limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need this bed. yvonne: we are from bloomberg asian headquarters. welcome to "daybreak: asia." asia-pacific stocks set for a mixed and for the week. wall street lower. sending the dollar higher. trumpwith president milling he is happy to press ahead with his trade war. ramy: from global headquarters, item in new york where it is just past 7:00 p.m. on a thursday. the aussie may fall to a low. not as political turmoil threatens chaos. powell'slate jay

reach. we are live to wyoming. good morning. happy friday to you and all of our viewers across the asia-pacific. watching on the western hemisphere, happy thursday. we have a lot to talk about in terms of trade war and in terms of what is happening in the central bank as well. down nearly .2%. they were brought falls across the board. s&p, materials, energy and financials were the biggest laggards. they are very sensitive to what has been happening. we just wrapped up those low-level talks in washington dc with regards to the u.s. and

china with those pretensions. donald trump definitely wants to double down. let's look at the board and see what happens in terms of currencies. bloomberg commodities index also going to little further. crude is on the 67 handle. continuing to rise. -- , let's call that given -- yvonne: given this situation president trump is end, it reads like he is talking tough on trade to build up political capital once again. let's take a look at how equities are set up on this friday morning. up about .1% on the index. when it comes to futures, we are up one third of 1%.

that storm still looming around malcolm turnbull. will it be game over for him today? nikkei futures pretty flat at the moment. take a look at currencies. little morepace a troublesome today. beginning to 689 overnight. we are still around the 111 handle right now, but the aussie continues to see weakness. morgan stanley says we could see further weakness cousin that political risk not being priced in. saw a little bit during the interview with the governor adrian ward. he said they will not rule out a rate cut in the future. we are holding around $.66 at the moment. that's get back to the

u.s. market close and talk about that. dispute played a big role in the stock market decline today. a trade sensitive stock, including bowling and caterpillar helped to lead the way lower. u: there have been trade war concerns. it creeps back in as it did today. also a lot of weight in c. a snapshot of what might come out of wyoming, the conference with the central bankers. let's take a look. the dollar is stronger. the nasdaq. with some strength and caps. you might have seen the market a little lower. let's go into some of the movers.

earnings with a mixed bag. the parent company of victoria's secret, the monterey company. they slashed their outlook. a lot of this deal stocks have been under pressure. advanced micro moving higher. let's going to the bloomberg. pace untilks kept right about here. this is with the u.s. and this is without. president trump put out his message that if you want to impeach me, it might cause the stock market to go down and that would make everybody poor. in any event, this chart indicates that other stock

markets -- new development in the tesla story as well. su: we are hearing that morgan stanley has been hired. goldman was earlier hired. they are going to help the ceo look for better solutions to taking the company private. it reduces losses and has been down a lot lately. let's take a look at the --ficult road that tesla as has been on. a three saying that he plans to take the company private.

we are also told no official proposal for such has been made to the board. the u.s. and china are wrapping up two days of low-level trade talks with equally low level expectations. of fresh tariffs on each other. joe, it does not seem like there was a lot of progress made. how far to go before getting a resolution or more negotiation? the white house statement that was issued immediately afterward said they had exchanged views. that is usually code for no progress. told a slightly revised the demand for made earlier in

the year to china. china came into talks with no new offers of compromise. they are planning to go ahead with the retaliation on trade. sometime in the next month or so , they are pretty much locked in to this escalating trade war. no sign from the u.s. that they fear any repercussions from that. president is ill dealing with this crisis at home with the guilty plea this week from michael cohen. will there be some kind of hearing? talk said he wanted to

with the attorney to see what michael might offer. there is pressure from the democrats on the committee to open up some sort of negotiation. right now, republicans in congress are treading carefully on this. trying to see which way the political fortunes will be to hearas they go ahead back from constituents. which way polls are going for the november election.

quiet. they are taking baby steps for any sort of reaction to the guilty plea. ramy: from what you are hearing on the ground in, is the mantra for conviction going to change the way that donald trump himself is doing business? >> has not been a lot of precedent for the president changing his tune or shifting strategies. he has been pretty muted in his response compared to other situations. the white house is trying to manage this as they go along. the big problem for them is that it really is his chief of staff as communications director, so he will be dictating exactly how this goes about. in past scandals during the clinton administration, he had ,ssentially the chief of staff what working on governing and the other on the crisis areas this is not the case for president trump. he does not have as many allies in washington as clinton and his approval ratings remain pretty flat around 40%. he does not have a lot of room to maneuver. he is trying right now to keep

pitching for keeping the house hands by republican emphasizing that democrats will try to move to impeach him. they are shying away from that for fear of generating interest from trump voters, but it looks like a political gridlock ahead. ramy: thank you as always. let's do the first word news with jenna dagenhart. enna: reports suggest u.s. gdp growth will surpass that of china by 2040. china's economy will be 77% larger in dollar terms. the scenario says that the u.s. and india will swap places by 2037. shares the global larger than that

-- countries combined. the aussie dollar may fall to a two-year low of 70 u.s. since as political turmoil threatens paralysis. turnbull is clinging on to power by a thread. he is australia's six prime minister since 2007. he will step aside if opponents have enough power to unseat him. wanting to ensure that kim jong-un sticks to his promise to shut down the nuclear program. enlisting former executive to lead negotiations. there are signs that china has resumed cross-border. said to have hired morgan stanley for advice on his cook -- go private plan.

morgan stanley suspended his coverage of the stock earlier this week without any explanation. the bank is among one of the top 20 shareholders with a stick of .6%. 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. this is bloomberg. ramy: still ahead, we will be heading back where christian for joins our lineup. forbes joins our lineup. yvonne: we will look at how the trade tensions are affecting india where the former governor -- with the former governor. ♪

yvonne: this is "daybreak:

asia." let's head back again. global economics editor is there for us along with former r.b.i. governor. he was the governor of the reserve bank of india from 2013 to 2016. athas long been a professor the school of business in chicago. he was the director of research for the monetary fund and he is another part -- that trend -- veteran. he presented one of the lead in. he argued that they are buildup to such a degree that there could be some kind of breakdown. there will be big problems in the u.s. financial market.

