>> is mom-and-pop a.m. in sydney, where we are live. stroud-watts. modest gains after wall street rose a third day. and berkshire hathaway listing energy and financials. the s&p 500 closing at its highest since january. brexit angst sent sterling to an 11 month low. ramy: from bloomberg's global headquarters, i am ramy inocencio in new york. will be in thes spotlight later after snuffing out initial gains following the pboc move must week. iran strikes -- last week.

for demanding compensation "decades of american intervention." haidi, such an hour here with you, heading into daybreak asia, and it was pretty bullish. at least a little bit hopeful. take a look at where we closed. mentioned, earnings, especially with financials, berkshire hathaway pushing up the financials. saudi arabia revealed it had production cuts in the last month, so this is what we are the drivers.ms of nasdaq up by .6%. bloomberg dollar spot had been higher in u.s. trading, up .2%. nymex and brent crude up higher,

.6% each. futureses -- gold cannot get higher because of what is happening in the rising rate environment. haidi: yield seeking investors put up by the strength of the u.s. dollar. take a look at how we are setting up. modest gains going into the asian session. new zealand looking pretty flat. flat asutures looking well into rba decision day. around for some tweaks wage inflation and broader consumer inflation commentary as well. chicago and nikkei futures looking flat at the moment. the kospi set up for a little bit of again, but taking a look at currencies. the index, four sessions out of five higher will dominate in the asian session.

74 u.s.ie dollar under cents. lots of downside factors. to watchomething else out for for the rba policy statement as well. we will get more on that plunge in sterling on these brexit w oes. the turkish lira falling by almost 7% overnight. we saw more volatility in dollar zero. -- lira. rouhani is taking a tough stance ahead of renewed u.s. sanctions, addressing the nation. he criticized president trump but left the door open for talks if the sanctions are lifted. negotiations and sanctions at the same time is meaningless. if someone stands in front of his rival or enemy and pushes a should firstrm, he put the knife in his pocket and

come to the negotiating table and use logic. haidi: we are joined by gregg sullivan for more. what do these sanctions target and is the administration planning more? what do they want out of this? greg: this is the first round of sanctions that are being reimposed after they were lifted after president trump withdrew from the joint accord. the particular round of sanctions was going to affect midnight tonight. the auto industry and even fascias. is planningration an additional round of sanctions. harsher sanctions that will target the country's oil industry. those will hurt countries that import iranian oil. officialstion briefing reporters said the sanctions are not aimed at regime change but instead behavior change. toy are seeking an end

iranian missile programs and destabilizing behavior in the middle east. whether these sanctions have that effect remains to be seen. haidi: what about the other parties? i am wondering what the response has been from the allies, the response to the nuclear agreement. what is iran's response? the: despite expecting sanctions to come into effect today, they drew condemnation european allies. european countries as well as the other countries involved in the accord, iran, russia, china, said they would like to see video continued. rouhani was critical, saying while he is open to u.s. negotiations, he will not do it under sanctions. keep in mind that president trump himself that he is open to sitting down and talking with rouhani, even with no preconditions. the administration has mixed

messaging. they did say president trump is willing to talk with rouhani. ramy: what happens now? can the skill continue with the u.s. out of it? partythe other countries to the deal do want it to continue and they will take concrete steps toward continuing it. rouhani called on the e.u. to take those concrete steps, but it is unclear how successful they will be. you this -- u.s. sanctions will have an effect. it will make it hard to do business with it. that will put pressure on rouhani and the iranian government to continue and affect the stability of the deal eventually. gamy: chris sullivan -- gre sullivan, thank you. back to the u.s. market close, strong results from berkshire hathaway. it definitely helped boost stocks. oil, the dollar, and bonds. su keenan is here with the

latest. helped push itse higher. we go into the market snapshot and again, you see the rise of the dollar, the bonds. you are seeing gold and oil turn lower in extended trading. we are seeing hedge funds because of all the concerns about the cross current. movers werebig earnings stories of the day. berkshire hathaway really kicking it out with its second-quarter earnings and creating hope of a buyback. facebook getting a lot of attention on the possibility it may have linkage with the banking industry. also giving positive news on it not having to take down as many accounts as some people thought. as we go into the bloomberg, we

can see the real story of the day. it is the unprecedented earnings. the s&p 500 index has been knocking it out of the ballpark at historic pace, 82% of the 413 companies that reported so far. .t has been the biggest winner 94% of firms topping estimates. telecoms not quite so big because they only have three companies. energy, not surprising, has been the laggard, haidi. haidi: the story when it comes to oil, is we have sanctions in iran. a bit of an unexpected production cut by the opec largest producer, hoping they catch a bit. kathleen: when we look at the one week chart, we see it has definitely gotten some rebound because of the concerns about the saudi's cutting production. russias a view that probably will be still producing

. this is definitely going to have an impact. there are questions about what that oberon sanction -- iran sanctions will do. there is concern china may not go along. we are seeing hedge funds cut their bets to a two-year low. to readd it very hard how the global demand will impact the direction. the iranian sanctions situation is yet another equation. and they have decided trading data to shift this one out for the short term. haidi: thank you so much for that. jessica summers. jessica: thanks, haidi. the leading u.s. aluminum producers asking washington for relief from tariffs that are said to be intended to help. they filed five requests at the commerce department, asking for the duty on metal imports. three of them are for aluminum

it says are unavailable for u.s. producers. two others are from mental that cannot be made insufficient quality domestically. greece has received the final payment in its european union bailout after objections from germany delayed it by several weeks. the stability mechanism paid the equivalent of $17 billion, 11 to meetof which will go its financial obligations for almost two years. the remainder is earmarked for paying down greece's still considerable that. -- debt. a star has formed a coalition. oneparty says it has hundred 74 lawmakers on its side, more than 172 needed for an absolute majority, and it expects to have as many as 182 in the end. to be named prime minister. opposition parties claimed widespread fraud in last month's election.

