♪ 7:00 a.m. in hong kong. we are live from bloomberg's asia headquarters. markets set to rise as better than expected u.s. growth at street optimism in the global economy. a big day for earnings, china's for big banks reporting, margins and assets improving. >> it is just after 7:00 p.m. in the york. president trump tweaking that he will announce his preference for the fed and coming days. sources tell us he is leaning towards jerome powell, but john

taylor remains in the race. ♪ >> got a keep that interesting. can't give away the person. it has to come down to the wire. this week will be quite interesting. .e have so much on tap everything from the boj meeting on your side of the ocean to the new pic for the fed chair. lots of economic numbers. donald trump heading to asia. i want to mention a chart that we will be looking at throughout show, 7997. it shows you how the 10 year has climbed above 2.4%, which has been considered a red line. this is why it matters so much.

week couldppens this finallyoming to terms that with the yield of about 2.4%, maybe we see the end of this bull market. >> i'm sure we will be checking that chart there out the week. seems to be coming back to the fixed income market. they could be tested in a big way, so something to watch out for. plenty of far, given green on screen on wall street on friday, technology earnings fueling momentum. new zealand positivity when it comes to the index, up .25%. that 6% drop in the kiwi since the election will be key. we are down .2% with the nerves of central bank reform and

possibly leading to a further slide on the kiwi. up .1%.200 australia also dealing with its own political risks with the prime minister losing the majority seat in the lower house of that country with the dual citizenship debacle. the boj meeting tuesday. japan retail sales coming through this hour. , some outside.71 of the open for the nikkei 225. earnings kicking into high gear in asia. including thee big four banks out of china this week as well. let's get you caught up with first word news. pro spain demonstrators gathered in barcelona as separatists lawmakers rejected madrid's proclamation of control. the prime minister has dissolve the parliament and put the

administration in the hands of his deputies and called for elections. decide workers will whether to strike in favor of independence. iran is complying with the new through according to a watchdog and is calling on all parties to abide by obligations under the accord. president trump refuse to recertify the deal and washington has impose new sanctions on tehran. the philippine president said the u.s. should stop threatening north korea and reassured kim jong-un there are no plans to force him out. he said the military rhetoric should be toned down and should try to talk to north about its nuclear program. the president applies to japan today for talks with trade on the agenda.

a new poll puts president trump's approval rating at 38%, the lowest in modern times for this stage of an administration. the survey shows republicans at 81% and democrats just at 7%. trump scored higher because of the hurricanes in texas and florida and on the economy and lowest for health care and puerto rico. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you so much. took to twitter to attack hillary clinton and the democrats before the first charges in the russian investigation may be announced. let's discuss were this inquiry stands right now and washington. issounds like the president

trying to deflect some attention on the russia probe. what we expected to hear as early as tomorrow? chargesuld hear about and who is being charged, maybe 1-2 people, very early monday willng u.s. time, so that give president trump even more to talk about, even though we expect he has been told not to say too much. things lawmakers are looking for come up london's, and journalists, who has been charged, how close do these people come to trump's inner circle of advisers and people who work on his campaign, or are they more peru real. as one lawmaker said today, the charges that have come to light after many, many years, a business deal with russia, or something related to last year's campaign, so there is a lot we don't know and hope to know within 12 hours perhaps. that's right.

we don't know a lot, but what is the speculation? how damaging might this be to the president? >> it is another major distraction for the president's legislative agenda for a week where he was supposed to make a big reveal on who the next central bank chairman or chairwoman will be, so that is a huge deal that he has been touting. he has made it into an apprentice-style song and dance. of course from his own preparations ahead of a pretty important 11-day trip to asia as well as tax reform, which is moving quickly through the congress. as big eventsed this week for the president. chair, about the fed this big week when he travels to

asia. will that derail any announcements we could hear on tax reform then? >> tax reform is on a different track. we expect the house republican tax writers to provide details of their plan. they have been doing it in sayet, in private you could , and there is a lot of elements of that plan that people really want to see, about what happens to certain deductions, property tax deductions, mortgage interest, how 401(k) retirement accounts are handled. that is independent of trump and details will come out this week, be would have expected to be some kind of joint appearance between the tax writers and president trump. we don't know if that will go ahead, but certainly the tax announcement will take place as

planned. >> why do you think we haven't seen -- we saw with mitch mcconnell a couple of weeks ago. do think were not seeing a lot of unity? the house republicans and the senate republicans are on different tracks. they have different bills that will have to come together in the end, and we may have more detail on the house plan than we do on the senate plan, so i would not say there is no unity. we did see a little unity today on the morning talk shows, a couple of republican senators came out with a unified message the tax plan as they see it won't raise the deficit and talking about the small amount of additional economic growth they think would be enough to offset a sharp reduction in taxes, so it does seem like there is a fair amount of unity there, but we expected

that there will be a lot of live being -- a lobbying and opposition to the changes in the tax plan in that be the next big thing to look for. >> thank you. has we look ahead to what will be a big week out of washington. the race for the next fed chair coming to the home stretch. president trump put out a video saying he will announce his decision this week. kathleen hays in tokyo to cover that the a.j. does the boj. -- boj. her reality shows what trump has made this into. >> absolutely. he is not messing around. he went out of his way to make a polished video for instagram and tweeted it out to his 41 million followers, making up his mind and announcing it this week. >> i will be announcing it

sometime next week. it will be a person who hopefully will do a fantastic job, and i have somebody very specific in mind. i think everybody will be very impressed. some reporting by our white house team of the weekend as tell three people bloomberg news that president continues to lean towards jerome powell. he is a current fed governor since 2012, is a banker for many years. as continuing janet yellen's policies of gradual rate hikes. janet yellen the current fed chair apparently came off as very polished in her meeting with trump, but does not appear to be in the lead. also in the mix. stephen mnuchin telling reporters over the weekend that trump is unlikely to announce his nomination to be the vice chair at the same time as he

announces the position for the chairmanship, so don't expect that. do expect this to be announced before november 3. >> you are in tokyo to cover the boj policy meeting, starts today, ins tomorrow. what is expected? >> a little wiggle room on inflation. boj can't do anything policy wise. they are so far from the 2% target. cpi they cut their 2018 outlook? you can see many lines. the core cpi is 0.7%. the horizontal line shows the 2% target. governor kuroda and his colleagues are far from that. one more thing going on, tailwind on mobile phone charges. expected to move the boj

