♪ yvonne: 8:00 a.m. in hong kong, minutes from ages -- we are in bloomberg's asian headquarters. i am yvonne man. big numbers in beijing. president trump expected to announce a quarter of a trillion dollars of deals on his trips. chinese ceo's like what they see, the president is good for business. betty: he wants to be a dealmaker, he is a dealmaker. i am betty liu in new york. it is just after 7:00 p.m. and wednesday. expecting to continue the rally in wall street. nissan cuts for your forecast on

the uncertified inspection scandal. they say the u.s. market will be critical. ♪ yvonne: markets seem to like the dealmaking that could be happening in asia. the donald trump a visit we have been calling it in the region, gone pretty smoothly so far. the state visit in china, they haven't rolled out the red carpet, the chinese opera. it seems this relationship between president xi and trump has softened more. we will talk about the deals we are expecting. betty: $250 billion worth. a common theme that we are hearing from many of our guests is, the real work is going to

happen afterwards. it is nice to see the pomp and circumstance. but really, the real work, the nitty-gritty will happen after the niceties and handshakes are finished. let's get the first word news with courtney collins. u.s. tax changes move a step forward thursday. the senate finance committee scheduled to release its proposal. republicans plans outline the bill with gop colleagues after facing criticism from inside and outside the party. in an interview with bloomberg television, treasury secretary stephen mnuchin signaled of the white house is continuing to work with lawmakers on what is considered a fundamental part of the administration's agenda. >> this is the president's most important domestic agenda item, and we are going to get this passed. >> when? >> the objective is to get it to

his desk in december. >> the british government lost a second cabinet member in a week with international development following the defense minister out the door. she failed to tell prime minister theresa may she would be having 12 meetings with israeli officials during a holiday in august. tuesday it was revealed she suggested giving british aid money to an israeli army project. president putin says he supports a free-trade zone, including the eurasian economic union. putinof the apec summit, said the development of the far east is a priority and apex partners can play an active role. he suggests cooperation on cybersecurity and software protection. tellsinian president bloomberg his reform plans

remain vulnerable to global debt markets. he says it will take time to lower double-digit inflation and cut the labor cost that left investors wary. on the other hand, president macri admits the government still has to borrow. he says argentina's image as a sick economy is changing. >> we have learned from our mistakes and now we are committed to grow, committed to be part of the world, to be predictable, reliable. to create rule of law, develop the country with private investment and create jobs. that is my first commitment. it is really happening. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. ♪ news, earningsg

coming through when it comes to galaxy entertainment for the third quarter, bang in line with estimates when it came to adjusted. 3.5 billion hong kong dollars. the estimate was for 3.5 billion. 3.7regular range of 3.23 to billion. third-quarter revenue, 15.9 billion hong kong dollars, the estimate was for a 14.49 billion. this recovery in macau very much intact. let's get to the market open with sophie kamaruddin. we have been assessing donald trump's trip in asia. seems so far, so good. sophie: markets rolling out the green carpet. bonds are falling. we have data on the reader as well as earnings. chinese inflation numbers due

this morning. chinese inflation figures, oil and gold edging higher this morning. i want to see what is going on with the kiwi dollar, swinging after the rbnz showed they held on the rate hike. the yen, that is sticking to a tight range, around 114, near a march low. a japanese stocks towering above the 23,000 level. the nikkei 225 -- we did get machine orders less than expected falling by 8% month-to-month, compared to the 2% drop penciled in. it is getting into negative territory in the fourth quarter. we do have most segments in the green for the nikkei 225 utilities, leading the gains, along with i.t. tech stocks. the board member telling business leaders the high level

verypanese stocks are welcome and he does not see them looking overheated. he said there is a need to change the boj's etf purchases, it could lead to the rally. some stocks we are watching around the earnings story, toshiba set to report results this afternoon. in tech climbing after boosting its profit. profit --energy project will happen in march. olympus missing second-quarter estimates. japan displace lighting, admitting the results and its ability to continue is a growing concern. nissan cut its profit forecast by almost 6% at recalls in japan happen. their profitsed of targets. masa getting ground come although it was downgraded to neutral on goldman sachs.

