live from bloomberg's asian headquarters. hundreds are hurt as spain tries to halt the referendum. capitalist separatists may be declared independent. the premise or braces the police for disrupting the vote and says the poll was not a -- was a nonevent. globalomberg headquarters. abe the gives shinzo edge. and the u.s. confirming engagement with north korea. president trump says it is a

waste of time and he is going to do what must be done. ♪ and even though some of the major markets are closed, investors are going to keep eyes on simmering tensions in north korea. we are going to get the hong kong survey for the fourth quarter out of japan. they'll get a glimpse of how businesses are feeling about the economy. you were just mentioning the top of the headline about shinzo abe and his prospect. represented by the blue line here. that certainly has benefited exporters. recentlyn see, as of

we have seen that. with thehat has to do dollar strength we have been witnessing. we are going to look at how businesses field. sincest monthly gain february. losing a it of speed wrapping up the fourth quarter on friday area we see record profits from japan. here is how we are faring so far in asia. not a whole lot of action with markets in new zealand kicking things off. down a fifth of 1%. strength easing on this monday. we are seeing up a fifth of 1%.

looking for a slight improvement after some steady gain. could ben, 100 1268, seen some gains on the equity markets this morning. it's golden week in china. the day after we got some big fireworks yesterday night and treating in india or south korea. let's get you caught up in singapore. morning, china rose to a five-year high, indicating efforts to clean up the financial sector and environment aren't yet hitting the economy. from 51.7n september

a month earlier and beating expectations of 51.6 in a bloomberg survey. slipped.y a cut in the amount of cash lenders. -- 90% of city commercial banks and 95% of rural commercial lenders ranging from 0.52 -- foreign lenders will also be illegible if they meet the requirements. south korean experts rose to a record month in the global economy. shipments rose in the 11th month of 45%. imports also beat expectations, showing south korea is surviving

the war of words between washington and pyongyang. a new vision for global travel, saying the journey from new york to shanghai can be done in 30 minutes. claims to be able mars, themarx, -- to international space station, or make a trip around the earth. tickets costing about the same as full fair economy in a traditional plane. >> the great thing about going to spaces there is no friction, so once you are out of the atmosphere it is smooth as silk. you can get to most long-distance places in half an hour. and if we built this thing to go to the moon and mars, when i go to other places on earth? >> global earth -- global news

powered by analysts in more than 120 countries. >> let's talk about another rocket man. tillersonof state rex saying the u.s. is communicating with north korea but its nuclear program and testing pyongyang's appetite for talks. president trump says it is a waste of time. he said, i told rex tillerson he is wasting his time trying to negotiate with little rocket man. let's cross over to washington and our reporter. is this a good cop bad cop strategy? or is president trump undermining his secretary of state? >> it's hard to imagine trump would have signed off on this

short but very important visit to beijing this weekend if there wasn't any kind of strategy behind it. we do suspect there may be a little good cop and bad cop. tillerson let it known -- let it be known there are two or three direct lines to pot -- dark lines to pyongyang. we don't know if there has been any progress made. it does seem like channels are trump to come out and talk about don't waste your time. is surprising but perhaps there is some method behind it. >> there is a lot of stuff to get through with what is going on in washington. several comments coming up from , itident trump on your looks like he's making a total 360 one or maybe a

infrastructure, saying he's not supportive of public-private partnerships. >> you may remember candidate trump talked about harnessingure and private funds to goose of federal spending on the nation's roads and bridges and airports. that been -- that has been a platform of his for a while. he has a staff in the white house working on this project. supposedly there would be a pro -- be a formal plan. he said a lot of times those public private partnerships, they don't work well. he really has had a change of

heart and our reporters are looking for other guidance on that. it's supposed to be a trillion dollar plan and a lot of companies have seen their shares go up on expectations. president will be traveling to puerto rico to assess the storm damage. his angry comments over the mayor of san juan, saturday night live had lunch of new content. could be a very awkward encounter for the president. he will uncertain if meet with the mayor of san juan, who is being critical of him, i think it's possible he won't meet with her, he will meet with the governor, he will spend time on the island.

certainly it raised a lot of eyebrows and even the standards of a lot of his antagonistic twitter, coming out and talking about ingrates and implying some puerto rico late -- rodrigo people are lazy had a lot of blowback. we're wondering if this hurts his standing with latino voters. >> great to have you kicking off the week. now,hing gears to spain separatist leaders may make a unilateral declaration of independence by the end of the week. hundreds of people were injured in clashes which regional lawmakers announced as the unjustified excessive and irresponsible use of violence. musketeer european governor and editor joining us.

i know it was very laid out there this evening. the video has been very alarming. hundreds of injuries so far. what has been the feeling on the ground here tonight? >> i think it is like a sense of shock. we have been building up toward this day for weeks and weeks but nobody really expected it to fall like this. measureden a very horse to contain the separatist movement. it seems like the gloves came off and we see all these incredibly shocking scenes of police officers dragging people out by the here, pushing women down the stairs, old ladies with blood dripping down their faces. something either went black -- in the planning

of this. now we are in a scenario where this declaration, which seems to be a fanciful prospect 24 hours real andas become very the next question is where does that leave us? the governmente is unlikely to recognize these results. what is this mean for the prime minister and his ability to govern here? he has overdrawn his budget for parliament last week. >> the first thing is his authority is very much in the question. he went on television after it happened and cleared it hasn't happened where the whole country was watching the videos of the scenes, which made it fairly ridiculous. going to bening is

a very big moment. he needs to establish his authority very quickly. >> how about the concerns for the rest of the european union? factions or movements, what >> therese concerns? are lots of regions around europe who will be watching this very closely. they have their independence 2014 and the scottish theater is targeting a second independence referendum once they got exit out of the way. there were parts of northern italy, parts of belgium. if it suddenly becomes feasible for part of the european state to split off on their own, then we anticipate there will be a .ot of very nervous leaders

>> we're going to keep our eye on this situation in madrid. plenty ahead on bloomberg television. we're going to unpack the latest talk on survey results martin schulz, that is in about 30 minutes time. and don't miss our interview with tony fernandes later on today. from three: 30 this afternoon on hong kong time. >> the latest manufacturing data out of china says the economy continues to grow strongly. we will discuss that. this is bloomberg.

midmarket opens this morning.

much of asia is closed. in particular china and hong kong given the golden week holiday. i am betty liu in new york. >> manufacturing rays to a five-year high cleaning up the financial sector and the environment, manufacturing pmi i just 52.4 last month got a bloomberg chart, it really the pmi number, the fact that the private gauges we have seen is showing a it of a different pick her. a bit of a slide. providedd has actually what we have seen recently. let's get the latest with our next guest. he is bloomberg's most accurate

seniorter, tell joe, market economist. give us a little bit of color on this right now. tell us about where the economy is going. the pmitend to believe gives a more accurate picture of china's economy. china's industrial production has slowed in the past two months. the official pmi continues to hit new highs. i think there is a vague -- a big divergence. believe at this moment, i tend to give them a bigger picture of

china's economy at this moment. and we know there is a kind of recently to contain the air pollution in northern part of china. so that has been hidden in the chinese economy already. it wasn't just the pmi data, we have seen a mismatch when it comes to the manufacturing pmi's and industrial production. what is at also say? productionstrial gives a more accurate picture at the moment. exports are china's going to see a significant slowdown as well. and we count the possibility that china will see export growth in november or december.

-- aisk of a sick and it significant slowdown will be likely. >> what is that mean for the chinese currency? thingthis moment the good is that there is no clear expectation at this moment. basically given the chinese central bank more room in terms of monetary policy. i would like to see a relatively volatile session in q4. 6.5he price will be around to 6.95. i think it is quite a big range for the chinese economy. and we do see that the volatility is ahead.

>> just listening to what you and cyclical slowdown in the fourth quarter is this change your outlook to the deleveraging program by chinese officials? you see any room to ramp up that deleveraging, or is it going to be the status quo? >> as long as the growth is above 6.5%, the pboc does not need to change its policy at the moment. the deleveraging will continue. a cutw they conducted over the past weekend. if you look at the timing is very interesting. it is effective next year. that means the pboc has no intention to quickly or provided liquidity to the market very quickly. believe they

liquidity problem is not a problem. the most specific issue is the , which is theblem small firms are under pressure, but the big firms are ok. it is not only because of liquidity, it is more related to the structural problem and banking sectors. case,t seems to be the because they have levers to manage the liquidity. say anything about pboc policy is in moves ahead to 2018 and moves ahead after that part? thatere a signal delivering an agenda will be easing off of it in order to support growth? or should we be expecting more of these targeted rrr cuts? think in the short-term because it will

be effective for next year. significant or any cuts from pboc given at the economy looks still kind of above 6.5% growth. for next year i think the problem is a significant issue facing the chinese economy. we do see the proxy market has to the tier down three and tier four cities already. we do see the physical stimulus will be much more than next year. we are facing pressure next year. >> always great to have you. of course for a round up of the stories you need to know to get your days -- your day going, bloomberg subscribers all you need to do is go to -- on your terminal.

it is also available on the anywhere app. you can customize your settings so you can only get the news that you care about. this is bloomberg. ♪

ceo john cryan may come under pressure from investors thanks to a turnaround plan to show results in the next six months. a spokesman still thinks crime is the right person for the job. directors fell consulting the new boss or other board members. something recalls something you would challenge how when nick against the lawsuit brought by

largest shareholders. revenueno -- can see no to $2.7o revenue -- 16% billion. the momentum is expected to continue. --den we cast but central golden week has the potential to generate more revenue. next the start of a new quarter, we will look at the most recent period and what we can expect between now and the end of the year. also looking ahead to the japanese markets. we are seeing dollars take a little bit of a breather here on this monday morning. we will see how that plays into the job -- into the dollar-yen. we will see how business

conditions are faring. looks to be a slight improvement on the nonmanufacturing and manufacturing sector. this is bloomberg.

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♪ yvonne: 7:30 a.m. monday in hong kong. on a holiday after national day. we are 30 minutes from the open in japan. betty: beautiful. that you wish you were out there. york..m. sunday in new also a gorgeous, gorgeous fall day in new york. the markets closed on friday higher, and perhaps could continue that rally. it depends on what happens with economic data we are seeing in the u.s. i am betty live in new york. -- betty liu in new york. yvonne: let's get to first word news.

haslinda: separatist leaders in catalonia say they may making national independence by the end of the week. after 89% of eligible voters backed the move. 761 people needed treatment after riot police closed polling stations. people braved the security forces and said the controversial vote was a nonevent that did not happen. >> there has been no referendum in catalonia. all spaniards have seen our rule of law is still strong and enforced. those that react, in the face of those that want to subvert that. the spanish state has written another shameful page in the history of catalonia. this is not the first time. too many oppression and violence has been the response to catalo -- catalan.

haslinda: moore track -- more cracks in the trump administration. the infrastructure plan using public-private initiatives was announced. but then he said those types of deals don't work. infrastructure was a feature of his campaign. the president also started controversy by saying the secretary of state was racing -- wasting time to seek talks with north korea. this came after trump acknowledged the u.s. has been directly involved with pyongyang . military options are on the table andtable and continued, sr energy, rex. we will do what has to be done. [please stand by] contenders for this year's nobel peace prize. the european chief and the

iranian foreign minister are leading candidates for the award. president trump has derided the accordance as the worst ever made, but it is supported by the international community. duty-free purchases people make on foreign e-commerce sites could be lowered to $25 in russia as the company tries to ease competition. the government of -- this may be cut next summer on the webpage it wrote. it could bring in more than $1 billion a year. and the embattled prime minister theresa may says she will stay on despite calls for her to quit. she was at the party conference insisting that the cabinet supports brexit policy even as boris johnson set out new demands for the negotiations with the e.u. it was a gathering of tories since the --

global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am haslinda amin. this is bloomberg. yvonne: we are counting down to the market open in japan this morning. korea also, hong kong and china, india closed for holiday. equity futures in the green, slightly positive. let's get more with sophie kamaruddin. we are seeing records, the tankan survery coming out any time. scarlet: ahead of the -- sophie: ahead of the tankan survery, we are seeing futures edge higher for the nikkei 225 and more from the yen losing momentum today. the dollar is holding on to its gains ahead of yellen's speech on wednesday. the yen has lost 2.3% in september, the first monthly drop or the currency against the dollar in three months. yvonne: looking at specific

stocks, mazda and toyota, the partnership has been the ev raise. the more carmakers jumping on board, what do we know? sophie: suzuki might try to get involved with this ev venture, taking a 5% stake. there is speculation subaru might be joining the bandwagon and the ev venture, toyota has a 19% stake. the recent developments, the nikkei is reporting mazda looking to boost capital spending by 20% and next year 30% as plans to reduce -- evease easy cars for 2019 -- cars for 2019. yvonne: seeing limited trading with the region's that are closed. -- regions that are closed. what will be a likely catalyst for equities in sydney?

sophie: the aussie share market, this is the largest in the world, but today it is trading higher for a third day. looking at the map, you see the breakdown for the asx 200 in sydney. you have trading at september 20 hi, health care and financial stocks alone, energy leading the way. we have the aussie dollar rising after the latest china pmi data. i want to show you this stock. you have beach energy, the worst -- best performer in sydney, gaining 17%. recordctober 2004, a pickup for the share offering. that is part of this capital where we need to fund the $1.6 billion was the capital dollar acquisition -- aussie capital dollar acquisition. betty: taking a look at some of the movers today in the market. one of the questions ahead, can

the stock markets' record run continue? we saw all-time highs, treasury splits, president trump in the process of picking a new fed chair. that an economic reports, they will grab the headlines and attention. su keenan has more with what to look for. su: that makes it come -- direction question big. can they stay in the, or speculate with the new fed chair? that will hang on the market .ecause the news is fresh very strong on friday, strong way to end september with record all around. if we look at the euro-dollar, we saw weakening on the inflation number, which we will to. also big come down on the violence in spain where there was police presence, people hurt or beaten, a two-day rally snap.

if we look at the market snapshot for the u.s., gold is falling. bank stocks are rising. the u.s. dollar posting a monthly gain. third straight weekly gain. we go to the bank index, it tells the story from the beginning of the year where the bank stocks were on a tear. there was optimism with the new days of the trump administration . a lot of questions now on the tax reform, that rate hikes, and here you are -- fed rate hikes, and here you are in september. it will be a fascinating week going forward. betty: it will be, and we will hear chatter for the next fed chair. but before that, the drop report on friday. -- jobs report on friday. this will include the hurricanes. su: that will be an anomaly. we should point out one of the

things we watched with the russell 2000, the broadest measure of the market, it is where small caps reside. it is not only at the record we saw on friday -- you go into the bloomberg 3578, it is also at the highest strength index since 2003. and some of the things, you could read that either way. if we going to jobs data and earnings focus, let's talk about earnings. pepsico, monsanto, they are reporting. i have the year to date reform is is for the companies. the first two have done well. tesco under pressure. in terms of economic data, expansion expected, but it is jobs data. what is expected here is a ofher weak report in terms hiring, and that is not unusual when you have two hurricanes. pastcanes have shown a

disruption in hiring. 85,000 is the latest survey from economists polled by bloomberg, unemployment around 4.4%. yvonne: su keenan joining us from new york. she mentioned the end of the third quarter marked an eighth straight period of u.s. gains, the longest in two years, despite continuing drama in washington. the war of words with north korea and the hurricanes. ramy inocencio is at the wall with the charts you need to know. 3923.first off the g #btv it is all about rotation, and in the third quarter of this year, we have seen this inflection point in the blue line and the white line. the blue is the ratio of small-cap index to large cap index. we can see the inflection point around august. similar later on in september

with the value index. so what does this mean? high ont a record friday. tax reform optimism is hanging out. 20% in terms of corporate taxes and a stronger dollar as we move ahead to december for a possible rate hike. the white line here with the value is interesting. the money has to come from someplace, so investors are pulling liquidity out of growth and pushing it into value. technology stocks took a hit. apple is down 6% all of september. so if you are in a position you weren't expecting this change, you might have got hurt. 7176.go to g #btv what were some of the biggest sector performers? the financials were one of them, just looking at the third quarter from july to september. for that quarter it was up 4.8%.

that was the best performance out of the three quarters. you can see the s&p is lagging underneath that. the yellow line is the infotech index. we are seeing money come out of technology stocks. it turns out the third quarter of 2017 was the second-best. all the financial sector got or .8% higher -- 4.8% higher. this is where the many -- money was. no 5079. -- now 5079. possibly we could continue to go higher. looking at these red dots, these represent corrections -- not officially, but drops of 5% or more. a lot of people surveyed by bloomberg said this could rise higher. theirid that they raised

year-end target. betty: thank you so much. ramy inocencio. up next, the latest read on business sentiment in japan out any moment ahead of the snap elections. we will analyze all of it. this is bloomberg. ♪

♪ asia. this is daybreak i'm betty liu in new york. yvonne: i'm yvonne man. the asian data break continues, japan getting ready to release the tankan survery. kathleen hays is here with what is expected and why it matters. it should not matter leading up to the snap election. kathleen: it matters to the boj. this is the most procedures thing and comprehensive look at business conditions and the outlook given by small, medium, and big businesses.

manufacturers and non-manufacturers, improving maybe. led by non-manufacturers. services firms. 5320 as we wait for the tonkin results. here are the non-manufacturers. manufacturing will -- we have got the sentiment, business conditions being unchanged among large manufacturers at 719. you can see that is welcome news. picture, the overall this will do best among businesses -- we think of exports having a brighter outlook. they have a change in small business sentiment where most of the jobs are. as long as readings are positive , this is a good trend in a small improvement. we can look at fixed investment.

investing in capacity. this helps build the base for future growth. trend.ow you can see the it is a three-month moving average. you can see back to 2015 some fairly strong numbers. way back they were even stronger, then they have the jump up to eight in the second quarter. that could be 8.3 according to bloomberg intelligence. and as you recall, yvonne, cpi rising on friday last week, across all the measures, so far the 2% target. but the boj once to see the to seesing on friday last halfs the glass half full. and that is important for the prime minister going into the snap election. betty: he wants as much us he can get, as much support. that report any moment.

let's bring in research, martin schulz. where do you expect we will see the greatest improvement? around,we look companies are optimistic. the numbers are at peak levels. nonmanufacturers, services, the outlook has been a little depressed, lagging. if the outlook among service companies improves, we need a stable investment number, even a tiny bit. then the small companies, they are three quarters. if they stay there or it improves, we have a solid economy. yvonne: production is up, inventory down. we have not seen that followthrough when it comes to investment. if we see second month where we see a plan gaining more than 8%, what does it mean in terms of next year?

can we continue the flow momentum building up? -- slow momentum building up? martin: companies have been down, interest down, interest in the storage, what they had, their offices. they have been filling it. production has been improving. investment has to come in for the manufacturers. they have to continue to rely on the weak yen. the second one will be smaller companies in the services among the service economy. they are becoming more optimistic. betty: the latest surveys -- yvonne: the latest surveys coming out of japan, there is more support for prime minister abe. do not seemajority abenomics working, 50% in change versus 46% who do.

what kind of referendum is that? how will that factor in to the elections? martin: the impression here, the feeling in japan is, we need to get the government on its toes again. there has been little in terms of extra reform, now we don't have the government during a difficult time? it is competition coming from mr. abe not to rely on money printing. betty: we are just getting the first numbers out of the tankan survery. large manufacturing index coming in above what economists estimated, a reading of 22, the outlook at 19. we were talking about the nonmanufacturing index. coming in at a reading of 23, so just below what economists had estimated. you can do the small manufacturing, but some are slightly above and some slightly below.

yvonne: it is interesting because bloomberg intelligence was expecting we would see more outperformance went domestic demand, but the metrics are very much a bigger feet. it was a miss for the nonmanufacturing side. when it comes to the all industry large cap explants, it is a miss, rising 7.7%. the estimate was 8.3%. the small manufacturing index, well into positive territory as martin was talking about, 10 for the third quarter. --is a sizable jump from the also beating expectations, and the outlook at eight. nonmanufacturing was also upbeat, slightly higher at eight as well. beating expectations from the economists. when it comes to small manufacturers, seems like this

is important. when it comes to tankan, will this sway the vote for shinzo abe? is this election going to be a very good vote of confidence? martin: all of these numbers are actually quite solid. some of the forecasts were a bit more optimistic than what we have right now, but everything looks quite ok still. companies are not really building. they are not building on their business models so far, and that is the really important part. the government plays a role here. everyone accepts monetary policy has run its course, now we need some more courageous reforms coming in. this is where the election might actually help quite a bit. yvonne: what about the proposed ¥2 trillion spending package and

the consumption tax hike? is this what businesses need to hear and then see the government do if prime minister abe wins the election? will that improve investment? martin: this is one of the auto parts in terms of -- the odd parts in terms of the election. few people expected the consumption tax will go up in 2019 again, so it will go up. we will spend it immediately as well. i would put a little on the blind point with growth expectations. he needs a platform here. the government is focusing on micro reforms. education, but also workplace. many people are working smarter. we see that in software and i.t., they are growing. these are investing and productive. betty: something else that is

important is the stock markets in japan. 8207, btv 8207, you see abenomics has been good for stocks, not great for the japanese yen, but the white line you can see -- yes, the white line. given that, martin, do you expect any of this to change after the snap election? martin: i don't think so. mr. abe will still be in play. he will have a challenge to focus on reforming the bank of japan. onhink we can trust protecting interest rate on the way up, and everyone focused on the exit strategy, the yen will remain quite week. this is good -- weak. this is good for exporters. betty: thank you for joining us

through the tankan survery. hays, and large manufacturing, the highest in a decade in japan. this is bloomberg. ♪

♪ check of thek business flash headlines. they will buy the european logistics firm. blackstone and pick up gazely.c had aight capital september to remember. the main hedge fund group 5.3%, lifting from a lost to a gain.

it was sure bets against what he called a bubble basket of tech stocks. market open coming up. this is bloomberg.

haidi: 8:00 a.m. in hong kong. welcome to "daybreak asia". hundreds are heard as spain tries to halt the referenda. separatists trying to hold a referendum. globaloomberg's headquarters, i and betty liu. business sentiment stay strong. back ate house pushes --as critics attack

cut. they say he will live to gdp. gdp.ey say it will lift good day for the data frenzy. the manufacturers, large manufacturers seeing the largest we have seen in 10 years. a five-year high at the china pmi numbers. most numbers -- most markets are closed. reaction can continue into tomorrow. those numbers were very insightful for the small manufacturers. that sentiment seems pretty that with theple china pmi numbers, it seems things are on the upswing in asia.

let's get to the first word news with paul allen. referendacatalonia closed with hundreds of people injured in clashes with police and authorities in madrid saying the controversial vote never happened. 161 people needed treatment after riot police attempted to close polling stations. congratulated the security forces. >> there has been no referenda in catalonia. today all spaniards have seen our rule of law is still strong and enforced. that it is reacting when faced with those who want to subvert it. the spanish state has written -- >> the spanish state has written another shameful page in its

story of catalonia. this is not the first time violence has been the response to catalonia operations. l: the manufacturing pmi rose in september and beating expectations. however, the private sector survey slips to 51 from 51.6. china's central bank announced a targeted cut in the amount of cash lenders must hold next year. this applies to 90% of city commercial banks. cuts will range from 0.5 to 1.5 percentage points depending on how much business banks conduct. foreign lenders will also be eligible if they beat the requirements -- meet the

requirements. 35%,ents abroad rose driven by the need for steel and petrochemical products. south korea is surviving the war of words between washington and pyongyang. frommusk says the journey new york to shanghai could be done in about 20 minutes. he is planning a new rocket that claimed to be able to fly to mars, the international space station or make trips around the world. worldays anywhere in the can be reached in under an hour. >> the great thing about going to space is there is no friction. once you are out of the atmosphere, there is no turbulence. there is no atmosphere. you can get to most

long-distance places in less than half an hour. thing to go to the moon and mars, why not go to other places on earth as well? l: global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: we are starting out the third quarter on a positive note when it comes to equities. pmi at that five-year high. let's get the market open. just a pain here today. sophie: that is the major market. along with australia. up and aussie shares on the up. china pmi setting the time. we have chinese markets closed for the holiday.

check out what is going on with the offshore yuan. seven.ay in the aussie is also on the rise. the aussie-dollar climbing 0.1 percent. gains looking limited. we are seeing an advance for the kiwi dollar. investors are assessing the progress being made to form a coalition government in new zealand. stocks on the rise climbing for a second day in three. foot after thek latest survey showed confidence among the big manufacturers rising to a decade high. they are forecasting dollar-yen in the fiscal year. that, the euro is

sliding just a little bit when it comes to the morning session after the catalonia-induced fly we got overnight. lide we got overnight. sydney, the share market rising and the energy pulling ahead of afterck -- beach energy rate.les saw a take up stocks we are watching in tokyo. -- is aeek us a boomtime but travel restrictions could impact the japanese consumers and retail players. nikkei first reported a rally when chinese tourism officials denied this restrictions. shimaya is feeling

positive and that could help the department chain. today their price lighting and shiseido. yvonne: looking at the movers, nissan, we're seeing shares falling 4.4% after we learned the japanese ministry of land israstructure and transport suspending new vehicle registrations in japan. the company has been -- the domestic factory did not follow processes agreed, this is according to the government in a statement on its website, the inspection process has been fixed. the vehicle affected which are on dealer lots, they will be reinspected and registered

afterwards. that suspension affects about 60,000 vehicles, according to a nissan spokesperson. pretty big hit of their. we will continue to watch. big hit there. the latest hong kong survey for the third quarter remains strong. the new poll make since they the favorite to best shinzo abe -- akes shinzo abe snapavorite in the elections. >> those the japanese exporters managed to boost their business. from the bank of japan, this is the biggest survey of business

sentiment in the country. very closely watched. we got the best number among the big manufacturers in terms of that index in 10 years. chart, youinto this can see here are the ratings on large manufacturers. we have the business conditions and sentiment, a five point jump to that decade high. here is the outlook, also improving. our bloomberg intelligence team, it was even not manufacturers leading the way. in terms of sentiment, of how they look at conditions, that did rise, sentiment held said he, conditions rose -- sentiment , the red line and

the purple line, not such a big game. we do not have the small company's readings on this chart. for small manufacturers, sentiment went on the rise. this chart looks at the fixed investment outlook. here we have a little bit of disappointment. this was supposed to rise to 8 .3. bit.d pull back a if i am at the boj, you can see the things wiggle around and it is good news. years, they see the inflation rate at 1.1%. that is not good news for the boj because they are trying to

move the needle on their wage expectations. this suggests that companies large, small and medium -- betty: these readings on the economy and inflation, how much more important are they because of these upcoming elections? 30a poll done september 45.9 percent% -- prefer abe in the next election. overould vote for the ldp the party of hope. another poll taken showing that those surveyed are hopeful about abenomics working

while 50% do not have high hopes. i think it is interesting. hopes fort have high vote for but they will prime minister abe. people cannot help think of theresa may's snap election and what happened but the polls are looking better for prime minister abe. betty: thank you. we'll get more perspective out of japan. trend continuing on this in japan when it comes to equity. with inflation. getting momentum but we are at the 0.7% target.

japan, can thein catch of rally continue given that the latest reading from the tankan survey? >> it is possible the japanese equity markets will hit higher. we need to see structural reforms taking place in japan. a pending --reases increases in spending and structural reforms, investors need to see that. the survey is a good set of numbers. with japanese equities, the boj is the only main central bank in the world. all the other major central banks, i expect them to tighten.

i think lose policy has been a driver of equity markets. it should benefit the japanese equity market. betty: the exporters seem to feel better in the third quarter in terms of the improvements we saw for q3. at-dollar exchange looking in the 2017 fiscal year. we have seen an upside for the manufacturers. i have a chart to show our aswers, we still see the yen one of the most popular for trade given this geopolitical risk we see in north korea. how difficult is it to forecast the dollar-yen? >> in the short-term the dollar is going to strengthen. percentar is almost 10

on a rate basis. many other at, so central banks are tightening. the dollar is probably going to sink a little bit. the fed is not the only one tightening and hiking rates. the yen could strengthen against the dollar. whereby the dollar will be weak down the road. ahead, the race for the next fed chair is heating up with president trump singling a decision. yvonne: later, mixed messages from the administration on north korea. the secretary of state wants to

talk with the president says it is a waste of time. what came out of tillerson's we can visit to china. this is bloomberg. ♪

asia." this is "daybreak betty: the race to lead the fed is ramping up again. the inflation data showing yearer wins the job next is going to face an even bigger conundrum. the president says they have interviewed four people and more we do not know are on the list. that, whoou have to bet would be the next fed chair. >> it is a hard one to forecast

but i would vote for continue that would be yellen. yellen would represent continuity. he has more problems with north korea. yellen has done a good job so far. she has been fairly dovish. good for equity markets and the u.s. economy. betty: u.s. equity markets have been great for trump and she has not throw that applecart over. does it mean someone other than create more volatility and uncertainty or could it get better with someone else in that chair? >> yellen is as a dovish as you can get. fed monetary policy is very

loose. hard to see someone come in and be more dovish. betty: some say she is not dovish enough. >> she has not hike interest rates, she has been fairly cautious. she tends to look at domestic factors like inflation and unemployment. sense, she has been fairly dovish. if you look at equity markets in the u.s. and elsewhere, their policy has been fairly loose. yellen is fairly dovish and she is going to be good for every market if she is reappointed. betty: what if she is not good? we're talking about kevin warsh. it is widely telegraphed that he is more hawkish than yellen.

if we see someone like kevin chair, --me the fed are markets really under-pricing this? whoou have a new fed chair moves in, he will not have to -- he will not be able to move the dow did get. yellen have a lot of credibility. just because someone hawkish is appointed does not mean it will change immediately. up, inflationcked hawkishd inflation -- is not bad provided the economy is strong and inflation picks

up. markets digested the initial discomfort. betty: looking ahead to the fourth quarter in asia, it is hard to see october turning out to be so positive for the region. the ecb may start joining in and announcing a lower pace in asset purchases and not to mention this japanese election happening october 22. . what is going to be the biggest conviction for asia in the fourth quarter? >> asian markets have done extremely well. it is up more than 30%. well ahead of the u.s., europe and elsewhere. it, theif you highlight best shrinking its balance sheets, within asia there are

going to be bright spots. singapore, these are the markets we like. it is going to be a tough time for asian markets in the coming months given that it has done so well. some of those our markets may have room to catch up as well. senior president for wealth management. joining us live from singapore. on the bloomberg anywhere app you can customize your settings. this is bloomberg. ♪

yvonne: quick check of the latest business flash headlines. deutsche bank has warned there

fromay come under pressure investors. investment group said they want to have proof the plan is working. but others said he is the right man for the job. uber's ceo named two new directors. the news was announced late friday, something uber called a complete surprise. kalanick is defending himself in a lawsuit over his authority to fill the two seats. rose 16%,receipts beating the bloomberg survey. golden week has the potential to

generate more revenue than last year, with tourism dollars seen rising. more to come on daybreak asia. stay with us. this is bloomberg. ♪

yvonne: we are just half an hour away from the opening of trading in singapore. betty: gorgeous day's all wrong. -- gorgeous day's all around. get to the first word news. >> sentiment among japan's large manufacturers climbed. 17 boj survey of the 22 was in the previous period. the reading for large, not manufacturers was 23.

cracks are appearing in president trump's administration. his infrastructure guru promoted helplion-dollar plan to america's roads and airports. in the meantime, the president said those things do not work. the president also sparked controversy for saying his secretary of state wasted time for seeking talks with north korea. the president has repeatedly said military options are on the wele and continues to say will do whatever will be done. we are told eu foreign affairs ian foreignhe iran

minister are leading candidates for the award. president trump has the right to be a court is the worst agreement ever being made -- ahs accord as the worst agreement ever being made. yvonne: let's get the latest with sophie. sophie: check out what is going on in the bond space. we are seeing them slide along with gold which is losing 0.3%. that was the best weekly showing for the greenback this year. despitelosing ground better confidence among large manufacturers. is snapped in a two day advance.

be building a case of selling of euro against the yuan. the latest pmi data and economic growth in europe and asia. you have the pound continuing to drop in the early asia-pa session. the aussie dollar is gaining ground after the latest china pmi data. most in julyg the for the energy, materials and health care stocks. beach energy soaring 18%. in tokyo, we have shares mostly higher. take a look at the session today. makingseeing retailers,

gains in terms of index points. they are losing ground in tokyo. as 5.4%.lling as much but we are seeing gains. yvonne: we will be watching singapore's glp after it agreed 2.8 billion to european rival gazely. >> their logistic assets are spread across the u.s., brazil and china and this adds four of markets.biggest

this gives them a global footprint across the developed china'sd brazil and fastest-growing markets. >> how is this deal going to be structured? is 1.6rently there billion of the 2.8 billion is in the form of equity. it will be 1.2 billion of debt. this is essentially a property company and they say they are going to syndicate this. when the deal is completed and it is fully syndicated, they'll have a 15% stake only. the rest of it will be sold off to other investors. there will not be issuing any new equity to cover the financing of this deal. betty: how will the deal affect

the planned privatization of the company? >> according to the statement, this will not affect their planned privatization. the sovereign wealth fund of singapore as the biggest commission in this company. they are moving ahead with this privatization. the timing should remain the same. yvonne: thank you. our asia companies editor joining us from tokyo. plenty of big stories coming up this week and we're covering them all here on daybreak asia. on wednesday we will watch all the central banks. the india they decision. gross momentum still slipping. of economists think the monetary policy committee will deliver a dovish vote in terms of keeping it unchanged. that would put the r.b.i. further behind the rate curve.

the slowdown in inflation is likely to become clear in data we see in december. that has prompted the r.b.i. to cut rates. the market, we are seeing a little bit of a drag when it comes to the indian companies. toy are failing to live up the optimistic earnings forecast. we saw that seven-day selloff when it comes to indian stocks. the analysts seemed to not to be dented by amy at this. brokerages have raised their estimates to a record. the question is are we going to see this rally live up and catch up to the projections. betty: we will be able to see that in the coming sessions. you mentioned with the r.b.i., it is going the opposite direction here in the u.s..

here in the u.s. there are plenty of fresh economic numbers coming out. auto sales on tuesday. i am them services data -- services to data on wednesday. friday's nonfarm payroll report. jobsmists think 85,000 were added in september. well below the recent performances. as the series of hurricane we are still trying to dig ourselves out of slowed hiring. shows the shortfall we are seeing in this payrolls report. the red line shows you how far line.ap is in the yellow the largest payroll report we have seen. none of that likely to change

the rate forecast. no one expects anything to happen on december 1. given these are exceptional numbers with the hurricane, likely economist will throw it out. yvonne: it will look more like work. you have to take it with a pinch of salt when it comes to the data for the fourth quarter. president trump says rex tillerson is wasting his time trying to negotiate with kim jong. this is bloomberg. ♪

♪ ♪ betty: this is a daybreak asia. yvonne: former treasury says the trump administration's conversation about the iran nuclear deal at

the same time they try to rein in north korea is not helpful. their development of a nuclear weapon is an enormous threat to the united states and the whole world. if sanctions are going to be a factor to change their behavior, it is going to have to cut down the regime access to resources him totheir army and fund the sustaining center of his regime. the avenue of that has to go through china. north korea's only connection to the world comes from china. we have worked with china for years. years important that last we were together at the u.n. to

put tougher sanctions in place. it is a good thing the current administration was able to get some restrictions again. sanctions again. if you're going to ramp up sanctions, you have to do it in a thoughtful way. we did not want to cause a recession in europe when we put the russian sanctions in. we wanted to put pressure on to and his circle. circle.tin and his turn a northt to korea problem into a u.s.-china problem. can you ensure the efficacy of sanctions when the black market take such a big part of that economy? >> without fuel, even a black

market economy would have more problems. access to international transactions. north korea does not produce very much. it has to have some external connection. the need for a diplomatic approach with china is very important. yvonne: that was former u.s. treasury secretary jack lew. secretary of state rex tillerson says the u.s. is communicating , however, korea president trump said it was a waste of time. being nice to rocket man is not working 25 years.

he joins us now on the line from washington. in is this being received asia, hearing something like this, it sounds like the risk coming from president trump of the military kind? it is another situation we had dealt with with this presidency. something -- rex tillerson says something and then the president within hours undercut him. we spoke with secretary tillerson at the ambassador's --idence in beijing and the -- he a knowledge they are and he acknowledged they were with northommunicate

korea. i was a sea change and then see these tweets. yvonne: is this a strategy coming from the white house? not. sense is it is they're trying to portray it that way. after president trump made his tweets in a group of press people saying they are in line. he is saying the window for diplomacy is closing. anyone who would suggest this is part of a coordinated strategy, none of those people were in the room with the secretary and he sounded very hopeful. he said stay tuned.

we want to get them to the table. this is something he thought a lot about. and to have it on president say this is a complete -- and to have his own president say this is a waste of time. i don't think this is a strategy. i think the secretary sees the president tweets at something to be go with. you wake up in the morning and you run around it. yvonne: how does the chinese officials welcome the secretary of state? offering anto be olive branch and saying they would talk to the pboc and the banks to cut business with pyongyang. as this trip led to any breakthrough in the u.s. china relationship and how they rein

in north korea? >> there was no breakthrough. what we can gather from this trip was secretary tillerson was coming to the chinese to say we are ready to talk. it is up to you to bring the north koreans to the table. and a couple of other been in theseave unusually fulls of good wishes. it is clear they want to be on the same side of this one, the north korea issue. the message secretary tillerson cents was we are ready to get to beijing, with them so you need to help us out. yvonne: always good to have you. our foreign policy reporter joining us on the line. sticking to d.c., the white

house's long-awaited tax framework was met with accusations it was designed to benefit the wealthy. trump's top economic advisor gary cohen says it presents a group activity -- presents a growth activity. >> if we can grow gdp by 1%, we can a pay off the deficit. we are excited about our tax plan. we think it is very stimulative to the u.s. economy. hiring american workers. >> you must agree that this would hurt revenues in the short-term. plan,nder the reagan tax they lost over $200 billion in revenues over the first four years. >> we are putting incentives in

place for companies to spend money in the united states. > this is going to cost them money in the beginning but like every company that has ever been built, you invest upfront to produce greater returns over the long-term. we as a country need to make an investment. we are creating a tax plan that encourages you to invest in this country. >> let's talk about how you are going to get this done. one of the things you are proposing is really curtailing the production for state and local --curtailing the deductions for state and local taxes. saying we have to make accommodations from some of states.est taxed

>> our plan at this point does not allow for deductions of state and local taxes. we set out to achieve a couple of main goals. lower rates for everyone. simplification. we were trying to get rid of all of the loopholes and deductions that mostly wealthy people use. yvonne: that was president trump's top economic advisor gary cohen and maybe our future fed chief. we want to bring our interaction tv function to your attention. you'll not only be a few watch us live but dive into the functions we talk about and you can become part of the conversation. this is for bloomberg subscribers only. check it out at tv . ♪

>> he calls it a bubble basket stocks. the proposed merger of indian reliance communications and aircel collapsed. the merger would have created india's fourth-largest budget carrier. it says it will find other ways to cut debt. a luxury home in hong kong has set a record even as the authorities and try to quell the most unaffordable market. this condominium-fest about 520 million hong kong dollars -- fet ched about 520 million hong kong dollars. prices rose for 17 straight months in july, hong kong's

longest streak since 1993. wish he would have been in the market then, right? market are closing early. not just this luxury apartment but we see the property index climbing 11.1% this year. plenty more to come besides talking about that. rishaad, is not just about property prices. rashaad: it is the affordability. i think the average joe has to s pend 18 years to pay off a mortgage. that is the key and that is the problem. high.s a decade some elements did come in weaker than anticipated. we're going to be looking at all

withand what is going on the japanese economy. looking ahead, we have those pmi numbers over the weekend. yvonne: also looking quite robust. that is the difference of calculating what is going on. we have a situation where there are small and medium-size enterprises not doing as well as the larger stakeholders. coincidentally, with change has there been in the way the pboc lends money out. betty: china will help the smaller companies. they're giving a bit of a lifetime for the banks to prepare for this. rashaad: a quick look at catalonia as well. violence in the street. every 350 people arrested.

the vote deemed illegal by the central authorities in the draft. cattle lands are signaling they are going to declare independence in a week. the boat the and illegal by the central authorities in mardrid. catalans are signaling they are going to declare independence in a week. yvonne: that is it for "daybreak asia." standby for bloomberg markets. this is bloomberg. ♪

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rashaad: 9 a.m. in hong kong. it is 9 p.m. on sunday evening in new york city. a new poll has him as favorite to continue as prime minister. lows in 11ing the months after japan suspended car registration in japan. alan referendum, ists say it is another shameful page in spain's history.