the ceo stepping down from pepsico. the dearth of prominent female executives in corporate america. she remains chairman until the early part of next year. she is the first foreign-born head of pepsico and the first woman to lead the company. her replacement will be ramon laporta e laguarda. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thanks for that. still ahead, china says it can survive along trade war. we will take a look at the economic implications with a university of california professor. ramy: bloomberg opinion columnist -- he discusses china's options as this standoff

escalates and what that means for markets. this is bloomberg. ♪ ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. in new am ramy inocencio york. now for a look at some of the stories trending across the bloomberg universe, and on the web, we are reading about indonesia's burgeoning gig economy and how part-time work is a crucial lifeline for onslow laborers in the country. on twitter, to talk tweeted -- tictoc tweeted a video future. a trade war will only make america poor, he says. on the bloomberg terminal, subscribers are reading about china's pledge to play hardball, saying the nation is ready to endure the economic fallout. storiescheck out those

trending on bloomberg, online, or on the terminal. haidi. haidi: let's talk more about trade. i want to bring in the global strategies founder and a bloomberg columnist. great to have you. really just kind of taking a look at this trade deficit. a u.s. china trade balance. the big picture. weigh less than zero as we see. we see this tit for tat. it will come to a point where like for like is not possible due to the nature of the trading relationship and the nature of the chinese economy compared to the u.s.. where do we go from here? >> that's a very good point, haidi. china have a huge trade surplus with the united states, it appears that in 2018, the trade surplus is increasing. very many u.s. importers have

accelerated imports from china ahead of the tariffs. this battle is not going to get less. it is only going to increase. what chemchina do about it? they had to -- what can china do about it? they have done two things. they imposed tariffs again. the initial $34 billion that the u.s. imposed on reacted within a minute to react with their own u.s. products. president trump spoke about another 200 billion of tariffs on the u.s. side and china responded with 60 billion. this is the first time that the chinese number is lower than the u.s. number. but keep in mind that there are weapons the chinese can use. the second one has been used so far, which is allowing the renminbi to depreciate. i think the significant fall that we have had including

monday in the u.s. markets is coming from the fact that capital outflow is calling it, and in addition to that, there is a deliberate policy to let .he currency weaken the third weapon the chinese could use is to use a higher percentage tariffs than the u.s. be tried.at is yet to that is a possible weapon in the future. ramy: a range of 10% to 25% is what we are looking at. your point about the yuan, i want to hop into the terminal. missy and why has declined -- the cyn has declined. an advisor saying it will hold the line at seven. it could weaken 60% more. how much can the pboc stomach

for it to fall? greg: that's a very good question. it is essentially an interactive process. dollar coming the up as well, so in that sense, the yuan or remedy will be weaker -- renminbi will be weaker. i think we are going to cross it . remember that on friday, the people's bank of china imposed a 20% reserve requirement if you wanted to short the renminbi. on friday, it appreciated as a result of that. on monday, we had a depreciation follow-up. it did not last too long. my expectation is it will be back and forth, but then the renminbi is going to cross seven. and has.s. retaliates even more tariffs imposed on cannot reactchina

dollar-for-dollar, as haidi mentioned, you will see the currency, the chinese currency, weaken further. i would say that seven is clearly something that is going to happen, perhaps in a matter of weeks. ramy: and pushing things along in terms of superlatives here, seven on that side. i want to get your opinion on what is happening in terms of yields. jamie dimon saying the 10-year could push to 5%. i have got this also in another bloomberg terminal. hop into the gtv library. we can show our viewers where we are right now. 2.94%. can we hit 5%? what is the probability? sri: look at what happened. jamie dimon's reference to the 5% mark was on saturday. on monday, the monday in the united states, we have seen the yield actually go down to bank or three basis points.

the market has not reacted with anything like in sympathy. can you reach 5%? yearsears from now, 10 from now, it can be anything. it depends on how the global outlook changes, but i do not see 5% anytime in the near future. i have been looking for that to continue to grow, to get lower, and create tensions that are good for u.s. treasury holders. they are very good for dollar holders. as long as you have a lot of trade support to be supportive here, you continue to see the yields going down and the dollar going up. haidi: do you think the fed is moving too quickly given everything we do not know about the impact of a trade war? absolutely. i think the fed has indicated they are going to raise interest rates on september 26.

it is as much as given, they say. that, in turn, at the time it reached chairman powell. he has been referring to the lack of wage growth as a mystery. the question is, why would you keep hiking interest rates when you cannot explain a basic concept like a wage increase? when you do not know something basic, you cause. you do not shoot first and ask questions later. the second point, the the yield spread in the treasury side -- point, the yield spread in the treasury side has essentially narrowed. inther 25 basis point hike september, that may well invert the treasury curve by the end of the year and you may be signaling a recession by the end of 2019. want to bring up another chart. we are looking ahead to china trade numbers later on this week. we had a bit of an indication from the south korean first 20

days export numbers which is a bit of a bellwether. misss pretty much almost a in the most recent reading. is this where you see the most evidence of the trade tensions collapsing in sentiment? thehere a real concern that supply chain is being endangered right now? sri: it depends on whether you are looking for the short-term or the short-term, it is going to be negative for a whole series of countries. china, vietnam, philippines, india, all being painted with the same brush in terms of facing the negative impact of the u.s. tariffs and the impact on southeast asian nations. longer-term, i think you are going to see significant opportunities for long-term investors. i am very bullish on china is you give me a five-year to 10 year time horizon. the annan has immense cost

advantages, and -- vietnam has immense cost advantages. the wages are very attractive. significant drop, i would look at two points which i wrote about in a bloomberg opinion piece. look at countries where the current account deficit is small and supportable, and look at countries which are encouraging foreign direct investments to come in. two importantose characteristics, they will establish countries which are going to do well from the countries which end up being a value trap, which you should not go to even in the long-term. so you are going to have a lot if it turns out to be negative and the short-term will be negative. ramy: you made me smile because 10 years ahead for china were possibly going to be the biggest.