he was dismissed. they said it was a misguided idea, yet three beers later -- three years later, we were in the middle of one of the worst economic crisis. we did an interview and talking about some of the going on. what are policymakers missing now? missed thingshey years ago? that twoe well aware things have built up. they built up before the previous crisis. leverage and asset prices. both at pretty high levels. we thought that after the crisis it would bring down leverage. it has not. it has moved. then, asset prices. 500ad a record for the s&p

just the other day. is yes, someoncern things have been reasonable so far. growth has been strong, but how long can i go on? does it fit with the kind of prices we have and the kind of leverage that we have? he warned about the and on fordng rate action on trade. the federal reserve is on track for two more rate hikes. the u.s. and china continue to build down this tit-for-tat path. >> i think the underlying conditions are fragile. that is why i raised the issue of leverage and prices. the hope growth. this forward, but trade, actions of trade on either side will

create a heavy strong winds. that would be a source of a concern. we have also seen emerging markets level. brazil for example. a lot depends on what the administration decides to do. we have seen turkey, argentina. my sense is it is not a systemic issue yet. there will be outliers. countries that have not used currentars to get their account deficits in order. there are vulnerabilities in the system. productivityarding

, do youf the unofficial think they will be having conversations about what is going on? these rate hikes are putting pressure on us. does the fed acknowledge that? been signaledhave very clearly. to --hey have not adapted the are very dependent on trade , many of themle export through china. subject tocomes tariffs, you have china slowing down. creates -- you say one of -- this

is one of the biggest risks? importantxtremely that we have good outcomes. do not pull the nuclear trigger there. seen an impactve on india. there could be more of this. do you think they will have to do more? >> just to be fair, the indian authorities have write-down the fiscal deficit. is driven by higher oil prices. has depreciated. it has not depreciated to worrying levels.

rupee hastent, the depreciated enough because of the higher inflation in india. i think this is a time where countries should be focusing on getting in order. on getting macro stability. important that all of the emerging markets try their best to look as good as possible. kathleen: the release of this unofficial data shows the previous administration much higher than it was under prime minister modi. he is now -- how is that going to play out? >> what we have to do right now is move forward.

india is recovering from a slowdown in the last couple years. most countries would kill for 7.5% growth rate. that is in india's favor. they need to make sure that the deficit does not -- it needs to remain stable. it gives a picture of strong growth but reasonable macro. that is a good thing to have at this point. kathleen: latest ability report showed banks piling on more losses. can they come out of the rut on their own will they -- or will they need more help from the government? that we do need to improve the governance of the banks. this is a major reform and it has to be done. whatever new administration comes in, this will be one for them.

kathleen: he will have to leave it there. -- we will have to leave it there. speaking to another -- up next, we will be speaking to another guest. yvonne: looking forward to your next interview. do not forget our function tv . you can watch us live. can dive into any of the securities or functions that we talk about on the right out of your. this is bloomberg. ♪

back.welcome let's do a quick check of the latest headlines right now. the value of a regional business area a firm saw profitability of life insurance policies of the first half beating expectations in dark contrast.

2010, shares in have outperformed rivals. yvonne: boosting spending through the rest of the year as higher crude prices push profit to the highest in 2014. the first half was $3 billion. the ceo says he is very confident they will meet their annual spending target. ramy: aiming to move away from kandi and processed food and focusing more on nutrition and supplements are you looking to build a health food business. it has seen increasing demand for japanese nutrition program which costs about $600 to subscribe for a year. the transition is a long-term plan.

on for awe are waiting key inflation data to come out in just a few minutes. global economic risks tops the agenda. .e will get information this is bloomberg. ♪

ramy: you are a taking a look at a live picture of tokyo. onenikkei futures are up third of 1% as we are waiting for the latest read on national cpi to drop. that is out right now 0.9% year on year. fresh food coming in at 0.8%. getting you a bit more context. 0.9% for the cpi year on year is a little less than the day of 1% as the expected consensus. relativity towards

the month prior. we do see an uptick in terms of cpi. fresh foods 0.8%, also a little less than next acted. 0.9% was the consensus survey. month ofatch the prior 0.8% as well. aboutests will join us in 15 minutes time. it's get more on what is happening with asia-pacific markets. we will bring in sophie kamaruddin. trade talks have wrapped up without much apparent progress. trump praised tariffs. how can this feed into this busy week? where: the question is, to from here when it comes to the u.s. china dynamic russian mark -- china dynamic? officials had raised that -- what not

be held until the u.s. elections in november. , weoutcome of the talks have the japanese cpi data coming in as well. nikkei futures pointing higher for now and pressure coming through for the kospi potentially. australia, we are seeing him uptick there. we are seeing downward pressure on aussie dollar. .aking a look at the agenda expected to pick up slightly. we also have reaction to alibaba's earnings that would be closely watched after its earnings miss. look at the offshore yuan. retreat inh a emergency -- emerging currency. we did not get a lot of progress on those trade talks.

politics weighing on the aussie dollar. this political risk really has not been priced in. sophie: it does not look like it for now. a widening interest with the u.s., the oddly fell the most on thursday. ussie fell the most on thursday. it will create policy paralysis. a check in on some of those challenges we are seeing for the aussie dollar. the former head of fixed income at blackhawk australia -- itended the pressure has fallen more than 10% and it broke the 81 handle. not every asset manager is bearish. it is going to stay above.

