>> it is 10:00 a.m. in sydney. welcome to "bloomberg daybreak: asia." top stories now. there was one. president trump will make jerome powell the new president of the fed. the governor faces gradual rate hikes. financial regulations. >> and from bloomberg's world headquarters, i am betty lou. a case of highs and lows. facebook smashing estimates in the third quarter. topping at 39% that tesla is

slumping is the critical modern cashry -- critical modern critical model three is delayed. betty: we knew this would be a is he newsweek and it certainly is. with the latest reports of bloomberg news reporting that jerome powell will be the next fed chairman. it will be announced by the trump white house. we saw all that speculation before with the reports. not a whole lot of reaction in the markets to that. >> yes. as kathleen said in a previous hour, some people are calling this janet yellen 2.0. he is seen as the that are continuity candidate as opposed to the more hawkish paler

options. with more of a change from the status of. but we also have the other fed decision. meeting with a little bit more of the same. cautious optimism when it comes progression for the u.s. -- still optimistic we will get to 2% growth in a few days. they: the consensus is for december rate hike. marketheck out the u.s. close today. earnings to watch out for. particularly facebook and tesla after the close. the s&p and the dow eked out gains again. .2%.d hit down by so a mixed session to start you off in asia. haidi: a mixed session after what was a hefty session yesterday. asia-pacific a, a decade high. at 821 yearcks

high. take a look at the bloomberg because we start off in asia on a summer night area weakness when it comes to the ends, off session lows. the dollars the best performer in the g10 space. turns are getting underway as we get up to the trade balance, as well as all the approval. coming up today. on the upside for the asx and theaussie dollar ahead of numbers. where also coming down to the open in japan and korea. we have an earnings driven session. when it comes to the nikkei. with .3%pullback lower. trading toave been the weakest in close to six months which could provide a boost to japanese equities. back to the top story. trump is said to of made up his mind about who will be the next chair of the fed. bloomberg's global economic list is here. in tokyo with the latest.

kathleen, it is jerome powell. >> pitcher looks like it. bloomberg news reporting in a long line of reports to give us solid information. first you where he was heading and now to what he has decided. it was a prize did tell bloomberg and others that he had powell.towards jerome at least, his staff has been telling us this. janet yellen, her term is up february 3 and the question is being asked -- who is jerome powell? does he have the right stuff? let us remind ourselves of who he is. he studied law, he is not an economist. he went right into investment banking when he got his law degree at princeton. group, esteemed names in this industry. and he served in government after he got himself established in the financial industry under the secretary for domestic ,inance under george h.w. bush

among other positions. said governor since 2012. this is a man with a long history. the question is, what will the mean for monetary policy? many say it is janet yellen to window. that he will continue her path. let's look at the aspects of what he is said in speeches. the fed is close to its mandates. -- policy is currently very accommodative. it is appropriate to gradually normalize rates and below target inflation means you don't have to go quickly. of patience.a lot how is this sitting with people? even harris is the chief u.s. economist at bank of america a merrill lynch and he gives a thumbs-up to jerome powell. fed team hereour in new york and he thinks that jerome powell will be a good choice. that he has exhibited sound judgment and will continue to do that as fed chair.

the bank of tokyo mitsubishi had some doubts that a lot of people expressed as we go through the process of senate confirmation. he said, look. the fed chairs the 1980's has become the nation's chief economist. and the question is now, when it with congresst, as opposition, can they defend policy? how will jerome powell reform in a crisis? the senate confirmation will come soon. -- he has already been confirmed twice. a lot of big questions. betty: big questions. in gina smiley. kathleen just covered the monetary policy side of this. onceerome powell, he was known as being tough on banks. will he be just as tough or, maybe even the opposite, when he becomes chairman?

>> people are watching this closely on the street and what they consistently say is that he to reverseming here all of these policies that we have put in place. at the same time, he probably has a less intensely regulatory agenda as janet yellen. this won't be crazy. it will not be an intense reversal of what we have seen. betty: does this mean that wall street is plotting the appointment? trader'sk from a perspective, you can't ask for much more. betty: what does this mean for janet yellen? serve outl probably her term. and then, generally, a exit. we haven't heard from janet yellen what the plan is but that is typically what will happen. her term ends in february and you will serve for their -- she will serve until then. haidi: let's get analysis with

, he served as treasury secretary under the clinton administration. great to have you with us. toot of news this morning get through. it looks like jerome powell is the one, after so much anticipation. the fact that he is not an economics phd, the first person this the 1980's to hold role without these qualifications, do you think that is concerning? or do you think it is refreshing that he comes from the private sector? >> i think it is neither neither concerning more refreshing. it is normal. the things you learn when you get an economics phd are not essential to being a good fed chair. and as of now, he has the equivalent of much more than a phd in the financial markets and policy.ary given all the time he spent around wall street and government since he left school.

haidi: do you see -- given that he came from private equity -- do you see him as having a relationship with the banks? trying to work out if he will basically be a fed chair who is more in favor of a deregulation environment? it equity people tend to be very focused on capital adequacy. right? they'd play money in risky situations. and they tend to be worried about over leverage. as opposed to people who come from banking who tend to buy being more willing to let banks do what banks do. private equity people are more concerned that banks not find a gambling with the government's money, which banks in some sense have because deposits are guaranteed by the government so it isn't clear to me that he will be more do regulatory rather than janet yellen. rather, i think he will be focused on it for it portions of

the process. betty: like what? where will he be more focused? brad: again, the big problem camewe had in 2007-2009 not out of private equity. it came not out of the stock market. it came not so much out in extraordinary amounts of overinvestment into the economy as a whole. it came out of a relatively narrow decision by a relatively small amount of large banks to try to be a little bit too clever with the assets they held and told regulators they were aaa. andfact that banks do that that it had such horrific consequences, not just for the banks but for everybody else, has focused everybody on the importance of making sure that our banks -- both official banks

and shadow banks -- organizations that while claiming not to be banks work like banks -- is that they borrow money and make investments and leverage up and hope that the water doesn't go -- while they are exposed keeping a close watch on those will be jerome powell's number one priority as it would be of practically anyone who becomes a fed chair. betty: yes, that will be a priority for any fed chair. direct year history. you've been at the treasury department. you were there to help design the bailout during the mexican peso crisis. you know what happens in an in crisisen it is mode. and i ask that because we are in relatively peaceful times. right? you know, this is not an economy that is in a recession or needs any kind of -- the mandate really is to keep everything study and call. so if we were to hit a speed

