♪ betty: the united nations putting sanctions on north korea, confident they can bring the nuclear program to a hau lt. in manila,nsions saying chinese actions in the south china sea have eroded trust. positive payroll numbers expected to lift asian markets. the yen little changed after friday's slump. tieups, but is

it a risky strategy? is daybreak asia coming to you from u.s. and asian headquarters. i am betty liu in new york just after 7:00 p.m. hongst after 7:00 a.m. in kong. a positive note in asia. pretty incredible that we can monthins of 200000 and given how tight the market is. we had a guest in the last hour who said it looks like it is short covering. in the dollar. we will have to see how the dollar trades this week to tell if we have seen a reversal in the declines in the dollar. if you are looking at the boards right now, we closed higher. the dow up 66 point. the s&p and nasdaq closing in the grain. president donald trump in the white house, absolutely 100%

right away tweeted these numbers on friday saying "we have created one million jobs" since the president was elected. taking no time to take credit for the job gains. that is lifting some of the stocks in asia. yvonne: we have only just begun putting the carpenters who are about to break out into song. the dollar.jump in we did not see it move in chairs premarket, expectations for more tightening from the fed or another rate hike premarket. this could keep that year rally in asia going a little longer. let's look how things are trading in new zealand. that we got on wall street on friday, down .1%. at .7415.ollar australia, the key thing to walk

is the opec and not opec meeting in opera dobby discussing compliance with oil output. non-opec meeting in abu dhabi discussing compliance with oil output. discussing gains of 24 points for the opening. for japan, big earnings out today, including the likes of softbank. seeing dollar-yen, 110.78 on to levels that . it looks like we will be breaking above the 20,000 psychological level in tokyo. let's get to first word news. morning. venezuela claims to have defeated a u.s.-backed attack in an army base. were arrested after social media showed images of soldiers declaring a

rebellion. security has been tightened across the country with military checkpoints in caracas and elsewhere. observers say the story echoes another attack on a base earlier this year. say that some golf lenders are refusing to roll over holdings when they mature saudi-led qatar's isolation. they fear they could face repercussions from their government for continuing to do business with qatar. no intentions of stepping down despite the bank being sued for money laundering and terror financing. he has been the ceo since 2011 and remains committed to the job. monitoringsed of not accounts at atm's that can be instantly transferred to accounts in australia and

beyond. more sanctions on north korea in response to recent icbm tests. it'll cut exports by 1/3 and cap the amount of citizens working abroad at current levels. china is optimistic the move will bring north korea back to the negotiating table. this is bloomberg. ♪ yvonne: north korea was on the agenda at the meeting in manila. let's bring our correspondent who was at the meeting and has a reaction among the delegates. >> the acknowledgment from the delegates that the un security council did what it needed to do. the finance minister from australia released a statement saying it acknowledged that the north korean missile launches are a grave risk to the peace

and stability not only in asia but the rest of the world. reaction from china, said thatgly, china they might to bring north korea to the negotiating table. that is yet to be seen. remember that china has always warned that sanctions should not be the end game. learization must come through negotiations. they say that sanctions, even when it escalates, that could go to a critical phase. thenow that china is biggest ally of north korea, the biggest trading partner by far. the fact that china agreed to the sanctions is a reflection that it knows the gravity of the threat that north korea brings with its nuclear capability. the question now is if the

sanctions would work. i put that question to the australian foreign minister in an interview yesterday. sanctions, in addition to those that have been imposed in the past, the message is clear. members,permanent including china, russia, are determined to prevent north korea from continuing down this path. how effectivee they are. of course, it has only just then announced. we must maintain pressure on north korea to change its behavior. it is a risk to the region and a global threat. >> there is general concern that that the sanctions will not be able to completely put a stop to north korea's nuclear program because it is at such an advanced stage. we know it has been indicated

that missiles can reach as far as the u.s. therein lies the huge complication. always, bilateral talks from the sidelines of the meetings between china and north korea. what more came out of it pushed ? >> you are right. geopolitics hijacked the meetings over the weekend with lots of bilateral meets, including north korea and china. the chinese foreign minister met with his north korean counterpart. he urged north korea to react the sanctions imposed by the un security council, and urged the nuclear missile launches. what is interesting is that china took it upon itself to speak to the u.s. as well a south korea, encouraging them not to raise tensions with south korea.

negotiations must continue, talks must continue, and denu must be done through negotiation. it is about finding a solution to the problem. other bilaterals took place. one meeting that caught our attention was between the u.s. secretary of his russian counterpart. amid ais meeting came backdrop of versioning relations between the countries. the u.s. agreed to impose sanctions on russia, and russia retaliated by forcing the u.s. to remove 1/3 of the diplomatic corps. the two sides have agreed to work on syria. syria is the sticking point. the u.s. has put pressure on russia to help resolve the issue. rex tillerson has said that he is confident that there is no

way that a boscher al-assad will continue to govern syria. whether or not that will materialize, we will see. betty: a lot on the agenda. we will be talking about that with our guests. thank you so much. now, let's talk about things that are happening in the u.s.. the man who appointed former fbi director robert mueller to investigate the russian influence in the 2016 election says it is not merely a fishing expedition. it was a rare appearance from rosenstein, who refused to confirm if the grand jury has of the agenda. it was unusual to see the deputy ag talking about this. what was behind this? what details did rosin stein want to bring out the interview? tohe went on to fox news

primarily talk about the 's newment of justice effort to crack down on leaks from the administration. he could not avoid the rush of probe, something hanging over washington these days. confirmhe would not that there is really a grand jury that has been impaneled, but he did not deny it. he said that a grand jury help us in the process of digging up information. one thing that was very interesting was that he said anything that special counsel robert mueller unearthed in the course of the investigation is fair game. interesting, because, as we know, president trump has said that there is a redline that he considers in the russia investigation. that is basically don't look at my family's finances and don't mess with my family. said,on what rosenstein

we might be at that redline. betty: have we heard anything from president trump on this? >> president trump is in the middle of a 17 day stretch at his golf resort in new jersey. he has been pretty quiet and subdued on twitter since he got there. a lot of people think this might be the influence of his new chief of staff john kelly, a retired marine general. kelly has imposed new order on the white house. it seems that flows all the way to the oval office. we don't know that kelly is vetting everyone, but the president has been not on the rampage this weekend. yvonne: meeting some discipline on the twitter account. congress also on break at the moment. does that mean we are in for a

quiet time in d.c., or could we see personnel decisions and policy moves when they are both away? >> that is an open question for sure. with john kelly having moved to the white house, president trump will be on the lookout for a new secretary of homeland security. that could trigger a domino effect. how heas been talk about would possibly like his cia director mike pompeo to come to the department of homeland security. if that's the case here be looking for a new saieh director. he also has the position of kim ciasions -- for a new director. he also has the position of communications director open. it is possible we could get personnel announcements in the next week to two weeks. yvonne: thank you. looking ahead to what we could on daybreakty ahead

asia. a strong first half for the owner of the peninsula hotel and to thenic tram ride peak. we're joined later this hour to discuss the outlook for the rest of the year. betty: we are back to the diggers and dealers conference in calgary to talk gold. 10:30 watching in sydney. yvonne: do not miss our chat with the former world bank president in bloomberg markets. he is also in calgary and will join us 10:50 hong kong time. 12:50 in sydney. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." on thelet's get more

latest sanctions on north korea, unanimously passed by the un security council. our next guest says a trip to pyongyang should be on the president's priority list, and they should abandon a one korea policy. you say that we should be implementing a totally, radically different approach to north korea? >> i think that they key is recognizing. everyone is starting to recognize that the path to a resolution and north korea with this nuclear issue is through china. china has the overwhelming influence and the ability to effectuate genuine change, genuine reform in north korea. the question is how do we is ince china that it their interest? i think that china would prefer , evenmewhat unstable nuclear regime to the concern

about the growing u.s. influence, growing south korean influence. they like having a buffer. i think that when china comes to the realization that this nuclear north korea is jeopardizing its interests, it will take action. i think that a smart u.s. strategy has both carrots and sticks. betty: what about the sanctions this weekend? isn't it a step in the right direction? cry from whatfar the international community had with iraq and iran. ofis not that type sanctioned regime. if we really saw china getting tough, they would be cutting off field supplies to north korea. i think on the margins this will help. china has made it clear that the purpose of these sanctions from their perspective is to bring north korea to the table. the only real party that north

korea has to talk about his china because they have the real influence. we have to persuade china that it is in their interest to make a fundamental change. mentioned last week about abandoning the one korea policy, a radical approach of that is needed. what do you mean? does that mean establishing formal diplomatic relations with the north? jay: not at all. i am suggesting that the united states should make clear to china that the northern part of that peninsula is its priority, its responsibility. that if there is a collapse of the regime we are not going to rush in and try to assert u.s. influence and unified the peninsula under south korea. an fms something that is it to china. they do not want expanding u.s. influence. if we explained that this is its

problem, you have to deal with it, you have to solve the problem, and if you don't there approach thatthe are short-range missiles and missile defense systems in the region to protect u.s. interests . i wouldn't go that route without first offering china and incentive and inducement to solve this on their own. north korea, they continue to go on this complete parade of showing off its nuclear ambitions. they continue to drain their resources. every couple of weeks or so we hear something from pyongyang. i way underestimating how long they can keep up the parade? jay: i think they can keep up with it for a long time. when you're dealing with a country that isn't really a ationstate, it is dictatorship surrounded by maybe 10 to 15,000 people around this cult of personality.

they are happy to starve most of the population. they have done it periodically with famines. when the international community sent in food aid, they sold it on the black market to support the military. i don't think that sanctions will necessarily bring north korea to its knees. they: are we overestimating nuclear capabilities? they have only fired the missile straight up. the only way you could tell is if they fired it at a target. jay: i'm not sure that i would want seattle or san francisco to be that target. the way the you develop missiles is that you test through failure and you learn to limit treat and and -- you learn telemetry you learn more of with each success. even if it is a year the united it has to the issue

deal with, strategically. it cannot just tell china to solve the problem, it has to come up with a mechanism to bring china to the table. betty: thank you for joining us. ellis.er at kirkland and still to come on daybreak asia, this is bloomberg. ♪

yvonne: southeast asia's largest technologicalg a transformation. digital has already paid off. >> the impact on our revenue , for example, the mortgage , all of them are seeing important increases in revenue. gauge withitized the us. we are seeing movement on the expense side because the cost of

acquisition is lower when we do as well asy processing costs are lower because it goes straight through. ago 46% a couple of years to 43% now is a testament to the improvement in the income and cost lines. the other benefit is the ability to realistically look at expanding into markets like india and indonesia at some scale. were finding it hard to expand into those markets, because a brick and mortar strategy is hard to make work. >> you were the first to identify alibaba as a potential competitor in singapore. with the digital transformation are you prepared to face alibaba and tencent head on?

>> there is a lot more. cultureore nimble, the is becoming a little more startup-like. they are still a formidable competitor. is thathe advantages the cost of customer acquisition is low because you are sitting ofhundreds of millions customers. it is different from the 99% that were small but have to spend a lot of money finding customers. that isn't true for alibaba. said it ishas prepared to use regulations to allow banks to acquire digital platforms. is that enough? will that level the playing field? the bank and make visible. the long-term view is to make

dbs invisible. people do not want to do banking in and of itself. people want to do something else , they want to buy house, a car, go on holiday. invisiblyg should be and seamlessly hidden in something you want to do. if we can work with partners to hide the banking service in something the partner provides it would be a big step in the direction we want to go towards. some is encouraging in this time frame. >> are you in talks to acquire digital platforms? >> we are in talks all the time. one third of our customer acquisition comes through chinese partners and not directly. that is the difference in our philosophy and approach. banks used to be pipeline

companies, today we try to be platform companies to engage in equal relationships and bring customers in through chinese partners and use china to improve our range of product offerings. ♪ ♪