thank you very much. let's get to first word news with jenna dagenhart. jenna: the u.s. and china with mid-level trade talks with little expectation of meaningful progress. officials meet in washington as the country hit each other with new tariffs. .100 billion the administration says they will keep talking but sources tell bloomberg that the chinese team aims to have gotten nothing new. president trump says there is no justification for being impeached but warns of a bloodbath in the markets if it does happen. bedoes not see how he could toppled for doing such a great job adding that ordinary americans would be hit in the pocket if he is forced out of the white house. of thee in the middle

longest bull market on record. president trump: if i got impeached, i think the market would crash. thinking, you would see numbers that you would not believe. google has identified and channeled 30 youtube linked to iran. it has also engaged in cybersecurity from other consultants to kompromat the work of its internal team over the past few months. pages arecounts and linked to the state lancaster of iran. -- broadcaster of iran. no longer commercially viable. u.s. sanctions have reduced the demand from travel from iran. air france is also dropping its iran link, claiming weak

performance. 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. this is bloomberg. yvonne: more now on the fed annual meet and greet. kathleen hays is there with another special guest. kathleen, take it away. kathleen: kristin forbes has .ong been a professor she has worn a lot of different hats. she was a member of the bank of england monetary policy board. she is a former treasury 2012, you gave the league paper on international financial contagion. fast-forward and here we are

with not only contagion but plenty of emerging-market stresses and strains. turkey has become a bit of a poster child. and south africa having troubles. should we be worried today? we know on the unofficial agenda people will be talking about this area -- about this. contagion know about from 2012 and since is that turkey does not meet the criteria to be terribly worried about contagion. there is a checklist of what to worry about. there are not many countries with connection. most countries do not have substantial finance exposure. it is manageable. of the most important lessons we talked about in 2012 is leverage.

when you have banking systems that are more leveraged they can to contagion. one benefit is the reforms of the crisis. they are much less leveraged and less at risk for contagion. that is good news. we should be less worried. but we should not be as worried about contagion, it is largely driven -- there has been a shift. rates are going up in the u.s. and many central banks are tightening monetary policy. countries that have been able to finance cheaply -- we are going to see heightened vulnerabilities in countries that share some of turkey's andlenges like deficits reliance on foreign borrowing. it will be harder to pay back.

not contagion, but there will be increased pressure is on a number of countries are you -- countries. asianen: are there nations that are vulnerable? there has been some central bank increases directly aimed at supporting their currencies. is there vulnerability there? >> there are some countries more vulnerable than others. most of the countries are at the top of my watchlist. indonesia is one country worth watching. it has a larger deficit, relying more on capital flows. market structure, kind of unusual. you look at competition and productivity. is this something that governments should be looking at? >> it is a bold topic for this conference area what is

surprising is why this has not been addressed more by bankers. they affect wage growth, pricing, inflation, productivity. central to monetary policy decisions, so they should be discussed more by central banks. -- leen: given the fact >> i think the biggest issue is that we do not know the facts very well. we have not established. the sense that market competition has fallen around the world. concentration have increased. there is a debate on whether that is true for the rest of the world. the fact is behind it are probably u.s. policies. ,f this is a global phenomenon drivers are probably global.

know thate do not basic fact of what the trend is around the world makes it difficult to understand that. kathleen: is that anything that could affect the fed rate decision? >> certainly. i do not think there is anyone takeaway that will change what the fed decides next meeting, but there are issues. is market concentration allows companies to raise prices more because there is less competition, that means more inflation, which means the fed might have to raise rates faster. more concentrated industries is where you are seeing more productivity growth. if there is more growth, he raisethe fed more room to rates more slowly. we do not really know these facts. four you will oversee in the opening session on friday, you're the person doing that.

let's quickly look at the bank of england. most of the commentary around august decision was about brexit. due to policymakers are focusing think -- do you policymakers are focusing enough on that? >> my sense is that the bank of england has been focused on the outlook for inflation. they are just interest rates based on inflation. pressure has been moderate and building slowly. they are starting to pick up now. it was one of the factors for why they raised rate. kathleen: was the august rate hike too little too late? -- was it toought little too late? needs tonk of england raise interest rates more is inflation follows their forecast. that is a big if.

i understand why the bank would want to be cautious. there are different outcomes of the brexit that would in fact -- affect inflation. i do not have access to all of the data. kathleen: another outgoing policymaker recently said u.k. wage growth could reach 4% next year. -- a chancea chain that it picks up quickly. a lot of the data on the labor market suggests a tight labor market which usually means that wage growth would pick up. is a lot of uncertainty around brexit and it is not clear how they will respond to that. they might be worried about brexit and don't not pay the wage gains you would see, given all the other data. kathleen: one of the immediate criticisms after the rate hike -- people said why are they raising rates going into brexit?

mistake?ink it was a >> inflation is about 2%. it has been about 2% for a couple years now. the forecast will continue to be above 2%, especially given the growth rate. prayre getting higher oil -- oil prices. is bank of england mandate to keep inflation around 2%, so it makes sense that they will raise rates. kathleen: thank you for taking time. we look forward to hearing you oversee the proceedings tomorrow when the symposium really starts going. are going to send it back to you. a lot going on. opening reception starts moments from now. ourt going on in the coming -- hours of the show. yvonne: joining us with the

latest out of jackson hole. the latest we are seeing out of sky news in australia. and the likely challenger of malcolm turnbull has been deemed not incapable of sitting in parliament. this actually sets the stage for a part -- a leadership challenge by peter dutton. one hurdle that has been cleared for him to do so. the question is whether he has gathered enough signatures to justify it. had dug into this legal issue of whether peter. and was eligible to sit in parliament. now that the hurdle has been cleared, we could be acting some sort of leadership vote later in the afternoon. ,ydni is what has been expected

around 2:00 p.m. hong kong time. we are not seeing too much reaction. comingore analysts through and saying that the political risk has been underpriced in the aussie. alibaba with record growth. a look at why margins are's ill under pressure. -- are still under pressure. this is bloomberg. ♪

ramy: welcome back. yvonne: let's do a quick check of the latest headlines. waymo has set up a subsidiary in china. the unit was set up in shanghai in may. $440,000 --

google said last week it is aiming to launch a beijing compliance engine for china. ramy: he will keep a look at xiaomi. -- we will keep a look at xiaomi. increasing concern about dwindling margins. theytors question whether should be a high growth company. rival: alibaba domestic is said to have one approval -- won approval. u.s.ng more than 4 billion dollars. preliminary perspective names goldman sachs, bank of america as joint sponsors for the offering. next, we will do a tale of two chinese texts.

