anchor: 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." the markets to detract modest advance. the yen weakens. activist investors. higher commodity prices for the rise in profits. in newi am betty liu york, where it is just after 7:00 p.m. on monday. the turmoil on washington beginning to worry investors. a hedge fund investors as he is tactically reducing risk, and

the president will be addressing military strategy in afghanistan, shortly. in u.s.dy the largest history. ♪ betty: good morning, folks. it has been another busy news day, not least because half the country was watching the solar eclipse. in the meantime, as we are awaiting the president and his speech on afghanistan, we had many lieutenants are talking again about policy. was one, the treasury secretary at an event in kentucky with mitch mcconnell, and he was talking about tax reform, and one of the most contentious areas of tax reform is the carried interest, which president trump had noted is a carried interest break for the

1%. he noted on the trail "i am going to pull it." a little bit of a turnaround for mnuchin. they said they would that to continue the carried interest for funds that create jobs. the hedge funds are evil. get rid of them before the other funds that actually create -- let us keep them. he struck a different tone. let me play this for you guys. permanent is a lot better than temporary, and temporary is a lot better than nothing. betty: that is a little different. you remember a month ago, he was so adamant. cats reform is going to happen. watch for it. first, it was the end of the summer, and now it is the end of the year. somethingif we get buried, that is better than nothing. yvonne: given the turmoil we d.c., he is trying

to mend jets rotations. i have got a chart just to show you why. g #btv 9407. this is the small caps indicator, barometer, which climbed as much as 12%. they pretty much have given back all their games, betty. the blue line is the russell 2000 against the s&p, which has basically moved in tandem with trump's approval rating. it has fallen to the mid to high 30's now. say investors have completely written off corporate tax reform. they had to deliver something soon. betty: no, no tax reform. what about that trump bump? pretty much disappearing. the markets traded today. it was pretty limp overall. the dollar edging lower. that being a drag markets. the s&p closing of a bulk .1%. on thegoing nowhere nasdaq. really, yuan, a pretty mixed

session. not a lot of direction for you over in asia. risk off, butvely pretty quiet out there. you guys are closing or near the end of your season. here is how we are seeing how new zealand is pretty slow going as well. 73 .25. the kiwi at let us go to australia real quick. equity futures going up for -- four points. from 54, but in still missing estimates. the big news about selling u.s. to demands.g in we will get more analysis on that. the aussie is sitting at 39.37% right now.

take a look at japan. that right now. we briefly had around 108 or so. that is a pretty bearish signal now that we have called it. you'll see if there is dead -- we are looking for 50 points up when it comes to agree futures for the yo -- betty: first word news with emma chandra. selling itsplea assets. the minor has been under pressure from investors, including l&l elliott management. point $7 billion. $600 million short of estimates. marketend was also below expectations. china has expressed strong dissatisfaction from the u.s. itssion to investigate intellectual property purchases answer that will respond if

necessary. calledistry of commerce them responsible. the genesis the international community was was the investigation. -- police have shot that the suspected driver of last week's attack. was killedyaaqoub outside barcelona. he was accused of driving the van that killed 15 people on august 17. he was thought to be part of a terror cell planning a bigger attack. south korea has more -- not to ae the latest war gains as provocation. pyongyang has called the exercises reckless saber rattling that could lead to war. when the north launched a bolstered muscle from a submarine and put the army on the highest -- millions of people watched

today's total eclipse. the moon completely obscured the sun. the resulting shadow moved across 14 mainland states. the increase in visitors to eclipse centers thought gas prices spike. operators reported no major problems despite the associated dip in solar power. i amre than 120 countries, emma chandra, this is bloomberg. back to you. yvonne: more on this wall street closed. searching for direction. we saw lighter than normal trading volume after two weeks of losses. maybe folks just watching the solar eclipse. su keenan joins us. u: he watched the eclipse without the glasses, so he made a few headlines. again, it was a lower than volume.8%

you did have greater swings in the market. we saw the s&p power higher. let us go into the big movers. investors are -- a health care company soaring. investors like that. foot locker falling in addition to its drop on friday, not a five-year low with pain from amazon competition, one of the problem. early light, the business model facing paul j regulatory scrutiny -- regulatory scrutiny. 8119. the white line is i can't position, which has increased 24.5%. it is one of the biggest positioned out there for a food company, a nutritional supplement company. they struck a deal that icon

will not increase tomorrow -- increased to about 15%. he suffered some major pain today. given these risk-off tones, we have seen all the 1300. some saying it has gained a little bit too expensive now. some saying it is time to load up on bullion, outperforming oil. su: some believe the rally is just getting started as it into his its way to $1300. let us take a look at the price chart. you can see how the events of political turmoil among everything else has caused a lot of hedge funds to pile into gold. we also, interestingly enough, treasury secretary steve mnuchin, visit fort knox.

he sent out a tweet that the gold is in good shape, still there, which may have injured the market a little bit. many believe the oil -- let us go to the oil chart. gold is now said to outperform. gold is up 11% year-to-date. oil drop in the most in nine weeks. both had to the exit and folks head to the exit. thea working to reopen up area. let us go into one more bloomberg chart, g #btv 3203. it has a lot to do with the swirling turmoil that is washington right now. you can see the white line is rumorsction to thecohn

that he might leave. you have seen the vix spike while the migrant has gone down. the market has gone down. we will see more groundswell before the end of the week. stay tuned. yvonne: stay tuned indeed. su keenan, thank you for joining us from new york. a last look ahead to the head of his primetime address on america's longest war. they have been working on a revised policy afghanistan where u.s. forces have been fighting for nearly 16 years. joe.ng us now is we are two hours away from this address from president trump, potentially going to talk about the escalating tensions on the war on afghanistan, but this is a president that campaigned on anti-intervention. what is the change, and what caused this change in sentiment? joe: most of the troops are

