not so much. earlier in the year, raised borrowing costs. incoming indicators are pointing to some recovery in business spending, but it does not mean we are expecting a robust rebound. notably, even with a stronger consumer, the businesses i talked to said their capacity is right-sized for their sales expectations, and they remain very cautious about spending money on even moderately risky new opportunities. caution and risk-averse decision-making continue to be a headwind in united states. when you add all this up, i see growth in the u.s. recovery from a tepid 1% first half of growth in 2016, and averaging in the range of 2.25% in the next three years.

although the pace is modest, it should support for the reduction in labor market slack in the u.s.. in particular, i expect the unemployment rate to decline further over the next three years, to reach 4.25% by the end of 2019. 4.2 5%, that is a low number for the u.s.. democrat -- demographic numbers will be lower. the natural sustainable unemployment rate will be about 4.5% by 2020. monetaryropriate policy, i expect the unemployment rate to overshoot its natural rate in the next few years. in fact, i think undershooting our an employment goal is necessary for inflation to reach our 2% target in a reasonably timely and sustainable fashion. let me turn to the u.s. inflation outlook and risk assessment. unless -- i am less optimistic about the inflation outlook. in january 2012, 2% inflation was

set as the explicit target, consistent with our price stability mandate. this is measured by the annual change in the price index for personal consumption expenditures, pce. threer, over the past years, it is averaged only 1.5%. much of the global economy is faced with low inflation pressures. that is part of the risk calculus we have to think about. of me to get a better sense where total inflation is likely to be headed over the next year or so, i find it useful to strip out the volatile food and energy component and look at core inflation. pc inflationore about 1.5% since the crisis. although core inflation did move up a little at the beginning of the year, it stalled at 1.6%. in august, it edged up to 1.7%. further ahead, i see both core and total inflation moving up

gradually to approach, but not quite reach, our 2% inflation target over the next three years. this past two improvement reflects the dissipating effects on consumer prices, of earlier declines in energy prices, and the appreciation of the u.s. dollar. the influence of further improvement in labor markets in growth in economic activity, and the supportive and accommodative path for monetary policy. however, i see downside risks. the u.s. and other advanced economies experience below target inflation rates for several years. given the disinflation area forces across the globe and the challenges faced by many countries, international developments may result in further declines in energy crises or additional appreciation of the dollar. most worrisome to me is the possibility that inflation expectations in the u.s. might be drifting lower. the financial market compensation for perspective inflation has fallen considerably over the past three

years. some survey-based measures of inflation expectations have moved to historically low levels. for instance, investors see more worry -- see more worried that the total over the next 10 years will be below 1%. that is versus 3%. wax that is charles evans speaking in auckland. not as hawkish as some of his colleagues there. we have heard in the last couple days he did say rates would be changing soon. but he added, frankly, nobody knows when the fed will be raising rates. he is less optimistic about the inflation outlook. he says he has not seen clear signs inflation is heading to the 2% target. at least, he said, until 2019. that was coming live through auckland. first word news.

>> singapore's property market witnessing its steepest fall in about seven years. in its longest quarterly losing streak on record. the indonesian billionaire one of the biggest real estate investors in southeast asia. but he says singapore is still too expensive. he told our asian correspondent that prices must come down further to make things interesting. [indiscernible] >> maybe it goes down to 20%. ,> google taking on amazon apple, and facebook with smartphones with headsets and speakers. it challenges the iphone. $600evice will cost about and features high-resolution displays. a siripixel cameras, and

-like device. ecb officials have told bloomberg the bank is likely to gradually wind down bond purchases before ending its program of quantitative easing. .hey say it may happen in steps european bonds declined in the news, and climb to a three year high against the pound. says it will continue to next march or beyond. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. ahead, round two, special coverage of the vice presidential debate, starting in about 20 minutes. back in emerging markets, this is bloomberg. ♪

remy: you are watching "daybreak asia," i am ramy inocencio. have been hearing have been hearing from the feds, charles evans out of auckland. he indicated rates may be changing soon. exactly when is unclear. let's bring in a strategist joining us live from singapore. michael, great to have you again. initial takes on his comments? michael: he is trying to do damage control, not contradict his colleague. but i think his colleagues comments are more relevant to global portfolios and risk management. because even though he is a nonvoting member stated that interest rates in the united states are significantly too low and need to rise. 1.5% u.s. rates,