closer to that target. ir youill keep the curve control policy in place. the consumer doing their part as well in japan. well,have the fed has maybe more of a sideshow, but what will we expect out of this meeting? december right now at 85%. could we hear anything in the fomc this week that could bring that number higher? >> we will see. we will get no press conference. that is why we don't expect any move now. the policy statement could give signals about where the fed is leaning, give us a sense that there is a december rate hike on the table. on friday, that u.s. gdp report, 2.6rowth topping the

percent forecast in spite of all the damage from the hurricanes. this is chart 3101. you can see how the gdp has picked up at the far left hand side, that 3% data point. next to it is 3.1% for the second quarter. back to back the best of two quarters of growth since early 2015. that is with some help from people buying cars after the hurricane. less investment in oil and gas structure, but the consumer really helping. the fed also watching on monday in the u.s. for the personal income and spending report with the key inflation gauge. 1.3% expected to remain at . also watching the jobs report on friday. the tightening vapor market continues to give those ready to hike rates the confidence to move ahead, but leaving inflation has to follow along at some point. we shall see. >> absolutely.

thank you so much. the boj meeting, kathleen hays. looking ahead, we will talk commodities with s&p dow jones on some of the biggest threats to gold and oil. that is later in the program. faceming up, bond traders a pivotal week with the data in the coming days. i.t. markets gives us it's strategies next. this is bloomberg. ♪

♪ this is "bloomberg markets: asia." traders will be facing some of their biggest fears this week perhaps. president trump will announce his pick to head the federal reserve. the fomc will release their interest rate decision. on top of all that, we get the latest reading on the u.s. jobs

report. got all that? let's stitch this together with chris weston joining us now from melbourne. good to have you with us to kick all of this off. we were showing a chart earlier about how the yields for the 10 year up above 2.4% makes it that much more nervous for bond investors as to what will happen this week. e the fed chair pick and talk about jerome powell. with that the of positive for the markets, in particular bond investors? how do you think they would react to that appointment? looking to buy duration on the back of that, a flatter curve. , just twome down candidates now. the weekend speculation is

jerome powell is the front runner. that would be the easier option for donald trump. in theory, it's a just a flatter curve. i think that is what we have been seeing recently. they been moving rate expectations to the front of the curve and you seen the reaction in the twos and fives. justice -- just a flatter curve, but nothing too aggressive. >> it sounds like you are saying steady as she goes? it will be status quo? certainnk there are calmness around the fixed income market. is he going to shake things up? the fed is data dependent. it has been largely on the positive side of things. year andinto the new

people are focused on tax reform and what deficit position will be and what kind of fiscal stimulus will happen from that situation. it is just one vote. if jerome powell gets that gig he would have influence, but still just one vote. ultimately still data dependent. if you're looking to position yourself on the rate curve coming you are asking how much of an influence will he be and the data to drive those interest rate expectations. what seems to have more sway on the 10 year? the pick for the fed chair or the prospect of tax reform? longer-term, it is a combination of both. taylor, there is still an element of confusion as

to what he would do. i heard investors saying he will be very mechanical in his thought process with reform. the market has effectively sold off in the rates market every time his name is mentioned in a positive light. he came out with a white paper a couple of weeks ago saying whilst he has created the taylor rule, there are certain circumstances where having an interest rate below the applied level, so will he be as hawkish is what he said? it is a combination of who is at the health and what the data looks like longer-term. not just the bond market, but equities. you said they are tired, fatigue, but we have not seen any kind of correction this year. what will be the trigger? how much of earnings has ordered been baked in? we have not seen a 50 basis

point on the s&p as the benchmark for 38 days, so we are going into record consecutive run territory for limited drawdown. everyone is in the market. levels, theat cash banks we trade with are talking about international client cash levels at record lows. clients aretional low cash balance. the active managers firmly in the market. you wonder where the new money will come from? a selloff in fixed income, that classic rotation that never really materializes? there is limited cash on the sidelines. the thing that will cause a genuine correction is going to be a stronger steepening of the real rates market.

you will see that 10 year great accelerate. what will cause that? it would have to be the fed behind the curve. we are a long way from feeling that inflation will skyrocket. of miles aways from that point, so i think profit-taking is what will happen if we are going to get it. that may be from a disappointing payrolls number this week. the payrolls number, but i wanted to interrupt for moment because i want to get back to this fed chair pick and remind our viewers about what a guest of hours in the last hour said about this pick and how market friendly it might be. just listen in on what he said. will get an idea about just how close does the trump administration is to the stock market. if he surprises people and real points janet yellen, that will

probably be the most market friendly picked because it will mean there is no uncertainty about where monetary policy is going, so that should be good jeromecks, but otherwise powell is the closest of the alternatives to janet yellen. think that the market friendliness is really as big of a factor as it might appear to be? that is in favor of asset prices continuing to go in the direction they are. president trump believes he is part of the reason he is behind that situation. janet yellen, if what we are seeing is correct, is out of the race and we are down to taylor and powell. if janet yellen is appointed it would because of how she handled

raising interest rates a number spreads and yet credit are tight and the equity market at all-time highs moving higher, and the economy is transitioning nicely. earnings is good. trump would be saying more of the same, please. would bects we surprised if janet yellen comes in given her view around regulation as well. >> chris, great to get your perspective on this. ig market strategist joining us live this morning. plenty more to come. this is bloomberg. ♪

♪ >> this is "bloomberg markets: asia." i am betty liu in new york. >> let's do a quick check of markets in asia so far. a lot of greene after the momentum on wall street on friday. the nikkei 225 will be key to

watch with futures higher this morning. >> they are. speaking about futures, u.s. futures, actually showing a little pullback given the week we will have. ♪

