>> turkey's crisis deepens. the lira plunges again and spreads to equities. erdogan repeats the country is under attack. >> the fallout is spreading around the world. emerging market stocks and currencies drop to their lowest in a year. wall street isn't

convinced. >> we have the latest live in los angeles. >> hello from sydnie, it's just past 8:00 a.m. here. i'm hide hide. we're two hours away from the opening of australia's first major market. >> and i'm ramy inocencio. we'll be looking at how the action and really elsewhere in he world will play into your asian pacific trading day. the news was all about turkey. the lira continuing to plunge. look at, that weakening over the course of this year by nearly 82%, this as erdogan says he still will not consider rate hikes or those capital controls. having a cratering effect. there is some hope. the u.s. national security about john bolton met

the latest turmoil. the ran is now as its weak nest two years. theage teen possessos is at its weakest ever and the ruble down to a two-year low. in u.s. markets, more red on the board. the s&p 500 down by about .4%. this, though, having to do with stronger dollar and energy. stronger dollar means it gets more expensive for commodities pretty much everywhere you look. >> you see that in gold as well. really getting hit from all fronts. not behaving very much like a safe haven these days. look at the chart in asia. we're looking pretty mixed as we continue to assess how big the fallout is likely to be from

turkey. a little bit of a bright spot there, if you want to talk it a, that about .1% higher. nz saying it's going to end out the year at 82 u.s. cents. and external conditions don't look like they'll improve. sydney futures, the aussie dollar at 72, 73. a flurry of chinese data coming out, which will be the key calendar event for asia. looking at china, and what's going on in turkey kind of makes what's going on with the u.n. looks under control. 6.88 at 12 is where onshore is trading at the moment. yesterday we had that six, about the strong nest a month. continuing to watch that and employment numbers out today from china. let's get thank you first word

news with jessica summers. jess? >> thanks, haidi. the indian rupee hit a new low as the crisis in turkey ripples through currencies. it fell the most since swept role as theuing its worst performer in asia. the chances of the reserve bank keeping rates on a hold after back-to-back hikes. bad loans of chinese banks rising more than $26 billion to almost $285 billion. that's the biggest quarrel jump ever recorded in data going back a decade. loans represent 1.8% of total advances. china's crackdown on shadow banking has made it harder for weaker borrowers to refinance.

the forecast for u.s. growth slightly diminished. the c.b.o. says the -- sees the comply expanding 1.1% through 2018. it says the growth will east next year on slower investments and government buying. at least six are feared dead and thousands more displaced as the tropical storm hit parts of manila. the storm hit the river to burst its banks. e local counsel is declaring an emergency for at least 20,000. global news 24 hours a day on summers. essica this is bloomberg. >> jessica, thank you. turkey is like a boxer on the

ropes right now. taking blow after blow. the lira has lost about a quarter of its value against the dollar. then president trump slammed additional tariffs on turkish steel and aluminum. president erdogan remains defiant. >> turkey, as is the case elsewhere, is under economic seage. >> we're joined by bloomberg congress editor joe, with us out of washington. any sign that u.s. officials are concerned about the potential for turkey's market collapse spreading? >> it's pretty clear that president trump is willing to roll the dice on this and that the u.s. economy is big enough and robust enough to weather any ripple effects from emerging markets. at that he's shown he's willing to endure some market pain to get his foreign policy goals. we see that from the counter terrorists from china and the conflicts that

he's initiated in order to rebalance u.s. trading relationships. what's interesting here, too, is that he is now using a tool, that is, the tariffs, as an instrument of foreign policy along with sanctions. previously those have been typically used by u.s. presidents strictly in trade matters but trump is willing to use them as well to get what he wants, in this case, the release of a u.s. pastor that's being held in turkey. >> we just got the lines about bolton meeting with the ambassador but that seems like a drop in the buck. >> yeah, it's a very preliminary stem and interestingly, this came at the request of the tourkish -- turkish ambassador to the u.s. the white house has only said that they discuss it would issue of the pastor who turkey is

holding as well as the current state of relationship between the u.s. and turkey but for the most part, as we saw with erdogan's rather defiant message and trump on friday was actually cheering the drop of the turkish so against the dollar, there are some pretty hard feelings on both sides. >> all right, now, yornled turkey's economy, there is much more at so there are stake. what are the most oven orb obvious links? >> the most obvious is the relationship of turkey within nato. they're a key partner of the u.s. in syria and provided a major u.s. air base that's been used for a.f.c. -- afghanistan and by the u.s. and middle east and there's the question of whether in pushes turkey closer to russia, which russia has sort of embraced the idea of drawing turkey in closer.

