♪ >> 7:00 a.m. in hong kong were real life for -- and bloomberg's asian headquarters. welcome to "daybreak asia." uncertain outcome in two elections this weekend. germany faces coalition talks, the far right returns to parliament. in new zealand, bill english came up just short, anti-immigrant party now holds the keys to power. >> from bloomberg's world headquarters, i'm kathleen hays in new york, it is just past 7:00 p.m. on this sunday. president trump another battle with senior republicans, this time over the corporate tax rate. as commerce secretaries in china amid heightened tensions over trade.

we will check the mood live in beijing. ♪ >> not -- politics daunting markets, the outcomes not exactly the results we were expecting. >> we are going to be delving into the in depth in the next few hours. i want to take a quick look at a close in the u.s. market on friday. not surprising that after a fed meeting, continued concerns over what was coming out of the u.n., tensions with north korea, there was about a mixed close. you can see that the dow was just down ever so slightly. flat, fractional gains in the s&p 500 and the snp -- s&p 500e up.

>> not a lot of direction for us. we have a lot hanging when it comes to the big week in washington. central-bank speakers set to speak, as well. new zealand not a whole big reaction to this weekend's election when it comes to stocks. we are continuing to see the kiwi dollar, 7310 weakening from the third of desperate 3% the surprise outcome here as we look ahead to those coalition talks. australia, we are seeing teachers up about seven point four the excess 200. we did see an upset about .1% on friday aussie still below, the 80 handle. oil a bit sideways this morning. we didn't get a whole lot of consensus out of the opec bring on whether they will be spending those out the cuts are not.

prime minister shinzo abe back at home from the yuan general assembly, ready to announces ¥2 trillion package. speculation of a snap election. that press conference happening this afternoon, as well. it could be a good day for tokyo today. >> let's get the first word news with revenge and -- rosalind chin. > a weekend poll said must two thirds of japanese voters disapprove of prime minister singh jalopy's plan to collate snap election. unelected -- a extraordinary session were probably is expected to dissolve in the lower house. opposition parties and other critics say he is trying to cling on to power despite a string of can -- scandals and resignation. u.s. air force b-1 bombers who their closest to north korea this century on saturday. our before pyongyang's foreign minister told the yuan that president trump's threatening he's the one on a suicide

mission. u.s. aggression is the reason his country needs nuclear weapons, he said. china says on earth tremor detected on saturday was not artificially triggered. dispute over respect of the u.s. national anthem as joined in stevie wonder. he made his protest alongside his son at a festival in new york, after president trump said that athletes who failed to stand for the end of should be fired. trump also canceled a white house visitation for nba winner steph curry in a twitter right that brought condemnation from league executives and star players. global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. i'm rosalind chin. this is bloomberg. kicking things off in germany, the euro taking it on the chin after the german election result. all of these coalition talks going on. chancellor angela merkel' christian democratss in on top, by now face a tough coalition talk after a current partner,

the spd ruled out a deal. caroline, good to see you. merkel's party is the biggest one, but you take a look at the outcome of all of this, they did come out as losers in a way. >> it's surprising, really. very surprising for a german election to see that the cdu csu did come out on top, still the biggest party. angela merkel winning a fourth term, on the other hand their support has been hollowed out. so too has the support for the spd. the big winner, one in five german election there's -- electors voting for a fringe party. third, pulling down about 13% according to the exit polls which make people see as largely reliable.

they are anti-euro, anti-immigration, and even anti-islamic. this party now considered to have a much more power potentially when it comes to german politics. quite an accomplishment on their part, maybe that's one of the biggest surprises coming out of this. there are a lot of talks of the jamaica coalition, which means merkel would add the environmentalist greens to a broader coalition called jamaica, because the colors add up to the colors of jamaican flag. how realistic is this? what does it mean for those getting short locked? i if hence minister would be able to maintain his position, there are already questions, wrinkling around of that as merkel have to make deals now. he showed he's a veteran

politician both in europe and in germany. the finance minister, he is angela merkel's right-hand man. that job is absolutely key. coming the spd leader out and saying that this potentially is a target for them in the coalition talks. this is really interesting. angela merkel now looking at the so jamaica coalition and bringing in this business ftp, they're very far apart, these two parties when it comes to policy. is ftp is much worse -- fdp much more susceptible about european integration -- skeptical about european integration. the greens, on the other hand, want to see lesser alliance on diesel and combustion engines by 2030. they come from very different political backgrounds, now angela merkel would have to somehow bridge these differences

in order to bring these two parties into this three party coalition. in the past, it's taken more than 80 days, some people say there won't be a german government until christmas. takes,hat's how long it i'm sure angela merkel will open that president with great delight. thank is a much to caroline hector, europe's euro anchor joining us from berlin. we want to dig deeper into the german election with chief global strategist greg valliere. days, perhaps till it is formed. if you look at the results of this election, how do you rate the strength of angela merkel at this point? yes, her party had one of its worst results since 1949, they dropped quite a bit from the last election in 2013. on the other hand, she's heading for a fourth term potentially. clearly, she still seems to come

out of this is a strong terminator. >> maybe not as strong as she looked one week ago. i think the result was a little disappointing with both extreme parties, especially the one on the right, doing pretty well. i think that may hamstring her ability to cut deals with other european leaders. i have to say that she's been knocked down a peg. she is still strong, but not as strong as she was a week or so ago. afdhis wildcard was this party, they have become the first far right party to enter the german parliament since the nazis. how big of a concern is this right now? it seems like we are seeing these populist movements kind of rear its head again, not just in germany, to a certain extent, also new zealand. >> you thought maybe the worst was over, maybe the real populist radicals have peaked as a force, now i'm not sure. god forbid that there's any kind

of fresh terrorism in germany, or wherever. i think these radical parties will demand their leaders a barriers -- of their leaders a very vigorous response. >> stay with us, i want to talk about what's going to be coming ahead in bc -- washington, d.c. still ahead, india's finance minister tells business not to panic, despite the nation's loading economy -- lulling economy. >> for your income falls at the world's largest dairy exporter. we will get the latest from tailspinning's in just a moment. this is bloomberg. ♪

♪ this is "daybreak asia." i'm kathleen hays in new york.