when is the flip that we are going to see between these strong u.s. dollars as well as yen? we are seeing this route there. sri: you are talking about the dollar versus the renminbi/yuan? ramy: yes. sri: there is one important thing that has to happen on the chinese side before the renminbi can truly become a global currency, and that is you cannot have foreign-exchange controls, capital controls in order to beat and undo fall in the level of the currency. as you move towards freer capital markets and free of foreign exchange closed -- freer foreign-exchange flows, that is when you become a mature global currency. ramy: great stuff. thank you. sri: thank you very much. ramy: always great to speak to

you. remember, bloomberg users can interact with the charts shown using gtv . you can browse recent charts, catch up on key analysis, and save charts for future reference. this is bloomberg. ♪

the latestpe of headlines. the legal problems are worsening. prosecutors have opened a criminal investigation based on multiple complaints that the unit was used to launder billions of krona of dirty money. it was launched in estonia last week. senior creditors of towards the rest are expected to make an opening bid for its operations in asia, far less than the $1 billion the company was touting a few months ago. court documents say the lenders would make a so-called credit bid using their secured notes rather than cash. haidi: new york city council is said to approve a one-year cap on new licenses for uber and

ridesharers. the measures would make new york the first city to impose such limits. this is bloomberg. ♪

haidi: we are 30 minutes away from the market open. rba decision day. expecting any fireworks from the reserve bank of australia. 1.5% is where the cash rate is expected to stay up a record low as we have the downside in the aussie dollar. divergentions with rates compared to the fed. these declines when it comes to resources weighing on the rba's decision-making. ramy: we will look ahead to that. it seems like it is pretty much a done deal. markets closed slightly higher. up nearly .4%. energy as well as financials

give the equities a move higher, in particular berkshire hathaway. it turned out they reveal they have a cash pile of $111 billion, and that sent shares rising. i am ramy inocencio in new york. haidi: a gorgeous looking shot of the new york skyline. i am haidi stroud-watts in sydney and you are watching "daybreak asia." first word news with jessica summers. a hard: iran is striking line ahead of new u.s. sanctions, demanding compensation for what it calls decades of american intervention in the country. president rouhani said he is open to talks with washington without preconditions, but not while you're on his understand -- iran is under sanctions. sanctions are to be imposed at midnight eastern. negotiations and sanctions at the same time is meaningless. as someone stands in front of his rival or enemy and pushes a knife against their arm and

seeks talks, the response is he should first put the knife in his pocket and come to the negotiating table and use logic . jessica: the turkish lira stabilizing as concern over the diplomatic spat with washington overshadowed the attempt to support the currency. 6.7%.lier fell as much as the rate on 10 year bonds hovered around 20%. the president has vowed to respond in kind after the u.s. imposed sanctions for the detention of an american pastor. optimism thatd on it is forging deeper ties with banks to offer customer service is via messenger. via messenger. they have the aim of replacing email. it has faced widespread criticism about the security of private data. report -- a new report

highlights the gap between making music and marketing it. artists receive just 12%. sales,cludes cd on-demand streaming, radio royalties, and concert tickets. will long standing complaints that record labels and tech companies are getting rich off the work of artists. global news, 24 hours a day, on air and at talk on twitter come -- tictoc on twitter. i am jessica summers. this is bloomberg. thanks for that. we are counting down to some of the major market opens in the asia-pacific. us get it over to sophie kamaruddin. asian futures looking modest. dark clouds gathering this tuesday? sophie: asia may struggle to match wall street optimism. taking a look at the futures board, modest gains anticipated

in the region. we are waiting on the iranian sanctions to take offense at midday, hong kong time. inflation data. foreign reserves due from china. investors get a chance to react. we are watching moves closely in the currency market which could dampen risk appetite. the dollar weakness anticipated. softened. a reversal could be in place. as for the turkish lira, goldman is calling for caution. no credible policy to address unsustainable balances. commerce bank saying turkey's central-bank move will lead to more currency weakness given the

unwillingness to raise rates. they are hoping for positive data from the u.k. this week. the aussie remains under pressure ahead of the policy decision, forecasted to keep its target rate at a record low. central bank could cut its long-term inflation outlook this week. ramy: meantime, the earnings season. commerce bank is among the highlights. is the biggesta bank expected to report its first job in annual profit in nine years. this is for a host of reasons. it's dealing with the fallout from my money -- for a money-laundering scandal. that is chipping away at revenue. the line in white is on the chart. is for an update by matt

komen. indeed. job thank you so much for that. back in focus,e raising the trade concerns of course. thee are overshadowing pboc's move late last week to support the currency. tom mackenzie joins us now from shanghai. the selling pressure did not abate for long, did it? tom: pretty short-lived. you saw bit of strength yesterday, and it eased off and ended slightly weaker by the end of the day. in terms of the string hike opposite, that -- shanghai composite, but closed down. again, there is this caution amongst investors. wariness particularly about those trade tensions. we did have that announcement out on friday just before the

list of $60 billion worth of u.s. goods china is looking at targeting which came out, and the move by the pboc to make it more expensive and short the yuan does not seem to have put much of a floor under the currency for very long. that is what many of the in 2015.had told us it is interesting that we have pboc speaking to one of the newspapers, saying that we are not going to get to seven yuan per dollar at least in the short-term. that is a key psychological level. and also, that is a line that others have pointed to as potentially a line in the sand. we have had previous lines in the sand that have been crossed. interesting to hear from the pboc advisor. we have been watching for the fx reserves. we will see if policymakers have

been drawing down on these reserves to put something of a support platform or for under the currency. -- floor under the currency. ramy: in terms of further downside for chinese equities here, what our analyst saying -- are analysts saying? tom: we are seeing the rotation out of equities and bonds. we have a terminal which shows the difference between the shanghai composite earnings yield versus the bond yields. five-year aaa rated corporate bond. the yield differential gap is the whitest it has been since march of 2016, and there is a view that despite this not going toou're see a change, really, that it is hard to call a bottom for chinese equities. again, you have got the concerns about the trade tensions. there are not many factors. it is expected to fuel an uptick.