so the relationship with the rest of the european countries who are also part of nato so this has some strategic implications as well as some economic ones. >> joe, thank you so much. joe in washington, our bloomberg congress editor. breaking news crossing bloomberg. an yum date. national australia bank expecting additional provisions in its second half 2018 results, nimba interests declining slightly in the third quarter. profit reported amount 1.65 billion aussie dollars there. we're rounding up some updates from australia's big legenders that have been wildly profitable but have come under quite a bit of reputational pressure as a result of the ongoing investigation into financial

misconduct. >> another of our top stories, investors are divided on tesla's privatization push. the tweet was based on discussions with the saudi sovereign wealth fund. musk said he left with no question that a deal with the p.i.f. could be close. let's go to tom giles in san francisco. does this change anything with this s.e.c. investigation of mr. musk? >> well, it certainly gives us more clarity on why he was so optimistic when he sent that tweet about $420 a share. they'd had these meetings. his optimism was based on what he said was a clear indication from the saudi sovereign wealth fund that it wanted to take tesla private. so it helps explain why he was

so optimistic. does it actually alleviate the concern about the certainty of saying funding is secure? lawyers are saying the s.e.c. is still going to have a lot of questions around that. it's one thing to have a big, wealthy investor say we want to take you private. it's another thing entirely to go and say that the funding is secured. so this is all going to boil down to what is meant by the term "funding secure." what should the market take away from that and what are the expectations around that and did he break some kind of a rule about what you can say about your publicly traded company when you make a statement like that? lawyers are telling us that the .e.c. will not be completely assuaged by his statement on the saudi p.i.f. >> with the saudi p.i.f., saudi

wealth fund, are they just interested because it's diversification away from oil? >> certainly we do have an indication that the saudis want to look at the future beyond oil at some future date. certainly electrical vehicles are a good hedge for that. there are many who believe that tesla itself is a good investment. it's innovative. the cars have style and a very committed fan base. despite some of the production issues we've seen. the cash burn issues we've been talking about for weeks on end here. in the short term, those inancials' hurdles and the supply and production hurdles should give investors pause. but there's a school of thought that if you take the company private, take it out of the

public eye, there is a school of thought that if you give them the time they need that they will be able to achieve their goal over the long term but you have to be a committed long-term investor in order to make that happen. >> what about the idea of taking elon musk out of the public eye? >> the sense witch -- remember, we broke news last week that he was -- had also been talking to softbank about possibly going private. those conversations didn't go anywhere and there was disagreement over what role elon musk would play. he wanted to retain a great deal of control and that didn't sit well with softbank. now, the question is how many of a role would the saudis be willing to accept for elon musk? we're not privy to exactly what demands he is making.

clearly this isn't a done deal and we have no reason to believe, based on the statement that will elon musk put out this morning, to expect that it's a done deal. clearly my sense is that a lot of those leadership questions have yet to be determined. and just the question is how much of an appetite do the saudis have for elon musk very much at the mel helm of the company? if you look at the charlotte at tesla, do they have a really strong number two who could snep and take his place? he does bring a lot of vision and a lot of the energy, the creative tension that has gotten tesla this far. do you have a tesla without elon musk at the helm? and the answer seems to be probably not, at least not the tesla that many tesla fans have come to know and love. >> the drama continues.

