>> u.s. stocks rally for a decade and increasing optimism about trade talks next week. the white house isn't quite convinced. president trump said china will have to offer a lot more to get a deal done. the li rmp arch climbs a third day. and they are warning of additional sanctions. and the perth mint said it lost its shine because it has become

immune to bad news. news bad enough, hello from sydney. we are two hours away from the opening. and just past >> i was green on the board here because we have gotten a lot of volatility because of turkey and trade. the most in three weeks. all s&p sectors were up, led by telecoms and the financial. the dow is up the most since april there. and this is all on hopes that china and the united states might have at least a little

minor ray of light through the cracks of this freezing over between the two in terms of trade tensions. look at the board how currency and commodities are reacting. first fall actually in the past five days as investors pull out. up 1%. that is the most in three weeks on the hope. you can see how new york crude and 65 handle and 71 handle. >> here in asia we are under way trading in new zealand and has been going on for a couple of minutes and reason apply bright spot. the kiwi dollar finding stabilization as the u.s. dollar eases off its bull run. futures are looking unchanged. the aussie dollar also unchanged. something to watch out for.

the reserve bank of australia, the governor will be testifying before the house of representatives standing committee on economics, terminal subscribers can watch that. this is a regular semi-annual testimony that they do. and the rates here in australia all hinge on inflation and the wage growth, both of which seem to be missing in action, so let's see if the governor sees something that the rest of us don't. >> the s.e.c. is reportedly asking directors that musk told them about a substantial deal to take his company private. they said he is investigating whether musk intentionally misled investing groups. gains for a third day

as turkey gears up in the worsening standoff. the president spoke to the leaders of france and germany and held a finance call. washington turns up the heat with the treasury secretary warning of additional sanctions. after a, the latest ribe back-to-back rate hikes. the governor said domestic growth is recently strong but warned of escalating trade war which could hit investments and exports. the worst major currency has gone to a record after the crisis in turkey and widening trade deficit. and the queen of soul, aretha franklin has died at the age of 76. the daughter of a baptist

minister, she forged what the said nd roll hall of fame she spoke. she was the first female inductee and "rolling stone" named her the greatest singer of all time. global news 24 hours a day, powered by more than 2,700 jourmists and analysts in more than 120 countries. >> thanks very much there. let's head to the markets, wal-mart was a very big factor in the rebound on stocks in wall street. its best sales growth in more than a decade and easing of u.s.-china tensions and looking to put every major index in the gene. >> robust quarter from cisco. that helped pull the market out of the dog days of summer.

the s&p 500 coming 1.1% of the january high. we had the dollar a bit weaker but erased some of the losses because of the renewed talk of sanctions or tariffs against turkey and you can look at the nasdaq, coming in strong after taking a beating. let's look at some of the big movers. wal-mart listed the grocery chains to their best gains since november. j.c. penny is taking a huge hit. this has been a very much embattled retail chain. that is the exception. and facebook taking a hit. let's go into after-hours because we have nordstrom coming in very strong. they blew it out on sales and gave a very strong forecast and that is going to set up retail as very strong as we go into friday. let's look at the bloomberg real

quick because we had an interesting tweet from president trump talking about how, quote, money is pouring into our cherished dollar like rarely before. we are, as we said close to 14-month high. we did see the dollar give back some of those gains, but the talk from the trump white house about coming back on turkey with more sanctions if they don't release a pastor, that again could renew this whole concern. >> it is interesting while trump is trying to push the dollar higher. a few weeks ago, he was going with lower. it is impacting the commodities. catching a bid. >> we got a break across the board after a big slam yesterday. let's take a look at oil and you will see that it edged higher and dipped below 65 yesterday and again in this latest session. we look at gold.

it has been cast aside. gold is down some 14% from its high this year. stronger dollar as we mentioned is part of the higher interest rates. if you look at the big picture on some of the metals, they got it back. platinum has been hit hard because they are used in a lot of the cars for the smog control devices and have been hurt by tariffs. and copper which fell into a bear market looks like it is down in steppeding trading but did have a bounceback in the regular trading. >> big names in the semiconductor sector. athey are all falling. >> there is a lot of concern. and the perhaps four-year run on his group is going to be hurt. there was a lackluster outlook

and hurts the shares. applied materials, the biggest maker of machinery to make these chips gave a disappointing outlook and is causing concern that perhaps the whole industry s peaked and some of the rivals fall as well. i don't know if we have a chart there as a way they are performing after hours. the shares are down % to 4%. and that could trend sboor weakness. >> sue, thank you for that. the white house is concerned that china is going to come to washington for trade talks. the first meeting since june. in discussions in beijing. joining us now a bloomberg reporter. who is involved in these talks and what could happen? they are talks about talks? >> china is sending a vice

minister of commerce and will meet with the assistant treasury secretary aimed at starting broader negotiations. the chinese side might have to offer some concessions to get started. back in may, they signaled the willingness to significantly increase of purchases of u.s. goods and purses and that could restart the negotiations. china, for its part has said it does not support unilateral trade restrictions and is against protectionism. we will see where the talks go. >> will they make any concessions here? >> it looks to be an uphill battle. both sides are looking for concessions from the other. the u.s. wants to see fundamental changes to how china approaches the economy and its trade practices.

the chinese would like to see the u.s. drop the tariffs. neither side looks willing to do that. both are projecting strengths and both have an interest in projecting strengths and it comes down who feels the economic pain first. >> larry cud low pointed to strong u.s. government do you think that will allow the administration to continue pursuing these aggressive tactics? >> the strong u.s. economy does provide some air cover for the trump administration's trade move. the u.s. economy has had rosey data coming out. the tariffs are not yet biting. the chinese economy is at a risk with the slowdown. and yuan, briefly spurring again after the news of these talks. both sides are gambling they can outlast the other side in these

negotiations, but it is who will blink first. and who feels the most economic pain. >> we have the latest between the u.s. and china. the council on foreign relations explains how president trump's approach to turkey is better than his predecessors. >> can the u.s. economy withstand trade tensions? how tariffs could boost inflation and hit consumers. note -- ♪

>> more about changing the nature of the trading relationships that perhaps have better economic competition with china. >> we're aware we are not seeing trump playing in this. >> why would they change their strategy? the u.s. data is very strong and u.s. equity market is very strong. >> as we have seen, the power lies with the president. >> investor reaction of renewed trade talks between the u.s. and has and larry kud lmp ow been defending the tariffs. for more on all of this let's bring in senior u.s. economist. good to have you here. we looked at the markets and saw a bump here. the most in three weeks when it came to the s&p while it talks

about talks. people are looking for some hope and optimism. >> i think we need some good news on the trade front. it seems to be very one way in the u.s. continuing to push other nations. where does that end up leading whether it is a war, skirmish or battle, there is a lot of negativity in terms of growth for the u.s. and around the world. >> there is positivity just for the day. where does this go looking forward? august 23 deadline for the $16 billion there as well as september for the $200 billion. >> the $200 billion is the big game changer. because we are not just talking about that, but one-fifth is u.s. consumer goods. things that you might buy off the shelf and might go up by 25%. that is the much more serious

issue. it's funny that the president will be -- the u.s. trade representative will be having a discussion with the public the same day that the delegation is supposed to be talking to the delegation as well. >> when i saw that headline cross, i thought this is clearly an obvious play to say the wall is here right in front of us. we have to make a decision. one other thing that president trump is saying, he is happy with a strong dollar where he was trying to jawbone it lower. what is the reason? >> what they are saying, the strong dollar in the context of a strong u.s. economy. we are leading the world in terms of growth, the dollar is very strong and the confidence is with the u.s. and what our policies are. those are the policies achieving this growth. you could argue whether that's

true or not. the u.s. is doing very well. we don't need to be the first ones give up anything here in this trade skirmish. >> the flip side of that is what happens to the offshore -- we are hearing from a bank, we need to be talking about eight. does the picture change there. >> it changes in the sense that ultimately the goal when it comes to china and other nations is to reduce the deficit. the stronger dollar will make it -- use the term of trade in u.s.'s favor. consumers may want to demand more goods coming from china. if we don't get the tariff, the currency is working against what they are hoping to achieve sort of long-term. >> what does it mean for the fed. if these tariffs get implemented on the full 200 million that

200 million that will light a small fire on the calculation. >> it will make it much more difficult. we know from powell's interview several weeks ago, it will be difficult because the inflation is rising. what does the fed do? they stuck to the script. whatever is happening out there is not what we are watching. the tariffs go through, we are talking about higher inflation in the u.s. especially on goods prices and how that plays out into consumption is what the fed will be concerned about. it could be something that causes them to slow down. we have seen a lot of folks saying, hold back on capital investments and plans and concern from businesses about the costs that they are dealing with right now. it could change the calculus for moving forward and see

if these tariffs come to fruition. >> when the u.s. will feel the pain, sooner rather than later. what is your forecast on this the way things are going? >> we have a clear brooklyn. look at the washer-d rmp inch emp rs. 20% tariff showed up in three months. it did not take long for people to push it through to consumers. and seen a shipment of those are a decrease. now my time line we would see these these come through. if that happens, you will start to see like furniture, handbags, some of the items on this list, it comes through pretty quickly. probably after the mid terms but i think the u.s. consumer is going to feel that pain of the pass-through of these tariffs.