bump, a crisis point, would you want someone like jerome powell at the fed? if we were to hit a crisis point, i think i would prefer someone like ben bernanke who 2007-2009 but the great depression in his bones because that is what ben bernanke cut his teeth on as an academic and we were well served when 2007 came around that we did have ben bernanke because he felt the great depression in his bones and was ready for what was coming. that was important back then. it was important to have sold with a look back at distant economic history then because the last huge major crisis we had have been a long time ago. unfortunately, the last prices is within the living memory of pretty much everyone, especially jerome powell. so i don't see that as a reason to think that jerome powell will

not react as best as the federal reserve can, should have to. betty: i want to ask you a monetary policy question that has become the conundrum. you have markets picking up with inflation that has stayed low. -- back in march, when i had haidi: it looks like we did just lose the signal there. brad: i can answer what i think her question might have been? betty: go ahead. brad: we can ask it if she is back. betty: kathleen? you know what i'm going to say. how should jerome powell lose in that direction? is clear we do not understand the labor market. everything we understand about the unemployment rate and where can go suggests that the federal

reserve should already have interest rates significantly higher than it does now. everything we understand about what the employment to population ratio should be in an economy with our current demographic conditions suggest that the federal reserve should still be more expansionary than it is right now. the federal reserve is trying to split the difference because it doesn't really know and so far, the evidence that has come in has been ae fed little too cautious in the sense of raising rates too fast and too far. but the question is still open. and the fed is delicately balancing on a tightrope without being sure of what direction the gravity is pointing. stay with us. we will talk more on the fed formally delong who is working at the treasury under president bill clinton. in the meantime, more on the

first word news. >> first up, the reappointed prime minister shinzo abe has raised the bank of japan's efforts to revive the economy and reach 2% inflation but stopped short of endorsing kuroda as governor. a bloomberg survey makes him the favorite for the job and shinzo abe says he has faith in his policy. victory last month raised expectations that the current monetary stance will continue. >> the bank of england is expected to raise interest rates on thursday for the first time in more than a decade. with slow growth and brexit hanging over the outlook, the bank is trying to slow inflation driven above its target by a weaker pound and a slide in the long-term trend. governor mark carney has previously laid the groundwork for a hike without delivering them. and big tech remains under fire on capitol hill for the slow response to russian meddling in

the election. democrats on the senate and intelligence committee rated lawyers for facebook, google and twitter on a second day of testimony. they criticize social media for from legal teams to answer questions, they want to talk to people at the top. >> global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am courtney collins. this is bloomberg. betty: thank you. you can get a roundup on that story and many more that you need to know in a today's edition of daybreak. bloomberg subscribers can go on their terminal and it is available on mobile. customize your settings so you only get news on the industries that you care about. we are staying on the news about jerome powell being picked as the next fed chair. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia" and i am in sydney. betty liu: we have been saying on top of the news about jerome powell said to be the pick by donald trump for the fed chairmanship. and we are back with brad delong, an economics professor and he was deputy treasury secretary under the engine white house. he worked in the treasury at that time. we have been talking about jerome powell and his appointment. how do you think it will be received by other fed governors? brad: extreme would positively. he is extremely polite and collegial and smart and informed. anythingis going to be going wrong with the federal reserve while he is chair, it will not be because of his personal idiosyncrasies, beliefs or management style. it will be that something has

gone wrong with the entire committees view of the economy and of what should be done. >> a quick question into where we are going in terms of tax reform. will we get it done in a timeframe that trump wants? and even if it does get done, will it lead the growth boost that we are expecting to be given the talks about the strategy and how we are unclear that it will be paid for? things to flowt across my screen suggest that it will be phased in slowly and then faced out quickly. that $1.5 trillion over 10 years, $150 billion a year really isn't enough to do what they want to do without creating enormous amounts of people who

are going to see their taxes go up a lot over the course of the last decade. basically, the republican party has somehow not done their homework. it didn't do its homework on health care. it hasn't done his homework on taxes. a have no real idea of what their options are and how they how this fitsr into a coherent whole. so if they do pass something, it will be very much on the -- we have to do something and this is doing something so let's do this. it will not be well-crafted for the perspective of boosting economic growth or, indeed, avoiding further damage to the overall income distribution. and the margin in the senate is so small. that i do not see how they will manage to get and keep 50 republican senators on board when it emerges. they should have started this earlier.

question and i need a quick answer. should the fed raise rates three times in 2018? are they on the right path? brad: i would like them to raise one and see what happens. raise ratesthey three times in 2018, then they will be more or less done with what they think they're raising cycle will be, given the complexion of long-term interest rates. and it is really not so good to raisingwith the rate cycle when you have never gotten back to the inflation target at any point during the expansion. so i would hope that december would be the last and then they would hold on for a while and see what inflation does. isause what inflation does the acid test. and by now, the federal reserve has overestimated how high inflation will be next year for 10 years in a row.

and they think they finally gotten it right that there's a good chance they haven't, yet. betty: the old inflation conundrum. haidi: brad delong, thank you so much for that. a university of work late professor is economics and former treasury deputy under the clinton administration. we have a lot more coverage about the latest of the fed powell is and jerome president trump's pick for the leadership at the fed and will be passing through the fomc them meeting for applications. plenty more to come.

betty: this is "bloomberg daybreak: asia." haidi: we continue our coverage

with a leadership at the fed, three sources are telling us that the said governor jerome powell is the pick for president trump that is inspected to be announced on thursday before trump heads off on the asia trip . we will be talking to the locations for policy for markets and investors but in the meantime, implications are coming through from earning season. big tech. ahead of apple, facebook earnings. the company enjoyed another record quarter with sales beating estimates expectations. and that help to offset a few tough weeks for social media on capitol hill. basement shares currently record before the earnings report but they turned around and extended trading. let's get through the numbers with the senate testimony with --omberg intelligence joining us. let's go to the earnings. ais was the bright spot in tough week for facebook. >> es. if you actually look at the earnings, they had a flawless

quarter. expectations were for them to grow 40% revenues and they came in at 47 percent. every metric, they beat it. les, it looks strong for next year. demand is pretty strong. earnings are not the problem. the problem was the expense guidance that, in light of the hearing and with the fake news issues they are hearing, they are bolstering expenses aggressively next year and that is where the profit growth slowdown concern is what you see aftermarket. hear zuckerberg say that he is serious about getting rid of bad actors on facebook and the interfering in elections. what you make of the testimony and the skewering of these companies got by the democrats? >> it is basically a realization of the problem being significantly bigger and more one-time fix. a on the earnings call, you heard loud and clear that mark

zuckerberg is saying we are investing aggressively to fix this problem. hopefully, this positions them for longer term. betty: thank you. that was our bloomberg intelligence senior analyst. many more to come on the news about jerome powell, heading the fed. who knew that phones would start doing everything?

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♪ it is 10:30 in sydney. away fromminutes asia's first major market open across the region. a gloomy day in sydney. i am haidi lun. haidi: in new york, markets mixed, speculation on the fed. it seems like that has been put to rest with these reports. i am betty liu in new york. haidi: this is "daybreak asia." let's get you caught up with first word news. >> sources are telling bloomberg

that president trump has gone for jerome powell. he will make the announcement later thursday. toell's republican appointed the fed into thousand 12 and has the reputation for a non- ideological and pragmatic policymaker. he supports gradual rate hikes and supports looser regulation. president trump claiming democrats for an immigration thecy that allowed suspected new york killer into the country from uzbekistan in 2010. he is accused of killing eight people and the president said he might be sent to guantánamo bay. and the fbi says it has located a second man sought in the attack. the widening u.k. sexual-harassment scandal has claimed a high-profile political target, defense secretary

michael fallon has quit citing allegations about his conduct with women. he had already apologized for his hand on putting the knee of a female journalist 15 years ago. at least 40 conservative mps have been accused of harassment. visa extending into digital currencies, approving a prepaid card for the cryptocurrency monaco. more than 7000 cards have been reserved and monaco says it plans to expand across asia into europe and north america. the currency surged when it revealed the visa card plan despite not having a deal at the time. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you for that.

any market anxiety about the by themay be quelled fomc decision and the likelihood of powell being named fed chair. yellen heard powell is 2.0, a continuity candidate going into change at the top, but still pay mixed start when it comes to asian markets. with that consistency from the fed, we may look to other, less. stocks may consolidate around 10 year highs. we will be paying attention to tech after facebook's beat ahead of apple's results. this is chart for 219. it shows you asian dps has soared to a near record. -- dps has soared to a near record. asia underutside of

estimate the amount of innovation in the region. been a beneficiary of this optimism. you see this on 4230. tokyo stocks rewarding bulls for the first time in years, the topix adding 10.5% since august. the line in white outpacing global stocks. reversal of the first eight months of 2017. the futures board, potentially a positive open in tokyo and seoul, korea. the yen above 114 could be a boost to shares in japan. a few potential market moving drivers have play today. what is going on? sophie: commodities and corporate results driving sentiment in sydney. aussie tradeg on

figures for september. shares rising for a second day down under. resources players, miners and energy producers leading gains there. crude, the retreat in oil set for a fourth weekly gain. leading the drag, telcos and financials. last i the metals story helping bhp, fortescue, and other minors climb in sydney. check out for two to six. you can see that climb in zinc, ,nd the coal, aluminum, copper i'll gaining 25% over 2017. that has given a boost to the gauge of raw materials. if such gains can be sustained, should chinese manufacturing

growth moderate? this perhaps could be a continued driver. copper near a three-year high. bhp wanting to add more copper mines because of the electric car boom. there could still be momentum behind this metals rally. betty: i will pick found out. thank you so much. some more headlines from washington. this time on the tax bill. we are getting new headlines on the repatriation tax. that is very important for businesses. haveop tax bell is said to a 12% repatriation tax rate on the 5% repatriation tax rate on non-cash holdings. this is a one-time tax rate that had been talked about as part of this gop bill to incentivize companies to bring their money rateoverseas had a lower

than what they pay in corporate cash, lower than what is proposed with the corporate tax rate at 20%, so this to incentivize almost $1 trillion to come back to the u.s. the tax bill will be unveiled tomorrow. very likely jerome powell as head of the fed, picked by president trump. contextus now with more his tom keene, who has been speaking to many newsmakers on this story. what is your reaction to powell? now it seems like it is almost official. >> it is almost official. we will now begin to study what jerome powell thinks hand does. with a wide variance

of opinions. what i did is what i would do and look at what they say. innovation come reform, the role of corporate boards, treasury market, none of it is on monetary. come so the distance governor powell from the traditional things we expect from the fed chairman. we will leave it there. i know the line is a little hard for you to hear. standing bys still and staying with us on top of the story. interviewst tom often is bill gross. i want to play some of the comments that bill gross and the economist from bnp paribas said

and how they contrast. >> he has been there for the past five years. equityxpensed in private as a salesperson rather than investing. i'm not sure what he knows about the inter-workings of the financial system. let's also play this. is that jerome powell has been on the fed for quite some time. he is a well respected member of the fed. agree withessarily bill gross's comments that this guy is coming out of left field. not being an economist is not a hindrance. he is well suited to continue the policy along the lines of janet yellen. gross being quite harsh

calling powell a salesman more than a economist. growth is the outlier here? >> from what i have heard, yes. on a fed washer that powell was not an economist. to dismiss him as a salesman if you look at his background as an investment banker does seem harsh. in addition, he worked in government hand on capital markets and domestic finance and has several positions. you hear about people in washington who know how to play the game and get it done. me haspowell it seems to always been spoken about in hems of his abilities, what

has quietly accomplished, and he seems to have earned respect in many different ways. he has been following janet yellen's footsteps. that is the consensus of the fomc. is concerned that he has not been through a financial crisis. ben bernanke knew about the depression, but never stood over the worst financial crisis since the great recession. some people criticized alan gotten a for having lot of things right, but taking his eye off the ball when it came to the excessive building and not being able to see the financial crisis until it was well underway. ben bernanke inherited that. this is difficult for anyone to come into office with real experience. brad worked for a democratic administration and is also a noted economist and follows the fed. doneid what powell has

five years of the board of governments and the positions he has held is like a phd in capital markets, right? so are a lot of people are giving jerome powell more of a chance. if we get a crisis, nobody has really been trained to get through one. haidi: i think brad was saying work in spirits, the background he has. you solve the markets sanguine about the likelihood has he became the favorite increasingly over the past few days. trader saying janet yellen would have been the ideal scenario, bestowell is the next thing. his he's seen has continuing to be a friend to this decade long bull market we have had in u.s. equities? >> he is, the risk with the john is that he might follow

his own rule too much and be too hawkish and raise rates to quickly, but jerome powell, and this has been developing maybe even since alan greenspan, the federal reserve has been more and more concerned about doing any kind of move that is not telegraphed to the markets. they do not want to repeat the taper tantrum of 2013. that is something jerome powell will not be making decisions on his own. fomc that of an includes 19 people including him. ofhas some 200 people, many whom have been there for many years. continuity is expected. it is not just to jerome's personality. it is the way it works at the fed. this is why he is expected to follow this path. no one is quite sure about inflation.

every day. question how should central bankers deal with it? this is something they are all grappling with right now and jerome powell does not have the answers anymore than janet yellen did. to me this seems to have a lot to do with leadership. you need someone who is a leader and can build consensus, and that is something janet yellen and ben bernanke did well. greenspan was more of an autocrat, but the last two fed chairs have been good at getting people together and staying on the policy path. kashkari, the president of the minneapolis fed the tarp program together, but there aren't too many people like that in the race. i know we were on this fed to news and don't want to ignore those tax headlines that just came out, and exclusive to bloomberg about the repatriation taxes at 12%.

it had been talked about at 10%. by the white house to bring back hundreds of billions of dollars into the u.s.. how stimulative if this goes through could that be for the economy? with donald trump hoping and predicting that companies will use this money that they propped back to invest in their companies and invest in plant equipment and raise workers wages. skeptics who look at the past when this kind of thing that has been done, companies have bought act their own stocks in many cases. it has been something that helps shareholders and has not trickled through to the whole economy. if this passes and money is be a testd, this will of donald trump's ability to put pressure on corporate leaders to take the money and not just enrich their own shareholders,

but to do something to make their companies and workers more productive. that will be the real test. it has not always worked that way in the past. haidi: we will leave it there. kathleen hays for us there in tokyo. she will be continuing to cover this breaking news we half. we have three sources telling us that fed governor jerome powell will be president trump's pick to lead the fed after janet yellen. we are waiting for the official announcement on thursday. thes get back to tom keene, host of surveillance, hopefully with a better line. great to have you back. you have spoken to so many as this game of celebrity

apprentice, who will be the next head of the fed, has gathered traction. what has been the take away, is powell a market friendly leader of the fed, or is he seen as friendly when it comes to deregulation as well? >> the deregulation is there. i'm sorry for the bad phone line before it i had to pay my phone bill. i think that jerome powell is a mystery. we have had phd economists with substantial track records and changes along the way of their track record when they speak on monetary theory. jerome powell will be a huge shock to the financial media and the people who care about monetary theory. we really don't know where he stands with his decisions, and particularly we don't know where

he would stand given a crisis. with others you never know either, but at least we could take a guess on john taylor. i would say most people in the know where john taylor stands on interest rates and jobs. we don't know on powell. all thehe markets with speculation did not seem to be too curbed by this pick, in fact seeing it as janet yellen 2.0. it makes you think why didn't donald trump just picked janet yellen again? validhink that is a point. i guess i would suggest that maybe this is the apprentice picking of an important government position and an american institution come but -- institution come but we have had

analysis of governor parnell versus taylor that the market -- versus taylorl that the market has set up for this. the market has priced this in. you make an exceptionally valid point about the idea he will be "just like janet." the line, particularly for our international audience, the -- you have the rate jerome powell. there is a point that the feeling is jerome powell will have policy similar towards the tendency of an arch phd in macroeconomics janet yellen. thank you so much. i'm glad we cleared up the phone

line and you paid your bill finally. tom keene, our bloomberg surveillance anchor. big tech under fire for the perceived slow response to russian meddling in the election. democrats on the senate and intelligence committee be rating lawyers on a second day of heated testimony. several members criticize social media for sending legal teams to answer the questions, saying they want to speak to the ceos come and not the general councils. the meantime, facebook investors are balancing robust third-quarter results against the warning that tackling fake news will hit profits. facebook read highest estimates in the third quarter. revenue $10.3 billion, monthly active users topping 2 billion. mark zuckerberg saying preventing misuse of the site is going to be costly. another company that released results, tesla, slumping in

extended trading as the cash burn proves hotter than expected, down 5% and post market-rate. delaying the critical model three reached an unwanted record and tesla expects 5000 per week late in the first quarter next year rather than the end of this year. tesla acknowledged those production issues. was a bigtioned, it day for all of this. let's talk about all of this tech news. ivan, let's start with tesla. the call wrapped up a little while ago. reported saying elon musk sounded distressed with these production issues. how big of a deal is this for tesla? >> it is a big deal. for a long time they have not met production deadlines in the market has given them a pass.

overall making cars is hard. where they have got into so far is a phenomenal feat. the cash burn is increasing and he will have to come back to capital markets, and maybe the capital markets may not be as friendly as they have in the past because his production schedules have not been met. before,e has done this short-term pain for long-term gain. is this the same scenario? but now youyes, have mainstream manufactures bringing new electric cars to the market. 20 newmonte over is by 2020. bmw is introducing the model three series. there will be more competition. more electric cars as positive overall for all electric cars. as electric cars become

mainstream, people are less concerned about range, battery concerns. more people will buy electric cars, so it is positive for all electric cars and tesla. haidi: what about the china market? that is one of the great hopes, teslas traction when it comes to this market, saying three years out from local production. is that a disappointment? >> they are talking about building a factory in china because they will want cars built in their market. china and france want to be 100% electric cars by 2030, which is not that far off. ivan, let's talk about wait for apple towards the end of the week. it has been a horrible week on capitol hill, but bloomberg that itence is saying

was flawless earnings period. would you agree with that? >> absolutely. they continue to beat the numbers, and revenue continues to grow. daily and monthly user engagement grows. mobile access continues to grow. they continue to introduce new tools. want to introduce tools based on artificial intelligence to help advertisers better and more effectively target potential customers. so i think they are doing everything well. the issue with monitoring the fake news, i don't view tesla, google, or twitter as news sources. all of their content is user generated and the recipient of the content has to make up their own mind. do trust people that much? >> no weird people will give their opinion.

what is on the sides, twitter, facebook, and google is people's own opinion. they have a responsibility to make sure the content is appropriate and not offensive. betty: and not fake. >> in the sense not misleading. if it is people's opinion come i don't know how it is fake. betty: it's fake. it's fake. >> other than a false fact. betty: that is fake. we have notarter seen the impact, but this has to sayl of i don't want just starting, but early innings of what facebook will do to tackle this problem and what washington will do to facebook. next 12 monthshe have a substantive impact on their business? >> they said they will hire 10,000 people to work on monitoring the content. they will incorporate artificial

intelligence to ferret out false stories, so it will have a cost. the benefit of a higher level of content will benefit them. i think it is overall positive in the near term and i think facebook does invest and spend money well. betty: it does. very efficient in that sense. mark zuckerberg said he is dead serious. what else to think he might do to tackle this problem? algorithmscreating of theet out -- also one key things will be the verification of the source. twitter has a verification process. facebook does to a point. that you could still go on and not be verified, so it is up to people to choose to take their information from sources that are verified. thank you so much for

joining us. we have been watching all of this breaking news out in the last hour or so around jerome powell as the next fed chair. also getting some initial lines around a tax bill that we are expecting to be unveiled repatriations 12% one-time tax expected to bring in hundreds of billions of dollars, if it goes through. there are lots of questions around that. haidi: not much left when it comes to the rest of this working year for congress. 12%, 5% for non-cash holdings. this is according to a republican lawmaker who has asked not to be named because negotiations are still private. moree still waiting for details on how they will fund these tax breaks. we will next hour

continue talking more about this. betty: we will be talking more capitale fed with lgt in just a few moments. this is bloomberg. ♪ is this a phone?

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♪ haidi: and then there was one. president trump will make a jerome powell the new head of the fed. current governor favors rate hikes and sympathizes with calls for looser financial regulations. tesla slumps as the model three is delayed. the cash burn his proving hotter than expected. betty: facebook smashing estimates in the third quarter, profits soaring 79%. users topping 2 billion people.

hello and welcome to this second hour of "daybreak asia." i am haidi lun in sydney. betty: i am betty liu in new york. the news seems to be confirmation that jerome powell will be the next fed chairman, so janet yellen's term will be ending in february. we had some additional news from washington on the tax bill. we are waiting that release tomorrow. expected to include for the first time some numbers, a 12% one time repatriation tax, a little higher than expected. expectations were for 10%, but still lower than what corporations pay now in the u.s. a huge uphill battle to get this done before the end of the year. the treasury secretary stephen railing against the

strategy because it's not likely to deliver the huge economic bump anticipated. let's look at markets in asia. we do have a mixed the session. coming off decade highs, asian decades when it comes to japanese markets. andave the fed announcement the first boe rate hike in 10 years expected, and critical nonfarm payrolls at the end of the week. betty: that's right. on the agenda appeared let's get to sophie kamaruddin has the markets are just opening up. sophie: it is still a wonderful world for equities. key pillars in place, growth, earnings, and liquidity. you have gains across the board. the nikkei adding .5 percent, the kospi building on record highs. the dollar holding on gains and bonds climbing with powell

looking to be in play and a december rate hike lightly. the dollar-yen above 114 level, looking steady. not getting that turbo boost from the fomc decision. higheralyst for a break could be governor kuroda securing the next term as boj governor. take a look at the aussie dollar looking steady at head of september trade data. the surplus is expected to widen. aussie stocks led higher by energy and materials. minors across the region tracking the rise in base metals. copper at a three-year high and nickel at a 2015 hi. il might be on the retreat, but brent is gaining. oil prices set for a fourth weekly gain.

materials rising in tokyo and seoul, korea. japanese auto stocks in en the rise in sales. we are seeing those stocks gain ground. boost did say the sales from the recent hurricanes is largely over. --da had a good are over good october. mazda to report along with suzuki and yamaha motors. , those hyundai motor stocks at the open sliding after reporting a drop in october auto sales. hyundai's u.s. sales fell 15%. haidi: thank you so much for that. president trump is said to have fed up his mind on the next chair. kathleen hays is all over this out of tokyo. jerome powell is the one. >> certainly looks that way,

doesn't it? news talking to sources close to the white house has learned that he has made up his mind, jerome powell will be the next fed chair. yes, unofficially there. leave it to donald trump. does jerome powell have the right stuff? he has been that the board for five years. look at his background. he studied law, princeton, georgetown, investment banking. , therked at bankers trust carlyle group storied names. he worked in government starting in theearly 1990's george h.w. bush white house. he went to the board of governors and 2012 to fill out a term left partly unfilled and was reconfirmed twice for his own term in 2014, so he has

republicans and democrats and made it through twice. berkeleyist at university who covers the economy, monetary policy, watches central banks, also at treasury itself. he worked in the clinton administration. even though, he had balanced comments to make about the experiences powell has had, including the fact he is not an economist. it is neither concerning nor refreshing. i think it is fairly normal. the things you learn when you get an economics phd are not essential to being a good fed chair. the equivalentas of much more than one phd in the financial markets and in monetary policy given all the time he spent around wall street and government. >> and i think that is pretty telling.

the other thing about jerome powell, he is open to bank aregulation has many people looking at the dodd frank act as a little excessive. these are the questions he will be facing when he goes through his senate confirmation now the donald trump has made up his mind. betty: stay with us. lgtnt to bring in the capital partners global strategist from hong kong with more reaction on this. are you are sure to hearing this news that jerome powell will lead the fed? >> yes, i am among the happy crowd, although i must add fed it is not entirely surprising. there have been rumblings that powell president trump was leaning towards powell, and that is good for the u.s. economy and good for asia. betty: is it the best outcome? >> high thinking given the ioices probably yes, although

would have been equally happy if the choice would have been made with yellen. i think she had a little bit of a hard time in between, but at the end of the day she has done a good job with a fed that is on target to hit the 2% inflation rate after being slightly too tight for a while. she has done a good job, so i would have been happy with both. the overwhelming narrative seems to be the continuity candidate is powell if we could not get yellen. i want to look at world interest-rate projections to see where we are sitting in terms of expectations for what the fed does next year. clearly december expectations did not change from the fomc minutes overnight. is this expectation of cautious optimism when it comes to growth. december is sitting at 80%.

interesting one because that will be jerome powell's first policy meeting. you expect him to stay the course and not rock the boat too much, all being data dependent, or given that he is a former private equity guy who seems to be more in favor of open markets and deregulation may be becoming more dovish than yellen even? >> i think he has the right attitude. matter of having a bias towards not rocking the boat. i think it is about understanding with the economy needs. , when we had this discussion about the phillips curve, was among those early to say may be the phillips curve does not really work as if.. we have to be pragmatic -- as a

theory. we have to be pragmatic about that. not onlyrate hike is possible, but doable and sounds about right. going into march, we will have to see have the economy and inflation expectations evolve. if the nominal gdp and inflation stable, icingtay a reason why they should not hike rates. the room tos that make an error is relatively small and powell has the right mindset to understand that and know that, so that is the right thing for the u.s. economy. >> i appreciate what you said about powell being one of the first to question the phillips curve here it he is a person who has done his homework. chart,to ask you about a 111. what inflation has done and what

willed is predicting it do, and you see the cap between expectation that inflation would rise and how low it has gotten, in 2018 does this become an issue for the fed? the mostk at that his impolite way to criticize what the fed has done during the past couple of years because that is precisely the point. just because employment was lookively strong, if you at the headline inflation, the inflation rate did not pick up and went the other way, so that was the mistake, if you will. however i don't think it is a big mistake because if you look at the broader inflation measures, it is not that bad, so the fed is certainly below target. few months,t especially with the pause they put in until december, that was an important signal that gave the economy market expectations

room to recover towards the .arget inflation level if they stick to that philosophy and that approach, i think they would do just fine going into next year. toy just have to watch become not overeager in tightening and signaling so-called normalization. i think the risk would have been slightly bigger if the choice would have been mr. taylor, for example, even though i think that is slightly unfair criticism because he has also, he is also a great economist, but this is the right choice politically and pragmatically so to speak. thatnk not so important you are a trained economist. you have to be pragmatic and the ability to understand markets. betty: you have to be very nuanced. i want to pull up a chart in relation to that, 3211.

we saw treasury yields rising in anticipation of this pick, even possibly being john taylor. we seem to have this new range with the 10 year yield. to think we will be heading towards 3% soon? >> 3% may be too high for my taste, but that is possible because you see an interest rate chart and talk to two people and get three opinions, but the that we in u.s. yields saw recently, that reflects the markets wisdom that it will probably be someone who is not that terribly hawkish because i am a bitds, to me old-fashioned come up means the market is pricing in more inflation than before, and that is exactly what the u.s. needs. at can see that if you look two-year-to your breakeven rates

are market-based inflation expectations or the five-year-five-year if you look at the tips market. you will see they basically hit their targets if you take a medium to longer term approach, so that is really encouraging for the macro space in the economy. half fullays glass fine. -- i find. caughtht let's get you up to date with first word news. paul allen here in sydney. paul: bloomberg has been told the gop tax bill to be released thursday will impose a one-time tax of 12% on u.s. companies accumulated offshore earnings held as cash, and 5% for non-cash holdings. an estimated two point $6 trillion is stashed offshore. according to a republican lawmaker, house tax writers plan on phasing out the corporate rate of 20% after a decade.

big tech remains under fire on capitol hill for the perceived slow response to russian meddling in the election. democrats on the senate intelligence committee prorated beyers on the second day -- rated lawyers on a second day of testimony and criticize the companies for sending legal counsel. shinzo abe has praised the boj effort to revive the economy and reached 2% inflation, but stop short of endorsing governor corrode as governor. shinzo abe says he has faith in his policies. victory raisedn expectations that the current monetary stance will continue. to raises expected interest rates on thursday for the first time in more than a decade here it with slow growth and brexit, the bank is trying to slow inflation with a weaker pound and a slide in the economy's long-term trend.

previously laid the groundwork for hikes without delivering them. we will bring you that boe policy decision at 11:00 p.m. in sydney time, 8:00 p.m. if you are watching in hong kong. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you so much for that. we continue our focus on central banks next. like jerome powell could be the one as we wait for president trump's announcement. we are speaking to cumberland advisors on the appointment at the top. down: and we are counting to the latest trade numbers from australia estimates they crossed the bloomberg. this is bloomberg. ♪

♪ betty: this is "daybreak asia." i am betty liu in new york.

haidi: i am haidi lun in sydney. president trump to have made up his mind on the next fed chair. jerome powell is the name it. joining us is the vice chairman at chief monetary economist cumberland advisors and former executive ppm director of research at the atlanta fed. great to have you on. it is the narrative that we have been seeing that jerome powell is the next best continuity candidate if we don't have janet yellen sticking around. do think this is the best case scenario? two-for.rd this as a powell's republican with experience in government and treasury. and hasas been on board bought into the moderate approach to policy the fed has pursued.

found a quote in a recent speech he gave in june. he basically says the committee has been patient in raising rates and they should just pay dividends. that is what we will get in this particular case, and that is patience. haidi: having worked with in the ofearch department in one the regional feds and atlanta, do you think it is a huge disadvantage the fact he does not have a background in economics and does not have a phd in economics and comes from the private sector work experience aspect of his background going into this? >> it depends on where you are sitting how you look at that. youou are a markets person, say we need someone who understands what's going on in markets. an economist, you say we need an economist in that position. what concerns me more than that is the fact that if you run down

the background of the people now on board, first of all it is unlikely janet yellen will stay, so we end up with one economist on the board of governors at this point in time, and what that does is increases the power of the staff, because they are the ones running in these models who understand the intricacies and the nuances of what is behind those models, and if you are not an economist and trained recently, you will be at a big disadvantage when it comes to knowing what questions to ask those people. it is true and that jerome powell has been around and hurt their questions and so on and so it will not be the same kind of situation. then what does that do to the relative decisions of the s?deral reserve bank president s

, andof whom are economists now they can help promote the board because there were only be three members in a short time, even with four. so that to me is where the interesting dynamic comes into play, the relationship between the poured as it is presently structured, the staff, and the reserve bank presidents. haidi: if all does not go smoothly, what do you think could happen? thingss around when didn't go necessarily smoothly when we had the former president -- i've just lost the name unfortunately -- but he was there for about 78 months, and he never understood how the board worked. i don't think that is an issue with regards to jerome powell. he has been there and understand how the board works and the

rules, so that is not an issue. it is more when you have an executive who comes in from outside and does not understand how to operate in a collegial environment. betty: i want to play for you someone who is a critic of powell, bill gross. let me roll what he said earlier. experienceinly has during crisis. he has been there for the past five years. his experience is really in private equity as a salesperson rather than investing. i'm not sure what he knows about the inter-workings of the financial system. haidi: does bill gross have a point here? >> if you look back through the speeches that powell has given are some and there interesting topics that relate to everything from the role of technology and what is happening

in emerging markets, treasury markets, the role of boards and directors. this is someone who has broadened his background much more than what mr. gross is suggesting he has at this point in time. frankly there aren't many instances where you will say we will appoint someone who has been through a crisis. of those very few people come and you certain he don't want a crisis to generate more candidates. wouldn't want a crisis to validate somebody by any means. thank you so much. much more ahead. this is bloomberg. ♪

♪ betty: let's get a quick check of the business flash headlines. tesla slumping has its cash burn hotter than expected. it is delaying model three.

expects to make 5000 model threes per week in the first quarter of next year rather than the end of this year. sinceock has slipped 6% last month when tesla acknowledged production problems. haidi: facebook investors balancing results against warnings fake news investments will have profits. revenue came in at $10.3 billion, while monthly active users top 2 billion. mark zuckerberg said preventing misuse of the site will be a costly exercise. nab fell in sydney despite a rise in profit and plans to cut 4000 jobs. that is 12% of the workforce. 5%enses will rise between

and 8% this financial year, but the ceo says the bank must think long-term. nab.: painful times at more analysis on a jerome powell

haidi: taking a look at how things are in sydney. guessing the sun come up a little bit, not so much for the market. a little bit of green for the asian market after hitting that decade high earlier this week. taking a look at this trade balance number crossing for australia. $1.74 billion. $1.2ng expectations of billion. a huge jump up from that figure we had in the august period. we are seeing this on account of the recovery.

shipmentsen a jump in to the recovering chinese market . having a look at the august trade balance. importance -- let's get to sophie with a look at the markets. sophie: checking out what is happening with the aussie dollar. it is on the rise, gaining one third of 1%, hovering around that 200 day moving average. finding some support from recent gains and commodities. ussie bonds are continuing to climb. take a closer look at what is shares. with aussie they are trading flat. the biggest laggards in sydney. energy players helping offset some of that drop.

minors are climbing with that climb in base metals. they plan to cut 4000 jobs here. of metals andikes other iron or man -- ore miners climbing. paying for the shift to high-quality iron ore. the electric car push is on the rise. i want tof lithium, show you what is going on with panasonic. it is the biggest maker of the -- lithiumh the end car batteries. says the problems

are getting fixed. betty. thank you so much for that. so much news for investors to contend with today. let's get to first word news with paul allen. paul: president trump has gone replace janetthe yellen. he is a republican who was appointed to the fed in 2012 and has the reputation for being a pragmatic policymaker. he sympathizes with looser financial regulations. policy democrats for a saipov is accused of killing eight people and may be sent to guantanamo bay. says it has located a

second man connected to the attack. has cited morery -- he has already apologized for repeatedly putting his hand on a female journalist years ago. digital currencies including a prepaid cut from singapore. they have been reserved in the city state and monaco says it plans to expand into europe and north america. the currency surged almost 700% and they revealed the visa card plan, despite not having a deal at the time. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg.

let's get back to our top story, which is president trump likely to pick jay powell. our bloomberg fed and economy of reporter is aqua best. in terms of more details on when this will be -- back with more details. be thursday. the -- betty: have we heard anything from jay powell? >> no. we sent a reporter out there. dipaolo declined to comment. y powell declined to comment. haidi: the sense is that he is kind of the next solid choice or continuous choice.

>> absolutely. i think he is a continuity choice. -- lessightly lost hawkish. a slightly dovish tone coming from powell. a slightly more dovish pick. how does his background change things? is this something that is being digested by people who are watching the decision, that something could be an issue? we have been talking about if the fed faces an actual crisis areas you rather have somebody with economic background in their?

crisis. would you rather have somebody with economic background in there? >> when you talk to people about powell, what they say is that he is an excellent listener. he is the kind of person who invites staff into his office. questions soof that he understands the full concept and details. how theelling me about staff briefs him on the balance sheet and how he asked question after question until you fully understands it. he might be able to overcome his lack of economic background with that curiosity that he has. think that will have any effect on how influential his voice will be? it was so singular with janet

yellen, although she was supported by stan fischer. will he be as influential as other fed chairs? >> that is a good question. the others have good reputations. if powell will carve out his own path as much. if we have another crisis, maybe he will -- unless we have another crisis, maybe he will not need to. yellen engineered an exit. i do not think it was personality politics. i think we might see something more in line with that. betty: some concerns about the makeup of the board of governors. maybe the lack of experience among the staffers, the

relationship with the fed president. put all of that in light for us. having an academic or having someone as a trained economist is much better in terms of the relationship with others in the fed. >> one thing you hear consistently is that it is important to have someone who really understands this stuff or the staff will run circles around them. you have a lot of senior staff that have been there for decades. you know how this stuff works and respect people with phds. powell has been there for about five years now. he has a lot of experience in listening to them. someone who is willing to get nitty-gritty with details to really understand this. it isre is a real problem that we do not have enough governors. was one of the three that

we have left and now he is getting pushed up. talkinge have been about the dramatic ideas of what kind of leadership this means for monetary policy. talk us through some of the procedural aspects. what happens between now and march? what are we expecting? >> we will have the announcement .omorrow after that, he will have to go through senate confirmation. once he gets through senate, he will go to the floor. after that, he will be the nominee. that she will no longer be the -- he will no longer be the nominee. he will be in place for that. that is the process we are at from here on out. betty: thank you for joining us.

many more stories that you need to know to get your day going in our edition of daybreak. you can go to tv on your terminal. it is also available on mobile. you can customize your settings so you only get the news on assets that you care about. this is bloomberg. ♪

haidi: this is "daybreak: asia." betty: the start of each month is a important to invent -- an important event. trucks and suvs leading the pack. it is really interesting. it looks like there was a memo that went around the u.s. can rumors that october was the month that you had to buy pickups and suvs. pushing the is

numbers for october. 18 million autos are what we are looking at. this is the second highest for you can see that this has actually been rising. we are seeing it trying to pull back. your screen, of this is the share price for car manufacturers in the united states. ford outperforming its competitors. chrysler and gm coming in at third and fourth. heading over to japanese automakers. we have to talk about the yen because of repatriation.

strongerr it is, the it is. we see that at the end of 2016, weakthe yen weekend -- ened. at aboutas stabilized 111. we see this impact on the fractures.y those are the traditional ones. let's go into the electric ones. we have to talk about tesla. tesla's cash burn. $1.4 billion, that is the most that tesla has on record. this was worse than what analysts were expecting. we are seeing tesla share price falling over the past two quarters. all is not lost. , bloomberg newe

energy finance is saying by 2018 tesla will be in a good position, beating general motors , saying they think that in 2018 will emerge as the standout. they will eventually be thing some hundred 9000 vehicles -- 700-9000 vehicles. 700-9000 -- 709,000 vehicles. giving us a really good look at the u.s. auto market. child.et over to james great to have you on the program. let's start with tesla. is this a temporary blip? he does not know how to prevent

it from happening again. tesla is entering a new phase going from much lower production volumes to a magnitude of difference in the terms of model three ramp-up. they have had some production .ssues i would expect them to get through this in the coming months to ramp up nicely as we get into 2018. it is a little early to say how long these production issues will go on for. i would expect them to get through them. 2018 should be a good ramp up year for them. haidi: the production line is being transitory. the other thing that was a bit disappointing. at least three years out from local production in china, was that on the mark for you?

the you expect them to quicken that process -- did you expect them to quicken that process? and start up production facility in china is a big ask. it will take that long. it should give them some significant advantages, once they have a footprint here. they should be able to respond to market needs much quicker than they would by importing cars from fremont, california, which is what they do today. earlier, were talking an investment professional saying that with tesla, it is always unique. the short-term pain of what he is going through is for the long-term gain. he is doing this at a time when all these other car companies, everyone from toyota, nissan and millions ofesting

dollars into electric vehicles. does he have that timeframe or ability to spend as much money when he has competition coming down his throat. last three years has seen a significant ramp up into the electric vehicle segment. millions ofnding dollars in this segment. is tesla going to be fast enough to ramp up model three? are because they have such a large share in the electric vehicle segment, especially with consumers, which will be a good competitive advantage for them. betty: let's talk about those u.s. auto sales. of -- do you expect

that to continue? >> i do. toyota had a bit of a disappointing month. truckzoom in to their sales. that is their full-sized pickup, which is the hot segment in the united states. he had a pretty good month. the japanese, because they have shifted a lot of production to trucks and suvs, especially toyota, are gaining traction there. betty: thank you so much. we will leave it there. as always, plenty of big names coming up on bloomberg television. more on "daybreak: asia." later today on "daybreak three in10 minutes to hong kong.

that will be at noon new york times and midnight in hong kong. stay tuned bloomberg. this is bloomberg. ♪

haidi: this is "daybreak: asia." not surprisingly, the fed has been our dominates story the last two hours.

the nod.l is getting i would not expect expectations to change too much. that is important for markets to understand where the economy will grow. that is what they care about. they care about that confidence, given the current set of how the fed will react. >> the difference of what will come if we get into a crisis down the track. he will have to rely more on advice. what happens in financial crisis, he would have to be someone who would take advice more. i think he is a good choice for president trump to take. financial stability, that is the sort of background america needs. >> it is neither concerning or refreshing. i think it is fairly normal.

the things you learn when you get in on -- and economics degree -- powell have the equivalent of more than one phd in the financial markets and monetary policy areas given all the time he spent around wall street and government. haidi: those are just some of the voices we have been hearing from in response to the story that jay powell is the man of the hour. announced as a nominee. you can watch us live and catch andn previous interviews dive into any securities on the bloomberg functions we talk about. the involved in the conversation and send us instant messages during the show. this is for bloomberg subscribers only. betty: we have had a diversity of opinions tonight. , he is say that overall

happy, assured with this pick. newsll the unpredictable and events that we have gotten out of the white house, this may have been one of the most predictable. it was so well telegraphed earlier. seems we are sharing to the markets so far. haidi: some relief for the markets to focus on earnings season. it. is just about very eventful few hours on "daybreak: asia." time to take a look at what is coming up in the next few hours. " is next. markets rishaad: missing you on the program today, haidi. looking at that subject, i will not mention. it will help us analyze what is happening there.

the take away was the word solid. asian researchers will be joining us. specifice on this asia . in aboute joining us 10 minutes or thereabouts. looking into this part of the world and how it is impacted by the federal reserve. .ecember is now a shoo-in a tightening taking place there. also, what about diamonds? are they a sound investment? we will be asking that question of the chairman in singapore. he will be joining us.

there are also synthetic diamonds out there getting better and better, and harder to tell from the real thing. that is just a flavor of the things on the way. betty: that does not have a good ring to it. synthetic diamonds. i think we all want the right -- real thing. we are going to stay with all this markets coverage on the fed. he will be covering this wall-to-wall. markets."r "bloomberg this is bloomberg. ♪

♪ you have now had to follow bill gates and steve ballmer, two legendary figures. satya: look, the clear message was don't try to be like us. david: did steve say if you do this well, we will be happy? the result of having empathy made you a better ceo? satya: my pursuit is the growing sense of empathy for people around me. david: do you get a standing ovation for what you have done? satya: no, i get a lot of people asking me saying, hey, come and , fix my computer. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alrit.