potentially higher. that very much led to a dollar rally. is, if thequestion fed is behind the curve, what is this mean to the central bank narrative? because that supports the argument of mr. greenspan, who pointed out that inflation could become a real issue. , andhey confronted again lowered global growth again. it is disappointing, especially in the western world, and the fed could be behind the curve. that, they top of could be winding down their euros,es by 10 billion before qe ends. if that were true, how do you think you should view this? is it an indirect way the ecb is trying to steepen the yield curve? michael: yes, i suppose. but the ecb is the bigger

question. if you're a member, many people have felt the deutsche bank would be too big to fail. now you reach the point where the debate is still out there. it becomes a big decision whether deutsche bank should be restructured or allowed to fail or not. it has a huge impact on the ecb. is the ecb too big to fail? central banks versus solution, could increasingly change to the narrative that central banks are part of the problem. that would mean we could see potentially more capital market dislocation. ramy: looking ahead to the rest of the fourth quarter, what are the biggest risks you are seeing , traders and investors pessimistic. michael: complacency, and the narrative that more stimulus is always good. most of last year and even this that the narrative was

risk assets arising because of hopes of future stimulus. is counterproductive like in japan. but the comments are true that it -- that america needs much higher interest rates. it is wrongly priced. potentially, yes. -- by thatly says logic, u.s. equities could be 30% to 40% cheaper. ramy: there are also political risks. we have the vice presidential debate in 10 minutes or so. for your client, which candidate is the better person? is a veryook, this personal choice and it is difficult. i am not a u.s. citizen so i can only think that maybe none are really good for the world. toneed better candidates

solve complicated problems. but it is what it is and we have to live with that. to the question of risk or the perception of risk, i think the election outcome will be very close. i think the swing vote should not be underestimated. i the market has not priced in potential government changes in washington. i think it is still thinking it will be business as usual. if you overlay this with the believe that central banking could mistakes or errors rise, we would definitely see more volatility going forward. higher cash balances and volatility tragedies and more tactical applications that it might outperform. iny: michael price singapore, thank you for your analysis. up next, it is not over until it is over. the rally in hong kong stocks expected to run through the end of this year. more on that. ♪

ramy: you are watching "daybreak asia," in new york. the view is that markets will continue to lead the rest of the -- leave at the rest of the region in the dust. be clear, this is not investment advice, just to get that out there. but you look how everything is lining up. it looks like hong kong is set to rally further. three quartersst have seen more at inflows into hong kong from inland china than any other time. you did get the spike in the is also a2015, but it

function of markets in china not doing very well. you still have much cheaper valuations here. historically we have a bloomberg chart that shows you this. the total quarter, has been very good for hong kong stocks. yes, it is historical data, but when you consider shares with the exception of 2008, it has gained the past 10 octobers. a lot of attention because of this upcoming second tunnel. ramy: talk to us more about valuations. there is hong kong specifically right now? david: hong kong is still dirt cheap, if i can use that term. relative to historical examples, the bloomberg graphic shows you this. we are still in what you would call the normal range. we are pushing up a little bit because of the rally. but roughly, trading at 13 times -- you have to strip out what happened before and after the

crisis to get a normal average. it is a bit high compared to the last five years, but that is because the market has been in a sad state. even after this rally, which is the best in the region, i believe in july, hong kong -- hang seng trading at about 13 times forward. at mci world, 14.4, emerging markets, 13.8. still quite cheap. that is why analysts are saying it will keep the market supported. yvonne: quite cheap, but are there risks? david: there are a few. we are at things unique to hong kong. the economy is not doing well. retail sales, you look at commercial rents, for example. but a lot of things are not hong kong stocks anyway. second, this upcoming rate hike

coming from the fed. it will happen at some point. then we import that monetary policy. it is not the best time to import higher rates. and then mainland money. it is the reason stocks have not done so well. not theup of investors most stable, speculative. today's mainourse, event to come. the full vice presidential debate in the run-up to november's election. a lot of excitement leading up to this. could you call it excitement? ramy: not long now. you're taking a look at live pictures from longwood university in virginia. we will have special coverage of the entire event. i am looking forward to that. it will be interesting to see if either candidate moves the needle for donald trump or hillary clinton. historically, they do not usually do that. but stick around, and the next

few minutes we will have this. life. this is bloomberg. ♪

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>> good evening everyone, i am john halperin -- john heilemann with mark halperin. we are in farmville, virginia presidentialvice debate. it starts in a little less than half an hour, after 9:00 eastern. we will be filling the time in hopefully an interesting and entertaining way over the course of the next 30 minutes. the debate, 90 min l