barriers.own behind the government only controls 60% of the countryside. trump is a reluctant warrior. he will be putting forward a strategy, as the white house is filling it, that was developed over the course of the past. she has already authorized the department of defense to extend more servicemen and women to afghanistan, but it is really sort of an incremental change at this point. the white house has been very tightlipped about what this strategy will entail. i do not think we are looking at any big bold or massive increase in the number of u.s. troops going over there. one of the things they want to do is bring pakistan and more into the strategy to root out some of the and todd and horses

and taliban horses that have been hiding in the hillsides. go overhis going to with democrats and other members of congress? there are no really good options here. pretty much no one in congress has been willing to look at the authorization of military force or provide a whole lot of guidance in terms of more or less. rand paul, a republican, who has been a frequent critic of u.s. foreign policy, has come out against increasing any forces. the u.s. is a bit locked in at this point. the president is looking to at least make some sort of step so the u.s. is not losing ground, but it is unclear whether it will be enough to gain it. all right, joe. we will bring you president trump's address in bloomberg

markets at 9:00 eastern time, and hong kong as well. 11:00 a.m. if you are watching in sydney. yvonne. yvonne: we have the guests coming up. vivian joins us to discuss for policy horse to beat him a smart nation. betty: bloomberg markets' andrew mackenzie joining us from headquarters in melbourne to run through the latest results at nine: 30 hong kong time and 11:30 if you are in sydney. this is bloomberg. ♪

."tty: i am betty liu in new york. china'sdespite

confirming its interest. soared to a record in milan and new york. the company is reviewing strategy. is thought jeep unlikely as it anchored yet chrysler's whole business. it remains one of the most attractive names in the business. a good brand. i would have loved to have been able to buy it when i was at general motors is the opportunity had presented itself. betty: onto airplanes. upgrading its fleet, ordering new planes, worth more than $4 billion. it is in the middle of an extensive revamp, having reported its loss last week. it is on track for a first back-to-back annual loss. we will be challenging. yvonne: bloomberg has been told

goldman sachs is planning a revamp of its struggling commodities business. it is bringing in high commodity traders while boosting pitches in mining. we are told the unit has been under review for months now, during which time it posted its worst quarter in 1973 at the public company. au can get around of -- roundup of that story. bloomberg subscribers, go to dayb . you can customize your settings so you only get the news on the industries and assets you care about. they with us. this is bloomberg. ♪

yvonne: this is "daybreak asia." betty: gary cohn is emerging as the clear front runner. this is according to a survey by the national association for business, economics. it has been quite a popular story on the bloomberg. for more on the impact of that ,hange at the top of the fed louis alexander is with us, executive director of the fed board and counselor to the treasury secretary prior to joining nomura. the tcu today. are you one of these economists who have checked the box? leading think he is a candidate, but we have a long way to go. trump said he would not make the decision until the end of the year. this administration, a lot of things can happen. he is the leading candidate, but it is far from certain. betty: being the leading candidate, and he is in fact the nominee, have you gained what

that could mean for the fed in monetary policy? caroline: this at -- lewis: this administration wants growth. so i do not think we should change.ome big on the other hand, he is not a professional economist. we have gotten used to having academic economists in this job. betty: and we do not really know what his monetary policy stances are either. lewis: absolutely. he is not somebody who has done much policy before he came to the white house, unlike other people who came out of goldman sachs, where you had a better sense of what their preferences were. betty: speaking about putting a stance on monetary policy, there are stories out there, speculation, that janet yellen will use jackson hole this coming weekend to really reiterate and prepare the market for higher interest rates. that is going to be the platform where she prepares the market for that. do you believe that is going to happen?

lewis: i think she will talk about the outlook for policy to some degree. the topic of her speeches financial stability, which does hot morten that -- not morp naturally into monetary policy. ath that topic, you look what was said in the minutes on that, and that will be the focus of the speech. they expect to continue to raise rates gradually. markets got a pretty benign view of that adjustment. they could be surprised. one of the most interesting things is whether or not she is going to link those topics. the fed has been jeff up until now to essentially say monetary policy is about their macro economic objectives. in an environment where frankly, there are threats to roll back regulation, there is an open question as to whether or not they might say, in an environment where we cannot do what we want, we might feel the need to use interest rates to address financial ability issues. that would be an innovation. the topic of the speech

is financial stability, but you have to bank on some heated debate we saw in the last fed minutes or so. 1% or oneong with point 5% inflation. i mean, if you have steady growth, you have a tight job market, is to present just a psychological number -- 2% just a psychological number? lewis: one of the problems we have with these low interest rates is that when we get into trouble, there is not much they can do. the higher inflation is, the higher nominal rates can be. there is also the issue of you won't want people to get it into their heads that we could be moving towards deflation. i know, inflation has been pretty stable. the fed has been adamant they want to get inflation up to 2%, and if you do not do that, you run the risk that inflation expectations starts to go down,

and that is an environment that makes it harder to sustain robust growth. anchor: are you saying we might not even see that last rate hike for the year? lewis: it is certainly possible we will not. my personal view is that that the declines are temporary, to by after things like cellphones as well as housing away from home, which do not look to be persistent forces. that is where most of the fomc is, consistent with a hike in december. we could obviously be wrong about that. i do not think yellen will butle the issue this week, she may suggest talking about it. betty: it is interesting, this whole debate about the phillips curve, whether it is broken or not. also an element of causation as well on what really generates these inflationary pressures.

rising wages trigger inflation, or is it the other way around? lewis: the best recent research has suggested the link between wages and inflation is not that tight. i do not think we should think of it as wages, first and inflation is not what the data in the u.s. suggest. if resources are scarce, we should expect it to be rising. if that means the unemployment rate continues to fall, we should expect prices to move higher. yes, the curve is a lot flatter than it used to be, but that does not mean it has gone away. betty: when you look at the investment community and how they are looking at policy, and how that could not only affect their investments, but their outlook on the economy, i want a manl up a quote from from bridgewater, who said interesting things about reducing risk. he said "i am concerned about towing conflict, leading

impaired government efficiency. i continue to closely watch how whilect is handled tactically reducing our risk to it not being handled well. thelict has intensified to point that fighting to the death is more likely than reconciliation. what is your reaction to that? lewis: i think he is right to be concerned. we have a couple of big things coming up in washington in the month of september. we have got to extend the debt limit or we will have a government shutdown. given the way congress has been cooperating, the odds of a disruption have gone up. i still do not think either of those things are the base case. they definitely have gone up. that is just washington. there is obviously other conflicts in the world. in korea and whatnot. i think that apply to that as well. betty: thank you so much, lewis alexander, nomura chief economist.

lands for chips this year. sales have hit a record pace, next. this is bloomberg. ♪

anchor: 7:30 a.m. tuesday morning in hong kong. it is hot and humid. 30 minutes away from asia's first major market open. betty. betty: it does look a little soupy in hong kong, yvonne. 7:30 p.m., monday. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia." a: tensions finally being felt. foreign investors sold them at

$450 million worth of korean outflow second weekly since november. investors need to retreat on president trump threat of fire and fury and kim jong-un's warning of an attack on gu am. new fines of stability and chinese markets and revised plans to allow individuals to invest abroad. forces say the foreign-exchange wants approval for people to invest in securities traded overseas. if approved, it would signal a departure from strict controls on outflows, including last week's announcements curbing investments chinese companies can make abroad. oil supplies set to plunge if opec renews supplies. this one after surprise hit their highest level this year. rising in has been latin america.

are focusing on dealing between banks and troubled borrowers by giving companies 24 hours to report missed interest or installment payments. they will have to notify the stock exchange of any default on a loan to stem the rise of bad debt in india. the bank has been forced to step in. global news, 24 hours a day, part by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. betty. betty: we are counting down to some of the major market opens in asia. david joining us from sydney. ared, u.s. stocks say -- kind of week. benchmarks pointing modestly higher. of abated from that now?

david: it is sort of an interesting move we are seeing. a lot of investors are hesitating close to the top, and i think it is worth looking at context.s in that have a look at the s&p 500. somee not that far below of the highest valuations since the dot-com bubble. it is just back in march. valuations are pretty high, close to long-term highs on the , the s&p, and the asx 200 in australia. pretty healthy again, even relative to the big bubble we saw in 2015, and in china and hong kong. at the same time, on equity, the profitability of this index is, it is doing ok. certainly in the rich world index is, it has been improving a little bit over the past nine

months, but it is not spectacular. that starts to undermine some of the reasons why there is nervousness about. betty: talking about commodities, we see crude and industrial metals pointing in different directions overnight, where we see metals rising pretty strongly, but crude falling. what is going on? speaks to thehat same story in a way. you have crude down. brent at 51.30, the biggest drop in a week or copper up at a three-year high. zinc at a 10 year high. there is nervousness around developed markets. have seen a lot of optimism. there is still a bit more faith in what is going on in china. demand is in china, next to 20% of crude demand. metals are much more leverage to

the china growth story, and we have not seen the congress yet, which is really driving a lot of state driven investment in the economy over the next few months. in the vault markets, your the slight decline in treasury yields and more nervousness creeping in. i think it will be interesting to see as the year pans out how that performs. yvonne: we will see how that chinese demand plays out. thank you. more earnings to talk about. a miss on underlying profit, coming in at 6.7 billion dollars, with a dividend of $.83 a share. the headline grabber was the company's plan to sell its shale unit. paul allen joining us from melbourne this morning. running to the numbers, this was a fivefold jump in earnings despite that miss. paul: it sounds good when you

express it that way, but it was a miss. it was a sixfold increase, so difficult to please everybody, even in this environment of strong iron are prices and prices.- iron ore the big news here is the divestment of the u.s. shale assets and petroleum has been a long underperforming segment for bhp. this is onshore assets. billion backth $20 in 2011. between value them at $8 billion to $10 billion. they will not be seeking board approval for that $12.8 billion project in canada. yvonne: certainly significant. betty: getting out of your us shale, that was a key demand of elliott management. is this going to be enough to placate holsinger and elliott?

paul: it will be interesting to see what elliott's response to this is. no doubt, elliott will be pleased one of its key demands will exitet, that bhp u.s. shale. those other members were a bit of a disappointment. the main underlying profit and the dividend as well. theyou know, this is in context of elliott accusing bhp of destroying $40 billion in shareholder value. however, elliott management does approve of the new chairman, mckenzie, so this result may buy them some time. worth noticing, has expanded its holding up bhp. it holds 5%. it can call a meeting at any time. theait with interest to see response to all of these numbers today. betty: paul, thank you. paul allen there in sydney on bhp. the forget, andrew mackenzie

joining us first on bloomberg later this morning at 9:30 hong kong time, allowing: 30 if you are watching in sydney. in the meantime, blue-chip companies have sold more than $1 trillion of bonds this year. they are hitting that mark faster than ever before. for more, here is our corporate finance reporter on this. the pace of this -- was this a surprise? guest: a little bit. strategists were expecting that 2017 was going to be flat, so a down year in terms of issuance. we have reached that $1 trillion year in a the sixth row. we were expecting a couple of rate hikes to come in and companies have been taking advantage of a low rate environment to take advantage of cheap financing. betty: what about for investment grade issuance? what has been working on that front?

cheap rates. it is advantageous to take advantage of the financing while you can. the demand is there as well. europe, you still have negative or near zero rates, and those foreign investors, if they can get any positive yield, it is to be found in the u.s. corporate bond market, and even if it is an investment green where you are looking at some of the lowest yield we have seen in three years, they are still positive. yvonne: what are we expecting for the rest of the years? will we be flat from here on forward? molly: the expectation is that we are looking for probably a flat to slightly down year. the m&a calendar is certainly lighter going into the rest of the year, and financing makes up a big part of issuance right now, so probably going to be .ighter on that front the rate hikes, it is still a lower environment

to issue rates in, but you can still get the cheaper finance and. -- financing if you can. yvonne: we await president trump's speech on afghanistan. we will be discussing u.s. policy in asia, joined by singapore's foreign minister, next. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hancock -- in hong kong. betty: toshiba western digital are said to be seeking a compromise. nikkei news says stephen milligan will go to japan this month for talks with counterparts in the ministry of trade. toshiba may ask western to drop

its opposition to sale of the chip unit while milligan will try to make western part of its consortium, buying it. theyhe nikkei also says plan to sell the mobilephone operation. they have a track to detention capital and others. they named lenovo, another company, and foxconn. a potential deal could be priced in the billions of yen. escalated with the termination of an agreement involving one third of its restaurants there. the company says it entered the deal with restaurants, a joint venture that operates in northern and eastern india. mcdonald said the partner violated obligations of the agreement, including the payment of royalties. yvonne: total is to buy the oil and gas unit of ap moller-maersk

in its biggest acquisition since 1999. they would pay $4.5 billion of its own shares and another $2.5 billion of debt. the transaction value is about what analysts were expecting. mmerck sales jumped. >> we do not think there is a case for combining them and sending them off or divesting them as one. a think we will probably see different solution for each of the three remaining businesses. singapore is laying out a strategy for smart nation status, urging people to embrace the technology that will be needed. let us go to our teeth international correspondent for southeast asia, haslinda amin. it sounds like an ambitious plan for singapore. there is still work to be done. haslinda: a lot of work can be done. over theabout it

weekend. the prime minister says it is time to double down and get on with it. the smart nation has to be done. let us speak with the minister in charge of the initiative in the lion city. minister, good to have you with us. >> morning. haslinda: good morning. why is it so difficult for a company to get to the smart nation status? why are we facing difficulties and challenges? guest: first, we are living in a revolution. the advent of basic computing, this is a revolution. if we do not get ahead of the curve, we are going to be swamped. fortunately, singapore is starting from a position of strength. we have a sophisticated, demanding, digitally literate population. we have more smartphones and people. we have an education that emphasizes finance --

science and tech. haslinda: why don't we foster that? the prime minister brought up china. why are we not there yet? why are we lighting behind the likes of china? haslinda: there is a danger of complacency in any place -- vivian: there is a danger of complacency in any place. if you look at this, i would offer you three layers of looking at it. first, life level. enterprise efficacy. third, opportunities. let us deal with the first one. whatever services are created, devices are created, are the user-friendly? is it convenient? is it accessible to all age groups? that is one level. does it improve the quality of life? there is a lot more that can be done to make services more accessible, more fun, more

entertaining. the next level, however, it harder. that is enterprise efficacy, companiese our inventing stuff that makes them more competitive, innovative, relevant? where do they stand globally? how are we using our resources? are we optimizing the way we produce things? it ise of globalization, not enough to be competitive in singapore. you have got to be competitive worldwide. it is the enterprise level. there is a more fundamental level. the wayin a world where value is created, the way work is organized, the way our es transform ourselves, it has all been changed. if we do not address this, you will see the danger of the middle class being pushed out of jobs. it is really about the distribution.

that is why we are so obsessed about education and skills futures. the point is, there are a whole lot of new jobs being created, but do you have people at the right skills? can you match your own population? haslinda: minister, where are we in this digital transformation? are we at risk of not meeting the 2025 smart nation target? vivian: we are at risk if we are complacent and go to slowly. we have the double down and ramp up the rate of change. and this has to be done. there is no way around it. haslinda: legislation is important. there seems to be a lag, that legislation is lagging behind innovation. i don't think we have addressed that. housing,of rental three months versus six months. it is not addressing platforms like airbnb, for instance.

is legislation lagging behind, from your point of view? vivian: legislation is not the key thing. there are several things governments can do. for instance, research and development is the primary role of government. we have set aside $19 billion. the next thing, infrastructure. in our a case, we have to bring fight -- we have the world's fastest broadband. the hardware is almost the easy part. it is the software. that is why we are working over criticalthree platforms. he payments, digital id -- secure digital id which has biometrics and public key in the cashless -- transactions. the purpose is not to create it for its own sake, but that it actually mobilizes, create value

[no audio] betty: it looks like we briefly lost the connection to haslinda's interview. we will continue to fix that problem, but in the meantime, let us take a quick commercial break. we will be right back as we look at those technical abilities. we will be right back. ♪

haslinda: this is "daybreak asia." i am haslinda amin. let us continue the conversation with the foreign affairs minister. you have had conversations with your counterpart in the u.s. is there a shift in commitment? vivian: i think the u.s. is undergoing a period of anxiety. the first sign of a society that is probably not keeping up with the digital revolution is when

middle-class wages are squeezed and middle-class jobs are being eroded. this is a clear warning sign. the problem however is in the reaction. and i want to make this point. do not blame trade. the real game in town is the digital revolution and the fact that new jobs are being created, and you need new skills, and you need to create people for that. the worst thing that would happen now is a trade war. i will give you another recipe which is a dead end. obsolete jobs. you need to look at where the new jobs are being created, where the new ways of treating value industry leading opportunities, and preparing your people for it. in singapore, we focus on education, skills future, putting money in relevant causes, enhanced productivity. it is hard work, not glamorous work. that is the way the real solution is. i am also worried about a trade

war. the southlooking at china sea, for instance, to see how vietnam is pulling back in terms of drilling, and presumably because of the pressure from china, and also the philippines has pretty much the drilling with china as well. countries sense that are pulling back from challenging china? vivian: i would take step back. the key strategic trend is that we are moving to a different level. it is india, europe, south america, and africa. second point is trade. the south china sea is so important because 5 trillion u.s. dollars worth of trade goes through that. think the, i think the risk of reward is very low, but that is not what i am worried about. just the hint of tension risks

insurance premiums, affects trade. we need to have peace and stability so trade can continue. the third point is that never before in human history have twoa and the u.s., superpowers, been so intertwined. china is the largest trading partner. the largest single holder of u.s. treasury bonds. never before have two powers been so intertwined. this is completely different from the iron curtain and a very limited interaction between the ago.and america 50 years so we are in a different world. to prevail. heads we need to stop blaming trade and trying to onshore obsolete jobs. we need to work together and ofk to create a zone interdependence, mutual investment, and then reap the fruits of this technological and digital revolution. was once singapore

seen as the educator in the south china sea. vivian: no, we are not educators for the south china sea, not at all. but [no audio] ok, again, singapore's minister for foreign affairs talking about the big digital divide in this world and how that is affecting the middle class in the u.s., but also all around the world, just doing the interview with haslinda amin. technical difficulties. backll try to bring that up. we have plenty more still to come with asia's first major market opens. just moments away. yvonne: we have earnings from butte, and oil came in this hour as well. sophie kamaruddin is watching that. sophie: we may be tracking the sessions we saw on wall street. the last hour.in

because we could snap a two day drop. the u.s. will face revenge over the joint military drill with the south, promises north korea. also on the radar, mining stocks. the metal rally looks set to continue. we had bhp reporting its results this morning. missing estimates, but an interesting turn. investors have been pushing for this. oil surge reporting this morning. note, spotless appointing a new ceo, who was elected to pursue other opportunities following the recent takeover. some stocks in focus this morning. a brief look at what we will be watching when trading gets underway in australia, japan, and south korea, just moments from now.

heads prevail. confirmation around the white house. that is a look at what we are waiting for. this is bloomberg. ♪

got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. >> 8:00 a.m. here in hong kong.

welcome to "daybreak: asia." trustor $1300.s ns to quit u.s. shale. 8:00: it is just after p.m. turmoil in washington worrying investors. risks.ally reducing president trump is to address the lee terry strategy in afghanistan at the top of the

next hour. the longest war we have had in american history. >> a lot of talk from some of the wall street titans. you mentioned talking about a greater roleng in affecting markets we have ever experienced before in our lifetime. kind ofat its we, tongue-in-cheek -- sending out a tongue-in-cheek, wishing the moon was in the only thing casting a shadow across the country. bit of a downer on that sweet but at least he tried to end it on a positive note. we'll get through this one is what he is trying to reassure

the country. i want to show you on this chart here how jittery investors are since that trump bump. we're coming off our worst two-week lost in 2017. several weeksed ago, not just with north korea but with charlottesville, steve bannon being ousted. we haven't seen this nervousness since before trump. that was present. -- that was brexit. relating toors be what we saw with brexit? we have seen that we survived brexit. it is reassuring that we will get through this and survive this as well. let us get the first word news. says the united

states will face revenge for ignoring demands to hold military exercises. said they meant preparations for war. they also called the drill reckless. last year, the north launched a missile and put the army on the highest alert. -- shotpolice have shut dead the suspected driver in last week's attack, ending a five-day manhunt. killed in a town outside barcelona. police say he was wearing a fake explosive belts when cornered. he was accused of driving the van that killed 15 people. was also thought to be part of a that wascell planning a bigger attack. china says it will respond if

necessary. the ministry of comments, pro irresponsible, saying it ignores the wto rules. the u.s. and china industries will investigate. when hundred $29 billion and is paying an interest dividend of four cents a share. the producers these 2017 29 andions at between $35 billion. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. i mentioned how quiet it is out there. lot moving before jackson

hole. applicant is happening friday. let us take a look at markets. how are things looking? >> there might be a little appetite. to ng 4/10 of a percent snap. korean won. we do have some fleeting in sydney. change as the yen is 1.09 level.10 still firm given the overnight losses we saw with the dollar. yuan.n eye on the an advisor said that on sure rate could retire. one,it comes to share

indonesia's policy decision are anticipating a holds. when it comes to risk, we have revalue of bridgewater says he is taking risk off the table. the latest ton, try to come nervous saying congress will raise the debt ax reform is an attainable goal. funds haveyou hedge pulled back in the biggest dollar net short since january 2014. that is the purple bar. at the same time, their lightning up on the largest euro net in years. that is the light blue bar. progress in u.s. tax reform,

that could serve as a catalyst for a dollar rebound. , which had a 2.5 year high. could address the euros appreciation. it is leading the rise in sydney. gaining, extending monday's game. it missed estimates when it came to earnings. the dividend looks to be getting off board. mccourty estimates the sale could reach $8 billion to $10 billion. you so much. the next hour, president trump will be making a primetime address as he looks to recover from a tumultuous week of protests, corporate disapproval, and staff exits. he will be outlining device -- revised u.s. policies. joined by bloomberg editor

jodi schneider. elements already reported on today, including increasing u.s. troops engaged in afghanistan. but also we expecting with this speech? jodi: this is important for the president. it is his first speech to the nation since the january address to congress. he is hoping to reset after this with losingeek support from the business charlottesville and the departure of its steve bannon. he is expected to use this to talk about the goals and afghanistan and trying to reset their, as well because afghanistan wasn't something during the campaign that he came and said we should get out of there.

now, he wants to have a more sense didn't -- substantial discussion. yvonne: you were so much from him on twitter, it is rare to hear from him in this format. where are we in the situation in afghanistan right now? jodi: this has been the longest u.s. war, 16 years after 9/11. each president has faced this. george w. bush, president obama, and now president trump. they have faced a situation that is difficult. -- abouten trying trying to help the afghan troops and forces to regain and fight against the taliban. this is really -- this has really become more of an assistance campaign. that is why you can expect from how you aret today going to do that.

yvonne: that speech coming up really thin. thank you. we will bring you president address live on bloomberg markets in about 45 minutes from now. we will be joined by bloomberg intelligence to discuss the health of china's property center. there's this release the earnings. yvonne: plus, pressure from activists investors. withll begin to that mccourty wealth management next. this is bloomberg. ♪

betty: this is "daybreak:asia." yvonne: the blood have been dropping. they plan to sell the shale u nit.

there's a big and too much for the assets, which should not deliver expected returns. they reported a mess on underlying profit at $6.7 billion. joining us live from melbourne. paul, we will talk about the latest headlines from the ceo as well as the numbers we got. paul: still pretty healthy numbers. the marker -- the market was expecting more and more. the dividend also missed this coming in a $.83. the expectation was something more like $.88. a $2.5 billion buyback. thebig news will be estimates of the u.s. shale assets. they pay too much and didn't deliver, a paid 22 million dollars in a deal spree and 2011. when they come to unload that,

php may get between eight and $10 billion out of that. the german bank was encouraging them not to go ahead with a project inon shale canada. they said they will now wait two years for that. u.s.: getting out of shale with a key demand. togetting out of this going satisfy the activist shareholders? paul: it would be interesting to see. it is likely elliott management will be encouraged. itsourse, at the core of criticism was that bhp destroyed $40 billion worth of shareholder value. the lens ofthrough a net profit miss in terms of expectations anyway, will that

be enough to satisfy elliott management? take a look at this chart here. it shows is the percentage change from bhp and major competitors. you can see it is beaten by anglo-american. still managing to meet the index. of a the bit -- a bit mixed bag. elliott expanded its shareholders. bhp now holds 5%. that is enough to call a meeting at anytime, so we will wait and see what the reaction is. elysees like the new chairman. that is something. at least they like the new chairman. that is dumping. now is theus management direction from sydney. it looks like the numbers kind of undershot what you were .xpecting you expected $45 billion --

$0.45 per share. would you make of that? -- what did you make of that? headline number was disappointing. but because the cash flow numbers, we are comfortable with that. unit costs are down. debt reduction continues to be substantial. there are a number of elements that we are comfortable with. the dividend was a little bit of -- mistrust. the results are in line with expectations from the cash perspective. and $8 estimate between million and $10 billion has been on the cards for some time. these assets are not making the grade. this is not a for style, this is

not a swift exit. they're looking to try to extend and get as much as they can out of the process. the reality of that? can we achieve that, martin? martin: if you look at how u.s. shale oil is producing, there will definitely be buys in the marketplace. thes not just due to quality of assets but the price. this will not be a short-term style process. we'll be watching this very closely. it would appear that the rest of --citation -- of the debt reduction and clearly overseeing what they see as absolute core, long-term assets and the return on shale was going to provide for them did

not make the grade. yvonne: betty and heidi were speaking earlier. when it came -- shale, is there a need to bow down to paul's demands? -- canith it long-term they stick with it long-term? martin: oil is going to go intomartin: a balance to supply demand. i commented that in the release from bhp. time is on their side to improve the exit position for u.s. shale. again, this is all of it provides the returns. i think they will be very patient. the old price will probably hold $50.d $47 to

like what opec and non-opec producers do on the production site. we don't the oil going much higher than that. i the market would like to see the oil price stabilize and see the supply and demand dynamic being in balance. we have the power yesterday the $65 range. we saw a dividend bonanza. i want to show you the start with the miners in australia. you see a clear advantage here when it comes that yields. the blue line is rio tinto. the bottom line is bhp. the balance sheets are also looking a little better. what else we need to see from the hp? -- bhp?

i think if you look at both or all three, they are done a fabulous job and reducing cost over the last three years and cutting out debt. stage, from the next outside of the cash flow is coming from stable commodity bhp, whichuided by is seeing a modern -- a modest list and. we want to something investment for growth. that is scope for future investments. have: we are going to andrew mackenzie from bhp on. if you are sitting there in front of him, what is the number one question on your mind for him? more a bighink it is

picture perspective around where they see some stability and commodity prices. clearly, that is the key driver for php. china was slightly subdued, little the same for the u.s.. it is interesting to see what youview is.re -- view is. do so much. one feature on the bloomberg would like to bring to your attention is our interactive tv function. you can find at tv . you can watch is like the also see previous interviews and died into any of the securities are bloomberg functions we talk about. you can become part of the conversation by sending us as it messages during our shows. this is where bloomberg subscribers only. this is bloomberg. ♪

i am yvonne man in hong

kong. betty: fiat chrysler says it has had no approach from potential deep buyers. shares a record in the lawn and new york. it may sell units for more. here is our asian autos reporter. why would great wall be interested in jeep? >> there are synergies. great wall is a fast-growing brands in china but it has a long way to catch up with truly jeep. makers like they longed their own market rent. there is a lot -- they have a in termsarn from jeep of marketing, branding, global

marketing networks. it makes a lot of sense for great wall to want to have a premium brand, like jeep. the brand by bobo, the success from them launching. this is a good example of what chinese companies could do by buying global brands. likely?sale challenging be because jeep is profitable at this point. billionrth $24 global great wall group. jeep trying to produce the

auto.with they will have to sort out their china joined infrastructure. there could also be some regulatory considerations involved here. toughest there what they could talk us through what they could be facing. ma: the chinese government is pushing for green cards and new energies, like hybrids. the great wall is one of the brands that are safe in the -- in the biggest challenge to clear the panels as more stringent. here, a company -- economy standards in 2020 are different doesn't help them

clear the fuel efficiency target. go ahead. all right, we'll leave it there. autos reporter joining us from tokyo. sorry about that. [laughter] let's take a look at the headlines. they will upgrade cap a dragon. with ordering neil planes a little more than $4 billion on paper. it reported its worst ever happier lost. it is the second half of the year -- half year loss. the company does it ended a joint venture that operate outlets in northern and eastern india. mcdonald says the partner violated parts of the agreement,

including the payment of royalties. stage foren hits the higher rates at jackson hole next week. this is bloomberg. ♪

>> we're having our from trading in singapore. betty: it was pretty there. you are watching daybreak asia. let us get to the first word news. >> is the shares are rising. sell planning to share -- it's u.s. assets, . the announcement came with for your results. $600 million short of estimates. --ividend of $.83 was also

would also slow market expectations. written and the eu remain at odds over the brexit cable as london tries to rates -- raise the stakes. they published papers this week hoping to persuade russell to -- brussels on the tops of trade. >> when britain we've the european union, it is leaving all of those trade agreement europe has made with countries like canada, japan, south korea. it is not yet clear to us what are these other deals that the british government really wants countries? and other i think more clarity would be very helpful. >> tensions in north korea are being felt in the southern neighbors bond market. they sold a net $415 million worth, that is just the second

weekly outflow since november. it briefly put south korea's risk about china. supply to such -- supply went to a punch in the most in five months. by 490,000ack barrels a day this month. after the hit the highest levels trol year in july, pe 's falling said it' in the middle east and africa. from october, companies will have to notify the exchange of any default on a loan in an attempt to send india's rising

tide of baghdad. the situation said members of banks are forced to step in. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. time to see how the asian markets are shaping this morning. they are still in the green, but north korea headlines coming through this morning talking about military drills the u.s. is contacting -- conducting in the next couple of months of liquid stage for the event. i don't see a lot of risk. >> that is not the case. .5%.opy of by up.korean yuan people visiting south korea will be addressing the latest provocation. this feelingseeing fairly optimistic, keep in mind foreign jitters have been

observed. they sold off south korean debt last week. that is only the second time since november. check out what is going on down under. -- the asx gains, the airports gained over 3% in that segment. forecast for the passenger growth. the miners in sydney are gaining. we are seeing an oil search on the rise after its earnings results. on the stock -- aussie stocks are set to stop the three-day drop. let the lord energy shares as well as utilities. , it is set for a fifth day is trading at the lowest level since june 15.

they are not enthusiastic buyers of japanese stocks other than the bank of japan. reduce inid it would favor of the topics. that is lacking the topics but the most in two years. there is a question of whether boj has been distorting the japanese stock market five -- today. yvonne: thank you so much. an early look at some of the market. we are watching jackson hole, that will be the center of attention. central banks standing messages -- sending messages. kathleen hays here with more. set the stage here with janet yellen. she will try to prepare the markets are what seems like a song -- a long time coming, higher rates. >> how much will she? people are waiting to see. this is jackson hole, this is the annual symposium. the fed chair, whoever that may

a who kicks off -- there is thursday night dinner, friday morning 8:00 mountain time, 10:00 eastern. .0:00 at night in asia she will deliver a talk about anything she wants. the topic of the seminar of the conferences here is burned global growth. the dynamics. her topic specifically, so far we know is financial stability. what does that mean? isn't she going to talk about inflation missing its target with about she -- for the balance sheet? lessig look at the bloomberg chart. has -- look at the down byyou can see 1.4%. missing the target and moving in the wrong direction. why is the fed not taking any direction on balance sheet or interest rate? the minutes from the last

meeting had a small bit about financial stability. people are wondering if there is a system -- systemic risk. other economists have talked about keeping rates too low to long could create financial long could -- too create financial instability. earlier we were speaking to a cheap economist. he worked at the fed board. the things this is an opportunity for janet yellen to express new ideas. >> in an environment where there are threats to roll back regulation, there is an open question with whether or not they might they in an environment where we can do what we want to do, we might feel the need to use interest rates to address financial stability issues. that would be an innovation. kathleen: donald trump republicans in congress want to roll back certain price of the dodd-frank, maybe the fed cannot

control excess leverage or traders, investors reaching for yield and this would help them do that. janet yellen's speech. if you look to talk about inflation and the balance sheet, she can too. maybe people change their expectations a little so far. scanners between overshadowed by the ecb could herthat -- speech be overshadowed? kathleen: mario draghi took his speech to talk about one purchases. they started doing that in the financial crisis. he's of the stage for what turned out to be 2.3

billion euros of bond purchases. people think he could signal something. the problem in the bcb is still undershooting. you have several key measures. why is the headline inflation, is down to 1.3. core inflation, super court inflation. take a package holidays. marketsions for the going down. this is the reason why people figure mario draghi may be cautious. is one more concerned that the euro is already so strong, with the signal and moved to the left stimulative double out some of the bond purchases. cannot make it the even stronger -- could that make it be even stronger? yvonne: possibly some surprises. kathleen hays, thank you. profit in china second biggest developer stirs 25%.

our other property companies likely to post similar gains? this is bloomberg. ♪

>> we are heading down to president trump's address on afghanistan. these are live pictures from fort meyer and arlington county in virginia. steve mnuchin just arrived from his conference in kentucky. the president is widely expected to announce a few strategic n engaging. resulty this is a direct of the ousting of steve bannon who oppose an increase in troops. thethat he has been ousted, president convened his national

security advisers and decided on these strategic points, including the increase of military engagement. we will hear from president trump. it will be speaking in just under 20 minutes. we will bring you his speech live when it happens. back in asia, it has been a busy week in earnings. they posted a 25% first half gain. -- patrick.to one can we growth given the persistent hiding? -- tightening? patrick: in the first half, we see a strong demand, especially in some smaller cities.

i thinklands purchased, they will still want to do more because it was strong in the first half. them inans for some of the second half. we will see if the trades happened. yvonne: there is a bit of an appetite for the rest of the year. what about in terms of consolidation? patrick: yes, by the last year we will see it in china. it is important we see some of the references as we used. we will prefer to buy land for some kind of s ou before. it is ok for them if they can finalize it at a cheaper price. it is ok for them to buy it.

the price is really, really high for me. --ty: china overseas lands oversees land. are other developers going to achieve the similar results this week? i think the margin is very good for some of that. margin,ieved a 30% which is physically hitting the target. that is because of the strong s ale prices. they also raised it 10%. even raise them higher in terms of the sale targets. the money is all there. raise it it easier to

are they match 83% of the sales target and the have -- they have agile of 75%. it means the margin growth is it might be as high as 30% for some of them. yvonne: thank you. from bloomberg intelligence. what patrick was mentioning thet, we saw some of property developer stocks. let me bring up the start here. you have seen the likes of country garden, china resources, property, which has doubled or tripled in their stock prices in the past year. these moves are focusing on the growth story of some of these

developers. my next guest is talking about the property bubble in china, he doesn't really see it at this point, and he is expecting government crackdowns. christopher, great to have you. take a look at what is happening in the stock market and it is more about the earnings momentum we are seeing in some of these results. it is a very different story happening in the death markets. many investors there are worried about if they can repay this debt. christopher: that is quite right. what we're seeing in a little bit of a paradox between the market and the performance of the developers. we do believe that government policies and restrictions put in place will slow down the market in the second half and probably into 2018. nonetheless, these restrictions are more calibrated and targeted than before. we don't expect them to over correct. when you look at these top

developers, they are performing better and outperforming the market itself. you see that in terms of good sales from 2017 carrying on through the last few months. they are continuing to gain market share, they are snapping smalleratching of projects. they are doing quite well. the margins improved, especially over the results we have seen so far. market -- margin - margin programs are doing well. refinancing risk coming up next year, where the majority for onshore and offshore bonds will create a huge demand for refinancing. it is about the debt repayment next year. yvonne: you mentioned china closing down. you think developers will continue to tap into the bond

markets. the bond issue was the biggest one in asia. you still see a bit of a demand here for some of these companies. anti-ather: the coupons the moment. a lot of these developers are taking advantage of that. yvonne: will that impact profits? ntristopher: to some exte yes. withholdingen approvals for the last few months, save for a few batches. once those come through, we don't expect them to open the floodgates once again, but it will face the amount of offshore they are allowed. when the new mission -- maturity welcomes in 2018, it matters how open they are. the onshore and offshore. at best, they will trade -- we will create much higher funding

costs. here: we don't want to be mongering here, but there was an interesting press release coming institution royal of chartered surveyors in singapore. i don't know if you got to look at it coming out strongly on these chinese property thisopers saying accumulation of debt is at levels not seen since the global that thiscrisis, exceeds what we saw from japanese real estate companies back in the 1980's. on the left-hand, i hear from you, don't panic, we are not in riskble, and refinancing is there but manageable. then there is another site that says we can see a real crisis here. we arepher: i think what seeing is there is no bubble in 2017. there is no huge market correction in terms of residential prices coming down,

but that refinancing risk is out there for 2018. we have to see how each of these that theser funding a developers are using would be performing in 2018. there could be a lot of unsettling of the smaller players if they run into liquidity crunches, they could create a knock for the rest of the developers. quite that all depends on whether the ledgers continue to extend credit, right? this is all it relies on, right? i mean, that is a singular risk there. that's right. in 2017, the market itself is fluid. whatever comes out to the market issues quite well. for 2018, we have to wait and see. for small all, i think it is the allowingy fluidity for the developers to pass into the market.

second is from the lender's perspective how risk adverse they will be for the sector. yvonne: thank you. senior director of corporate ratings. betty: you can get a roundup of that story and many more you need to know in today's edition of daybreak. -- can go to the terminer terminal. you can also customize your settings so you only get the news on the assets you care about. yvonne: we are counting down to president trump's address on afghanistan. from are live pictures arlington county, virginia. we are less than 10 minutes away from the president taking the stage. we will bring you the live coverage on bloomberg markets. he will talk about strategic policy when it comes to afghanistan after nearly 16 years.

this is bloomberg. ♪

did the ousting of steve bannon have much to do with the? >> i don't think so. it was a long process that was going on over the summer. mike pence was leading it. he was meeting with foreign-policy advisers throughout july and august. there was a meeting on friday where those options were presented. the options that-come up with bipeds and the military advisers. they were presented to the on friday -- i have lost track of my days. that is when it was a several hour media camp.

the people i have talked to on this said it was not a snap decision. it is something that has been in the works for weeks. a lot of discussion had gone on around us. this is a 16-year war as we noted. on the campaign trail, he talked about backing out of afghanistan. given these new points here -- or this new strategy, what is going to be -- what is the measure of success here? >> that is the big question. you have been asking about this since we got in. he was not for nation building. he wanted to see the money being in the middlears east being spent on our infrastructure. we are here and he and are hereged that we and if we completely pull out of the country, it lead to a humanitarian disaster, not to

mention a safe haven for terrorists and spread terrorism. that will be one of the issues. what will success look like that it will address tonight. this is a question on a lot of people's minds. in the obama administration, the success they were aiming for deal.a piece deal -- peace that may be a strategy receipt in this administration. -- a strategy we see. yvonne: thank you for that preview. .e just saw mike pence we will bring it to you live in a few minutes. this is bloomberg. ♪

♪ haidi: time for a new direction from the house of trump. the president is about to address the american people about his strategy in at anistan, speaking military base in arlington, hoping to put the focus back on his policy. it is 9:00 p.m. monday in virginia, 11:00 a.m. here in sydney. i'm haidi lun. this is "bloomberg markets: asia." ♪ haidi: here are the