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outside. you're looking at the icc on the calendar. already minutes away from the first market open. it looks like gains in asia. a beautiful night here as well. dusk, i should say in new york city. the markets closed higher with a gain of for the bulls on friday. you are watching "daybreak: asia ." let's get to the first word news with ramy inocencio. confident that

u.s. sanctions will bring north korea to the negotiating table and end the strike word ballistic missiles. the foreign minister met his north korean counterpart. china is urging pyongyang to act its exports are worth about a billion dollars each year. the man who appointed a special counsel to investigate russian meddling in the election says the inquiry is no fishing expedition. rod rosenstein says that if robert mueller finds evidence of criminality, he can pursue issues further. a grand jury was appointed. that indicates that he may have found something. foreign reserves were released, with its stockpile of international cash rising above the $3 trillion mark. trillionare at 3.75 dollars. that shows a rise from the january possible low --

january's lo0w. new funds are expected to be raised by march. they say many lenders have secured government permission, and some have raised new capital. need's public sector banks to meet requirements which go into effect in march 2019. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ramy inocencio. this is bloomberg. that faster jobs rate has kept unemployment at a one year low and supports forecasts for gdp coming in. 2% in the first quarter. is that enough to boost inflation? that is the million-dollar question. kathleen hays is here with a look. we did not see such a big backup in the treasury yields. kathleen: we didn't, and i think

that is because even though this looks like a healthier of and jobs growth is supporting the idea that growth will keep going, maybe one key part is wages and inflation. we will talk about some of the numbers that point to strength, because payrolls rose in july. let's bring up the chart, because it will help us see what is going on. see payrollscan rose. this is the three-month moving average, and it is up to $186,000. and it got better. low --yment, the 16 year let's get everyone straightened out. we have a 16 year low. that is all very good, however enough to makeng

the kind of growth that donald trump would like to see. our intelligence team knows it is signaling this level of growth is consistent with gdp growing 2.5% in the second half of the year. let's look at another chart because i want to dwell on this point about jobs. if you look at this chart,2528, this is payrolls growth. 1986 when you had well over 5% gdp and inflation at 4%. gdp has dipped down. jobs have stayed pretty strong. will they get back together? will gdp rise up to jobs? that is the question. i want to bring this to donald trump's administration. the economic council is said to be the next fed chair when janet term ends. he acknowledged the administration has more to do to

create more growth and jobs. here is what he said. >> we need to create the jobs like getting rid of regulations bogging down industries. we need to reform the tax code. that is what we are trying to do. we are committed to doing it, and we feel confident that we can get that done between now and the end of the year. admitted,d gary cohn we need to see more wage growth. we are not there yet. kathleen: we need to watch the wage growth. yvonne: is it rising wages as well as inflation? kathleen: if you get higher wages, inflation has to follow. this is the conundrum, the puzzle. inflation, theer average earnings is at 2.5% year-by-year. i want to show you another chart to illustrate this point about what the fed is looking at, because the focus is turning to the friday jobs report at the end of the week.

we see two liens. -- lines. the turquoise line is the court cpi. -- the core cpi. inflation has turned down. they want to see that turn up, according to one of the bond kings. they say the fed it will not raise rates until they get back to 2%. we will look at that cpi report on friday to give the fed a strong signal. yvonne: thank you. earnings.about toyota and mazda have confirmed to take a stake in each other plant in the united states. the plant is to build the new corolla and mazda crossovers from 2021, creating new jobs. president trump tweeted praise of the plan, calling it great

investment in american any factoring. toyota will also make cars in mexico and canada. >> our production systems can respond to rapid currency fluctuations. ourcally, we would procure components locally, and produce models in different locations, such as fan, the u.s., or elsewhere in asia -- such as japan, the u.s., or elsewhere in asia. let's talk to our analyst. it seems like news of this was overshadowing the earnings report. how significant is it? >> it is significant. it is significant for our industry. in the past, we heard a lot about electric vehicles, autonomous vehicles. as the car's move high-tech, it gets more expensive to develop. need to tighten

up and spread that risk and lower the r&d costs over time. betty: they need to beat out the apples and googles. honda is alone wolf that needs the announcement. is that going to be a risky bet for them? have seen potential consolidation for the japanese auto industry. last year, we had toyota tying up with suzuki, again, for the same thing. mitsubishi and nissan last year are also tied up. it is forcing the hand for honda. honda does need someone to tie up with over the long-term, make sure the economy of scale is reachable. yvonne: i am curious on the political side of it. the states want the plants in these -- in their areas.

president trump is clearly happy plansthat, seeing these being established. how might that affect how these japanese companies operate in the u.s., and their relationship with those in washington? i am curious on that angle. steve: it is one of major factor in relocating the corolla plant. potentially now there is worth in mississippi. toyota builds corolla in mississippi. there is a vacant lot next to a plant that they can use. think isics aside, i this is business. what they need to do is reassess and look at what the potential cost savings are. mississippi seems like they are coming to the table and providing some incentives, so now it makes sense for toyota and must to build corolla in the

u.s. rather than in mexico. particularly on the political side. thank you, steve. the u.s., the weekend in wall street promising more headlines. economic earnings will dominate the headlines. we have the run down. we have major earnings. we are mostly through earnings season. that is important to note of the s&p 500 companies, most have had positive surprises. only 18% negative. let's go through some of the names. disney is reporting about 3% am a relatively flat. it shows you the tough terrain the media companies are negotiating -- art mcgavin -- are navigating. the nine.e on tech is up 57%.

this is one of the winningest stocks of the year. report 3-d graphics, processors, and related software are their businesses area -- businesses. let's go to the bloomberg really quick. winninglk about momentum. look at that white line. it goes up and stalls out in recent weeks. look at the bottom line. the guilt low is the advanced decline line for companies that have failed to advance after hitting their peak year over year. inice how that has declined the recent week, as we have seen the s&p stall out. that is an interesting factor. can we get momentum as we enter the week? onther stock was up 15% friday. it has been under a lot of turmoil. well.o -- it is doing