-- techs. we will have more on the other side of this break. this is bloomberg. ♪

yvonne: this is "daybreak: asia." of two techs tale in china. the archrival alibaba reports its fastest pace in growth in more than four years. that's good down to san francisco with reporter selena way. managed to do so well? the fastest growth in four years. local services and now the problem is that investment in

these areas have started to drag on the profit margin. the question is, how can they keep investing without significant pressure on profitability? if you look into the numbers and peel back some of the , they did not grow quite as fast as expected. deeper,ig a little customer revenue slowed from 35%. the top line number is very positive and good. if you go further, growth and business is starting to slow. ramy: you talk about investment here. aside from the core business, where has alibaba been investing the most? >> cloud and entertainment. roku, their video streaming service.

there is also the local food delivery business. alibaba announced it is creating a separate entity. it is merging its food delivery business with a local services business, putting $3 billion capital with softbank into this business. there that is that through this capital, they can better compete with competitors in this area like tencent. tencent, i think there were a lot of worries about how alibaba would fare of well. -- as well. what does that say about the tech sector as a whole? there are concerns of the trade war tensions. this is a big win for alibaba. the issue with alibaba is

whether or not they will eventually get hit with some sort of stringent regulatory issue that will impact a part of their business. alibaba performed much better than its u.s. counterpart. we saw facebook and twitter suffer from fundamental core business issues. they struggled to grow users. with alibaba, they are not suffering from that problem. they have been able to consistently grow revenue and users. they continue to fight all these competing rivals when it comes to food delivery. our bloomberg tech reporter joining us from san francisco. back to aussie politics. headed for a showdown at high noon today. crisisest with all the and all the likely implications in this latest involvement. sittingnd is capable of

in parliament. what is the significance? >> there were some questions of eligibility, but they now say he is deemed not incapable. a horrible double negative there. it raised questions about eligibility because he has some -- there was a question of whether that was in breach to the constitution. the solicitor general has given it the all clear. ramy: paul, looking ahead, tell us what we might be able to see. the magic number that people are saying is 43 for the signatures. paul: 43 signatures on that petition would force a party meeting. the motion to spill the

leadership would be put out. malcolm turnbull says he will not stand, so three candidates are lining up. peter dutton's elevation would appease the right wing. can he win the center? the office was vandalized. he is not tremendously popular. bishop and morrison are much more popular with the australian public. not popular with the conservative factions. there would be questions of whether or not the leadership issues are buried or not. they will likely we service again. -- resurfaced again. certainly hard to

predict what could happen in the next few hours. paul allen joining us from the knee. we have the market open coming up. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows.

this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. yvonne: 8:00 a.m. here in hong kong. welcome to "bloomberg daybreak: asia." top story this friday asia-pacific stocks set for a mixed and to the week as all -- wall street edges lower. the new trade spheres some of dollar higher and the price is not right. inflation remained steady and japan but a 2% target remains a long way out of reach. ramy: i am many in the sincere from bloomberg's global headquarters in new york. the u.s. and china wind up low-level talks as president trump singles he is happy to press ahead with his trade war. in business finance and politics, all the way, jay powell made a speech at jackson

hole -- hall. we will be live in wyoming. ♪ yvonne: we are looking ahead but these trade tensions certainly have elevated the dollar. no progress will be made between the two countries there. as the today's talk wrap up -- the two day talk wreps up. up.reps up -- wraps ramy: kathleen hays has been covering us -- covering this all day. losing -- the dollar broke that losing streak so to speak in the past 60's. that had a knock on effect. this is the train that continues

to put inflows into the united states. we are seeing the s&p even though we came up a little bit today still pushing higher. pushing that dollar higher. global impact around the world. ramy: -- yvonne: we got aussie politics getting heated up in the next hour. this leadership challenge could be happening in time. in the meantime let's get you caught up with the market open. reporter: we kickoff this friday session we are looking at a mixed picture so far. the nikkei looking so extend gains for a fourth day. pi -- sby -- kos gaining ground after a three-day drop. it is higher now about 2/10 of a percent even after the annual deficit hit a nine-year high intellect. that is weighing on the dollar.

the currency to space keeping an eye on the yen of course which is set for a fourth day lower innospec stations that jay powell will reaffirm. we do see it trading just below the aussie being caught up in the political uncertainty adding to a two-day decline with more money managers saying they ought -- they fell to a two-year low at 70 and offshore yuan, six and 90 against the dollar amid the resurgence. cap u.s. futures edging slightly lower as well. samsung, ito watch begins sales of the galaxy note nine. reportsth korea bell they help negotiations with for the iphone x in the second half.