on the flipside, you have the supportive measures for corporate bonds that have been encouraging flows. it is all about the trade something president trump mentioned over the weekend, pointing to the weakness. the shanghai composite down. ramy: the latest out of shanghai. thank you. that's continue this conversation. joining us now is barry author of "the populist temptation: political reaction in the modern era." looking at what has been happening and trying to bring this all in together, what are of your recentne pieces says we have to wait for this fallout happens. we are seeing the fall in chinese equities. i sm starting to for -- ism

starting to fall. ppi as well. barry: financial markets are starting to sit up and notice. it's clear. economic growth has not suffered yet. the chinese economy maybe slowing a little bit. -- may be slowing a little bit. we will see the negative impact on output and growth in the coming quarters. trade wars are a big source of uncertainty, negative for investment, and that will weigh on both economies. ramy: the $16 billion of tariffs coming from the unit dates, to what degree cannot move the needle -- united states, to what do we can -- to what degree cannot move the needle? barry: i would have expected by now that they would have hinted more strongly at the measures they will take in addition against american companies doing

business in china. thatis the other hammer they can use and that they eventually will. i do not think they will use the it will weapon because hurt them as well as hurting the aited states if it has negative impact on confidence, but it can cause pain for u.s. multinationals, and that will be the next step. haidi: we are seeing some sort of trade detente after talks between the u.s. and the e.u.. is the fight with china different? a lot of people has in saying -- have been saying that it feels like an ideological battle and it will not be easy to get the parties to come to the table. barry: i think the europeans were offended by their turning on ally them, and president trump calling them a foe in the context of trade. the chinese made and not the similar statement when they cited their dignity as a factor

that will prevent them from backing down. i do not see an offramp here either for the u.s. or for china. i do not see a way that there can be a quiet accommodation and meeting of the mines, so that renders me deeply worried. you more deeply worried for the u.s. economy or china, it's currencies, the political stability you see, or is the biggest, i guess, aspect going to be the supply chain in asia and the trade in those parts of the world? barry: i am worried about the innocent bystanders which are linked into those supply chains. they have very little they can do about the problem. on the chinese side, they can use both monetary and fiscal policies to support the economy if their trade falls off and they have shown a willingness an indication that they are willingness to do so. u.s. economic growth is, at the

moment, strong enough that the u.s. economy can support this -- these problems as well. all of that can change, but right now, i think it is corollary damage on the smaller economies in the region. ramy: when it comes to feeling more pain on the u.s. side, right now, it seems the united states is shielded at least a little bit from positive earnings results, so when do you think people in the united faith will finally need to start taking notice, around the midterms or so -- the united states will finally starting to finally need to start taking notice? around midterms or so? barry: u.s. aerospace will feel the pain as well. we'll trump voters in general, -- will trump voters in general

be a will to connect the dots as well? the have not shown the ability to connect the trump administration's trade policies actions and threats to problems in specific sectors. i think, given enough time, they will. whether that means before or after the midterms, i do not know. ramy: there has been some talk. beijingdlow saying possibly might be manipulating its currency. we are seeing it to used. a little bit back and forth. your thoughts, and do you think that they will? barry: we have to wait and see what the reserve numbers that the chinese release later today. my part,ot think, for that they have been manipulating the currency. basic economics says when you're trade partner imposes tariffs and makes it more difficult for you to export something else --

export, something else has to give. that something else is the currency, which makes it easier for you to export and offsets the damage caused by the foreign-policy initiative. i would caution the chinese not to make seven yuan to the dollar of red line because red lines can be broken. they can be stepped over, whether you like it or not. the markets are powerful. i hope to draw that line in the concrete. it could turn out to be a big mistake. [laughter] abrasive,this bold, through the baby out with the bathwater -- throw the baby out with the bathwater approach, are there any winners you can see? so.y: i don think the europeans have been able to withdraw to the sidelines, so they are at least not losers. loserade wars are of these game.- a lose-lose

i strongly suspect we are about to see it. haidi: thank you so much for that. barry eichengreen joining us, author of the populist temptation. sticking with china and the bloomberg economy forum is coming up in november. bloomberg spoke exclusively to larry summers about the global economy. looming trade battles, and on particular, on the topic of china. no, i don't think china is the savior of globalization. i think the chinese are developing still in terms of its country withe average standards of living, like those in the united dates during the 1930's, so it's context is very different. -- united states during the 1930's, so its context is very different. much more can be found

online at bloomberg.com/new -economy-forum. this is bloomberg. ♪

>> welcome back. this is "daybreak asia." i am ramy inocencio in new york. haidi: i am haidi stroud-watts in sydney. paving the way for the nation's money to tap the bond market that is becoming more accessible to foreign investors. us cross-asset editor joins in sydney. why is it looking to join on connect? c has $74e -- qi billion under management. it is looking to tap the largest market as it is opening up more

and as its bonds will be included in global indices. it's worth noting that it is likely to be the first australian money manager to use this trading platform that started operating last year. what it wants to do is really to diversify the portfolio. it wants to access a market with much better yields. yields on 10 year chinese bonds are somewhere around 3.5%, whereas 10 year bond yields in australia -- in the u.s., they are hovering below 3%. qic says it is likely to do this at the end of the year. we have to look at how the infrastructure trading link works. ramy: what does on connect get from connecting asset managers? larry: -- >> on connect wants to

tap the pension funds in australia. australia already has one of the world's largest pension pools, but it is also growing at a pace faster than in the u.s., the u.k., and japan, and it is expected to hit $4 trillion by 2025. also, on connect, it wants to expand the number of customers that use this platform. it is a relatively new platform. it currently has about 400 customers. it wants to grow that to about 1000 by 2020. it wants to do this as china market asts bond these bonds will be included in global benchmarks over the next 12 months. at the moment, the chinese market is largely dominated by domestic investors. so this is a chance for them to

attract and tap into this huge pool of money in australia. haidi: and linda bit of legitimacy -- and lend a bit of legitimacy. they are watching the malaise in markets. andreea: i don't think any investor can actually afford to up of the opening chinese market, so i think they butlooking very carefully, it makes absolute sense for them to do this. chinese bonds will become part of global benchmarks. haidi: that massive pool of money, looking for places to go. andreea papuc here in sydney, looking at qic, looking to get into bond connect. don't forget tv on the bloomberg. you can watch us live, catch up on past interviews, do a deep

dive into any of the securities of the bloomberg functions we talk about. us instanto send messages. join in on the conversation during our show. this is for bloomberg subscribers only at tv on the bloomberg. this is bloomberg. ♪

ramy: i've got some breaking news with regards to daca, deferred action for childhood arrivals. the u.s. government will appeal a judge's refusal, trying to let donald trump rescind that order. that is following on from what happened last friday in the united states. a federal judge had upheld a shields 7000 immigrants from deportation. the u.s. federal government will appeal that judge's decision to uphold daca for now.