>> it has been investments in technology, investments in the member experience. it has been a focus on products, and certainly the partnership with oprah. and she hasd --su: a stake in the company. she has made a lot of money in the last 48 hours. yvonne: i am sure. a lot of earnings this week, but we also have the opec-non-opec meeting coming up. what are you looking at? su: we are interested in the opec-non-opec meeting coming up, because oil production is at a near time -- a near all-time high. interesting to see if we can get above that level. what is also very interesting is we will get some economic

reports. chief among them are consumer prices. belowion remains slightly the fed target, so that is an area people will focus on. in terms of some of the news in the spotlight, the federal courts will be looking at a trade's secret war between uber aymo, which is the outlook that-google owned self driving unit. is a lot on the trade secret war. that will be a fascinating development that will impact those stocks in the week ahead. joining us live from new york, thank you. it has been a headline week for one of hong kong's tourism operators. we will have that next. this is bloomberg. ♪ betty: we are counting down to

asia upon first market opening -- asia's first opening this morning. rise, shall we say, after the friday close in the u.s. this is "daybreak: asia." hong kong and shanghai hotels pushed a profit that more than doubled. an evaluation of its portfolio as did the bottom line. they own peninsula hotels globally, which will soon get a capacity boost. joining us is the ceo. it is great to have you. let's start off with the travel industry in general. you mentioned a bit about the uncertainty we saw in the first travelhether it was u.s.

restrictions, terrorist attacks in europe. you were still able to generate a growth. how did you do it? clement: i would start with hong kong. a year ago, sentiment was poor in hong kong, and people worried that tourism would come down. at the time, we had feared that the decline might be quite large, but things have stabilized quite nicely and at the moment we are seeing hong kong is quite stable with a reasonably good outlook. that is a lot better than it was a year ago. betty: it was quite flat a year ago. clement: the year ago, people were worried it would be worse. our main market, which is hong kong, is quite stable with a good outlook. that is important for us. the other part of it is the global scene. travel isnted out, affected by security, political events, and those we continue to deal with.

all the technology we have is quite uncertain, that what we try to do is focus on the long-term. we invest in our properties, and we keep going. yvonne: one of your key measures had big renovations in chicago and beijing. .anila was interesting as well the exception where we saw a negative number. what do you think will be driving that? driven, or duy have the ability to bring up those rates? clement: in the short-term, the part is renovations. it is a new hotel that we have combined to guest rooms into one. it has been fully opened for about a week. so i drive the revenue from that. the general answer to your

question is the world is a very competitive place. drive it up, you need to improve the quality of your product, which is why we invest in red -- renovations, to improve the quality all the time. betty: will you continue to expand, but expand slowly and expand as a small hotel operator? clement: that has always been our philosophy. we stay small and believe in owning our properties, so at the moment, there are only 10 hotels around the world. we have projects which are ongoing in london, istanbul, and will focus on those projects, but we want to be an investor. we want to improve the quality of each as well. betty: i am curious how the lower dollar is playing in to occupancy, theur booking of your hotel rooms.

how has it affected your hotel chain? clement: the main thing i would say is the always match our currencies. whichever market we do business, we are financing in the markets. impact sometimes, travelers might be affected by currency in terms of whether things have become cheaper or more expensive for them. of theer high end market, that is usually not much of a factor. yvonne: the cost seems to be quite an issue for you. does that -- is that a swing factor for you when looking at the model? clement: the cost issue becomes -- comes because it is so expensive. the guest rooms have the best technology and the best materials being used in the to provide the service, that cost equation comes into play. it is a question of balancing

quality and making the cost of portable, and being able to earn the margins right charging the room rates. quickly on this report about your second largest shareholder rate, the shareholder coming out and this is not cover for a takeover of your hotel group. but that is out there now. do you feel that you are now the target of a takeover? is your hotel group for sale? clement: the hotel group is definitely not for sale. although we are a publicly listed company, the shareholder holds 50%. think what has happened is the shareholders are coming in to buy shares in our company and it has highlighted to people the value in our shares, because our pervalue is more than $25

share. with a new shareholder coming in, it has driven the price up because it has made people realize that we have such a large discount at the moment that people see its value. we have assets in our balance sheet that it may not be reflecting until recently. betty: thank you for joining us. hk and shanghai hotels. you can find more of what you need to get today going on the terminal, and on the bloomberg anywhere app. you can adjust the setting to get news that you care about. this is bloomberg. ♪ yvonne: this is "daybreak: asia

." i'm yvonne man. betty: and i'm betty liu.

here's a check of headlines. nissan's u.s. employees have aalt a blow by voting down decades long attempt to organize a production plant. the staff voted to-one against the union, adding to the failure in japanese, korean, and german car plants. another setback to american labor groups, the workers that belong to a worker -- to a union fell to a record low this year. a report of the last august faultof a plane found no with the plane. 777triple seven -- the landed and was too far down the runway. it was emirates worst -- emirates'worst crash. develop a newto watch.

watch is to be connected to the iphone to work with the new model. it is supposed to have lg chips. intel is to supply the chip, which would be a big victory over longtime apple partner -- over a long time apple partner. tower" earnedark less than $20 million this weekend. the lowest for a number one film. it was the second release in a row to suffer bad reviews. betty: and another one not on my list. more to come with the first major market opening soon. yvonne: let's get the latest from sophie.

pretty green on the screen. sophie: it is the start of a new trading week, and futures are pining -- pointing higher. investors in asia are looking to the opec meeting in abu dhabi and u.s. sanctions on north korea. plus we have data out of china, korea, and japan. we have to watch for soft banks as well. likely toic profit is have dipped. the contribution will be interesting to watch after posting its first profit in three years last week. also in tokyo, reaction to toyota's latest earnings. also, watch reaction to korean utilities, reports that the government may shut down one or two nuclear reactors. and the commonwealth bank, the he intends to

stay in the role of investor and comes under fire. lenders are in scrutiny here. that is what we will watch when trading is underway in moments from now. this is bloomberg. ♪ ok ♪

yvonne: the united nations and slaps new sanctions on north korea. china is confident they can bring the nuclear program to a halt. there are regional tensions in manila. the actions have eroded trust. the commonwealth bank has stayed on despite the breach in money laundering. the annualder for conference. we will discuss the prospects for gold. this is the second hour

of "daybreak: asia." it is just after it :00 p.m. in new york. ass of things to consider trade gets underway in asia. that will have some lingering affects on trade. also earnings seasons is underway. those numbers will affect the trade today. betty: -- yvonne: the big surprise was the dollar. it jumped for the first time in seven months. we will see if this is any kind of reversal or shortcoming. for the meantime -- in the meantime, let's go to sophie kamaruddin. bonds are falling. a look at equities gaining at the start of this monday training session. as we noted, we had the dollar

waking up. traders have that to contend with. u.s. markets say the dollar --uld trade to historically it could prompt in the fed -- could prompt the fed to tighten. the data will be key for dollars. expanding. yen that is helping prop up the nikkei. ppi dataa head of the from japan, due today, along with machine orders. aussie is recovering from a near one-month low, adding 1/10 of a percent. showsut of australia construction hitting a record. we have a barrage of data out of china this week. trade on tuesday, and on wednesday we have an inflation

data. deck we have other data on despite the cost be rising. a check on what is going on with the euro. they added almost 0.1%. there is a risk with gold. it is falling about a 10th of a percent. check out oil, holding declines. trading -- crude is trading below $50 a barrel. we will be watching oil majors meeting in abu dhabi to discuss why producers are not complying with those cuts. lowestnce fell to its level since january. betty: we will be watching all of those factors.

we have an early go on the market. but get to the first word news. remy: venezuela claims to have defeated attacks in valencia. several people were arrested after social media showed images of soldiers declaring a rebellion. security has been tightened across the country with military checkpoints in caracas and elsewhere. independent observers say the story echoes another alleged attack on another base earlier this year. boring deposits in -- four in deposits inoreign are down.in qatar the bank as a predicate days repercussions for continuing to do business with qatar after ties were cut on june fed chariot the man who appointed a aecial counsel to investigate legend russian meddling in the u.s. election says it is no mere fishing expedition.

rob rosenstein says that if robert mueller has found criminality, he may pursue the matter further. he has appointed a grand jury. that indicates he may have found something. the un security council voted for tougher shenzhen's -- s on northnction korea. it will cut exports by one third and cap the number of citizens allowed to work abroad at current levels. it is optimistic -- china is optimistic that will bring the north back to the table. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. iranian a sincere. this is bloomberg. north korea was on the agenda. investors met in manila over the weekend. our international correspondent for southeast asia was at the meeting, talking about the officials and how delegates reacted.

betty, there is great -- thee sections sanctions will help. a statement was issued saying the missile launches is a great to peace and stability in asia and the world. we also saw strong reaction from asia. they say they are confident the sanctions will hold north korea's nuclear programs and it is optimistic that north korea also come to the negotiating table. this has not happened for a long time, but it is also cautioning patients have reached a critical phase in terms of tensions in the korean peninsula. it is important for negotiations to continue. sanctions should not be the end goal. we need to remember that china is key to negotiations and the sanctions. ally to the biggest

north korea. it is also the biggest trading partner by far. the fact that china agreed to the sanctions shows that china does the gravity of the how the nuclear program has advanced. we know that china is now capable of launching missiles reaching the u.s., and that is a huge concern. the question is whether these sanctions will actually work. these are the third sanctions imposed in 18 months. i posed the question to the australian foreign minister yesterday in an exclusive interview. take a listen. >> it is certainly a step in the right direction. the united states has been uphold on all nations to the u.n. security council resolution on sanctions, and the other night we saw great progress. not only in the members of the security council who were

unanimous on this point, but they are quite extensive sanctions. she maintains that denuclearization of the korean peninsula must be negotiations. korean -- theth south china sea, that was also on the negotiating table. has anything happened there? haslinda: we are not sure anything was achieved by china as well as aussie on adapted -- asean adopted code of conduct. in 2000 adopted back two, which was pretty much ignored by all claimants in the south china sea, especially china. in that time, china has built , somes, several islands of which have runway and satellite towers. china is a prime culprit, but it is important that they came over

to come to some kind of consensus. critics say they doubt this will achieve anything. the framework is nonbinding. it is legally nonbinding. mechanism is ao crisis should arise. it comes at a time when the u.s. is distracted by several issues, including russia, including syria, including its own domestic issues. it is a buying a time to enable it to carry on with its plans for the south china sea. amin, our chief correspondent joining us live from manila. let's get you a stock check on the commonwealth bank out of australia. it just started trading. shares are down 0.4%. the drop on friday after the allegations coming forward

from australia on money ceoes.ing rul the says he has no intention of quitting. let's get to our banking and financing reporter, she is live in sydney. the bank was out with a statement on the allegations this morning. what do they say? they saye main thing in these allegations, and i am looking at the statement now, is that after they first rolled out these machines, they did a software update. apparently, the update contained a coding error, which means they did not report a certain amount of themns, over 50,000 to the financing authorities like they were meant to. verydo also say in this clearly that mistakes can be made. so, can the board survive this scandal as they are calculating the cost of this? certainly, we will get

more currency this week. it is bad timing for the bank. it result -- releases its annual results and a couple days. normally this would be a great time for the bank. , andexpect record profits that would normally be the focus. it is fair to say that this time around, it will be, what did the board know, when did they know it? betty: emily, thank you. we are going to continue to watch for these australian banks. still ahead, the risk rise or the softbank and the spending spree. what it means for its earnings later today. world's biggest pension fund is rallying in global stocks. we will break down japan's pension results. this is bloomberg. ♪ ♪

betty: good morning, this is "daybreak: asia." yvonne: with japan's powerful government pension fund reporting a 5% return in the june quarter, that was worth about $46 billion. this is a rise in japanese and global stocks, as well as the weaker yen. let's talk with the cheap mark -- chief market strategist. happy monday. cash they havehe which is the size of the mexican economy alone. biggeste the stakeholders in companies like honda. as an investor, how much do you pay attention to that? -- >> as youu rightly said, they have a check -- chunk of the global assets.

when you look at the global space in the last few years, with traditional fixed income investments at a low rate, they have been forced into equities or alternatives. focused more on the allocation to equities. that has attracted a lot of investor attention. betty: there were some credit -- toostors saying it was risky. we see that in this rally. earnings season in japan has been quite robust. we have seen good earnings beat out there, only second to the u.s.. do you think earnings could beat it? because first of all, i am not sure where the yen will go. the weaker dollar, the risk is for the dollar-yen to go lower. at the same time, the japanese economy and companies are correlated with a good economy. from that perspective, the

export sector and also the japanese companies, we have a technological competitive edge. benefiting from global growths, despite the uncertainties from the japanese yen. the inflows showing the money flowing into asia, a lot in an-- we know japan is emerging market, but a lot of that is flowing into markets like china and india. we have been hearing more about how more foreign money is going in to india. what does that mean for the japanese market and? -- then? tai: i think japan is not part of the emerging asia, and investment is slow from the west to east. thell often go into emerging asia pockets, and that unfortunately will leave japanese equities on its own. when you look back the past you years, there will be investors

in equities. they do not have the equity mix just right. there would be more evidence on earnings for investors to be attracted back into japanese equities, but there are companies improving earnings that could be attractive. betty: would you say the yen is the biggest headwind in what direction japanese equities go? tai: traditionally, the yen has been a strong -- had a strong correlation with the dollar. the correlation has begins. i think that is part of the earnings. it is about improvement in governance, which we see -- that will help further weaken this relationship between the dollar-yen and the nikkei. think from the latest survey, forecasters were forecasting 108 for the year.

they have some more upside. i want to move on to the hang seng as well. it is remarkable because it is a top performer across the globe. we mentioned a bit about the influence. it has been dominated by seven stocks out of the 49. tencent, aia and the like. you have rising volatility and then leadership. sticking with my bloomberg here, we are seeing under this calm on the index, we have seen the likes of tencent in a 30 day volatility in the blue. it spiked and jumped over 50% last week. does that signal a pullback? at the hanglook seng index traditionally, august has always been a challenging month. but again, the functionality on the bloomberg, you can do the map and see that the bloomberg hasx -- the hang seng index been a driven down month from august.

at the same time, we see investors are more interested in emerging markets in asia, and that actually benefits hong kong. importantly, the global tech scene continues to benefit many of these tech companies, and at the same time, rising yield to the states is also in fluting -- improving the prospect of bank earnings. i think that is one of the reasons why. betty: what about the outbound flows? tai: i think it has slowed down to some extent, because we have seen the yuan appreciating. the currency factor has less of a tailwind. betty: great to have you as always. of course, you can get a roundup of the stories -- sorry. [laughter] .: check out dayb and check out your smart phone

on the bloomberg anywhere app. you will get the news on the assets and industries you care about. this is bloomberg. ♪

♪ this is "daybreak: asia ." southeast asia's biggest lender is spending billions of dollars to pursue a technological transformation. the ceo says going digital has already paid off. an impact on see our revenue lines. our mortgage business in singapore, for example, our business in wealth for example, all of them are important pieces of revenue. but we go to the fact that we have digitized the way customers engage with us. we have also seen important

improvements on the expense side, and that is because the cost of our customer acquisition -- as well as our politics because we killed the paper. the improvement in our cost income ratios from 46% a couple years ago to 43% is a testament of the incomement and cost lines. outside of that, the other place where we see the benefits is to realistically expand into markets like india and indonesia at some scale. hard tofinding it very expand into those markets because the brick and mortar strategy is hard to make work. reporter: you were the first to identify alibaba as a possible -- what is your digital transformation? are you ready and prepared to face alibaba, tencent, head on? >> i think we made important

improvements. nimble, little more coming -- becoming a little start up like. they are fermentable competitors. one of the foot -- advantages the have, in fact, any of digital platforms have, is the cost of customer acquisition is low, because they are sitting on a massive pool of hundreds of millions of customers that they can cross sell into products very easy. that is different from the 99% of companies that are small but need to spend a lot of money finding customers. that is not true for alibaba. haslinda: so, what now? they are prepared to ease regulations to allow banks here to acquire digital platforms. is that enough? will that level the playing field? isa long-term view for dbs

to make dbs in visible. that means that people do not want to do banking in and of itself. they want to do something else with their lives. they want to buy a house, a car, go on a holiday. banking activities should be seamlessly and invisibly hidden in what they want to do. if we can work with partners, where we can hide the banking service in something else, that would be a big step in the direction we want to go. so it is encouraging from that standpoint. haslinda: are you in talks to acquire any digital platforms? >> we are in talks all the time to acquire digital partnerships. -- acquisition comes to china partners. banks, including dbs, used only be what i called pipeline companies.

the pipeline from the bank to the customer. today, they are trying to be platform companies, so we can engage in an equal system of relationships and bring customers into china's partners and use china partners to improve our product offerings. was the dbs ceo speaking with haslinda amin. is's do a quick check of the this headlines. apple is planning a new watch this here, one that can connect directly with cellular networks, thus reducing its reliance on the iphone. the watch must be connected to the phone to work, but the new model is expected to have chips, allowing it to conduct mini tasks so low. to supply those chips. it would be a big victory over qualcomm. stabba is taking another at its u.s. partners, saying western digital has no right to chip reduction that is crucial to both come -- both companies.

toshiba says it will be built with no input from western digital, thereby cutting the company off from new technology. western inherited its stake in the venture when it bought toshiba. the chairman held talks over the weekend with the michigan governor and is ready to make an announcement soon. it is not known how much money would be involved. spend moneyonn will on a new display plant in wisconsin. next, we will up talk commodities as well. dig.ig miners the third-largest gold producer in china, we speak to them about acquisition. this is bloomberg. ♪ we check our phones 85 times a day.

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we are half an hour away from trading. it is picturesque in new york. you are watching "daybreak: asia ." let's get to the first word news with ramy inocencio. china is competent new sanctions will bring north korea to the negotiating table, and ballistic missiles. the foreign minister met with his north korean counterpart. pyongyang is being urged to act calmly in response to the sanctions.

releases, the pboc foreign reserves on monday, with its stockpile of international cash seen at rising further over the $3 trillion mark. economists spoke to sob reserves up from june and a rising trend from january slow due to capital -- tighter capital controls and growth. boss sayswealth bank he has no intention of stepping down. that is after the bank is being sued for more than 50,000 allegedly just of money laundering and -- he remains committed to the job. accused of failing to monitor deposits at atm second the instantly transferred to other accounts in australia and overseas. typhoon has meant flight cancellations in japan. japan airlines have asked -- axed 62 services.

the top food -- the typhoon has hit them hard. expects iter agency to cross the coast in the coming hours. reports from india say that about half of the nation's banks are planning to raise new funds before the end of the financial year. securedders have government permission, and some have already started to raise capital. india's public sector banks must find $15 billion to meet the requirements, which go into effect in march 2018. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. inocencio. this is bloomberg. let's see how the asian markets are starting this morning. the s&p is looking positive. the lotus -- the latest with sophie kamaruddin. ofhie: we are seeing gains 0.8%, and markets holding up the

aussie dollar. check out the won, falling. this perhaps signaling some concerns of investors around the president's efforts to change up corporate korea. i showinge the kosp gains, and the nikkei 225 is looking to snap a two day drop. in tokyo, we have property stocks in telco. discretionary shares are being held up by auto stocks with the likes of toyota, mosher -- mazda. toyota rising after its first quarter beating its forecast. high withfirmed its mazda. earningsse -- isuzu's have beat the pack.

they arrived -- risen the most in over a year. we do have pacific metals on the back foot, down over 6% this morning. forecast byir nearly 20% and widened the operating loss by over 100%. check out retailers. family mart and the back foot as well. it will also -- the fourth quarter profit rose, but bloomberg intelligence does see sluggish sales for the retailer, given concerns. yvonne: thank you. the annual dealers event in western australia, among the delegates, northern star resources. they are a strongly as third-largest gold producer -- they are australia's third

largest gold producer. they have announced a major upgrade to its gold reserves. joining us now is the executive chairman. think for joining us here this morning. so ironicays been about diggers and dealers when all the nations top miners are gathering to celebrate the industry at the time when it has been hit hard by the downturn of the mining boom. what is it like this year? >> it is definitely positive. gas prices are up, oil prices are up. it is a great atmosphere at the moment. betty: we have seen a bit of a rally with the gold price in the last week or so. the u.s. job reports on friday took the wind out of the gold rally. even so, we see it stuck in this of about $1300 an ounce.

what will be the catalyst for prices to go higher? i guess it all hinges on the u.s. at this point in time, associated with the currency is knocking it out. thatis a very good price is running at the moment. we -- do you think we could break out of that range, about $1300? next with income in the months, there is the opportunity to go higher, but it does show the confidence with interest rates. if inflation starts creeping in, that will be positive for the gold. yvonne: the gold bull.

i am curious. wherever gold goes, being a range bound, are you on the acquisition task? you talked about that for a bit, but are you looking to acquire? we did stay away from the acquisitions for the past two or three years, and now we invest heavily in our own investments. we put money back into our business and put out a massive reserve. we had reserves for only $24 a strain. we have been mining coal mines seeold mines, so you can why we have stayed away from the acquisition. you always look as an executive and we are very comfortable with the portfolio and growing our production as well. betty: what about adding on

other precious metals? we are a pure gold company and in australia. our strategy is pretty simple. no, we do not plan on that. we do not plan to go offshore for that matter. mentioned about this huge upgrade in your resources. this should extend the life of your operations, the -- and the lift production to around 600,000 ounces a year. as you see northern star taking the next step beyond that? you think you will be a one million ounce producer soon? bill: that would be nice, but one step at a time. our production next year to 600,000 ounces a year, but we have two other operations. if things fall in the right

location, we might go up to 750,000 to 800,000. there is definitely opportunity in our portfolio to get closer to that mark you mentioned. betty: there is still expectation out there that the industry are mine output is set to fall in coming years. yourse an operation like becoming a likely target for larger companies hunting for ounces? you are writes, production is declining and reserves are declining globally, so that is a real issue, not just for the gold sector, but others as well. it is interesting that we know -- than some of the margins, so it is an interesting position. they have done a good job in that area. betty: great to have you. mining us from the

conference in western australia. coming up next, a charter takeover. we will question the likelihood of a deal going ahead. this is bloomberg. ♪ ♪

this is- yvonne: "daybreak: asia." betty: softbank is reporting its first order earnings today. they will be on the lookout for the bid for charter following many other acquisitions it has made in its $93 billion vision. our next guest retains a bite with a price target of ¥13,800 for softbank shares. he is the senior analyst at jefferies. let's talk about the bid for charter. if you are looking at some of

the investor reaction to this, it is a worry here for those who are holding softbank shares. do you think it will take away -- not only will it increase leverage for softbank, it will take away, per instance come up from concentrating on the vision fund, which he said is his big focus? >> absolutely. and the latest report, we said that it could change the narrative completely, because there are three things that are happening. there are investors who did not by to play the cable industry and wireless consolidation in the u.s.. that is what this acquisition would mean. secondly, it would increase the risk of leverage on a softbank's balance sheet. ever since i started talking about the fund, the belief has been about the balance sheet risks shifting from softbank onto the investment portfolio.

that comes back. as you rightly pointed out, it takes away the focus point. and not only you shared this view, i want to bring up this chart we have for our viewers. how the1, and it shows credit default swaps have arisen in reaction to the headlines coming out, jumping to the highest level since january. given that, why do you think marcio she is so keen on this? and why have you kept that buy rating on top? atul: we believe there is a huge discount to the sum of parts, what we see is one country in japan that is willing to take risks in the financial side with technology investments. plus, we do not believe that this will go through.

it is highly unlikely in our view. the probability of this is close to zero. multiple reasons for that. hostilee never had a takeover before, and every time he has acquired another company, it has been about 50% of his own market cap. you were to acquire charter, it would be a hundred $50 billion -- it would be $150 billion. that probably more of rather then the actual investment in charter, per se. we don't think that will happen. yvonne: even without this takeover, softbank does have the liquidity. cash,ave $26 billion in but they have much more when it comes to currency non-liabilities -- non-currency liabilities.

the question, at what point will this be unsustainable for softbank? atul: that is a very good point, however what is happening if you look at the 30% stake in alibaba alone, that is worth more than a hundred billion dollars in softbank -- more than $100 billion in softbank. businesses.estic $60 billion.nother it adds up nicely to about $200 billion. the market cap is just $90 billion. that is smaller than their stake in alibaba alone. any discount that has been there for a while, but with the help of the fund, we believe that could be narrowed. that could be some form of deleveraging.

we talk about the m&a for softbank, but what about the core business? does that at the top of your radar at all? atul: yes, indeed. that is why we like it. it is not just the investments alone, but just about -- a year back when they acquired and talked about a a iot, it did not take that long. this year, it was all about aaiot. about vr, they all talk ar, all these things in which softbank has taken the early lead in investment. lookdition to that, if you at the history with softbank, they took the early investments with yahoo! and yahoo japan. these are very early investors. if you look at who is

positioning himself, who is best positioned to invest and grow in the next 10 years, softbank is well-positioned even from the core business. ,etty: you mentioned the stake the largest stake in alibaba. if you nephew do not believe -- even if you do not believe that they will be acquisitions to charter, do you think they will have their alibaba shares, that will fuel more m&a transaction? atul: we do not get a sense, but it is possible. they did it last year. they trimmed it to 30%. there was a bit of trimming of alibaba shares. riskwould definitely be a if there was overhang on alibaba shares, because the market might perceive that he needs to deliver his balance sheet to get more debt, if you wants to personally acquire charter. last question.

we talk about the evolution of the company from telco to tech conglomerate. alibaba, uber. do you foresee them exiting the telco business altogether? how likely is that? atul: no, we do not expect that. things into perspective, in 2006, back then, softbank was not a telco company. but the reasons to invest in telco, they turned it around from a lossmaking entity to a very profitable will one that is not -- profitable one that is making an investment -- is making a profit. that cash flow can be used to invest in other things. it is not dissimilar to the beginning, where they ensure the business would generate cash flows that he would invest in other businesses. betty: great to have you. thank you.

on bloombergture we want to bring to your attention. the interactive tv function. you will watch us live and dive into various interviews and securities and charts that we talk about. you can become part of the conversation. send us an instant message during our shows. make sure to check it out at tv . this is bloomberg. ♪ ♪

is "daybreak: asia ." betty: a quick check of the latest business flash headlines. nissan's u.s. employees have dealt the united auto workers of blow by putting down a decade-long attempt to organize production plants. againsted almost 2-1 the union, adding to their failure in japanese, korean, and german car plants in the u.s.. the number of workers belong to a union fell to a record low last year. yvonne: the crash landing of an emirates flight into by -- in dubai has not had fault with the plane. the plane had arrived from southern india, and touched down too far along the runway. it was their worst accident, and the investigation is turning to the actions of the crew.

sony's adaptation of a stephen king story opened at the top of the north american box office, however the "dark tower" earned one of the lowest weekend tallies this year for a number one film. it is sony's second week in a row to suffer from core reviews -- poor reviews. "the emoji movie" plunged in its second week. scramble to secure supply among the lithium markets biggest players is heating up in australia. the boom is due to rising -- two china's demand for ion -- lithium-ion batteries. david stringer joins us live. we are going back to western australia to explain. how fast is this sector developing in australia? david: good morning. it is accelerating extremely

fast. western australia is better known as the heart of australia's gold industry, the real club of the iron ore sector. lithium-ion is adding a new dimension. mines coming into production this year. australia is also the home to the largest hard rock lithium mines, and that operation is looking at doubling its capacity over the next few years. all of that will increase production. we are seeing companies like company, and the second largest lithium producer in the world, they are coming to australia and making investments and projects, sign up deals for supply. a scramble toe or lock down long-term supplies. one analyst likens it to big oil moving to the middle east in the 1960's and 1970's. betty: what can we expect from

this new supply? what impact can we expect? david: like any commodities market, that surge of new supply would depress prices. that is not what we have seen. lithium carbonate prices -- rose, and they are still rising this year. we are seeing prices rise. benchmark mineral intelligence, an industry consultant, they do not see prices declining for at least another three years. strong, it will absorb all the new supply that could come online. betty: thank you so much. yvonne, before we go on a lighter note because it is a monday and we need a little perk here to start the week, if you thought gary cohn might be a different kind of fed, this might be an indication -- fed

chair, i should say, this might be an indication. we have come to stocking gary cohn at a hampton party. a cancer pink fundraiser in the hamptons. i love this other picture of him in front of the house of fluff paddleboard. might if you thought he be a different kind of fed chair, this is an early edgy -- indication we might be in for something new if he is nominated. the president himself was on a 14 day vacation. hasne: he mentioned he phones and he is working. let's take a quick look at what is coming up and then i two hours on "bloomberg markets." rish, you will be going back to australia, right? rishaad: we will be talking to

the former world bank president, and talk about what the mood is like in kalgoorlie. looking at central bank policies around the world. we will look at the situation in north korea. china and donald trump buying time, you can look at it that way. we will have a look at that. yield.is the search for 10:40 hong kong time, we will a representative from goldman sachs. betty: that is it for "daybreak: asia." this is bloomberg. ♪

is a 9:00 sunday evening in new york city. markets enjoying a positive start. stocks rising on positive payroll numbers in the u.s. north korea on the agenda. the united nations verging with new sanctions. we will head over to manila. -- -- >> i am in sydney. staying in the job despite the money laundering claims. this is "bloomberg markets: asia." ♪