i also have a deal energy on the radar. this is after the company announced that the ceo will step down after a four-year tenure marked by clashes with the government over plans to retire a coal plant. he wanted to keep it running to avoid possible blackouts in the next decade in new south wales. -- agl istralia australia's biggest energy generator. ramy: discuss our eye to what has been happening in washington dc because president trump is now warning that any move to impeach him would cause markets to crash. let's check out markets are digesting this news with our lead strategist garfield reynolds. lay it straight. should we take this seriously? certainly, we saw markets come up a little bit in recent days following the: guilty plea and some of the

reports i came out of that. that indicates that anything which has an impact on donald trump's capacity to be politically effective will be taken as boasting uncertainty for markets and for example, it might bring word lock back -- break -- gridlock back. you need a two thirds majority -- majority to convict him. looking at that example, we have a lovely chart that demonstrates what is going on here. we looked at the s&p all the way back to when next and was impeached and was forced out of office or faced impeachment, that brought the s&p down. when clinton was impeached, the stocks kept him sailing up. the key thing there is the economy.

in the 70's the economy was in a typical place and it was vulnerable to follow -- political concern. now we have the u.s. economy heading for some pretty spectacular growth, the best in years. we have the tax cuts sitting through an strong earnings. in the longer run, whatever political standard dimmer be up to and including an impeachment process you can expect stocks to go their own way and will not .ome down ramy: we are seeing currency sliding on trumps recently -- recently. -- recent tweet. every currency is in the red. there is no green on this screen. abouts recent tweets south africa. should we be concerned about contagion?

we should certainly be concerned about emerging markets they are in a tough place. trump's trade policy is a part of that. he is -- his unpredictability and willingness to target vulnerable regimes as he did with turkey and as he has been with russia recently with the sanctions, and iran, and he is trying to do with china, the list goes on. emerging markets are vulnerable because of u.s. dollar strength. that underlying strength. it has a lot to do with the fed and what they are doing both with hiking rates and reducing the balance sheet. you have dollar strength in emerging markets and quite possibly the s&p will be able to shake it off. it cannot just be that contagion happening it is how deep it is. if we take a look at a chart that one of my other colleagues did is showing how emerging markets often spike down quite

seriously. most of the time developed markets especially, the u.s., they ignore or go than a little bit and come back up. there have been two incidents where there was a really drop in emerging markets and that conformed to a really big drop in u.s. markets. that is around the 2000 dot-com bubble. 2008, we all know what happened there. yvonne: it has been a crazy week for us and politics. how big of an impact does this have on market mostly? -- most today? >> yesterday in dollar will remain under pressure. yesterday it had its worst day in orson a year. -- the aussie dollar will remain under pressure. it will continue for at least a while because the liberal party administrator is terry tim tebow part of public in a way that nobody expected.

a lot of people have -- are having to change their thoughts on how australia politics will go and who might be for a minister in the coming years. it will put short-term pressure in the long-term ash in the longer term we can expect the australian dollar to come back up. they're not really going to be affected and in fact we get a string of third quarter -- toond quarter gdp that is come from the australian economy is traveling recently well and that will bring the australian dollar back. you garfield reynolds, joining us from sydney. our -- follow this on your bloomberg at m live dots -- and lifelet go go . yvonne: jenna dagenhart joining

us from new york. reporter: the u.s. and china wind of today's of mid-level trade talks with little expectation and meaningful progress. officials met in washington as the two countries hit each other with new tariffs taking the total value of good started in the trade work with -- for $100 billion. administration says it will keep talking that the chinese seem to have brought nothing new. justificationp's for him being on patient, he warns -- being impeached, he warns of a bloodbath. he adds that ordinary americans would be hit in the pockets if he is forced out of the white house. we are in the longest bull market on record led by trumps cuts and market earnings. >> if i were to be preached -- impeached the market would crash

and everybody would be very poor. you would say numbers you would not believe in reverse. reporter: a new report from the -- suggest that u.s. gdp growth will surpass that of china by 2040 china's economy will be 77% larger in terms of dollar terms of the time. the u.s. and india will swap places by 2037 as the world asia.ic mine switches to the aussie dollar may fall to a two-year low of 70 u.s. cents as political turmoil threatens paralysis and camera -- and camera . rivals lineup to challenge the minister. he is the sixth's prime minister -- prime minister since 2007.

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. yvonne: policymakers are gathering at jackson hole wyoming -- jackson hole wyoming -- hackson hall wyoming. what is likely are we watching out for this time? are watching out for if there is even a subtle signal from the fed chair that he is confirming. he will not come on say we will hike at the next meeting and that the end of the year, but he can emphasize as esther george good andeconomy looks

inflation is near target and more rate hikes would be appropriate. that would not be much of a market mover. it would be the opposite. if the signals any kind of things are ok for now for puts emphasis on the trade war or currency volatility or the potential damage that a strong dollar could do to u.s. exports and u.s. growth it could rattle the market. in the sense of where the fed should go we spoke earlier today with jacob frankel who is the chairman of jpmorgan chase international. he is also the former head of the bank of israel. he has been in the bank for 30 years. he think there should be hiking rates and their -- they are on the right path. let's do it jacobson. less -- let's hear what jacob said. >> i think this is a much more serious subject then -- then the interest rate.

>> another topic i think many people do not expect jay powell to say anything specifically about emerging-market volatility is he could perhaps mentioned something about global financial markets or financial markets generally. just to give a nod. but a lot of people will be waiting to see of anything more specific comes out on the. ramy: that is part of the official agenda but what happens unofficially to? that fornly i think happenedl trade war to the global agenda has have power and how it affects that policy for the bank of england policy member -- policymaking member and someone who is often a presenter at jackson hole -- hall. that there is a sense that that will be a discussion.

one of the latest pieces of news we have gotten is donald trump's tweets about potential south african appropriation of land by the government. we just spoke to the deputy governor. he thinks they are a constitutional government that the economy will hand as this will and they do not have to .eact that will be running here on our bloomberg television show in a few hours. it is an important take from someone will be so affected by what is happening there especially that worsens. yvonne: thank you kathleen hays. this ever flattening yield curve we are seeing the u.s. to 10 years spread shrinking below 20

basis points. the first and that actually has happened since 2007. it has been this long debate even a month the members about what this all essentially means thisse people are saying is historic and unprecedented. it is wayne, of course on the long end of the curve but still, there are some upset officials i think this has some significance here. that the fed should be watching out for this little bit more. those are some key questions that perhaps is something jay powell can clarify during his speech later on on friday in jackson hole -- jackson hall. next, we stay with the global economy review japan's raiders inflation data. ramy: alibaba achieves its fastest growth and -- and solid revenue but margins are under pressure.

we will have the views of blue lotus capital tianli wen. this is bloomberg. ♪

ramy: welcome back. inflation remains steady last month. it is the same as in june. the bank 2%show inflation target still remaining a long way out of reach. joining us now is. takuji okubo. the chief economist and principal at japan macro advisors. the survey was 1%. 0% was the actual. particularly here -- your take away here? saying the last half month there has been a slight of trending in inflation and warren importantly -- more importantly which has risen by 1.3% as of

june. this is actually the first time that that wages in japan start to see a consistent aborting -- upward inflation for the first time in 20 years. there is an undertone of inflation taking place in japan. ramy: bloomberg intelligence is saying that they are expecting fresh food prices, energy and import prices thanks to the weaker yen, would be drivers here. looking into the details, what are you seeing as well? inflation is generally speaking, still like food and energy so that we can as you yen.week -- weaken the that is helping push up the inflation. , the mortarshould -- the more important thing is the wage inflation. if the wage inflation starts to

rise above the rate of inflation that is great news for japanese consumers. it is a real income gain. which inflation being higher and inflation then both cpi wages starting to rise will be the ideal circumstance for the japanese economy. yvonne: as you mentioned the conditions are ripe for some momentum when it comes to inflation. if we had that halfway mark which where expected to this time around, what does that mean for the boj? will they have to start raising that 10 year bond yield target? japanhink the bank of basically has given up on doing anything proactive in raising for fastening the face of inflation. the bank of japan feels that they are -- they have almost a pleaded not in terms of a purchase, the actually even see

some side effects in the asset purchase program. they are just waiting out to see if the current moderate rising inflation turns into a continuance inflation. they areo you think doubling down on stimulus or is this really more of the stealth tapering that they have undergone? you can't really have the best of both worlds. >> now. -- no. the bank of japan thinks doing more is actually even risking. they are becoming more aggressive on this. it might bring more uncertainty and side effects to the economy. they feel in order to achieve inflation in a more smooth and stable manner is actually the best idea for them to step back and let the good economy dry wage inflation of and cpi

inflation up. ramy: the word credibility of the boj has come up more and more. do you think that is the boj really does not do anything here that it basically calls into question the people -- that people can actually believe in? -- and it? >> i think the boj has damaged its credibility significantly over the last six years. --t 2% in christian inflation and not really making a serious attempt to analyze why they were wrong. i think that has hurt the boj greatly. the governor lying about his intention. just two weeks before they actually did it. that is -- has actually hurt his credibility. in terms of credibility of bank

of japan has lost so there is much they can do about that they just have to let the actual inflation rise so that they do not have to rely on that credibility but then let the market see the inflation. we just wrote an alert of this to 10 spread of the treasury curve now below 20 basis points. pretty much now converging with the likes of japan. what are the market implications for this? particularly when it comes to japanese investors and whether they will be returning money home or not. the flat yield curve itself is actually a warning from the market that maybe there is some negative event around the corner. when i look at what is happening with emerging currencies there are certain areas and the fed regardless ofike

what is happening, that might actually be a risky move. from japanese investor point of views, it is not something they want to see. it would prefer overseeing interest rise, the weaker yen. thank you, takuji okubo. chief economist and principal at japan macro advisors. plenty more to come here on "bloomberg daybreak: asia." this is bloomberg. ♪

yvonne: the debate over wireless costs in japan has taken a twist with the telecommunications ministry contradicting the chief cabinet secretary. they said big three carriers have cut bills by 40%. chairs tanked and response raising and billion dollars of market gap. it is not clear how they come up with that. have said to have won

approval from the hong kong stock exchange for a planned ipo. we're told the share sale is more than $4 billion -- u.s. dollars. this is bloomberg. ♪

i'm all about my bed. this mattress is dangerously comfortable. when i get in, i literally say ahh. introducing the leesa mattress. a better place to sleep. this bed hugs my body. i'm now a morning person. the leesa mattress is designed to provide strong support, relieve pressure and optimize airflow to keep you cool. hello bed of my dreams. order online, we'll build it, box it and ship it to your door for you to enjoy. sleep on it for up to 100 nights and love it or you'll get a full refund. returns are free and easy. i love my leesa. today is gonna be great. read our reviews, then try the leesa mattress in your own home. order during our pre-labor day

mattress sale and save. for a limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need this bed. ramy: -- yvonne: i am yvonne man in hong kong. ramy: you're watching "bloomberg daybreak: asia." good morning. this get the first world news. reporter: inflation remains steady in japan last month. prices minus fresh food and energy claims by treat -- 3/10. the bank of japan's 2% inflation target remains a long way out of reach. the bank of japan governor has skipped the fed and the jackson hall conflict -- symposium for

the first time since taken the job. new zealand central bank says it is an no rush to raise rates even of it means it is out of sync with the raise -- rest of the world. our governor adrian said he has if ruled out cutting rates it is necessary to reach the banks inflation target. bewe are in no rush to raising interest rates. that puts us out of sync a little bit with the rest of the world but that is fine. it will help support our economy. we do not rule out a cut if we have to. we have to ask to ask -- to use the full range of inflation. the cap certainly is on the table. secretary of state mike pompeo sister not -- heads to north korea next week to make sure kim jong-un 60 ms. promise to shut down the nuclear program. wants a tough international sanctions to

remote -- remain enforced but there are signs that china has resumed cross-border links. powell is said to give his debut address at the annual jackson hall symposium in this history will do little to shake financial markets according to analysts at cornerstone macro who reviewed reactions. 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 jenna dagenhart, this is bloomberg. ramy: that the to the markets that because we are seeing limited risk taking ahead of jay powell's speech. what are you seeing? reporter: the 10 year yield is hauling that bassist two-point

range that we saw on thursday and that is while the u.s. curve is extending. the recent flattening we have seen looking at cheaper. the 2/10 spread has fallen below 20 basis points for the force time since 2007 and you can see that move with the gdp chart that you can find on the terminal. the currency has for a third day of losses. we are seeing a pickup in volatility on the one-month at -- as traders hedge those bigger signs. earlier main pharma jumping as much as 35% after its result and its positive outlook. we revenue meeting estimates for the company but we do have private sliding by nearly 5% after its earnings report. i want to highlight after paying such a rising to a 14 month high. the stock was rated -- erase to add financials. thank you.

about earnings here. china's largest offshore oil explorer. me theirthe expect to annual target -- target -- ca ppex target. based on the low end of their full-year budget for the year. that certainly will be a question. the spring that question to asia's energy industry reporter in hong kong. should we be concerned about this conservative spending? >> people have some reason to be concerned because that number is 21 billion. --ir target for the year is

lest they said we will spend the full 62 -- $72 billion cappex but by the end of the year they only spent about 50 billion yuan. they can get a little bit concerned because they feel like you failed last year in you .ailed to meet that it isterday little interest in detail when you said we are confident we will meet the annual spending target. it immediately -- he immediately corrected himself saying i am very confident. wanted to emphasize very confident because it do have a lot of the type of projects in the plan both in china and the overseas because seen up -- c nooc has excellent cost control. they are producing crude oil at about $32 per barrel. think about oil prices around $70. have a large margin to make a

lot of profit. the only problem with them is they cannot produce as much as people hope they can. they have every reason to's and more and they probably will be able to try their best to produce more because that will mean more profit for the company for the shareholders going forward. yvonne: what can we learn from cnooc? >> they are very different companies. cnooc is a pure upstream player. they do not have the re--- refining assets. we have certain amount of options and business but there -- most of their profits were generated by the sector. china had this blue sky campaign, they want better air quality anywhere. better air quality starts with better fuel policy. they managed to upgrade consistently so even at the oil price the oil -- material for

the refining product goes higher and they still find a way a much higher margin at sinopec. it already flagged around the first half and they are -- they may just break even for the first have since 2000 -- 2014. have a lot of aging oil field. they are like -- their production cost for barrels is around $50 for barrel. right now you look at the oil prices it is $70 of the can break even in one of the most important segments of their business. ramy: looking ahead, petrochina comes up. saving the best for last. what are we expecting? >> have already flagged their profit growth of about hundred 22% -- 122%. that is more than doubled.

petrochina is more like cnooc. stock theird the import laws. they have to import a lot of gas from central asia and sell at a lower price to china because of china's national policy. they want the national player to subsidize their economy. earnings people will closely watch for the import losses and finally to narrow the losses and especially petrochinaond half, has a better ground for the natural grass growth in the second half because they have already made it clear they want it up to 40%. ready --nment has a

the government has a ready relaxed -- already relaxed. people want some indication from petrochina to show that to the market. ramy: thank you. bloomberg's asia industry reporter. coming up, alibaba posts fast growth but profits may actually be a problem. we will take a closer look in just a moment. this is bloomberg. ♪

ramy: this is "bloomberg daybreak: asia." yvonne: i am yvonne man in hong kong. alibaba shares tumbled the most since june after first order earnings fell short of estimates for the company also reported its highest revenue growth and over four years -- in over four years.

let's discuss all this with our asian tech reporter. we saw a roller coaster when it came to the premarket with a stock and how things ended on the wall street session. what you think they are more concerned about the earnings? reporter: they are extremely strong, the figures, it is the fastest growth in four years. but if you dig deeper a lot of this growth is holstered by acquisitions, investments, and to new businesses like new retail, logistics, food livery and entertainment. -- food delivery and entertainment. the most the grid of part of the business was actually and only -- a 26% growth. analysts are really concerned that coming next quarter or a few quarters down the road whether the company will be able to sustain this kind of growth because a lot of it is done by acquisition. yvonne: stay with us. the spring in our next guest.

head of research and strategy at blue lotus capital advisor. founder and ceo eric wen. overshadowings what we are seeing. the slowdown in the core business. how are you concerned? >> i don't think we are concerned that much. certainly i think this quarter. margin profiles the core business. the management revenue did slow down but the commission revenue reached the heyer. i think -- a high year. you naturally see some slow down in the business. but our view is that starting from this part of the revenue, it will react so the rate -- reaccelerate. --

invest the company will heavily into the food delivery business announcing that they are teaming up with softbank for $3 billion investing. what do you say the dynamics between the competition between alibaba going forward? competition is definitely going to be a serious matter for alibaba. we see it like jd four years ago. after the competition between alibaba and jd they will definitely be smarter this time. what is at stake is the traffic and so-called gateway traffic that is feeding into the e-commerce empire. alibaba will go all out to compete against them in this regard which will cost a lot of money. the market concern really is you

have this very strong very much are commerce -- e-commerce business. now you are facing more and more competition. mostly from tencent. tencent sponsored competitions that average and the traffic. that is coming from all directions. then, how long can you hold on the gross profile of your core business? at the same time, spending on those competitive fields to win the competition first and then to profit next. i think that is a challenge the market is concerned about. ramy: it is clear that the company is spending more now to get more later but, my question is, when do they see the return on investment here? and investors hold on for that long -- can investors hold on for that long? >> it almost has been one year that the company has started on

this dramatic acknowledgment of its landscape. it's business scope. the concern is that the competition is getting more and more. this collision is definitely getting more prolonged. it weighs on the shares. you know that the company has been very resourceful and cultivating its core business and very confident that they do have -- not completed all the cards they can play. it is also getting more drawn is ano what we are seeing evaluation that comes in for alibaba. yvonne: we reported yesterday that they got the green light to march an ipo in hong kong. you need to raise about $4 billion. how would this competition

freshly introduced by alibaba ma's own business and ipo? >> what is being at stake is mostly folks on the restaurant, the cooked food. it is naturally -- natural to extend to fresh food. this is 15% of china's entire retail. in the traditional sense of e-commerce which we define as apparel cosmetics, electronics, and maternity. this is a huge market and its height the quincy purchase -- high-frequency purchase. this is what we called gateway traffic. alibaba must wait. ipo we see from prospectives is even though generally money -- they are losing money, the second is free

classroom -- clash -- cash flow deposit. it will be a fit -- flow, youet free cash are not dying, and you can compete. i think alibaba will probably focus on promotions and couponing. ma's free clash -- free cash flow. yvonne: we have been talking about how chinese tech has been held hostage to a lot of these u.s. trade tensions. we talked about it during the earnings call. >> we believe that china's government policy will continue to support imports into china to satisfy the rising demand of chinese consumers. this coming november china will

largest world's exhibition in shanghai that will showcase products all over the world. if u.s. goods become too expensive due to tariffs, chinese consumers can ship to domestic producers or imports from other parts of the world. yvonne: you could argue that alibaba is a little more insulated from the likes of tencent but in terms of the macro picture do you think these u.s.-china trade tensions have been priced into the stock already? i think the trade tension will definitely play a role. you can see that the retail sales in china hit an all-time low in the month of may and june. i think we are also seeing a lot of the manufacturing capacities for export now is sitting idle and turning -- floating that the method market. you see the rise of other platforms.

i think yes, we are seeing demand shifting. the question is how does the company cope with those pictures? alibaba did pretty well on this regard. it also has explored southeast asia markets. the company is taking real progress in those countries. it is going really fast with huge populations. judging from a history of alibaba as a company, have been very nimble and they refer cited -- farsighted. this time there will be no exception. >> it is want to quickly asked one less question. among all the e-commerce companies we are seeing, alibaba, j.d., coming to the market, what is your take on each of these and who would you invest -- recommend investing in? >> we still like alibaba the

best. 218,ve a target price of not very high, actually below the main. are looking atwe the overall picture of all those economic restructuring going on in china. domestic issues, and the trade war with the u.s., but within the means we are relatively most positively alibaba. the company has expended on new growth opportunities as well as domestic and international. their computing is really positioning that very well for the future of iot. alibaba.ndorse yvonne: thank you. eric wen. head of research and strategy at blue lotus capital advisor.

from bloomberg -- for bloomberg subscribers go on your terminals which is also available on your bloomberg mobile anywhere app. you can look at assets you care about. this is bloomberg. ♪

yvonne: just want to bring you the latest to you from the

ministry of commerce in china. we are wrapping up these today talks between the u.s. and china. talks between the u.s. and china. they are to keep communication when it comes to trade and they are constructive and honest talks when it came to the trade issue. they did not make a whole lot of progress but perhaps they are still keeping communication and there was a signal from the chinese official that perhaps we will not be able to see another revival of talks until perhaps after the midterms. we will see how that plays out. ramy: the expectations for asething really were dashed well from president donald trump trying to say that nothing might come out of this. and to be totally honest, all of the guests we spoke to said these really are just talks. just trying to get a little bit out of the tone crossing the bloomberg terminal, the fact that they are positive and

constructive and honest is as if they are trying to continue as you say, these lines. at the end of the day as we have been hearing, no one wins in this trade war. the $16 billion tariffs have been enacted. looking ahead, the $200 billion could also be enacted as soon as september 6. clearly china does not want to be at the mercy of the u.s. just resting this again, china says u.s. trade trucks are constructed -- trade talks are constructive. we see a renminbi, strengthening here in the currency but this is of course just getting a little bit more ground after the weakening's that we did see yesterday given the dollar researching -- resurgence. there was not a whole lot to came out of it. there was a lot of -- a lot more of this dollar buying and how you can inflate the trade dynamics.

we are seeing strengthening here at 6.87. a 6.9 handle overnight that would perhaps lead to more speculation as the pboc was going to step in to calm things down. but here we are seeing a little bit of strength this morning. let's get you caught up. what are we watching? >> will be looking at the foreign minister. as beijing relate ups the ante on taipei and the world stage here, they just lost el salvador as a double medic partner -- diplomatic partner. bringing just to 17 the number of people that taiwan has diplomatic contact with right now. we have pressure coming at the moment on the island. the democratically led island.

also hong kong, there was a way around it but they got caught on to that one as well. we will talk to the foreign minister about 1.5 hours from now. that is what we have coming up among a plethora of other guests . yvonne: thank you. stick a quick look at how -- markets are trading right now on this friday morning. losing a little bit of direction here not sure which way to go, the nikkei 225 seeing think -- gains amidst this dollar strength. the kospi heading lower as we count down to the jay powell speech at jackson hall. this is bloomberg. ♪

rishaad: stocks mixed at the end of the week, trade fears dominating the agenda. the dollar out for the first time -- up for the first time in six days as china and the u.s. wind up low level talks. president trump saying he is happy to press on with his tariff war. alibaba falling the most since june after earnings fell shy of estimates, but the highest revenues in four years. nevermind. in hong kong, i am rishaad salamat