>> we are seeing u.s. economic strength. the interesting thing on the ip side, we are seeing commodities in a route here. i want to show you as well as our viewers the terminal library, these three lines represent three seeing mepts, copper, european banks and uities hitting bear-market levels. the fed doesn't really care on this and they don't have to also. >> the fed may not care a great deal -- if it spills into u.s. market, they will stand up and take notice. u.s. equities are doing well. issues with turkey have hit european banks. it is less so a problem right now for the u.s. the fed is low unemployment and

stable inflation around 2%. that's what they will be focused on. what is going on in the rest of the world right now because it hasn't spilled over into the u.s. the u.s. has the fiscal stimulus as the tailwind. i can't remember you heard a fed chairman say the u.s. economy is doing well. we see the next several quarters being robust. unless it is a spillover, i think the fed is looking at continuing to look at it. >> you mentioned consumer pain. there isn't any sign of it at the moment. retail sales. wal-mart reporting very good figures and consumers putting their money where their money is. there is a degree of come placensy and any risk associated with that? >> it is a fielded party. unemployment is low and wamings are ticking higher and grab

extra savings in terms of the tax cuts and the retail sales have been pretty strong in recent months. the pain isn't going to come now. it's more when prices begin to rise. so far the tariffs they are on intermediate items on steel and aluminum. coke mentioned they may be rising prices. the $200 billion, to me that is the bigger game changer, $45 billion of that is finished u.s. consumer items and you will see price rises more generally across a wide swath of consumer goods and the consumer will feel more pain if we continue to move forward on this $200 billion list and possible apply extend it. the president did say he would slap tariffs on all 500 or so billion imports from china. there is a lot of imports we get

from china that we don't get from the rest of the world. and the consumer could be in danger and how it all plays out on the tariff front. >> we'll leave it there. thanks very much for joining us oday, senior u.s. economist. catch up on key analysis. this is bloomberg. ♪

paul: regulateors criticized citi for inadequate. ramy: jeep dealers are seeking compensation for what they say is unfair competition. dealers were made to stockpile cars and then offered discounts to offload them later. and while 78 dealers joined the protest, only 35 signed a letter for fear of retaliation. paul: volvo is pressing ahead for plans for an i.p.o. after indications it will hit the 30 billion valuation. the primary listing will be in stockholm with a secondary one in asia coming at a later date. banks have been asked to launch a formal idea. ramy: up next, is bigger

actually better? the trend in australian business seems to indicate it's not. we'll look at the country's a ire for downsizing in just moment. ♪

paul: another beautiful winter's day. the fate of new south wales, a drought. futures looking pretty. i'm paul in sydney. ramy: it is 6:30 p.m. and watching day break australia. let's get our news. >> president trump is telling china to come up with a better offer ahead of trade talks next week and he won't do a deal that hurts america. the talks will be the fourth round this year and only the first since tensions flared in

june. they seemed to reach a deal in may but the president backed away. >> we are talking to china and they want to talk we're not going to do any deal until we get one that is fair to our country. > surged the most in six months. optimism that it will fall. t jumped .8 of 1%. it had sunk to its weakest since january of last year. he currency strengthened more. gottenint said they have immune. .e.o. said it has sunk despite the u.s.-china trade tensions and simmering crisis in turkey.

and the dollar has strengthened as the fed appears to hike again. the biggest oil discovery in australia in more than 20 years could make its owners a target for buyers. quadrant energy got lucky while drilling off the coast of western australia and there is a base case for 150 million barrels for highly commercial crude. it has some of the world's largest gas crude. china's debt-ridden group is selling manhattan skyscrapers because of its proximity to trump tower. it is valued at $452 million. in the proposed deal with the management company could mean it could take a loss. it saved millions for the

building two years ago and trying to find a buyer. global news, 24 hours a day, powered by more than 2,700 jourmists and analysts in more than 120 countries. paul: let's get a quick update in the markets. 30 minutes now. a little bit of a rally. the index is up a quarter of 1%. everything else. the kiwi and aussie dollars. futures are looking pretty calm. let's get more on what we should be watching as trading gets under way. and ruth, looks like investors are jittery about the roller coaster ride, what is going on there? >> what about turkey. all about the trade war. and to big firm managers, china,