>>; 30 a.m. in hong kong. -- 7:30 a.m. in hong kong. angie: it looks beautiful there. kind of. sunday, miserable in new york. it closed brighter on friday fueled by tech gains. i am betty in new york. yvonne: i am yvonne in hong kong, you are watching "bloomberg daybreak: asia." president trump has unleashed tweets attacking hillary clinton and the democrats. to press approved charges. the indictments are sealed and

it is not clear who is implicated. it is reported the first arrest could come on monday. the president tweeted phony collusion and accused democrats of a witchhunt. has searched the fire of speculation about the next fed chair by tweeting is video saying his decision will come within days. sources say the president is leaning towards governor jerome powell. john taylor remains in the race. the president has said he will make it known before he leaves for asia on friday. reports on the middle east say the heat is being turned up on qatar. the membership of the gulf corporation is to be canceled. it comes four months into the chrysler's -- into the crisis. attempted to has mediate, but says one cannot force negotiations on people were not prepared to talk. biggest airlines are

announcing results with operating profit to top $1 billion. that figure comes from the nikkei news which says profits at the japan airlines will be 1800 million dollars in the first half. global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. down to theunting market opening in tokyo. we have the latest sophie kamaruddin in. not just for the fed, but the boj. sophie: we are waiting on japanese retail sale data to drop. slug us retail sales have not been on the side of policymakers. but look at 238 seven. this shows you an improving picture anticipated for retail sales numbers along with a modest climate in wage growth. mean fort this might the boj. it could reinforce economic green pass that japan is

enjoying and provide more for the bh aged to maintain its progrowth strategy. we are not anticipating them to make policy changes but they may look to trim their inflation given that cpi does remain. yvonne: we have seen quite a bit of rain in tokyo. when i was in japan it was thai typhoon they have at -- and we have at 21 there. there is a dynamic of improving environment for the retailers. the yen is a big factor in this as well. sophie: quickly on the sales we could be seen could come from the online segment, not just brick-and-mortar. going back to what is happening with the yen. we saw a slip against the dollar back below the 114 level. we are seeing hedge funds continue to pile into short positions. this has happened before the snap elections. this chart on the terminal shows

you the climb in leverage that i am positioning on the line in white. this shows you that wagers on yen weakness are at the highest level in two years. the are 15% shy of strongest level since 2007. this shows you that traders are less bearish on the dollar. the dollar yen, given the fed decision due on wednesday, as well as other key economic data from the u.s. that to show how the dollar could shape up going forward. with the yen holding onto overnight losses, let's show you what could be happening for the nikkei 225. we are anticipating a flat opening there. just slightly higher with positive starts for soul could be in the making. we have plenty of earnings in the pipeline. a lot of key players on the agenda with the likes of sony. keep an eye on retailers given the retail sales data we are waiting on. .vonne: thank you so much

let's turn to oil now and focus more on it. brent crude eating a two-year high on friday on speculation. thatwill extend beyond march. exxon and chevron drop on earnings. china's oil majors have a lot on tap. we need to know. looking at the share price here, it is interesting that exxon mobil did rise on friday. chevron fell 4%, the lowest since september. it is the magnitude of the drop that has investors shrugging it off for a exxon, but really pulling away from chevron in friday trade. let's go into the bloomberg 624.nal this is g #btv on the order for exxon, they only miss the exit by 30,000 -- the estimate by 30,000 barrels.

that was less than half for chevron, which was 60,000 barrels. it was 1% versus the miss of 2%. we saw that fall and chevron taking a hit. both companies are trying to reserve that cash. for example, exxon is trying to keep it around $4 billion for the last four years. we saw print fall from $90 back in 2014 and now climbing. with that said, let's look ahead to the chinese oil majors. this is the financial analysis function for petro china. today.s out at the close this is the fa function on your bloomberg terminal. they talk about this being a roller coaster ride of $90 oil. look at the yellow lines. this is the exploration and production for petrochina. we see the fortunes rise and fall. in 2016.o a low

we are seeing that pushed back up to 2017. bloomberg intelligence does say it expects a rise in terms of profits. -- posix -- brent crude is up 13% over the quarter. that is a $50 break even petrochina says. profit.lly a rise in it is a $50 break even for joe china, it is actually a $60 --ak even when it comes to we see that white lines for brent. we see the fortunes falling. with that break even, they are actually expecting bloomberg thelligence for a loss for emp unit. that could have a knock on effect when it comes to earnings. let's do a wrap on how things are going globally with petrochina and how it goes with

market cap relative to u.s. competitors. white, justs in above the $200 billion line. exxon has far been number one over the past fee years. $355 billion. in yellow, shell and in purple, chevron. this is where they stack up and it is not very good. terminal, aberg recent article came out saying this is one of the biggest losses for petrochina since 2007 and it could get worse moving ahead. looking for that floor for petrochina. the firste is up $60, time in more than two years. wti rose to a more than eight month high in the speculation that they will extend its supply curves next year. the outlook of oil with the managing director who joins us in our hong kong studio. good to see you again. what do you make of the moves we

have seen in the crude markets? we heard from the saudi prince think he is upping the ante's if he wants the curves. is this purely in opec curve? >> it is not. i think the chinese demand growth acceleration prospect is really bullish for energy. now that we see so many commodities moving up together, it shows that the demand side is more powerful, possibly than the supply side. wally opec and the u.s. supply have an impact on oil, we have seen this term structure change in brent showing that there are shortages. shortages are hard to replenish. i think it is both demand and supply. seeing thisave been deepening discount. i have this chart to show our viewers. it is the discount that wti has over brent. we have seen it the most in almost two years. i think it is at a 6% discount. do you see it widening more or

giving more room for the shale exporters to ship around the world. ? on how foss depend refineries come back online after the hurricanes. the bti i came in pretty close to brent. it almost turned into a short it's situation. it just touched an equilibrium point before it widened back out. the hurricanes was the disruption, and it will depend on how fast the refineries and supply chains can get back together. was showing us we saw u.s. oil majors like chevron and chinese companies, and in europe we will hear from euro dutch shell. there is a lot of earnings on tap -- on tap. i wonder with earnings above the $60 a barrel level, will that elevate these companies back into -- as a bloomberg story on

our terminal, are we at the turning point now? the rising oil can certainly help these companies, but many times the companies are hedged so that they do not move exactly with the volatility of oil. wet happens is, if the management is smart, on the downside they never fall as much as oil, but they don't rise as much as oil. you may have noticed that the companies have not risen as much as the second in the equities as the oil has alone as a commodity. do you expect that to be that way for some time? jodie: i do. it is a long-term relationship between equities and underlying commodities. a can change depending on how quickly the companies can put on and take off their hedges. the companies are trying to reduce the volatility from the oil and have other things that they need to do for shareholder

value that may be unrelated to the oil itself. i want to step away from oil, but stay in the commodities space. i want to ask you about gold, and where we are headed with gold. particularly, given what we have seen with the recent dollar rally, but more so with the upcoming news about the new fed chair and where monetary policy goes from there. how do you think gold will react? jodie: it is really hard to pinpoint one factor on gold. gold really does not move exactly with the dollar, or interest rates, or inflation, or gdp growth. taken all together, you can see some relationships between how everything is moving. in particular, the central bank selling and buying with gold. but we noticed is the volatility -- the volatility of gold is somewhat predictive. there is a lot more upside than

downside, but the risk is if volatility hits in the 30-40 -- 30%-40% range, the could be more losses. yvonne: look at the the trigger of a 30% uptick in volatility? tax reform has not seen a whole lot of uptick, we have not seen it in geopolitical tensions. do you see anything that could trigger that moment? the chinese saw demand growth decelerate, and the u.s. and u.k. growth accelerate, that would be the worst case scenario for gold. it would be a really bullish stock good scenario and gold might have another drop. that would be the big risk. yvonne: also looking at a industrial metals, steel, aluminum, how much of a tightening effect has up and from china given that they shut out plans. environmental controls. how much of an effect could that have, and how long can it last? for precious metals, the

acceleration and deceleration of impact thaness industrial metals. it is hard to separate because, in china, metals are being used as collaterals and loans. they are now carrying credit risk. seemay notice, to industrial metals, as well as gold might move with the credit risk in china. yvonne: what other metals do think are more vulnerable? copper, nickel, lead, aluminum, anything to a lesser extent. yvonne: we will leave it there. thank you. usaging director joining here in hong kong. investors are expecting a share of buybacks. we will hear from the ceo, giorgio armani, next. this is bloomberg. ♪

betty: we are counting down to

asia's first major market open this morning and we will be focused on japan, particularly japan's economic numbers. you get the nikkei futures are quiet ahead of these numbers that will be coming out in a few moments on retail sales for japan. expected to show a rebound up 8/10 of 1%. this is for the month of september and the prior month retail sales have fallen by 1.6 percent. also expected to see an improvement year on year to 2.3%. japan.ory here in domestically a has been on the rise. as theyquestion for boj meet today and tomorrow is where the inflation is. and where that wage growth is. this is daybreak asia -- this is "daybreak: asia." yvonne: the banks capital buffers rebounded so profit in

praise. giorgio armani said it is to close to talk specifically about a buyback that he remains confident about managing the environment. >> i think the volatility is particularly is sensitive issue around the effects around major occurrences with very low volatility. it is clearly affecting institutional business. in general, i would say the cholesterol, like there is good volatility and bad volatility. we are missing a little bit of volatilitye positive . we even want to have disruptive volatility. we could see low volatility's also pushing more and more investors. and other forms of investments. volatility is not

what kicks the ip of the curve? we arere hoping for a, part to manage any kind of market conditions. it is very important for us not to go into wishful thinking about the environment. we see gdp growth forecast is set to be revised up again. the geopolitical situation in the market is still very complex. we are issuing -- entering into a very challenging quarter. i think we stay focused on executing on our current strategy. that is very important for us. when favorite subject, that you can report talking about. you brought up in america. we are almost there. actually, we are there. it is affecting .7%.

do we get a buyback in 2018? is pretty much a rude to talk about our capital return policy. in the past,hat, we have reached the capital levels that are needed for regulatory requirements. -- 42020, capital is done. we are looking to implement our progressive policy on our base, on our cash dividend. eventually, complement it with capital returns. it is too early to talk about that. that was ubs ceo sergio armani. we will have more on thinking a little bit later when they released the latest results. we will break that live right here on bloomberg, and speak to finance director. that is in a special edition of

"bloomberg markets: middle east." we have japan's retail sales numbers out now. yvonne: let's take a look here for the month of september. we take a look at the month on month figures rising 8.10% or it -- a point temper said. one pointen that down 7%. those numbers have revised towards -1.6%. a lot of that to do with the rain we saw erring the summer. we are seeing improvements on the retail trade side. you're on your we are seeing 2.2% year rise. -- year on rise we are seeing 2%. people heading into that. we saw the rise when it comes to those numbers at 1.9% for the month. betty: you could see a slight strengthening of the yen going into these numbers. now we are seeing a little bit coming off of the lows for the

dollar-yen, or the highs for the yen dollar. to a huge amount of reaction these japan retail sales. we will see more when the japanese markets open. you can also find in-depth analysis on bloomberg radio. tune in to "bloomberg daybreak: asia" and him up a app. you can access it by a bloomberg radio.com -- access it via bloomberg radio.com. stay with us. ♪

yvonne: this is "daybreak: asi." " betty: a quick check of the business headlines. australia brett -- australia bank says there are allegations that will be felt and the 2017 resolved. 10 million aussie dollar fine will pay the regulators $20 million cost and will donate 20

million to a financial consumer protection fund. the bank admitted breaching regulations on the bank will swap rates 12 times between 2010 and 2011. yvonne: hsbc post their quarter earnings with investors and analysts looking for resilience in revenue after share by led positive sentiment in the last two quarters. cost energy should have reached the banks $5 billion goal. it is likely to remain solid. apple is pricing a new iphone x with an extra $100 at rest by with the release five days away, customers putting in preorders at the chain are being caught charged $1099. 1249 for high-end phones. they say the higher cost with the purchasing options available on its website. what is an extra $100? yvonne: nothing when you are

buying a $1000 phone. loyalist aree ready to come up with that kind of cash. plenty of big stories coming up this week or it we will cover them all here on "daybreak: asia." we will be watching alibaba's second quarter earnings coming through for the market earnings on-- market opening thursday. company for alibaba appears to be on track to meet the higher end of its revenue growth target, which was set between 25% and 49%. profit earned from marketing, --baba's retelling entertainment as well as cloud computing. the core business is strong, but margin gains will be a delay given the investments we do see in all facets for alibaba. i have a chart that shows how much further week ago with alibaba, and whether it is expensive. if you tear it up with tech

names like amazon and facebook, it really much fits in the middle. price to earnings we are seeing for alibaba at 63.32. 78.96 -- 27896. fits in aally kind of sandwich between facebook and amazon. betty: facebook looks cheap. facebook reporting up the market closed in new york. reported their earnings for the quarter after stalling for most of 2017. the company sought a sustained pickup and app visitors to its different properties. the increase may have been held by instagram, which added 100 million users from april to september. you talked about how expensive 1361, were, but g #btv

facebook is nothing compared to netflix. take a look at how much the stock has gone up. netflix is a clear winner. much more ahead on "daybreak: asia." ♪ stay with us. ♪ -- stay with us. ♪ is this a phone?