>> on the yvonne man in hong kong. fonterra has reported an 11% fall in for your net income 25 $44 million. it is maintaining. forecast and $16.75 a kilogram. joining us is ceo tailspinning's. always great to have you on this date day. day.-- this big 2017 higher milk prices, higher costs for fonterra. what is your read on that year -- the year? >> you are right. it has been quite an extraordinary year. here at home, we had a couple of weather events going into our peak of milk so we could collect less volume.

at the same time, prices went up by 57% around the world. higher input costs. the no milk price. with, on theo deal other said, in terms of efficiency, operating expenses we have improved a lot. it's actually quite -- we're actually quite pleased with the results because the payout to farmers is significantly higher. we were able to stick to the 40 sense of dividend, which we did last year -- $.40 of dividend, which we did last year. we always focus on what's the yield on the share for our shareholders and with our return on capital. both have been extremely strong, on the increase of milk rice which we have not seen in a long time. >> can this continue? this rally in the prices we have seen? we see new zealand milk

collection actually fall in august, there were signs that weather would actually greg production in september, as well. without boost the global dairy trade price -- with that boost the global dairy trade price? i do think that the prices will remain to be strong. i also do expect that prices will creep up more than where we are now. do we see this massive increase for over 60% of last year? definitely not. -- you big increases would see big increases again, then demand falling, then prices -- then prices coming up. i do expect it to christmas, then you see it supply around the world coming on. we are in a much more balanced world right now than last year. last year was a huge challenge, this year is going to be, we can

much more focus on the sales on business,nd drive our rather than this huge uplift in the price, which we saw last year. >> talk about some of your investments, especially in china, back in the black right now for you, but certainly it's come with quite a bit of desperate of costs. to?you happy we are happy to retain a stake. our china strategy is so much bigger than the investment in being there. we have a massive ingredient business, and value in china. we have a big food service, we have consumer brands, we also have what we call administration in aging population. infant formula, we have the

partnership with being make. it's part of our great -- it's important for us to keep this footprint together. when we look at the partnership the whole newht, registration and regulation in china. i -- we have moved through the phase pretty smoothly. we have brands and recipes ready with our partners. i'm much more positive of the year to come, because we are registered, this is a key partnership and we are going for market share. >> we are going to leave it there. we appreciate your time. of stories a roundup you need to know to get your case going in this edition of daybreak for subscribers. it's also available on your mobile in the bloomberg anywhere app. you can also customize your

settings so you can get news on the things you care about. this is bloomberg.

♪ ♪ this is "daybreak asia." i'm your man in hong kong. >> and kathleen hays in new york>>. it looks like it's great to be a busy one for president trump with taxes and geopolitics. topping his agenda the word -- the word words with north korea continues. let's discuss all of that with our reporter in washington. let's see if we can hit on some of these points. let's start with north korea. war of words, here we are sunday night on the east coast. monday morning in asia. where do we stand in the donald trump versus rocket man a.k.a. kim jong-un? news looks like the good over the weekend is that things didn't get any worse with north

korea, but they didn't get any better. we had north korea's foreign minister speaking at the united nations, he spoke on saturday. he responded to comments made by president trump last tuesday and had some very sharp words for the president, continuing the rhetoric there. we also had a u.s. warplanes flying as close to north korean airspace as they have for decades. we didn't really get much out of the president this weekend on north korea. it could come anytime, we will just have to wait and see. >> a big week in washington, as well. with the top and health care, tax reform, as well as this travel dan -- ban. is this brent cassidy bilbrey much dead on arrival? >> never say never in washington. the white house is working hard to try to slip at least one

senator who has come out and say he is against the bill, rand paul of kentucky. they have very little breathing room, rand paul and john mccain said they are against the bill. if those two votes hold, senator susan collins of maine, who voted against the previous obamacare repeal, has said she's against the bill. she could change her mind, we think she's a pretty firm no. that would be enough to end the discussion, and at that point it's possible the legislation wouldn't even make it to the floor. the white house and some republicans are working hard to see if they can flip any of those votes. i have a question about the nfl donald trump, then of how saying that, trump saying they should fire players who do neil during the national anthem. so many ceos, it a lot of pushback, including from the former ceo of microsoft.

he now owns the los angeles clippers, saying donald trump shouldn't be doing this. what does this mean for his agenda? is a good, is it that, what is going on here? >> i don't think it's a good thing for his agenda, in that it's another huge distraction. at the time when there's a lot of focus on health care, a lot of focus on his you tax plan that is supposed to be coming up this week, and you have the president sending more than a dozen twitter messages over the weekend on the nfl and sports stars in general. you would have to think that it's sucking some of the air out of the room. the president has done this before, sometimes it seems like a deliberate distraction or a whim on his part it's something that his supporters really aren't too critical of. really has anyit impact in the end on his

legislative action. >> thank you so very much, we want to get back today deeper into -- to dig deeper. we want to try to hit all of these, but since we just finished on the nfl, what is your take? is it sort of a distraction, is it something that really matters to a donald trump is trying to do? he is big things on the agenda this week. >> i think for his base, they probably agree with him on this. maybe he solidifies support on that 35% or so. i think the bigger issue is what about the rest of his agenda? he is probably going to lose on health care. it looks like ted cruz, of all people, might be wavering as well. i don't see the president winning on the health care bill. they were going to unveil at least an outline of a tax bill by the end of this week. kevin brady and others, i don't think they will have legislative language. i don't think they've decided whether this is going to be a

big tax cut for the wealthy, or if it will be a populist bill that doesn't cut taxes for the wealthy. and we are, less than a week away, they haven't decided what's in the tax bill. us, isect the dots for it right to understand health care reform have to get past our tax reform to go through are we going to find that those dots connect differently, that may be health care goes back to the drawing board again and somehow they are able to go with the --t, even though health care obamacare is in the tax code itself? >> how many times are they going to touch a hot stove before they realize they are not going to get abolition of obamacare? maybe there's some grand compromise, i will believe that when i see it. before we get a tax code, they have to get a budget resolution. there in a close on that, either. i think it will be several weeks before anyone can say a tax reform bill is moving. the idea that we can get a tax

reform bill done this year is ludicrous. maybe if we are lucky, we will get one done by next spring. come've heard some leaks through on this tax reform bill, targeting a corporate tax rate of 20%. do you think the president is going to accept anything about 50% -- 15%? >> just a few weeks ago, people were saying it may wind up being 23%, getting it down to 20 is a modest victory for trump. the issue is how do you get close to 15% and do all they want to do without this blowing a hole in the budget? they will use optimistic assumptions, there are ways you can get a bigger tax cut, but i think they're going to lose a lot of credibility if it's a budget buster. >> let's take a quick look at north korea. when you field questions from investors, what are they asking you about -- what's at the top of their list? is in north korea, because that

seems to be a potential threat? should tensions escalate even further? >> number one issue by far, nothing else comes close. i think the markets are two statement, i think at some point in the next few weeks, north korea will launch another missile, test another bomb. at some point, we will have to respond. this is an exceptionally dangerous story, i don't see improving all that much. game donald trump laying a --laying a game? what do you think his endgame is? >> i have no idea what his endgame is, i worry that we are going to stumble into a war by mistake. >> let's leave it there, give everybody something to think about. greg valliere, thank you so much for joining us. plenty more to come on "daybreak asia." we are going to be taking a look at the new zealand election, as well. some inconclusive results will

have great ramifications for the markets there, as well. a lot more to come, this is bloomberg. ♪

host: 7:30 a.m. here in hong kong. just 30 minutes away from asia's first major market open. betty: beautiful day there. it topped 90 degrees in new york city. markets ended the week pretty much mixed. i'm kathleen hays in new york. yvonne: i'm yvonne man in hong kong. you are watching "daybreak asia." reporter: an air traffic control

problem has now been fixed. domestic services at all airlines were especially hit. it happened on a day of heavy air travel demand on the first weekend of the spring holiday. the euro fell against the dollar after the german elections. angela merkel's party one most seats. she is expected to talk to the pro business free democrats, a process that could take weeks. sd --nti-immigrant a major new challenges in front of us, mainly the fact that the afd has entered the federal parliament. we shall certainly analyze this very closely and in-depth because we want to gain back those voters by solving their

problems, by giving them solutions, and certainly by good politics. iran says production is starting to stabilize in the oil market compared to rising output in libya and nigeria. they called for changes in the deal that exempt of the recent turmoil. however, he did not elaborate. they have agreed to curb output through march to drain the global surplus. to bepitol hill is said targeting a capital tax rate of 20%, higher than president trump's preferred 15% down from the current 35%. an announcement is expected on thursday. global news 24 hours a day, powered by more than 2600

journalists and analysts in more than 120 countries. this is bloomberg. yvonne: let's do a quick market check here. a big weekend where we did see election outcomes that were quite a surprise with the balance of power in new zealand that determine how this coalition is going to be shaped. we are seeing a little bit of upside in stocks, about 1/10 of 1%. we can do to see -- we continue to see some volatility here as talks continue to go on. in australia right now we are seeing the upside about 1/10 of --in futures of the asx 200 in spi 200 futures as compared to the asx at half a percent.

there is speculation we could see a possible snap election announcement, a press conference happening this afternoon. the dollar-yen still quite favorable for the equity out 112.35. host: let's share some breaking news now with our viewers. the u.s. is issuing a revised travel ban, president trump seeking new restrictions as he pushes on with this. we will be looking for more details on that. this is something the president was mulling over, so this is not what hundred percent a surprise. -- 100% a surprise. we will be watching for more details. fromve limiting travel iran, libya, syria, yemen, and somalia.

coming in. details i guess he wanted to make sure it would get underway with a bang. yvonne: more headlines coming through here also, lebanon travel from venezuela, north korea, and chad. north korea in particular not a they comprise. we will continue to follow those headlines coming through from the white house. let's get more on what we should be watching as trade gets underway in asia. let's bring in our global markets editor in sydney. it is kind of this unexpected outcome from the new zealand election that all the currency traders are focused on, also germany as well. what are you watching out for the most? reporter: good morning ivanka. yvonne. morning as we have seen from markets, there has been an almost insipid

reaction in equities, and really the market reaction has been largely kiwi dollar. we saw a lot of that retrace come back to a level change, but still weaker as we go into the open of major equity markets in asia. it looks like certainly a period of days, if not weeks, of negotiation. it is largely a picture which is still inviting to risk takers and people wanted to place more equity market exposure there. the equity market in new zealand has had a good run, up about 15% with what is in line with global equities. oftainly a period uncertainty, but nothing to watch out the risk takers. host: what should we expect when

we look at the markets and the german election? it is clear angela merkel faces a tough coalition ahead. does it really matter to traders as much as long as she puts the coalition together and keeps things on track, or are there some potential trading opportunities in here? there are certainly arguments on both sides of this, but we shouldn't lose sight of the fact that germany has an investment destination -- as an investment destination still looks very good. indexhart shows you the on a forward price-to-earnings ratio relative to some of the other major markets in the world. good performance of germany's stock market, there's a lot of exposure from global companies, and this is still somewhere that people

wanting to incrementally increase their global equity exposure in europe may still look to somewhere like germany to do that. this election hasn't massively impacted their appetite to want to do that. certainly i've heard arguments , saying this is not a worry, in fact quite to the contrary, that merkel will be fine in the situation. i think more broadly speaking , thequity markets and risk dial swings now away from these political elections of the weekend and focuses more on central banks. with got fed chair janet yellen speaking later this week as well. the big change in tone we have had over the last few

months, those are the statements that are really going to be scrutinized and will be focused on by markets this week. watching in japan very closely, what happens this afternoon if abe does call that snap election, that is where the focus now moves for global markets. kathleen: plenty for us to keep track of. one of our economist is quoted in one of our stories, referring a "fedfed this week as speaker front." prime minister bill english has claimed a mandate to form the next new a "fed speaker feeling government, although falling short of majority. new opposition leader is refusing to concede defeat. our wellington bureau chief joins us now. let's look at this question of refusing to concede defeat. what does that mean? what can she question in these results that would affect the outcome? reporter: as you say, bill

english and his national party secured what on paper looks like a pretty convincing win. , whicht 46% of the vote is 10 percentage points higher than the labor opposition. but as you point out, they are just shy of a majority. the problem is that on the other side of the fence, when labor links up their support with their ally the green party, and if they were able to woo winston peters, they too could obtain a majority and form a government. the new zealand electoral system has no obligation for the party that gets the biggest share of the vote to have first dibs at forming a government, so we are now in this position where the guy in the middle can literally decide who becomes the next prime minister. it certainly is an interesting character, mr. peters himself. now that the balance of power

has rested upon him, is there any indication this could be -- this could be for a few weeks, but is there any indication of where mr. peters will go? national says they have the stronger mandate based on having the biggest individual slice of the vote. labor says more people voted for change overall. it is down to winston peters, and he will do presumably whatever gets him the biggest prize. yvonne: does that really changed the question or the issue -- kathleen: does that really changed the question or the issue of what the next leaders have to do for new zealand? your team wrote earlier this weekend that the call is to

focus more on homelessness, income inequality, these very fundamental issues that a lot of liberal parties have been pushing. once you get past this deal making, what is the big challenge? reporter: that's right, we saw this extraordinary surge from the labor opposition and the new , and when it became clear that labor code topple -- the labor could topple the government, they began to address issues more on new zealanders' minds. there is concern in new zealand about poverty, the housing crisis, people being priced out of their housing market. in order to have a chance at being reelected, we will start to do more on those issues. even if labor doesn't win, it

has had a significant impact on how the new government will adjust these sorts of things. it seems that just and -- it seems that they are not going to vanish to quickly. next, commerce secretary makes his first official visit to china. we take a look at his official agenda next. this is bloomberg. ♪

♪ yvonne: we are coming down on asia's first major market opening of the morning. new zealand elections were quite a surprise for investors. we are seeing the euro and kiwi heading lower this morning,

weakening on those election outcomes. in terms of politics in japan, we are expecting some type of announcement this week on a snap election as shinzo abe tries to climb back up in terms of his approval ratings. dollar-yen is well above 112 this morning. this is "daybreak asia." vestorsn: this week in will be watching a speech by janet yellen and a fresh round of economic data. joining us to put it all together and tell us what to expect is a su keenan. reporter: forgot janet yellen speaking this week, we've got the vice chair speaking, and that will be a lot of eye on the dollar. if you look at stocks, though, these are the ones expected to move among the many in the monday session. one is an ipo that had a horrific day on thursday,

an online international e-commerce company that sells consumer-products worldwide. investors are betting the price goes lower this week. we will how that takes hold on monday. and six flags had a nice bump on monday, but analysts leave it could drop as much is 15% going forward. let's put on the bloomberg really quick, these doctors that's the stock pickers -- the stock pickers' favorite chart here. the close on friday was close to unchanged. we saw the dow show some slippage. can be record-breaking rally continue is really the big question as we enter the week. yvonne: that's true.

turning to commodities, we have seen oil trending higher by friday's close, still holding her of the $50 mark. this opec meeting cynics a mixed signals. sending we expect? -- some mixed signals. what can we expect? reporter: the opec meeting a disappointment for many and that the silence was a verdict. there was no decision on the deepening of the cuts that many, at least u.s. traders, believe is needed to keep prices above $50. it was pretty much a nonevent. it was bland, but bland is good. some believe oil is on track for the third monthly gain, so we are coming out of the abyss for oil prices we saw a few months back. we are seeing gas prices d

rop. the average price in the u.s. is about seven cents lower. see fuelanalysts prices continue to drop as the storm recovery continues and refineries get back to normal. many fed bank presidents, governors, etc. are interested in seeing the pce inflation numbers later in the week, but every day we are going to have a very full plate for markets to digest. reporter: will be a lot of focus on that. key is theso household spending, impacted very much by auto sales. what we are finding is a pickup goods come a but in terms of household spending, it is seen as probably only a

very small gain for august. in terms of the stocks, the reported earnings, we've got goods comenike, a number of dit all veryat would be much interesting to see what is going on in terms of their international sales, how the dollar impact them, how they see the coming month ahead. yvonne: thank you, su keenan there was a look ahead at what to expect. wilbur ross will push for greater access for american companies when he talks in beijing later this week. there is a business angle to all of this, and talk about trrorists -- about ariffs, which we haven't heard much of lately. reporter: he will probably meet with the vice premier in beijing in the next few hours. he is having a breakfast meeting

at the moment with the u.s.-china business council. is talking greater access for u.s. firms trying to get into the chinese market. in the past he has called china one of the most protectionist countries on the planet. he's also likely to talk about north korea and the sanctions that are being put in place. we saw those from the chinese side start to bite on saturday, with the pboc telling banks to stop your business with any north korean entities. we've also seen a reduction of flow of oil and gas across the border as well. it seems to be fairly high up on the agenda as well, as well as trying to improve this trade relationship ahead of the visit i president trump expected in november to beijing. ross is expected to lay the groundwork for that. he is also going to be coming here with a trade delegation at that time, bringing over business leaders and executives from the u.s. into china. this visit is part of a six day

to her of the region. is also going on -- six-day tour of the region, also going to hong kong. kathleen: on friday, ross said the trump team has decided to defer a decision on steel tariffs. more broadly, how much progress has the trump administration, and particularly wilbur ross who has such a great relationship are theya, how much starting to actually rebalance the trade relationship? reporter: it is an imbalance, as you pointed out, that is something for president trump. we have a chart in the terminal that has been showing what is going on since 1999. it actually compares the trade imbalance the u.s. has with china to the ones with mexico and canada, obviously in focus now with the nafta trade talks.

as the years have progressed, up until 2017 this imbalance has just increased. there's marginal spikes up and down, but the overall trend is it has widened further and further. that is something the trump administration has made a push on wanting to rebalance. they did have, and ross led this , a trade deal earlier this year with the chinese pledged to take imports, to buy more u.s. beef, to open up the finances sector. havee last few weeks we heard the authorities here are looking to open up the electric to foreignket carmakers and potentially allow them to fully own their electric vehicle operations here in china, which would be a boon for a company like tesla. we've also heard that the financial services sector maybe further opened, the pboc

potentially looking to allow banks to increase their holdings , do have majority ownership, to also increase their potential ownership of chinese banks and be involved in things like clearing. those are the areas where there has been some momentum. as you pointed out, things like the steel tariffs have been weighing on this relationship. china will be breathing something of a sigh of relief to hear these will be put on hold, at least until this tax bill is passed in washington. we've also got potential solar what the u.s. says his international property violations -- intellectual property violations. there is a lot to discuss at this meeting in beijing. yvonne: it certainly is a busy week for mr. ross. thank you. more ahead on "daybreak asia." ♪ this is bloomberg. -- asia." this is bloomberg. ♪

♪ yvonne: reports from the uk's a uber is ready to make concessions to win back its london license. rivalnday telegraph says lyft has been meeting with transit officials over the past year. softbank is willing to accept a stock for stock merger with t-mobile at current market price. the two sides have yet to agree on an exact figure. softbank does not expect a premium over sprint's $30 million market cap. shares should be valued as a significant discount. kathleen: facebook plans to ,reate a new class of shares with mark zuckerberg selling almost all of his stock to control philanthropy.

centerburg said he would proceed, selling up to $13 million of shares. yvonne: sophie: plenty -- yvonne: plenty more to come. goldman sachs chief strategist joins us to talk about the elections this weekend. this is bloomberg. ♪

yvonne: welcome to "daybreak asia." the euro falls after uncertain outcomes in germany. angela merkel faces coalition talks as the far right returns to parliament. negotiations as well in new zealand as bill english came up just short. and anti-immigrant party now holds the key to power. kathleen: i'm kathleen hays in new york, where it is just past 8:00 p.m. on this sunday. the trump administration issuing a revised travel ban. the president says the tougher the better. 's commerce secretary is in china amid heightened tensions

over trade. -- kidscheck the mood commerce secretary is in china amid heightened tensions over trade. we will check the mood. ♪ we've got the results of the big elections. angela merkel winning her fourth term as german chancellor, but the far right getting a foothold that is going to stretch out this whole question of forming a coalition. in new zealand, a strong surprise showing by the labour surprise showing by the labour party, but currencies a little weaker, certainly very interesting election outcomes. yvonne: we know markets don't like uncertainty. it seems like both the coalition talks in germany, as well as new zealand come are going to take some time to really shake and take form and see where these governments go from here on.

the big news in the last couple of minutes was that president ban restricting travel from eight countries. kathleen: president trump has ordered more travel restrictions for people seeking to come to the u.s., saying "the tougher the better." they from six muslim majority ban from- the previous six muslim majority nations is set to expire. majors in line with the pieces, who the ban is going to be placed on, how exactly it is going to work question mark -- work? reporter: i think there were some surprises. i personally was surprised to see north korea and venezuela on this list. is now a list of eight countries, before just six countries. i don't know if this is by design or by accident, but perhaps we can no longer call it a muslim ban because with the

addition of those extra countries, it is a little more geographically and ethnically diverse. one of the things the administration has done is given a grace period until the middle of october so they could be a little less confusion about this ban. at the same time it will certainly give opponents plenty of time to get their lawsuits going and protests going. just a very interesting development. of course, the administration had to do something today because the previous ban was set to expire, so that really is the bottom line. yvonne: so these new restrictions, there is a grace. as you grace period mentioned. how likely are we going to see this actually go through and avoid all of the mass confusion we saw in the airports? reporter: i think the mass

confusion could probably be headed off because it probably will be clear, at least by the middle of the month, who can travel, who can't travel. there are some subtle differences between the restrictions across the range of countries, which is somewhat similar to the countries we had before, but some countries like sudan no longer on the list, whereas we mentioned the venezuela and north korea on the list. i think there's probably enough time to get this mostly straightened out. there are some differences in some instances. students will be allowed to get visas. the restrictions on venezuela seem mostly targeted at government officials. in the case of north korea, the executive order from president trump basically says that the government there doesn't cooperate with the united states in any way, shape, or form, and it is that cooperation and the willingness to share information about a country's citizens that

is really detest here as to whether they ended up on the banned list or not. yvonne: good to get your perspective on all of this from d.c. let's get to the first word news with rosalind chin. reporter: a we can poll says almost 2/3 a japanese voters disagree with president shinzo abe's plan to call a snap election. is expected to dissolve the lower house. opposition parties and other critics believe he is tragically onto power despite a string of scandals and resignations -- he is trying to cling to power despite a string of scandals and resignations.

the growing dispute over respect for the u.s. national anthem has now drawn in stevie wonder. his protest alongside his son at a festival in new york after president trump said that athletes who failed to stand for the anthem should be fired. trump also canceled a white house invitation for nba champion steph curry that fromht swift condemnation league executives and players. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. yvonne: major markets in asia just started trade. looking pretty favorable for of a, up about 7/10 percent on the nikkei.

we expect an announcement from shinzo abe on some sort of economic package and the snap election. a mini correction in august for korean stocks. we are seeing a bit of strength the at 1131.48 against dollar. of 1%, notbout 1/5 going a whole of direction. the quick check in new zealand. fallingnce of power upon winston peters in the new zealand first party. we are seeing stocks going nowhere, and the kiwi continuing to see some downside here at 7283. watching the euro coming we are seeing it far off from the handle we have seen in the past. that fell against the dollar after the german election.

angela merkel's democrats came irt on top, but the recurrent partner ruled out a deal. outcome i guess you could call it, caroline. merkel coming up victorious, but there was a bit of a sour taste in all of this and what happened over the weekend. you could argue it was kind of a defeat for many of the traditional mainstream parties in germany. reporter: what it really is is the fragmentation of the political landscape here in germany. or sevenw got six parties going into the bundestag . so yes, it is quite an interesting outcome, particularly because one in five german voters actually went for french parties cannot be that on

the -- fringe parties, be that on the left or the far right. that is surprising, especially when you look at the fact that germany is still western europe's strongest economy. you've got the best gdp this year expected. 80% of germans say they are either satisfied or very satisfied with it comes to the economy. quite surprising that you still have on the margins strong support for these populist parties, perhaps a bit like marine le pen in france. is the message here that people are very happy with the german economy, they've got low inflation and strong so is it more of a concern about refugees, migrants, terrorism? if so, how does that affect how angela merkel is going to have

to govern, no matter who is in her coalition? reporter: absolutely. this open doorad policy kamala 1.3 million immigrants into germany from policy, allowed 1.3 million immigrants into germany from 2015. she took her biggest hit in popularity as a result. now the question is, how does angela merkel go forward with the coalition where she brings in the green party in the pro-business party, both with quite different views when it comes to things like european immigration, taxes. how does she make that potential coalition work? how long will it take to get the coalition actually formed? merkel is confident it will

happen by christmas. others saying this will make her into a potentially lame-duck chancellor unable to get through anything new or innovative because she will have such such a big coalition to deal with. yvonne: thank you for staying up with us live from berlin. let's get the juice from goldman strategist. asia you could say she is in a weaker position now. what does this mean for the euro rally we have seen in 2017? guest: it seems this would put a bit of a cap on that. in relation to markets in asia, that is the key transition mechanism. one of the factors for asian markets this year has been the weighted increase of asian currencies against the u.s. dollar. that has been a tailwind for

investors in our markets to the extent that the euro, one of the most significant crosses, is a bit weaker. that might take some of the steam out of the currency rally here. it may be more of a headwind for markets going forward. kathleen: can you explain to us why it is a headwind? angela merkel is still going to be the chancellor, giving the position for a fourth -- keeping that position for a fourth term. i understand a coalition is hard to build, but what is the risk in the strength of germany and the euro area in this election outcome? some stories have mentioned the euro integration. are people that concerned about things around migrants and refugees that are going to break up the coalition? what is the risk to the euro? guest: it is a great question. i position it more in terms of expectations from the fed. the key issue for the dollar is that so far this year, the fed has been perceived by the market to be more on the back foot.

that has meant that expectations are short and rates have been suppressed. the right between the dollar and other currencies, like the euro in this instance, has been less strong than perhaps the market and we have been expecting in the beginning of this year, and that has led to a weaker dollar than we had been expecting at the beginning of this year. to the extent we now have market expectations for the fed repricing, we have gone from 39% probability to a 63% probability of a hike in the past week, and these european elections incrementally flow into that. i think that will flow back into asian markets. yvonne: we are talking about the earnings environment in asia, which has been quite robust you could say. where are we going here? is it going to be more in focus with what the fed is doing, or

on the fundamentals of each market? guest: we think it is a bit of both. there is no doubt there is extreme easy financial positions in the united states that have been a very supportive backdrop to equities. when you have very strong growth in our current activity indicator, the august reading was 4.6%, which is high in absolute terms. when you got strong growth and that is a very potent cocktail for equity markets, and that has been what has been lifting equity markets globally. the key reasons why asian markets have outperformed -- and this is breaking a five-year relative performance downtrend -- of the 26% return we have seen, 16% of that is from earnings come up 5% currency depreciation, and only 5% from multiple evaluation expansion.

it has been a fundamentally driven rally, and it is our expectation that earnings begin to come through and that will drive markets higher. yvonne: stay with us to talk about more your strategy for the fourth quarter. more on the german election and all the day's trading on our market live blog. view the bloomberg terminal. you can get a market run down in one click, and commentary and analysis from our expert editors. you can find out what is affecting your investments right now. plenty more to come here on "daybreak asia." this is bloomberg. ♪

yvonne: this is "daybreak asia." kathleen: we want to get right back to our discussion of with goldman sachs' chief asia pacific strategist. you're just out with your

fourth-quarter outlook. right off the top, i would like to ask you about what this year so far tells us about fourth-quarter prospects because i think some people get a little nervous, but you are still pretty sanguine. guest: that is true. i think it is a good lead-in. i was saying a few moments ago that when you look at face value at the market performance to date -- and it was up 26% in the first three quarters -- this is the best first three quarters, the fourth best in the index's entire 34 year history. number two, we have had a win streak in monthly returns of eight positive monthly returns, and we are looking at one for september as well. we will set a new record of nine straight monthly wins. the previous record was seven.

we've already set a new record of eight this year. statistics would suggest that market or maybe a bit hot and might be at risk of a little bit of cooling off. from a trading perspective, you're not going to go off every single month continuously. by definition we will see a little correction at some point. neediggest picture is we to look within the performance and see if that is a speculatively driven or fundamentally driven. we think it is very much the latter. we have seen earnings come through well over half that gain. the region has only expanded from about 13.2 times at the beginning of this year to 13.6. that doesn't seem to us to be a super frothy environment. therefore if we think earnings can continue to come through, which is our view, we think this will further moderate gains ahead.

kathleen: we just had news earlier that prime minister abe in japan is getting ready to order his officials to come up yen economicllion package. is it a stock market that interest you right now? guest: it is a very welcome change. japan has been a bit of a ladder this year -- bit of a lagger this year, with upward momentum in the past few weeks. withense in speaking investors and looking at the hard data is that the risk-reward for japan does look pretty good, particularly as you look further into 2018. my colleague and chief japan strategist in tokyo has noted we have seen earnings coming through, japan is more driven than it used to be, focused on return and equity and

shareholder focus has been increasing. there's also flow story domestically. when we monitor where foreign investors are positioned, they are at the low end of their range. we think japan is a market that really is kind of an off the radar scope. if you have any contrary and bones in your body, it may be worth looking at again -- contrarian bones in your body, it may be worth looking at again. yvonne: are markets likely to continue with this rally? guest: it is a great question. there have been much more of this north asia versus south asia, specifically aussie focused. beene trade this year has north asia versus south asia. we think that continues for the time being. be at riske we may

of overstaying the welcome, but again, the welcome has been very fundamentally driven. h is the leading sector this year, up close to 50%, but 85% or 90% of that is earnings delivery as opposed to valuation expansion. as long as earnings come through, we expect china earnings to grow 70% next year, -- 17% next year. the market has gone from being undervalued to middle of the range fair value, so we don't find the underlying hallmarks of excess in china such as we found in shares in 2015 when a lot of your hallmarks of retail frenzy were very apparent in terms of turnover and margin lending. yvonne: we have seen this catch-up rally going on, and i think there were some of our colleagues on our blog saying that after the s&p downgrade last week, that this would be more impetus for chinese government officials to prop up stock as they did with the

downgrade back in may. do you share that view? guest: to an extent. i don't think the market needs so much support from the hand of the larger government. again, the reason is that valuations are perfectly reasonable. retailers have not really come back in force. they have been underinvested in the market. if you look at the metric of growth market financing, this comes back to the u.s. dollar $1 trillion level. there already seems to be efforts on the part of the authorities to curb that rally. our sense is that the earnings coming through, valuations are still reasonable, foreign investors will be coming to that market to a greater degree on a trend basis in the next two years, and that will come further into force as we go several years further along. our most strong

strategic views in the region. yvonne: always great to have you. you can follow more on the german election and all the day's trading on our market live blog. for commentary and analysis from bloomberg's expert editors on what is affecting your investments this morning. this is bloomberg. ♪

♪ yvonne: australia's banks are spreading with charges at atm's as they try to salvage the reputations after a series of scandals. the banks are trying to heat off calls for a wide ranging inquiry

into the industry and a $6 billion levy over the next four years. >> we are quite pleased with the results, and farmers are pleased we were result because able to stick to the dividend which we did last year and are doing this year again, and we are having a strong return of capital. kathleen: amazon is buying a 5% stake in an indian retailer. $5f bezos has allocated million for expansion in india.

they sell cosmetics, clothing, and home appliances, and will receive an exclusive the flagship store on amazon's indian site. plenty more to come here on "daybreak asia." this is bloomberg. ♪ is this a phone?

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yvonne: good morning. we are not just happen hour away from the open of trading in singapore. i'm is on man in hong kong. kathleen: -- i'm yvonne man in hong kong. kathleen: i'm kathleen hays in new york. and air traffic control software problem has now been fixed. the glitch grounded flights in and out. domestic services at all airlines were heavily hit on a day of heavy air travel. the euro fell against the dollar

after the german election results. chancellor angela merkel's party came out on top but now faces tough coalition talks after the current party rolled out a deal. the process could take weeks. the anti-immigrant afd 113% of vote.te -- won 13% of the >> a major new challenge is in front of us, namely the fact that the afd has entered the federal parliament. we shall certainly analyze this very closely and in-depth because we want to gain back those voters of the afd by solving their problems, by giving them solutions, and certainly by good politics. the kiwi also fell after results in new zealand. prime minister bill english's

seats.ne 50 expected to talk to the anti-immigration new zealand first party. discussions could drag on for weeks. president trump has ordered new travel restrictions on eight countries expected to talk to the anti-immigration new zealand first party. replacing his soon to expire man on six -- expire ban on a six muslim majority nations . the president says the u.s. will admit no one it cannot and that properly, -- cannot vet properly. targeting ad to be corporate tax rate of 30%, higher than president trump's preferred rate of 15%, down from the current 35%. the plan is also set to cut the

-- global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. yvonne: let's see how asian markets are shaping up here so far this morning. equities in the green. volatility after the election in germany and new zealand. let's get the latest with david. we got central-bank speakers, a lot of drama, the german and new zealand elections. reporter: i think it is one of those days where you have to strip out the currency story and have a look at the broader market. we will talk about currencies in just a moment. have a look at what is happening across the region right now. currencies inbout just a moment, but certainly very textbook risk on such

moderate gains. gold is being offered up for 1%.hs -- up 4/10 of new zealand markets are up one third of 1%. a lot of that on the back of the week japanese yen. yen, backk at the above this 200 day moving average. the fundamental story when you look at the japanese currency, if you look at the spread, the 10 year treasury spread, the wider that gets, the more inflated this gets. they are targeting 115 as the fed continues to unwind its balance sheet. that is if you believe the dollar strengthens from here. central banks obviously very

much in the mix. it is also about politics as we get underway this monday. kathleen: i wouldn't doubt the fed's determination on unwinding that balance sheet. i think you are right about the elections and just trying to sort out what the translation is to the markets, to currencies in particular like the euro and the kiwi after we got the new zealand and german results. what do you see there? thoseer: when you look at two elections come a we were hoping we would get a little more conclusive results. obviously we didn't get that. the results came in as expected, get started -- i don't know what i'm getting started with -- your ago, the kiwi dollar. seeing some weakness right now, 7281. expected tohort, pick up any next few weeks or so as we can do to follow all of the developments here. we are right at about the lower

levels here of the last session or so. the euro pushing now below 119. just watch this very closely. just in case you're wondering what this is, this is when the fed cannot with their decision to unwind the balance sheet. kathleen: ok, david ingles connecting all the dots for us in hong kong. japanese prime minister shinzo abe is expected to announce a's snap election in a news conference in tokyo -- announced a snap election in a news conference in tokyo. this has been in the press for the past few days. it is not a complete surprise. what is actually coming now? reporter: the best worst kept secret or the worst best kept secret coming up later this afternoon, with shinzo abe

expected to announce this snap election. it could be october 22, a sunday. what we do know is shinzo abe wants to take advantage of increasing poll numbers. his cabinet in the latest poll from the nikkei had a 50% approval rating. we haven't been at this level for quite some time, especially after the summer. a number of scandals with cronyism. they were battered by this upshot of political party led by the tokyo mayor or associate of someokyo mayor took licking in metropolitan elections. he is seeing the timing as favorable because of his strong stance against north korea, and also the main opposition in disarray as some key lawmakers have resigned.

he is trying to that advantage of the timing right now, especially with this new party, some lawmakers are defecting over to this new party that is about to be formed. the want to get the selection done before they get a bigger base nationally. yvonne: you mentioned the referendum for abe is taken advantage given his hanley of north -- his handling of north korea has been quite favorable for him. an opinion poll came out locally, 8% support for the opposition democratic party right now cause of things are working in favor fortunes of abe. is there -- in favor for shinzo abe. is there also a risk for the on theection based opinions on abenomics? reporter: their not anywhere near their 2% inflation target. they have pushed that the

deadline several times. what is he going to likely do? sweeten the pot with lots of stimulus. they are talking about a ¥2 trillion stimulus package and putting that government target to achieve a balance surplus down the road a little bit, increase spending on education of it. yvonne: we look ahead to that press conference. thank you, our chief north asia correspondent. u.s. commerce secretary wilbur ross will push for greater market access for american companies when he holds talks in beijing. it is going to be a pretty busy trip for mr. ross, not just talking about business access, tariffs and steel

north korea. what is likely to be at the top of the agenda? reporter: a lot on his plate in a relatively short amount of time. it is part of a six day to her ur the region -- six day to of the region. there is the issue of north korea that he is going to be discussing as well. we have seen the latest sanctions being that in place and enforced by the chinese, whether on banking and chinese banks doing business or 80 north korean business, the -- or aiding north korean business, or banning the export of north korean textiles. all of those have been started to be put in place. then there is the issue of laying the groundwork ahead of president trump's visit expected in november, trying to size up

some deliverables for when that presidential visit happen. so there is a lot on ross'as plate -- on ross's plate. yvonne: china is moving in the direction of opening up the financial services industry. we had more on that last week. wilbur ross is critical of the closed markets, understandably. when you look at the data, it is hard to argue with the u.s. position that there is a very large trade imbalance. when you talk to chinese officials and business people, do they realize this has to change? or is it just a question of placating the u.s. and pushing back in a very subtle way against any real steps to change this relationship? reporter: that is a really interesting question. i think the general consensus you get from speaking to people here is that china is not going to be pushed into radically changing its approach on opening

up its economy from pressure from washington. it may offer a few sweeteners, dangle a few olive branches to washington to try and placate them, but it will not be forced into any major changes. they will do things on its own terms. but there is an announcement from the authorities that they do need to open up more their markets, they are setting up an expo to try to encourage imports of foreign goods. they are working on steps to open up the financial markets further, whether that is changing the structure for investment banks were the ownership holdings of foreign investors in chinese banks. also the electric vehicle market, they may allow for automakers like tesla to own its own fully owned operations here in china, which would be a big allow foreignhey automakers to operate in this country. there are steps, but really the consensus is that this will be on china's terms. in terms of trade balance, most analysts say it is significant, it is growing.

you can't dispute the facts. we have this chart on the terminal that shows the trade imbalance. china and the u.s., u.s. and mexico, and canada from 1999 to this year. it has continued to widen for china, much greater than canada or mexico. trump is right to point out that that exists. it is really how you approach that. there are issues in the background as well, questions of potential tariffs on the solar industry from china to the u.s.. there is the steel issue as well. we heard from ross on friday saying that the question of steel was being put on ice until this tax bill is passed in washington. from the chinese side, they want to make sure that dealmaking from chinese companies trying to invest in the u.s. aren't going to be stopped because president trump a few weeks ago didn't stop a chinese backed private equity firm from buying up a semiconductor producer in the

u.s. that is a concern from the chinese side. thank you so much come our china correspondent getting us ready for wilbur ross's visit to china is weak. kathleen: coming up, we hear more from energy minister alexander novak next. this is bloomberg. ♪

kathleen: let's turn to the week ahead on wall street. candy record-breaking rally continue? will the u.s. dollar continue to strengthen? we look at data that could help .nswer those questions

reporter: we had an ipo down from 22% on friday, bad first day. will it continue the downward trend? gopro has become a favorite of short-sellers. interesting to see how that plays out. six flags entertainment has been going great, but a lot of investors feel it will drop as much as 15%, so that will be in focus. let's go on the bloomberg real quick. we have titled this the stock figures favorite chart. we are seeing correlation fall, so this is something being tracked.

you see that after a week of record-breaking closes for the benchmarks, we saw the dow slide, the s&p and nasdaq just eat through with some gains -- just eke through with some gains. there are questions as to whether this rally still has legs. kathleen: we have fed talks this week. a load of economic data. i think you are very smart to call our attention to the consumer spending data. reporter: that really says a lot about our consumers putting the money out there in the economy. that puts focus on auto sales. the household a number will be very much in focus, on whether the car sales have rebounded. household spending is seen as steady, but the gains are seen as much less than expected for august. big-ticket items are expected to

track well come although the capital goods number is expected to come in a little better in the household number, which is a key piece of data. earnings ahead, nike, blackberry , all very much important stocks , particularly nike, what has been under pressure. yvonne: just taking a look at commodities, we have seen just this morning iron ore's coming to a bear market come about it comes to the oil markets, we are wider.it trending how sticky is that $50 of all right now? reporter: traders were tell you $50 is a psychological barrier. they didn't get much help from the big opec meeting in vienna. u.s. traders call it a nonevent.

it was kind of tame data, or bland, but bland is good. at least they cap to the oil ed the oil prices above $50. refineries are coming back online after the hurricanes, reducing the cost of retail gasoline throughout the country, average.t $0.07 on that will increase demand for oil as well. let's continue to talk about that opec gathering. russia's encz the -- russia's energy minister says it cannot last forever. alexander novak spoke to yousef thel el-din and says agreement will wind down

gradually once the market is back in balance. >> any agreement come especially aimed at balancing the market of supply and demand, has to end the somewhere. we all very well understand the oil market is a free market governed by supply and demand dynamics. this is the governing force. i believe that once the market is balanced and wants the material is removed, we reach roughly the five-year average level, we can start talking about reaching our goals for a balanced market and start a slow exit strategy not to deteriorate the results. as far as my opinion goes, i for ourthe best period efforts is the time of demand growth. during such time when demand is growing, you can absorb any additional supply if the need arises.

reporter: i want to talk about libya and nigeria, described possibly as a fight with the demons within. countries like russia are compliant. a lot of your peers are compliant. then you have countries adding production while you are taking out production. isn't it time that libya and nigeria are applied some restrictions as well before this agreement expires? there's not a lot of time left. >> as far as conformity goes in terms of countries which are fully conformant of are not, i think we should look at those numbers. none of those countries have three to a level of conformity of 160%. opec countries excluding libya and nigeria are also 100% conformity. that is why i can say that with

-- you can say that room exists for better conformity and for improving it. but overall we are very pleased to see that opec is at 100% conformity. it is a question of themselves balancing out the efforts within the organization. overall we are happy. nigeria,ly within output growth impacts the effectiveness of the whole effort. we are also seeing that the fast production of oil in nigeria has lost steam. over the past few months you are seeing significant volatility and not big production growth in these countries. that is why overall we see the initiative as very effective and positive for the market

rebalancing efforts. that was russian oil minister alexander novak, rather optimistically saying the opec deal could and gradually once market balance is reached. there's still more ahead on "daybreak asia." keep it right here. this is bloomberg. ♪

kathleen: this is "daybreak asia." yvonne: that's almost it for us here. time for a quick look at what is coming up in the next few hours on "bloomberg markets." there's time to talk about this election in germany in new zealand. was a win of some sorts, but support seems to be adding away -- seems to be ebbing away. with got a senior asset manager in london -- we've got a senior asset manager in london. [indiscernible] yvonne: that downgrade, too. reporter: totally. would you believe that hong kong is still the most attractive

property market in this part of the world? we're going to find out why. the researcher will be on in about an hour and a half to talk about why they have that belief. we know that prices for property here are just ludicrous, but anyway. kathleen, how are you? kathleen: i am fine, so wonderful to see you back. i guess it is a real vacation when you lose track of the pound. that is it from "daybreak asia." standby for "bloomberg markets." this is bloomberg. ♪

morning,headlines this tesla merkel -- chancellor election.s the iraqi kurds vote on independence later today. this is "bloomberg markets: asia ."