what is happening with the relationship with the u.s. dominating their thinking. we have a great chart that we'll pull up now and clearly shows that they have been beerish. and but, but, there are still optimistic firm managers. deutsche bank is one of them. and they think it will stabilize this year. ramy: president trump appears to have changed his tune on the dollar. there seems to be a little bit of an urgency or support for a stronger dollar when in the past he actually favored a weaker dollar. what is going on here? >> i think it is fair to say that donald trump is favoring a

stronger dollar and for now being the keywords. let's look at this chart that shows the dollar strength this year. as you mentioned, it was aren't too long ago that he was complaining about its strength and now we have a u.s. president that saying u.s. investors are pouring money into the u.s. dollar. this is very much tied how the u.s. dollar continues this year and if it continues to strengthen, we will see weakness across the major markets from asia to europe. paul: don't forget, check out our library for some of the charts that ruth was showing us there. corporate australia, year of expansion is coming to a close. some of the country's largest and oldest firms are planning to

spin off assets as a boon for investors. with more our australian business reporter. who is doing what? >> as you said, paul, it looks like it is a thing in the past, looking at some of the oldest and biggest companies in the country. the commonwealth bank and firmer and they are spinning off assets that could be valued at $60 bill you -- $40 billion u.s. dollars. that is more we have seen in the past decade. an unprecedented pipeline. paul: seems like they have good reasons for doing this. >> you would hope so. ut it's the old story of transparency and isolated assets at hopefully the erp company

if investors can see the earnings right through. this is a model that has been under attack in u.s. for years. and u.s. fourth year declines and going the other way. and hey are hoping nvestors volume. ramy: on the other side of things, is there any evidence that it actually does work, then? >> the documents would suggest that it does work. if you look at the bloomberg dex of companies in the u.s. another han double astonishing statistic. the supermarket

giant, that share or shares, if you like have gained 30% even before it starts that spinoff. investors anticipating that it is better value. e spinoff will be mostly, it will be four times as profitable as a return. t's about isolating the best performing and offloading. paul: thank you very much. ramy: treasury secretary says turkey could face even more sanctions. we will assess the situation with council on foreign relations fellow, steven cook. ♪

338.9 volution mining, million. final dividend. and 795 million. that is a bit of estimate was for 784 million. and gold, even though it has been coming off pretty keenly when it comes to australian dollars. ramy: the trump administration is now warning of additional sanctions on turkey as they moved to shore up old alignes. the government spoke to france and germany and he has no intention of imposing capital controls. ow chief economic adviser told us what turkey must do to ease the crisis. >> the major concern whenever

you look at these things is a technical dislocation. and it plays out through the following channels. corporate bankruptcy because of currency mismatches and you have increased dollarization and then recession. that is what turkey must avoid. they need a circuit breaker and need a solid circuit breaker to stop financial disruptions. >> i just wonder how difficult it is to introduce a circuit baker when so much is out of their control. they could have an internal response. you and i talked about it, it is not hospitalable. i want to wrap up with some final thoughts. he story this year, have we go

beyond this for emerging markets? >> you see coalitions going up across the board in emerging markets. we are in the midst of a phase that is impacting both strong and valuable economies. that will provide opportunities. if i were back in the game, i would be saying, this is great. the market isn't distinguished to know between strong and weak names. we are in the midst right now. paul: that was the chief economist and bloomberg columnist. just a correction for your net income, 263.4 million. all right, next guest says president trump may be the first president to get it right on turkey. joining us from washington is steven cook he is a fellow at

the council on foreign relations. this tension with turkey does pre-date the current difficulties over the past andrew brunson and turkey has been testing the patience. why do you say the president is getting it right. >> there is a long list that the united states has. the turks have undermined american efforts to contain iran. has helped iran evade u.s. sanctions and complicated the islamic state in syria and buying weapons. and the list goes on. george bush's administration, barack obama's administration have chosen to deal with the challenges in a private manner. to engage with turkish

counterparts privately and hope for the best. i think president trump understands that the turks actually have responded to pressure before. the russian government has applied a significant amount of pressure after the turks shot down a war plane. the russian government has applied significant pressure. however the detention of a german journalist. both the germans and russians were able to get positive responses. and i think president trump has looked at this situation. the turks renegged on the deal regarding the release of this pastor from north carolina that has been held in turkey for two years and has decided that an actual policy that brings pressure to bear is perhaps warranted. paul: the u.s. bringing pressure to bear.

the u.s. said even if the pastor s released, these sanctions or tariffs on steel would be lifted. is there a risk that u.s. could push tushy into the arms of russia or china? >> there is always a risk and hard to define turkey as a strategic ally of the united states. it has been cooperating with russia on a number of areas. certainly the turks are looking for alternatives to the united states. i think that the problem with the president's policy with regard to tariffs is it violates the principles of free trade and we know that free trade is better. overall, the pressure on turkey is good. turkey has intergrated with the west despite the rhetoric coming

out of turkey. they are looking for a solution that is based on europe and ultimately the united states. europe has significant grievances and even if the pastor is released, 15-20 other americans that are being held in turkey on trumped-up charges, there are a whole lot of other challenges that turkey presents to the united states. ramy: on the other hand, turkey and the government there, they say that they are going to try to keep things afloat but not by normal means, not by rate hikes. it is just too little right now. do you think the president has a reason, an argument for this case by not going the normal way? >> the president has unorthodox

views of the economy. he believes that high interest rates cause inflation. the turks are trying to deal with this problem with fiscal policies rather than monetary policies. it is hard for the president of turkey to concede that the central bank to raise interest rates to the extent that most people believe they need to be raised. the president of turkey, his success has been based on growth. there is a new middle class that had benefited of cheap money over the course of the last 15 years or so, and it would be politically risky for the president of turkey to go back on what he has been saying on interest rates and force his swinssi to pay more for everything. ramy: we are getting at least

reports or more reports coming out about folks not being happy and being unease of what is happening with the strength of the lira. to what degree do you think it has to get until it erodes the support of the president of turkey? >> i think it is a very high threshold and astounding number of turks believe that the united states was complicit in the failed coupe in july of 2016. the president has made a direct connection between u.s. policy and the failed coupe in 2016. he said this was a failed economic warfare. if you ex trop you late that you believe that united states is trying to undermine turkey, there are a large number of people that the united states is behind the economic problems. this is something that the president of turkey has prepared

the country for at least the last five years. he has been saying any economic troubles are the result of the interest rate lobby, international bankers, the united states, the c.i.a. and a host -- a whole host of other phantoms. paul: i'm wondering about the potential of this potential strong arming to spread. you said the u.s. doesn't have a relationship with turkey but it does with qatar. they have offered $15 billion in aid to turkey and qatar is testing the patience of the u.s. is qatar next? turkey and ere in offered $15 billion to turkey, it was one returning the favor after the imposition of a blockade on qatar in june of

2017. the turks came to the rescue. i also suspect that the amir was channeling between washington and the turkish government. they play the roles of talking to people that the united states can't. so i think the countries are useful. there is a major air base which the united states runs military operations throughout the region. it seems unlikely that the president will start strong rming qatar. paul: thank you, steven. get a round up of the stories you need to know in today's edition of "day break." and also available on the app. and customize your settings and

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paul: latest there. on the passing of aretha franklin, queen of soul. make sure that you follow tict omp c. ramy: latest and the world's wealthiest family is $11 billion richer today. that is wal-mart. the company reporting its strongest sales, shares surging d boosting their shares to $163 billion. wal-mart grocery sales rows the

most on fresh food products and higher online orders. retailers have been under threat rom amazon and others. aul: j.d. saying that the july sales have ticked up. and says investment in technology and logistics could affect forecasts for the year. the equivalent of $320 billion in the third quarter, eight times more than analysts. ramy: a gloomy forecast in a greater than expecting fall for chips. revenue in the fiscal third quarter will be $3.75 billion, one million short of the average estimate and they expected $100 million to currency miners. that tote tall was just $18

million. break asia day coming up next. >> going to be about commodities given this turkish turmoil and getting a little bit better after agreeing to talks. willrecious metals analyst be joining us. and gold, why isn't it getting the haven bid? and the dollar catching it. she thinks things could rebound nd test the five-year highs. ramy: we'll take a look at what s happening in the latest of .s.-china trade and chief asia

economist. paul: we look forward. all the action coming up next. this is bloomberg. ♪.

yvonne: we are live from headquarters. welcome to "daybreak: asia." the top stories this friday. asia-pacific markets look to follow wall street. the dollar falls for the first time in six days. three days of gains as turkey shores up old alliances. washington is warning of additional sanctions in the pipeline. a new york it is just past 7:00 p.m. on a thursday evening. investors are optimistic about next week's trade talks. china must offer a lot more if a deal is to be done.