thes get a quick check of business headlines turned softbank mulling an ipo of its domestic wireless arm with a potential valuation of $90 billion. we are being told it is speaking to advisors about offering one third of the business. the final decision will depend on feedback from investors. a $30 billion ipo would make softbank mobile the largest best thing ever. alibaba's 2014 is the biggest so far. rakutan is a -- stock to watch. that far outweighs the $238 million seen. ceo's efforts to expand rakuten. faces rising domestic competition from amazon.

global copper supply will win a five day reprieve after the world's biggest miner opted for government mediation in a bid to avoid a strike. buying a time to reach agreement. the main union was preparing to down -- the remediation problem can be extended for an additional five days of both sides request it. haidi: we are counting down to the market opens over in japan and south korea. it is rba decision day. this is how the futures session is shaping up. it does not look like we will get much of the shine we had on the wall street gains overnight. bit less when it comes to the kospi. sydney futures looking exactly flat. session those as we go into the open of trading here in sydney. the reserve bank of australia decision expected to see no change.

a record rate of 1.5% lower. the lead, we will talk currencies and bonds. interestingly, he sees the u.s. dollar as being a bear outlook in the long-term. ♪ this isn't just any moving day.

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haidi: 10:00 a.m. in sydney, live from a bloomberg's australian headquarters. welcome to "daybreak: asia," your top stories today. modest gains after wall street rises for a third day. berkshire hathaway earnings lifting. the s&p 500 hitting its highest since january. sending sterling to 11 month low ramy: from bloomberg's global headquarters, i am ramy inocencio in new york, 8:00 p.m. on monday. taiwan semi says it can deliver apple orders on-time, despite chip production being crippled.

intelligence and a listing of softbank mobile arm. it could be the biggest ipo ever. haidi: does not look like we can get too much of the positive handover from wall street overnight as in asia we continue to worry about volatility when it comes to the u.n. continuing to worry about how the trade war plays out for the asian supply chain in a week that holds a number of central bank decisions and key trade numbers out of china. we are watching the rba and whether they will make any language tweak and therefore caps on inflation or weakness in the aussie dollar when they make their policy decision today. ramy: we are expecting them to stand at 1.5%, the record low.

looking ahead as well, especially at the end of the week, one of the biggest data points is japan gdp. it is very much a chock-full week of ego data. we also saw some buoyancy in the u.s. markets thanks to earnings for the most part. berkshire hathaway said they had a mother lode in terms of cash they could use for buybacks, $111 billion. also seeing oil on the up and up because of saudi arabian supply, pushing .6% higher for new york and brent crude. haidi: we are going to get more on the markets as asia wakes up. sophie kamaruddin on the markets for us, as always. sessionit is a mixed when it comes to the start for asian stocks. nikkei 225, a little change. we have the cost be edging shares are1% and under pressure, down .2%.

on the data front, we are waiting on chinese foreign reserves plus inflation figures from the philippines and taiwan. emerging currency is under pressure on dollar strength. offshore yuan below 687. a one in three chance of a move above seven. aussie bonds are rallying before the rba policy decision. 10 year yields have lost as much as six basis points this morning. when it comes to the rba, talk is cheap with the glass half-full approach not credible due in part to tepid wage growth. checking in on the yen, trading at a narrow range ahead of trade talks on august 9, the 1.11 to 1.12 range. jgb's are also lacking direction. given concerns over japanese earnings and boj policy, foreign investors have been shying away from japanese stocks.

we have seen significant selling prior to that and earnings forecasts have been revised downward on yen strength as well as higher prices since the start of the year. on the earnings front, some stocks to put on your radar. softbank, keeping an eye for reactions to its earnings beat and rumor it is considering an ipo for its mobile unit, which has been rocky as profit tops estimates. .2% ahead ofbout its earnings update, expected to post the first annual drop in profit in nine years. it is the worst performer among the big four of aussie banks this year. ramy: sophie kamaruddin, thank you very much. let's get the first word news with jessica summers. iran is striking a hard line ahead of u.s. sanctions, demanding compensation for what it calls decades of american intervention. president rouhani seeks to open talks with washington without

preconditions, but not while iran is under sanctions. he also says to ron can rely on china and russia to shore up its oil and banking sectors. sanctions are to be imposed at midnight eastern. greece has received a final payment in its european union bailout after objections from germany delayed it by several weeks. the european stability mechanism played the equivalent of $17 billion, $11 billion of which will go into a cash buffer to use to meet financial obligations for two years. the remainder is earmarked for paying down greece's considerable debt. australia's big banks face tougher scrutiny with the regulator, urging lenders to crack down on corporate misbehavior. the treasurer says the banks need to know that if they do the wrong thing, they will come down on them like a ton of bricks. down asw ye stepping

ceo of pepsico. the move highlights the dearth of prominent female ceos in corporate america. she will remain chairman until early next year. she is the first woman to lead the company. thereplacement will be just sixth ceo in the 53 year history of the company. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. ramy: thanks very much. battle lines are drawn in the sand as the world's two largest economies prep for a prolonged trade war. the trump administration has portrayed china as a weak economy with a protectionist regime. china has fired back with its own rhetoric, arguing the u.s. is trying to turn it into an economic vassal and morning of fight to the end. bloomberg asia government managing editor is in beijing. back and forth rhetoric, dan.

