♪ >> a warning, the global economy is weak and vulnerable to a new financial crisis. >> reports say 18 employees have been detained. >> apple puts the pressure on suppliers. >> china focused hedge funds are recovering, although a full

comeback remains elusive. this is "daybreak asia". i am yvonne man. looks like a quiet monday. china data, could get interesting. we had some fed speak when janet yellen talk about letting the economy get hot. all of that on the docket. yvonne: also and ecb meeting this week. the last and third presidential debate. momentum signals looking bearish for stocks. key we-dollar bearish now. aussie stocks on the dull line

-- decline right now. dollar bearish now. down, but a soft open here. this is on some dollar strength. thatll continue to watch one. world's largest emerging markets have pledged to boost trade as china's president warns the global economy remains fragile. presented a front on global terrorism and infrastructure. what have we heard? minister the prime saying he wants to see trade the nations doubled to

$500 billion by 2020. the pictures surrounding this summit is one of political and economic malaise. russia is burdened by sanctions and a week oil price, and of course china where we saw exports fall 10%, the slowdown continuing. chinese president xi jinping gave a bleak outlook for the global economy. the economic recovery remains fragile. global trade and investments have slumped and commodity prices are fluctuating. the problems have not been solved. >> that is president xi jinping of china. he called for closer economic corporation between the brics

nations. india and russia pushing for a eurasian free trade agreement. we may get more details in december according to vladimir putin. a potential about $25 billion pipeline from russia to india. of course, the nations continue to push for what they call governance changes at financial institutions like the imf and world bank. ramy: terrorism was also high on the agenda. any progress there? >> it was, pushed to the top of the agenda by host india. there are geopolitical tensions around this. they presented a united front, but there are tensions between india and china.

china has been improving its ties with india's archrival pakistan. for example, china has prevented india joining the nuclear suppliers group. part has been trying to improve ties with russia, signing defensive deals. the indian prime minister called vladimir putin an old friend. there are geopolitical tensions there. the trade between china and india is $75 billion, but there is growing suspicion on both sides. indiaals we saw between and russia, we will get more details in the month ahead. ramy: thank you very much for the update on the brics summit. >> australian gold producer

devolution will buy a mine -- evolution will buy a mine from rival new crest. still needs regulatory approval. donald trump is taking a hit at the polls as allegations of sexual conduct damage his bid for the white house. women in key battleground states increasingly prefer hillary clinton, giving her an overall 6% lead in those states. heald trump acknowledged is has lost women but blamed the media for "rigging the election." a new round of sanctions after firing a rocket over the weekend , u.s. and south korean defense officials say it was probably a mid range ballistic missile. it blew up immediately after launch. the missile was the 23rd launch

for the north this year and it also conducted to weapons tests. china taking another step towards running its own space lab with his third rocket launch this year. the lab was launched last month, and the crew will spend 30 days there. sends torm, china sends to a person to the moon by 2025. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy: thank you. we have earnings out of the big banks, plus the final debate between donald trump and hillary clinton. deutsche bank is looking to trim its business here. a lot of pressure on deutsche bank. the ceo is now under pressure to

reduce the financial pressures on the bank and they may consider cutting back on their u.s. presence in doing so. they are under pressure to cut costs. mulling aank is partial pullback. it was reportedly discussed by the board. initial $14the billion offer to settle that probe triggered the selloff. the stock has recovered a bit from that record low. they are trying to negotiate down the number, but there has been a lot of credit concerns regarding that fine. ramy: we have an initial reading last friday, and more set later this week. what is the preview? ,> we kicked off last week

goldman sachs, morgan stanley, and bank of america. third-quarter revenue may grow by 8% versus a year ago. it is the first gain in over a year, but that has a lot to do with easier comparisons. tuesday. wednesday, we get morgan stanley , 11% growth expected as the eps jumps 84%. the investment bank will be an area of focus for a lot of the street on the banking pipeline deal of interest. ell,on monday after the barr we will get bank of america. yvonne: a fresh round of eco-data as well. starts,ng data, housing

also numbers on existing home sales. thet of interest in whether housing sale market has stabilized or retrenched. u.s. cost-of-living likely rose in september. take focus will be wednesday, hillary clinton and donald trump baby, aface-off, vegas, town known for prize fights. they hits just keep on coming with donald trump. poll from wall street journal in bc showing clinton leads trump by 11 points. that will be interesting. this is the s&p 500 wording with 2120. that is a positive sign in terms bulls moving forward.

that debate could be pretty personal and pretty ugly. thanks. and crown resort slumping in australia, down more than 10% after 18 employees were detained in china for what is being called suspected involvement in gambling crimes. let's get over to paul allen from sydney. what happened leading up to these arrests? a lot of questions, but not too many answers. what we do know is that the chinese authorities are rated offices across china thursday in employees,esting 18 three australian nationals, including the head of the ip gambling. that does -- head of the

gambling. look of a shote across the bow from china as part of the broader crack down against the illicit flow of runs into casinos. the chinese government says australians are under criminal detention for suspected involvement in gambling crimes. like they haves not been able to get in contact with those detained could what has been the reaction so far? they haven't. a number of employees have been detained, but they have not been able to speak with them. information from chinese authorities on what charges they do face. that is pretty much it. the austrian government has taken an interest as well,

saying consular staff may be able to visit those employees later in the week. what sort of financial impact might this have on the company? paul: if we are seeing a crackdown from chinese authorities on illicit lawns and gambling spreading, we've seen the impact in macau. possibly it is coming to australia as well. crown is in the process of building an impressive development, the first casino in the area, and it is targeted at chinese high rollers. they bring in a third to a quarter of crown earnings. some interesting implications for crown's revenues, and that's what were seeing reflected in early trade today. ramy: we will be looking ahead to see how that develops. ahead, china pushing

reforms at state owned companies. things have not all worked out well for investors. details later in the show. yvonne: after five quarters of declines, there may be a turnaround. this is bloomberg. ♪

counting down to asia's first major market open. sydney, aderway in little under the flat line. yvonne: a quick check of the latest business flash headlines. to equitylion debt t part of a larger deal to cut the debt ratio. chinese policy release guidelines last week for

reducing corporate debt. kyushu once to invest in residential and commercial property across southeast asia. yvonne: passengers will have their smart phones confiscated on american airlines. have issues of overheating and catching on fire. let's discuss the global state of play.