betty: movers early in the market, trade. the white house expecting to announce a quarter of a trillion dollars worth of deals in china this week. the president looking to level the field with chinese hosts. tom mackenzie joining us from the forbidden city in beijing. tell us more about these deals expected to be announced this week. yes.that is a big-ticket deals expected today, we will get a signing ceremony with both presidents. so far, the deals we had penciled in our around energy and industrial sectors. involve existing partnerships between u.s. and chinese firms. the proof will be in the proverbial pudding. it does come as trade flows and m&a started to soften, around

48%. if you go to your terminal and bring up fsla, you will see it has slumped to this year. there have been restrictions put in place here in china around what kind of deals chinese companies can make, particularly around entertainment and sports. a the u.s., you have president eager to focus more on national security, he has vetoed a couple of deals the chinese would of liked to seen -- to have seen. for example, around semiconductors. today,expecting big deal particularly in the aviation sector. in town.he boeing ceo and energy, a big company looking to invest in texas infrastructure pipelines. we also have a press conference from the two presidents around 12:30 local time. today'sn terms of

meetings, what are we expecting to come out? we are going to get that press conference by the two presidents, and there are big-ticket deals. these are relatively easy takeaways, in the works for months. hard work for the companies involved. is the president, the win beyond a changes from the chinese when it comes to trade and the trade relationship between the two countries. that may be harder to come by. if he can persuade president trump, he can persuade chinese counterparts to accelerate reforms. this is a concern amongst european and u.s. businesses, that the environment here in china has become more difficult, a difficult place to operate for u.s. and european countries. from the chinese business council talked about this earlier.

we can take a listen to him. >> going to meet with a group of u.s. trade delegations and chinese ceos. it'll be interesting to hear the two presidents remarks in parallel and learn more about the question. tom: that was from the u.s.-chinese business council in beijing. we will bring you the latest. yvonne: we will come back to you, real quick. tom mackenzie, joining us from the forbidden city in beijing this morning. let's look at the big picture with someone who enjoys a global reputation, known for his memos. howard marks, investing in high-yield bonds and private equity. he manages $100 billion in assets. he joins us in our hong kong studio after a long international tour. welcome. >> great to be here.

yvonne: cannot help but wonder what happened a year ago here in asia when president trump was elected. s&p futures dropping, the mexican peso tanked. now you fast-forward a year later, it is like night and day. when you look at investment cycles, how does president trump impact what we are seeing right now? has it shortens up, distorted it or prolonged it further? howard: there has not been a down month since the president was elected. the only thing we were sure of before the election was that the market would tank. it just reinforces my belief that we do not know what the future holds. and we do not know how the market will react to it. there was a great enthusiasm among the market participants that he would fix corporate taxes, tax reform, infrastructure, deregulation.

the original impetus was expected to be a pro-business president. now, almost none of that has happened. and still, the market is moving positively. clearly that indicates it is less likely to happen than thought to be. but that is not deterred the market. yvonne: but there was the prospect of it. people say, at least he has reinvigorated the animal spirit we see in business and you talk aboutn deregulation, business reform, infrastructure. or do you look at the yield curve that continues to flatten and think otherwise? howard: the expectation he will be pro-business is legitimate. it is not clear how much he will be able to get done, but he is pro-business. that is just one of the elements. in our business, everyone should focus on one element at a time. there are a lot of things happening. president trump is just one of them.

the market has behaved very positively. the economic outlook is positive. pro-business's aspect is positive. on the other hand, things are very expensive. and they are roughly the lowest they have been. offering thee lowest returns ever, how much should they go up? the thing i harp on, we are in a low return mode. in order to get a high return in a low return world, people engage in pro risk behavior. their risky behavior makes the market risky for us. that should temper our enthusiasm. yvonne: has it reached the point of healthy exuberance versus what is rational? howard: i do not think the behavior today is a rational -- irrational. it is a rational response.

