♪ kong, we.m. in hong are live at bloomberg's asian headquarters. welcome to "daybreak: asia." chinese markets return from the golden week break, traders watching for reaction, the search in age shares in hong kong. opec says output curbs are rebounding the market, but extraordinary steps may still be needed. 7:00: it is just after p.m. in new york. a forecast from the fed distorting payroll numbers. rates are still expected to rise in december. and japan's great debate, abe reporting his support for the boj.

others say reform must come quicker. ♪ betty: chinese markets coming back online. if have others like japan offline today. we are washing for reaction to the jobs report on friday. it was really quite interesting. you continue to see -- for the first time, you saw the equity markets little bit unsure of how to read the jobs report. wage growth surprising many economists. i want to pull a chart that shows you how disjointed the treasuries market has been from the equities market. 6076. as you know, equity markets have been on a record run, it seems like stock investors believe the economy is getting better for interest rate hikes. if you look at the bond markets,

yields are in the tightest range since the 1960's. they have been that way the last three quarters. it has to make you wonder, what exactly is worrying the bond investors? yvonne: what is being priced in at the moment? we spoke with bill gross on friday about the jobs report. we have been here before. we really have not been able to hit or break through the 2.4% meaningfully. we saw some lines coming through from president trump, calm before the storm, north korea and risk aversion. we have seen in the dollar as well. take a look at how things are feeling -- are faring in new zealand. shares up. kiwi has been interesting. coalition talks have heated up over the weekend, just to see the separate the ruling national party and the labor. flying forn the kiwi the third day as we get to the thursday deadline.

is 4951 right now. -- $49.51. hurricane nate impact of the oil price, the latest story the gulf coast. sydney shares just opening here, up about a 10th of 1%. $77 $.22 for the aussie dollar. week ofe second october, it is sports day in japan. sports are closed for the holiday. just slightly stronger here. the showdown during sunday's debate. china will return from the golden week holiday. there is some excitement here today. betty: you were just mentioning crude oil. will companies is trying to head back to the gulf of mexico after operations were shut down by hurricane nate. our oil reporter is joining us

from mexico city. first tell us how bad was the shutdown, or is the shutdown, particularly on the gulf coast infrastructure? compareually, when we hurricane nate to some of the other recent natural disasters we have seen in the u.s., such as hurricane harvey, it has been rather uneventful. so far just under 70,000 , butents have lost power when it comes to the actual energy infrastructure side, so far we have not had any damages reported. shutusly companies have their platforms and evacuated personnel and we have seen roughly about 90%, slightly over 90% of that production in the gulf still being shut in. this has been more of a precautionary measure. it seems that we have are restarted to see companies sending personnel back and bringing platforms back online.

we should see production start to normalize pretty quickly. but also counts on the refinery side. so far we have only seen two refineries shuttered as result of nate. it is not quite the scale we saw when we were looking at hurricane harvey, for instance. not as much, but in terms of the oil price, how big of an impact has it been on the oil price? said, obviously a lot will depend on how quickly restored.duction be i think a lot of analysts are saying this really is not going to have a big impact on prices, but if we brought in and out a little bit and look overall, so many weather-related incidents hitting the u.s. -- events hitting the u.s., it has an impact on market volatility,

what we have seen with maria in puerto rico to irma in florida. this adds up and creates a lot of market instability. opec: just talking about really quickly, the deal reached by the countries and cartel expires in march. we heard from the secretary-general saying they needed 49 measures to stabilize the market last year -- next year, what you think he meant by that? we have not heard him say that the cuts are working, the we are starting to see rebalancing underway. but that more must be done. 24far, we have about countries that have participated in cuts. what he is really saying is they need more precipitation. as you said, the agreement expires in march, so we could see that extended past march, so far we have not really gotten a huge amount of detail on that

and what they would look like. also, what other countries might participate in this. obviously opec is meeting again next month in vienna, so probably a lot could come out of that meeting, as well. can, thank you. -- reporterer joining us from mexico city. we switch gears to china. banks are sure the retailers will be in focus when markets open following the golden week holiday. our china correspondent is joining us. we are expecting some fireworks given the rally we saw in a chairs -- h shares last week. what can we expect? tom: what a rally. if the first time chinese markets will be able to digest this reserve cut by the pboc that was announced on september 3. it doesn't kick in until 2018, but clearly it led to a big surge in shares of chinese

listed banks in hong kong last week, bank of china, merchants up about 6%,ing 7%. this is expected to pump up about $30 billion of liquidity. the idea is to final credit to small and medium-sized enterprises. the other factor is the people have been spending heavily over the golden week holiday on travel and trips and food, restaurants. we had some data that has come through already over the week, from the first through the eighth of october restaurant receipts have picked up and retail receipts have picked up about 10.3%. overall tourism income up and does up nearly 14% you're on your. yes, the banks are one to watch, retailers and also tourism. betty: were expecting some sort

of catch up rally. i guess history is on their side. usually we see chinese equities trade favorably after golden week. week itt's right, last ticked up on the first day back about 1.5% after the golden week. it takes up again about 3% in 2015. in october, it is also typically a decent month for returns. over the last decade, the shanghai composite has recorded rallies around 4.4% in the month of october over the last decade on average. those are the factors that are positive leading into this. caution.uld err there is a focus by policy makers ensuring there isn't too much volatility leading up to elections. there is a combination of factors, but historical president which is just -- president would suggest it is a

strong time for chinese trading. betty: were expecting change reserves on a private pmi survey . what can we expect out of those numbers? tom: we are expecting the composite pmi survey and services numbers, as well. of august, 52.4 and 52.7 respective way. we have have forecast for the shushing number, but it is a official pmi manufacturing number we got on september 30, the highest level since 2012. it will be interesting to look at the shushing numbers that come out at 9:45 beijing time. we also looking at fx reserves. they are forecast to take up -- $3.11 chilean trillion u.s. for september. they're expecting reserves to be gradual because we have capital come close, -- we have more

capital reserves. real estate curbs have started to bite. that may pressure some to look assets abroad if they can do that. the fx reserves expected out later today and the shushing private survey numbers, looking at smaller businesses rather than the big as so we -- soe's. yvonne: thank you. let's get to the first word news with haslinda amin. president trump is said to have approved a new wouldgy on iran that leave the 2015 news video intact but asks congress to toughen laws on oversight. three administration officials tell us the plan will be announced this week, and aims to present a united front between white house and capitol hill. trump has called the deal the worst deal ever and an embarrassment. japan's political leaders held

their soul debate before the hep election with abe saying supports boj policies and it is too early to discuss and access strategy. tokyo's governor repeated her manifesto pledge to phase out nuclear power and said she is taxl debating whether to cash reserves at the countries. the election is october 22. separatist leaders in catalonia are promising to present head with independence -- press ahead with independence despite a massive devastation of barcelona. they say what is happening in catalonia is real mother protesters like it or not. police say 350,000 people rallied, while organizers joined twice as many. -- aalan business catalan leader was asked to abandon independent. >> we won't be at the

negotiation table. we've always been there. there is no reason for not being at the negotiation table, whatever the decision is. politics is the answer. that is what we are demanding. haslinda: the financial times says eu regulators have raided offices of banking authorities and poland and the netherlands as part of a trust -- antitrust crackdown. they are inquiring into lenders that reportedly blocked rivals from gaining legitimate access to customer information. it says brussels has concerns trade bodies may have engaged in antitrust practices. 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. looking ahead, japan's political leaders hold their soul debate later this hour. how the election could affect corporate japan and boj policy. yvonne: up next, westpac's out

with major currency, the dollar rose for the third straight week. this is bloomberg. ♪

♪ >> we about half an hour into the trade right now in sydney this morning, you can see the fx there up about 4/10 of 1%, the markets have been open a little over 15 minutes. this is "daybreak: asia." i am betty lou in new york. yvonne: and i'm in hong kong. north korea is prepared to test a long-range missile. there are chances of a rate hike in december. let's talk more about this in sydney, where our strategist is. good to see appeared. a lot of things moving the dollar at the moment. first it was who the next fed

chair will be month and you have hourly earnings and the jobs report. then you have these kind of, for the storm comments coming from donald trump. can we trust the dollar rally at the moment? >> i think you have to have a caveat on the rally. we have chart data for the most part, the asleep a disappointing headline in the payroll for friday. wasly earnings, much of it solely due to a shortage of workers in some sectors. the unemployment rate is very low. , you were indications would think there would be enough for the fed to become double to keep talking about a december rate hike. the price section not that impressive actor that. we had the dollar bounce and minute rolled over. we saw some headlines regarding north korea potentially planning another test and opening a

little bit mixed this morning. there are arguably worries, obviously dollar-yen would be the most. we have a gap in terms of u.s. data until friday with the retail sales and the cpi. it may be vulnerable to pulling back, it will trade off geopolitical headlines. fory: broadly optimistic dollar. this is for our viewers, 1394. it looks like what seems to be the bottom we reach for the dollar the summer. if you look at the spread on the u.s. 10 year, the 210 year treasuries. we saw slight widening, but not really with the moves in the greenback. with the dollar really -- rally continue? can it stay before the -- below the 2.4% level? it's where we work with

highs in july. it is taking some work to get through it. first, need something fresh information beyond just an update. u.s. economy -- showing that the u.s. economy will gain momentum in the next year or so, perhaps of intangible in terms of tax reform, if tax cuts are likely to become reality, what size will they be? that will be something else that would be enough to continue to 260.the fed to now we get a squabble, name-calling between president trump and key senators. you wonder on the unanimity in terms of getting tough measures through, important legislation through congress. there is caution in that regard. >> is it going to be very nuanced with the dollar rally?

g10, wedollar versus can use the weakness in yuan. with the fed, and a pending rate hike in the summer, em currencies will be more precious. have certain currencies with that their own fundamentals. honestly they can be very important. in the case of euro, it is certainly looking like a top in terms of tolerance from the ecb. level,ied back into that it would be more cautious in terms of tapping the break on things. that is something looking at with the euro along with tensions in spain, you have all of exit headlines, it

leads to -- all sorts of brexit headlines. a lot of of vulnerability having been resilient for the last six months or more. there are some emerging markets. thinking about emerging markets and rising tensions, i have to ask you about the turkish lira, just about an hour ago hit a record low against the euro, against the dollar, based on these rising tensions between the u.s. and turkey over the arrest of a turkish national. what do you read into the sharp drop you are seeing in the lira? what is the fate not only the situation about the lira but emerging-market currencies? sean: it is pretty dramatic to have that sort of reaction, tickling as the turkish president has paid a friendly visit to the white house a few months ago. for the most part, the relations are seen as fairly positive.

for this -- to have this blowing up it suggests there has been a great focusing in turkey on issues that are potentially going to upset financial markets , they're producing a calm outlook for an -- producing a calm outlook for investors is not a priority. -- a bitd be of it vulnerable. certainly these markets will be vulnerable. we are seeing sharp price action insert areas in recent weeks. >> thank you so much, sean. westpac senior strategist. you can get that story and many more to get your gay -- your day going. subscribers can get on their terminals, is also available on mobile. using customize your settings so you only get the news on the industries and assets you care

about. this is bloomberg. ♪

♪ ." this is "daybreak: asia >> we have some breaking news, harvey weinstein's saga. it looks like the weinstein company has terminated his employment. this is according to a statement that has just come out in the last few moments. these sexualnow harassment claims that arose in this "new york times" article against harvey weinstein really set out a chain reaction in more and moreking claims against him, but also just the culture in hollywood of that is hollywood, and supported by prominent actresses. it has cost harvey weinstein his

job. there you go. this is anuess example of potentially, could this be a turnaround in hollywood, more women could come forward with their stories and there could possibly be some change. betty: not just hollywood, that silicon valley. , the sort of intolerance is spreading to other industries. yvonne: putting pressure on ceos and companies to put more women in leadership roles. that is something to watch. quick check of the business the flash headlines. the deutsche bank ceo has yet to meet its largest investor. a will meet hna, which has 9.9% stake. he has been avoiding meeting them since march. o attempt too -- tw

meet have failed. some aluminum and copper products have had falsified documents. to companies were provided falsified documents, it came to light following inspections carried out in september to august last year. yvonne: the sunday times says its head ofed for wealth management to be its new thedid the board approved promotion last week. he will take over from the current ceo, in the post nearly seven years and who will retire in 2018. next, president trump's possible fed choices, and implications for the labor market. this is bloomberg. ♪

♪ yvonne: 7:30 a.m. monday in hong kong, looking at victoria harbour, australian markets 30 minutes into the ♪ session. there is optimism, up 0.6%. asian stocks doing their best since july last week, likely to continue with china coming online today. betty: looks like gains all around. 7:30 p.m. in new york, where the markets are closed today. they closed pretty much unchanged friday after the get -- the jobs report. yvonne: you are watching daybreak asia. take a look at first word news with paul allen. paul: thanks.

the lira is tumbling against the dollar after the u.s. suspended these the services to turkish tourists. recent events have forced it to reassess the earning one'sthe le dollar after the -- -- theys government were interested in involvement in last year's failed military coup. the opec secretary said output restrictions are rebalancing the oil markets, but further steps may be needed next year. there is a growing consensus extraordinary measures may be required to ensure a stable price. the benchmark brent crude ended at $55.62, down 5% on the year. u.s. oil production in the gulf of mexico is coming back on stream after the latest storm made landfall. nate became a hurricane across the coast of mississippi,

causing flooding and halting 90% of the gulf output. manyal storms have killed in the u.s. and mexico, causing $300 billion in damage. theresa may has triggered speculation she may shakeup her cabinet to reassert her authority and end the ministerial infighting. she told the times that she is not want to shirk and wants the best people around her. the led to questions with future of boris johnson, seen as being out of step with government policy. the new zealand dollar fell in early trading monday after final election results showed the future of boris both main parties could foil -- do a reliable coalition government. talking to the first party, they support a working majority in parliament. the leader said there is a deadline for a decision. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

♪ thank you. with japan and south korea offline for holidays, trading in australia underway. the latest from juliette saly. it is looking good for australia and new zealand, up 0.4%. the kiwi is down, dropping on wellington. we will continue to see a little bit of concern whether or not there will be a government in new zealand. you have whole milk prices down wellington. we will continue to0.3%. good sign and start for the trading day and wellington. iron ore is up 0.9%, helping the australian shares. on the asx every sector apart from energy is ok. if we look at the stocks in the session, rion --

is weighing the sales of the euro -- europe top aluminum sales. comment and the weakness from the energy -- i mentioned weakness in the energy sellers. this continuing to rise on the demand for baby formula from china. jewels, we have been talking about the china open coming off of golden week. but we saw the close on friday with a 10 year high. jewelswe -- what kind of catchp rally are we expecting? juliette: a huge one. we have the pickup in retail sales that were weaker than expected, but when you look at restaurant receipts, of 10% over the golden week holiday. .- up 10% the markets will react to that cut, the reserve requirement ratio which boosted hong kong

stocks over the course of last week on the news they were open. we saw the big rally coming through in thinking players like icbc. -- banking players like icbc. we could see gains across the source of the session and we have data like pmi numbers and foreign reserves to come in and $3.1 trillion. betty: thank you so much, juliette saly on the market. hurricanes, we saw the story that u.s. payroll report is pretty much all but impossible to decipher what the numbers really mean or the economy. the fed, or stopped the expectation the fed will raise rates in december. kathleen hays joining us now. we saw the decline in job creation, but the wage gain was noticeable. kathleen: it was, particularly since the fed is focused on wages and boosting inflation.

we are going to run through this. key component by key component, starting with don farm payroll, they fell for the first time since 2010. we'll get 1972. you see the -- look at 1970. . it was forecasted 80,000, last month was 156. it was negative for the first time, you can't even see it. that is one aspect. that was even weaker than people forecasted, even if it is because of the hurricane. there was also unemployment. that was 4.2% to 4.4%, 16 year low. the broader measurement, it was a 10 year low. and the jobless rate is much less subject to being distorted by hurricanes. wages definitely could show the

impact of the hurricane in a different direction. average hourly earnings rose 0.4% on the month, 2.9% year-over-year. here economists are saying workers and utilities, which got blown out by the hurricane, they had to work more, paid for overtime, boost wages. low-wage workers in industry like restaurant could not get to work, so you pull out the low-wage component, boosting the average. also july and august revised higher, so that makes you figure it isn't just the hurricane. how is the fed going to read all of this hurricane clouded data? yvonne: that is the question, how are they going to read this data? 79% expected rate hike in december? kathleen: build utley is giving a speech on friday.

he is like the right-hand policy man. he indicated more rate hikes coming. the chances of a rate cut -- hike in december, they are all up nearly 80% now. september 8 they were over 20%, so big change in expectations. yvonne: what is the latest in terms of the rates for the next fed chair? we see phil rose chiming in. kathleen: a lot of people are chiming in. perfect story for bloomberg, you have to read it, the white house once a fed chief that can revisit financial regulation, revisit rules during the financial crisis. this comes after the treasury department put out a big 220 page proposal for changing the rules that govern stocks and bonds and how they can be traded . sourcede house has also credited in the story they want monetary policy and leadership skill. you mentioned bill gross.

he is looking at minneapolis fed president. for three years, he is brilliant. he has ideas that are different than other central bankers. he looks at the market different from a structural 10 point as opposed to a statistical -- standpoint as opposed to statistical. he is young. he has only been there a year to, but he would be my choice -- a year or two, but he would be my choice. globe king, hehe said he would recommend this man and think the white house will choose him. [laughter] yvonne: the bond kings chiming in and signing with the michigan chair, though he is not in the race. kathleen hays, thank you.

it is all about the economy as japan's political leaders debate ahead of the snap election. this is bloomberg. ♪

♪ betty: you are watching daybreak asia. i am betty liu in new york. yvonne: i am yvonne man in hong kong. japan's political leaders to get out ahead of the election october 22. shinzo abe maintained the support for monetary easing. the tokyo governor is still looking at taxing corporate japan reserves. david engel -- ingles following this. it came to taxes. also nuclear power. they did not depart from the manifesto. it really came down to, can shinzo abe convince the japanese

voting public that abenomics and his path forward is worthy of the two thirds majority they enjoy right now? that is his biggest issue, can he maintained his two thirds majority? for the governor, this was her chance to show herself. she is popular in tokyo. she gave the moving party a run for their money in the municipal elections in july, but she does not have a big national base. was she able to convince voters on a national level of her platform? yvonne: and whether she got to differentiate herself from the party. stephen: they had differing opinions. yvonne: on nuclear. stephen: let me get through the other things first. -- it ise reinforced premature to talk about using -- easing. he said he will lead that

decision to mr. garuda and the boj -- he will leave that decision to mr. kuroda and the boj. this could weaken -- ms koike does not support this. we have seen with consumption tax increases, japan heads into recession. abe reinforced his call that they need this consumption tax increase from 8% to 10%. yvonne: on the nuclear statement there are slight differences. stephen: and for the other opposition parties, one party saying we should have zero tolerance for nuclear power in the energy mix. in 2011 with fukushima. oblique seeks to reduce reliance on nuclear power, but scrapping it entirely is not responsible energy policy. e also aiming for zero reliance on nuclear power by

2030. you can see from this footage, there is a large group of people in the japan population that does not want nuclear. betty: very controversial and a divisive topic. thank you, stephen engle, on the latest report. yurinomics against abenomics. now the senior japan economist, and marcel, there is a lot of zeros here. zero nuclear reliance, zero food waste, zero this, zero that. it is a lot of wishful thinking because it seems like the support she is getting is not enough. marcel: yeah, i think so. she will need to have candidates in all single number districts across japan. she does not have enough time to find enough viable candidates. in terms of the progress, there

is wishful thinking and contradictory. to reduce fiscal easing, and she also does not want to go ahead with the sales tax hike. she wants to cut government spending, but we also have things to increase to achieve the targets she asks. betty: on the surface of it, there seems to be some contradiction, but the message resonates with a portion of the japanese populace. what in her party's manifesto did you feel was worthy of debate? taxel: definitely the sales hike. last time it was raised, the economy went up slightly. now after the long expansion already, when the tax goes up in 2019, there is a chance the economy would slip into a real

recession with unemployment rising and the stock market tending. -- tanking. it is worthy of debate if this is good or not. yvonne: it is interesting when she spoke with thetending. boj. i am quoting her, keeping monetary easing in place, the government and boj would together take a smooth exit strategy. she is talking about exit strategy. there is a fear there could be a resumption of the sales tax hike . think about her stance on boj policy and what that includes, keeping garuda at his job -- kuroda at his job. marcel: i am not sure what review is on kuroda, but if she wants to face out monetary policy -- phase out monetary policy, she might want to nominate someone who is not as aggressive in terms of easing. kuroda is a proponent of that.

there is a target for the future, so easing will have to stay in place given the current economic conditions. yvonne: it is also interesting in the manifesto that they will retain earnings as well. what could that have on the economy? marcel: it sounds good. the idea is to encourage firms to lift wages, list investment spending, but in practice firms will find a way to get around it. will transfer their money into real estate and stocks, or they will shift money abroad and increased dividends. -- will increase dividends. i don't think it will have the effect she wants. betty: there is a great land for increasing education which koike thinks of as after-the-fact, after the sales tax hike from abe. do you think the deflationary

treasures like it program like this do you see any deflationary pressures from a program like education? marcel: it could have an effect if something that cost money now is on the consumer index. it is not something we should worry too much about. the boj will look through that as they would through an increase in the sales tax. i don't think it will have a big impact on monetary policy. yvonne: we don't really know the question, but what are people voting for on october 22? is it about abenomics, the economy, or constitutional reform? morel: i think it will be the economy. constitutional reform, the parties don't differ enough, at least the party of hope and the other to make this into a big election topic. people are interested what happens to them, to jobs and

wages. that is what would come about. yvonne: we believe it there. thank you for coming on, the senior japan economist joining us from singapore. golda gets its groove back. worried about north korea, revives haven demand. this is bloomberg. ♪

♪ is daybreak asia. now the week ahead on wall street will bring a whole new round of economic numbers. they got the job to report, now it is retail sales. also focusing on headlines from the imf world meeting in washington. su keenan is here with more. we will look at the hurricane impact on sales. su: there are already some indicators it will be a very mixed tag because one of the

things we are learning is there will be a surge in car sales. people are buying back some of the things that were damaged in the hurricane, there was a rush to buy building materials before the hurricane. it is interesting to see what will happen. we have an indication from economists it will be an increase in september sales, we don't know in what areas. in terms of one company has gotten hammered by the hurricane, office depot already gave us a hint of how bad it could be. 8%y reported last week and hit to sales is what they are projecting. there is a dent in the stock. they took the for your forecast down and they had some acquisition news. that is telling us it is a widely anticipated report. let's go into the bloomberg for the market in general. we have weakness on friday. the nasdaq with strong, but unprecedented gains.

the left-hand side of the screen, a lot of big green boxes. can the bulls keep running? it was an anomaly because of the jobs data, but the close on friday did have a little bit of green. can we bring more of it on monday is the question? yvonne: and for the gold bowls as well, they have -- bulls, they have been struggling. we saw a fourth week of loss for bullion, but we saw some on friday with north korean concerns reemerging. su: this guy is a big old investor. saber rattling is good for gold. if you go into the bloomberg, you see the trend, gold movement is what we are calling it. one reaction is the fed talk and the reality there will be at least one hike toward the end of the year. but also the talk of any kind of

new problems and a missile launch from north korea is causing what is called by gerald, worry, which is positive for gold. there was the fact that we did see a big exit last week, a lot of that having to do with the projection for fed rate hikes, but long-term analysts say that could change as well given the geopolitical climate. yvonne: thank you. earnings season now, getting into gear. let's give the latest from ramy inocencio. he is with three terminal charts, looking at the banks. ramy: the banks do come up later this week thursday and friday. looking at the entire earnings season, from the u.s. side and the gold side, things look rosy. first off, 3639, this is the s&p 500. you can see earnings over the last several years since the

financial crisis. we see a widening gap between expectations with the 12 month forward versus the 12 month past average for etf. this is the loftiest since the financial crisis. it will be interesting to see if those hold especially given the couple hurricane that hit the united states in august and september. we are expecting a pullback in terms of growth expectations. that is expected to be short-lived, so we could see rebound in the next quarter after. let's look at global context. 7737, take a look at the far right side of your screen. this is 2017. it is the only green on your screen going up over the past five or six years since 2012. you can see the revisions have been going down. the first time we see global expectations getting higher because of growth, the world bank saying growth will be up

0.1% and 0.2%. last week they upgraded growth forecast for east asia and china. for inflation we know that, looking at december. fed funds futures 80% chance. we will look at the effect. and looking at banks later this week, this is 8124. if the white lines are going up, that means revisions are more positive. negative, look at the red line. last time it was hit, it was during the financial crisis. we are seeing positives overweighting the negatives when it comes to the banking sector on thursday and friday. that includes j.p. morgan, citibank, bank of america, and wells fargo. betty: thank you so much. much more ahead on daybreak asia. we will speak to the vice president of jupiter asset management. yvonne: he will tell us why he anticipates a correction in

chinese stocks with japanese shares remaining attractive in the long-term. that is in five minutes' time. this is bloomberg. ♪

♪ kong.0 a.m. here in hong asia.e to daybreak quiet start to the trading week with several markets closed. china reopens later. opec says out the curbs are rebounding the market but they warn extraordinary steps may still be needed. york it is just after 8:00 p.m. on sunday evening. more backing to be the head of the federal reserve. doesn't look like it's going to happen. japan holds the great debate. shinzo abe repeats his support.

reform must come quicker. ♪ >> no japan, no souel. china the big one. just goes to show why because we saw a stunning rally in the china index. 47% surge we have already seen this year. compare that to be a percent gain we saw on the shanghai composite in the white. we have been talking about this, which the shanghai composite has been the first to react to that this morning. the premium when it comes to shanghai shares, wiped out when it comes to the offshore stocks as well.

the big question is if we're going to see a reversal on the flow. will they revert away from hong kong and back to shanghai? >> indeed. who weina bearers interviewed still very negative on china. they say these banks have got to get better even know there is a crash coming in china. we are going to get a chance to ask our guests coming up who believes we are going to see some correction in china in the next six months. let's get to the first word news. >> thank you. president trump is a to have approved a new strategy in iran which will leave the nuclear deal intact but asked congress to toughen oversight. administration officials tell us the plan will be announced this week. the president has called the accord the worst deal ever and an embarrassment to the united states.

leaders heldical their sold debate before this months snap election premise or shinzo abe saying it is too early to discuss the next strategy. said she isvernor still debating whether to tax cash reserves a big companies. the election is october 22. leaders in catalonia are promising to press ahead with independence despite a massive pro-spain margin best alone. -- in barcelona. it is real whether protesters like it or not. 350,000 people rallied while organizers claim twice that many. we're always going to be -- [indiscernible] we will be there.

there is no reason to not be at the negotiating table. answer.olitics is the >> u.s. oil production in the gulf of mexico is coming back on stream after the latest storm to make landfall. nate strength into a hurricane as a cost -- as it crossed mississippi. 14 storms have killed hundreds in the u.s., mexico and the caribbean this season and caused an estimated $300 billion in damage. producer heidi weinstein has been fired by the agency he cofounded after allegations of serial sexual harassment. hisweinstein company says dismissal is in light of new information about misconduct that has emerged in the last few days. he had already stepped down from the company after the new york times reported settlements with at least eight women claiming harassment. global news 24 hours a day,

powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. we are seeing a regional wrench mark rising. -- benchmark rising. not a great amount of action you would normally expect at this time of day. japan and south korea closed today, taiwan also closed. we're waiting to see what will happen when the chinese markets reopen after that long week holiday. look at what we are seeing, australia and new zealand both marching higher. up by 7/10 of 1% in the first hour of trade. mining stocks lead the gains. also the new zealand market looking solid. the worst-performing currency in the asia region today down by one third of 1% against the dollar. also seeing the kiwi fall

against the australian dollar by about 6/10 of 1%. this is as we await the outcome of that new zealand election looking like old major parties could form a viable coalition government. keep an eye on the kiwi. elsewhere in little flat. we wait the pboc after the golden week holiday. in terms of commodities you are seeing solid support, giving a boost to the australian. if we have a look at the asx 200 in detail come also some solid moves in media companies. in play. three players goldbach and focus in turkey -- gold back in focus in turkey. what we have seen is weakness coming through in wti. it picked up a little bit in the asian session but having a weekly drop impacting a lot of

those energy players in australia. down around 9/10 of 1%. -- eyes on china when the oh when they reopened in 90 minutes. >> we will come to you for that. let's go to beijing to talk more about the china open. our china correspondent joining us. plenty of tailwind. retail sales as well as the targeted cut we got last week. >> it's a lot for traders to digest on an otherwise grim, went and polluted day in beijing. maybe a bright day for the markets. in terms of the consumer, a lot of strength between the first of october and now. overall tourism income rose around 14% year on year over the golden week holiday. we also some receipts for retail and restaurants of about 10.3%. those will be ones to watch. but also as you say the banking stocks. last week we saw the china index

surged 4% on the back of this decision by the pboc to cut the reserves for china's banks. the vast majority of them starting in 2018. cuts are between half a percent in 1.5% depending on how much the banks are lending to startups and sme and a move that could pump as much as $150 billion of liquidity into the system. those are some of the big factors that the traders will be wearing -- looking for as trade opens. >> also had to data coming out. the expectation is for reserves to actually rise $3.1 trillion for marshall -- threshold. he could weaken in the month of september. bloomberg's in-house economists still think it will edge up to run the $3.1 trillion

level. the fact that growth is relatively stable, the fact that controls remain a place. the fact we have had a pick up in terms of inflows, things like the bumped -- bond connect have helped funnel more for money into the chinese market. that is expectation from bloomberg. but they do say the realm of the has weekend and you have housing curves. we will also get private surveys -- bejing time.45 more data to digest. >> certainly a lot to digest. thank you so much. investors are awaiting the reopening of the mainland chinese market after the weeklong break. let's talk more about this with the jupiter asset management

vice chairman. he is usually based in london but joins us from hong kong. jupiter has $61 billion of assets, so good to have you with us this morning. let's start with china. a lot of folks including obviously the china bears but a lot of folks are saying given this rally, we should be seeing some sort of correction here. it's gone high for too long. you say it would make sense, it would almost not make sense not to see a correction. >> yes. i agree with that. as you point out, markets have had a really strong run. onbe in the next few days the back of some tailwinds you have been talking about, things will continue. but i think one would assume not just for china for markets in general, which is had strong runs throughout the year that one should expect some sort of sucked back -- setback. >> quite healthy.

you would buy that again if you saw that correction? >> yes, if you had some sort of correction and investors to the fundamentals were still in place. it's a bit about monetary policy, corporate momentum. but the set that could be five or 10% in net is not just in china. it makes perfect sense. one more on china. we had an interview with a longtime bear on china. inreiterated his concerns the liquidity anti-debt at the chinese banks. he said they have to get better capitalized. what do you say to that? >> i agree with his sentiment but timing is everything. if you look at the whole chinese economy, out-of-pocket, very high debt. general is amy in pretty healthy growth rate. the consumer by and large is pretty under leveraged.

you should expect a setback, banking aspects look at it high in reserves need to go up, but the whole chinese economy looks in reasonable health. >> i want to bring up a chart here. we are seeing the premium come the shanghai shares pretty much gone now compared to the -- 47% surge offshore. remarkable. are we seeing a meaningful reversible now that we have a limited this arbitrage opportunity? more fun flows on back to shanghai? >> that is what it is indicating but trying to predict relationships and widening and closing is a difficult thing to do. i would expect more the same for the moment. then who is to say. those fund flows could be significant. >> this is the bottom line showing the margin debt off from

the 20 month high. people are saying we might not see that kind of the needful rotation for say. but the china banks have been gangbusters in hong kong. everyone treating it like it is a change in policy. more dramatic moves in a last couple days than any kind of normal rrr companies. is this too far too fast? >> i would think so. your point about margin debt is a good one. i get nervous the more people get excited. sell early come as famous investors say. are there potential things were looking for in terms of reforms, capital controls which will be eased? >> i think it will be more longer-term liberalization of chinese economy. cementation.tical i think we are looking for indicators of that. and the number of people on the central committee. and i think we are looking for

further reforms in the economy because the key issues how do you keep growth up? you need to do that for the expanding population. >> i want to turn to what is going on in japan. we were just speaking with our japan economist about the outcome of the elections, with the party -- what the party is lobbying for. we have seen japanese markets rally ahead of these elections. do you think they will continue to do so? and what of these elections tell you about doj policy going forward? longer-term bullish on the japanese market. the main reasons are not so much related to monetary policy, which we see as broadly supportive. but more the underlying corporate profitability that we see as improving on a secular basis. that's the main reason we think it is politics. short-term, japanese market has a habit of rallying into

elections and that my continue for the short-term. over the longer-term we are optimistic about the japanese market. us, in the next segment we will talk more about europe. a closer look about with. the political crisis in catalonia means for markets. >>. this hour, who built growth is backing as a next fed chair. what he says it is not going to happen. this is bloomberg. ♪

♪ ." this is "daybreak asia >> let's turn our attention to europe now. jupiter asset management vice chairman joining us in the hong kong set. we have been talking about what has been going on in catalonia, protests happening in barcelona and madrid urging for talks between them.

the whole issue of sovereignty still has not been resolved. is there any room for talks and negotiations at this point? >> we would like to think so. no one wants to see an outbreak of violence on either side, i am sure. so there must be room for talks. this is a serious issue, a big, historical issue. yesterday or the day before was an anniversary of the independence movement of 1934. this is not a recent thing. they have to have talks. >> the bond market seems to be reacting differently than the equity market. we saw stocks last week saw the worst week. the spanish tenure pretty same right now. who is right in this? will it be isolated? >> as it goes on and there is a proper independence come i think it will affect both markets for some time to the negative. this will be significant.

one forgets, people say this is a small region. up economy in catalonia is $220 billion. that is the side of portugal. that is big. that is quite serious if it happens. >> is it a blip if it comes to we have seenrally and the outperformance and optimism in terms of the growth? is it a one-off? tension quietshe down than you are right to call it a blip. but if it goes further than that come and hopefully not, but if talks break down and are is violence than i think then it is quite serious. secessionist movements and fractionalization would be a serious problem. >> i want to turn over to another issued that is related. global central banks, easy be, boj. the fed headed out on friday it

was confusing, but the wage growth was what caught people's eyes -- economists eyes. do you think the fed is on target with the rate hikes? looking like a genius here on this rate hiking path when it seemed for a while and she was to mortgage? -- too mawkish? >> the key thing you are suggesting is the rate of inflation. i think that is the key for world markets because it determines fed policy in the next six months and a year and that determines what will happen around the world. so, with growth is one of the key indicators. it will be a bit of tightening, which i expect. that will be a good call in my view. >> a right hike in december -- rate hike in december but what happens in 2018 and how will the markets react? >> i think the equity markets

can take a bit of tightening. after all, it would show a normalization of the economy. it will be good for corporate earnings and equity. obviously it would have implications for the bond market that is starting to be in the price. the question is what shape the yield curve will be in next year. if the economy continues to strengthen you should expect another couple hikes next year in 2018. >> depending on the fed chair is, we have seen dollar move towards who could possibly be more hawkish, who is more dovish. we are still not sure who the president really wants. is it someone who has more of a preference for policy for regulation, for tax reform? how do you view all this? >> trying to predict the american president, it is not my forte. whouess it would be someone would say his clinical view on the regulation and policy.

but getting that is very hard. i suggest he is pro-economy and will want someone -- >> do you have a preference? >> i don't know. funnily enough it is for janet yellen to have another term. i don't know if that is likely or probable that i think she has done a good job. >> the equity markets have been rallying on the back of better economic numbers and the prospect of higher rates. treasury markets have been very quiet over the last three quarters which has been interesting. bill gross made some comments on friday where he said we are only a few basis points away from the end of the bond bull market. 2.4% is the red line. do you agree with him? >> i think it is a really interesting question. if you stand back from the bondable markets -- i started my career in 1982 when the great bond mobile -- bull market

began. if you see a brick of that trend , that will be significant for becauses and you guys that's a significant change in terms of the interest rate cycle. do i expect it immediately? no. i think we will have a long period where rates will occasionally break out because it think conditions in terms of economic growth and more importantly, inflation, are not there yet. >> so then does that mean you still believe if there was a bias for yield, the bias is still down for treasury? >> maybe sideways. all bets would be off if we have another phase of disinflation or deflation. that would also be serious. >> edward, great to have you here in hong kong. one feature on the bloomberg we like to bring to your attention is our interactive tv function.

you can find it at tv and can watch us live and see previous interviews and other functions we talk about. this is for bloomberg subscribers only. this is bloomberg. ♪

♪ a check on the latest business flash headlines. an australian group is soaring after receiving an offer. three aussie dollars a share in cash in a deal worth $930 million has been given access. you would take control of the hotel operator with more than 20,000 rooms across australia and new zealand and indonesia. deutsche bank ceo has yet to meet's largest investor but does plan to. a spokeswoman says he will meet the chinese conglomerate which has a 9.9% stake.

the wall street journal says he has been avoiding meeting them since the group raise holdings in march. failed and hege does not want to meet them. kobe steel has admitted it falsified documents on strength and durability for aluminum and copper products to make them seem to be quality standards. they said the products in question were delivered to more than 200 companies but declined to offer names. he falsification's came to light during inspections carried out in september last year through august. coming up, japan's political leaders speak at of the snap election. headlines coming up next. this is bloomberg. ♪

yvonne: 8:30 in singapore. half an hour away from the open of trading. sophie: -- betty: you are watching "daybreak asia." is tumblingra against the dollar after the u.s. suspended visa for turkish tourists. arrest of a the turkish national working at the u.s. consulate in istanbul. outputry-general says

restrictions are balancing the furtheret but steps may be needed next year. he says there is a growing the that extraordinary measures may be needed to ensure a good price. ays he willnk's ceo s meet the chinese conglomerate hna. he has been avoiding the meeting reportedch, and he is to say he does not want to meet hna. the financial times says eu authorities have rateided as part of an antitrust crackdown. it involved blocking legitimate

access to customer information. they engaged in anti-competitive anti-competitive processes. this is bloomberg. ♪ yvonne: thank you. come to see how the asian market are shaping up. let's get the latest from juliette and report. bit of a are in a waiting game until the markets reopened. we have japan and south korea closed today. we are only tracking two market s. it looks like both major parties in new zealand could form a coalition government. keep an eye on the kiwi. it has fallen about 0.6 of 1 percent. the aussie dollar, seeing it

hold. we have data coming through out of australia. expecting thember data out of australia, which includes the september business confidence survey -- they would remain fairly consistent giving support to the aussie dollar. stocks in australia, we have mantra groupabout arriving to a record high in sydney. this is after that deal came through. arera saying the talks incomplete but it is allowing books. to its gold rising. investors going into the safe havens.

weakness coming in in these oil players. energy off by tenths of 1%. weekly drop.at yvonne: the china markets are coming back online after the golden week holiday. hot saying closing at a 10 year seng closing at a 10 year high. the pboc we had requirement ratio. we saw that they list to the index -- lift to the index. 2007.ghest since ftse suggesting some gains as we see the chinese market reopening. positive data came through out of golden week holidays.

an increase in retail sales. a want to focus on this market. having a quick look at the hang seng index, this is what we have not seen since september 2007. we are expecting the developers stocks to flow into the mainland market. yvonne: thank you so much. an's political leaders are duking it out in their own debate. shinzo abe retaining his support for monetary easing and kioke says she supports cash reserves. steve, we have the manifesto coming up and the whole party. what is put out for you? >> not a lot stood out but the scenes inehind the

japan is fascinating. you have the liberal democratic party, ldp trying to maintain that 2/3rd majority in the lower house. abe said this is the main snaping factor to call the election, if they can maintain the majority with their minority partner. , who is note kioke running for a parliamentary seat. she could not be prime minister. the odds are long against her from reaching that goal. this is a chance for her and her new party to stand up on a national stage. she has a strong following in tokyo evidenced by those municipal governments in july where they hammered the ldp candidates. yvonne: seems more like politicking from her.

she will not get a majority in the parliament but there is a chance to take a couple of seats. and possibly do a coalition partnership with the ldp. >> we were talking about this in the newsroom, why she didn't name the prime minister candidate. that would take away from her rising star power. she would gain traction right now. stall.entum might she is seen favorably in the eyes of many people. the big reason shinzo abe called this snap election so quickly more than a year before he needed to, he did not want kioke to gain the traction nationally. yvonne: 30 more days before we had to tokyo.

we will be there for that snap election. a check of the latest business flash headlines. cars has recalled 17,000 in australia. the automobile regulator has asked drivers to find out if there cards are filled with faulty products from takata. reports of had no airbag failing in its cars. >> sprint and t-mobile are putting the finishing touches on a merger likely to be announced when they report quarterly earnings by the end of the month. they will decide on an exchange ratio that will decide sprint's dilation. it has a market value of $29 billion. the report says a company will divide to include its aerospace

division. ell'srs said honeyw turbochargers business will be one of the spinoffs. the venture capital arm has completed its biggest fundraising for southeast asia and india tech deals. vertex was the first institutional backer in ride hailing company grab which became one of the region's most powerful tech startups. still ahead, we will look at who may be the president's picked to lead the fed. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." bill gross has joined a chorus of big names in business

backing neel kashkari as the next head of the fed. gross told bloomberg he would be a great pick. >> i join jeffrey and this one. kashkari has great experience in terms of the lamen crisis. he has had experience that goldman. he is a brilliant man. he looks at the market a little bit different, from a structural standpoint rather than a tailored model. he is young. he's only been there for a year or two but he would be my choice. he's not going to be the choice. >> bill, who is a brilliant man, just for neel kashkari-- jeff or neel kashkari?

wouldnycoul suggest you are talking your book not that he has been challenged. the would he give taylor atthan a john stanford university. taylor, there is a model, you can put in your own input. it depends on what taylor thinks is the natural way -- natural rate of unemployment. if the national rate is five and a court -- and a quarter, it should be 100 basis points different. rule suggests we are

there in terms of where fed funds would be. he would probably follow the taylor rule. will.ri i do not think betty: that was bill gross. some might assume president neel kashkari to succeed janet yellen. the administration has something else to consider. it was a great bloomberg story that came out right around the jobs report really outlining what these administrations are looking for. cap link: when is the thing -- cathleen: they want someone

willing to take another look at the regulations around financial services. you say that eliminates janet yellen because you made it so clear that she wants to roll back dodd-frank but what she was talking about what those higher bank capital rules. the treasury market sent a 220 page of board looking at the regulations around stocks and bonds and derivatives. and what to look at ask do these really work. the white house said they want someone with monetary policy experience and the skills needed to run a large organization. janet yellen has done that so well. i want to jump into the bloomberg. according to this chart, kevin morse, he is still in the lead. j powell, a current fed governor

with a lot of banking experience and janet yellen is down towards the bottom along with gary cohn. nothing definitive they are. we do not have john taylor. and people think he would hike rates like crazy area. there is nothing automatic about the taylor rule for john taylor. he uses it as a guy based on where things should be -- as a guide based on what things should be. maybe trump wants a dove like neel kashkari. but he is not in the running. betty: what we saw friday was wages, wages coming back. and we are looking to that inflation data. wagesen: wages, wages, and hurricanes and hurricanes.

that brings jobs. jobs fell for the first time si nce 2010. down 33,000. they are supposed to arrive 80,000. rise 80,000. what was surprising was unemployment. onemployment fell from 4.2% t 4.4. it hit a 10 year low. the jobless rate, it is probably more immune to hurricane impacts. you just mentioned wages. average hourly earnings. month ored 0.4% on the 2.9% year-over-year increase. 2.5 have been running at for about four months in a row.

utilities were hit hard by the hurricanes so people worked overtime. overtime wages are higher. lower wage industry workers could not get to work so that helped boost the average because low-wage workers fell out. august, the year every year for average, one month higher. maybe there is more fuel in the pump that we thought. look at bill dudley, the new york fed president, he is saying inflation, the weakness is going to be temporary. paving the path for a rate hike. go right over here with me, december meeting, odds of 278 when 5% that the fed will hike percent that.25 that rate.l hike

gary cohen made it clear the white house thinks this is a policy report. >> we at the white house are excited about the numbers. there is some noise in the numbers because of the hurricane is as you said you discount that noise and you look at the numbers and the wage growth and the unemployment number which is the real right is. -- real bright news. >> he showed the judgment a possible fed chair could show. he was asked about the next fed chair and the qualifications and he said i do not think it is appropriate for me to comment. up even if thes model says he is the guy last on the list. yvonne: still on the running.

kathleen hays, thank you. you in the roundup of the stories you need to know on this today's edition of daybreak. it is also available on your mobile and the bloomberg anywhere app. you can look at the news on the industries and assets you care about. this is bloomberg. ♪

♪

let's do a quick check of the markets and play a round of the region. singapore starts trading in just about less than 10 minutes time. futures pointing to an even open. other markets like australia trading higher right now. japan closed. this is "daybreak asia." betty: a quick check of some of the stories we are following. u.k. prime minister theresa may has triggered speculation she may shake of her cabinet to reassert her authority in the ministerial infighting. shirk aot one to challenge and some question the future of secretary morris johnson.

results showedn both main parties could form a coalition government. both would be required to form a working majority in parliament. there is a deadline of next thursday to make a decision. of retail banking and wealth management will be the new ceo and it has asked the bank of england permission to make the appointment. overew ceo will take gulliver, who has been in the post for seven years. betty: it is the start of the u.s. earnings season which is just getting into gear. ramy inocencio with the three bloomberg chart. ramy: looking to the third quarter, it looks like an

optimistic outlook at least. let's head to the first bloomberg terminal chart. the key here is in blue. the trailing 12 month eps. we can see this divergence around 2014 until where we are now. the gist of all this is we are at the most optimistic ever at the financial crisis. you can see some optimism here with earnings expectations looking quite lofty. because of the hurricane that hit the united states, we are seeing some growth forecast get take back a little bit. they are not expected to turn into the negative. turning into the global context. overve a lot of downgrades the course of the past several years ever since 2012. look at 2017, is the first time we are seeing this rise on the

year. analysts are hoping and betting on inflation as well as global growth to finally kick in on these earnings. the world bank is looking for an upgrade for the united states as well as east asia and china, which happened this past week. talking about inflation and the interest probability rising. we are looking ahead to thursday as well as friday when some of the major banks in the united states the starter for their earnings. this chart we want to show you. it is the lines. if the smartcards are above the zero line there getting the upward revision more than the downward revision. look at the first chart. the last time we saw that was during the financial crisis. we saw the downgrades outweigh the upgrade. not that much anymore.

all because we were talking about inflation instead of growth. the three bloomberg terminal chart we have to keep in mind as we start the earnings season with jpmorgan and citibank coming up first. yvonne: that is ominous it from us here on "daybreak asia." here on bloomberg markets, we are taking a look at what is coming up. process they often the by doing the reverse. kong, this chinese banks trading. 3.3%. yvonne: doing better than when a normal sugar are -- rrr cut is. some are saying this is going to fast. rishaad: everybody was scratching their heads and they said it is.

have someone- we from deutsche bank giving us his ball before the start of the session -- his thoughts on the start of the session and looking at that debate over the weekend. betty: a lot ahead to watch. that is it from "daybreak asia." dan by four bloomberg markets -- standby four bloomberg markets. this is bloomberg. ♪

so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver.

rishaad: 9:00 a.m. here in hong kong. 9:00 sunday night in new york city. sophie: this is bloomberg markets: asia. ♪ rishaad: quiet start to the trading day areas markets closed. superreopening after that golden week break. hang seng finishing