tom, issue so much for joining us. tom giles with the latest on tells la and still ahead, trailed tensions show no signs of abating. the impact on the u.s. economy with the former u.s. trailed rep for china. >> up next, more on the turkey contagion. national australia banks, a possible spillover for major currencies. this is blook bloomberg. ♪

ramy: welcome back. i'm ramy inocencio in new york. haidi: and i'm hide hide in sydney. you're watching "daybreak: australia." let's get more perspective on the crisis in turkey. we're joined by national australia bank head ray. great to have you. what a time to be covering the markets, particularly over the last couple of days.

is the correlation and contagion selloff we're seeing likely to abate? at the end of the day turkey is pretty unique in lots of bad ways. >> i think so. it is to some extent. a little local difficulty. has far the contagion been relatively limited. the african rand, one of the more significant currencies under pressure. a few signs of contagion within the eurozone. some of those government bonds and countries where the banking center appears to to have the bigest exposure as far as turkey is concerned. if you look at the index, mathematically when turkey is doing what it's doing, it's having a big negative effect on emerging ncy --

countries currencies. so we're seeing some contagion. at the moment i think those are relatively limited. i'm far more concerned about other things going on in the world. particularly what donald trump does next with respect to paris. haidi: the euro with its relations to turkey but further down is that just a liquidity situation? commodities and trailed. >> i think it is. let's not forget that in australia, its national indebtedness to the rest of the world about $a trillion dollars. when foreign investors retreat to home shores, currencies tend to weaken. it's partly that. we've seen the weakness in the chinese currency spreading to the rest of asia.

but generally there is a strong observed correlation between what's happening in american markets and the australian dollar. that's one of the reasons the australian dollar has been one of the major affected currencies. haidi: to what extent -- you see the selloff across the rest of the effort m. space. you agree that turkey is a basket case. would you be opportunistic that some of these currencies are starting to look undervalued? >> no, i think the biggest emerging is still ahead of us, specifically whether trump the going to go to next level as far as the trade spat with china is concerned. it means more dollar strength, countries are going to be impacted by concerns that we're going to see slower chinese

growth. potentially lower growth as a result of trailed tariffs. so in that sense, no, i wouldn't be looking for -- i'd more be looking for any strength in the next week or so as an opportunity to sell rather than a buying opportunities. ramy: i want to show and you our viewers, that actual correlation at its highest in the past year. 0.44. there was a downturn in july. looking at the knockdown effects for the rand, example, it's weakest -- weak nest two years. are there possible domestic effects that could turn those around? yesterday we were talking that currency philippine could be a gige -- buying

opportunity. >> as i say, i still think there's a bigger emerging market change ahead of us. in general, there have been ito sin accuratic issues that have been impacted the emerging parkts. -- markets. so there's been good reasons for some of the weaknesses in individual churn sis and once sink t three or four it accuratic pressures, then it's no real surprise that we're seeing that sort of apparent contagion. three or four currencies that all have an 8% weight. suddenly look at the m currencies in general. unfortunately i think those relatives are likely to be swamped by the bigger impact and as i say, i'm still far more

concerned about how the trade tariff spat plays outs in the months ahead. ramy: in terms of dollar trajectory here, we're getting some interesting calls that maybe the forecast weakening of it possibly by the end of this year might be turning around. short term the dollar isn't strengthing a because there's a love affair with the dollar but because of the other currencies going down. it's also like the sum of it parts mandates things. i think that's been the story. i think there is more strength -- again, if we get into a situation where trailed tave tariffs start to impact on concerns about both global and u.s. growth and most of the modeling that's been done, suggests that the u.s. could be at least as badly effected and

-- affected and probably more so than the rest of the world. if we do get into a riskoff trade conflagration at the end of the year, that has the ssibility to check current opinions about what the growth could do and that could unsink the u.s. later in the year. we're still sticking with the view that one said side or other at the end of the year are likely to see a resumption. ramy:. they and remember, bloomberg users can interact with the go.ts shown using gtv you can use them to quasm it -- up on analysis and save them for future reference. this is bloomberg. ♪

ramy: let's do a quick check of headlines. high precision posted a surprise fall in earnings last quarter. that is slowing demand for apple's flagship device squeeze margins. 300 u.s. million through june. compared with the estimate of 700 million. they rely on apple for more than half its sales and is looking to diversify. haidi: earnings doubled in the first quarters boasted by growth in the global market. hon hai. revenue climbed 22% from the year earlier to 5.4 billion. the global steel is benefiting while infrastructure spending is still in demand in india.

ramy: up next, netflix throws in a surprise plot twist as it recruits a new financial held. details in a moment. this is bloomberg. ♪

haidi: it's 8:30 a.m. here in sydney where markets open in about 90 minutes' time. futures showed a little bit of positive activity but global stocks tracking lower with the contagion risk of the declines across all turkish assets at the moment. i'm hide hide in sydney. ramy: and i'm ramy inocencio in new york where it's :30 p.m. and you're watching "daybreak: australia." the first news with jessica summers. >> turkey remains under pressure from all sides. the first steps to bolster the financial system were seen as

insufficient by some analysts. president erdogan again lashed out at the u.s. saying higher rates were impossible and that he would not accept any international bailout. the fallout from turkey's emerging markets sending stocks and currencies so -- to their lowest in a year. the rand's one perfect month volatility the most. and the peso touched 32. emerging stocks the cheapest since early 2016 which saw the start of a two-year 60% rally. wall street remains divided over tinsel's privatization plan. that's after elon musk's tweet. he left the july meeting with "no question that a deal could be closed."

that means funding is not secured but gene munster says the financing question has been answered. stocks and ing 18 deleting four from its index after a quarterly review. a -- y addition will be acwi. that's what's happening at the close of trade on august 11. powered by more than 2,00 journalists and analysts in more than 120 countries. this is bloomberg. ramy: jessica, thank you. turkey is being pushed to the brink. the lira has lost about a quarter of its value against the dollar and the fallout is spreading far and wide. we have a report from is stan

bum. >> it's been a dramatic few hours for turkey and the rest of the world. we heard from the turkish president earlier and he underscored what he'd pointed out on the weekend that. he doesn't see real for interest rates that the levels will go back to a ration aal level on its own and the currency is underseage from factions abroad. we saw the central -- central bank intervene early on in the day. injecting additional equity. we didn't hear anything from terms of commit from the i.m.s. and here on the ground in istanbul, it's been interesting to watch shoppers, a, those with they h lira to get what can and for those that much hard

currency, they're able to lock in great deals in a lot of theeg these shops. but the question is how this is going to trickle through into inflation and what this means in the wilder standoff between the u.s. and turkey and who's really going to be able to touch it out? haidi: a quick update on the markets where early trading is under way in new zealand. a little bit of upside there -- we should probably just call it lat at the moment. sieved any futures looking a little bit more positive although looking like we might extend yesterday's declines. and the aussie dollar trading at 2.74 u.s. cents ahead of a

flurry of chinese movement. and employment numbers as well expected from beijing. bloomberg's news market editor is here with us looking at the fallout continuing with turkey. what does it mean for the markets? there are a few brave voice saying you should seize the opportunity because turkey is fairly unique in its imbalances. >> on the one hand that's definitely so and turkey is busy making itself more unique because erdogan is saying we can touch this out by ourselves. we're no -- we're not going to raise rates. we don't want the i.m.f. so we're going to go on our own and we'll seau you -- how that place owl. in the meantime, the lira has sort of stabilized and we do sow, at least in the future, some indication that the asian

session might start off ok so people are going to be looking around and trying to assess, do we want to come back here? if we look at the charlotte we have up here, you can see that that hit to emerging markets has extraordinary and what's also extraordinary is the way the u.s. markets keep climbing and climbing. i think if you look at, that that will encourage pockets of risk appetite, including perhaps in asia, which is a long way away from turkey and there aren't many economies here that much any serious ties to turkey. ramy: china is releasing eco data later on today. include cluth including refill, industrial production. it looks that as at least --

least two of them are expected to surprise on the upside. is this good news? >> asian investors really have to hope for good news out of this. we heard some not so great news about china overnight. some slightly remeasured aggregates for credit, which showed they slowed again in july. that's not fwreament. but considering that came -- the first for july, which was when the trade tensions really kicked up, that that's very needed and you can see again on the charts we have for you and also find that in the library, the stock market has been trending down as interim output has been trending down. that would be good news to help people forget, perhaps, about some of the turkey fears.

amy: bloomberg's global market editor reynolds and don't check out the tv for some of the stats you just saw. we'll take a break and more in a minute. this is bloomberg. ♪

ramy: i'm ramy inocencio in new york. haidi: and i'm hide hide. you're watching "daybreak: australia." executive groups at netflix. chief financial officer david wells is stepping down after eight years in the role but will suck sis -- duck saysor. this is a pretty big loss for netflix. good and 's never

david wells who's stepping down today. he has been there since before netflix was making original content, so a long time that he was instrumental in building, in helping build financial backbone for a company that now has 130 million sub scribers worldwide and has upended the tv business as we know i. it's definitely a loss and he will stay on while they pick a successor and help in that transition. the company said today the market hasn't reacted too negatively to the news so there wasn't a huge selloff at any stage. haidi: what were some of his biggest accomplishments during his time at netflix and i suppose what will the company look for as they search for a replacement?

>> netflix has been spending a lot of money on original content. david wells there for the past seven or eight years, really building a frame work for knelt flicts to be able to invest a huge amount into creating its own allergyal content and to what was a d.v.d. by mail business to now a original content streaming service. he helped orchestrate this and now the company's focus is to try and keep up this level of investment. see ccessor will need to if the company can maintain its level of investments and how that will transition over the next few years. one threshold we cost is how many of netflix's content is licensed. it seems the amount of original content has overtaken the amount

of licensed material. so netflix is sblg a sort of new phase at the moment and the new c.f.o. will have to manage that. ramy: what are analysts saying about the shake-up? >> they don't see -- you know, telling investors not to worry too much about it. they said there was a small stock movement, about 1.3% but it's not had any kind of major shakeup and, you know, he's oing on to leave for philanthropy so it doesn't seem like there's any problem in the background that investors should be concerned about either. ramy: thank you very much. switching gears and the congressional budget office has lowered its 2018 u.s. growth outlook as it warned of trailed uncertainty and feds will probably not reduce the u.s.

trailed deficit. arnold and porter sr. council claire reed and also former assistant u.s. trade representative for china affairs. good to have you. slightly down, 3.1% this year from a previous forecast of 3.3%. your thoughts first. >> well, the you see -- u.s. economy obviously is driven by a large number of factors. my perspective comes from watching china and the u.s.-china tensions as well as watching the general international trade world, if you will, with all of the very disruptive policy position scomms approaches that trump has taken. there's a lot of uncertainty, i think, which will end up potentially having an impact on the u.s. economy. ramy: yeah, slowing growth and

business investment as well as government pumps there. one interesting thing that was reported earlier today is that donald trump is using a combination of sanctions as well as tariffs and it seems to be working but only in certain case, for example with turkey on one side but china not so much. explain the china aspect and the restill yens si. >> i think it's important to us understand that, from the chinese perspective, there's going to be no way that they're going to just, if you will, kowtow or give in to the united states on this trade matter because the economies are intertwined but not so desperately dependent on each other that either side really needs to move on the basis that there is major economic harm to their by lateral trailed

relationship. on the other hand, one of the uncertainties here is what is the u.s. strategic goal? and i think that's the question that a lot of people are asking and the uncertainty about what trump, who's really in charge of this kind of issue, what he a ts to accomplish is create very major uncertainty for everybody. haidi: claire, i want to drop this chart in our g.t.e. library. the level of uncertainty, both to do with how this plays out and also sheer uncertainty tuesday what the trump economic policy is in is one gauge of uncertainty.licy it's the highest we've seen in about 20 years. it's very difficult for businesses to make investments and business decisions in this environment. but do you think trump would be

happy to get some wins going into the mid terms or is this a functional thing with china that he's waging. >> that's an excellent question global markets generally remain stable thenic trump will have no reason to be backing off of his position of being the tough guy who's ample -- amping up tariffs and will not allow china to respond in kind without upping the antti again. the other factor that we need to take into account is that international trade degrees not necessarily that popular and he is looking potentially to move on nafta. if he moves on nafta and declares that he has victory with regard to canada and mexico. he may not want to actually move forward with another trade deal with china ahead of the midterms

so if the politics force him in that direction then i think he'll do it but i think the markets and the business uncertainty perceptions are very valid and could potentially continue to be an issue through to 2019, depending on how trump views this. haidi: how much uncertainty and grief to you -- do you think is going on in beijing at the moment? given we've heard many reports that the president may be facing a bit more domestic pressure than we had expected when he basically concluded his consolidation of power. >> yes, i think we have a lot of challenges in trying to read what's going on in china. it's extremely opack and so i to it's early for us

really be able to assess how xi jinping is in with regard to regarding the old xi jinping policy of biding your time and hiding your light, which was the low-key approach that china took for so many years to try to preserve its capacity to be able to develop with relative peace with the external environment. i think that with the u.s.-china trade problem that xi jinping doesn't have a lot of options. he has to look strong and he has to avoid any kind of indication that he is going to be caving to u.s. demands. that's very pomplet. so the question is going to -- important. so the question is how do you achieve a privet -- pivelt between china, which will demand

win-win and quid pro quo for any deal against trump, which believes either you win or lose? ramy: there's the issue of nays and saving, that especially for xi jinping here. how do you think they would find this? back channels comes to mind but what would you recommend to donald trump? >> donald trump may not think he needs any recommendations of how to do this. i think that what really needs to happen, though, is that both sides need to look to try to find an off ramp and it needs to be an off ramp that satisfies enough of the objections that trump has raised, which include the trade deficit, which you mentioned at the top of this segment is not going to be going anywhere in terms of dropping probably and then you have this

other issue that trump raises about repip rossty. which is to say, fairer, more even balanced in the relationship. in terms of access to the economy and it may be that looking at these kinds of measures may be the all the platt way that we get the off ramp. but until trump decides that there's been enough pressure put on china, i don't know that we're going anywhere. ramy: claire reade, thank you very much. a roundup of the stories you need to know in today's edition of "daybreak." it's also available on mobile in the bloomberg anywhere app. you can customize your content so you only get the news on the industries that you care about. this is bloom berk. ♪

haidi: the latest report out of ticktock there. we just had the headline that will mark pompeo, the u.s. secretary of state may visit

north korea later this month. to miss on tictoc not outs on any of those reports. ramy: credit suisse is breaking up its international wealth management units into seven areas rather than four. this with the latest push to regionalize the bank. they'll have more autonomy to make decisions and each division will have its own managements team. haidi: new classic media buying for as much as $2.3 billion to expand ebook content. the mick anymore has a possible download adjustment if earnings fall bowe certain levels. has popular tv programs and

movies. amy: neilson shares surged big elliott announced a gain. elliott says the data company, best known for its tv ratings service is undervalued and represents an attractive opportunity. haidi: hedge fund manager ray is keeping faith in gold. bridgewater associates maintained its levels in gold shares and held 11.3 million in the second largest shares of gold trusts. that's about it for us. "daybreak": asia continuing. yvonne to look -- look at contagion or mountain -- in the

more immediate outlook from the situation in turkey. >> we've seen that contagion spread. we've seen this emergency hike in argentina. the rand obviously taking it on the chin. we'll speak to the chief economist and head of credit portfolio management. he said we could see more fallout but potentially he said some olive branch from the german chancellor angela merkel who has a known interest in destabilizing turkey, he says that's a positive development. perhaps they may be stepping in to help torque. ramy: and later in the next few hours, we'll be taking a preview look in terms of what's happening on the eco front for china with head of china equity strategy. in just a few hours we're expecting both retail numbers,

industrial production as well as fix assets to come in, haidi. haidi: lots more to look forward to over the last -- next few hours. this is bloomberg. ♪

haidi: it is 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." face acific markets mixed open. the lira plunges again and the selloff spreads to equities. the fallout reaching across the globe. from bloomberg's global headquarters, i am ramy inocencio in new york, where it is past 7:00 p.m. on a monday. easing inflation may offer indian policymakers the chance of a breather. elon musk says