people move out the risk of to get a positive return. that is what has happened. it is not nonsensical. but it does involved an increase in risk. that has taken place and has implications for all of us. yvonne: if you take a look at basiseld curves, 113 points. when you look ahead at three or four years from now in the future, is this something you will say, this may have been a missed opportunity for us? howard: i think the narrow spread between short-term and long-term is saying the they do not put up a sign saying, this is what we think, but it implies they think economic growth will be lackluster and inflation will be mild. the interesting question is whether the market is acting as if economic growth -- the stock market, is acting as if economic

growth will be lackluster. if the bond market is right that it will be, and the stock market is ignoring it, that is one more factor, in my opinion, calling for caution. yvonne: what signs are you seeing we could see that this yield curve could flatten more? howard: i am not a yield curve prognosticator. yvonne: in terms of cycles. howard: i do not believe in that at all. i do not know. yvonne: the biggest risk you see, globally? whether it is a fed that raises rates more aggressively, central bank liquidities that refuse to shrink, or china? howard: there are lots of things that could happen, could be very negative. each appears unlikely to happen. i think about it as the unlikely disaster. interest rates could go up faster than we expect, but we do not expect that come obviously.

questionhe biggest mark i see, is, what will be the process and the affect of the central banks becoming less stimulative and thinking their balance sheets? the central bank balance sheets have risen from $22 trillion, roughly tripled, or a bit more. they are going to reverse that. what is the effect? the answer is, we do not know. we have never lived through this before. you cannot live through something you have never lived through before and be confident how it will go. i am not forecasting this to be negative. it is an area of great uncertainty. yvonne: you said before there is no distress in a distress market anymore when it comes to the u.s. what would it take for the stress to return to the u.s.? howard: it would probably require an economic slowdown. which right now is not a prospect.

the economy is chugging along and there have not been any excesses. it does not look like recession anytime soon. that is what it takes. and byudent times, extension of credit, the last several years have been somewhat of an improvement, loans are made that cannot be paid is conditions get worse. that is the predicate. the question is, will things get worse? will those improvement loans be exposed? and maybe they will. betty: it is betty here in new york. you mention how the markets are acting rationally. for some investors, they are acting pretty irrationally. came out with a comments, i do not know if you read his investor letter a few weeks ago, when he talked about value investing. many value investors will soon be extinct.

it is a hard market. can we pull up the quote from david hein on -- david einhorn? after years of running into the wind we are left with no sense stronger than that it will turn when it turns. perhaps there is a new paradigm for valuing equities and the joke is on us. time will tell. he is think he was -- being premature here are quite accurate? howard: i think he is making a joke. when he talks about the joke being on them, he is making a joke. when the market goes in one direction for a long, long time people start to say, a, it is different this time. and, b, history does not matter. so far it turns out it is not different and history matters. andthere is a redirection, the thing that has been working continues to work. i am willing to bet that will be

the case and i know david is, too. value investing has always worked. i see no reason why it shouldn't always. but buying things, regardless of price and the ratio between price and value, which works in heated markets like we have been having, especially for things 's, dependably, has proven not to work forever. i will put my money on the fact it will not work forever. there will be a correction and we can't at all say when. betty: not imminently? hour.: could be in an [laughter] betty: it is that uncertain. howard: and it could be in three years. one of my colleagues, andrew

watts, wrote a memo to his clients that i always thought was great. if you name a price, do not name and date, if you name a date, do not name a price. we have some idea what should happen. and we know nothing about when it will happen. yvonne: getting back to e has raisedktre more than $10 billion in the u.s. you have been waiting for opportunities. i think it has been two years since you raise capital. investors more concerned, perhaps even asking to redeem capital? of $3.5the first billion has essentially been put to work. raised in awhich we standby fund, is still standing by. we always tell everybody, like i told all of our viewers, we do not know when things are going to happen. the people who put up the money

for that funded did so because they believed it was good to prepare for the eventuality. they do not bet their whole portfolio on the fact they would be distressed. but they thought it was smart to bet some. i think it was. the wisdom of doing that has not been disproved, it only has not been proved yet. yvonne: they are willing to wait. but do they need to change in terms of their investment? howard: they would probably like to reduce their fees, but because they are zero, they are unlikely to do that. the money is not burning a hole in our pocket. pre-committed to a distress opportunity, secure in the knowledge that when the crisis comes, if it comes, they will never say buy, at the bottom. for us to be able to buy at the bottom, it has to be precommitted. it has worked well with clients in the past.

i think it is the right thing to do. ended they fully accept we do not know anything about the timing of when that opportunity will arrive. yvonne: you dipped your toes in this part of the world. what are the opportunities you see here and your seven country trip to asia, in terms of opportunities? i know you have bought into a couple mpl's in china and india is another opportunity. howard: on the mpl or distressed debt side, we are getting our toes wet, having a learning experience. ventures with local partners, which we think is important. very challenging for an outsider to go it alone in china and india. we are in a learning curve right now. investor in some equities in this part of the world through our emerging-market effort. when we find value, we buy it. yvonne: is a profitable?

we have been talking how you can manage through a lot of competition, not just foreign investors, but the local, chinese domestic side, too. howard: the distressed effort or mpl effort is not a product center. it is new product research. and we are learning. everything we have ever done, starting with when i began citibank's high yield bond fund in 1978, was unprofitable at the beginning. you say, i think there is going to be an opportunity. you put some staff on it, you ramp up your expertise, and hopefully, the opportunity arises. in the interim, you did not do it for the money, you did it to be properly positioned. yvonne: are you hiring people? howard: we have people here. yvonne: in terms of regulations,

is there a long-term strategy for oaktree? they say china is not exactly of foreigners market. how do you see the environment in china and india? the leadersink of of both china and india are moving their countries in a consideringection, outside capital being put to work. since the systems are different from ours, we cannot say categorically we know what the future holds in that regard. but we are optimistic enough to be moving in a positive direction in both countries. about howncertainty creditor rights will be treated. investor in less than stellar credit debt, you have to be able to rely on a restructuring process which delivers appropriate value to

the creditors. we cannot be absolutely sure how it is going to go. but we are certainly willing to find out. we have a bloomberg terminal viewer who wants to ask you a question. he says, what do you think about corporate profits improving by the penetration of technology that is displacing capital and labor with a software and services? corporate margins are improving, even though the economy is going at a snails pace right now. what he describes is the condition. that is what is going on. i guess what he is asking me is to make a value judgment about it, which is not an economic question, as to whether it is a good thing or bad thing. i think technology it -- and hence is a good thing. and it produces winners and losers.

for the losers, it is a bad thing. if you ask me, what is my over thebout the world next 10 or 20 years, my biggest , is, whatcern, betty happens to the people who are displaced? in the various iterations of the industrial revolution, people lost jobs, people said it is a disaster, people will be out of work. or whatwas stacking hay have you, or adding up columns of numbers. it turned out the economy evolved in those people got jobs. i am not smart enough to know how it will work this time. i worry about it a lot. i think the populism we have seen in recent elections is a function of this. i hope that our elected leaders will be on the lookout for solutions. yvonne: howard come a pleasure to have you here.

howard marks, oaktree cochairman and founder joining us in the studio. plenty more on "daybreak asia." this is bloomberg. ♪

betty: we are seeing shares up about 0.2% right now. home loans for the month of september missing estimates. roughly 2% after we saw the rise of 1% in the previous month. falling,t lending also not a good print. we are seeing overreaction. betty: as yvonne mentioned,

quite a bit worse than expected. we did expect again and you are seeing the aussie dollar react to this. when you look at it on the chart 0.1%.a drop down about let's get to the first word news with courtney collins. the white house expects to announce upwards of $250 billion worth of deals in china. although the details remain scarce and many are expected to be nonbinding. many deals are expected to focus on the energy sector. president trump has long claimed that china indulges in unfair trade practices. we are awaiting china e-cig october inflation figures. the forecast is for cpi to rise in1.8% on the year from 1.6%

september. stronger readings are not ringing alarm bells for pboc as they focus on addressing debt. tonese inflation expected edge down. for foxconnls chairman to personally guarantee 25% of any potential playback if they fail to meet investment and employment targets. to build a plant south of milwaukee that could employ up to 13,000 people. bitcoin jumped 11% at 1 point after the main architects behind the upgrade canceled their plans

. that cryptocurrency is unreliable. jamie dimon called in the scam. regulation will come if required. >> believe at the point where it does become meaningful and difficult to manage around tax collection, criminal activity, tax evasion, money laundering, the government will have something meaningful to say. moreobal news powered by than 2700 journalists and analysts. >> time to see how the asian markets are shaping up. >> stock gains pretty much on track. bonds are falling. 1%.nikkei 225 rising over

1.922 as we are seeing the dollar firm up. all industry groups are advancing buying auto components, tire makers in particular. on kiwi dollar erasing gains the back of the rbnz's hawkish -- they have also lost ground against the aussie dollar, though it has eased following the lower than forecast home growth for australia. -kiwiat the aussie pair. guidance could spark a longer dread for aussie and qe yields.

-- kiwi yields. stoydney, real estate cks gaining over 1%. more red flags being race around the housing market. national home prices are flat in september. wage growth is sluggish. strategistsg the saying the housing boom is over. incould limit the downside other states. we have investors digesting the latest home loan value data. betty: not good there. thank you, sophie. one of thailand's largest property developers has announced an $80 million investment in six rands -- brands. a 35% stake in a hotel chain.

says -- theansiri core business being real estate. joining us now is there cfo. you standing at a property and into more lifestyle brands and technology? why does this make sense? betty: with moderate growth in the economy, the company cannot go beyond that. we will be looking beyond the , noton into other areas just for the thai markets. betty: the investments, where are you looking tyo make make these investments? there are six new investments

that will be synergies between new investments themselves. we are an evolving real estate company. we can look at the new clients, the new millennials. where they live and play. bytry to make that demand offering new things to them. betty: can you be more specific? >> our strategy is investing in global and exciting brands that can meet these demands for the new millennium. for example, star were international is a very exciting new hotel that has turned the high end hospitality upside

down. they are renowned for that. they are fast-growing brands major part of sansiri's brand infusion. about kelly a little bit how these long-term investments will affect the core investment, property development. servicese lifestyle help increase sales of sansiri projects in the future? >> from the domestic market, yes. we believe that in three to five years, the real estate industry will change. a house is a house, but the service and the things you put in the house will be more important than just the shell on

its own. looking forward, we are very excited about his investments. we think, you have probably heard this before. less thirst for fixed assets. therefore the experience. as you can see for the investments we have made, these are lifestyle, investment-building brands. yvonne: you mentioned thailand forecasting moderate growth in the future. it has been improving the economic situation at home. what is the financial performance outlook that you foresee in the next year and for 2019? growth if be moderate

the developers and other key players -- domestic play. we have a large fortune that caters to buyers buying property in thailand. at present, it is about 20%. we want to grow that. investing in global brands will help us in terms of brand building in the region. china i am curious about and the chinese market. you are forecasting the growth double from the china market. why is the strength continuing. there are still concerns about money coming out of china and slowing down.

>> we're also concerned with that. >> the foreign buyers market. china and the hong kong market has grown since then. slowdown. seen any we can expand the market. us, the you for joining sansiri cfo from bangkok. toyota and honda raised their butal profit forecasts, that wasn't the case for millions. we will be live with a damage assessment next.

betty: this is daybreak asia. yvonne: i am yvonne man in hong kong. ford is going all in on electric cars in china finalizing a deal to make and sell a full line of vehicles. they will sell under a unique brand,. will meet executive in the u.s. and chinese leaders in beijing thursday. >> uber has problems on the ground but it is advancing its vision for flying cars by signing an agreement with nasa. before they sign a deal regulators need to figure out

how flying cars can share the skies with traditional planes, helicopters and drones. nashey people forget that -- nasa is a national aeronautics and space administration. they focus a lot of money on aviation. they are connected and engage with regulatory bodies as well. this cooperation makes a ton of sense to bring this to market as fast as possible. >> nissan cut its full-year forecast by 6%. domestic production was halted in mid-october when the government carried out checks. what is important is that nissan and mitsubishi have had dynamic growth which is based on new products and new technologies which are very modern. we're talking about connected

cars, and mobility services. matters.at shares downeing some 2% this morning. when i can bring your attention to our interactive tv function. not only will you be able to watch us live but you can see the bloomberg functions that we talk about. you can also become part of the conversation by sending us instant messages. make sure to check it out at tv . this is bloomberg.

yvonne: this is daybreak asia. haidi: nissan cut its full-year profit forecast by almost 6% rate -- blaming the recall of cars in japan after uncertified safety inspections. any surprises in these numbers? >>, after toyota and honda ,aised their annual forecast the headline of nissan cutting their outlook seemed alarming at first glance. if you look into the details,

the downward revision was merely because of the one-time charge on the japan expection issue. having the earnings offered a lot of surprises. any girl so these are more one-time issues. -- how big of an impact big of an impact did it have? charge wastime around ¥40 billion, out of which 30 billion was because of the inspection issue. but at the following investment -- the impact on -- includingfit the loss of productivity and production in japan. their 600 out of billion is about 9%.

big,nk the impact is quite but having said that, it is a one-time thing. nissan said their local production and shipment will return to normal in december. lastnk the impact will not very long. >> basin also announced a new midterm plan. they are seeking an 8% goal when it comes to global market share and operating profit margin. is that a realistic target given the fact that they have failed in the previous plan? >> the announcement has been affected by the japan inspection issue as well. after the revelation of -- the 6% market share and

operating margin has been the target that they were trying to reach but failed. at yesterday's presser, the ceo said, those are just guidelines, but they think they have the potential, but those are not objective, they are not pursuing the miracle objective in the next plan either. reachms of how they will the details, they will be announced after the japan inspection issue is completely resolved. release is due to inflation figures for october later this morning. analysts are estimating it will come a bit higher than september. in the chief economist and head of global

markets research. i have a chart here to see before these numbers come out. you see how the prices really track the likes of bank lending in japan. this in particular when you take a look at oil spot price as well as iron ore. we have to little bit of deceleration. but we have been calling this since the start of this year. can we color the top finally -- call it the top finally? guest: china is very excited. they have been issuing -- more than anybody expected.

pbi's shooting is due to supply rather than demand. this is about chinese policy on operation. this is working together. --the other hand, the economy is slowing down. --ply will be improving -- g forward, yvonne: what is your outlook for the next two months. we are more plants expected to shut down two to the pollution that we saw. >> what will be the new normal? five-and-a-half percent?

government shutdown -- what has it done? there will not be more shutdown. the base will play a big factor. inwill go something below 5% december. stayber will probably reasonably high. >> you mentioned that surprise that it is not sustainable, but what kind of impact might it a temporaryf it is phenomena, is there a longer-term impact from that? basically, china would like to lift the value change, scaling down these polluters.

process -- from that point of view the price is moving up. from time fluctuating to time. forward, dogoing you think the risk has been of aetely mitigated financial crisis in china, or is there still that risk? >> i think financial deleveraging is a must. the financial risk is high. doing two parts. they like to control the pace of new debt increases.

for the stock they have to take measures to take over. that is an assumption train what you have to do, slowdown, and you have to control the -- this process should continue in the next couple years rather than already being completed. we look ahead to those china inflation numbers later this morning. that is almost it from us on daybreak asia. time for a look at what is coming up over the next few hours. a lot of speeches for you guys. rishaad: really sending out that warning to north korea and talking about the virtues and successes of the south. he is in china now.

we had a former u.s. ambassador yesterday. we have another one today joining us from tokyo. we are looking at not trade per se, but individual trade deals. half $1 trillion expected. rishaad: we have investors from the eurasian group joining us from denying. they will be talking about saudi arabia and this talk of asia as well. betty: that is it from "daybreak asia." market coverage continues with rish and heidi.

rishaad: 9:00 a.m. in hong kong, 8:00 on wednesday evening in new york city. heidi: i'm in sydney. this is "bloomberg markets: asia." ♪ rishaad: the rally rolls on as asia extends wall street gains. , facing a stocks capital uphill battle. heidi: