♪ betty: president trump going on the attack at the u.n., saying america may have to totally destroy north korea. >> the dollar fell in treasuries weekend as the president spoke. wall street remaining calm ahead of the fed. betty: at least 90 people have died in a powerful earthquake in mexico. it came on the anniversary of a shock that killed 5000. >> tony blair talks brexit with bloomberg. he says there is a 30% chance

the divorce will not happen. ado about be much nothing. welcome to "daybreak asia," i am haidi lun. betty: and i am betty lou. i love how people have game to that out. people putting bets on as to whether brexit could reverse. in the meantime, a lot of bets on what we will hear tomorrow from the fed. that is the market staying relatively calm or at least not moving much before the fed news conference. the dow up 40 points. still has the slight bullish tent. level, above that 2500 1/10 of 1%. the same for the nasdaq. a slightly higher open in asia. haidi: mostly calm, volatility slumping. we keep talking about these indices pushing into the record highs.

we saw that again with the s&p. bound,s of being range this is the tightest range for the s&p we have seen in decades. not a lot of motivation, strong motivation ahead of the fed, the boj. kiwis head tohe the polls this weekend. we saw the kiwi dollar one of the strongest to gainers among the slumping greenback overnight. .25%.stralia up the aussie dollar kicking up above $.80. best performance against the u.s. dollar. chicago-nikkei futures, a little weakness. but what a strong comeback from the monday holiday. japanese stocks closing up by 2%. the yen holding to that weakness at about 111.

betty: let's get back to one of our top stories. president trump went on the attack in his first address to the united nations. he threatened to destroy north korea, saying the u.s. is ready and able to protect itself and allies, and would respond with overwhelming force if attacked. president trump: the united states has great strength and patience. but if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. betty: i want to bring in our bloomberg national security editor, bill fairey, who is in new york covering the u.n. meeting. you are in the room or new people in the room. what was the reception like to that speech? bill: it was classic trump, for those of us accustomed to hearing him. it was at the united nations, which was created in the axis of world war ii, toward building peace between countries. it was tough language from the

president. at times in the audience as he laid out a tough agenda on north korea, iran, venezuela, he even singled out. left: the north koreans before his speeches. bill: they had one of the best seats in the house. they do lottery seating, they were in the first row off to the right. but they left after one of the opening speeches and were not there to hear him go off on his attacks about kim jong-un's behavior. betty: now that he has made his speech, what is the goal for the rest of the week? did he achieve what he wanted to do be -- today? he is pleased with how the speech went. the administration has done what it wants on north korea at this point.

it wants to see the sanctions take a bite and make sure china is enforcing its side of the bargain. the president seems to be turning his attention to iran. tomorrow, rex tillerson will be your leading a meeting of ministers that are involved in iran deal. they want to find a way to change the agreement. so far, even among u.s. allies, there is not much entrance. haidi: this was a highly anticipated appearance before the international stage. how did the president's speech go down? bill: he did stick to script. that was a change from some of the rallies we are used to seeing the president speak at. there was a little bit of shock at the tone. even among european allies there was a little bit of a sense he was boxing them into a corner on the iran deal.

beside the u.s., all the european allies, china, and russia, feel is going well. iran is meeting its commitments under the deal. trump has long been opposed to it is -- and is trying to find a way to put iran in noncompliance. u.s. allies are not interested in going that far at this point. it was interesting, key players were absent -- china, mexico, germany. bill: and russia, as well. president putin has never been a big fan of the unga -- the unga. has the party meetings later this year and is focused on that. chancellor merkel has elections coming up, so she missed it. even the u.k. prime minister who was in new york did not make it

to the u.n. building for trump's speech. she was meeting with investors, and that is pretty important for her, as the brexit negotiations go on. but it was read as a snub of the u.s. president. us,y: thank you for joining our national security editor. >> the senate intelligence committee expects facebook and possibly twitter to face a public hearing on russia's alleged use of social media to influence the u.s. presidential election. the chairman says the timing and scope are still being me -- being decided. there were fake russian accounts. but they say there has been less -- coming. reports from london show the u.k. is prepared to offer the equivalent of $24 billion for its divorce to the european union. that is a figure theresa may has agreed on. some in her party say the u.k.

owes nothing. they say the u.k. must abide by commitments made in previous years, and the bill could top $100 million. at least 94 people have been killed by a powerful earthquake in mexico. the 7.2 earthquake struck near mexico city, halting trading on the stock exchange. investors sold assets. it is mexico's second major quake this month and came on the anniversary of one in 1985 that killed 5000 people. $200 milliona new plant in china, hoping to boost coming the biggest in the world. planes a roll out two month. they are home to a plant that produces planes.

boeing estimates china will order more than $1 trillion in new jets in the next 20 years. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: jessica, i will take it from here. another day of records. investors, aonal pretty loaded end of the week when it comes to risk events. of its starting day two latest business -- meeting. keenan with us for a closer look at the u.s. market closed. we are talking about weather events. su: we could see more forces in the wednesday session. green across the screen. market isalm as the

pretty much waiting on the fed and other elements. if we go into the most active source, stocks grabbing the spotlight, you see earnings. deal to entering into a make their checking paperless for clients. autozoneand disappointing earnings. especially best buy. we know retailers continue to be under pressure. autozone, the auto market has presented problems. let's take a look at the bigger picture for the s&p 500. going to chart g #btv 5079, if you have the bloomberg at home. no retreat come on, no surrender, to borrow from bruce springsteen. these red dots are the 5% correction. we have not had one since then. for means we could be due

one. betty: we also learned about toys "r" us bankruptcy filing. exposure.nly a lot of we will get into that. the real surprise was how rapid the collapse for toys "r" us was. details emerge said they were trying to do a restructuring out-of-court, and word leaked to the press, it spooked creditors and suppliers. suppliers halted shipments. creditors held out for perhaps a sweeter deal. and toys "r" us was a forced to file. down.e renato rivals like metallica and hasbro were up in today's market. they have less exposure to amazon and builds their own online in a better way than toys "r" us. it seems a very isolated situation.

many analysts saying it does sound an alarm that perhaps the credit crack's are becoming more visible. su keenan on the markets. silicon valley taking on trump over his immigration policies. we will speak to a tech entrepreneur later this hour. haidi: bank of america merrill lynch on whether investors should get wound up over the feds unwinding. this is bloomberg. ♪

haidi: we are counting down to asia's first major market open across the region. japanese futures, a little downside after yesterday. almost 2% jump in the nikkei as japanese investors play catch-up. this is "daybreak asia." i am haidi lun in singapore. betty: i am betty liu in new

york. the federal reserve not expected to raise its key rate. the focus returns to what it might mean about future rate hikes, via the dotplot. kathleen hays has a look at that. su: they have been upset -- kathleen: they have been upset thing over dotplots. the fed has a summary of economic projections that gets updated every three months. how they get this, it each fmoc member makes forecast for deeply, unemployment, and inflation. in this snapshot, what they see leads them to predict the rate hikes for the next three years. by changing the dot, it can send dovish or hawkish signals. let's look at the chart. the median, eight dots.

this implies one more rate hike this year and it can move to 2018, the median is smaller. but, five, that could take it up to 1.25. even more looking for more rate hikes. dotom line, even a couple changes down or up could change the markets. bloomberg intelligence is looking for that fmoc to lower. it means they can anticipate tighter later mark -- labor markets. they do not have to feel too much pressure to raise in place in. line, new faces on the board of governors, do future dot plots really matter? it puts a slightly different spin. betty: what are we looking for in the balance sheet announcement? kathleen: the balance sheet

announcement is so much more straightforward. fed officials jim bullard and others have said, i think we should announce the start date in september, and start the runoff in october. also in june, they laid out a plan. you stop producing the proceeds of the bonds when they mature, and you do it gradually. and raisen a month, the cap $10 million every three -- $10 billion every three months. you stop when the cap reaches $50 billion. they say it is so simple and well telegraphed, it will not rock votes or move markets. bloomberg news looking at the old long base in treasuries, still robust. in bonds have gotten scared and are backing off from this. the balance sheet is pretty straightforward. do not expect too many surprises there.

press conference was huge. you know what i would like to know? janet yellen, can you back raising interest rates in december if if it -- it has not moved? haidi: absolutely. when she be more inclined to do that if she knows she will be sidestepping and potentially replaced by someone far more dovish? let's get into this fed meeting as day two gets underway. --k of america merrill lynch as interesting as watching paint dry. to go from extraordinary monetary policy to tightening, you would expect unexpected volatility. >> that is right, the fed has

never done this before in the history of central banks. we do not have too many examples of a major central bank beginning to unwind a significant portion of its balance sheet. there is a lot we do not know about how this process will unfold. it is pretty clear and straightforward. it will start gradually. we heard $6 billion in treasuries, $4 billion in mortgages. that will cumin lead over time. we are looking at a potential $1.4 trillion reduction, if all goes well. that is a lot of supply in the market and new paper for investors. we do think that will accumulate and have sizable impact on the market. it will not happen at day one, but over time it will matter. rates,the dot plot and you are seeing that as a nonevent this month. mark: our baseline is for no change in the dots. it would be a surprise to see

them shift upwards. there are risks they could potentially move lower. we do not think we will see that in the 2017 dot. they do want optionality of hiking in december. where we do think we could see adjustment is in the path of rate hikes. the fed has penciled in three rate hikes in 2018. we do think we could see the 2019 dot shift lower to indicate slower pace of policy normalization. this is true given the fed will come out and include 2020 projections in this set of sep release. we think they will show they are above their longer run with those 2020 estimates. there could be potential downward shift in the 2019 dot,

that means the fed will be more gradual and slower than perhaps with a previously communicated. haidi: you guys expect to the language when it comes to inflation to be more up the this time around. does janet yellen move in december, even if core inflation does not move that much? impetus to do that if she knows she might be replaced by someone who was going to be more dovish? mark: i think it will be hard to find someone more dovish than janet yellen. i do not know that that would necessarily be the case. i think she will continue to be guided by the data. the fed was encouraged by last week's cpi report, that they finally broke the string of weaker than expected inflation. if inflation does not appear to stabilize, we believe the fed would like to go.

primarily because their models, at least the phillips curve, would show inflation pick up, given how tight the labor market is. she is not going to want to force this hike. although i think it would be a nice bookend to her tenure if she is not renominated or ends up resigning in february. she would've put the balance sheet in play and raised rates back to neutral. betty: puts a nice bow on top of this. i am curious what you think, how asset classes are going to react to this qt we are expecting. i want to pull up a chart, g #btv 9516. it shows you how close the s&p has tracked. money, the balance sheet, and the increase in it. lately it has taken off and is on momentum.

the fed has backed off on adding much more. given this unwind, how do you think that will affect assets like stocks? mark: that is a great question. certainly we think it will be a headwind. if you have monetary policy gradually drawn back, that will be a headwind for risk assets, generally. you do have the ecb expanding its balance sheet. we think they will slow expansion over the coming months. you have the bank of japan still highly expansionary. the fact the fed to be looking servee back, could interest rates over time. that means you will discount u.s. dividends at a higher rate than you otherwise would have. that should put slowing pressure on some of the elements we have seen in risk assets. betty: thank you so much, mark

from bank of america merrill lynch, head of u.s. short rates strategy. you can get that story in today's edition of daybreak. subscribers go to dayb . it is also available on mobile. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. talks ofd t-mobile in a merger that could give door to telecom merger control. deal,k for stock negotiations are some away apart. the t-mobile chief john ledger would be placed income -- in control of both operations of a deal is struck. they say a merger makes sense, but there are other possibilities. >> at the same time, we have

another company as a possibility, that we may consider to do it. we have not decided one or the other. we are looking at them in parallel. haidi: the nikkei news says western digital has made a new bid for toshiba's chip unit, reducing its own role, and reducing that of the government and incj. it puts him back in front of the bain capital consortium. the board is due to meet. it is not sure if a final decision will be reached. hedge funds that that against china are having it tough time as the u.n. surges, the mainland stocks rally. 13%obal macro fund was down -- down 13% since august. they are saying the biggest credit bubble in the world is still poised to burst. following china bear, down 80% through august. next, we speak to a man who

has funded over 1400 companies, including airbnb. we talk about investing in startups and the next big thing. this is bloomberg. ♪

haidi: it is 9:30 a.m. wednesday morning in sydney. a pretty gloomy day. markets are 30 minutes away from the region's first major market open. a persistent lead from wall street, despite the major indices being ahead of the fed. betty: a pretty tight range. it is 7:30 p.m. tuesday evening. a lot of rain today, but looks like a glorious evening. markets closing higher. but not a lot of moovit -- movement ahead of the fed meeting. i am betty liu in new york. haidi: i am haidi lun in singapore. you are watching "daybreak asia

." let's get to first word news with jessica summers. >> president trump has threatened to destroy north korea, saying kim jong-un is on a suicide mission. making his maiden address to the united nations, he says the u.s. is ready to protect itself and allies and would respond with overwhelming force. he described it kim as "rocket man," and said -- would not be required. president trump: rocket man is on a suicide mission for himself and for his regime. the united states is ready, willing, and able. but hopefully, this will not be necessary. jessica: hurricane maria has strengthened to a category five that barreled across the eastern caribbean. it is bringing gusts of 165 kilometers an hour. just weeks after hurricane irma caused widespread destruction.

harvey costma and an estimated 140 billion dollars. this makes it the second most costly since 1980. ford is to cut production at five north american plants before the end of the year to keep inventory in check as u.s. auto sales decline for the first time in eight years. stoppages will-- happen at another plant in mexico, michigan, and kansas city. they say they must match output with demand. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. betty: the trump administration is being sued over its decision to delay and likely resend and obama-era initiative to

encourage foreign entrepreneurs to build their businesses in the u.s. -- an ownership stake in the u.s. they can stay in the u.s. for up to 30 months. that is now in jeopardy. a company invested in more than 1400 new operations, including airbnb and dropbox. sam altman joining us at a tech crunch conference. good to have you with us. i imagine you are all for what the venture capital association is doing to fight against trump on this. do you believe this is going to be rolled back permanently? sam: i honestly do not know. i can only speculate. i hope not. you joined at the venture capital group. have you had discussions with them, have they recruited you to get you involved? sam: yes.

i have joined that and it is something we are trying to do. i am optimistic we will get through this. -- it is important, our industry. betty: there have been many tech entrepreneurs who have been funding startups to try to fight policies coming out from washington. what are you doing, i know you have detailed many initiatives your self and fighting poverty is a true passion of yours. what are you doing in terms of using your money and making change? the best thing i can do is try to help startups with funding or advice or networks or anything else that creates a better world for everybody. many of the startups we funded try to do that. startups is a great way to

create new technology, economic growth, a better world. that is more important than ever. we need to do that in areas we may have traditionally relied on the government for. the other thing i am doing is a hash and project, trying to find in funded new candidates. i think we need to have a lot more voices in the governing net in and a very wide terms of who we have in our democracy. those are two things i'm trying to do. betty: let's take that second part first. when you say fund people and politics who share the same passion as you and same motives. who are you talking about? who?the question is betty: the candidates you are funding? we do not have specific

people in mind. even if we did, they would not be people we have heard of. one thing we believe, it is important to develop a bench of new people who want to get into politics and make this their calling, but do not have the resources they need and cannot get attention in the current political system, which is dominated by whatever the local party power structures are. what we want to do, much the same we do at combinator, is identify talent the rest of the world is missing, and give those people resources. betty: is this nationally? starting just in california next year as a beta hub. if we can make that work, it is something that would be great to expand nationally. i think it is good to start these projects small and learn as much as you can. haidi: what about your own political aspirations? playing a yourself

personal and individual moral? will you run for governor at some point? sam: i am so happy in my current job. i wish life for unlimited and people could do a lot of things. i think i can have an important impact where i am right now, and i love doing it. interesting, been the trump administration, the lead up and formulation of his white house. ofhave seen the influences tech individuals, people across business. the corporate realm has become more lyrical. do you think this is a positive thing? sam: yes. it is a little reaching, but one thing i think is good about the current political climate, is that it has gotten a lot of people to be active and involved and participate and be aware and pay attention. i think we as a participatory

democracy or republic depend on that happening. i am happy to see the increased level of engagement. although i wish we had gotten here another way. haidi: i want to talk about these comments from elon musk about how geopolitics is not the threat, but that ai is potentially a bigger risk to humanity. you have come out and said that powerful technology is always good and bad. what is the biggest risk and opportunity being capitalized on at the moment? the one i am most interested in is ai. i spend more and more of my time working on that. i think we are already seeing ai transform our world and incredibly powerful ways. the speed at which we are developing new capabilities is a very steep exponential curve. you see it in hardware, algorithms, people joining the

field. we are still in the very early innings of something that is getting more powerful, month by month. one thing i have learned, my time estimates of when certain ai milestones are going to happen, i have been optimistic. change will happen rapidly. it is great in a lot of ways. but the downsides or something to think about seriously. we should do everything we can. what i am hearing from you, projects and initiatives like basic income might need to be put further or higher up in developsity list as ai more quickly than even you imagine. income how your basic project in oakland, california, how was that doing? sam: we are still in the pilot

phase. we expanded it to the number of people in oakland. we are coming up on one year into that. we will do a review of what worked, what did not work. if it works well enough, we will expand it. the thing to be careful of, we do not want to have anyone lose their housing assistance. we want to make sure we are helping with local, state, federal regulatory agencies. betty: what is in the findings? you find basic income does not work. what if it becomes a d motivator -- demotivator for people? sam: that is totally possible. we mean this as an honest experience. eliminating poverty is a good thing to do. i would certainly never say i have high conviction it will work. if it does not, we need to try other things.

is changing so fast and in such fundamental ways, this is a good time to test a lot of ideas. so when we find ourselves in a super different world, we have some data. it is better to make decisions and have when you can, options, rather than say, we will take our best guess on this super important thing. the more time i spend on open ai, the more i think we should be's -- be thinking about all possible futures in terms of getting meaning, fulfillment, what work looks like, a good economy, and every thing else. betty: sam altman, of y combinator, the president and founder there in san francisco. trouble on the trading floor. why the declining in trading may be worsening on wall street. it is not due to robots and ai, but something else. this is bloomberg. ♪

betty: we are counting down to asia's first major market opens this morning. japanese futures are looking slightly lower, down 1/10 of 1%. a little over 15 minutes away from the opening bell. this is "daybreak asia." i am betty liu in new york. haidi: i am haidi lun in singapore. we are awaiting the market opens, day two of that fed meeting. the unprecedented balance sheet unwind. let's look at the fed at the markets with sophie. sophie: as we wait on the fed's decision, global stocks remain at record highs and markets all,. asian futures are pointing higher. we have a light economic day-to-day. -- data day. emerging-market bowls are mulling what the future will

look like without qe. it did not set up much in the way of reaction with markets. flipping the board to show you stocks we are watching. softbank, my seo she son -- masayoshi son could see a merger. it would mean a real fight, real competition with three strong shares. look at toyota shares. hybrid tech remains a central to the company's strategy, even as governments and rivals increase their bets on electric vehicles. china is making things more interesting for foreign players planning to relax rules that would allow them to set up shop in china without local partners. heavy, in talks to build iron ore shippers.

the order could be for 10 very big ships, each costing $80 million. since mayhe most yesterday. betty: big things to watch. think do so much, sophie kamaruddin. we are watching japanese trading revenue, slumping to its lowest to the first -- since the first quarter of 2016. what does that mean for the rest of wall street big banks? laura keller joining us from l.a.. can you extract what is happening at jefferies to the other banks? or some of this -- or is some of this specific to jefferies itself? look atis a good way to it. you can extract some things from the japanese report as far as trading lines, how they are doing and investment banking. but there are some differences for sure. japanese overall, their

trading was down a 7%. that was partially because of fixed income, bound 27%. equities better at 19% increase from last year. that is not a great picture. but at the same time, down 7% overall for trading is better than what larger banks are forecasting. bank of america and citigroup both forecasting 15% down. jamie dimon of jpmorgan saying it could be down 20%. haidi: what about the concept of big bond trading? has that been an element that has played into what we have seen? laura: yes. who hasooking into pulled back from the market. here, thereport investment banking head at ubs

gave an interview, and we have written that up at the terminal in a news story this morning. lull saying, the trading from sleeping markets, affects banks with less -- he is saying the bank may be affected more by clients not transacting, than other banks that use more balance sheets. that is not a good picture there. we have seen from deutsche bank a report from autonomous research. the analysts were looking at deutsche bank and saying, this will require america from the bond trading in order for deutsche bank to have either a good quarter or even what they said beyond repair for the stock. betty: what does that mean -- a miracle? is that true? laura: what they are saying is, the valuation deutsche bank has now, and what has been happening, there is not happening in the business units.

with john a presiding over the last year or two, he has had a loss for the banks. hadr to this, deutsche bank a lot of money from bond trading. analysts are looking at a miracle, saying, we need to see deutsche bank having a better bond trading quarter, a better year, in order to revive itself. youy: laura keller, thank so much, our bloomberg banks reporter on jefferies. a hard brexit rings the risk of a hard left government in the u.k. former prime minister tony blair talks about britain's bid to leave the european union. this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. haidi: i am haidi lun in singapore.

august trade data from japan painting a picture of a robust recovery, that growth is coming up above potential. for augustxports coming in at 18.1%. the estimated number was 14.3%. picking up from 13.4% in the previous month. suggesting economic demand is good. beating expectations of 11.6%. a little slower pace than the 16.3% we saw in the month of july. that leaves japan with a trade billion -- or3 yen, not dollars. that continues to paint the picture of a resilient recovery ex-inflation.

see how those numbers may affect trade is tokyu opens in a few minutes. in the meantime, let's get a check of the business flash headlines. they'rew chairman says working on a framework for capital allocation. ken mackenzie has a truce with agitators, including elliott management. in the annual report, bhp says they see challenges from global uncertainty and commodity prices above long-term forecast. they also see china's growth falling next year. former british prime minister tony blair says he sees a 30% chance brexit will be reversed. he also told bloomberg a hard brexit could damage the u.k. by eight giving power to the labour party houston lead. this idea that britain is

going to flash out of europe and become a low-tax, deregulated, offshore harbor on the continent of europe -- it is not going to happen. the risk that we face is that, if we do this hard brexit, actually, the economy will suffer, our public services will be under threat, and you actually might end up in the u.k. with a new labour government, further to the left than any labor government has been. i would still like to see a more rational debate happen in brexit and a possible diverged from -- divert from the course we're on. i have been very frank about this. punchmbine a hard right in the term -- form of brexit, punch -- hardht left punch, you will do the

country some damage. >> what are the most important things to address -- immigration, free movement of people? how important is that to the british people? audience, what financial services will participate? stay in brexit, i would like to see -- we do 2/3 of our trade with countries covered by trade agreements inside the single market or through the customs union. if we don't in the financial sector, we will find a very hard to be able to be active in europe on the basis that london is the financial sector at the moment. what we need to explain to people is the consequences of these different options. remember the thing about brexit. last year, people voted for brexit. but they did not know what the new relationship would be. my point is simple, i use an

analogy of the house swap. we voted to swap our house, but we have not seen the other place yet. before we make a final decision, we should at least go and look at it, have a survey done, look at the neighborhood, see what we are left with. >> how much worse is it for the u.k. to remain in that market? specifically, would you write a check? a checkr: we do write to europe, as do the other major european countries. it is important to realize, this check is primarily to help those east european countries that we brought into the european union to progress. polandmple, in 2004 when joined the european union, britain had a trade with poland of 3 billion pounds a year. today, it is 13 billion pounds. we pay money in, but there is benefit in our trade. betty: that was former u.k. prime minister tony blair. we take a closer look

at the bull run in asian markets wealth management for its outlook. haidi: we are also going to continue talking bitcoin. one of the first cryptocurrencies -- cryptocurrency's earliest investors joining us to talk about the regulatory headwinds the pboc is cracking down on. is it a rally that can be held down? we are counting down -- haidi: we are always counting down -- betty: go ahead. haidi: australia, my favorite market, counting down to the open in japan and korea. it was a reasonably calm handover we had from australia overnight. betty: it absolutely was. we will see how long that lasts.

all eyes on the fed and how that might affect trade. not going to affect asia trade today. but the next 24 hours are going to be critical. this is bloomberg. ♪

>> america may have to totally destroy north korea, president trump said. betty: the dollar fell and treasuries weekend. market seemed largely calm ahead of the fed. haidi: 119 people killed as a powerful earthquake shakes mexico. betty: a sprint t-mobile merger make sense but says there are other options on the table.

this is the second hour of daybreak asia. i am haidi lun in sydney. as we continue to digest president trump earmarks that he addressed the u.n. general assembly, he taunted the north korean leader calling him rocket man saying he is on a suicide action. homeowners -- president trump making it clear that he is willing to go there at least he says he is willing to the is necessary. word: we're waiting more coming from japan. shinzo abe will be speaking at the new york stock exchange. -import numbersrt come out, exports much better than what economists had estimated. despite the stimulus firmly

planted in japan the economy continues to prove -- improve. paul: the u.s. secretary of state has confirmed the trump administration intends to renegotiate the iran nuclear deal saying anything else is kicking the can down the road. he made his comments despite the european allies in russia saying the thing is working but iran is not abiding by the commitments. tillerson insisting the deal must be revised. >> there has to be changes made for the sunset provision. that is not a sensible way forward. that is kicking the can down the road for someone in the future to have to do with. paul: facebook and twitter are expected to face a public hearing on russia's alleged use of social media that influence the u.s. presidential election.

the timing and scope of the hearing are still being determined. facebook has revealed $100,000 and had spending linked to free russian accounts and says it has been less than forthcoming. 119 people have killed by a powerful earthquake in mexico. struck 100s -- kilometers south of mexico city weekly closing the airport and halting trading on the stock exchange. the peso fell to a session low against the dollar. it is mexico's second major quake this month that came on thethe peso fell to a session lw against anniversary of one in 15 that killed 5000 people. hurricane maria has strengthened to a category five storm again as it barrels across the eastern caribbean. it is bringing gusts of 265 hourr -- kilometers an coming weeks after hurricane irma spread widespread destruction. irma and the earlier hurricane

harvey left a damage bill of $140 billion making this year's storm season the second-most costly since 1980. guestglobal news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. imp am paul allen. this is bloomberg. ahead to are looking the open of major markets across asia going into the fed meeting going into the boj. we are expecting a bit of a hangover from yesterday's party after the three-day long weekend. critics we were wondering if there was going to be a pullback. we did see some weakness. we have the nikkei higher and similar for the topix. overnight markets barely

flinching as trump criticized the rocket man in his un's beach. it will take more than that to derail sentiment. even the korean won little changed despite would have to say about north korea. look at what is going on with currency markets. we have the dollar rebounding and the aussie dollar ring around the 80 level. atcks in sydney are looking 10 weaker for the cost me -- but trading at a high. we have the end fairly reacting to the trade data we got out this morning. exports did go at a stronger clip. not much reaction in that currency. base metals are mixed and

aluminum has had a good start to the weekend money managers are turning more optimistic on metals increasing bullishness while trimming their long wagers on copper. down .1ve it swinging of 1%. potentialay there's a election for japan that could be above and for stocks. the election may include following through with a tax hike pledge and clarifying the role of the nations self-defense and this could be key about north korea. betty: you see the headlines right here, uber is reviewing the bribery allegations that it violated bribery rules. justice department.

it involved the malaysian government as well as payments to police in indonesia all part of the attempts allegedly to crack into those markets indonesia and malaysia. the said to be reviewing bribery allegations amid the doj group and another signal that the new ceo is tackling many of hailinges at the right company. president trump went on the attack in his first address threatening to destroy north korea saying the u.s. is ready and able to protect itself and its allies and would respond with overwhelming force if attacked. president trump: the u.s. has great strengthened patients but if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. by jodie are joined

schneider. maning kim jong rocket again seemingly almost to his face on television. it trump achieve what he set out to do -- out to do in this stage? >> this was a huge worldwide speech, the first at the u.n., he went to give a signal to not only two north korea but the rack in venezuela but particularly in north korea and trade accord the other nations to help with this. i think in his mind that he achieved that. he also was talking a great deal about national sovereignty, the primacy of national sovereignty, it came up 21 times in a 42 minute speech. whether that was successful is another question but he came out and achieved what he wanted to. for him, this is diplomatic for

him. language,ch his the there was calm her, he was doing tough talk but less leisure and that his body language sometimes has been in these kinds of speeches. i think he was pleased with it and we will see what others think. it justas he just doing to play to his base again in the >> the base loved the speech. it was a tough talk and part of it is he was trying to get others on board. that is the real question here. -- there's a dichotomy and one of the things is at the time he is asking other countries for help with china anda and even russia he's saying everybody has

the national sovereignty as their right and responsibility and the world stage less so. even at the u.n. here saying it is not as important to have the world body so there were a lot of mixed messages but for him he came out with what he wanted to say. some of the people were missing from the room. the north korean delegation walked out in the beginning. china's president was not there. angela merkel was not there and theresa may took another meeting, she was at the u.n. meeting but not there for the speech. talking about these people when they're out of the room. what are we expecting from president trump? >> he is going to talk tough about north korea. he is going to in his we try to

get support. he did not yesterday in that andch, he did not come out he thanked russia and china and indirect the criticized china for not doing more. we may hear more about the need for others to do more. he called on china to start an export ban and china has not wanted to go there. we may see some more specific statementsquests or by what he wants to see others do. we're going to continue to hear ande kinds of talks sovereignty will be a team that in-- he will address meetings over the next two days. lots of nuances but out

of the gate very strong threatening to wipe out north korea. we are with one of the earliest investors when it comes to bitcoin. we will talk about the cryptocurrencies future. marketsook at asian processing president trump's luster. -- bluster. this is bloomberg. ♪

betty: this is daybreak asia. i am betty liu in new york. haidi: i am haidi lun in singapore. also attending the dollar trading its recent loans.

percent.see you in start with. interesting but can be --hodical when there is no can it be methodical when there is a do notology think it will markets. down talker sitting about the taper tantrum. using region is better positioned? exactly. i think liquidity will not change. i think a lot of the best this little result in funds flowing from the u.s. to asia. ratese had low interest

and that is one of the reasons there is so much rushing around. in terms of where you see the a.m. rally going, is that still a one-way down? dollare were short the and like the euro. it should be trading from 115 to 120 and like to settle at 17. haidi: what are the implications when it comes to asian currencies? from 2% to 8%.re largely because of the fact that the federal reserve is on a normalization path. our view is in december you will

see a hike. haidi: what a rally it was yesterday. me back from that three day weekend. this idea that we might see snap elections by the end of a over, that is giving upside to japanese equities and we have august trade numbers coming in. a lot of people said it was a goldilocks situation. you do not have which everything else is above put pencil and does that change a good way forward when it comes to the market? ask a have always been skeptical about japan because it is a currency driven market. -- ink it is a short-term would say over the next weeks the yen is going to come back into play. we knew it is goldilocks. the in newsweek, consumption

when in the second quarter. everything looks ok. reserve andderal the actions to two point go 0%. haidibetty: it has been interes, you could have lamed a little bit on the dollar depreciation but the dollar has stabilized the last several weeks and you still see the end rising, even exhilarating. how big of a worry is where weightedt on a trade basis it is not that worrying. reacted.t actually

that is one of the things we look at. all that is going to taper off after the october meeting. to letnese are likely rekindled.y the economy is not as strong. 6.2 to 6.3%ng to compared to the 6.9% in the first half and betty: do think there's any risk or damage to exports and the economic outlook? guests: i do not think so. on a trade weighted basis, consumption has been going strongly. i do note consumption has weakened in third quarter but not the extent that it will cause concern about the economy. it has not slowed down that

much. economysitive for the as a whole. betty: there's so much focus right now the fed and whether it is going to tighten and what kind it will have in asia. do you think we are not counting enough party congress in china, not cause or of an effect just on china but the region? are we discounting other actors is what i am asking? yes: what we're seeing is quite nice because of the fact that exports are growing in a lot of computergrowth in the sector where it is strong. announcementthe

will make any impact or any impact on the markets. up.now what is coming want to know whether it is going to start. all indications are it will start next month. the fomc announcement is going to be a nonevent. i do not think the federal reserve is surprising markets this week. betty: one feature will bring to your attention is our interactive tv function. it can see it is interviews and dive into the securities or bloomberg functions we talk about. check it out at tv . ♪

haidi: this is daybreak asia. betty: a quick check of the business flash headlines. western digital has made a new bid for toshiba's chip unit. writers said that puts it back in front of a bain capital led consortium. toshiba's board is due to meet later wednesday to discuss the matter but it is not clear if final decision will be reached. bain capital is said to want apple to put more into their bid for the chip unit. billion ofing $7 from $3 billion. apple uses its chip in the iphone. , debtcing a suspension

leverage coming under official scrutiny. an internal memo said the risk department has ordered a halt of new loans that have not already been signed. it will work with the developer as long as risk remains manageable. we are getting the latest on some breaking news. aboutotified the u.s. payments made by staff in asia. the news comes amid the federal ruleswhether uber broke against overseas bribery laws. what countries are we talking about? >> we have this mysterious u.s. justice department pro. -- probe. what we are learning is uber

hired an internal law firm to look at activity in five asian haveries treated we differing levels of specificity on what went on. the last specific case we know about took place in indonesia and was ordered to the justice department. it is unclear how many countries are being affected i this. indonesia that seems paid onlyer employee could continue to operate and office. uber fired the employee but did not report it to the u.s. government. that is one instance. there are questions in malaysia

about whether there was a quick quote and a series of investments that went on there. uber isill early, trying to figure it out it self created is hard to know where the justice department is landing but they're looking at it closely are you betty: are there other areas as well? >> so far everything seems focused in uber asia. executives travel and manage activity in asia so does not mean it will be limited to asia-based employees but we do not know exactly but the focus is on asian countries and what went on there. betty: thank you. report on uber.

and looking for clues to deciphering policy. this is bloomberg. ♪

haidi: it is 830 in singapore. another rainy morning in the lion city. joining a down market ahead of the fed. betty: you're watching daybreak asia. let's get the word news with paul allen. reportedan double-digit increases as external and supported demand continued in trade. imports also expanded beyond expectations raising 15% on year

. that left the trade balance of over $1 billion against forecasts of a $935 million or us. resident trump has been to destroy north korea saying kim is on a suicide mission. he said the u.s. was ready and able to protect the offended allies and to respond with overwhelming force of attacked. he described him as rocket man and said deal action against north korea would not be required. >> rocket man is on a suicide mission for himself and for his regime. , willing andeady able but hopefully this will not be necessary. >> hurricane maria has strengthened to a category five storm again as it barrels across the eastern european. it is bringing gust of 260 kilometers an hour and comes two

weeks after hurricane irma caused widespread destruction. a damageharvey left bill estimated at $140 billion making it the second most costly season since 1980. fortis to cut production of five american plants before the end of the year as auto sales declined for the first time in eight years. the most downtime will be for three weeks in mexico. too weeks stop at his will happen in mexico and that facilities in kansas city. ford said it must match up with demand. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am paul allen. this is numbered. markets feeling a little bit of caution going into that fed meeting, the decision

expected.nt we're talking about the hangover not just for japan. regionally we are seeing a down day. betty: i want to highlight what is going on in australia. we have the asx 200 sinking .41%. number -- falling over 6%. take a look at what is going on on the -- here and the aussies under pressure down .1 of 1%. perhaps saying that coming from the downside in iron ore prices. we did have iron ore futures continue to slide. with iron ore ring the main next word for australia that has some

influence in the fortunes of the aussie dollar in with iron ore falling before key technical levels that is fading into the aussie decline, still hovering around the $.80 level. the mexican peso. citing after the earthquake that we saw on tuesday. the psychological levels could we a key support at least in the near term. betty: investors remain focused on the fed. kathleen hays is here with more. let's start with the fed and the dot plot. >> that may be the key market mover. we think we know what we will get on the balance sheet.

of economicmmary projections. h member votes so based on the snapshot of the economy they predict the number of rate hikes for the next couple of years. they could send dovish or hawkish signals if people change their minds toward fewer rate hikes or whatever. , this istart over here 2017. the median is for three rate hikes this year. if you go to 2018 the median is smaller, there's five of the 16 looking for three and 2018. there are several looking for even more. could one or two of the more dovish members go to this line?

convinced there three rate hikes in 2018? analyst thinks the fed is getting ready to go again. >> we think the fed would like to go. primarily because their models should tell them we would begin to see inflation pick up given how tight the labor market is. >> the cpi turned up last week what about the fed's key indicator. betty: what are we looking for on the balance sheet announcement estimate >> they will announce the date they are going to start, probably october. here is what they said they would do in june.

start not reinvesting. raise the cap by 10 billion until the cap its 250 billion. beside that we don't know what they might the that they do not want to rock the boat. they do not want to roil the market. positionterm treasury is still there in the bond market. you would think they would be dumping long-term treasuries. it is no the deal but it could be a really big deal especially for the boj. >> here's the deal, they are not going to change their rates, action is below target but they will have to struggle with yield curve control. 0%.you keep the yield at

fallen below 0% in august as north korea tensions create risk aversion and a lot of money went into bonds. are they going to buy fewer you do notake sure fall again, will that be like the tightening? qe and the fedts is doing some tightening and yields rise even little bit in the u.s., is that something that will upset the boj? they will not have to fight the low bond yield. this probably resonates for the boj as well. haidi: a preview as we await the fed. of [inaudible]es

it as a signalng that chinese officials are concerned about the yen strength and how could that impact the country's exports. the infixing at again. wasn't that interesting? >> absolutely. it was pretty run-of-the-mill for a long time. ofelieve that in times crisis, you look at the fixing. we do have some officials coming out and saying things which some people take to decipher pboc policy. they will be fairly steady when the currency is moving one way or another. we saw the yuan rising aloft and

we had last week falling by 0.9%. this was brought about by the pboc may be uncomfortable. in the absence of clear to medication from the pboc one should look at the fixing. numbers tell the story. betty: what about the pboc in terms of communication, is it doing more to improve its communication? guest: yes. -- it was left to analysts to decipher what was going on or not. we do see the deputy governors talking a lot and we see the newspaper that is run by the same authorities coming out and giving hints of policy. -- they have improved their communication. however one tends to be

concerned and be a little bit wary. surprisetends to people with market moves as we have seen them in the past 11 years. fixing all that much more crucial. you look at it and then you decide what the move should be for the day or the short-term. we saw the rally going to an extent where it started making us uncomfortable. with a series of weaker fixings has -- has said the message. -- and sent to the message. betty: we will ask one of the earliest investors in bitcoin next. this is bloomberg. ♪

haidi: this is daybreak asia. betty: bitcoin is [inaudible] jamie dimon also slammed the crypto currency. china has been cracking down. bitcoin is back on the rise. stephen engle is at a cryptocurrency conference. can investors get into this space in a safeway despite all the naysayers? >> yeah, it is in the spotlight right now. i cannot answer that question but our first guest can. he is the ceo of bitcoin.com. thanks for joining us. the anchor asked how safe this is or wire how can we trust bitcoin? >> with traditional currencies

you have to trust a bunch of politicians have never met and they can rent as much as -- of that money as they want. trust the laws of that much more than some politician. dimon said it was a fraud and said he would fire any of his traders who indulged in bitcoin. >> they do not understand. , you can send or receive any amount basically for free and there is nothing anyone can do to stop it or block it. incan open a bitcoin account seconds. you do not have to give your name or your first or and child. you can do it in 30 seconds. >> where will it be with regulators taking key -- kaine

interest? -- keen interest? what is the next step for regulators and what does it do for the development? >> any smart regulator would embrace this technology. bitcoin is one of the most important inventions in the history of human kind. worlds how big of a changing invention this is. anything that china tries to ban is something you should invest in. -- bitcoinhings are news on its way. thehina controls a lot of -- it is centralized as well. centeredhe miners are there. what is the crackdown because it

is so centered? >> it is like a balloon. if you squeeze one and all the air flows to the other side. bitcoin is here to stay. the only way to stop it is to turn off the internet and keep it turned off. >> what role can they play because if it is to beated it is going under the strict regulation of securities regulation. >> traditionally hong kong has in a beacon of economic freedom and i would love to see that continue to be the case. >> how about your personal holdings, because of the possible split we saw. are you moving into the coin cash? that coin cash is much more

aligned with the original vision of bitcoin. we support the bitcoin cash and legacy but i am a bigger fan of bitcoin cash. it has been around a month than a week. the legacy version has nine years worth of infrastructure built up this is the biggest crypto coin and that is a pretty darn amazing start. first leg of the that. is there another split looming? >> there's going to be another split but from my point of view that gives me more coins that i can sell for the bitcoin cash version. it has limited supply but you can move it asked her and cheaper than any of the other ones in the world. i am a fan of bitcoin cash. >> why does china crackdown on

the mining, what lasting efficacy will that have? >> not much at all. more mining will taken places outside of china. if china said ok we will not mine gold anymore in china may be the gold price will go up but people will mine gold in other parts of the world. headed to as record? way back up. >> i have been in bitcoin for seven years. i remember when it coin would go from two dollars to $10 and three dollars in the course of a couple of hours. the percentage swings we are seeing, that is huge. if you have an in bitcoin a while. the trend is up. andhave to forms of money

you do not have to beg for permission to use and you have traditional legacy forms are you have to ask politicians for permission to use and your accounts can be frozen. it is clear so the future of the coin is brighter. >> when is the network effect kicking and when you get the large enterprises and it has critical mass which will team down some of that volatility and spike gains in price drops. where's the critical mass application going to be first? >> the application is money. the bigger the market cap is the smaller the volatility will be. we are a few years away from that. it is coming fast and furious. the pricing is at least double. >> thank you for your time. bitcon.ere from

coming up next, we will hear from tony blair. this is bloomberg. ♪

haidi: president trump threatened to destroy north korea. tony blair said that trump needs to be measured when dealing with pyongyang. mr. blair: you have to find as much common ground as you can. there are different -- differences. what the u.s. is trying to do is the right thing, keeping all the options on the table and doing as much as it can by diplomacy. it is also going to be working hard behind the scenes with china. >> how do you encourage the to thef china to come table and engaged the way you want them to? mr. blair: you have to reassure them you have no designs on the korean peninsula. you're not trying to change the status: the korean peninsula. they have also an interest in ensuring that north korea does not have this nuclear capability.

the chinese also understand this is a highly unpredictable regime and i do not think the relations are, they are not relations between -- of trust between the two countries but the chinese have enormous power and influence to move the situation in the right direction. you have to work the u.n. and keep the military options on the table. you have to work as hard as you can with the chinese to get some common strategy. aboutre is a lot of talk the nuclear rising. is that realistic or is it a matter of containment? : you have to go for a denuclearization. once a regime like this has a morear weapon, this is unpredictable and odd then any i can recall. if you allow them to have that

capability you have injected into the region something of the ,normous unpredictability uncertainty, and danger. >> have they ever changed their behavior in response to outside pressure? blair: they have occasionally. they have reacted to pressure thist is not clear with new leadership if this still applies. part of the problem is people find it hard to get a measure of this leadership him a what does it want, where does it want to go? for the north koreans, what they are trying to do is create a situation where their regime is invincible and they have a router desire which is to unite the korean peninsula on their terms. this is something that is unacceptable and contrary to the wishes of the people of south korea. said before your election last year, all the problems will be difficult. north korea is very hard because it is hard to see the solution to this problem.

>> can we establish we are dealing with a rational actor in north korea and does it compete things if you cannot establish that? mr. blair: you -- it is hard to establish. -- thereart of why will be a lot of things happening underneath the surface which is right. you are having to navigate every part of this. the consequences could be devastating if you make a wrong step. this is the difficulty. north korea has a huge amount of conventional weaponry assembled and that could trigger devastation. this is about managing the .ituation as best you can

>> you mentioned sensitivity and that is not a word that people have associated with president trump. what is the value of the way he has been dealing with it which is more aggressive rhetoric. is that a positive thing? mr. blair: it has to be measured all the time. there will be messages of diplomacy, messages almost of reassurance and there has got to be some message of threat because they have to understand the consequences. haidi: that was the former prime minister. it is a difficult balance. this is bloomberg asia. ♪

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♪ david: markets flat, not much happening. the yen.appening with mix,litics still in the president trump addressing the united nations. he threatened to totally destroyed north korea. seeing anhat we are increasingly robust recovery. this is "bloomberg markets: asia." ♪