what has been the latest message out of beijing? dan: beijing has been pretty consistent in is mine. -- its line. there has been harsher language from the global times, a more nationalistic newspaper. the government itself is trying to keep things moderate, say, the u.s. started this war. we don't want to fight it. we are open to talks, but we are not going to give in to pressure. we are ready for a long, protracted trade war if necessary. seem to becomments hinting at new strategy for the trump administration, shifting focus to china's economy. dan: that's right. we have seen from president trump and from his advisers in recent days this narrative that china is on the ropes, that it

stock market is down, it is showing cracks in the system and it is going to break at any moment. the narrative coming out of washington, they really feel like they have china on the ropes. being here in beijing and speaking with people this week, it is clear that china is not going to give in. i think there is a debate about china's economy and this is exposing some of the weaknesses there and leading to some real thought about how that can be fixed. the general sentiment here is people are buckling up for a very long ride. haidi: increasingly the people that we talked to are saying eithern't see a ramp for side to get off, there is not a circuit breaker they can envisage. we are setting up for a longer and longer trade war. what are the implications? yeah, there is implications

for the global economy, global growth, certainly supply chains. most companies are looking at, what do i need to do to keep operations going, to keep the bottom line flush and strong. we will be seeing companies making moves in the months ahead. we will be seeing the chinese government react policy wise to try to keep up growth and not see a big downturn in the economy, just as we have seen the u.s. give money to farmers in the agricultural sector and try and shore up that support. both sides are going to use all the tools in their toolkit to see who can outlast each other. the question is really one of results. who can make it the longest at this point? haidi: thank you so much for that, dan 10 kate in beijing.

singapore's manpreet gill. one of the comments that stood out to me the most, which i think is outside of the consensus. you said the recent decline of the yuan has been a mirror of dollar strength. what would you to -- what would you say to the correlated weakness we have seen against the basket of currency? more of a reflection of the yuan or of other currencies? >> it depends a lot on your time. if you take the most recent period, you could look at dollars cmy and say her has been a lot of weakness not matched by the dollar. when you look at a longer time, the last few months or a year, it looks more like a catch-up move. not to say we have not seen a bit of excessive pressure on the renminbi, but the question for us is the bulk being driven by

the dollar or the renminbi. so far we still think the dollar is one of the most important components. not the only component. and over the next few days, the key question will be how the recent policy changes on the fx market move the remember the. we -- move the renminbi. we think they might offer support even if the dollar strengthens. being we are not at the point where the renminbi is weakening much more than one would otherwise expect. haidi: manpreet, we were speaking earlier about whether this trade war would be much more prolonged, setting up for a cold trade war, if you will. if you assume that, is the assumption weakness for the yuan and further strengthen the dollar as you get a return to base effects from investors? >> from an economics standpoint, absolutely.

the longer it goes on, the more you see impact. there are two points i would make. one is let's not assign it to a renminbi weakness. there are many other ways economic growth could manifest, not necessarily a direct impact on the currency. what the dollar does is still going to be the most important thing for the remember dollar and most of the fx markets. there is a lot of discussion about the trade war and some of the tensions and sentiment. let's not also forget that the u.s. is headed towards midterms. , but wet the same thing have seen tensions with other trade partners turn into a deal. things with china would be a little more difficult, but let's not overlook the possibility that at some point this aggressive positioning could be ahead of negotiations. ramy: i just want to reference

the bloomberg terminal. you can see weaker against ... pretty much everything. i also want to bring up my own bloomberg terminal. we know the chinese yuan has been on a losing streak for the past eight weeks. some reports have been saying the pboc will hold the line at seven, others are saying it could weakened by 50%, which is pretty unbelievable. where do you think this is going with the addition of all these trade war tensions, deleveraging, etc.? [indiscernible] there are two parts to our argument. one is, do we see a lot of dollar strength from here? dollars cmy higher? we actually think we are at the tail end of that. while you might get more in the few coming days and weeks, we think we are closer to the turning point of the dollar.

is there that much stress for this emi that might cause disproportionate renminbi weakness? we don't think we are at that point, particularly with support from the end of last week. 50% move sounds extreme. to get that kind of move, you have to be looking for a very negative scenario, not only on trade, but in chinese growth and capital flight. we don't see that in the baseline outcome. you would have to be looking quite far out. at the end of the day as global investors, we think there are many better ways to protect ourselves against that kind of outcome than positioning for a short move on dollars cmy. ramy: talking about drama in the forex markets, i would be remiss if we did not talk about the lira. in the bloomberg terminal, you can see what has been happening with the lira, really spiking over the past year to date because of what has been happening with erdogan's

son-in-law. where do you think this is going? can they stop this bleed? 5.2 to the dollar right now. >> it is a tough one. most of asia looks like it is in pretty good shape compared to turkey, where the fundamentals are weaker. they have been weak for some time and it is global liquidity that has offered support to the leader. we do see greater stress emerge. places like the lira are one of the first places we will see it. , the fx of fundamentals reserves and fiscal deficit and monetary policy, none of that adds up to support for the year of -- for the lira. the currency would not be a favorite place to take any risk at this point in time. the lira has gotten away with a lot because the global environment has been supportive, but it is potentially one of the

most potable currencies in the em space. ramy: i will remember that, not a favorite place. hold on because we are going to get more from you in our next block. but we are going to talk currencies and the rba as well and the aussie dollar's dismal performance. there is also this tip on malaysian bonds. haidi: later this hour, we are hosting an exclusive with the ceo of hong kong's largest electricity supplier, debriefing first-half results. also, energy investment. what it would take to keep the lights on during a trade war, literally and figuratively. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." i am ramy inocencio in new york. sydney.nd i am haidi in the rba is expected to hold its

key rate steady. also creating some dark clouds on the economy. kathleen hays is here with the preview. with talk about the rba being the dullest central bank in this part of the world. lots more reasons, perhaps more than ever, to sit on your hands for a bit. kathleen: it is always good to know why it is sitting on its hands for so long. it is not as though its economy is not doing well, not as though inflation has not moved higher. when you put it together, you can understand why again there is no reason for them to take the key rate off 1.5% yet. one of the biggest things, very important not just to the reserve bank of australia, but the australian policymakers who are in control of the government right now. wage growth remains on the flat side. let's jump into the bloomberg library and look at one of our gtv charts. you are going to see a yellow

line, wage price index. flat at 2.1%. you can see the cpi, which has moved up a bit, but still not as high as the rba would like to see it. meanwhile, the cash trade holding steady at 1.5%. they move along in this story. the inflation rate at 2.1% is barely within the 2% 3% target. gdp is raising -- rising at a 3.1% rate. the target for the year is 3.25%, so progress being made. however, the aussie dollar, which has been weakening with the chinese yuan, is also weakening because inflation has not moved up even more. a lot of traders are betting the rba will cut its inflation forecast. right now their forecast is for 2.5%, but at 2.1% barely, maybe they figure they had five months to do that. let's take another chart, which

shows how the currency has been moving. i am just going to quickly updated to get it where we are right now. you can see it has come down a bit. currency,stronger picked up a bit, but definitely on the soft side. this is one more reason for it to stay there and another reason for the rba to be cautious. what economists are looking for is a statement that still shows the glass half-full. focus on the fact that unemployment is down to 5.4% from 6.4% in 2014. you are getting some progress on inflation. but i don't know if they will for will anybody. they are still not where they need to be. particularly with chinese trade tensions, a big question hanging over the australian economy. ramy: the world as well. global economics and policy editor kathleen hays. let's continue the conversation with manpreet gill, still with

us from singapore. let's talk about the rba. we know what is going to happen, i.e., not going to happen. what are you looking for in terms of a statement. let's see the positive here. >> i suppose what would be most useful would be any comment on how you are viewing the balance of risk. at the end of the day, inflation creeping higher, unemployment rate, some good news. you do have headwinds, so it is a balancing act. has the balance shifted materially in their view? that will be key in terms of figuring out what we should be looking for, not immediately, but policy over the next couple of quarters. domestic economy is quite visible to us. the international economy, particularly exports to china, that is uncertainty, which could be a risk. it could end up being quite a bit of support. that balance will be quite important, both the pricing on

future rates and therefore the currency. r di: in addition to the decisionscentral bank , thailand and the philippines among them. what is the outlook for emerging markets? have we seen the worst? is there going to be momentum going against these markets regardless of how strong their domestic fundamentals are? >> as we mentioned earlier, i think the dollars is for many of these currencies one of the most important factors. central-bank policy is ultimately a balancing act between managing trade tensions and where each economy is in terms of inflation. but the dollar continues to be the key driving force of these currency pairs and for capital flows into the domestic equity and bond markets. at the end of the day, we think a lot of the dollar strength is behind us.

there is a small amount ahead of us, days or weeks at the most. we think that should ultimately be supported for e.m. assets. the risk is that will extend further than we expect. look at e.m. assets, leaving aside the currencies. look at the equity markets and em dollar bonds. we are seeing more optimism coming off what has been a difficult first half. that is one indication that the dollar may be that much closer to potentially stopping to strengthen further. that is the most important thing for em assets. speak, we are we seeing the turkish lira rising 1.3% after thinking to that record low. earlier, itpeaking is hard to see a consistent upside for turkish assets. manpreet gill, standard chartered head of ficc investment strategy from singapore. bloomberg users can interact with the charts we have shown

using gtv . you can browse charts featured on bloomberg tv to catch up on key analysis and save them for future reference. this is bloomberg. ♪

ramy: quick check of the business flash headlines. this is the stock to watch after second-quarter earnings smashed expectations, operating profit $550 million through june, far outweighing the estimates. the results show the ceos efforts to expand record 10 -- expand is starting to pay off. haidi: australia's own core is set to buy a u.s. rival in a deal valued at more than $5 billion to expand sales of plastic packaging in the americas. shareholders will receive the equivalent of 57.55 per stock.

global copper supply will win a five day reprieve after the world's biggest miner opted for government mediation to avoid a strike. this is bloomberg. ♪ this is bloomberg. ♪ retail.

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>> we are happen our out from the trading. singapore looking like a little bit of a cloudy day. agendase, a lot of the this week starting off with the reserve bank of us try to decision today. you are watching daybreak asia. let's get the first word news. isthe turkish lira recovering after seeking to -- sinking to a new low.

fell as much as 6.7%, while the rate on 10 year bonds hovered below 20%. the president vowed to respond in kind. the leading u.s. aluminum producers is asking washington for release from tariffs. they filed request asking for waivers from the administration's 10% duty on metal imports. three of them are for aluminum. thatthers are for metal cannot be made in sufficient quantities. optimism thatd on it is -- tried for years to a replacement for

email, but it has face widespread criticism about the security of widespread data. a new report highlights the gap between making music and marketing get. thests receive just 12% of $43 billion generated by their works last year. fueleport led to long-standing complaints that and music labels are getting rich off the backs of artists. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. thank you for the accurate time to see how the asian markets are shaping up so far this morning. we have asian socks with a mix. you have the yen gaining ground.

change and ittle will show you one that is holding below on the chinese foreign reserve data to when it comes to what we are watching, the markets going to be the one to watch. this after japan's labor cash starved -- far surpassed estimates year on year. when it comes to stocks to 2017, the most since may and it expands beyond e-commerce. in southbank, that has climbed the most and its earnings also they say no pessimism is following the most in

two years after the banks provided its results over the #and pioneer is falling after sales were softer than expected. a last look now at some of the movers. angkor is fighting today. eclipse group falling the most since april. this after cutting its forecast. >> almost 40% downside. upside, climbing 49% from a year earlier. also emphasizes artificial

intelligence. -- strategyegy was wise. in summary, i would say ai is everything. be prepared for that. >> softbank shares are trading since the highest since november. softbank is rising significantly after that earning support. -- earnings report. >> for the past two years, softbank has been a tug-of-war between -- it has been a change in formula. there is a one-time gain from a

chinese subsidiary, but about 245 billion came from increased evaluation. they have been talking for years about -- from moving beyond being a simple carrier. there was also news about the company's planned ipos in japan. if that does happen -- >> the latest we know is that it might value the telecom about $90 billion. ipo just to record give you some comparison.

raised 25 billion in 2015. the evaluation will probably depend on the capital, but it does seem like the prospects are good. in terms of the grand strategy, you are saying there were about 300,000 words to get through. anymore light shed on thinking? >> the briefings are always interesting. you can get lost trying to analyze everything. for while, he has been talking about the idea of making noncontrolling stake in the world's leading companies and encouraging them to operate and get greater energy. he put a slightly finer point saying while all of the investments range from satellites to agriculture and dna analysis seem desperate,

there is a one unifying theme and that is artificial intelligence. that it comesves from information technology. fund continues, i think a lot of investors can live with that accurate -- live with that. >> softbank shares the highest november 2015. -- our asia technology editor peter joins us. for applempact heading into the holiday season. turnaround.rprise

companyto be clear, the had a press conference yesterday in taiwan and talked about the computer virus and how it got into your system. they did not talk about specific customers. we talked with analysts trying to understand how deep these issues could be and what it could mean. what the company did say is this one acrossnt of the virus. what analysts say is given the shutdown was only about three had, they did say they andored their facilities will likely have no substantial

impact. if there were some damage to either the equipment or themselves, that would be a longer recovery because it could take six to eight weeks. the analysts anticipate that what you saw was a temporary shutdown and there was no damage and that likely for apple as they head towards introducing three new phones in the fall, then production is going to be ok. apple is used to dealing with this very long complicated by chain with hundreds of other suppliers scattered throughout asia. these sorts of things are able

to make up the difference. >> that is the number side of things. trust, is there any damage to speak of? a very key piece not just for apple, but other companies, they deal with many customers around the globe. and apologize for the delay may are looking at how they can or othereir procedures components for dealing with suppliers so this is not happen again. it is important for them to signal reliability for the customers that depend on them. underscoresy, it

that aiken cause companies and into -- counter these threats? >> that is certainly a big issue. they are trying to take down corporations around the world, steel all sorts of information. companies are increasingly aware of this. we have seen this in many places, not just to wire -- not just taiwan, but the u.s. and other locations. they do want to look to governments to lead the way. this elongated supply many that runs through companies around the world. >> thank you for that.

coming to us out of tokyo. in just a moment, hong kong's major electricity supplier a 26% rise. this is

>> welcome back. .his is daybreak asia >> with the larger of hong -- thato electricity was driven by gains last year. right here in australia and mainland china. it cost the maximum return of 8%.

from hongexclusively kong to decrease -- debrief from the earnings. if you take a look at the breakdown, 26% are operating and was largely due to 75% from china and almost doubling the contribution here in australia. he will say it cannot be sustainable. are you optimistic? >> the fundamentals in our business are very strong. we are seeing growth in our market in hong kong and we are australia andin we are continuing to see growth in mainland china and india are it we have had a particularly good first half, but the supply and demand balance is coming more and more into balance, so we will expect to see suffer

prices in australia. in china, we had high levels of dispatch because there was very little rainfall. oura couple of factors, first half was particularly strong and we don't see that caring into the first half. also, return will be reducing from october, so in the near term we will see slower reduction in our earnings compared to the first half. like a almost sounds gentle managing of expectations. what about other assets? to looking for other places see upside to that? >> we have a big increase in our market in hong- kong. we just had a five-year development plan improved which will increase capital spinach or

. over the next five years, we will be meeting to invest nearly 53 billion into our core market. our other two are mainland china and india. streaming the as far as growth is concerned, we are in a pretty good place. tradeking at rising tensions between the u.s. and china, what concerns you? we won't seewar, winners in the business sector. everybody will be exposed to some extent.

with the new full energy, we are not exposed to imports, whereas coal. we do import with that diversity, we are well protected. >> oil prices have been pretty volatile. how sustainable do you think that can be regardless of whether there is a smaller percentage you're talking about? china is transitioning from a coal-based economy to a low carbon economy, but it still consumes a large amount of coal. having the high coal prices and electricity tariffs have not resonated with those coal prices

and is not sustainable in the long term, so this is an issue that china will have to deal with. >> you spoken about the renewable opportunity in china. looking at a progressive increase, there is a lot of pressure on companies. you expect this market will become more challenging? >> yes, china is going through a transition. there is quite extensive reform going on. we are seeing that happening and varying paces. some are moving faster than others. we have moved almost completely to regulated prices. the fundamentals are still quite helping. it is leading to develop the capacity, so there are still

fundamentals and we are still seeing a fundamental change in the market. we still see very good opportunities to invest in china and that is where our investment into the powerstation and renewable energy we see as being in line with the policy direction in china. >> you are looking at a massive long-term bet in hong kong over the course of 15 years. what are you planning to do with that money and how are you planning to fund that investment? >> -- find that investment? >> we have been in hong kong for years. the development plan outlines where the investment will go and a large portion of that is , but a growing demand

significant portion would be aimed at reducing carbon emissions and coal will be 1004 hundred megawatts of coal capacity and replacing that with natural gas capacity. we will also be strengthening be aowerstation that will relatively modest investment and enable us to get more clean energy from china, so these are investment that will be in support of the policy. we would be spending $50 billion roughly over five years. that is a step up from the level of investment we've had in the past. for joining us. you can get a round of of the

stories. it is also available on the mobile. you can come and get the news on that you care about. this is bloomberg.

>> i don't think china is the saver -- savior of globalization

. of livinge standards like those united states ensures the 1930's, so the context is very different. -- that is from the sixth through the eighth of november. much more can be found online at bloomberg.com. at what to take a look is coming up over the next few hours. what are you watching without me? year, it seems like it was one way that has doubled. we have really come off late in the last few months. one of the prospects very important as they move towards

electric vehicles. cobol chief executive . some data outng of china as well. it --y should be giving an idea on how much money the chinese actually do have. used and maybe we would have seen a shopper fold in the yuan. >> thanks for much. before we hand it over to you, let's do a quick look at market trading. up.an see japan is sneaking

we still have eco-data coming out. >> of course, the reasons why it stays on hold, creeping towards their, looking at quite a bit of upside. that is it for a break australia. bloomberg markets is next. phones have made our lives effortless.

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>> the currency move brought only brief gains and it is iran bracing for u.s. sanctions. of americandes intervention. this is bloomberg markets.