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♪ 8:00 a.m. in hong kong. i am yvonne mann. welcome to "daybreak asia." markets rising amid optimism. earnings dominate the week. in japan continues as retail sales rise. consumers are more willing to spend. >> i am betty liu in new york. p.m.,just past 8:00 president trump will announce his preference in coming days. he is leaning towards governor jerome powell, although john

taylor is still in the race. ♪ >> we will be talking how this will be a wild week for the bond traders. trump taking his fed chair. the fed, boj meeting this week. what does this mean for the yield differential when it comes to the u.s. 10 year? jgb's?jgb's -- versus the lateeen since summer the widening of that yield cap has been -- and has been a beneficiary environment. we've seen a little bit come off , but still quite intact leading up to the boj meeting. signal forbe a good

the nikkei 225 although we did break that streak. we are still holding on to those twenty-year highs. >> indeed. monetary policy has been good for the nikkei 225. it is interesting to see this yield gap. oft to me is more a function the boj than the fed and how active for aggressive they will be in hiking rates come although we are above that level on the 10 year of 2.4%. will will see if the boj be cutting their inflation forecast for the near term. let's look at the market open with sophie kamaruddin. sophie: it is a heavy central-bank week for the boj, the fed. the focus on earnings. we have chinese pmi.

inflation from south korea, indonesia, and thailand on deck. japan retail sales for september signaling and improving picture. we did not see too much in yen movement on the back of that, looking fairly flat. pilingge funds have been on to bearish yen positions in recent weeks. japanese stocks opening higher .2%. we are seeing gains for seoul, korea, and sydney, the korean won gaining ground. .3%have the kiwi down getting sold on chatter that the central banks mandate might be expanded to tackling unemployment. the aussie dollar resuming losses. the currency looking vulnerable after friday's high court ruling government decisions

vulnerable to legal challenges. today,king vulnerable brent staying the course, rising .4%. let's get down a breakdown of tokyo. energy and telcos leading gains. energy climbing 1.7%. earnings when it comes to sinopec and other big oil majors in the region. we have that jump in brent helping to spur that segment higher. the nikkei two for a third session. discretionary stocks gaining .1%, but consumer staples on the back foot, losing .25%. >> thank you very much. let's get to first word news now. president trump has unleashed a flurry of tweets attacking

hillary clinton and the democrats. a grand jury has approved the first charges in the russian inquiry. it is not clear who is indicated, but could come monday. thepresident accused democrats of a witchhunt. united nations atomic watchdog says iran is complying with the nuclear deal and calling all parties to abide by their obligations under the accord. president trump refused to recertify the deal and washington has imposed a new sanctions on tehran. rouhani rejected talks last month on the sidelines of united nations general assembly. the philippine president says the u.s. should stop threatening north korea and reassure kim jong-un there are no plans to force him out. he says the u.s., japan, and south korea should turn down the -- rhetoric.ick

the president flies to tokyo today to meet with prime minister shinzo abe. north korea and trade are on his agenda. pros spain demonstrators gathered has legislators rejected control. the president has called elections on december 21. the next step comes monday when catalan government workers decide whether to heed calls to strike in favor of independence. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thanks. the race to beat the next fed chair coming into the home stretch after president trump put out a video saying he will announce his decision this week. kathleen hays is in tokyo for us this week, focusing on this video from the president, a bit of a tease for everybody. >> it is a tease.

it is putting us on notice when he said he would make his decision before he leaves on november 3. polished, well marketed, here is what president said about his upcoming decision. i will be announcing it sometime next week. it will be a person who hopefully will do a fantastic job, and i have somebody very specific in mind. i think everybody will be very impressed. >> another bloomberg news scoop ,rom our team in washington they are confirming that trump is currently leaning towards jerome powell. he has been on the board of governors since 2012. , held numerousng positions in washington, including at treasury. "net yellen, who came off as polished" in her meeting with president trump.

john taylor, well-respected in author of thees, taylor rule, still in the running as well. steven mnuchin and over the weekend telling reporters that president trump is unlikely to nominate the price chair at the same time he nominates the fed chair. again, we will get the announcement this week. >> we are indeed. it seems like we have been counting down to this for months. in tokyo covering the boj policy meeting that starts today and ends tomorrow. what are we expecting from the boj? can't do tooey much because inflation is so far from target. 7942, what they could do is change their outlook for core cpi for 2017 because it is at 0.7 right now.

the green line is the 2% target. the outlook is 1.1%. maybe not too much time in fiscal 2017. beyond that governor kuroda and his team expected to keep yield curve policy in place. they are battling falling mobile phone prices come up at the labor market is tightening, so the yen is getting weaker and retail sales for september came , a bit weaker2.2% than the forecast over the previous month. consumer spending money, the labor market is tight. the patientaying and inflation will rise at some point. >> we are expecting some inflation numbers out of the u.s., that fed meeting this week. fomcwill we learn from the this week when it comes to that december rate hike? >> it is all about the policy

statement. this is a meeting without a press conference. that is why there is your percent chance that there will be any announcement on rates, but they can talk about the referencedy be growth in the economy after third-quarter gdp came in on the high side of forecast despite the hurricanes. 3101, a nice solid line tells the story. the far right-hand side of the screen, 3%. the quarter before, 3.1%. ofhave not seen two quarters growth like this since early 2015. heading in a strong direction. spending overall on plant and equipment up a percent, almost a strong is the second quarter.

85% is the chance the fed funds futures markets is now for a hike. they will watch the personal income and spending report on monday, not just the consumer, but also the pce core deflator. it is 1.3%. is 1.3%, not exactly what they want to see. why did they have faith in the december rate hike? the cousin the labor market. payrolls expected to rise 300,000. statemente policy will get a lot of scrutiny. whoever is the next chair will be epic big topic of conversation this week. >> it will be. thank you so much. kathleen hays in tokyo. focus onontinue our central banks next to with a guest who says markets have priced in trump taking jerome powell or john taylor. hsbc canon, whether

deliver a third straight quarterly rise in revenue. this is bloomberg. ♪

♪ i am betty liu in new york. >> i am yvonne mann in hong kong. president trump preparing to name his pick for the fed. governor kuroda staying in the job when his term ends in april. let's discuss with the david mann live from singapore this morning. there is a scoop or headline when it comes to the next fed chair. today it seems like it is jerome powell. would jerome powell be a good choice for the economy? what can he bring to the table that john taylor or janet yellen can't bring? toohey wouldn't distinguish

much between choices such as paolo or taylor given they have been working together and seem to share in a broader sense some of the views on how policymaking should be done, more rules-based , not as much data dependency, not short-term data dependency. i think that will be the big difference. jerome powell or john taylor, the market would and thatre hawkishness will short-term impact the markets on treasuries and the u.s. dollar. >> what would jerome powell signal in terms of president preferences? one guest says he favors the market situation where they stock market is at record highs. he wants to stay the course but do something different. that jerome powell

has a different stamp to janet yellen when it comes to regulation? get the feeling it is more to do with regulation. ,n the rules-based approach that would imply more hawkishness, and i doubt that would be good for the stock markets and something that would not fit in with what the white house is looking for. it is probably more on the deregulation side, which may be more appealing. that may in reality not get a that dramatically anyway even with such a new person taking over the chair position, but would create more uncertainty for the markets on that front and they would worry about the potential for a surprisingly stronger series of rate hikes than otherwise would of in the case. beclearly this is going to the headlines this week. we also have an fomc meeting wednesday.

on friday, we get nonfarm payrolls, which normally would be to highlight of the week. i know the hurricanes will factor in and make this report more of a throwaway you might say, but what could we learn from the jobs report on friday? >> this is the hard part. assuming we get some feel for how much of what will be a bumper number by definition because of the drag from the hurricanes in the previous month , even if you get hat or above 300,000, and we are thinking 280,000, we need to get a feeling of the underlying strength here it with all these -- strength. with all these distortions that come thatcreated could be something that we will be watching. has you say in general, we will not the caring as much about the

payrolls compared to the other news for distortions reasons and the new fed chair and where the terminal fed funds rate goes. this will not change that. been the past, we have writing on these payroll numbers. on this a lot is riding 10 year yield above 2.4%. you have the equity markets up. you have yields being bid. you have the dollar rebounding from lows. what you make of the general direction of all these asset classes and what that is telling you about investor psychology right now? >> i think maybe you can argue there was some degree of markets positioning for having tested the lower end on the 10 year treasury yield, now seeing how far they can test on the upper end. if we get these major breaks

sustained, that raises questions around emerging markets. critical factor in terms of another reflation trade , maybe a rocket interpretation of the fed chair decision, and what if we get even more progress on tax reform the triggers broader fiscal deficits and inflationary impacts on what is already an economy growing at a decent run rate? you combine those things together, it would not be great for treasuries or emerging markets, but if you get a rerun of last year around the time of president trump selection, markets might see that as an opportunity long-term to buy into emerging markets still. we've been talking about these retail sales out of japan setting us up for the boj meeting that kicks off today. it seems like we are getting green shoots when it comes to consumption, domestic demand. is it meaningful?

will it sustain itself? we have been talking about whether this can and the inflation outlook for the boj. they will still be having a tough time achieving to 2% inflation target over any medium-term, but the underlying reality is that when you adjust for the number of workers in the of economy and the demographics hitting japan hard, just as they will hit many economies in north east asia hard in the 20 20's, the worker has not been two different than the u.s., so should we expect japan to grow in aggregate like the u.s. or europe? it is hard to do with those demographics. it is doing the best he can. i think policy will stay where it is. a longchange, but it is way off before the boj needs to

change its stance. demand when it comes to exports, japan, china, or south korea. that is causing this pick up an activity and investment from the private sector. it is that a signal for central banks that they may need to start following the fed and raise rates soon? more skepticalbe on how lasting that strength of exports will be around the region. i couldn't agree more. we were warning that my 2017 that the numbers would be picking up on the fact there is a strong correlation even in asia between commodity prices and export goods prices, which drop last year and recovered this year. it has also been the inventory restocking in china and structural stories and electronics that has helped sectors around the region, taiwan, singapore, and part of that is structural, the internet

of things, and the major launch of new devices this year, but is that something sustainably as strong as it was? probably not. is it enough for them to hike interest rates? we are not sure. the first one we would take his korea. a case of those that were at risk of doing more easing just holding off for now and going back into wait and see mode. >> thank you so much. we will leave it there. standard chartered's chief economist for asia. one feature on the bloomberg we would like to bring to your attention is our interactive tv function. live and see us previous interviews and the-into securities or bloomberg functions we talk about. this is for bloomberg subscribers only. check it out at tv . ♪

♪ this is "daybreak asia."

in new york. liu the latest business flash headlines. subaru has apologized for allowing uncertified inspectors to conduct quality checks on cars for decades. company submitted a report and is expected to recall 250,000 vehicles. earlier company submitted a thin recalled more than one million domestic cars because of similar tests. that a steel's bond risk two-week low after the company have8% -- 80% of customers confirmed the safety of its products. the current level pushes it is dealingeba, which with a corporate scandal of its own. more on industrial scandals and

corporate governance on daybreak asia. , a well-known backer of shinzo abe's reforms, joins us in 10 minutes. stay tuned. >> the 6000 bank job cuts announced last week were a down payment for an industry facing a radical overhaul. nordea stunned staff. unions describe the decision has brutal and shocking, but the bank says the banking industry is in for dramatic change. cuts are a transformation more than anything else. it is not a cost-cutting exercise. it is about creating a model that is digital distribution and centralizing functions and doing a lot more, so this is creating the future bank and these cuts

are a result of that. this is something you will see in the whole industry going forward. >> he is looking like the future is not too bright for a bank like his. you are hearing about companies from amazon to facebook to all these other tech firms disrupting the banking industry. we've been hearing reports about amazon going into the banking business at some point. what isn't amazon involved with, right? >> dominating every facet of the world it seems. the ceo defending these job cuts. a pioneer in are all this and it could be the beginning of what we see when it comes to the banking industry. it makes me wonder if you're looking into the financial sector if you will think twice now. we are seeing that here with the recruiting struggle some of these wall street banks are having with trying to get folks

here. more want to go to google than they want to go on wall street, right? >> that's right. plenty more to come here, including hsbc earnings. this is bloomberg. ♪

♪ 8:30 in singapore. half an hour away from the open of trading. looking foggy this morning. >> i am betty liu in new york. this is "daybreak asia." let's get to first word news now. >> a recovery in japanese retail consumers show a willingness to open their pocketbooks. sales expanded 2.2% from year earlier. it grew .8% from the previous month. sales beatstore expectations, rising almost 2% on year.

president trump has stoked the fire of speculation about the next fed chair by tweaking of video saying his decision will come within days. the president is leaning towards fed governor jerome powell to succeed janet yellen. although john taylor remains in the race. the president said he will make his preference known before he leaves for asia on friday. a new poll says president trump's approval rating is 38%, the lowest in modern times for this stage of an administration. shows support among republicans at 81% and democrats 7%. trump scored higher for his handling of hurricanes in texas and florida in the economy, and lowest on the iran nuclear deal, health care, and puerto rico. the heat is being turned up on qatar. doha's membership to

be frozen. the secretary of state rex mediaten has offered to but can't force negotiations on people not prepared to talk. japan's two biggest airlines announcing operating profit topping $8 billion. profit at japan airlines will be $880 million. up 6% on a year earlier. both airlines are expected to raise their full-year forecasts. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> time to see how asian markets are shaping up so far. let's get the latest with sophie kamaruddin. sophie: asian stocks climbing. the nikkei 225 for july 1996 highs. some weakness in the yen,

deepening morning losses. above 5900es holding points for a fourth session. energy shares leading gains in sydney, a likely tracking oil above $60 and wti above $54. taking a look at what is moving .n the kospi earnings in focus. samsung engineering falling after third-quarter earnings miss. a few coming back online. they are fighting after the restructuring. shipbuilding losing over 60% this morning, the biggest laggard on the kospi after trading was halted in july 2016. korea investments securities said trading will be explosive because of plans to convert debt into equity.

a quick look at the movers in tokyo. two companies in particular is. komatsu has jumped on an earnings beat. falling after its miss, pointing to investments to maximize e-commerce and become a data company. nikon rising after its first-half numbers beat estimates. it announced plans to discontinue its imaging china unit operations, expecting to book a 7 million -- ¥7 billion charge. >> thank you with those movers to watch has we are deep into the session in japan and other markets. , brent crude hitting a two-year high friday on signs opec will extend production cuts beyond march. exxon and chevron dropped on earnings and china oil majors are reporting results on monday. we have the chart you need to know.

at where we stood on friday, exxon mobil up .3%. rose because it missed production estimates, but , the lowestdown 4% since september. it is the difference in the magnitude of the miss. this is 4624. take a look at the right hand side of your screen. ..9 7 million barrels expectations were 4 million barrels. there was a bigger mess in terms of chevron's output, 2.71 versus 2.77, so we saw that mix in terms of share price movement. all eyes looking ahead to the big chinese oil giants. financial analysis function for petrochina. figure thing you need to

out his that the fortunes of petrochina follow the money price, exploration and production in particular. $90 for brenton 2014. $40 in 2016. right now $60. bloomberg intelligence is forecasting a slight rise in profits for the third quarter because brent has risen by 13% over q3. , 8860,a look at sinopec this might not be because of the thekeven number, $50 breakeven number in terms of profits for petrochina. $60 is the breakeven number for sinopec. hitting $60 for brent over the past year and never got that amount. we can see the rise and fall and fortunes here. the one quarter of loss when brent was $40, but rising again.

a 296, we are , we areow -- 8296 seeing how the oil majors stack up against one another. exxon has been writing high since 2015. the white line is petrochina, losing steam over the past few years. it is just above $200 billion. there is a new bloomberg news story about petrochina. this is the biggest loss, at loss of $800 billion, since this company ipo did. analyst recommendations are saying they think it will fall further over the next 12 years, down 16%, so watch that if you are a bloomberg terminal subscriber. these are your bloomberg terminal charts as you look ahead to the end of today. a change in

fortunes for petrochina. the first $1 trillion company, but definitely turning in the last decade. we are expecting earnings from hsbc. analysts are watching whether it can post its third straight quarterly increase in revenue. let's get to stephen engle outside hsbc headquarters in hong kong. resilience in the top line is what we are looking for. >> that's right. it has been a rough road over the last six years, but they seem to be turning things around as they have exited 100 businesses globally in 18 countries as they restructure. the incoming ceo and the recent say they both want to accelerate the pace of reform and change at hsbc. that is what we will be looking for in the third quarter conference call. as for the results, we are

expecting a pretax profit of about $5.4 billion. revenue forecast of $12.7 billion. the number of analysts including those from citibank expecting what they call solid results in this third quarter, loan growth in asia boosting the top line there, securities trading also getting a boost from the markets in hong kong. ubs analyst expecting a 3% gain in markets revenue. what do we expect then in terms of ford guidance from hsbc? d guidance from hsbc? >> we will see if six years of retrenchment in restructuring are over. a $4 billion of share buyback program, unlikely to be announced at this earnings results.

that will probably be saved for the full year 2017, so after the fourth quarter. buybackot expecting a or big jump in dividend as the bank has this excess capital. that is what the analysts want to know, how will they dispersed that back to shareholders? >> thank you very much. earnings.hose we will break hsbc's results live on bloomberg and speak to the company's finance director on a special bloomberg edition of bloomberg markets: middle east from midday hong kong time. stay tuned for those results in reaction. >> that's right. coming up next, japan inc. the reputation as a trusted supplier as the country has been tainted with subaru making the latest headlines. we will speak to a well-known backer of japanese corporate governance reform and the impact on investment.

this is bloomberg. ♪

♪ looking to be a happy monday in asia. outside the imperial palace in tokyo. beautiful this morning. the nikkei two to five seeing gains of .1%, still the underperformer when it comes to the major indices and asia, but tech earnings from wall street fueling the momentum. also, that gdp print on friday , firste u.s. back-to-back games of 3% for some time. >> that's right. i love and consecutive gains for retail sales in japan adding to writer sentiment and equity markets. particularly in japan. this is "daybreak asia." i am betty liu in new york. a look at earnings now.

kobe steel preparing to release second-quarter results today. investors want to know if the fake data scandal will affect future prospects. let's head over to tokyo now. stephen, it will be about the ford guidance when it comes to the fallout from the scandal. kobewhen the market say if steel pulls on guidance? >> from the analysts i've spoken with, they are expecting it. there have been rumors and we have a source saying they were considering it, so it is definitely in the cards. it represents the company is fully acknowledging the way the scandal has unfold has hurting -- been hurting and we'll be unable to see how it will affect earnings. year.ere in the red last they were hoping to come to a profit this year i'm us of that is also at risk if they pull

their earnings forecast. the japan credit rating agency is also monitoring the situation. what are they looking for? >> one of the big things is to if the independent commission finds that the managers and the folks in charge at kobe steel are able to continue doing their job, they may ask for all management to be unworthy of running the company and that they should be replaced or changed. that would be a major impact. another thing they are looking at is if customers come forward and say we bought these products. to us ando thes we need money from you. if that happens, that will hurt definitely kobe steel. they will have to take some costs, and that will hurt their creditworthiness going forward. >> thank you so much. keeping and i on these

thesecements -- eye on announcements are reports from these japanese companies. seth fisher is joining us. attempts to reform corporate japan, a supporter joining us now from tokyo. certainly has not been reformed enough after seen what has gone on with subaru, nissan, and kobe steel. is there any link you can draw in all of these revelations we have heard, including takata? this is all bad for corporate japan. it is bad from an faction japan and perception of quality in japan. the link underlying these is that we need -- this is all part of the corporate governance code supposed to be explicit

with whistleblower protection. they are helping the company when they come forward. in all these cases the revelations were not brought immediately. these could have been caught much earlier in the process. case, the subaru's knowledge of these faulty inspectors seems to be happening for decades possibly. what can be done then? there should be more whistleblower protection, quicker action. i you seeing any of that change at all, even right now? >> unfortunately we have not yet seen that. weask every company meet how many whistleblower complaints they have had. 0-1 a year.y

that sounds way too low a number. people are encouraged to help by coming forward, and we have not yet seen that. >> do think the current snowblower law does more harm than good? >> i think it is good. whistleblower law does more harm than good? >> i think it is good. it has then reported in the news atat one of the tak whistleblowers came forward. >> that's right. you are a big investor in japan, more than $1 billion in the country right now. few the market like japan after this latest string of scandals? , if youan't look ahead

can't trust the earnings reports that come through, but do you look at 10? -- at then?> >> we continue to try to figure this out. this is the failure of the shareholders, the auditors, on behalf of the regulators, and clearly on behalf of the employees of the company and senior management. thise trying to figure out. i have four analysts in japan speaking to customers and suppliers and asking them how it is going with the company we have an investment in? do you have any complaints? have you heard anything? we continue to do more research. also there are various short-sellers who are doing a good job ringing these things to the surface. >> what is their incentive? you mentioned you are going to

customers and asking them if they are seeing anything. what is their incentive to tell you? simplyr incentive is to -- we are an investor at the company. we ask them to help. we have not been turned down too often buy customers when we want to speak to them about the companies in question. veryve actually gotten favorable responses. when you ask people nicely, they tend to treat you nicely. >> but do they tell you honestly, seth? >> you know what? i don't know. the encouragement is that at the end of the day the truth will so it is helpful for the company now and helpful for us if you tell us now. there is fear of embarrassment that if the truth comes out 2-5 years so it is helpful for the company now and helpful latd

say, did you not really know? so maybe there is fear of investment on top of that. has this concerted push for corporate governance, but it has been more about improving the balance sheets then it comes to policing bad behavior. to think shinzo abe seems more serious on this front now, or more serious about constitutional reform? >> he has an enormous amount on his plate and is serious about constitutional reform, and yet this is as important for the defense of japan as constitutional reform. this is about the net-net profitability and performance of corporate japan, which makes up an anonymous amount of the gdp for japan, so this is as important.

yes, there needs to be continue development on this and that is part of their plans, continue independent directors and continue on working on how they improve companies in general. services todvisory keep these companies more honest and to encourage more activist shareholders. do you see any of that happening in japan? >> i'm sorry. can you repeat that? >> in the u.s. we have shareholder advisory services that keep companies honest, that attend the meetings and advise shareholders on what they but the should be done in order to increase corporate governance. do you see any of that happening in japan? >> sure. they do a great job here. have ranked an enormous

amount of companies has 10, which is the worst score for corporate governance. they have been part of the charge here in trying to improve corporate governance. they have done more proactive things here than anywhere else. they recommend to vote against management if roe is under 5%. they are part of the solution, not part of the problem. >> we will leave it there. thank you. seth fisher joining us live from tokyo. you don't want to forget an in-depth analysis on the days "daybreak asia" and you can download the mobile app or access it through bloomberg radio.com. ♪

♪ >> this is "daybreak asia." betty liu in new york. the apple iphone 10 $100 more if you go to best buy. customers are being charged $1099 for face models. $1249 for the high end phone. best buy confirms the higher price is intentional.

more, maybe not a big deal when it comes to apple loyalists. price is no barrier, but you can imagine the flood of orders coming in. reports are apple suppliers in , beingarticularly taiwan asked to double capacity. there seems to be no say see it in the appetite for the new iphone. appetite for the new iphone. definitely something to watch as we look ahead to the taipei open. that is homeless it for us here. time for a look at what is coming up. $1249 for an iphone x. what do you think, rish? have?d: what do we

the prospects of the trading week. be?fed head, who will it three people in the running, or two? we will have the head of socgen global markets joining us. i look at corporate governance. talking to seth fisher, continuing that conversation from tokyo. there we have hit. that is what we have on the way. >> a big agenda, particularly with hsbc. our market coverage continues. this is bloomberg. ♪

♪ 9:00 a.m. in hong kong. 9:00 sunday evening in new york city. i am rishaad salamat. haidi: i am haidi lun in sydney. this is "bloomberg markets: asia." ♪ rishaad: president trump stoking fed flames, announcing his preference in the coming days. haidi: sources telling us he is leaning towards jerome powell. rishaad: