yvonne: 7:00 a.m. in hong kong come alive from bloomberg's asian headquarters. i am yvonne man, welcome to "daybreak asia." tol street gains expected expand in asia. robust earnings amid speculation of the fed. they say janet yellen is out of the race. that leaves just john taylor in jerome powell. betty: from bloomberg's global headquarters i am betty lou, where it is after 7:00 p.m. thursday. mario draghi switches gears, saying a short taper may be an option in 2018. amazon proving it can deliver on all fronts. sales topped estimates and

stocked -- stocks jumping in extended trade. ♪ betty: it is risk on one day, risk off another. today it was risk on. some event in washington like the house passing a budget resolution, helping sentiment along. earnings have been a big driver in the markets, particularly today. i want to pull up a chart that shows you where we are in the earnings season. it is g #btv 2346. i love the title, "the beat goes on." about a quarter of s&p 500 companies have beaten earning estimates. they set a lower bar so beating them is not that big of a deal. it shows a trend. these earnings continue to rise.

even if they taper off the rest of the season, they are tapering at a higher level, giving more credence to the fact we are still here at this -- at the highs of the market. yvonne: do the earnings justify the stock prices, given this tremendous rally? we have not seen the cell in news on these earnings report. this shows sector by sector how they are performing. we are seeing earnings surprises on your right side. energy, oil and gas are the ones performing the most, the best, when it comes to earnings so far. the bottom is technology. that was a big driver today, up 12.4%, when it comes to half the companies that have reported so far. we talk more about amazon, twitter, later this morning. all look to be a decent set of earnings. betty: you have mattel coming

out with their results, which are terrible. companies like mattel being taken out by the huge giant in the retail world. let's pull up the boards on where we ended up in the markets based on earnings results. you can see the s&p closing 0.1%, well above the 2500 line. the dow finishing higher, up 71 points, higher by 0.3%. unchanged in the nasdaq. setting up for a mostly bullish session in asia. yvonne: looks to be a good for us and you guys in the u.s. on those tech earnings reports we saw a blowout sale of chinese government bonds, the first in a decade, since 2004. a lot to look forward to traders. 0.33% onnd, shares up the nzx 50. traders watch the new government bring in possibly new mandates for the rbnz.

we are expecting industrial profits out of china, something to look forward to. flat at the open for the asx 200, the aussie at .7654. japan inflation data coming out this hour. the nikkei did snap out of its record winning streak this week, but we are still poised for a seventh straight weekly climb for the benchmark. the yen short continuing to pile up after abe's election win, 114.12 against the dollar. jessica: amazon jumped after hours when it proved it can turn gadgets, the, cloud, and sell strongly online. amazon sees more of the same in the coming months. sales are forecast to be as high as $60 billion through december. the results show it can integrate whole foods without interrupting its e-commerce performance.

the wheels may be coming off the independence grab in catalonia. separatist lawmakers are unhappy with carles puigdemont. puigdemont says he is abandoning elections. two lawmakers quit his party, as they denounced him as a traitor. >> we have to assess the impact of what is going on in catalonia and the spanish economy. decimalseen estimates, point impacts on gdp growth. it -- the economy is strong, robust. if it has a negative impact, it will not be significant. imposingthe u.s. is sanctions on senior military officials and the labor minister. diplomat and another are targeted by the

measures. they would have to abandon nuclear weapons on the agenda. president trump japan, south korea and china next month. china sold its first sovereign dollar bonds and 13 years. bill -- $1 billion of five-year notes. 40 basis points were announced earlier. they were priced at 25 basis points from the initial guidance of 40 to 50. china offer the bond ungraded, in a break from traditional practice. moresteel has found four cases of fake data, widening a scandal. more than 500 customers potentially affected by falsified certification of the strength and durability of their metal products. they said they know of no client that stopped using their materials, and no reports of safety issues. i am deeply sorry how much impact of this has caused our customers.

finishirms, we have not the investigation. 26 are overseas. i regret i cannot announce when our probe will end, but we will make the best effort to provide all possible information. jessica: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. ♪ mario draghi led the european central bank and its first, long-awaited and widely telegraphed step to dialing back and monetary stimulus, showing the world had a taper without a tantrum. a big contrast to president trump. let's get the latest from bloomberg's kathleen hays joining us from new york. will it work? kathleen: it will depend on some things that are proven so far to be out of the ecb's control.

let's look at what lower for longer on quantitative easing bond purchases mean. halved purchases will be to $35 billion. started in january, finish in september -- february. mario draghi said, this should not be called tapering. let's listen to mario draghi at a press conference earlier. >> the decision today is for an open-ended program. it is not going to stop suddenly. it is not going to stop suddenly. it is never been our view that things should stop suddenly. kathleen: do you think it is going to stop suddenly? [laughter] that so clear,de he wants the bond markets to be calm. so far, he and his colleagues at the ecb have achieved that. they have not pushed up inflation. thatcb is perhaps thinking is going to happen, so it can

stop its taper. let's sic a look at g #btv 8187. target, if i2% want to be exact about how the ecb looked at it. here is core cpi, a long ways away. our bloomberg team found out they do not formally debate if the ecb options for what to do after september 2019. what if it is not there? there is consideration they could keep going. there is no question about bonds. it is a very important first step and it was leaked and talked about ahead of time. wanted, whichthey is, get us started and have bond markets around the world ticket calmly. betty: in the last hour we spoke with the former philly said chair -- fed officer.

he looks like he is choosing john taylor as the next venture. it is not updated to choose. kathleen: of course, look at who has been eliminated. first, gary cohn, bloomberg news broke that, he is not in the running. told us it yellen is out of the race and so is kevin warsh. told them, trump changes his mind every day, we cannot be sure what is going on. charley foster who knows all the said the next fed chair should be an economist, they should be ready to push back against forces in congress for example that are rushing against the fed's independence. when it comes to the taylor rule he thinks it is not mechanistic and john taylor would not apply it in a knee-jerk way. we sat him down, this is what he

said about his pick for fed chair. >> i think john taylor, for example, as an economist, is likely to be much better equipped to deal with the kind of questions i was considering in terms of what we do. i am supportive of john. that is not to say the other candidates could not do a better job. given my criteria about what i think are needed, it leads to picking john. kathleen: i do not know if it is you who asked charles plosser about who trump would pick and he said he did not know, my depend what side of the bed donald trump got up on that morning. [laughter] betty: he made a good point, the last time it was between yellen and summers it was ugly and played out in the press. kathleen: i do not remember this every day having a leak. summers and yellen, both the democrats.

it is good to be reminded, it happened in a certain extent, before. betty: we tend to have short-term memories. ouring us to dig deeper, bloomberg intelligence chief u.s. economist. i know we -- you are looking at this interview with charles plosser. in terms of who is in, who is out -- we talk about this all week long. we have charts, it will go up 10 basis points of it is taylor -- all of this stuff. does it matter in the short-term? >> just to refresh our short memories, it was contentious when it was summers and yellen. was not as into the whole notion of reality game , america's next top fed chair was not the modus operandi. he was looking for continuity because it was a much more fragile economy.

they had to move in a smoother fashion. now it will be past the eight year mark in the cycle. the economy is firmly able to stand on its own two feet. we haveite resilient, seen an impressive recovery from the hurricanes, natural disasters. chair will have significant consequences for the market. we saw that a week ago when it was rumored to be jay powell. we immediately saw that reaction the market because jay powell is a continuation of chair yellen's philosophy toward monetary policy. he is viewed as being somewhat dovish. if suddenly we see it will be john taylor or someone else who the market is perceiving to be more hawkish, you will see that well.on, as the markets do not believe there is significant inflation embedded in the system. if you put a hawk in place it will mean shorter rates. you will see a flattening

effect, as well. if you think it will be a dove, you will see the opposite. this -- theave seen question is, a meaningful breakout in yields recently, what if they are pricing in a hawkish fed chair? you have to wonder given the slow tapers from the ecb overnight, the -- that will be a big cushion when it comes to where yields go, providing that cap. carl: it is a cushion, but if you listen carefully, you can hear the hissing sound, it is losing air. the fed has become less accommodative. they are still adding accommodation in europe, albeit at a slower pace. this is moving toward less accommodative power -- policy. it is not absolutely busting out. this has to be done in a very careful fashion. backup inn to that

yields you are highlighting in the u.s., we also see the end of this weak dollar trend, which has persisted the first nine months of the year. we get to the point where we are running down the balance sheet in the u.s. the dollar stabilizes and shows signs of appreciation. it is too early for certain to call this an established trend. stronger dollar, that is the de facto tightening of economic conditions. we are doing little better than 2% in the economy. pedals,ad multiple brake there are serious risks, to be sure. kathleen: one of the things charley plosser brought up, he thinks the next fed chair should be an economist, and someone who is independent, who will push back against what he sees is the politicization of the fed.

pulling back from a defensive crouch, if i made some up what he said. between and the dots economist and being able to push back. they have to be able to explain the fed policy and breakthrough groupthink. do you agree, and with a favor someone with the stature reputation of john taylor, versus jay powell, who also has a great reputation, but not as an economist? carl: i think jay powell is qualified for the position. it is not just one single person calling the shots. they are doing this in consultation with the 200 to 300 phd economists who are working on the staff at the fed. economic credentials are born to some degree. i do not know that it has to be a phd economist sitting in that seat. andy -- any candidates would be able to fill that chair

adequately. and yellen art opposite ends of the spectrum in terms of how they were thinking about policy over the last decade or so. they do both adamantly defend the fed's independence from politics. i do not know that we can say they were a slouch in bending to the political influence. i will say they did it in a very appropriate fashion. much more appropriate than that advocated by a number of talks, including plosser. betty: we will also talk about tax reform. looking ahead, looking ahead to japan's latest inflation numbers, that outlook for abe-nomics with the bank of singapore. a look ahead to the crucial u.s. eco-data, gdp coming in friday. this is bloomberg.

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betty: this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong kong. let's talk with our chief u.s. economist. we are talking about tax reform, we did see a movement in the dollar in yields overnight over the house republicans passing this budget resolution. looks like they are on the fast track to get tax reform done by year end. was, how split this boat -- vote was, can they get it done by the end of the year? carl: they need to get the budget out of the way, and hopefully get the tax plan passed along a straight partyline vote. that is a narrow path forward. i think there is a lot of optimism we will get this done

by year end. i am personally doubtful that will be the case. we have a couple problems. first of all, there has been an ongoing -- ongoing feud with the president. whether we look at lindsey graham or senator corker, marco rubio, john mccain, there are a lot of republicans who may not be willing to support the president, if they are not happy with the way the tax package is looking. as we shift gears and look to the house of representatives, one of the issues in this tax plan is that potentially removing the state and local tax deduction, which means i can detect -- deduct my new york or new jersey taxes out of my tax bill. this is predominately used on the coast. california and along the east coast, states that tended to vote for hillary clinton in the last election.

there are enough members of the house of representatives that come from the coastal states, who have declared their opposition to removing that deduction, that also the tax plan would not be able to pass on a partyline vote in the house either. we are further from the finish line than a lot of people estimate presently. about theant to talk data we are going to get, third-quarter data on gdp in the u.s. there are questions about how much the hurricane affected gdp. that theyations are might not have as big of an impact as we perhaps feared. impacts in thege month-to-month data. this is quarterly data. some of the impact from the storm is offset by rebuilding. i am a little below consensus in my forecast, consensus about 2.5, 2.6. my team came up with 2.25.

when we get these numbers, and it could be a blowout, maybe we could get something north of 3%. the first thing i would caution analyst to do is to about the inventory affect. it looks like there was may be significant inventory build in the quarter. that is a not so good way of inflating the gdp numbers. if you look to things like final sales, that will tell you gdp and inventory. if you look at final sales you will see economic momentum moving sideways, not dramatically picking up in q3. that is only the beginning of the onslaught of data. we have the fed meeting next week. betty: which by the way, nobody is paying attention to. carl: because of the horse race over who will be next fed chair. and you have payrolls coming out next friday. i will warn you in advance, it will be a whopper, to the extent of payrolls were depressed by

the hurricane. you will get at least that much of a spring back effect in october. do not throw it out, just average it was september. we were down over 30,000 in the month. 400,000.see 350,000, next friday it will be a meaningless number, a weak preceding month. you will get something close to the underlying trend. yvonne: which is -- betty: which is back to where we were. carl: where we have been all along, where we will be next year. [laughter] betty: thank you, our chief economist. bring to your attention is our interactive tv function. you can find it at tv . you can watch us live and see previous interviews and dive into securities or bloomberg functions we talk about. -- youlike i am yelling can become part of the

conversation by sending instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪

betty: this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong kong. 4.1%,quarter profit rose and showed signs of stability in asset quality. net income was $9.5 billion, they are the first of china's big banks to report with others filing monday. there reportedly watched for government efforts to curtail china's debt risks. betty: macau is the gift that keeps on giving for wynn resorts. thanks to the introduction of the wynn palace, the helped the company beat estimates for earnings. $1.52 per share exceeded

forecasts. they are helping macau rebound after beijing's crackdown on corruption triggered a three-year slump. we are waiting for japan's cpi numbers in a few moments. this is bloomberg. ♪ retail.

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tokyo at the imperial palace this friday morning, as we await inflation data coming through in the bloomberg right now for the month of september. this is a national cpi, core inflation, you're on your rising 0.7%. this is in line with estimates, the same pace for the month of august. if you exclude fresh food and energy, the core inflation in line with estimates at 0.2%. still staying the course from what we saw in august. it makes you wonder, what the boj will do next week. there is speculation they're

going to be pushing back or cutting down there inflation forecasts for the short-term. we see a little movement in dollar-yen. let's get quick reaction from sophie kamaruddin as we look ahead to the japan open, those yen shorts continue to pile up. sophie: yen shorts at the highest level since july. they have to be number, given the data we got. not much of a move when it comes to the dollar-yen, falling back. inflation data in line with estimates. overnight the yen did cross the 114 level because of the firmer dollar and verizon treasury yields. as you pointed out, with the boj speculated to trim short-term outlook for inflation, what might that mean for their easing policy? it could imply they could maintain that program. that is entrenching the global policy divergence and that could work in the boj's favor if the

yen weakens. that could spark inflationary pressures. dollar-yen is looking range bound as they await other catalysts for the dollar. due out on, u.s. gdp friday. they are looking at the fibonacci retracement for the third time since may, perhaps a triple pop. 114 has shown a firm resistance despite higher yields. taking on the open for tokyo, pulling up the board, the nikkei 225 added 0.2% thursday. futures are pointing higher. aside from inflation data, looking at plenty of earnings to digest, asahi and hitachi among them. betty: we will talk with our guest on reaction to these numbers. in australia we are waiting on producer price numbers for the third quarter. how is the session so far

shaping up against those numbers in sydney? sophie: let's take a look at what is moving in sydney, the asx 200 gaining 0.1%, rising for a fourth day. most segments gaining ground, although industrials are losing 0.2%. data, acomes to the ppi downturn after cpi forecast wednesday. i want to quickly highlight quarry shares, a fresh all-time high in sydney, after the bank said for your earnings might be slightly up from last year's record. thank you, let's get the first word news with jessica summers. jessica: the ecb policymakers said to implicitly assume the bond by his program will come to a halt at the end of the next year if the inflation outlook improves. they are focusing on the first nine months of 2018 and did not discuss what to do afterwards.

further extending the program without changing the pace of buying is a credible option. >> the decision today is for an open-ended program. add, it is not going to stop suddenly. it is not going to stop suddenly. it is never been our view that things should stop suddenly. jessica: reports from washington say janet yellen is out of the race for the fed. politico says the field is down to jerome powell and john taylor. president trump has made his liking for yellen known, saying that markets are doing well under her stewardship. he said he will make a decision before leaving for asia at the end of next week. toadian cheesemakers agreed for $1tralia company billion, including assets and liabilities. their largest dairy processor beat the japanese competitor.

they reported a loss laughter after milk production fell. an australian -- australian prime minister malcolm turnbull looking for a court ruling for a one seat majority. that may beven mp's ruled ineligible to sit in parliament because of dual citizenship. he relies on the support of independent lawmakers. cabinet makers could be singled out. the singapore exchange investigating possible tieups with its trading businesses. the ceo says exchanges may move away from traditional roddick --peration, which offer product cooperation. he told bloomberg there is no rush to the side -- decide. the views we received were wide-ranging.

however [indiscernible] we are in no hurry to implement that. when we reach a conclusion, we update the market. jessica: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. summers, this is bloomberg. ♪ japan's core consumer september, 0.7% in bang on estimates. the joining us from singapore, bank of singapore chief economist from the lion city. richard, set up the data for the boj next week to read it is the first meeting for the central -- abe's election. willoughby harder to implement policy changes? it is hard to see them

implementing policy changes. you talk to anybody at the boj you get the sense, we have done all we can. the economy is at full employment, we are waiting for wages to rise. even if we do anything else it is hard to see how that has a transmission from the economy into the prices. i think the boj is pretty much done. they are waiting for the yen to come through. they have been waiting a long time already. yvonne: given the print we see today, abe coming out with a stronger mandate, kuroda, his job in tact probably for a second term, does he of confidence did push those back again or cut down on them? richard: i guess they have no choice. they will produce new inflation forecast next week. as they have been

for several years, are implausible. kuroda will tell a story about what will happen in the future. that point in the future is further off than he has been hoping for. lowering no problem in their inflation forecast for this year. for the sake of credibility they have to do that. i guess he is confident in his position, not worried that if he does that he will get fired. presumably he will keep saying that at some point in our forecast range, they will get close to that 2% number. they have to continue to demonstrate that confidence they will get there in the end. betty: if they do lower it, where could they lower it at? what number? for this year at least, the year is half done. presumably they will have to go 0.8%.1%, may be

they will get a lift going to next year. get two or three tenths above 1%. numbers sound like what we are hearing also from other economist. it is a reasonable number, if they are to lower the forecast. if they do lower this inflation forecast and cut it back, what does it mean about their bond buying program, their easing program? what is that signal? -- what does that signal? richard: a degree of inconsistency. implicitly there is a question of, why are you changing policy to hit the inflation target faster? is, theyhe problem

seem to have dodged the question for the past year. it is hard to see them having a consistency, saying, things are not working out as we had hoped. theink they're going to say inflation forecast is coming down. but in the end, the current policy framework of yield control and negative short-term rates, in the end, will get us there. i do not think they will make announcements on the bond buying. it has diminished quite a bit since they change the framework over a year ago. it is hard as a pace of bond purchases. it is not necessarily stay at that level. but they are buying fewer bonds now than they were year or so ago. yvonne: so-called self tapering, but they will never collect that. are things they can do at the margin -- the economy is on more solid footing then we saw a year ago.

is there a need to buy eps, given that market is rallying on these two decade highs? richard: the ecb still tapering in march when they cut from 8 billion.o 60 -- 6 i doubt if they are going to cut away the etf. it is a fairly small number they are buying. the state of the market does not really need it. itsink the boj, considering history of premature exit from loose monetary policy, i think they will be very cautious not to send a signal to the market that could be interpreted in the we are already beginning to tighten policy. bill be careful to maintain the current policy -- they will be careful to maintain the current policy. yvonne: they said we could be seeing possibly a push further reform.

also, this consumption sales tax in 2019 is going to be a done deal for shinzo abe's government. will that goal post, is there a risk to having it, given wages and consumption are soft in japan? richard: they have postponed it so many times in the past, this consumption tax increase, i think no hard deadline is as hard as they claim it to be. they have seen problems in the past, three years ago when they raised the consumption tax. i presume the economy is struggling. if wages are not responding by 2019, they'll be unconcerned about postponing it again. if you look at public finances, they have improved a long way over the past five years sincea took over.e the deficit has more than halved .

the urgency they fell three years ago does not exist today. you can see it in the way they are saying they will take some proceeds from the sales tax and use them to fund different welfare programs. that suggests the focus has shifted away from the deficit reduction, that seems more urgent, when it was a percent, 9% of gdp. betty: richard, we will leave it there. reacting to the inflation data out from japan. much more ahead. results for amazon and alphabet. impressive earnings, investors piling in the after hours. this is bloomberg. ♪

betty: this is "daybreak asia." yvonne: we are at breaking news coming through on subaru.

it has been quite the busy week when it comes to scandals in japan. according to kyoto news and the nikkei this morning, subaru is said to have used uncertified inspectors for cars. we are hearing response from executives this morning. betty: we are, indeed. subaru telling reporters the faulty inspection practices at factories were being done by uncertified workers that carried out safety checks. kyoto, a practice the automaker had been following for more than three decades. we have been talking quite a bit about, has japan inc's reputation been tarnished by these recent scandals, kobe steel the latest, of course, and now a subaru executive -- sound like he's coming clean, telling reporters these faulty inspection practices have been going on for more than 30 years.

we will continue to watch headlines coming from subaru. i want to focus on one company firing on all cylinders, amazon. yvonne: third quarter sales -- topped analyst estimates, driving the stock up after hours. a good day friday on wall street. they can run grocery stores, turnout gadgets, expand its cloud computing business, and invest in new markets, all while selling more products online and managing expenses. let's bring in our guest -- reporter this morning. spencer, there is speculation on this -- how this whole foods fare forion would amazon. looks like it went favorably. spencer: there was anxiety about how much amazon would spend on it. investors i spoke with were pleased amazon made some money, even though they had some

integration -- it was an not be as it would costly out of the gate as some of them feared. walmart is stepping up its competition against amazon. is there any signs it is making a dent at all? spencer: that was another wildcard heading into earnings. there,sage to investors walmart might be doing a lot and innovating a lot and grabbing a lot of headlines. but amazon's growth continues to along strong, and they are expecting a strong holiday quarter. whatever walmart is doing is not denting its momentum middle. betty: we were talking to cory earlier about amazon in the last hour, saying it looks like the margins for whole foods as part of amazon have come down.

whereas they had not been when they were producing healthy margins. sounds like amazon is applying the jeff bezos, expand as much as you can to gain that market share, versus worrying about profit. spencer: exactly, that is a good point. again, at least there was a margin. the fear of investors when amazon take something over is, ok, grocery is a business that depends on the leaders. will amazon make the entire business a loss leader? the answer is, no, they squeezed profit out of it, even while managing a huge integration, and they are still promoting products and making a little money. investors feared it would be a huge money socked -- suck. the takeaway is that it is not. yvonne: amazon's prime day fell in the third quarter, how did that affect results? spencer: there was talk on the

earnings call about that, particularly internationally. they said it went well, this was something they initiated in the u.s. they are happy with the international results. a lot of people trying prime as a result of prime day. that is a motivation behind the promotion, to get people to try prime and convert them into paying subscribers, which makes them more loyal shoppers. betty: think you, spencer soper, the amazon reporter on the blowout results from the company. there is more. amazon and twitter were hardly the only tech firms reporting. ramy inocencio at the wall with more on the tech shares. let's talk with alphabet-google. ramy: i wanted to highlight twitter, because we did not get to that in the past hour with my terminals. what you are looking at here is this huge hop in them social media site on nearly 19%.

this hit a high not seen since july, the order of three months or so. were,g pushes, supports the monthly active users, that hit 230 million. in the quarter before that was 228 million. we are seeing a better-than-expected pop. revenue and profit, was in the negative. is better outlook than estimated. hop into the bloomberg terminal one more time. i want to show one thing, especially for asia-pacific audiences. it is thanks to you and folks in -- all over the world, in terms of the overall revenue twitter is getting. here we are for the third quarter of 2017. you can see revenue in orange for the u.s. has been stagnant the last three quarters. a look at what has been writing, the blue, international revenue. on the order of the past year on year for the same quarter, the

revenue from international has risen by about 6.6%. the revenue from the u.s. has fallen by 11.2%. let's go into google, flip up the screen and see how google and alphabet shares are doing in after-hours trading, up nearly 3%. a had been as high as $1040 share. about $28 a share. it had closed around $990. what was the huge piece of support was the number of paid clicks. the percentage of paid clicks was up 47%. people clicking into google and also that helping this number. hop back into the bloomberg terminal, i want to show you one thing that could have been a wait. it is called tac, the traffic acquisition cost. we were not sure where this would go. we thought it would go higher, it was that 11% of revenue in

the third quarter. it went to 12%. bloomberg intelligence said that was not high enough for it to be a big weight on the share price. let's go to the google of china, baidu. baidu shares going the other way, by nearly 10.5%. this is in regards to that whole online ad crackdown we saw in beijing and across china during the 19th party congress. we saw the impact of politics on the share price. the reason for this is because the fourth quarter outlook, baidu says, has been lowered billion yuan.25 one more time go back to the bloomberg terminal, one good thing is in g #btv 2206. the blue bars are the revenue per customer.

that did rise at its highest over the past several quarters, continuing to rise and push the shares up by 59%, year to date. we will see how this does react in trading tomorrow. the rest of the tech that reported today in the busiest day we have had in two or three. yvonne: it certainly has been busy, thank you for that wrapup. you can find in-depth analysis of the big newspapers -- on bloomberg radio, you can also download the app or access it through bloomberg.com. plenty more to come. this is bloomberg. ♪

betty: this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong

kong. theking news out of subaru, latest big japanese name embroiled in possible wrongdoing. yoda news saying it allowed uncertified staff to carry out quality checks on vehicles. an executive said the practice may have been going on through three decades. betty: up to 300,000 cars could be affected, although the company has yet to decide on a recall. a report on their inspection practices at the end of this month. it is not just to brew. nissan is said to use these uncertified workers to inspect the cars, as well. theyll the automakers, will turn in their inspection practices by the end of the month, which is only a few days away. they are poised to fall at the open, any minute now. we will look ahead to those inflation numbers and how the

market will react to those. same thing for the month of september for japan. this is bloomberg. ♪

>> 8:00 here in hong kong from bloomberg headquarters. i'm yvonne man. the top stories this friday, prices under pressure in japan. inflation is flat. the 2% target is out of reach. sue broke is the latest name embroiled in wrongdoing. namebaru is the latest embroiled in wrongdoing. reports from washington state janet yellen is out in the race to head the fed. that leaves john taylor and jay powell. the gift that keeps on giving.

thanks to the opening of the palace. ♪ yvonne: it sounds too familiar when it comes to japan inc.. more headlines on subaru. they let unqualified workers inspect cars, similar to what we heard from nissan a couple weeks ago. we are waiting for any kind of response from the company. the spokesperson says there are no plans to hold a press conference. subaruwe will watch how trades at the opening. all sounding too familiar. all of these automakers are under sharper scrutiny by authorities and regulators in japan. officials say automakers

have to turn in their inspection reports. how have they inspected these car parts or these cars? subaru and executives telling reporters of had done this for 30 years. how did it all happened without anybody noticing? yvonne: that is a good question. also.teel let's get the market open with sophie kamaruddin. inflation numbers just came out. we are looking at emerging markets, stocks climbing across the board, telco property and textures leading the rise in tokyo, gaining .2%. bond traders might get a foot up after the dollar bond sale. the ecb putting up the exit sign, leaving u.s. policy as a driving force for currencies. it is extending gains at a july

high, but marginally. we saw ten-year yields climbed to a seven-year high. data point this morning, japanese inflation kept to a steady pace in september at .7%. that did not move the dow too much on the dollar-yen, which was already under pressure. given this a drop tax reform progress we saw in the united states. check out what is going on with the korean won losing .5%, but it is set for a rise. the euro is extending losses after falling to a july low. check out the euro yen cross. more than 1% after the ecb decision.

top of thisee the club. let's get to first word news with jessica summers. jessica? hours.on jumped after chicken run groceries, turnout gadgets, and distilled cell strongly online. amazon sees more of the same in the coming months. it sees highs of $60 billion in september. the wheels maybe coming off of catalonia. separatist lawmakers are unhappy with the president pulling back from secession as authorities finalized lands to force them out. -- twosident says lawmakers quit his party.

minister's business quit because efforts to find a solution failed. he had been the most vocal opponent of independence and set the cabinet. he is the first member of the cabinet to resign, saying attempts to spark a dialogue came to nothing. to talkleaders convene their next step. it's difficult to explain what they affected of this is on the spanish economy. we have started to make some estimates. it is too early. the recovery is very strong, very robust. if this has a negative impact, it will not be significant. >> the u.s. is stepping up texans on north korea and imposing sanctions on the labor minister.

persuade can to abandon nuclear weapons will be on the agenda when president trump visits next month. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers, this is bloomberg. we are getting the first trades on subaru coming out from the japanese press on these uncertified inspections. the stock is down 2.7% right now in tokyo trade. the biggest drop since july 18. subaru,not just about but the other automakers in japan inc. where are the other skeletons we are going to find? what other coverups are happening in japan? how much is this tarnishing the made in japan brand? just more detail according to the nikkei reports about whether

there will be a recall or reinspection is necessary, that's yet to be determined. up to 300,000 vehicles could be subject to such a recall. we are looking for some details in the company. the errant is company of subaru, so we will watch them. who is going to be the next fed chair? it's a merry-go-round of people possibly in that seat. kathleen hays is here with more. the latest seems to be these reports that yellen will not be the one. kathleen: she did tell fox news earlier -- or heated, donald trump, that he likes janet trump,-- he did, donald that he likes janet yellen, but once to put his own mark on the fed. he has ruled out janet yellen he

has also limited kevin warsh and before that, he eliminated very come. that leaves -- gary cohn. that leaves two. but the president changes his mind every day, so we can't be sure it's just down to these two. john taylor is a former undersecretary of treasury and the inventor of the taylor rule, an equation for how to set interest rates. we had a former president of the federal reserve bank of withdelphia and he agrees the john taylor's rules-based approach to monetary policy. he says it is not a mechanistic report. he says he can defend fed policies when they have to and he is someone who will foot -- who will push for fed

independence. he said john taylor would be his pick. taylor is likely to be much better equipped to deal with the questions i was considering in terms of what we do. i am supportive of the john. that is not to say the other candidates cannot do a good job. but given my criteria about what leads tos needed, it picking john. interesting, at a time when the ecb announces a dovish taper, the boj to meet asked week, so much time and attention and focus being put on the race for the fed chair? donald will make the announcement by november 3. maybe he will wait to when janet yellen steps down next thursday.

betty: my favorite line is, he could change his mind. we don't know where he is going to lean on that one. kathleen hays is staying on top of that for us. investors are betting a number of central banks may need to follow the fed and their western counterparts thanks to booming exports. let's bring in and occur in joining us right now. story, seen this growth in particular when it comes to investor banks. what does that mean for central banks? equations part of the that may be changing. they haven't been following the fed tightening. what is happening now is this in during export boom in asia becoming more entranced than people anticipated. promoting --

possibly even increasing wages. if that happens, central banks will have to respond. one contender is the bank of korea, given south korea is going gang busters. how much longer is it expected to run? it is surprisingly on the upside. the view was tied to the smartphone cycle. once the updated handsets were out, it was petering off. it seems to be shaking that off. the demand is not just coming from the u.s. or eurozone, but from its original asia demand. asians are buying more stuff off each other and asia is entrenched in the global supply chain. they are building the cars and

gadgets that need to go to europe. the feeling that it has lasted longer than anticipated, it still has legs to run. that is helping japan, as well. as we saw with these inflation numbers and our ago, inflation is going nowhere in japan. what does that leave the boj? guest: it is going nowhere fast. one of the things that came out of the election was, we are ofng to have a reinforcement abenomics. be voted in ifa he seeks this? even as the ecb tapers. japan is nowhere near the 3% target. there is a feeling that that is part of the problem. or worrywer the target about deflation. betty: thank you very much.

enda curran there. why the ecb might be looking at a short-term taper. later on this hour, wi-fi do has disappointed. -- fido has disappointed. more on that next. ♪

♪ asia, this is daybreak i'm betty liu in new york. yvonne: i'm devonte man in hong kong. man in hong kong. is as long as the inflation out what improves. sincero falls the lowest july. let's look at the reaction now. michael, welcome.

you have to give it to mario to execute this taper without the tantrum and manipulating markets. was it to dovish coming from draghi? ecb pretty much hit the nail on the head in terms of expectations around qe, the 30 billion per month. it is a survey of clients. it shows it is pretty much what they consensus was. it was much more dovish and there was more unity than expected and they are happy for the economy to run hot in order to help stoke up inflation. yvonne: kept saying it doesn't suddenly stop although the other scoop said they could be stopping next year. what does that mean for raising rates? some say they might not be able

to do that until 2020. would he allow that? it's far too early to talk about rates. that's why they are putting efforts into the market. --: what does that mean for yvonne: what does that mean for euro? the first test of that hundred daily moving average, we broke below that the first time since april. is this a trend? michael: it's a thing that happens with bearish euro-dollar. it shows the market is the other way. the market is holding a long although they have started to reduce more recently. not only do we have this dovish surprised from the ecb, another story which we think is important is the progress made on u.s. tax reforms. we saw a budget resolution passed in congress yesterday, so

the bearish sentiments is likely on mind and -- yvonne: we also heard from draghi the downside includes developments. usually he talks about volatility. michael: he was talking about upside risks in this environment. the dollar has been under pressure and that is a concern for the ecb. high euro is a large headwind for your resume inflation. -- eurozone inflation. -- if wew much of this do get tax reform done, and we took one hopeful step toward that today -- how dollar bullish is that going to be? michael: we think it is very dollar bullish. the market is not anticipating fiscal reforms. the outlook is pessimistic on the ability for something to be delivered. the market is short dollars

despite the fact the market is expecting the fmc to raise rates in december. a combination of all these factors means we could get a move in euro-dollar from here. the weight we like this is against euro-dollar. we are looking to get down to 1.15 or below that. i doesn't dollar dollar-yen will continue this upward trend. betty: i could not help but notice, how much the euro dropped. after that press conference with mario draghi. it has been interesting to see, the currency market in a way that led the market. they have been most reactive, whether central-bank comments or interest rates, what do you read into that? michael: it tells me a lot about the positioning. the market has been buying euros the last three or four months.

it is also due to the expectations the ecb is going to be easing up on the amounts of combination. we are seeing profit taking on those positions, which has done well. that will help further downward pressure on the euro. guy: your forecast -- yvonne: your forecast on dollar-yen. is that going to be a risk here? we saw the yen start to search. michael: i think that will be the case now. position on the yen is quite like. that means you can move higher. how high, do you think? maybe 1.17, so not a dramatic rise to 1.20 because when the fed moves close to the dollar, it is not like to

be as strong as it was 12 months ago. thank you for joining us there. -- global head at perry bought it kobe steel buying more cases than expected. .nd of course, subaru we are following that story. that and reports of subaru allowing unqualified workers to inspect the cars. we will be live in tokyo to inspect the scandal in japan. this is bloomberg. ♪

♪ this is daybreak asia, i'm yvonne man in hong kong. betty: i'm betty liu in new york. the scandals keep coming in japan. using admitted

unqualified staffers to conduct inspections for as long as three decades or more. lowered. fuji have tell us what these faulty inspections are at subaru and possible for be other automakers in japan? >> first of all, i want to point out that at this point, this is not as dire as kobe steel. what we know is, for as long as had people whou were in training to become certified inspectors. they had training, but they had not received their certification doing these quality inspections. as far as we know, something like 300,000 companies cars might have been infected, which

means they might need to do recalls, but we haven't heard fake data ort faulty parts or anything like that at this point. >> that is a fair point. at least the seemingly with these initial reports to that level with kobe steel, fuji heavy industries is the parent company of subaru. the stock is down 2.5%. what has the company said so far? what do we know? >> there may be a press conference later today. they are still looking into things and they are going to think about when they can address this. we have a source at that company that confirmed it is true these unqualified people were doing the inspections. they have not said more about that. subaru is a big supplier of cars, not just to japan, but to the u.s.

it is a big deal and we will hear what the regulators say and put the pieces together to see what the wider implications are for the industry. yvonne: we have been following the headlines of kobe steel. just the broader scheme of what we are seeing when it comes to kobe, subaru, nissan. is there a solution to all this given to government efforts push toward corporate reforms? we have not seen corporate governance conflicted, or happily -- or have we? >> we have been seeing accounting scandals going back to oakland this and toshiba and others, and this involves

problems. we also had industrial standard problems, like certification and doing inspections. we are trying to figure out, is this bad news that standards are falling across the board? dois this something more to with better quality oversight -- that her job of finding problems once they come up, maybe do to digitalization or data? we are still trying to get a sense of that. it is strange japan inc., which has edited from abenomics and has cash on its books, might be suffering these quality control problems. it tells you japan has been under pressure for some time from asian rivals to stay competitive. that is what we are seeing here. yvonne: china and south

korea moving up the chain. brian, thank you. coming up next, on a roll. we will look at the latest result from casino operators in macau. this is bloomberg. ♪

♪ 8:30 in singapore. some dark clouds looming on the opening of trading there. the markets want us to go to madison, wisconsin. john taylor is speaking this moment. betty: normally, we might not be monitoring these comments closely, that he is a fed chair contender. we have one headline coming out what he says lowering u.s. growth is due to economic policy. a little cryptic there. we have to parse his words as much as we have to parse the fed chair's words. case, taylor says it

lower growth is due to economic policy. we will monitor his speech at the university of wisconsin. let's get to first word news with jessica summers. jessica? jessica: the price gauge remained unchanged. core consumer prices including fresh fruit group .7% from a year earlier, matching previous estimates. underscored gains views that the boj will continue on its current course into next year as its peers normalized holocene. -- normalized policy. that compares with financial guidance of 30 or 40 basis points announced earlier. the 10-year note's work priced at -- china offered the bonds unrated with a break of traditional practice. the u.s. is stepping up sanctions on north korea,

imposing sanctions on the labor minister. kim jong-un are targeted. the campaign to persuade him to abandon nuclear weapons are on the agenda when president trump visits japan, china, and south korea next month. janet yellen is out of the race for the fed. the field is down to two, john taylor and jerome powell. trump said his a liking for yellen was known, but he wants to make a mark on the fed. he will make a decision next week. >> i think john taylor as an economist is likely to be better equipped to deal with the questions i was considering in terms of what we do. i am supportive of john. that is not to say the other candidates couldn't do a good

job, but given my criteria about what i think is needed, it leads to picking john. jessica: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers, this is bloomberg. we will see how the asian markets are shaping up. let's get the latest from sophie kamaruddin. we have snapped out of this record straight for japan, but it doesn't seem the rally is bending said. are's bill seeing gains for the nikkei 225 this week. we are still seeing gains for the nikkei 225 this week. we have the earnings parade to consider and we have inflation -- out this morning. that could support a revision of the price.

will find at that out after the policy meeting. take a look at what is moving the dow, health care and financials leading the charge, the pressure is continuing for the utility sector, falling .21% this morning. they have asked major power players to sell reserve power to the market. it has fallen for a third day. , subaru. it dropped 3.3% as we learn more about the inspection issues. that is the biggest drop since may. that is weighing on those stocks, but the better than forecast diamonds from fuji has seen stock climb from a high. earnings are a key driver for the japanese session. betty: macau is the gift that keeps on giving, profit doubling

thanks to the introduction of the wind palace. here is our entertainment editor in l.a. take us through our numbers of white macau is good. >> they opened up the wind palace in 2016, which gave them half the quarter of results a year ago. they have a full quarter of the wind palace this afternoon and it took off. a year ago, you had steve when planning about construction activities going around the properties that made it tough for people to get in and out. those impediments work there this quarter. you also have six months of recovery in the gambling industry in macau with revenue growing at her than 20% in the past two quarters. those things helped him out. too?: did macau help lds

>> they had a good quarter, the on both sales and earnings. they are betting more in the macau market, he is going to thed $1.1 million redoing -- into a london themed property or did it will have properties based in venice, london, and paris in the macau market. you can see most of europe without leaving asia. yvonne: talk about the new growth initiatives because there has been a focus in the the ip and a mass-market sections, we have seen these family-oriented theme parks and resorts in macau. is it too crowded in the space or to competitive? >> sam said that visits were up and people were staying longer. there are no signs of that yet.

keep in mind the market went through a long downturn. haveesults we have seen been the best since 2013. it is climbing out of a deep hole and it will be a while he for things -- before things look top he again. >> when it comes to business in las vegas, this is the same quarter we saw the las vegas shooting that happened. have we seen signs of improvement? what are they saying on that front? >> we had mixed comments on that regard. seen a said they have drop off in asian visitors following the shooting. said they had no impact whatsoever. it depends on who you are marketing to. wynn also said business in las vegas was the best he had ever seen it every the best

third-quarter -- seen it. the best third-quarter he has ever had. yvonne: we will leave it there. taking a look at more earnings, baidu tumbling with its earnings outlook. we have ramy inocencio joining us to break down the numbers. this is the situation where chinese politics played a part. here isat we are seeing the political impact on the share price and on the revenues for baidu. this goes back to the 19th national congress. they said they wanted to crack down on on might as and because there were fewer online ads -- online ads and because there are fewer online ads, there was less revenue. lookdid tear that down a bit by 11.6% or so, but in terms

of q3, it wasn't the q3 numbers, it was a q4 look ahead. hop on the bloomberg. this is the financial analysis function. q3 numbers here in your brighter shade of orange actually pops billion --bout $20 -- billion, up to it is not going to be that high. because of the revenue they will not be having. you can see further ahead, it is expected to go lower. will that have an effect? the national congress only lasts a week or so. it is only once every five years. maybe that might rise again. hot back into the uber terminal because there were good things to talk about. -- hop back into the bloomberg

terminal because there were good things to talk about. we could see this rose year on year about 31%. that is really good. this has been pushing the share prices of a baidu to 59%. that is the positive. the negative side, the customer base has fallen 7%. we will see if that has an fx. because i -- and affect. knock on effect. the yellow line here is the price of i do. the price is higher than the 12 month target. is a negative when you look at the red portion at the bottom of this chart. it has been rising. there on out 22.

the holes are 13 and the cells are two. definitely missing the boat, baidu is. >> up next, global exchange needs to get the ipo. we will hear from the singapore exchange and they host the share sale. this is bloomberg. ♪

♪ this is daybreak asia, i'm yvonne man in hong kong. betty: i'm betty liu. aetna surging in new york after the washington general reported health net is going to by the insurer. while cbs dropped. -- cvs dropped.

there is a bigger competitive for unitedhealth group, the biggest u.s. medical insurer. is the latest japanese name and broiled in wrongdoing after it allowed uncertified staff to carry out quality checks on vehicles. it is a practice that has been going on for three decades. 300,000 cars could be affected but the company has yet to decide on a recall. will submit a report on its practices by the end of the month. betty: iphone x preorders begin on friday. apple is facing limited supplies of some components. the date may slip after the first few million orders. advance the phone in led to shorter lines. on my customers don't pay up front.

they drop the cash only when the iphone is a shift. can't wait for lots of ipo's around the world, particularly saudi aramco. they are investigating possible investments to grow its businesses. lulu china says exchanges make move away from traditional part of corporations which tie up client access. he spoke to bloomberg editor tracy alloway. closed. the views were wide-ranging. shares, it allows for and we are in no hurry to implement. when we reached the conclusion, we will update the market. it sounds like you are leading that way -- meaning that way -- leaning that way.

>> it allows for choice. it allows for market -- are companies already knocking on your door? >> there has been some interest in secondary listings. tracy: what do you think about the saudi aramco listing? we heard that they wanted to be the exclusive venue for it. is that going to happen? companies,for global there is a significant presence. avenue of usnd one for wider investment. companies that view on ajax and other locations. more than 40% of our companies

are outside of singapore. tracy: do you feel you are in the running for a piece of the listing or have you given up? >> we are as good as any other exchange and we stand as good a chance as any others. >> our extensive interview with singapore exchange ceo. we have also been speaking to other players. barclays reported a rise in profits but revenue fell 31%. lagging behind the average of its u.s. peers. >> this is the restructuring of our quiz and setting up the new organizational sector to reflect what regulators asked us to do. below that group, we have to entities. -- two entities. andave barclays u.k.

barclays international, which is the consumer and wholesale bank. structure is supported by our service company. we have 81,000 employees. this is the new structure where we have oath of wholesale bank and consumer bank but separated as eagle entities. thes: let's talk about results. 1.1 billion pounds. i want to get to the investment bank. numbersid deutsche bank and their trading job 30%. how did you do? before tax, it was up 32% versus third quarter of last year. and the profits were up 44%. we are pleased with the progression. profitability as far as return on capital was slightly over 7% versus a little bit over 4% last year. they also came out with new targets.

we are setting a probability and 2020r 2019 at 9% at 10%. like the rest of the industry in the corporate and investment banking, trading was muted. volatility was low, volumes were low. like most of the industry in our business, we had revenues off in the mid-20 level when you that out certain adjustments. the questions you are going to face is, what is the toleration from shareholders at the i.b.? have an objective to deliver our cost of capital and higher to our shareholders. in 2019, we will deliver an overall group.

we will turn in an equity of roughly 9% and 10% in 2020. obviously corporate and investment bank will have to make a contribution. the strategy of barclays is to be a diversified global financial institution where you have profitable consumers bank and a profitable payments business. our u.s. business is growing 10%. we announced yesterday the co-brand relationship with uber. that is a great opportunity for our u.s. card business to win a mandate with american airlines last year. we are going to go for a variety of sources. that is a goal of this management. that was barclays ceo speaking to manus cranny. you can get a roundup of that story.

bloomberg subscribers can go to db go and it is also available on the bloomberg app. you can also customize your settings. xi sets out his priorities. how rising living standards can affect business. this is bloomberg. ♪

♪ this is daybreak asia. i'm yvonne man. betty: betty liu. presented a new economic vision focusing on rising living standards over high-speed growth. let's take a look with bloomberg asia executive brian bremner. will businesses feel this pressure to fall in line with what president xi outlined? brian: at a certain level, i think they are going to have to adjust to the new ira. as you said, it was clear one of the big takeaways from his speech was that he wanted to improve the living standards of ordinary workers, not just management. he wants to address the wealth gap, which will have indications for the property market. he wants to make china a better experience for the working

population than it has been during the high-growth, high-speed years. how are they already rising to this challenge? an: being a multinational in china is a multifaceted experience. it depends on which industry you are in. in the consumer goods space, you are starting to see companies trying to get ahead of the curve. starbucks is an interesting example. they are expanding their health care plan to cover parents of workers. the is a recognition of hole in the safety net in china. umere are companies like y china, that is offering. options to managers running their fast food outlets. food.s unusual in fast yvonne: to me the chinese

property developers. there is the one line -- tell me about the chinese operate developers. how are they positioned in this environment? brian: i'm sure that line cut their environment? it attention. incomests analyze the inequality in china and it came down to housing. you are in or out of the market, either you are struggling to get in or you are writing the bubble up. what that will mean is that there will be a serious investment in lower income housing in the major coastal cities. then a buildout of the housing stock in the second and third tier cities in the interior. it could be an opportunity for companies somehow affected in that industry.

brian bremner joining us from tokyo. that is all for us at daybreak asia. take a look at what is coming up in the next couple hours. >> i'm looking at banks and markets. plenty of chinese banks are doing quite well. >> we are going to have a look at those. to, what isoubled that figure in doubles? where are we in this rally? we so what happened with u.s. earnings dominated by microsoft and amazon and alphabet. these companies are driving things and the stoxx. it is a big day. the budget taking place. ubs is going to go through that in about an hour.

they have a target of fiscal you do you have an election coming up? they will ask that question. vote for sweeten the him and his cause, as it were. they are looking to invest in technology, k2 will join us. have been early investors in uber, alibaba, and airbnb. that is what is coming up in the next couple hours. from daybreakhat is it asia. this is bloomberg. ♪

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♪ rishaad: 9:00 a.m. in hong kong. 9:00 thursday evening in new york city. haidi: i am haidi lun in sydney. this is "bloomberg markets: asia." ♪ rishaad: reports from washington say janet yellen is out of the race, leaving john taylor and jerome powell. haidi: the ecb and the headlines, mario draghi saying a relativelyor