thank you for coming in on this sunday in new york i want to get your initial thoughts when janet yellen hinted at letting the u.s. economy grow a little hot. do you agree with this? if they want to see they have a need to raise interest rates, and i think janet yellen and the fed are willing to wait a little longer, keeping rates lower for longer, to make sure there is not a misstep, a hike too early. ramy: do her comments put a dampener on raising? may be a better way to put that is to reassure the markets and the public that those rate rises will be slow. we feel that december will be the next rate hike from the fed. toy: i want to direct you

the bloomberg. at in terms ofng the white line is the performance of the s&p 500. look at the percentage of members trading below the 50 day moving average. since juneits lowest or so. do you think we're in for a possible plunge further? >> we are in a state where we see that when we look to the price to earnings smal multiplee are expensive by historical measures. interest rates have been low. seeations are not enough to that plunge further, 10%, 20% more. we need that catalyst. we have two big events, the nlection and a fed rate hike i december.

otherwise we see the recipe in place for the markets to grind higher. ramy: you are saying markets have priced in the elections, a hillary clinton win. if she does, who would be the winners and losers? >> when we look at the different sectors, the clear winners are -- alternative energy is a winner, traditional energy is a loser. biotech is a loser, challenging to pricing. we know that there has been a lot of rhetoric about trade deals in what may happen, but we tpp, she will come back to not as strong in opposing those

as she is now in the election. yvonne: earnings is a big catalyst to the market. some forecasting for a turnaround. do you think it is because expectations are so low right now or are things generally getting better? >> things are generally getting better. the consensus estimate for s&p 500 earnings is minus two. to and ofe we get earnings season, we beat expectations by 4%, flat to a little bit up for earnings. we will come out of this earnings recession we have been in. we have been waiting to see revenue increase, six quarters of revenue recession. we are seeing slight revenue growth in the first quarter, and were expecting more in this quarter. companies can manufacture earnings for a long time, but not forever. were starting to see some topline growth, which is

good. global stocks compared with the bond price, you see this positive correlation has stayed consistently strong for more than a month. why do you think that is and will it stay that way? >> we are seeing stocks and bonds moved together more, the correlation going to one for many asset classes. we have had bonds and stocks ped by an accommodative fed, moving together on the upside. if fed policy get significantly tighter, both will suffer, and that will be important for investors to realize. yvonne: good to know. thank you. up next, apple and for a brighter future with better

screens, and that's putting pressure on japanese manufacturers. this is bloomberg. ♪

"daybreakare watching asia". wants to adopt organic screens. that could be make it or break it for some japanese manufacturers. apple playing a bit of catch up here. >> that's right. most high-end smart phones will have organic led screens, sharper and brighter than the older traditional lcd technology. apple looking to make this shift to organic leds next year.

that's putting financial pressure on its suppliers that need to invest in new facilities and plans to produce these greens for apple. yvonne: you talk about the pressure, will they be able to fulfill it for some of the suppliers? >> it is a bit of a financial tightrope. market is dominated by samsung. they have the vast majority of the market. they make the screens for themselves, but will supply to other smart phone makers as well. apple could get those screens from samsung, but the problem is they are a competitor and apple would like to have several choices. japanese suppliers in particular are feeling this financial pressure. sharpo primary ones are and japan display. sharp sold a majority interest to a taiwan company, so they

have some financial resources to make these investments. it is a heavy burden for japan display. asy need to invest as much $2 billion to get into this business, and right now they don't have the cash. if they choose to not build new plants for apple, what are the options? >> it is a big risk. right now japan display gets more than 50% of revenue from apple. they're looking at a big chunk of revenue that could move and other suppliers, so it is a risky strategy to move away, so most likely they will move into the oled market, but it will take a big financial gamble for them. ramy: thank you very much. , china counting down to blast off and another step towards putting a national not on the moon.

you are watching live pictures as we count down. this is bloomberg. ♪

yvonne: it is 7:30 a.m. monday in hong kong. we are just a few minutes away from asia's first major market open. ramy: it is 7:30 p.m. here in new york, where markets are on a down note, about 30% right now. i am ramy inocencio in new york. yvonne: i'm yvonne man in hong kong. let's go straight to the live pictures from the satellite launch center in china's western gansu province. we are less than a minute away from this list off. you are watching the launch of this command spacecraft -- manned spacecraft. there goes the countdown.

it is crucial towards china's ambition to operate its first mission in 2020. remy, i know you are a big spaceman. ramy: i totally am. there goes. for this mission, the astronauts are going to be heading up orbiting with spacelab in the next two days, and they may stay there for as many as 30 days in the , which was launched last month. amazing pictures there. we will continue to monitor that. in the meantime, let's get to the news with ross jen. reporter: the china president has warned that the global economy is weak and could trigger a new financial crisis. summit, he the bric

said the underlying causes of the 2008 crash has not been fixed and a threat remains for a repeat. economy is 16.6 trillion u.s. dollars. >> the economic recovery remains fragile. global trade and investments have slumped, and commodity prices are fluctuating. the underlying problems, which could trigger a new financial crisis, have not been solved. bank may deutsche shrink its u.s. operations amid legal costs. they say the idea has come up in talks with authorities and maybe part of a strategy. made, butn has been sources say it would mainly affect the investment banking unit. georgia has lost nearly half its value since u.s. regulators demanded $14 billion to settle an investigation into mortgage backed securities. crown resorts plunged at the open on news that china may have lost a criminal investigation into some employees.

the australian financial review says beijing has confirmed to have to change a number of staff , including three australians, on suspicion of gambling related crimes. they say there were a series of raids last week amid crackdown on illegal marketing by casinos. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: let's look at how asian markets are shaping up. a pretty quiet start so far, right? >> a lazy monday morning, i would say. , following astreet strong closing in europe. so it has0 minutes or changed quite a bit. when you look at what is happening in australia, we are seeing the markets fall back a little bit. china's gdp is coming out, those are the two main economic events. today, exports out of singapore, indonesia as well, philippines,

factory output out of japan. you asked me how would tokyo open up 30 minutes back -- firmly in the green. a lot of risk aversion has come in over the past few minutes or so, so we are looking at perhaps a flat if not lower start in japan. this is also in focus given the news flow, some other big companies also in focus their. we are seeing a pullback across crude and gold as well, so it is not actually a risk appetite type of monday. aty: i know you're looking japan potentially being a key catalyst later this morning. why is that? david: a few things with japan. i mentioned the factory output, you guys be talking about that it more. the yen -- have a look. we are coming off a third week of declines here on the end against the u.s. dollar.

we have a report coming that the boj may scale back its inflation forecast for 2018 to about 1%-one .5%. when you look at the japanese yen, a lot of the weakness we have seen is down to the dollar strength. a point when you look at the spread between u.s. treasuries, for example, and point -- have got to a i think we have a chart that shows you. the spread between these two has come to a point where it is very hard to ignore. that is the number one indicator many people say you should watch, because so far, it is widening, and the spread has really favor the u.s. dollar. if it goes further from here, it may have gotten a little bit too far. in the mix, the boj of course influences, because inflation

targets may be scaled back. yvonne: thank you. some of the largest china focused hedge funds are reversing losses they focused -- posted earlier this year as the stock market recovers. with industry soon be making a comeback? shery ahn is taking a look at some of the big players. reporter: some stabilization not only for the markets, but also the economy, so some relief after a year of volatility and market shocks, we are finally seeing the rebound continue. take a look at this chart, eureka hedge, the greater china hedge fund index, and you can see for the group, this is the worst year since 2011, but starting in june, you are finally seeing some rebound after that 8.8% slump during january. , again, 5.7% starting in june, not to mention

some big names like greenwood's: china fund worth $1.5 billion. they have been rising in september, considering that rebound, and some signs of optimism given the market volatility last month, just fell to the lowest in two years. yvonne: where do the gains come from? some sectors did pretty well, so you have to keep in mind that we are seeing a big divergence between sectors as well, but at least some sectors like tech. so take a look at goldman china, greenwood, in the bloomberg, you can see that if you type it in, golden china fund, you are going to see this fund did pretty well, gaining 3.3% in september and declined since the middle of the year. they say they have had some bullish bets on tech companies, energy, and consumer stocks, as well as some bearish bets on some hong kong companies.

of course, they do not identify which they were. ramy: to what extent does this signal a recovery for the whole industry? shery: we will have to wait and see, because at least for the year, the group has lost about 1%. some signs of optimism could come from data showing that the group as a whole has gained for three consecutive months. ramy: all right, shery ahn, thanks so much. back here in the u.s., fed chair janet yellen created a stir by saying she is continuing -- considering letting the u.s. economy run hot to boost demand. what would that mean for inflation? our central bank watchers answers that question. kathleen, what the janet yellen have to say first? reporter: her theme was macro economic research after the great recession, so this kind of big picture view, and she started by saying extreme economic events have often challenged use of how the economy works. she raised the issue of

thatresis, the possibility the great recession alter the relationship between growth and inflation, so that may be appropriate or necessary to allow the economy to run hotter than usual before raising rates. >> if we assume that hysteresis is in fact present to some recessions, deep the natural next question is to ask whether it might be possible to reverse these adverts -- adverse supply side effects by temporarily running a high-pressure economy. kathleen: a high-pressure economy, but will she tolerate higher inflation? she also said that the labor market-inflation linked seems to be weaker, so i think she is also suggesting stronger economy does not necessarily boost inflation right away, ergo, you can let it run. does that mean they are still going to raise rates in december? she did not say. ramy: it is just a couple of percentage points down from last week still.

looking at what happened after her comments, the yield curve did steepen, the dollar also rose. help me understand. kathleen: let's take a look at the yield curve. it maybond team put it, have shattered market complacency that is cap long-term yields lower than we expected, even as the fed has adjusted they're going to be raising rates. 30 year bond rates surging, hitting 2.56%. the biggest decline in the price and smacked 2015. you are looking at a wonderful chart, and it shows the difference between five-year and 30 year yields. , the highest27% since september 15. you can see on the far right that red card underscores this recent surge in the yield curve. why is this so important? we are not expecting a rate hike, the odds have not changed their, two thirds of a chance. it is not responding to that, it is the long and timely, bond

yields are moving up, prices moving down, this set is finally getting the bond markets ahead. if you let the economy run hotter and don't worry about inflation, you have more inflation. they certainly changes the discussion, not so much about december rate hikes, but possibly what happens in 2017. thank you, kathleen. the giants have denied a reported merger. a source told bloomberg that talks are underway to combine the state owned companies, sending shares of cited cams listed unit soaring. representatives responded to the report by saying "there is no such thing. oh stock exchange the companies have received no information from the government. china's push for reforms of state owned companies have not always worked out well for investors. for more, let's go to david thickly. david, good to see you. let's talk about this potential merger, despite them denying all

these reports. what would be the point of this? david: there is a long-standing logic here, essentially survival of the fittest -- the strong companies follows up the week line. you can look at some of these steel mergers that have been going on or underway recently curated -- recently. steel is a pretty good company, fairly low in debt, fairly profitable, and it is very much the opposite of that. putting those together is a way of mopping up the problem in the steel industry. i think this looks a similar sort of deal. as you say, it is denied at this sinoc but finally cam -- is a profitable companyhem, where as if you look at the most

recent bond perspective for cam mchina it -- che describes itself as a dumping ground for failed soa is. but those together, hopefully you have one decent company. yvonne: hopefully. when it comes to what we have the with chemchina potential latest one with sinochem, does it affect the chemchina-syngenta deal? about the thing to ever that deal is it is massively lopsided. this so $43 billion deal. syngenta has got assets of about 8 million, chemchina has about 1 billion and sinochem about 3 billion. syngenta 1.3 billion of net income in the most recent year,

chemchina lost about the same amount in the most recent year. about 43hem at million. how do you get this deal away? it is cast field, so it depends on debt finance, and the discount of syngenta to its offer price have been going to its lowest level for several months now. i think after we will see some interesting reports inside the mainland china business magazine, saying that over 15 billion elements of the finance package are falling through. this could be one way of dealing with it, if it was to happen. you could tap sinochem's shareholders and hope that would bring in more cash to make the financing package happen. ramy: thanks for much. china has launched -- government is working

hard to keep property prices in check and achieve growth. we will speak to someone about a tough balancing act. this is bloomberg. ♪

yvonne: you are watching "daybreak asia." i'm yvonne man in hong kong. ramy: and i'm ramy inocencio newark. first up, russia's biggest refiner is expanding into india. they are buying as our oil for $13 billion. the billionaire owners have been struggling to cut debt. they hope this will help them reduce their liabilities by more than 50%. the deal will be the largest investment in india, and is expected to be approved by the end of this year. yvonne: iran has invited potential investors to cement documents to prequalify as developers for its energy field. the oil developer is ramping up efforts to attract foreign business and -- with sanctions

prolific in january. interested companies have until november 19 to list their qualifications, and the government will publish a list of eligible bidders. ramy: italy's biggest bank merger, the decade could be a one-off. of the, the combination two banks was approved by shareholders on saturday and marks the first step in a process of consolidation urged by regulators, investors, and politicians. cover capital standards, increasing bad debt, and uncertain politics could slow further bank tieups in the country. yvonne: china will be in focus this week with a series of key data points coming up. it is likely to show growth comfortably within the government's target range. let's bring in the senior china economist, joining us live here in hong kong studio. it is great to talk to you. with the data dump coming in, what will be the biggest focus rio -- focus for you? credit, weerms of

have seen the credit impulse in china stabilizing moderately in the last month, we are expecting that to continue. that ties us into property, which continues to run quite a frenzied pace. we have seen some tightening with a fluid stream of policies in the last few weeks and more , we 20 cities, but overall saw very strong growth. we are expecting around 20% year on year growth in september. yvonne: we have seen that shipped -- shift from corporate debt to household debt. it is the mortgage that continues to be a riskier. at what point do you think that impacts consumption in china overall> guest: four household leverage, we are moderately more comfortable, starting from a very low base. if you look at the debt by in china, it is around 200 and 60%

gdp. the household we are talking about less than 40%, so it is a low base, low to the quincy rate. the default issue has subsided in recent months, has not gone away. it is still a risk. yvonne: the have seen the imf, pboc, it brings to question how long can this credit field continue when you have a housing bubble, businesses reluctant to invest. guest: demand for credit is very weak. i think they can actually continue to increase credit growth for a while longer, another year or two, without triggering a financial crisis. but it is not cost effective. increasingly more credit is being used to leverage debt, going to present the economy.

it risks increasing stagnant growth, which is exactly why we have actually, in the last quarter of two, started to see the government become more comfortable with long-term growth numbers and pick up the button again on starting to move forward on debt oriented reform. they are addressing not only which needs to, be done if they are to have any chance of bringing property prices under control, but they are trying to put more checks and balances in the banking system. about theseg property curbs, a lot of people are saying that what is in effect is more of a bandit. what do you think is more of a longer-term solution? guest: i think we are seeing the incremental steps that are longer-term solutions being gradually played out, it is just that they cannot release everything in one go. with the growth being in such a delicate state, with the property rebound seemingly ok, ,f you look at the roots

developers in city is still remain very cautious. i think the downward pressure on growth have not -- look at experts as well -- exports as well. they are trying to drown structural bounces inside the economy, reform on many fronts, not just yet but also in terms of fiscal reform, currency, etc., but we are seeing progress a step at a time. they will stop when they need to and take two steps back when needed, but they will continue to push forward when the situation allows. ramy: i understand thing is that there is a knock on effect essentially on hong kong's own property prices. a report out late last week said hong kong was not more affordable than some mainland chinese it is, because of what is happening in mainland china. do you see any rebound happening there? coming. long time i think without doubt hong kong

is one of the first ports of call whenever outbound investment leaves china. , you look atperty the hong kong shenzhen. fundamentally, where capital outflows are concerned, the appetite for onshore chinese corporate is to diversify the wealth overseas -- that is not going away anytime soon. has beense government tightening controls, but it will remain for some time. much, thek you so senior china economist at ubs. , china says the fight against pollution is at the top of its agenda. a dutch artist may be able to offer a helping hand. an inside look is up next. this is bloomberg. ♪

ramy: you are watching "daybreak asia." i am ramy inocencio in new york. yvonne: and i'm yvonne man in hong kong. air pollution has been a big

concern in china. it has driven an artist more than 600 kilometers away to take action. bloomberg got an inside look. >> what we are looking at now in beijing, you could say the largest cleaner in the world, which sets up polluted air, cleans it, and then releases the cleaner into areas like these, which are 75% more clean and the rest of the city. innovator.is and we are here now in beijing showing the power of this. so thisbeijing smoke, is the stuff we are smoking -- sucking up. this is in our lungs right now, incredibly disgusting. -- of this is made of carbon, and the inspiration came because when you put carbon under high pressure, you get

diamonds. this is the first smoke-free ring. people purchase it, and it will help to tell the first smoke-free tower. clean technology and clean-air technology has been around for 10 or 15 years, but always it has been indoor. started to focus on positive ionization. we teamed up with a great team of scientists and engineers, made it more robust, made it handle more volume, and it is the largest one out there right now. china will invest billions and billions of u.s. dollars. they have been doing it, and they will be doing it, so we are definitely part of that, making more of them in different parts all around china. you're talking about hundreds. but who will know where will take us? ramy: that is pretty cool, making diamonds out of china's small -- smog.

i would be up for that. yvonne: we still need more of those buildings to look like that. a great story from beijing. more to come here as the market opens in japan.

♪ yvonne: a warning from the brics , the global economy is weak and vulnerable. crown resorts plunges on reports 18 employees have been detained in china. apple puts the pressure on screen suppliers with the switch to flexible displays. ramy: more airlines banned the

note 7, and users may be fine. yvonne: this is the second hour of "daybreak asia". good to see you. some fedack, we saw speak with janet yellen talk about letting the u.s. economy run hot. hot.e: the buzz word is far, things looking bad, a slow start in asia. start.it's not a bad it is slow, lazy. just about on the fence here. when you look at what is happening across asia, it was

supposed to be a better start than this. valor-yen has pulled back. dollar-yen has pulled back. kospi up, factory output out of japan. softeningng to see curves in the market. mortgages you can take out will be scaled back, so maybe $90,000. that's a quick look across equity markets of the moment. a lot mixed, especially

dollar-yen. we could get new credit data and out as well.data out of guys. yvonne: we continue to see dollar strength this morning. what is our junkball point this week? dollar-yen, 104.09. 104.60 is what people see as the next resistance level. the other currency is the euro, trading below $1.10 here. it's about dollar strength. how much can this run further. we are seeing a little weakness their early monday.

guys. yvonne: thank you. the world's largest emerging markets pledge to boost trade as the global recovery remains fragile. summitual brics presented a united front on terrorism and reforming global infrastructure. tom mackenzie has more out of beijing. the host of the summit is the indians and the prime minister urged nations to double from between the brics $250 billion to $500 billion by 2020. the brics nations account for a quarter of the global economy, $16 trillion, but the background is one of political and economic malaise. you need to look at the recession in brazil, the

political tension in south africa, russia continuing to struggle with sanctions and a low oil price. and the question of china and the slow down there. just last week, exports fell 10% for september. in that context, xi jinping gave something of a grim view of the global economy. take a listen. >> the economic recovery remains fragile. global trade and investment have slumped. commodity prices are fluctuating. the underlying problems that could trigger a financial crisis have not been solved. he also called for greater economic cooperation between the brics nations. there were some trade moves between india and russia, who have talked about a eurasian free-trade agreement. there may be more details on that towards the end of the year. there was a report that india

and russia are looking at a potential $25 billion gas pipeline from russia to india, and of course still on the agenda for these nations, global changing,s particularly when it comes to institutions like the imf and world rank. ramy: terrorism was also high on the agenda. the indian prime minister specifically talking about that. any progress made? a yes, they tried to present united front. they called to fight global terrorism together. moves --our by chinese irked by chinese moves. there are these tensions between india and china. improve itsied to

relationship with pakistan over the years, and india and pakistan have their traditional and historical tensions, so india has been looking to russia for some support. the indian prime minister referred to blat amerco 10 -- to vladimir putin as an old friend. question over india's ties with washington. they wanted to improve relations. washington and moscow are icy, theery relationship week at the moment. ramy: thank you for staking that out for us. let's get to first word news. china has successfully sent they manned rocket into orbit in a step to running its own space lab. it was the third launch of the year.

they will spend 30 days there carrying out various experiments, including testing space food. ina plans to send a manned mission to the moon by 2025. donald trump taking a hit after sexual allegations and an old tape damage his that for the white house. new survey shows women in key battleground states increasingly prefer hillary clinton, giving her a 6% lead in the states. donald trump acknowledges he has lost women, but blamed the media for "rigging the election." mine fromwill buy a new crest. the deal still needs regulatory approval. the company reaffirmed its production outlook for 2017. north korea may face a new round

of international sanctions after firing a rocket. u.s. and south korean defense officials say it was probably a mid range ballistic missile that claims to be able to reach targets in japan. it blew up immediately after the launch. it was the 23rd launch this year , and it has also tested to nuclear weapons. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy: shares in crown resort slumping after 18 employees detained in china for "suspected involvement in gambling crimes." let's get over to paul allen in sydney. what happened that led up to these arrests? hard toformation is

come by, but what we do know is that raids were conducted thursday and friday at crown's offices around china and 18 people were detained, including three australian nationals. one of those nationals was the head of vip gambling. that raises interesting ing.tions about tim from theial line chinese authorities are that australians are under terminal the tension forces acted involvement in gambling crimes. investors concerned, shares dropping the most in eight years. what is the reaction so far? paul: crown resorts treading carefully with the official line. that is understandable. crown has been unable to speak with those employees and yet to

get exact details from the chinese authorities about what exactly the charges are. so apart from that, no further details. is australian government also looking into this and consular officials made be able to visit those detained officials in the middle of this week. yvonne: we know that china is a big part of crown's revenue. what kind of financial impact might this have on crown? upl: high rollers make between a quarter and a third of crown revenue. just down the road from the bureau in sydney, crown is having its first-ever casino in new south wales. it will be one of the tallest buildings in sydney, six star hotel, one of the intended markets for this is chinese highrollers, so questions are being asked about whether these detentions are part of this

crackdown we have been seeing on china on illicit funds flowing into casinos. the nerves and uncertainty around all this are perhaps why we are seeing crown chairs get it pretty hard today. yvonne: down more than 10% steel. -- still. thank you. ramy: our next guest says don't hold your breath for a fed rate hike. we talk investment strategy. this is bloomberg. ♪

watching "daybreak asia". yvonne: china construction bank has agreed to a 700 ward he $3 tillion that to equity pac

part of a larger framework deal to cut debt ratios. thes the second program bank is revealed in the past week with a state-owned enterprise. policymakers release guidelines for reducing corporate debt. will meantime jr kyushu set its ipo price, $23. the company will list in tokyo on the 25th. raisempany is seeking to $4 billion and aims to reduce its reliance on japan by investing in residential and commercial property. yvonne: passengers who try to take note 7 smartphones on flights will have them confiscated and may face fines. expandsgency order restrictions on the device is linked to two 100 incidents of overheating and higher. cathay pacific and dragon air bannnedlatest to have a

the phones. a look at the markets now, mark matthews. he joins us live from singapore. good morning to you. all this talk about this , do you see any meaning for on the markets this morning? >> i suspect so, because those are fighting words. at the history of the fed and what they say and what they do, you don't want to spend that much time looking at this stuff because otherwise we would never get any sleep. admitted thatly they don't want to raise rates, then asset prices would skyrocket, so they need to have a few hawks scaring us once in a while. very strong words, so

i think we can be comfortable that rates won't go up this year. yvonne: i know we don't get enough sleep as it is. is this another excuse for the fed to delay hiking rates. are they really going to keep rates low despite the fact that inflation surpasses 2%? >> i guess so. i saw itemember where before, so i have to be careful, but i think she also a looted letting the economy run hot for to lettingalluded the economy run hot for a while. their pce, which they say they like to look at, is still below 2%. if you come back to who are the voting members, when we read the minutes and they say some members think that they should raise rates or several members think they should raise rates,

several and some are not the same thing as most, so it is still a minority within the fed that actually wants to raise rates. yvonne: a minority that is making quite a bit of noise. , getting a lota of data this week when it comes to credit, gdp, the export figure, certainly disappointing. could this renew concerns for the fed? you are right. the export number four september was strange, but when i look at it in the context of all the other data, i think it will end up being some type of statistical anomaly, because growth was about 7% versus 3.5% year to date. imports of commodities like iron ore and copper, we are still quite firm in the month of september. because of some typhoons and a shutdown in several import

imports in the river delta during the g-20 meeting, that softness was probably an anomaly. the important number in my opinion was that ppi for september, which turned positive for the first time in 55 months. i was going to go into dollar strength. the dollar has been at its height in seven months, up 4% since its 52-week low in june. i want to know what impact that my have in terms of the asian market. i know you don't think the fed funds will see a rise this year. yeah, well, on balance, the dollar should probably can 10 you -- probably continue to be the better of the major currencies, but it is a lousy bunch, the yen and the euro basically. the other guys are going to

raise rates either. importantly among the two i mentioned, tokyo's core cpi turn negative for the first time since 2012. that leads the nationwide cpi, so they announced the tokyo number a month in advance, so i believe that is a signal that inflation in japan is probably going to turn negative sometime around the beginning of next year, so the yen, i don't see that going up, and the euro, i don't see why it should go up, so on balance, the dollar, yes, but only a modest rise. of compellingt reasons for the dollar to breach 100. ramy: one of your investment themes focuses on the united kingdom, the brexit vote, triggering next march. the telegraph is saying ministers are prepping for the most extreme form of rags it. how do you navigate that looking

ahead. ok, well, the first thing i would say is that, and i'm quoting napoleon, he said that britain is a nation of shop keepers. make fun ofng to them, but basically the bankers in london and the oligarchs and whatnot, that is a different part of the economy. most of britain's economy will not impacted by brexit. notr stock market is reflective of their economy, because only about a quarter of revenues come from the u.k. the pound falls, it is great for the earnings of the company's there. and many of the bigger companies only get 3% to 5% of the revenues from the u.k. of self, so there is great currency

advantage that their stock market and economy will reap the rewards on. they have very good quality companies. quality companies means a high return on equity, low debt equity, and if you look across the board in europe, the highest quality companies are in the u.k.. leave itwill have to there. mark matthews, head of asian research. think you very much. up next, apple wants to go organic with led displays on his next iphone. we will look at why that sounds unhealthy for japanese suppliers. this is bloomberg. ♪

ramy: you are watching "daybreak asia". thene: apple aims to make next iphone better, brighter,

and longer battery life by adopting oled screens. how exactly are they going to in prove? energy,s in journe brighter, crisper. planning as we have reported to adopt the technology. is that samsung supplies 99% of the market. is looking for new suppliers. you talk about how apple will change the game. what kind of pressure does that put on suppliers? >> it is a huge opportunity and a risk.

on one hand, you get a guaranteed instant demand for millions of these screens, and apple typically likes to have 2-3 suppliers for each component , so there is a steady stream of business to look forward to. the problem is that it requires upfront investment, 1.5 billion dollars to $2 billion. for these two companies in particular, where finances are sharp is, even though part of foxconn, it is a gamble. it is one they probably will have to make if they want to stay in the game at least in terms of supplying smartphones. ramy: if the suppliers decide they don't want to build new plants for apple, what are the options? >> there are not a whole lot. there is still demand for

regular lcd screens, but you asl see those edged out costs come down and more people prefer better technology. the has been the story for past 20 decades in terms of processors and screens. if that does not happen, we may see consolidation, other buyouts, but at the moment, they are at this point where they need to make a bet and accept the huge risks and opportunity. ramy: thank you very much. let's take a look at markets trading in the asia-pacific. sentiment getting better now that japan and korea are back online this monday morning. the nikkei 225 up by .5%. talk about janet yellen willing

to let the economy overheat, encouraging inflation to accelerate. debate, why janet yellen is considering letting the economy run hot. this is bloomberg. ♪

yvonne: we are half an hour away from the open of trading in singapore. "daybreakare watching asia". non-oiled the messick exports falling year, down 4.8%, slightly better than what economists were expecting. dropped whenmanic exports were flat in the month of august. month on month, up 2.4% month on month. that is after dropping some 1.9%

in august. the singaporean dollar, weakening ahead of that data. u.s. dollar.he residents has warned the global economy is weak and honorable to problems that could trigger a financial crisis. said the underlying causes of the 2008 crash have not been fixed. the threat remains of a repeat. represents a quarter of the economy at $16 trillion. >> the economic recovery remains fragile. and investments have slumped, and commodity prices are fluctuating. the underlying problems that could trigger a new financial crisis have not been solved. >> crowne resorts plunged on news that china may have launched an investigation. beijing has confirmed they have

detained a number of staff, including three australians, on suspicion of gambling related crimes. chemchina ands kim joi sinochem deny a merger plan. this is "daybreak asia". global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonne: david is by the boards for us this morning. david: markets have turned positive.

drop, sog off a weekly a little buying coming through south korea is up a quarter of 1%. trying to forecast and export number out of singapore is almost a fruitless exercise. a little bit of a pick up here and here. let's look at the forex markets, dollar strength coming through. 104.21, so coming off a third week of declines for the yen against the u.s. dollar. a lot of what has happened in the dollar strength, people have tried to digest and are looking at yield spreads. when you look at dollar-yen, have a look at the spread between the two year and the

jgb. we are getting very close to a level which is hard to ignore. levels where the spread is wider, then you tend to get flows back into the u.s. dollar. you will getens, money flowing back into the u.s. dollar. yen, have a look at this, 104.21, pushing extreme levels when you're looking at fibonacci retracements. ,ne other currency, korean won up back to levels last july. we saw a drop in the currencies, but any big stock moves? we talked about crown

resorts and what is happening in china, down 9%. heavy, a report in might be looking to divest its non- shipbuilding businesses. o.en of course tepc that it nuclear plant wants to restart. one reactor, $96 million profit per month. was just elected as the governor of that prefecture, and he's known to be anti-nuclear. the stock is down its most since the brexit vote. yvonne: thank you. the people of thailand have been told that it may be 12 months before a successor is named.

the crown prince has asked for time to grieve. no date has been set for the kings cremation, which is usually months if not years later. official suggested it could be at least one year. travel agents, and cruise operators are bracing for a slowdown following the death of the king. one-year of mourning, everything grinding down. what is the immediate reaction from airlines. >> we've talked to several operators in the region, and they're trying to figure out what sort of impact as will have on tourism. the immediate impact so far is that business is as usual.

they are trying to assess how much tourism might be affected by this, what might be affected, how many people might not want to go to thailand, but right now it is a bit too early to make a full assessment of what is going on. looking generally at the tourism industry, something like 10% of gdp, high season around the corner, what are folks saying about the impact? >> because we have this one year ning, there is a bit of concerned that as we approach the year and holidays, thailand is a favorite place for a lot of people across the globe to come and have their holidays in thailand. there is concern that with some ing, restrictions

on entertainment, it might not make it as interesting for thailand, soto airlines and travel agents are watching closely to see what the thailand government imposes. the government has sort of told them that much of the tourism plans that they have put in place will go on as planned, but you never know. i think that is what is raising concern in the industry right now. days we will know in the and weeks they go by. thank you. janet yellen created something of a stir by saying she is considering letting the u.s. economy run "hot close vote to boost demand. what will that mean for inflation. what did janet yellen say on friday? >> she was speaking at a boston fed conference. she was asking the question, did the great recession change the way the economy work. thataised the possibility

the great recession alter the relationship between unemployment and inflation, so it now may be necessary to let the economy run hotter than usual beef racing rate. after deepsume recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a high-pressure economy. she also noted the labor market-inflation link seemed weaker. it does have the bond market worried. didn't see a sharp increase in the bond market off her words. why? havenet yellen may

interrupted the complacency that has been around. on friday, we saw the biggest two-week jump in yields since may 2015. this chart shows that the yield curve has steepen the most since march, the difference between five-year and 30 year yields at the highest since september 15. the rate rise odds have not changed. the thinking about long-term yields rising if the fed let's inflation run hotter. what will bond markets be watching? >> friday, the retail sales data . they came in on the soft side, the atlanta fed cut its estimate to 1.9%.

