yvonne: 7:00 a.m. in hong kong were we are live from bloomberg's asian headquarters. i am yvonne man, welcome to "daybreak asia." stocks set to extend in asia after wall street fell the most in seven weeks. uneven earnings keeping investors on edge. the race to the fed loses a prominent player. president trump gary cohn has no chance. out.: he is i am betty liu in new york where it is just after 7:00 p.m. wednesday. thursday will be a big day for tech. silicon valley heady -- heavy hitters reporting.

whether they can deliver that momentum still. the atmosphere is electric at the tokyo motor show as they present their vision of the future. ♪ betty: speaking about electric, breaking news on south korea's preliminary third-quarter numbers. ier on south korean gdp, up 1.4%, quarter on quarter. much bigger than economists had expected at 0.9%. more than double what we saw in the second quarter. ofr on year, a healthy rise 3.6%. that is also above the estimate of our rise or expansion of 3%. well above what we saw in the prior quarter. helped likely by the continued export of electronic parts, particularly for smartphones.

it is interesting, the markets have continued to rise. maybe that is adding to consumer sentiment in south korea, despite geopolitical tensions with north korea. that is the risk, as always, with south korea. yvonne: have not seen the numbers yet, but 3.6% is a three-year high for south korea. we have a chart that says it all. is the bok going to be the first asian bank to raise rates? you see it with the bond market so far. they cut rates 1.25% the past three meetings. look at the bond yield in white. in the bottom panel, a spread of the two-year yield against the policy rate. in more thanidest six years. the governor says the economy is ripe for a hike, sooner than we think.

or sooner than later. we will take a look at how that will react when korea opens in an hour. we did see the pullback on wall street overnight. seems to be falling through in the new zealand session. we see that ends at x50 down. we did see trading numbers in the last hour, the deficit shrinking to a two-year low. the kiwi continuing that slide. sydni just opening up, the asx 200 down 0.2%. 702 against the7 dollar. japan, we did see a break in the momentum. the nikkei snapping up its record streak yesterday. futures pointing to a little upside, when it comes to stocks. throughstrength coming the dollar-yen. could be weighing on stocks today.

following what we saw in the u.s. for you guys. betty: let's take a deeper you -- look into how the u.s. traded. what is behind the fall? >> you do have to blame what happened here in the united states with what is happening in asia. theng a look at the red, dow down 112. anderday it was down 168 change. pulling away from that high, 0.4%. 0.5% for the s&p 500. let's head into the imap function. red even deeper as we go. telecommute and -- telecommunications down 0.66%. consumer discretionary down 0.4%. i talk about these three. you will see why these were also falling lower. if yousome major movers,

want to go ahead and flip the board we can see what those are. boeing down 3% in terms of industrials. sands down. coca-cola down 0.33%. you would think these miss their earnings estimates. every single one beat their estimate for sales as well as profit. you can see we have to go deeper into that. boeing sold a record number of planes in the third quarter. but they took a hit of $330 million for an air force plane that has higher cost than expected. freeport-mcmoran, we see some weight. a bigger going to get share than them by 2020. las vegas sands up. even though we know what is happening with macau. coca-cola, bottling revenue falling 15%. that is why they took the hit

over there. big markethe four movers. let's go back into the bloomberg terminal. we are taking a look at about 1/3 of stocks reporting, looking ahead to tomorrow, seeing the biggest day for q3 earnings, with tech stocks in focus. yvonne: thank you. earnings for the third quarter crossing the bloomberg right now. looks like it was a slight beat in terms of net income, coming 6 billion singapore dollars. a 5% beat above the estimate. the ceo speaking, talking about business activities, investments have been picking up. 997erest coming in a $ million. also seeing caution when it

comes to the oil and gas industry. the ceo saying there still watchful of the stress caused on the. we continue to watch those lines with ocbc. we will see have a trade when singapore opens. let's get first word news. u.s. commerce secretary in washington and beijing will probably announce deals with president trump next month. more time is needed to hammer out agreements on intellectual property rights in the forest handover of technology. he told the economic club of new york china talks about free trade, but in fact, has highly protectionist behavior. the singapore prime minister says the united states has lost credibility in asia when it abandoned the transpacific partnership. the trade deal involving 12 nations was the biggest in history. but president trump withdrew

from it days after taking office. he said countries will remember that in future negotiations and wonder how serious the u.s. is. dividends were there, the strategic dividends go beyond the participants and their tpp. it is a way to strengthen the considerable rationale that exists for america to be focused and engaged in the region. but it is not to be. it is not to be, you lost the upside, we will move on. david. brexit secretary davis has been forced to backtrack after suggesting british lawmakers may not vote on the final terms of the divorce deal. hours after raising the possibility in a parliamentary hearing, his office said the garlic -- the government wants to draft in time for lawmakers to vote before 2019. the negotiations were so tight,

there may not be time for debate. catalan parties in the spanish parliament are challenging the constitutional clause that allows the government to take direct control. the government may lose some support, the socialist party worried about plans to crush the separatist movement. leaders say they may drop their independence drive if madrid offers solutions to spain's biggest crisis in decades. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. ♪ trump hasesident still not decided will be the next fed chair. but he is started to narrow down a short list on who he will nominate for the top role. let's get the latest from kathleen hays in new york. bloomberg news getting another scoop from the white house this time. looks like gary cohn is out? kathleen: it is interesting how

the fortunes of the potential who is going to be the next fed chair have risen and fallen. gary cohn, former president of goldman sachs, brought in by donald trump to be the head of the national economic council, quite a big role in tax reform, he is out. white house officials telling bloomberg trump has nixed him, he does not have a shot. he said nice things, wants to on the. cohen -- cohn economic council. but they had doubted his ability to lead the fed. white house officials also telling bloomberg there is no decision yet. let's also point out gary cohn spoke out against the violence in charlottesville, how the president responded. a lot of people think that is what some can. who is left on the list? he is on theowell, board of governors now. we have john taylor from stanford university.

and of course, janet yellen herself. kevin warsh, i doubt for some. in part says he has a long running feud with someone appointed by trump as the fed board governor. has been lobbying against kevin warsh. steve mnuchin has been listening, because he is not on side, he favors jay powell. let's look at g #btv 3203. a bettingill see, website. red line is powell. janet yellen in the yellow line, moore strength. -- more strength. kevin warsh not convincing anybody. said john taylor is

far and away the strongest candidate. there is no way he would take the job is number two, he would not take the vice chair of -- fed. betty: he does not want to be the wing man? [laughter] kathleen: monetary wing man -- wingman. betty: -- thing going have a on with the markets, we like the markets. he give another interview this week to fox business news and here is what he said when asked about re-nominating janet yellen. you would like to make your own mark, which is one of the things he -- she has against her. that i think she is terrific, we had a great talk. we are doing well, if you look at the markets. while janet yellen has been on

the fed, stocks have returned 55%, unemployment dropped from 6.6% to 4.2%. if you look at trump's tweets, let's look at the one from october 17. when the dow surpasses 23,000, wow. stocks have continued to rise. that is one thing people are saying that she has in her favor. one of the biggest problems is to the extent donald trump wants to his base, she is a democrat, and that makes it much more likely to choose a republican. and the other three left in the race are republicans. betty: maybe it is more important the stock markets rise and party affiliation? who knows. not think anybody has ever seen this question of who will be the next fed chair play out like this. it is just amazing. betty: a lot of unprecedented

things to see in washington. hays, our kathleen global economics and policy editor. we have a big guest weighing in on the fed as we await president trump's decision. joining us tomorrow for an exclusive interview on daybreak australia at 6:10 a.m. in hong kong, 6:10 p.m. if you're watching in new york. you do not want to miss that interview with charles plosser. we will be live at the tokyo motor show where electric cars are this year's big thing. we will talk about the scandals eroding trust to the made in japan brand. this hour,er kapstream capital talks about positioning itself in the bond market ahead of changes the fed and the upcoming rate decision in europe. this is bloomberg. ♪

yvonne: this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty lou in new york. 10 year treasury yields hitting the highest level since march. they say the moment of truth has arrived, with yields closing above 2.4%. joining us from sydney, a portfolio manager, head of credit at kapstream capital, which manages more than $10 billion. i want to pull up a chart that gun version of the red line. it isdlach's g #btv 508. i guess it is the yellow line. he says, get the obituaries out, it is time to write. it looks like time to write the obituary for the decade-long bull market.

you think we are finally at that point? it is an interesting one. the reforms followed side of things. we saw back up 80 basis points. i think you need to good things, a couple good inflation trends. but you also need trump to deliver on some of the reforms he has promised. obviously, tax reform and fiscal. if he can do that, it will come back up. it is still kind of around that range. betty: is there anything that is different with the backup in yields that is different from what we have seen in the past? we have tried over the past several years, or the bond markets have tried to and this bull market.

every time they try it has failed. is there anything different this time around with a rally in yields? raymond: i think the main difference now is the reform that trump will tackle, the tax reform. it is important for republican policy. hopefully they will be more united around the. -- that. with tax reform in the senate they can only lose two votes. they are pretty confident on it. if they get tax cuts, that will be pro-economy and you will see u.s. yields continue to back up. another thing, what is happening with european on bunds. that could be a driver of global yield as well. a couple things we should watch out for the next couple months. yvonne: i will get to the ecb in a moment. what about the more hawkish fed chairs potentially we are seeing? what exactly is the bond market pricing in, or who are they

pricing in at the moment? we get hints and headlines every day. is that enough for bond traders like you to set a gauge? raymond: it is a difficult one. you would probably say the market is slightly pressing john howard because he is more of a hawk. saying,ollow what he is he wants the stock market to continue to rally. if he wants to do that, he wants to keep rates on the lowest sight of thing. he mentioned u.s. stocks adding 5 trillion of equity since his election. that is an upset of the deficit of $20 trillion. even if john taylor is more of a hawk, he will not come in as an aggressive hiker. he will have a less accommodative policy to increase inflation. as big of anot be hawk as some are suggesting. talking about the esp, i will pull up a chart, g #btv 5134.

it shows the central bank diversion. obviously, the ecb is up there, sandwiched up there with the fed and where the boj stands right now. what are you expecting from this meeting? they think mario draghi will be extending this program but potentially having the amount of monthly bond purchases. --we have to look at how the is at the pace or the length of the program that will be driving market? things tohere are two watch, one is short-term rates, the other is the balance sheet. short-term rates will not move. draghi said he will not lifted until he is stop the balance sheet growth. the markets are expecting a tapering from 60 to 40. even if they do reduce monthly

purchases, it will not start right away. it will happen the first of january. that gives the market time to price that information in. it will allow us another nine months, into 2018. that means you will add another 300 going into the balance sheet of 2.1 trillion. the balance sheet will continue to grow at a slower rate to reflect fundamentals. betty: slower we have seen with the fed when they have been taking out stimulus. anythingof the fed, the ecb thinks a mario draghi has learned that he will not do with the ecb? raymond: one thing he wants to do is communicate well, i think he has done that. if you look at the balance sheet reduction sheet program, he communicated a gradual and slow processing you do not get the taper tantrum we saw in 2013. draghi hinted at doing tapering in august this year. he will mention it more in this meeting.

it will be a gradual approach. you do want to see bonds pickup intensive yields. you want to do that in a slow and gradual way. lee, kapstream capital portfolio manager, joining us from sydney. one feature to bring to your attention is our interactive dayb function. you can watch us live, see previous interviews, dive into securities our bloomberg functions we talk about. it is for bloomberg subscribers only. check it out at tv . betty: a reminder on bloomberg flyers."rs -- "high indonesia's first billion-dollar starter. ♪ >> i think we got very lucky with taking the name. go works perfectly with every other service.

food leads to logistics and now payments. >> [indiscernible] >> our master vision is to eliminate the need for a wallet itself. ♪

betty: this is "daybreak asia, i am betty lou in new york. "yvonne: i am yvonne man in hong kong. uber sued by three latina engineers who claimed it pays minorities and women of color less than men, whites, and asians. twitter and microsoft are both fighting to those who accuse them of hindering the advancement of female workers. google is accused of paying women less than men. betty: las vegas sands aims to

capitalize on a recovery in macau by spending more than $1 billion renovating properties there, including putting the london-themed resort. it will be linked to the most recognizable landmarks. sands invested $13 billion in macau, the first u.s. operator to arrive since 2002. yvonne: kobe steel rose strongly. banks to offer funds despite the fake data scandal? they work with 6000 firms all across the nation. are used in planes, trains, and automobiles. leading the applause for india to inject more than $30 billion into the bank. the agencies say it will strengthen risk buffers and report a wider financial system. bank surged.ed --

the prime minister wrote -- minister hopes to improve lending at a 20 year low. yvonne: i had, the tokyo motor show.

yvonne: 7:30 a.m. thursday in hong kong. 30 minutes away from asia's first major market open. outside, beautiful fall morning. betty: looks beautiful from here. 7:30 p.m. wednesday in new york. markets closed considerably down. a big selloff today. not a lot of risk on at all in the markets. awaiting tech earnings for a change in sentiment. i am betty lou in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." >> brazilian resident michel

temer has secured enough votes in a lower house to avoid being tried for corruption. tot paves the way for him keep power until his term ends in december of next year. the voting makes it mathematically impossible for his critics to reach the 2/3 majority needed to put him on trial in force and out. temer survived two previous lower house votes. singapore bank warning about risk to the global economy. despite the optimism that has brought stocks to new highs. problems that were before the financial crisis have not yet been resolved. >> think the markets have been amazingly resilient. that has been part of the response that has been manifesting. i do think those will be

underestimated. excessive exuberance is cause for concern. rose 13% as growth in domestic banking operations and lower bad debts outweighed restructuring costs. to $5.3fits climbed billion with charges falling more than a third. shane elliott has been selling the bank overseas to focus on more profitable domestic operations. much of thailand will come to a halt later on thursday with the funeral of the late king. he will be cremated as part of a five day ceremony, governed by strict protocols for how mourners and the media behave. they have been gathering in bangkok, dressed in black. they are permitted to prostrate themselves in silence, but are prohibited from yelling or taking selfies.

ofs domino died at the age 89. he popularized the music of new orleans and sold more records than any of his peers, except elvis. his singles reached the top 43 dozen times since 1952 -- between 1952 in 1963. he ended up with two dozen gold records and sold more than 65 million records. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. ♪ betty: all these legends passing away. breaking news on the memory chip maker coming in for their third-quarter operating profit. estimate, 3.7 4 4 trillionon -- 3.7

won. around 3ate was trillion. a surprise given the memory chip boom we have seen. samsungndications with electronics a few weeks ago and their preliminary results. makercond largest ram with a miss on profit. yvonne: we will be getting a breakdown of samsung earnings pretty soon. we will see a breakdown for semiconductors. this could be a good indication how that looks for samsung. let's look at how we are setting up for market opens in tokyo and seoul. we have earnings to go through in korea. but gdp should be good for investors. sophie: pulling up the futures board to see how contacts in seoul are setting up. they are pointing lower given the jitters we saw overnight on wall street.

we will be gauging reaction on the latest gdp numbers, as well hynix.earnings of sk a bit of a mixed picture when it comes to earnings so far. the big theme when it comes to the gdp data is what it means for the bank of korea, whether policy tightening might be in the offering. given the fastest pace of growth since 2010, that is likely to boost expectations of a rate hike coming in november. you have goldman and nomura making those calls. 007, thisp g #btv 2 shows you the two year yield spread. since 2011.dest they expected to be the first asian bank to raise rates, given this backdrop. they have not telegraph to their concerns around household debt,

unemployment. yvonne: a bit of a mixed picture when it comes to -- you have good economic data, but then geopolitical tensions with the north. sophie: yet investors are remaining sanguine regarding the picture for south korea. we take a look at the earnings project and for the kospi. want to show you what is going on here. you still have earnings growth projected at 65%. you can see this in the column right here. looking at 64.5%. this beats what you are seeing for them msci asx index. isant to take a look at what going on in this market, pulling up g #btv 1203. we can see there is a record inversion of the yield curve. this is the 30 year yield

continuing to stick below the 10 year rate. 3-dcan visualize that in with g #btv 1279. eardog here -- dog signaling that in version. we are going to see if the korean authorities wrap up the issue of a longer 10 year when they announce their debt for november today. betty: thank you so much for explaining that. moving from korea to japan, play at a cutting investment in its mexico plan by 30%, reducing its production target by half. this after announcing a joint venture with mazda to build a $1.6 million plant from the u.s. perhaps pressure from donald trump? they told us about that investment in the plan for electric vehicles. >> we are a worldwide carmaker, we provide the right car,

everywhere in the world. we know we need a charging infrastructure for the battery. if you want to make sure you can survive [indiscernible] we decided to build a new company and establish a new , with alsoh mazda battery technology. we have a lot of experience through our hybrid technology, an electric car with hybrid technology. toyota announced it has decided to scale back its monetary commitment to the mexico plant by about 30% from the initial $1 billion pledged. i know toyota for a long time kept its initial commitment the same.

this must be a difficult decision. please explain why you took this step. >> when we decided the alliance with mazda we moved together a new plant in the u.s. we had this commitment in to adjust ourided strategy to make sure the new plant in mexico will deadlock with california, texas, and provide more structure to the american market, which is needed by the american customer. based on that we decided to construct in mexico. that will be step one. investment will move to several hundred million dollars. it does not mean we do not respect our commitment to the future. it demonstrates efficiency, the way we can succeed with production, it will be by the end of 2019.

we can come back to some initial investment. forapan's reputation quality manufacturing has recently been tainted by kobe steel manufacturing. what needs to be done to restore trust in the made in japan brand? >> [indiscernible] safety and peace of mind are at issue. conditions.y strong that was the toyota executive vice president speaking from the tokyo motor show. let's go live in talk with the auto and it -- analyst. a lot of shiny models behind you.

that, we want to to continue what we were talking about in our conversation with toyota about the scandals we have seen that have rocked the industry. what are some of the conversations you are having with people on the ground about this global crisis? are the carmakers concerned? so. think this is one of the biggest changes to global automakers. we will have a completely different type of department. there will be a lot of new technology [indiscernible] we are going to see a huge difference in this industry, going forward. yvonne: the talking bit about the scandals, we were hearing from toyota executives that there needs to be more focus on

quality in japan, that this could hurt japan inc, overall. is this the latest sign, these kobe steel scandals, that japan cannot keep up with foreign rivals right now? >> i do not think so. it is true conditions are fierce, a lot of people are jumping into this industry. a lot of japanese companies face a tough time in competing against not just germans and americans, but the new companies like google and amazon. and new players from china and other developing countries. but it is a different story from what we have seen from kobe steel. i do not think [indiscernible]

some of the companies are getting used to what they have been doing, with compliance issues. those companies have to develop in the future. yvonne: how does japan deal with the rising threat of china and their position when it comes to the market? china has their made in china initiative. they have strict environmental controls, a very ambitious timetable to reduce and eventually cut down production when it comes to fossil fuel-powered vehicles. can japan still remain competitive? and how? it really depends which companies we are talking about. honda, majorn and groups. there are many other smaller carmakers that are dependent on

technology. not everything can be covered by one company at this point. companies arenese developing all those new technologies. they can continue to sell and produce in china. that is the biggest car market in the world. at the same time, there seems to on thet of restrictions environmental front in the united states and europe and even india and thailand. there is no choice. the japanese companies have to continue to develop a number of different types to compete against those rivals. betty: every automaker now is so technology, and they are. -- and ai.

it is almost a cliche these days. they're coming out with a new models, more powerful than the next. what is missing in the conversation about electric vehicles? every country, every automaker wants to be the leader in electric vehicles. when it comes to electric vehicles, we have to numbers.ur have 40% more ev's. that means the country has to have 40% more electricity. how will they generated? ev's, they have to do something about their energy policy as a whole. on 75%ly depends

[indiscernible] weone hand they will say, have to have 30% more ev's. on the other hand, they continue borrowing fuel. that does not lead to any co2 problems. focus onanies tend to side.ter -- pure ev betty: they cannot be done in isolation. they do come on analyst from the tokyo motor show. earnings season hits silicon valley. starting tomorrow, we look ahead to the big names reporting. what to expect from amazon, google. this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man in hong kong. big tex hitters release earnings later. ramy inocencio is up a wall with the chart you need to know. >> first off, g #btv 2003. this is a great map of where amazon's factories are in asia and around the world. a lot of thent out factories are here in this country. dots, but at five least 41 fulfillment centers. this could be a possible weight as we look ahead to amazon's earnings coming out october 26 on wall street. jeff bezos has put millions of dollars and the country. the question is whether that will reap benefits. revenue from the international space versus the north america when you look at

numbers over the past five years. meantime, let's head over to alphabet, the parent company of google. thewhite bar is the tac, cost for traffic acquisition. over the past half year we can see this has risen by 50% year on year. the big question, will these costs continue to grow and will growthwth try to -- ad try to balance it out? heading over to twitter, the big question is monthly active users. that is in yellow. quarters thosewo have not changed at all. the share price has definitely taken a plunge ever since december 2014. at about the $17 range. quarters when it came out stagnant, the price fell by 14%.

we will be watching the mau's tomorrow. something are doing with twitter, bloomberg has a breaking news network for twitter. those are the three bloomberg chart you need to know. betty: thank you so much. let's dig deeper into the upcoming tech earnings with our guest, who gathers estimates from hedge funds. let's start with twitter, ramy just talked about it. despite our partnership with twitter, does it seem pretty dead to you? >> totally dead in the water. most active user growth will be the metric everybody looks for. we know they will come above the sell side in terms of eps numbers. theyhe revenue numbers, are looking at about 5% growth. that is not going to like this thing on fire. 10% to 15% toe

really get people interested in this. they can really bend that curve. the numbers are not large enough to add up to a better multiple for twitter. betty: it is not like people are not using it. leigh: i am a massive user of twitter, i love the product. i just do not love the company. betty: is the future that bleak for them? what do you think jack dorsey and company can do to revive it? there are a lot of people who counted out tech companies and they have come back. leigh: absolutely true, i think jack should focus on square, that thing is on fire, doing well. as mark zuckerberg said, twitter is a clown car that crashed into a gold mine. they are fiddling at the edges. but they do not want to do anything with the core product or understand their core users. they are trying to bring people in who are not their core users, when they could simply focus on

them. when it comes to the stock, the numbers are not in the right direction. it does not seem they are trying enough. yvonne: what about the other tech names -- amazon, facebook, microsoft? we see the huge run in these f.a.n.g. stocks. do you think these earnings we are expecting will justify what we see in the stock prices right now? leigh: it should. we do not think it is over. historically, a couple different variables have stocks showing momentum as these have. they beat earnings expectations, you see upward revisions to future quarter estimates, and high revenue growth. in all these companies, facebook, amazon, google, they have them. you do not see the multiples increase too much. facebook multiples come down as fake continue to put up numbers. with regards to amazon it will be a weird quarter because they have invested so heavily in the

logistics network that has underpinned the whole whole foods acquisition. it will be to the floor, near zero. it will be interesting to see whether investors give them the benefit of the doubt. the interesting thing is, while amazon is the revenue growth story for sure, long-term, the correlation between beating and missing estimate i eps expectations in the 90 day stock performance is pretty high. a lot of people say eps does not matter. it does in the short-term. in the long-term it does not matter for anything. yvonne: it is not consistent with what we have seen the past. david einhorn made a lot of headlines this week. amazon, he shorts the stock. he says the retail giant has not put forth many details about the whole foods acquisition.

tois leading details away the market and leaving that to the imagination of investors. is that fair? atgh: i think when you look the upward revision to future expectation, eps revenue, and key performance indicators, the market is expecting them to make good on this acquisition. and they have not given a lot of the underlying pieces for why they have done it. i do not think he needs to. with thisgone away for years. i do not see whether market would slash his multiple. we are seeing upward revisions to revenue into the print, which is a good sign. i do not see why they slashed the multiple. betty: let's look at alphabet, which is google. what should we watch? there is revenue per click that continues to go down, that is a long-standing story for google. what is a big thing to watch?

leigh: this one is about cost until they can show the other best category is paying off. google is a money tree, basically. the money just falls out of the trade. unless they screw that up terribly. the number of clicks continues to go up significantly. we see a rise in that number on mizedustomized -- esti platform. can they get a handle on general costs? are they just throwing money at dead things? it will be interesting to hear from the mobility category. i think people want to hear about ar, because that is the next thing on mobile. there is the question of os and how they monetize that. betty: do they have time? now they are focused on the acquisition cost and cost of other ventures they have. but do they have time, because

their core machine is throwing out money? leigh: i think they have plenty of time. it is hard to see who usurps them, except somebody in asia. you see what alibaba is doing, what is going on in baidu, tencent. these companies are moving away faster than google, facebook. it is scary how fast they are moving over there. i do think google has time. if the market did not think they had time, they would be slashing the multiple now. betty: thank you. open three market minutes away for the next hour of "daybreak asia." will get the take on the chinese communist party congress that did wrap up. don't miss our conversation with of asian economics research. xi jinping consolidating his power.

he did not name a successor during the politburo meeting. we will see market reaction. this is bloomberg. ♪

yvonne: we are live. im yvonne mann. stock set to, extend to asia after wall street fell the most in seven weeks. keeping investors on the edge. the race for the fed. thinks gary cohn has no chance. is just after 8:00 p.m. on wednesday. president trump congratulating his chinese counterpart saying they enjoy a good relationship. the atmosphere is electric at the tokyo motor show.

a scandal that has punished the native japan brand. -- tarnished the native japan brand. yvonne: not seeing any tarnish in the markets. it seems to be filtering through in asia as well. he got the mix earnings that have been a little bit confusing for investors. looking ahead to these catalysts, who will be the next fed chair? catalysts.e are earnings will continue to be catalysts as well. yesterday, they were propelled forward by those earnings. tomorrow is likely going to be the tech shares. will they keep that momentum going in the market? that will be a big day. we saw big numbers out of south korea. yvonne: let's get the market

open with sophie cameron. sophie: reaction to south korea's gdp figures. flat.spi opening a bit movement.ome the rate is that the whitest premium over the policy rate since 2011. reaffirms that case. -- pulling out the board to show you. their quarterly earnings surged 20 record thanks to a memory chip prices. we are seeing that putting some ynix.ure on sk h

aboard to show you some other companies, given the earnings watch that we have today. the reported earnings beating estimates. today we are expecting third-quarter numbers from hyundai motor and og electronics -- lg electronics. .ome big moves describing this risk we are seeing coming through in the yen and gold. we are seeing the dollar index lose ground. gold is climbing about 1/10 of 1%. giving a boost to bullion. about one third of 1%, continuing this rally. aussie shares are under pressure.

betty: thank you so much. looking at some of the movers in sydney. let's get to the first word news with paul allen. paul: reports from washington suggest the administration is hardening and line on nafta. the negotiating team must be tougher to secure a better deal for the u.s. if not, the agreement will have to be terminated. it was unlikely that they would reach a conclusion by march. probably announce some deals when president trump visits next month. more is needed. he told the economic club of new york that china talks about free trade the practices highly protectionist behavior. the united states has lost some credibility in asia when it

abandoned the trans-pacific partnership. involving 12 nations was the biggest in history, but president trump drew from it days after -- withdrew from it days after taking office. >> the economic dividend was there. strategic dividend was beyond the participants. strengthen the considerable rationale which already exist for america to be focused in the region. it is not to be. we have lost the upside. we will move on. paul: brazilian president secured enough votes to avoid being tried for corruption. this paves the way for him to cling to power until his term in the in december of next year.

it made it nearly impossible for his critics to put him on trial and forced him out. survived to previous votes. department challenging -- lose somester may support with opposition socialist party worried about the plan to crush separatist movement. they might drop their independence drive it. this offers a solution to spain's biggest crisis in decades. 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. betty: president trump says he is thinking about giving janet yellen another term. bloomberg also got a scoop from the white house. it looks like one of her rivals

is out of the running. kathleen hays with the details. kathleen: another exciting day in the fed chair rate. i think we got some real news today. this skip that bloomberg news got that donald trump has told his team that gary cohn is not going to be the next fed chair for sure. here is why. he says he wants to keep him at the white house. is the former president of goldman sachs and want him to stick around to help pass tax reform. staff has doubted his ability to lead the fed. maybe not quite so good. bottom line from this scoop, no decision has been made yet. short list must now have jay , janet john taylor warsh.and kevin

indy quarles who was approved -- by trump is rallying against warsh. that might have some impact on steve mnuchin who favors jay powell to be the next fed chair. lou dobbs asked him about me nominating janet yellen, and this is what he had to say. president trump: i really haven't it down to two or three people. over a short period of time, i will be announcing it. it will not be a big shock. kathleen: his focus on the stock market, he tweets constantly. janet yellen has also seen the stock market rise.

that could be a plus. i like to keep the money. though he says he likes her, a big-time he will have a tough time making her fed chair is because she is a democrat. yvonne: you have to make your own mark. she might be clinging to a thread here. this upcoming meeting might be a welcome diversion from this back and forth. in asia, the bank of korea coming back into focus with that gdp. kathleen: it is not all about the fed. this rates, even the amount of the block around it. a very important meeting at the ecb. this is where his colleagues are expected to tell us if they are ready to work tapering off on bond prices. inflation is certainly too low for the ecb to think about raising rates.

let's jump in. you can see 2% is the target. whatever measure of inflation you look at, you can see that they are anywhere from 1.5% to 1%. a big decision at the ecb. we will see how aggressive they get on that. i think this is pretty interesting. people have been figuring, given , that the nexts move would be a hike. -- policymaker things it is time for a -- thinks it is time for a hike. the firstot until quarter of next year. the bond market seems to be getting more nervous about this. let's take a look. david put this one together for us. he always has a hot guy on the market. percent,d a quarter

look at how the three year bond yield has continued to climb. shooting up recently. you can see the focus there. since that the bank of korea is one of the central in the world. let's look at the bank of japan while the cast our i around asia. arounde making -- eye asia. big win for the governor to keep a lot of stimulus. back again onpull the date where it will meet its inflation target. it might lower its inflation outlook for this year. yvonne: you will be over in tokyo next week. kathleen hays, thank you. ahead, the lying game.

my some of the manufacturers in it.n are faking it area -- we willan strike -- dive deeper into the aftermath of the party congress. this is bloomberg. ♪

yvonne: this is "daybreak: asia." betty: president trump has called president xi, congratulating on his next term. he says he is a good man and they enjoy a pleasant relationship. our asiang in

reporter, fred newman. policies interpret the that we heard over the last week or so? how will all of this be executed going forward? >> this is a big victory. yesterday, he got a fantastic lineup. majority of support. the decision-making panel, he we just had eight out of 18 members. he can hope.

because of the political barriers, it looks off. tocan focus his energy tackle the more pressing diplomatic and economic issues. he did not name a successor. fred, what do you have to say about this? does this mean bigger and bolder reforms for china? >> it has to. trying to consolidate and streamline the policy process. now he is in charge. he is the guy who rules the roost. -- i think we will be surprised at how quickly china is moving forward in the next couple of years. the lastig reforms in five years, but this will be another step up. we were sticking to the

conference board yesterday, and he said centralized power does not necessarily mean good governance because you might have these naysayers coming forward. maybe there is a lot of bickering behind the scenes, but not anything that will come forward. is this a risk for the president for any mishaps? concernnk the immediate has been tied with him. have a continuous plan, whatever happens 10 would immediately translate to what happens to the party leadership and the entire leaders -- entire country. because of this, we got this very centralized power structure. seeight mean a smaller poly -- policy implementation. betty: does this mean we might

see a growth target for china come down, given some of the focus on the debt and regulation? >> not necessarily. but goes to the point of policy content versus all of the implementation. policy implementation will be more efficient, but that does not meet policy content will change radically. he still has a very ambitious target as to where he wants china to go over the next five years. he has very ambitious targets for industrial policy, trying to push some of the state to commanding heights of global industry. that requires a lot of investment. i would not expect a lower growth target. not necessarily relaxing on those very ambitious targets and making china great again. betty: 6.5% probably saved.

for multinationals operating in china, did anything fundamentally change for them? certainly, we heard fairly encouraging new, officially during the party congress. foreign companies are invited to join. the door remains open. some are concerned that they would see a drop in investment this year. the word has gone out to try to reverse that. there will also be a lot of opportunities for foreign companies when it comes to industrial policy. as we bailed out electric vehicle and all these high-growth areas, china will probably need participation of foreign companies as well. it might be tricky, but there are opportunities for multinational companies. de-levewhat about for

raging? it is actually tightening that we are seeing. is the focus not so much on higher rate and slower loan growth and more so about how they will write off the debt? >> we have to be careful with the word de-leveraging. we are not going to see the debt come down very rapidly. that would be too detrimental to growth. -- this isg to see really what the talk is about -- certain industries in certain sectors will be prodded into reducing the debt load, whether from debt equity swaps or the closing of capacity. this is in line with shifting the growth drivers are you what we are seeing is peak construction. -- growth drivers.

what we are seeing is peak construction. the event sectors of industry will take over. that means that they will leverage up rather than sectors that are already highly leveraged. think we will see debt come down very rapidly. yvonne: how successful have they been? there are some private companies that are stepping in trying to raise funding. you are basically moving the debt to more debt. is it really not working by the margins only? >> if you look at purely debt equity swaps, there is a mixed record. in some places, it worked. in others, it was difficult to execute. place wherether equity is playing a role. when you look at private companies over the last 10

years, it has shot up dramatically. we expect that to continue because they use a form of equity financing. to the extent where the private sector has used equity funding and that of debt funding. that is a form of having a greater role. debt equity swaps specifically is a bit more tough going. years, hepast five seems to be favoring a strong state road. do you think it is fair to say that in the next five years, he will put a lot of effort into making a determined to push on his favorite economic industry? in what sense, we probably will not see a lot of economic globalization. >> i think that is right.

western economists are hoping for a liberal economic agenda being rolled out. they will be sorely disappointed. this is about strengthening control. in terms of directed industrial of state guided policy. it is not as if the private sector will disappear entirely. i think they are a very dynamic company. the leadership will want to harness that knowledge and perhaps bring a more -- bring more state guidance. betty: your little spin on that make china great again quipped that he made, it reminded me that president trump will be meeting president xi soon. do you think that will change at all his relationship with his counterpart?

to some extent, he has consolidated power. that gives them even greater negotiating authority, which might mean swifter implementation. his word is the bond of china now. easierkes it relatively now. i am not sure president trump will be able to enshrine his power in the constitution. a meeting of slightly unequal leaders with regard to the constitution that they represent. heit will be interesting how responds. they might do some football or soccer. thank you. this is bloomberg. ♪

yvonne: a quick check of the latest is nothing headlines. business headlines. profit rose fivefold for $3.3 billion, slightly missing estimates while sales were forecast that $7 billion. apple is the largest customer, accounting for 10% of its sales. shares have soared about 80% this year. they aim to capitalize renovating property there. the new londoner macau. the first u.s. operator to arrive in 2002.

coming up next, details on china's first debt sale in over a decade. this is bloomberg. ♪

yvonne: 8:30 in singapore. i'm yvonne mann in hong kong. betty: you are watching "daybreak: asia." let's get to the first word news with paul allen. brexit secretary has been forced to backtrack. they may not vote on the final climb -- final terms. they have also said the government still want a draft deal in time for lawmakers to vote before march 2019. negotiations are so tight, there might not be time for a debate area -- debate.

military authority spoke exclusively to bloomberg saying structural problems have not yet been resolved. i think the markets have been amazingly resilient. some of the risks have been manifested. underestimated. 18%. earnings rose profit climbed to $5.3 billion with bad debt charges falling by one third. have been selling banks overseas to focus on more profitable

domestic operations. much of thailand will come to a halt later on thursday for the funeral of the late king. of a five dayt ceremony governed by strict protocols for how mourners and the media behaved. they are permitted to prostrate themselves in silence that are banned from shouting or taking selfies. rock 'n roll legend fats domino has died. his singles reached the top 43 dozens of times. he ultimately sold more than 65 million records. 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. time to see have asian markets are shaping up. let's get the latest with sophie cameron. sophie: take a look at safe havens like the yen and gold. advance is easing as we get further into the session. take a look at what is going on after new zealand's annual trade deficit shrank to a two-year low. the nikkei 225 is regaining gains. foreign buying has slowed in the past week. .25%. are down is maintaining its climb. we are seeing two-year korean bond deals climbing.

the latest gdp numbers beat estimates. growth -- this picture could justify the kospi up trend. falling after results came in lower than forecast. memory chips continuing in the fourth quarter along with the supplies shortage. you are seeing this climbed over the past year in chip prices. that has been a driving force but -- behind south korea's export growth. third-quarter growth coming in at 6.2%. that is the green column on the far right. stem securities earlier this month cautioned that price chip

shortages will likely use next year. that prompted samsung securities to lower the price target for sk hynix. thank you so much. sophie kamaruddin on the movers on the market. kicking off a roadshow in hong kong, looking to sell $2 billion -- sovereignon bonds. out of the expecting ministry of finance today? >> we should be getting the announcement that the deal has been launched. we are expecting a two-part sale , looking to raise $2 billion in their first sovereign bond sale

since 2004. has it been so long since they have sold these u.s. dollar bonds? >> china does not need the money. that is an important point. why are they selling at all? we should look at the huge uptick in chinese corporate issuance in dollars that we have seen in the past three years. by coming in with a sovereign deal, they will be able to set a pricing benchmark for companies. yvonne: what does this mean in terms of liquidity? what will be the ripple effect? i was taking in these charts i had on bloomberg. when we see the corporate bond side, we see this spread on dollar notes. that's right. there has been a lot of anticipation for this deal. it is being keenly watched.

we had some people saying they to 40-- the spread of 30 basis points. it has definitely had ripple effects and other notes. change to taxis a rolls to encourage sovereigns. why? >> i think hong kong is well-positioned as a gateway into china. intothe gateway for china the rest of the world. they want to maintain that status. they're looking to facilitate any issuance that china wants to do to put everything on the same playing field. thank you. coming up next, tokyo motor show prevent -- presents the vision of the future.

this is bloomberg. ♪

yvonne: this is "daybreak: asia." betty: i'm betty liu in new york. the carmaker is continuing its drive into the market. it has these the motor show to unveil the concept of an electronic car. our chief correspondent stephen engle was there. so far, this is a concept. the nissan imx.

this is how we see the future of nissan. we see the future as electric. we see the future connected. beeneaf has already launched in japan and is about to relaunch in the states. we will see a lot of elements of this technology in the new leaf. >> how much pressure are toanese automakers under really push electrification? >> i do not see it as a pressure. we see it as an opportunity. we are a top japanese with all the operations that we had. china,also pioneers in as well as globally. worldwide, about 40% of that in the u.s. we are going big, as well as in

china. he has at least temporarily resign from the association to take care of this crisis on unauthorized inspectors. where are we now in resolving that internally at least on -- nissan? >> this is an issue that affects only vehicles produced in japan for japan domestic market. that is it. it does not affect anyone else. as a consequence, we have issued a noncompliance we call a few days back. it is currently undergoing. quality we call. it is a noncompliance we call. the ceo has said he is taking a personal action to take this problem and has commissioned a

group that is investigating the issue. they will, with accommodations very soon. we are working to solve this problem. the sooner the better. >> are you worried about the brand reputation of japanese automakers? it is not just nissan. aluminuml with some and takata with the airbags. there have been a noble -- number of scandals. chain.dy with the supply everybody is committed -- connected. everybody needs to do a study, solid job. the public is going to understand. that is the most important. >> how much of sales in japan will be affected because of the close of production and the impact on the buyer sentiment?

>> in the short-term, it will have an impact. they are built to order as opposed to delivery like the u.s. thehe next few months, remainder of the fiscal year, we are confident with everything that we are doing, that we will be able to accommodate. we will be able to recover within the fiscal year. yvonne: that was the son executive -- the nissan executive speaking to stephen engle. reputation asny's a trusted supplier has been tainted with headlines from kobe steel fake data. joining us now is bloomberg news energy reporter from tokyo this

morning. japanese manufacturers have this reputation for quality, but we really learned it has come with a cost. what is causing this huge pressure? issues that a few we have been looking at. according to analysts we have been talking to, a lot of it has to do with external pressure. when you look at japanese manufacturing as a whole, it is expensive because it is a developed country. electricity prices are more expensive. all that makes products that are more expensive. to justify the cost, they do inspections and say there are added values to the products. what we are seeing is china is moving up the value chain. they are making better products, providing better quality. to counter that, a lot of companies,untries --

all of them are trying to do a little bit more. by doing more year over year, by ,utting if you sent -- cents, they end up cutting corners. recalls at all for some, but they are promising the leveler aluminum at one of strength. they are giving them slightly less than that. that is still a problem, but it shows where they are overpromising in the market. yvonne: what about the efforts governance?orporate what effect are they having? it is helping in dividends and buybacks. they have been a few efforts over the last decade.

in 2004, there was an effort to make whistleblower laws so that if there were whistleblowers at factories, they could not get laid off or get their pay cut. recently, prime minister shinzo abe, one of his main points in s package was to have better corporate governance. corporate governance has been getting better. the is no doubt about that. analysts agree that companies are trying to do more. from putting on external advisors on their board of directors to having more meeting with investors, to having more activistwith investors. what you are seeing is, maybe not with nissan and kobe steel, theireleven had to change ceo and entire management because an outside investor from abroad came and said they had to

change things up. that was uncalled for two decades ago when the japanese ofks were the main financers these companies. you are seeing slight shifts. how much can investor due to a company like kobe steel? they cannot go into the factory. it is a difficult situation. there is a lot to be done. betty: what about the financial cost? japanese companies have been able to demand more premium pricing because of the quality and because of their reputation, known for excellence. will that come down? >> that is the biggest issue of debate right now. when i talked to analysts and investors, when you look at something like takata, obviously they went bankrupt. that is affecting them. a lot of these companies like kobe steel, they provide -- fors and materials

example, writable dvds, they provide 60% of the aluminum around the world for the production of dvds. you cannot really find a different supplier very quickly. he will have to depend on kobe steel. they will not be able to change suppliers, but maybe at the same time, if there is a bus -- less rigidy inspection, less environment in china, you could find companies and to a deal with a chinese company instead. you could see customers changing, but it is a very rigid supply chain that makes it very difficult. they: earlier you mentioned protection law. that is also making it easier for this kind of information to come to light and passed on to regulatory authorities.

that has something to do with this as well. law,r the whistleblower what is the most interesting about that is there have been more to come forward. the thing about japanese society, usually when the whistleblower comes forward, while it cannot be fired or pay cut, there are instances where they are shunned. according to lawyers, that is one of the biggest problems. there needs to be a cultural shift in terms of that. there still needs to be some gains in that area before we see more of that. betty: thank you so much. findt forget you can also in-depth analysis on bloomberg radio. tune into bloomberg daybreak asia. you can download the app or access it by bloomberg radio.com. ♪

yvonne: this is "daybreak: asia." i'm betty liu in new york. let's talk apple. analysts have been forgiving in delays in the supply chain. a look at its key suppliers is showing a far different story. joining us is tim colton.

what date are you looking in relation to the supply chain delays? are they worse than what some of the analysts might have predicted? what analysts are predicting shows a bit of a mismatch. analysts have tempered their outlook by a few percentage points. the numbers i looking at, i am looking specifically at taiwan. reports salesy numbers every month. likean look at companies foxconn come you have the chipmaker and the assembler. you look at those numbers for the last few months. down for the most recent months. 10, we will see october sales numbers. you might expect that to be week

as well.- weak that is some weakness that we see that might not be reflected in analyst estimates for apple itself. one new technology is having this impact. is that the facial recognition technology? >> yes. it is the facial recognition technology, but the problem starts with the oled screens. there is good reason to go with it, but the fingerprint touch technology cannot work through oled screens area -- screens. others but the fingerprint on the back of the device, the do not have to deal with that problem. touchave to get rid of id, so they have to make this id work. -- facial recognition work. nail ite to kneel --

with the facial recognition. the oledto go with display. there are two sensors, and they have had trouble producing those sensors. out of san francisco, they published a scoop saying they have dial back the technical requirements for facial recognition so they can get more sensors out there. the series of problems that have compounded to this day, where they are struggling to get a few of those parts into the device to ship them out. yvonne: you mentioned they went with the oled screens. half --w they would have to see a rise in supply. olede 8 does not have the like iphone x. i think it was a wrong decision. .t is easier

we see a lot of these decisions. my bigger concern, i think they may have lost their hardware mojo. this might be a one off blitz. it shows they have not managed the supply chain like we are used to seeing. that is my biggest concern going forward. yvonne: thank you. taipei.us live from that is it for us from "daybreak: asia." a quick look at what is coming up. what you watching? rishaad: yields. minutes from now, seeing where they are finding value. they know a thing or two about it. does that redline move? centralthe european

banks later. any news on them tapering or lowering their bond purchasing program will affect markets as well. inking at geopolitical risks the world. we will have a look at what is going on with north korea, japan etc. about a look and talking apple. given what has been going on with various scandals which have been plaguing the industry. you are not losing your mojo at all. betty: that is it for "daybreak: asia." this is bloomberg. ♪ who knew that phones would start doing everything?

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♪ you have had to follow bill gates and steve ballmer, legendary figures. satya: try to be like us. david: did steve say if you do this well, we will be happy? the result of having empathy major a better ceo. growingrsuit is the sense of empathy for people around me. david: do you get a standing ovation for what you have done? satya: i have a lot of people saying, hey, come and fix my computer. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright.