♪ >> 7:00 a.m. here in hong kong. we are live f from bloomberg's asian head quarters. i'm ivan men. he next start seen for asia-pacific markets as asia returns to gains. taxes and nuclear power top the agenda. >> and from bloomberg's global head quarters. i'm betty lu. with the holiday, a new positive for beijing. china is posting another monthly ride in september.

and kevin worsht leading the fed but critics say he would be too hawkish. reporter: a little bit of a mix between gossip and news. ok. as i mentioned, you know, the market here, the equity market were open but the bond markets were closed. i want to pull up a chart and kick us off. it shows you despite the rally that we've seen in stocks in asia as seen as the mici asia pacific index, it's still the cheapest in 15 years when compared to the s & p. this is represented by the white

line. despite the rally in asia and the rally here and in the u.s., in fact, asia is just getting cheaper an cheaper. and that's got more investors saying i'm going to buy into the asia pacific market. yvonne: seems like we've got the global gross optimism especially in japan. e'll see what happens with japan after correia. we're down by the .10 of 1% for the index 50 following what we saw, the downside with some of the major indexes. holding on to the four-month load as we wait for coalition talks after the election. futures were down in sidney. take a look at how things were faring down under.

we did see when it came to oil a little bit of up side in crude. politics hanging in japan as well as dollar ye ndiaye unanimousics. 112.66. when we talk about whether she will be running for parliament. that will be expected today. but highly unlikely as she's telegraphed before. we've seen futures pretty modest as we see the tokyo market open today. let's get caught with emma chandra. emma? emma: three more companies are leaving catalonia. urr sys, and telecom are shifting their head quarters from barcelona to madrid. the pharmaceutical company has seven companies in the region at

the beginning of last week. the u.k. has been warned it must make the next move on brexit if it wants to talk trade. this from the european commission after teresa may commented to parliament that it was the e.u.'s turn to act. the two sides have gun a fifth -- begun a fifty round of negotiations. disagreements in the divorce bill and the rights of citizens living in britain. >> this is not a ballgame. but what i can remind you that there is a clear sequencing to these talks. and there has been so far no solution found on step one which is the divorce proceedings. so the ball is in entirely in he u.k. court.

emma: china's foreign reserves rose in eight months in september. the yuan also advanced as the stockpile est afex ith more than $3.1 trillion. when we served peaked to $4 trillion before declining to the first part of the year. japan's leaders are talking disagreement.cy they're facing taxes from nuclear power. north korea will weigh on voters, but concerns about stagnant wages and household debts are likely to top the agenda. >> the extraordinary easing and fiscal packages only have brought marginal improvements in the ja pa knees economy. while i think rapid policy changes are not desirable since

that could destabilize the market, we must think carefully about the exit strategy. emma: the two sides have halted visa services in a dispute over the rest of a turkish man. he's accused of involvement in last year's failed coup. the lira down for seven straight days. powers by more than 27 journalists and analysts in more than 120 countries. i'm emma chandra this is bloomberg. betty: let's look at the tight range for the dollar. also investors seem to be stepping back because we had the bond markets closed for the columbus day holidays. and zu with more. might have been more quiet buzz going to get exciting this week. reporter: earning season ahead seems like a time for a lot of

investors to step back. could ramp up as you say as the week moves on. we've got some economic data. let's go to the movers. we're going to go get g.e. big drop. but micron. chip-mackers. 23% in september. revenues have doubled. you want to know how much they are year to date because they hit a new high? 87%. >> wow. reporter: forget about test la. they announced that hurricane maria that 17%, it could roll in the third quarter. express scripts down from 14% year to date taking a hit today in the latest session because of an analyst down grade. let's go into the bloomberg because we talked about turkey d the pressure of the u.s. lira. the u.s. dollar lira. guess what? there's no sign of contagion.

here's the currency index. analysts are saying it's pretty much contained. it's unlikely to spark durable contagion. a lot of emerging markets -- normally we don't see that when there's a scuff up between the u.s. and a country like that. reporter: g.e., the worst since 2008. and 2008 was the financial crisis. it's hard to believe. this is a manufacturing giant. 125-year history. and analysts are saying they're probably in for the most sweeping changes the company has seen in its history. if you look at the year to date chart you really see the decline here. eight straight monthly drops. what's beginning on? well, some cash flow issues, con tening with weak cash flow, the power generation in the oil markets. they need to deliver results fast is what a lot of analysts

are saying. they just added an active investor to the board. the new -- and g.e. are affecting a clean break. citigroup noting that their accountability and sense of urgency are probably at the forefront of the changes they are also looking at a dividend. this kind of step was looked at in twain before the financial crisis and before that. so looks like they're moving quickly to affect some change. >> and quickly looking at commodities right now, we've seen this turkey spafment it has kind of led to the lira tanking but not so much but we are seeing some of the safety heaven assets as well. >> if we look at the one week, you had gold under pressure. and the re-emergence, cyber rattling if you will. turkey situation and we've got gold catching up a bit.

we're back down below 581. it's -- 51. there's a growing view that hey, the opec cuts are starting to take effect. be there will be additional measures. and so oil it looks like back stock. we could get direction from the wednesday weekly supply data here in the u.s. >> let's look ahead especially with earnings as well. su, thank you. coming up, one of qatar's biggest bang is learning to cope with months of diplomatic ice lace. hour, our exclusive interview. >> we speak to a former fed president to get a view from the inside. this is bloomberg.

yvonne: this is "daybreak asia." betty: the next race to be the chair kevin wolsh he would pick up. but some say he would tank the bond market. kathleen with who is getting the support -- who is giving the support. >> bill acklan. hedge fund investor, worth a lot of money. right. he says he knows kevin. he thinks he knows about banking and other issues. most importantly, he thinks that donald trump wants to pick someone who will make things change, create change at the federal reserve. markets are not betting on the current fed chair. they think she's in the running but not the one most likely to success. i agree with bill ackman, trump

will say it's time for a change. who else is in the running? we just mentioned kevin worsht he's a former fed governor. more capital expertise. for crucial years. he voted on monetarily policy. john taylor, the economist who developed the taylor rule. he's considered hawkish. he would suggest much higher rates than what we see now. j. powell is well respected in banking. he's one whose name rolls when he appeared on donald trump's short lift. and gary kcohn head of the national economic council. now, george one of their rate strategist put out an interesting piece along with his colleagues today saying that kevin arsh. who said he would push yields yields a lot.

he thinks kevin as someone who was against rake hikes, excuse me rate cuts. he was a modern day vulcar. the 10-year deal he could jump at least 10 basis point. falling about three basis points in yield. a lot of people, just interesting. if you go online so many critics, yvonne, kevin was so hawkish. he criticized -- he was against necessarily cutting rates. quan taveveezing not such a good monetarily idea. it's not like yellin and powell re onboard with gradual rate hikes. all of a sudden we have a whole cottage industry. and we have a new fed chair that

we didn't have a few weeks ago. >> kathleen stay with us. i want to bring in our next guest who knows about the inner workings of the federal reserve. al, thank you so much for joining us. picking up with she's mentioned about kevin warsh. we talked about how inflation still remain as mystery. is there a need to return to these kind of rules based on the philosophy of the federal reskemb? >> rules have something to add monetarily t of policy. obviously taylor is at the forefront. it's an operating guide. for short and run fed rereactions to incoming data. i would say this, in conducting monetarily policy in addition to -- you need to be concerned and aware of what may happen in

markets and how markets may react in this very short run. and in the intermediate run over the next two or three months. but what really matters is what happens over the long run. the fed has a mandate. the mandate is to maintain in my view, -- the key thing is to keep inflation from getting too high. keep it from getting too low and also maintain the company with full floyd mayweather. those are the goals. that's where the focus has to be. sometimes when we get so focused on what the next market reaction, you can't wait to be, you can get cloudy decisions about the -- >> i think you make an important point. and i'm glad you made it al is that a rules based policy -- does that mean you mechanically follow a rule and say it should be 100 basis points higher? another point is interesting to me. isn't it doincht be the guy who is on the board of governors,

arguing with ben bernanke on why you shouldn't cut rates? do that in erent to front of the chair of leadership? >> i think that's a very good point. and i would say this, you know, a think a lot -- there's a lot of speculation as you mentioned about who the next chair will be or whether it might remain in the job. and in the -- when you hear these conversations, you know, it's sometimes so this person whoever it may be is going to impose his or her particular views pretty holisticly on the fed and the fed policy. you've got -- we're down a number of seats right now are empty right now. but if you have a full compliment including all of the reserve bank presidents. but you've got 19 "people" e

people on the tinet. . they're usually pretty knowledgeable. so sure everyone wants to give. the chair is going to be on the hot seat most frequently. o you want to strengthen tra person's hand. if you disagree, you have to say so. the chair's main job is to form a consensus. to lead but also to listen. that's an important point to remember as we follow this debate about who is going to be the next person. >> that's right. it's going be a mix of gossip and news as it is decided who is going to be the next chair of the fed. were we all know being the head of the fed, what aner mother mouse job, any economist would want to take this job. remember, this is going to do be a job under president trump whom we've seen can be really quite erratic, not following typical

protocols or rules. would you even want to be the chair of the fed under president trump? >> well, the really porn point, one of the fed's great strengths is that if it's been able to for the most part maintain its independence from day-to-day political considerations, there's a clear mission given to by the congress and it needs to spend its time thinking about that whoever the president may be. and i think that's the case here as well. i think, you know, it's a tough job to get what the fed has been mandated to do, done. and i think it's important just to whoever is in the white house. you need to sort of keep your eye on the ball and keep going after that goal. reporter: what do you think the president is going to make the decision on that? is it going to be whether

it's about money or politics? of course, it's hard to predict who is going to choose. but there's quite a lot hanging when it comes to tax reform an deregulation itself? >> you know, i can't speculate on what would be the president's decisions. what i would want if i were making a decision is the best -- the person most able -- most kely to be able to bring a solid, monetarily and financial conditions and a solid monetarily and financial background that will allow the economy to grow at its maximum pace. i know that sounds like apple pie and mother hood. but that is really what it is. monetarily policy the different from fiscal policy. all of these things have a bearing on monetarily policy but it's kind of fundamental. what you want is somebody really capable of doing that well.

i think all of the people that have been mentioned would bring something to the table. many have been in the if. let me just mention those two people. powell. lon and john the history of monetarily policy and this does not cast any aspersions on the others. either of those two in my view would be able to do the job and do it well. >> we don't want you to hold back. but a firm endorsement. let's turn to financial regulation because are reporting in water brought out the fact that the president and the white house team would like somebody who is willing to revisit all of the financial regulations. what is your view of that and i

want to ask about janet yell lynn because she gave that speech saying she was always four of the regulations. and make the system safe. but there were a lot of regulations past. do you think janet yell lynn or anybody on that list would not be willing to consider looking at that and do you agree with the quhouse on this one thing that there was a lot of stuff passed in a hurry and maybe some of it we don't need. >> i think that the point could be made by a lot of people. we had a tremendous financial crisis and a lot of trouble as you well know. and it naturally -- it was quite natural i think to create strongly. we have higher capital requirements. we would have inner to does on the liquidity. financial institutions. and that's all well said and done. >> there was a lot of other

things redundant as well. i think it does make sense. so take a look at that believe had some experience with these innovations. are they working well or are they supporting or are there areas in which they ma be restrainingly crit mat growth in financial transactions and in cre that might be detrimental. i think she that was open to doing that. i expect the others would be as well. i think it's all well and good. >> al, i appreciate the time and the insight. 6789 i want to thank kathleen hays. i'm make sure to interact. you can just find it at tv go. you'll be able to watch us live

and also previous center views. this is for bloomberg subscribers on. make sure to check it out on bloomberg go. this is bloomberg.

♪ >> a quick check of the headlines now. indonesia is investigating whether any citizens linked to the transfer of $1.4 standard charter kline assets complied with tax amnesty requirements the finance mist ministry has evident that it involved 81 private citizens and expected dquiry uare to be -- in to be finished. and they have compliance problems and potential penalties. australia sued c.b.a. alleging

more than 53 breaches of money land erring and terrorism financing laws. political leaders are staking out key party differences we here from yoiko koike.

>> it is 7:30 p.m. monday here in new york where markets were pretty much unchanged. a little bit lower, right? the bond markets were closed and we were left with a little less direction from treasuries. i'm betty liu. >> and i'm yvonne. let's go get the first news with emma chandra. emma: google has found $5,000 about spending tied to the russian government as it looks into possible interference in the u.s. presidential elections.

google is investigating in another $53,000. as president trump decides whether to dump the iran nuclear deal, the aies are trying to minimize the damage. they're trying to make sure that it doesn't destroy the 2015 accords. u.s. and russia view it as an achievement. president trurnlu trump has called it the worst deal ever made. chancellor merkel is looking at options if a new coalition government after months of talks. germany will be lucky to have the merkel-led government. after the 2013 election, the chancellor needed almost three months to seal a pact with the social democrats. chicago university professor has won the nobel prize for his

studies on the impacts of human fires. taylor was honored to show how human weak ns can ultimately affect the markets. he built a bridge between the psychological and cease of -- analysises of individuals. >> we're counting down until the market reopening in japan. australia is about a half an hour to trade now. for more, here's juliette. >> betty, it is pretty range bound on the australian and new zealand indexis. as we know the u.s. market fell during monday's session. we had bond markets closed for columbus day. so not a great deal of direction for investor.

so a.s.x. up by .10 of 1% pretty flat after the gain that we saw during the course of yesterday. you've got some pretty good moves from tellcos. real estate stocks are looking good. e sue w.t.i. pulling back from oil. that is below the four-week average of 114. and we are awaiting the nab business confidence and conditions survey for september as whelm let's have a look at some of the stocks we are watching in the australian session. a. & p raised with a price target of $1.20. it's up from wheres the trading ow, an extra dollar.

we're watching mantra group after that record high yesterday on the bid from the core. another nley and company down grading it to mutual to outperform and they have a target price of $3.95 and it's still trading below that. yvonne and betty. betty: we have japan reopening. south korea has been gone for most of last month. i think south korea the first to react to some of the comment wes heard on north korea from the president. >> yeah, that's so much for south korea react to because we had that saber rattling from the president. but also it had been closed for six consecutive sessions. it needs to catch up to what we saw in china we seen the requirement ratio. there was that huge rally coming through in banking stocks. the kopi is trading high.

if we have a look at what we could see from japan, at the moment you are seeing the chicago futures suggesting a modest gain coming from the any kay index. nikkei trading -- index. they are trading high. with of course that rally that we saw in tech players. we're awaiting august trade data which is going to come through in 20 minutes time. trade balance of $264 million yen. this according to the bloomberg. yvonne, betty. reporter: jules salley joining rom singapore. rime minister shinl zo abe and koike are set to base their taxes on power and nuclear energy. let's go to steven engel. he's here right now.

listening to our guests in australia, intelligence saying the last couple of weeks the party has had to form this party. it's been quite messy. has he done enough to challenge the majority of the l.d.p.? >> well, the latest pole suggests they are slipping in popularity. she came on as a real beacon of hope and change, right? there's been some disappointment within the ranks as well as she has not named a prime minister candidate within the party. and she is not necessarily tanding as the candidate -- reporter: she hasn't named who. >> we had an interview yesterday. she repeatedly say she will not be standing. many people are asking me why isn't she doing this? if she's going to be the harbinger of change? well, it's unlikely that they will win the election, of course. what they could do is chip away at the 2/3 majority of the

l.d.p. and the partner has. they control about 68 seats. so the hope is there's a lonner term play for the party of hope that they can start chipping away. there are differences between the l.d.p. and the party of hope. they differ on how to raise money whether it's a consumption tax that the l.d.p. launched in 2019. they still have another year and a half or so to reap that 2% inflation target to justify this increase. koike says no, you know, history says con surpgs tax leads to recession. she's more in favor of this retained earnings tax on japanese corporates. >> but steve, why won't she put her name forward? wouldn't that propel the party forward even more? >> yes, i mean, again, one of the main reasons why the l.d.p. and shin zo abe called this snap election quickly is so they

could not gain such a national base in such a short time frame. it's very unlikely that the party of hope which is coming out of the ashes of a very splintered opposition. the democratic party had infights so the opposition was in disarray. it's still in a bit of disarray because those who did not join koike's party they joined the c.d.p., the constitutional democratic party. so the opposition is still split. so very unlikely that she would win and she would have to resign as governor of tokyo to run for parliament as well. so there's -- again, as i said probably a long-term play. i want to play a sound bite from her from the interview. let's talk about the key corner -conomics.be they agree that easing policy need to be in place. they're just different on timing. here's what koieke had to say. >> the extraordinary easing in

fiscal packages have brought only a marginal improvement. while i think rapid policy changes are not desirable since that could destabilize the markets, we must think carefully about the exit strategy. reporter: six straight quarters of economic growth. that's what abe can point to. koike is saying not enough is being done on the social side of the equation. reporter: stephen engel, our chief north asia correspondent ahead of the elections. china's foreign exchange reserves posted in eight straight monthly gains in september as the pressure of cash outflows that continues to ease our china correspondent chad mckenzie with more on that. tom, it's another positive, right? ahead of next week's party congress. tom: it is. it's another strong marker the policy-makers can point to.

leading up to the party congress to say we are stabilizing the market. the f.x. reserves topping the estimates coming in increasing from august to september by . out $17 billion u.s. e've got a charter that show what's been going on. btv 96. you the violet colored that represent the esex and the u.s. dollar. there's a bit of a conversion when the u.s. dollar is weak and then you see the tick up in f.x. reserves. that's when they topped the $4 trillion level. then they start to edge off particularly 2016 but they've been grinding higher this year. comfortably about that $3.1 trillion with a bit of change as well. some of the reasons for this strength and the increase in the

f.x. reserves the capital controls have continued to be maintained here in china. the inflows as well. we've seen a pickup from foreign investors as well. we've seen increase market poverty around sentiment for the yuan that has led to the increase in the f.x. reserves. reporter: what does this tell us about the recent fluctuations that we've seen in the chinese currency? it picked up on-shore and off-shore yesterday. it's been an interesting month as you touch on the month of september strengthening in early september and coming off a little bit towards the end of this month. it seems that you may have had some of the big corporates converting those. that may have led into the stronger f.x. reserves. going forward there's a couple of different factors.

bloomberg intelligence says that the real estate sector and any pressure there from these additional curbs that may weigh on other assets. if flip side is if you have this party congress and on the back of the congress you get a stronger leadership and you get reform thenroach to that must give additional strength for it going forward. >> there's a dollar strength that we need to contend with. this hike is pretty much a done deal. how close do you think policymakers are watching the fed at the moment? >> for sure they're looking at what's happening with the fed, with the balance sheet and with the potential continues increase in the rates, of course, and the pressure that you have on the rem m.b. you see the likes of market and lisses saying policymakers aren't going to be sitting back and sipping that pina co lada.

they're going to maintain their focus on fx reserves. it is across crucial firepower to shore up the u.n. so should be continued or renewed threat as a result from what we see from the feds. there stablization always key in china and these f.x. reserves are going to maintain or are going to continue to be in focus for policymakers after this congress is done and dusted. yvonne: thank you, john. we speak to the chairman of the doha bank to talk about consolidation.

>> counting down to asia's first

asia market. the futures are lowered by 40 points. daria ndiaye unanimousics with this snap election just a couple of weeks away. this is "daybreak asia." we'll be talking about this until the day of the elections. let's turn to business in the middle east. doha bank talking about the possibility of raising long-term funding through either a private placement of a private sale. they plan to raise debt after completing a $350 million rights offer earlier this year. joining us now exclusively is ragman.o. of doha bank, i know you stopped here on your way to the meetings in washington. so i want to talk a little bit about the liquidity situation right now for your bank and for the banking system in qatar giving the cutting of ties earlier this summer with your

neighbors, with the neighbors cutting their ties with qatar. last year you were -- you were raising some along-term bells about the liquidity situation. at that moment in the banking system, now after this and the diplomatic standoff, how is the liquidity situation right now? >> it's a lot. qatar issue a ad onded paperers $9 million. the blockade was in place since june. there was a knee-jerk reaction . chile we have a partnership between global institutions is always possible for us to raise the debt and that's what the banks have done and you know, multiple ways in which the qatar financial stability have come to terms. and the central bank use the

reserves in chile for the liquidity in the local market -- >> right. >> and the overall -- the risk reserves as well as the overall financial stability has improved a bit between june to date and it's very much under control. the national stable is very much controlled. >> what's behind the improvement? >> qatar has had huge reserves, twice of the g.d.p., $340 billion plus, $40 billion central bank reserves. plus, the capacity to borrow has made this possible to function. now we are stable and functional. >> can you tell us a little bit more about your plans from the bank to raise at the moment. you said before you were playing something and a lot of qatari banks are doing the same thing. how close are you to some type

of financing plan right now? >> the auto integrated plan is what qatar is coming up with. the bank has been aligning to see the monetarily situation and the liquidity situation and the regular conversations takes place between the financial ministry, central bank and the other banks. we have an integrated plan to make sure that auto liquidity is stable and functional. qatar has beefed up liquid dating some of the opportunities and improve the liquidity and banks have borrowed as well. it's an integrated plan which is working out very well. >> integrated plan? is it raises funds in the open market or through private placement or other bonds or other currency? can you give us clarity? >> all sorts of options are open. we've seen news that qatar is likely to raise $9 billion in debt like last year.

a similar option is available. mean tpwhile the last four months, banks have borrowed from global financial institutions. and it has been very well responded. >> you know, there are reports that you've had to cut staff though amid the standoff. is that true? >> well, it's part of business, isn't it? we have branches in dubai and abu dhabi. >> but owing to what's going on right now? >> absolutely. it's a functional management waiting the operational norms and we have rationalized a bit but it's part of the auto rationalization. >> do you see that continuing? >> no it's business as usual now. our investments are very limited and we have done enough to make sure we're sustainable. >> all right. hold only a second here. we've got some breaking news coming out of japan. current account balance numbers crossing to bloomberg. we are seeing here actually --

actually a rise here in the account balance to 2.3 eight trillion yen. it was for contractions in the current account surplus in the month of august of $2.2 trillion. so this is slightly higher than what we saw in the month of july. we're going to delve into this to see what led to this. we did see a mild rise in the yen which may have deflated some of the export values but we're waiting for trade numbers coming through in the month of august. we're not seeing a whole lot of reaction in dollar yen, betty? betty: we'll continue to monitor that. c.e.o. the doha bank given the circumstances, but there are other reports and four areas businesses like x trading is at a stand still. is that true? >> the trade expansion is nearly

6.6%. 6%. expansion is 4. and it's corporate ganking or retrail banking, it's business as usual. there's no significant increase or decrease in overall terms. betty: what about oil prices? where does oil need to be for you to continue to stay business as usual? >> as you know, qatar has got oil, gas and petroleum. we have revenues, you know, a cross the globe, long-term supply change and we're going to scale up the productivity to 100 million. when it comes to oil, we have budgeted fiscal frameworkers to have 45 per battle. increasing. as are

almost around $15 billion other revenues. so theus likely to continue. -- so that's likely to continue. betty: this time last year you were talking about expansion for your operation looking at india as an opportunity. have you scaled a lot of that back. have you scaled expansion because of this stan-off? >> absolutely not. -- of this standoff? >> absolutely not. betty: we are scaling up. we are relocating some of the branches. bangledesh.ces in so the business model is very much that, it's very much. >> are you looking at new marks? >> india has a possible chance. this year we will be running

full scale operation in the next couple of days. >> thank you so much for joining us. doha bank here in this exclusive interview. you can get a round of -- up of hat story. we are available on mobile and the bloomberg anywhere app. you can customize your settings. this is bloomberg.

>> this is "daybreak asia." >> i'm betty liu here in new york. the latest headlines at the hour. the saad ji energy ministry says aranco will make cuts to help reduce global inventories and balance the market. the state run giant said it will 560 an unprecedented cut of

barrels. the kingdom is showing leadership ahead of a key opec immediate -- meeting at the end of november. >> the third quarter revenue. sales grew 12% with the perfume and cosmetic division surging 17%. paris base eliv mays has been boosted by demanding luxury items as well as efforts to appeal to younger people and sell more products online. louis vuitton opened a china web store back in july. some of ubers shareholders decline to wave their right of first refusal. they have four sources on this. soft bank and others would spend $1 billion to buy new shares in the ride hailer and take secondary stock from other investors at lower price. coming up at "daybreak asia" we've got the markets open.

we've got an update on markets in japan and how that could affect the markets and global macro strategist kay van-peterson.

♪ >> 58 a.m. here in hong kong. we're live from bloomberg's head quarters. van. onne markets return to trade. toyota and cobate steal -- steel in the market after fake quality standards. betty: i'm betty liu here in new york. saudi arabia planning deep supply cuts in the latest attempt to boost the oil price. low compliance by others have forced the kingdom's hands.

and human weakness and its ffect on the market has helped richard thaler win the noble prize for economics. yvonne: i was talking about the elections in japan in just the next couple of weeks. the cooperate governs is shin zo abe or the party of hope going to be honing in on this particularly with what we saw from koike. the implications are quite big given that this is the third largest steel maker in japan. go to my bloomberg terminal here right now. this is the lplc function and shows the suppliers on the one hand, 27 including the likes of into vale and the of 0

customers that they deal with. the carmakers are going to do be in focus. toyota among one of them. toyota saying this morning that they continue to to assess the impact. but calling this issue quite a grave one. >> they're possibly talking about countermeasures saying they used from pars from kobe steel. as you pointed out in your function there, general motors, ford, all the carmakers have used parts from kobe steel. this is a likely spiraling situation on the likes of toshiba or takata there in japan. the stocks aren't going to open limit down, looks that way. let's get to the first word news as we're awaiting kobe steel. let's get to paul allen.

paul? paul: thanks, betty, three more companies are leaving cat lone yeah as separate leaders push ahead with independence. the property company colonial their mix are drifting company from catalonia to adrid. the u.k. has been warned it must make the next move on brexit if it wants to talk trade. the european commission spoke after prime minister teresa may's earlier comments in parliament that it was the e.u.'s turn to act. dush o sides have gun a begun a fifth round of negotiations. disagreements over the divorce bill and the rights of e.u. citizens. >> this is not exactly a ballgame. you know, we will not provide comment on comment but i will

remind you that there is a clear sequences to these talks. and that has been so far no solution found on step one which . the divorce proceedings so the ball is entirely in the u.k. court. paul: the yuan jumps in a month as china reserves rose for an eight month northbound september. the yuan advanced as the world's largest f.x. stockpile climbed by $17 billion to more than $3.1 trillion. it's the longest since 2014 when reserves peaked at $4 trillion before declining through the first part of this year. turkish markets tumbled as divisions deepen between anchora and the u.s. he's accused of involvement in

last year's failed coup the lira fell for a seventh straight day as relations between the two countries hit a new low. global news 24 hours a day powered by 2,700 journalists an analysts in more than 120 countries. i'm paul allen, this is bloomberg. betty: thank you so much. we're watching kobe steel and we're watching the japanese markets as they're reopening again as well as korea. we have more on some of the big movers. julia? julia: south korea opening after a six-day holiday. up by $1.3%. samsung shares rise by 4% really playing catch-up to this rally that we saw amongst most equity markets we had that huge run on the market and had the best week. australia looking good by 1.10%. darta coming through once again.

current account surplus widening in august to $21.1 billion in u.s. dollar terms. this is supported by japan's export industry. we've seen a little bit of flat movement when you see the japanese yen. not too much movement. but kobe steel is one stock that we are watching today. let's have a look at how some of the japanese players are faring today as we await the reopen of kobe steel. not moving yet. but toyota shares are up by about .9 of 1%. toyota has found the kobe steel maker to have falsified data on what is used on hoods and rear doors and peripheral material. and the breach of compliance is a grave issue, they say. watching denzo steel. it is said to be investing $1

billion in a tennessee plant. adding to this story of a lot of manufacturing stores moving into self-driving cars. let's look at south korea stocks. i did mention samsung. but we're watching the automakers. in age investment and securities have said that if the u.s. imposes a tariff through revision, it would have a negative impact on the korean uto industry down by .7 of a%. l.g. has not been moving but it ha as price target of 26,0001. let's look at the markets. it is the i.t. players led by the likes of samsung. we do have taiwan on a holiday. apple supply yers are not going to move. consumer staples and health care stocks looking pretty good. a switch out of energy as they $50 barrel. m that

to y: japan's leaders are base their companies on taxes and nuclear power. although north korea may also feature. our chief north asia correspondent is here right now. interesting comments on president trump. >> true. they're dividing the lines of policy and preference, if you will. of course, we know there's a little bit of difference on monetarily policy. abe-enomics the key has been the monetarily policy at the e.o.j. koike disagree on the exit policy. they disagree how to tax the debt burden and also the social policies that are being proposed and also to pay for abe's big

$18 billion stimulus package. abe wants the consumption tax increase by 2019. by then they should hit that 2% inflation targets all bets are off if they do not. koike wants this retained rporate tax to the tune of 2.2. she wants to tax those retained earnings. so trump is another issue. of course, we had abe go right to washington, d.c. soon after the election right around the inauguration time. they became fairly chummy. talked golf. he gave mr. trump a japanese-made golf club. i believe we have the sound from ms. koike's interview from bloomberg yesterday where she talked about donald trump. >> the extraordinary easing in

fiscal packages have brought only a marginal improvement in the japanese economy and they aren't commence rate to the improvements they need to be made. we must think carefully about the exit strategy. >> well, that obviously was her comment about b.o.j. and the exit strategy. in the producer can tell me if we have that sound on donald trump. we can talk about some of the other issues -- oh, we do have the sound. let's hear what she has to say about donald trump. >> i am not yet sure whether the trump administration is stable. they're extremely dynamic personal changes in the main white house posts. alongside the american people, i want to look carefully to see what kind of administration this will be. >> well, the big question leading up to today is whether she would run actually for a parliamenttary seat in the lower house which is required if she was going to put her name party as the party of hope as the

prime minister. today is the deadline. she repeatedly said in the interview she is not. >> i think most people in tokyo wanted her to stay as governor. but shin zo abe the party of hope is like opening a new restaurant after a food poisoning scandal. it's just messy right now. that's going to be the keyish sure for them in the next two weeks. >> to continually undermine the l.d.p.'s grip on power and that 2/3 majority in the lower house. yvonne: steefpble engel. glad we're able to get the right comment there. or next guest isn't too worried about the japan elections with consensus that it is a done deal for abe. one sign of that is the sign of volatility and dollar yen for monday sitting below 1%. kei van-peterson.

how are you positioned here. it does certainly when you look at how the markets are looking at this, it looks as if they're pricing in no change that abe is going to continue on. how are you positioned ahead of these elections? >> yeah, i mean, it really doesn't go too different from what you said. i guess hard to really add any kind of new color from the implied volatility. normally it's 100 to 80 basis points. the market is not expecting much. it's only a figure up or down. we have seen clients coming in and buying some tail risk hedges. put spreads in the nikkei or dollar yen. we've had stuff like brexit. we have had the snap elections by teresa may -- >> we've had president trump -- >> exactly. exactly. >> you never quite know, right? and i want to pull up a chart here, kay. to show you about how the markets have behaved in japan

with abe there as prime minister. btv 8207. do you think that momentum will continue even if he wins this snap elections? kay: yeah, i mean, absolutely. it's a great question. but there's a lot of other moving parts. we u.s. rates going up, the fed balance sheet starting and there's a big question on the fed chair. but if you look at the interest rate differential between two-year u.s. rate and two year japanese bond. the japanese bond has been lagging. we should be 114, 115. and the reason we may be a bit lower, obviously these north korea on and off jitters that we've been having so far this year.

betty: right. and do you think that's going to continue to give that support to the yen? kay: i think for a while. to ou know, the time is move up on the higher side. with u.s. 10's touching 2040. i thought the u.s. data was quite strong. the risk is very, very much to the upside. i can easily see a scenario where we're in the high teens towards the end of this year as definitely flirting above kind of 120 territory first half of next year. betty: and we heard from koike in this interview talking about b.o.j. poll schism she doesn't want any sudden changes, of course, when it comes to easing butt. you have to start discounting he potential in the b.o.j. governor and the profit first japan inc. do you think this could have an opposite effect for abe-nomics?

do you think that would disrupt the markets? >> you know, let's go through a scenario of let's say abe losing, then you see dollar yen sub .110 and the nikkei selloff massively with the foreign investors kind of let go because everyone would be waiting to see what that means from a b.o.j. policy even how to structurally he would go upset the cattle card. betty: kay van-peterson coming up. china from saxo capital markets. let's talk about the rally that fizzled out when china mashes came up, betty? betty: that's right. we're going to have woodside c.e.o. accuses the australian government of most -- moving the posts. and that interview in about 30 minutes time.

betty: this is "daybreak asia." i'm betty liu. . yvonne: kay is still in singapore for us. we saw this rally, and there are a lot of expectations i guess that things were going to go fireworks after coming back from golden week. we saw a little bit of that but it soon petered out. i want to get your take it on that because the on shore market, how much more uptick could we see? is this a durable rally? >> i really don't know that. it probably continues to melt up on the equity side but on the side of the yuan it's hard to say. i'm not surprised given that we have the fifth congress meet on october 1r5th. they were out last week.

the u.s. wasn't week, given columbus day even though that some markets were open. this is too hard to read from overnight to be honest with you. yvonne: a lot of optimism is based on this targeted triple-a rcut. would you call this kind of a targeted cut for the small and medium businesses to really favor the most out of this or do you thing large cap could have the potential upside as well? kay: i think this is a great point. and this has always been a catch 22 right? where the growth comes from and where the innovation comes from is from the small, medium sized enterprises and a small company can be, a few billion dollars in revenue and in kind of size. but what tends to happen is they're not getting the benefits of looser and easier kind of capital. it's still accruing to the s.o.e.'s which is really the part that the party wants to

reform, streamline as probably also just privatizing in different kind of sections. i think that theme is one that i would expect to see more out of the party congress meeting next week. yvonne: and kay just switching gears now. we're talking about what's going on in the bond mark. bond markets were closed on month. but bill gross talked about the headline of 2.4% is where he sees a line in the sand for the u.s. tenure. we haven't been able to stay on that level. if we do stay on that, what could we see in terms of this equity rally globally? because it might actually disrupt it. kay: like anything. it's less about the level but also the magnitude around the level. so we did touch it on friday. i actually thought we were going to close above it but we came back. for me that level is as good as gone to be honest. i think we will close above that

if we don't even do it this week. you take a step back. you look at -- we just had the strongest isms both manufacturing annon manufacturing in 13 years. and this is prestimulus on the fiscal side, right? we're going to get quite a few fiscal measures even if it's first quarter or first half next year. you have to think of some point, you know the fed whichever fed chair comes in has to think that there is upside risks in rates, right? this is something that's very early now. the markets's not thinking about. so to me we're going to test hose two 64 highs. betty: you've got bill ackman aying it's kevin arkh who do you say? kay: everyone's talking about their book at the end of the day. i personally -- andly talk mine. i would like to see warsh because everyone agrees that the

central banks as a whole are long overdue for an overhaul. they need to modern hiesize how they look. they need to go back in the future as opposed to being married in the mark and where the s pnd p is close on the day. they need to go back to the long horizon of policing in the marks for a long term. betty: speaking of policing, kay, there's been a lot of talk about the alternative asset bitcoin. you've got regulators weighing in. there was an argument that ken rogoff wrote where he talked about bitcoin being in a bubble and it will collapse. we've been hearing so much from different voices on bitcoin. what do you say? >> i mean, i'm a scripto currency. i think they're here to stay. you should do the work. i actually think what's interesting is the first quarter of 2018 we'll be getting futures cboe. oin out of the

there's a wall of institutional money that wants to get in but has been struggling to get in given how early it is. and that's definite something to watch out for, you know, within the next kind of next six months. do the work on the space is what i would urge listeners. >> rogoff is saying, i'm not saying that the technology is going to thrive and continue but the price of the currency is going to collapse. kay: i take the opposite kind of view. i think we're easily at 10,000 before the end of the first quarter and you know, for reference i was predicting last year when 700. we more than tripled this year which we have. i think 1,000,000 is ultraconservative. now does that mean bitcoin lasts in the long run? i don't know. but for now it's still very much on the upside. >> 100,000 in 10 years.

we'll hold you to that. kay van-peterson joining us from singapore. we would like to take you to our tv function. you can watch us live but also see the previous interviewses, and the bloomberg functions are all on the right side of the screen that we're scrolling down right now. of course, this is for bloomberg subscribers only. this is "bloomberg."

yvonne: this is "daybreak asia." betty: indonesia's investigating whether any citizens linked to the transfer of $1.4 billion of standard charter client assets complied with tax finance requirements. the transfer of assets from the channel island to singapore involved 81 private citizens and

expects the inquire to be completed by the end of the month. australia will defend a class action lawsuit over alleged money laundering. it violated disclosure bligations to inform their customers about their problems. hey allege more than 53,000 of money laundering and terrorist financing laws. yvonne: we're told three of the largest stakeholders want progress in the foreseeable future if they're continue to back him. he said should they not be able to deliver an external candidate may be the best option to replace him. >> some of the major shareholders including benchmark have declined their weight of first refusal of their tender

offer. the f.t. sites four sources. others would spend $1 billion and take secondary stock from secondary investors at a lower price.

yvonne: we are still looking for the open of kobe steel. by thee set to fall daily limit after revealing that they did falsify data when it comes to their copper parts. we have heard from customers like to point it is saying they are looking at counter starts at the moment, calling this a great issue. it looks like it could actually tumble. 60 to one at the moment. it has affected supply to

almost 200 companies, many of them major automakers. you have everyone from u.s. automakers, japan coming european. they have been affected by this. toyota was one of the first to say that they had found that it had been used in hundreds of your doors, and they will take countermeasures. let's get to the first word news with paul allen. paul: japan's political leaders are taking key policy differences two weeks away from the snap election. are basing their campaigns off of taxes and nuclear power. chancellor social -- merkel is looking at foreign options for a coalition government next week.

if recent history is any guide, germany will be lucky to have its next government led by the end of the year. google is said to have found russianf ad funding advertisements. another also examining $53,000 in russian spending. google had originally said they electionevidence about related ads purchased on facebook. america's allies are trying to minimize the potential damage. european diplomats are lobbying hard to ensure that the decision does not destroy the 2015 accord. meeting their obligations. president trump called it the worst deal ever made.

chicago university professor says -- has won the prize for human economics. he was honored for showing how human weaknesses can affect markets. he has built a bridge between the economic and psychological analysis of decision-making. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. wall street not doing much for asia. we are seeing things in the green for the regional benchmark of 1/5 of 1%. kospi coming back from the holiday on a strong note. >> south korea looking very good. lasts closed for the

session. we are seeing this huge surge coming through in samsung shares and demand in trading value. up by 1.5%. kospi australia's market only up 1/10 of 1%. we did just have the business conditions and confidence numbers coming through for september. 14 for the conditions. that is unchanged. confidence rising to a level of seven, up from five. a little bit of buying coming through in the aussie dollar. we were expecting more from the nikkei today. the nikkei only up by 1/10 of 1%. kospithe kopspi -- leaving the game. game.ding the

we have a look at what is moving. i mentioned that big rally coming through in samsung. stock raisingi the index. you see quite a bit of the export stocks in japan coming under pressure. i do want to switch it over and have a look at kobe steel. let's bring up that chart as we wait for this to happen. it is the big story of the day. only still saying they have also fired documents on aluminum and copper parts. toyota saying this is a great issue. toyota shares up i 1.2%. two -- 1.2%.by case where we do

not actually see it open and till the close. denso steel is a little bit flatbed. flat there. betty: clearly washing for that. thank you for that. let's talk about kobe steel and the client in the spotlight. as depend returns to trade and that company admitted to falsifying the data, toyota and mitsubishi sing they have used the product in question -- saying they have used the product in question. tom, what are they talking about when they said they discovered falsified information related to their product? kobe steel is the

third-largest japanese steelmaker and they came out with a statement on sunday saying it. i data related to the strength -- it falsified data related to the strength and density. applied -- said this to 200ts had been sold companies in japan. it did not specify what companies. that has included the big automakers and admission heavy industries. today we are seeing the car companies, like toyota this morning said it had parts that were affected. mitsubishi has done the same. assess theng to fallout from this. companies comed

after revealing this data, sell offers of 60 to one. how unusual is it that by now it is not treated. you see the 60 to one ratio here. it is not unusual in this situation. it happens reasonably often in the japanese market. what can happen is the company will not trade all day and will fail -- fall by the daily limit. it is interesting to look at the peripheral market reaction to the situation. index has 33 industry groups. is that of the company they are out and said affected, toyota's shares are proving resilient. slightshi is posing a decline. yvonne: has kobe steel been able

to get on top of this crisis and manage it in the right way? have we heard anything yet on terms of the safety issues? have there been any accidents that that have led -- that have led to problems for consumers? released their statement on sunday, they say they have not found any and those yet where the products are call -- causing safety issues. we are really watching how the various customers are responding to this. we have toyota. it said they used the materials in peripheral areas. it is trying to assess what vehicles were affected. to assess what impact this may have on the vehicles. mitsubishi came out and said they aluminum parts are used in

its regional products. it is assessing the situation. we are waiting to see the fallout. stages, watching for potential ramifications for the carmakers in particular. we have some lines coming through on bloomberg from the bank of japan governor speaking at a branch manager meeting. that the of surprise boj will expand the monetary base until they reset 2% inflation targets. they also say japan's financial system is stable. they expect inflation to pick up the pace towards the 2% goal. the economy is expanding moderately. not a lot of fireworks there in terms of earthshaking lines going through. that is usually the case. it's talk more about this

implication about the snap election. it has captured much attention. the yen. scenarios for .et's bring in chris he joins us live from tokyo. what does it feel like right now? of hope is gaining some ground. what do they say about the yen likely direction? >> you look at the options pricing in the foreign exchange market. you look at what current currency strategists are looking at. forrnor koike would be bad monetary stimulus and good for the yen. if you look at her economics, her emphasis is not on we must achieve 2% inflation as soon as

possible. do whatever it takes to achieve 2% inflation. her emphasis is on making no sudden changes in bank of japan policy but focus on a smooth exit from the current policy stance. a very different approach than what we have seen from prime minister abe and governor kuroda , who was his hand-picked choice to pick -- run the bank of japan. does well inoike the election, the implications would be that we will see a quicker phasing out of a good japan stimulus. normaler return to more yields in the japanese bond market. that would be good for the yen. yvonne: minister the scenarios

right now. it is unlikely the party of hope will find any majority in the snap election. if they lose major ground, what happens to the dollar-yen? strategist are essentially game planning different scenarios based on election results. it is unlikely that governor koike could assemble some kind of coalition that would allow her party to choose the next prime minister. polling at the election shows that the plurality of voters have not made up their mind. exactlye doubts about where prime minister abe's coalition will come in after the election. essentially,n is, that if abe wins, he keeps his majority.

a be the yen falls a little bit. up to about 114. if you loses the two thirds ,ajority but keeps a majority maybe there is not so much impact. if you loses the majority, you would expect to see a bigger reaction. it would be passed the strong point for the year for the yen. another strategist sees it going through 100. uchiha-san says beware of the does not doif abe well but stays in power. he is likely to unleash more stimulus and the end would go back down. betty: what if there is a shock win?

happens? the yenould likely see rise very sharply, at least in the initial response. that is not the expected results, but we have had a lot of unexpected results from elections. betty: thank you so much. we are going to be live in tokyo for japan's election. we will have in-depth analysis and commentary from global market watchers. friday,l start on october 20. you are headed over there to cover that. yvonne: i am. for shinzo abe.

we are seeing some momentum being lost in the party of hope in the last couple of days. coming up, we will talk about oil. are the markets shrugging off the news? why they are skeptical about the outlook for crude, next. this is bloomberg. ♪

yvonne: this is "daybreak: asia." check of how the commodities are trading as we have seen gold rising on the back of these further geopolitical tensions. just about flat in trade right now. copper moving ahead as well as

crude oil prices of 1/10 of 1%. we have been watching how hurricane nate is affecting prices in the u.s. let's bring in energy reporter. to be ignoring the comments about the possibility of prolonging the supply curbs. what is behind all the skepticism? >> it is probably not skepticism. it is caution. the market has become accustomed to the rhetoric coming out of opec. not really offer anything new. they are talking about extraordinary measures. the market has known about the possible extension of the supply which ends in march of next year since early last month. as atle more tangible going to that meeting at the end of the -- end of november.

betty: their announcement for a cut in november also did not have much impact at all. when we look at saudi arabia, it is one of the leaders of the cut deal. the implication that they will been they have producer that has cut and supplied the market and kept prices in check. that was before we had the u.s. come into play. thank you. we are staying on commodities now. peter coleman said it is not acceptable for the australian government to change the rules on gas supply. usand -- they spoke to exclusively.

>> we did start the plan and then we took it down. we cleaned out some of the commissioning strainers, the fine mesh that we put in there to catch all the things that should not be there. we just did that. we expect it to come up really quickly. this technology is a well-known technology, similar to the east coast plans. inside book.a takingeople are earnings. we have some aspirations, but we have guided market to a point where we know we can deliver. there is some upside for us that we still have to deliver on that. >> do think it is ok that the australian government says that gas should be a national

interest and maybe should float first? what i do not think is ok is changing the rules after you have invested. what we are doing is encouraging governments at all levels, not just at the federal level. view andry long-term look at it as a policy platform can invest upon. it is not acceptable to make a large investments and start them up getting into an energy crisis areas that has been caused by many factors. they are pulling out at the moment. the producers on the east coast are doing their best to help us at the moment. at the end of the day, you have the social license to operate. it says you have to contribute

to the community. the numbers want this is shutting down -- none of us want is this is shutting down. -- businesses shutting down. that was peter coleman speaking exclusively to bloomberg. get a roundup of that story. many more that you need to get your day going. bloomberg subscribers go to tv on their terminals. it is also available on mobile. you can customize your settings so you only get the news on the assets and industries that you care about. this is bloomberg. ♪

yvonne: this is "daybreak: asia." we have seen the japanese markets open again. we are keeping our eye on the kobe steel. the company admitted over the weekend that they falsified documents. that is looking to have some pretty big repercussions in the global markets and among global automakers.s like but have a look at the shares that are pretty much irrelevant at this point. the shares traded a week before this news surfaced, up about 5%

over the past week. a limit down with kobe steel. usually you have to wait until the market closes before you see the plunge. toyota ande likes of mitsubishi speaking in the last hour, talking about the potential fallout from all of this. we are seeing stocks from the carmakers taking this in stride so far. toyota saying this is a very grave issue. there are confirming the impact on their toyota and lexus vehicles and considering countermeasures. take a look at to will get a -- toyota. they are currently investigating the parts in question. a lot hanging on this potential story. rish is joining us next. rishaad: we are looking at

shipping. 19% plus of everything that we consume. a big recovery going on. in the see that container market. the thing about that, it is showing -- is there a synchronized recovery? john will be joining in about an hour or hour and a half. ,e are talking to our very own talking about the company's future. looking forward to that. that is it for "daybreak: asia." rish andcontinues with sophie. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

in hong kong and over in singapore, it is 9:00 monday night on the eastern seaboard of the united states. sophie: and i am sophie. this is "bloomberg markets: asia ." ♪ rishaad: kobe steel under serious pressure after admitting they falsified products. mixed: the benchmark is in korea and japan.