early august, 3.8%. world will be watching inflation on tuesday, industrial production on monday. stan fisher will speak on monday around noon. we will be wondering to see if he repeats what he has already said. also, maybe he will weigh in on inflation. he has been more in the camp that gradual rate hikes are needed to make sure inflation does not get out of control. a lot of eyes on stan fisher after janet yellen speech. yvonne: thank you. one of the largest china focused hedge funds is reversing losses. let's ask that big question, what are we seeing her? some relief for

markets in china's economy. hedge funds are continuing their rebound. we are seeing this after a year of volatility and market shock and finally some relief for china focused hedge funds. they had deeper losses than their global counterparts trailing behind global counterparts for the first time in five years having the worst year since 2011. have a look at this chart. these china focused hedge funds have obtained a rebound of more inn 5% after a slump of 8.8% january during that market route. finally some signs of life, market volatility has fallen to the lowest in two years. ramy: where did these gains come from then? >> some sectors have performed

well, tech sectors, not just hong kong, but also the u.s.. this one fund called the golden china fund is worth $1.5 billion, take a look at what they've done. can type in golden china fund and you will see this huge uptick starting in may, and in september, they gained 3.3%. they are saying that their drivers of growth have included bullish bets on u.s. in hong kong listed tech firms, energy, and consumer stocks, also some bearish bets on hong kong listed companies. we are still seeing forts straight months of gains for golden china fund. straight months of gains for golden china fund. for the year at least, the hedge fund group as a whole has declined and we still have to

bring months to go, so we will see where it goes from here. a positive sign could be that china focused hedge funds have seen gains over three consecutive months and a number of funds with positive returns for this year, more than tripling since june, so some signs of life again. ramy: thank you very much. , boosting the banks, how the great rate debate is lifting u.s. lenders. this is bloomberg. ♪

ramy: you are watching "daybreak asia". yvonne: a quick check of the latest business flash headlines. russia's biggest refiner expanding into india. buying a producer for $13 billion.

the move will help them reduce liabilities and be the largest foreign investment in india and is expected to be improved by .he end of the year iran seeks investor qualifications. the government will publish a list of eligible bidders at the beginning of december. italy's biggest bank merger is the biggest one in a decade. it was approved on saturday and marks a process of consolidation. tougher capital standards, increasing bad debt, and uncertain politics could slow

further bank tieups in italy. storyanks of were the big on friday with jp, citibank, and wells fargo all beating profit estimates. trading revenues are booming. icc was the big lift for two of the banks, j.p. morgan and citibank. let me give you a quick recap. profits, eps beat the estimates. $1.59 versus $1.39 there. that's the good thing. all net income figures beat their estimates. caveat, one copy out -- one of them was lower and we are seeing bounceback because of the rate debate happening. we're seeing fed fund futures

rising on the possibly for a fed rate hike as early as december with a two thirds percentage chance or so. let's take a look at what is the big lift for these banks. first, look at this , $4.33ne, this blue bar billion in terms of the ficc revenue growth. this is its biggest percentage jump since 2009. 8% percent jump, so huge, especially with what has been happening over the past year. let's flip the chart and i will show you another one from j.p. morgan to citibank, a similar story here. once this comes up, you will see thatve this blue bar chart

has growth of about 35%, the biggest jump since the fourth quarter of 2012, a $3.5 billion bump in revenue, up more than expected by $500 million. yvonne: it was some marginal beat with all the banks, but the egg focus has to be wells fargo. it looks like more financial fallout from its fake account scandal. it costs the ceo his job last week. ramy: a huge amount of turmoil from wells fargo. we're seeing tim sloan take up the new ceo position. let's take a look at the terminal and see what has been happening in terms of community banking, net revenue. we are starting to see a knock on effect when it comes to this. here the consumer checking accounts problem is.

down relative to the past quarter year on year, a huge fall. numbers,on, some customers open 30% fewer accounts from september versus august because of the financial accounts handle. credit card applications drop by 30%. in person visits with branch bankers, people are going less and less to wells fargo on the order of 14%. with that said, that is just with wells fargo. on the whole, they all be profit , ifmates, and looking ahead past is president, we might be in for a better financial look ahead in terms of earnings coming out. at bank of america reporting before the bell, so potentially a surprise there. yvonne: coming up, cleaning up its act, becoming a leader in clean and green energy.

we talk more about that next. this is bloomberg. ♪

ramy: you are watching "daybreak asia". for a quick look at what is coming up. resorts in sydney taking a beating after 18

employees were arrested in china. controlled byany billionaire james packer. the search for yield, and yield is expensive. mp not on the hunt for global yield. a look at the week to come, a lot of data coming out. talking about china gdp wednesday, factory output, retail sales, fixed asset investment. that is all to come. indeed, back to you. yvonne: thank you. . an unlikely poster child for green energy, the first chinese have a fleet of electric

vehicles. let's bring in our asian alto editor. what lessons does this offer for the rest of the country? know, china is on a mission to reduce air pollution. relies one strategy electric vehicles it really is a poster child for industrialization. it was worse ranked than beijing in terms of air pollution at one time. ,y replacing its fleet of taxis it has become the first city to .o so

the results so far have been encouraging. pointsber of charging are up. ramy: this is promising as well as exciting. i understand that the taxi fleet is made up of 8000 taxis, and private operators are now setting up charging stations, but is there enough business to go around? vehicles toric really take off in china, you need a private buyer, a rich motorist to adopt them. what the government of taiyuan has done is put in a base of demand by replacing its fleet of taxis with electric vehicles. by doing so, they are encouraging more charging stations to be set up.

this is being done with the hope that the private buyer would the ease ofause now charging is no longer an issue. ramy: our bloomberg news asia auto editor. thank you for the reporting. yvonne: let's take a look as we wrap up "daybreak asia". ofgapore opening at the top the hour after a slightly them better expected export figure, non-exports falling still, but it was after that dismal gdp figure we got last week. that is it for us here on bloomberg markets. 20 more to come here. ♪

i am rishaad salamat. haidi: this is "bloomberg markets: asia." ♪ plunging,own resorts 18 employees detained. haidi: