yvonne: we are live from bloomberg headquarters. welcome to "daybreak: asia." the top stories this monday. stocks look to modest gains. the move to take control. -- no change in policy. i am in new york where it is just past 7:00 p.m. on a sunday area the talks might be a point of a breakthrough. and we will look at the road ahead for tesla as elon musk

dumps his go private plan. good morning. let's take a quick look at where we ended on friday because that will give an indicator as to where we are headed. helped to drive markets that you are looking at. that is a brand-new record. this hour, we will dissect what jay powell said. it seems that market are interpreting his comments as dovish. yvonne: take a look at what is

happening with the pboc. that difficult factor gave a boost to the renminbi and the selling of the dollar to the double whammy. it looks pretty favorable. we are seeing it pretty much flat right now. japan and korea looking pretty favorable. inare seeing developments that new cabinet in australia trying to bring more stability. let's take a look at the currency. lower was quite significant. if that will break lower during the day. also seeing some strength into the mexican peso. we could be seeing some kind of trade deal as early as today. take a look at the bond picture

because we did see this buying into u.s. treasuries after the speech. europe also looking a little different. we can see this uptick in inflation. italian bond yields, the thread communities see more fallout politically. haslinda: several people are reported dead in a mass shooting in jacksonville, florida. police say one suspect is dead. -- it is not clear if there were other shooters involved. stay away from the area around the landing mall. that itpean union says is prepared to veto the budget of illegal immigrants.

measures look at all and will oppose any inconvenience. they are increasingly your tater that other eu states refused to accept migrants that reach italy. iran as the economy suffers the fallout of the u.s. decision to abandon the nuclear deal. another blow to the embattledtion of rouhani. the tesla drama another page of elon musk dumping his plans to take the company private. tesla will remain public after shareholders asked him not to continue.

scrutinys it puts the back on the all-consuming workstyle. its ability to ramp up production of the model three. 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. look at ae talks breakthrough. they have reached an agreement. let's go to the bloomberg editor ros. does this look like a real breakthrough? >> there has certainly been a lot of to and fro. it sounds like they can be real

progress. continue at the office in washington. almost to the point where the two sides are measuring the podium, dusting off the podium and ready to come out to make an announcement. we do not know when that will happen. as agreement could be signed soon as tomorrow or monday. just what kind of announcement will be made, this is a bilateral deal between u.s. and mexico that paves the way to finalize the trilateral deal. a few things that we do not really know that could become clear over the next 24 hours, there was a telling tweet from donald trump that praised the way to size of the mexican government, incoming and outgoing, have been working together.

anything that happens with the u.s. with trade deals and nafta has to be signed off on by trump. upbeat comment from the president. ramy: there is positivity between the u.s. and mexico. between the u.s. and china, it is a difference tory. we got a shred of optimism because it looks like they are talking. it does seem like it is almost full steam ahead towards the terrorists. tariffs. the fightsuggests between the dinosaurs and the onmp administration kind of the protectionist side. steve mnuchin and maybe larry kudlow are on the trade side.

we will have to wait and see. is ahe seems to favor tough stand. if you look at what has in happening in the markets, the president looks at the stock market very closely. all he saw late last week was the s&p making record highs. he tweeted about that twice this weekend. there is nothing to suggest that his actions are not working. things can always change, but it looks like more pressure on down towardsg those very large tariffs. ramy: perhaps a sentiment that he is negotiating. thank you as always.

let's dig into the trade tensions even further. jason, always good to have you on the show. let's pick up where we left off. to what degree do you think that donald trump is negotiating or pushing china from a position of strength? >> there is probably more strength than there is with china. with china, we have seen this back-and-forth. right now we do not see any chance of winning on either side. ramy: do you think the tariffs will go ahead at this point? >> i think so. it could happen over the next week. far, we have not seen the administration back down.

what does this mean for the dollar trade? is the long dollar trade still intact? >> there are some factors driving the dollar. the first is what jay powell said. if you look at his speech, neither the word terrorist or or trade made it into his speech. really off the table for their consideration and came .cross as devilishly hawkish the intention to slowly raise rates. that is probably more important than what is going on with the china trade. what do you make of this move by the pboc in the past couple days?

the pboc in the past couple days? do you think it is enough to stem what we have seen with reutimann be as well -- the ?enminbi as well > >> it is not a trade war. -- it is overbearing still overbearing. we saw the people's bank of china make certain moves to coincide with certain kickoffs from the united states. to be honest, if we are thinking about the renminbi be on this as iseans to boost trade, that still a risk, where you could see weakness. ramy: picking up on the countdown that we had here, it

is getting real based on what you said. where are you looking at? what we want to look out is going on already, it will give us an idea of what will happen next from an investor standpoint. ,his is affecting companies engaging trade. this affects prices. are involved, a lot of chinese trade, that is a risk to the downside. the situation with nafta, if that were to improve, there is probably a long short trade to be made around companies trading in nafta. we have a chart that shows the correlations that we have when it comes to the renminbi versus global equities versus commodities.

avoiding if we be we continue to see more weakness ? in terms of where we are seeing the most pain? weakness, you are going to see it weaken further. they will take moves to stimulate the economy. as far as commodities go, china is the biggest consumer of the if we look,minum crushed.e gotten if we look over the past week, we have seen a double bottom in aluminum prices. optimism that

maybe things get better. if it gets better, prices will go up. yvonne: stay with us. we will have more. message more about the and how it is likely to shape global markets. later, higher oil prices boost earnings in china. we will discuss outlook with the of oil and gas research. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." unreliable monetary stars. it is a tricky business. that is not stopping jay powell from two more rate hikes this year. is just off the

plane from the symposium in wyoming. they are talking to jason about this. not a lot of mention about an escalation in the trade war or the flattening yield curve. this weekwe went into with a lot of anticipation of what he could do. stanceift in the policy seems to be towards more rate hikes. maybe more focused on some of these risks that would cause him to show more concerned. he went into this discussion where he used the metaphor of using policy stars to guide policy. said that he knows that there has been errors in the past. they are creating some

uncertainty. aople figure he will be little more uncertain about that and be a little more dovish. he sees no risk of overheating. saide other hand come he inflation is near its target. he said the fed must avoid moving too fast. at the same time, you cannot move too slowly. also, the current path taking both of the risks into account. others at the symposium seem to endorse his view. >> we should be moving towards mutual. it is consistent with that pass. hand, ouron the other

team see the dovish this. just look at the models, but the economic indicators. hike inll be no rate december. also, ever smaller. when mr. powell puts together his view in terms of trade and domestic economy, how does he bring that all in here? here is what he said in the speech. he said there are risk factors abroad and at home that could demand a different policy response, but today i will sit back. speaking to bloomberg television. he does think there is a serious recession risk.

you know why it is finding? we are reaching the short-term rate. long-term is going down. all this global uncertainty. fed -- a trade war has not hit the economy yet. if there is a risk of global recession, it is because the trade war into the five so much. a little asterisk or star there. kathleen hays there. jackson hole. let's talk about inversion. gap is atng curve 18.75 points. to what degree is this a concern

to us now as it gets ever closer to inversion? keep oursomething to eye on. i tend to concur with what kathleen was talking about. the biggest risk factor to the global economy is global trade. if we look at why global growth was so good in 2017, it is because global trade was really strong in the second half of 2017. -- wobal trade weekends eakens, that will be bad for the global growth outlook. they are saying do not look at the em. to what degree -- them they are saying to

not to look at the em. is something that jay powell is trying to do very hard. successfully slotting the discussion of trade and tariffs. if we see the other $200 billion in u.s. tariffs, if we see that go forward, it will be more difficult because you will see further reports from executives .nd economists ramy: his comments were interpreted as more passive. the same away from this? we are still looking at a september rate hike and a 60% chance for december. four have been expecting

rate hikes all year. we stand by that. some of what you said might have been a little bit of messaging to the emerging markets. this is going to be runaway train of rate hikes. there was a little bit of a soothing message. we will take this slowly and not rock the boat too much. the fed is not going to be careless. that was the messaging for markets. it does not mean that they are not going to the raise rates, but they will do it gradually. yvonne: what we got was kind of the reaction. he thinks these are changing.

where is that leading? a more hazy navigation. encounters last week. it is still better to base rates that way than to wait for inflation. go should we believe on that front? do you wait for low inflation? >> some of the reason we have seen higher inflation rates is a year over year fact. there is a chance that they could moderate. when the facts change, i change my mind. to a quote,it often it is not new. whether we are talking about jay powell now or janet yellen, any of the previous fed chairs, they would say that the economy is dynamic and we are watching the data. yvonne: thank you.

we have putting more to come on "daybreak: asia." this is bloomberg. ♪

yvonne: a quick check of the latest headlines. coal producers fell almost 7% in the first half. income -- net contrasts coal energy which posted a 54% jump in earnings. ramy: commodity trader fights for survival. shareholders voting on an equity plan that will strip them of control. the proposal will hand most power to the shareholders. they have lost a lot of value. up, pledging stability

after a tumultuous week. we will be live in sydney next. this is bloomberg. ♪

yvonne: good morning. we cannot break out of this bad weather spell. asia's first major market open. getting the action to jay powell and the renminbi. in markets closed, the s&p 500 at a brand-new record. the seventh weekly rise. anderms of trade tensions what jay powell was saying, helping to support the u.s. among investors. you are watching

"daybreak: asia." let's get to the first word news with haslinda amin. the u.s. and mexico are close to resolving differences on nafta. told it could have breakthroughs in the next three days. opening the door for canada to rejoin the talks. president trump tweeted that it could be a big agreement. expecting saudi arabia budget deficit to fall below 5% this year. the first time it would have done so since the crash. it will cause the deficit to 1.7% on better collection. rises andy price

heightened spending. the lifestyle of singapore is rich and famous. asianses put crazy rich , making a total of almost $77 million. its success has inspired warner bros. to attempt a sequel. a ferrari has set a record at auctions selling for $48 million. it was a 1962 and smashed the previous record. they have generated the highest prices in recent years. for --

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'm haslinda amin. this is bloomberg. yvonne: let's bring in sophie kamaruddin. relief. be set for some also with the pboc. you have the dollar with its biggest decline on friday. the pboc indicating it had little desire for weakness. you, the shows correlations between the yuan and the commodities, they are at a high that we have not really seen.

risk, such as slowing growth. not seeing a bottoming out. with this being said, let's check out. futures are nudging higher. political maneuvers are also alive and well. ramy: in the meantime, taking a look at turkey. in thentry will be spotlight because they are finally coming back from that weeklong holiday. what are you watching?

vacation is over. given that break, it may low longer -- no longer be the case. how it has in on served. thisira breaking earlier monday. the emerging markets take their yuan.om the also watching the mexican peso. eye -- ping an a busy start to this week as we randolph a week that has not been that positive for asian assets. so much for the dog days of summer. let's go to australia now. morrisonrime minister

promises stability after a tumultuous week. bloombergg in our reporter ed. any surprises? >> no real surprises right now. scott morrison wasted no time over the weekend. he did not let the grass grow. the newjosh as treasurer. julie bishop announced that she would not be standing again. still waiting to hear perhaps the biggest surprise would be that he has included peter dutton back into the ministry. he was the man who precipitated

last week's crimes. split between moderates and that is in that cabinet. to the latest opinion polls show after a chaotic week? his first news poll. gapas gone from a two-point to a 12 point cap. it is the largest in a long time, which is breaking through to see the precise date there. by may.s must be held

he was hoping for the banks and is seeing the reserves. is that sustainable? >> it was looking flat. global investing pointing to political uncertainty in australia. management and the political uncertainty last week eight australian debt less appealing. that is not a message that scott morrison and his team will really wanted be hearing. -- want to be hearing. upnne: we just want to bring an alert. a trading halt here today in singapore pending in announced. keep in mind this is the day

were stockholders will be voting on that $3.5 billion debt for equity rescue. we did get some details last week about what that might entail. the father richard ellman will not take up his position as executive director of the new company. critics who have been very critical of the company. withdrawn fromad his board position a couple weeks ago. what to watch as we approach that into game in this restructuring program. still ahead the recovery in oil prices. you'll assess.

-- we will assess. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." posting record profit. joining us with results. what stood out to you? they posted 33% growth. .till paying more money they find a way to squeeze a higher margin. they have clean fuel premium. they tried to upgrade their fuel policy.

the higher grade field helps the quality. that is important. profits toown the around 400. close,e really getting producing. breaking even. half, if theyirst keep expending, they only spend 20% of their entire budget. later on, we will have to look at the bigger picture. they still have another 80% to go in the second half. they will be watching.

china and india at the head of research. why do you think the spending targets have not really been breached yet? we are more than halfway through the year and they are still quite conservative. >> it has been a key focus item. only about 30% of the budget. it is our expectation that you have an uptick into 2019. i think it is something that is waiting to happen. driver and a big more broadly across the chinese region. a lot of credit.

a lot of analysts will have a pecking order. you were not round for whatever reason. i want to ask you a question. we all know that is a fact. be butd a cap has to only around 600 pounds. be do not think there will .uch going forward that would be bad news. maintaining been 85% for the past couple years. more motivation to increase numbers beyond that specifically? crackdown on the

the sector of finance. that does speak to higher volumes. offsetting some of the volumes there. ministers coming on board. you will see a competitive environment. ,n terms of the value utilization at 90%. maintaining strong margins. it is our expectation that they do that. even with $70 oil, it cannot break even. what does that mean now? estimates have been increasing. it used to be about 60 to 65. getthing that tends to

a bigoked, it is not contributor. it focuses on domestic natural gas. had as indicate that they tough business. ramy: what are your expectations for what to expect? they think something more than 100%. you agree? at least 110% earnings growth to come through. the growth is predominately going to be joined on the upstream. position rises a bit in the first half.

on balance, you will see strong earnings growth. i have two more questions. the retail unit, we have been talking about ipo for a long time. it has been delayed. about thee any idea wantnd on top of that, i to comment on the reform. overheard -- what is your take on that? these events are still to be looked at. conceptually speaking, to the

it is about 30%. theory, you get a meaningful event. about 940. it depends on the valuation. theare going to get perspective. it is interesting. similar to what it said about marketing. events are how these

valued. do have a timestamp? withe: i want to end up petrochina. how is it changing the market for you? there is a broad dynamic at play. consumption is up by about 18%. in terms of the u.s. imports into china, about 7% of the mix. what china imported was more steel.c to steal -- it speaks to low volumes.

china does need more lng. to the extent that the u.s. is out of the picture then china would have to fall back on someone else. yvonne: we will leave it there. head of oil and yes. bloomberg news. now for a look at some of the stories trending across the bloomberg universe. .eading about shareholders we are counting down to that shareholder vote later on today with that debt for equity transaction going into that restructuring plan. we are tracking our global trade close that will involve the next decade. how six to seven cups of coffee can help you live longer. you can find that online or on the terminal. this is bloomberg. ♪

yvonne: this is "daybreak: asia." faces possible bumps in the road after elon musk did in abrupt about turn and dumped his plan to go private. it came a few weeks after you first floated the idea of followed by news that a near executive is now leaving the company. twistnan has the latest and turns. investors might like that the plan has been abandoned, but it raises questions about you bad behavior by the ceo. erratic behavior by the ceo. elon musk tweeted out a bombshell to tweak about going private. then he revealed that funding

was not secured and there has been a rather rough ride until friday night late evening, tesla posted this equal bombshell on its blog. challenges -- he is saying that the company will stay public. he went on to say that he had that with the board on thursday. i believe the better path is for tesla to remain public. you will see that it has been an up-and-down ride. he announced he was going to get morgan stanley ball. another path to go private after it looks like the sovereign fund was somewhat spooked by the public. like maybe it has a

lot to do with investors that he thought back tim did not. again, you have a top communications advisor or executives in the firm announcing her departure on saturday. the company said that was planned before the volatility. very quickly, what happens with the board? u: if you talk to top investors , it does not just go away. the other question that comes up, does the board need to keep track of a ceo that is exhausted at a minimum and perhaps a

little too spontaneous in communicating something that has caused subpoenas. the question of what is the next egg benchmark for tesla, in october it will announce its third-quarter production and delivery dates. ramy: thank you very much. yvonne: counting down to the market open in japan, and australia. markets will be digesting jay powell's beach. officially hawkish is what this was. on top of that, looking at moves in the renminbi. we will be breaking below 680. a cyclical factor. partners investment adviser tom murphy will be joining us to talk more about markets.

of course, australian politics with the new cabinet. how much stability is being put forward. this is bloomberg. ♪

haidi: -- set for modest gains, the yen holding. markets liking the message from jackson hole. jay powell signals no change in rate policy. : president trump trade war may turn even a regular. the hawks are in the ascendant -- even uglier. the hawks are in the ascendant. shares suspended in singapore

ahead of monday's shareholder vote. ♪ yvonne: two central banks playing into the markets. l's fed digesting jay powel speech. the pboc, don't fight it. the bears are learning that after they stepped in to reintroduce this countercyclical factor. ramy: that's right. maybe a push in terms of what happened with u.s. markets, the s&p 500 hit a new brand root -- brand-new record. continues. if that trade tensions continue between the u.s. and china. we are t -10 on possibly a new

round of tariffs. yvonne: it seems like we are starting off on a positive note. sophie: that's right. on friday is positive, extending the rally on pboc. we do have trading in its height range against the dollar. kospist be also -- the also moving higher. it is its seventh day of gains. , a aussie dollar building more than 1% gain. futuressee the s&p pushing higher. in asia, some data on tap.

profits due out at 9:30 a.m. hong kong time. we will be getting reaction to major earnings from sinopec and china shenhua energy. right, thank you very much. let's get first word news from haslinda on. .- haslinda o haslinda: the u.s. and mexico differencesesolve on nafta. the two sides have achieved significant breakthroughs in the way few days, paving the for an accord and opening the door for canada to rejoin the talks. onsident trump tweeted saturday that that could be a big agreement with mexico soon. shinzo abe has launched his bid for a historic third term as democratic party in her, hoping to put the scandal behind him and become japan's longest serving prime minister.

the announcement kicks off what is expected to be an easy campaign. a recent poll says he has the backing of 77% of the few lawmakers. the party votes on september 20. selling for $48 million at southern bees in monterey. gto smashed the previous record by $10 million. ferrari builds only 36 examples of it. it generated the highest prices in recent years. soldby's says, since 1963 [indiscernible] the rich and famous top box offices again. to itsrich asians" added

total in the u.s. and canada, making almost $77 million. its success has audience fired work on a sequel with director john chu. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ much.thank you very back to the central bank world. jay powell signaling that the fed will put less emphasis on focus on unreliable policy stars. most officials and economists that attended the symposium still see the possibility of a rate hike. >> there may be some uncertainty. jay powell put his mark on the

federal reserve and how he will conduct policy about relying on a broad economic burials we have, questions about what is the national rate of unemployment. bottom line, the economy is strong enough. turn to.actors we can i love metaphors. this is when he was speaking earlier this year after one of the fed meetings. at questioninged this way of guiding the policy, using these variables, maybe some people were more dovish here and maybe that's true. he said inflation is looking -- isn't looking to top 2% anytime soon so there is no threat of overheating. he said the fed has to avoid moving too fast to hurt the economy and journey expansion. but he also said that you hand -- you can't move too slowly or

then you will have to hike rates up. cleveland fed spoke to bloomberg on television -- number television on friday gave us the same sense. what's listen. >> -- let's listen. >> the case for raising interest rates is compelling. we have an economy above trend. we have alone employment. we have inflation at our goal at 2%. kathleen: i must add that bloomberg economics found a dovish policy tilt in what jay powell said. they do think that he is a fed chair that will be careful, not model, in the economic but to go more on the actual economic data. people say that is not too different from what the fed has done past. that's what tom told me on saturday. bloomberg economics says a rate hike in september, sure.

rate hike in november, no. that will have to wait until 2019. yvonne: the pboc stole some of the fed's thunder late friday, more declines in the renminbi. will it work? kathleen: have been pretty effective in the past. thehey want to make sure currency does it further, they have the means to do it. surprised people is because the pboc -- first of all, they removed what they call they countercyclical factor sometime ago. the fact that they are bringing it back shows they want to take more control. it is not because they want to weaken the currency further. it's because they don't want it to faulty fast. a lot of people are saying -- it's because -- they don't want it to fall too fast. that of people are saying

maybe they want to appease donald trump. in the last hour day very gauge a -- of daybreak asia, it was there is a risk they might do it again, despite the pboc recent move. >> there is a risk event continuing in the future. renminbik at the facing devaluation beyond this as a means to boost trade and economic growth, that is still a risk. you could see further reason -- further weakness from the r&b -- rnb. even though the pboc is allowing the exchange rate to move more freely in the markets, the way people in the world want it to, many banks take counteryclical steps to something like this when they feel their currency may be pushed one way or the other in a certain direction. i think we have to wait and see

is trade-two oriented this tool oriented this is. yvonne: kathleen, thank you. looking ahead, how a trade affectld [indiscernible] ramy: and we ask thomas murphy why he is buying in. this is bloomberg. ♪

ramy: president's trade war may be about to get uglier after a long hot summer. the hawks in the administration seemed to have gained the upper hand.

let's look at the market implications. here, good to have you looking ahead to the end of the commentary period for this trade war, trade tensions between the u.s. and china. how optimistic or pessimistic are you that this will go ahead? i'm looking at this as a pre-election ploy by the trump administration. the worst of this debate will occur between now and the first week of november. this is a vote winner. among mr. trump's political supporters. i don't expect this to be cleared until early november. after that, it is a much brighter picture. deep down inside, the u.s. administration is committed to free trade. it is hard to imagine that is the case at the moment. they simply have not been negotiating in good faith. ramy: with these trade tensions, how should investors position themselves? we have seen the dollar

strengthen. but folks say there is a secular downturn we should be expecting as well. >> it's really interesting because, when jerome powell sounded like he is not terribly hawkish, that sort of made people questioned whether we would see a u.s. hike in december. commodity traders by commodities, the u.s. dollar coming off of it. all of these moves remind us, yes, maybe we are late like will, but there is still room for support in commodities, which makes us thank don't forget emerging markets. emerging markets benefit from two things. they benefit from accelerating global growth and from commodities, because many of them are commodity producers. when emerging-market shares are this cheap, it is silly not to look for value in the emerging markets. that is what we are doing. ramy: in terms of value, not everything is the same. where are you looking?

is now the time to buy in or should we wait a little bit longer? clients is oneto of the most naive things investors can do is look at emerging markets as a generic asset class. it is not an zero -- a generic asset class. there are pockets of value where current account positions of value occur. and you have the opposite, turkey, where debt problems are more severe. if you can cherry pick emerging andets in those markets those sectors where there is not a heavy level of indebtedness and there is positive growth, that is the place to be. one of the things across our portfolios, many of our clients own tencent and samsung electronics. these companies are solid. they will remain solid. an emerging markets fall will not scare investors away from those growth opportunities.

yvonne: talk to me about what has been going on with the renminbi. makingshore and in be is -- the offshore renminbi is making substantial moves. will this provide more stability in the asia em trade? >> we have said to clients for some time that we should expect a weaker rnb as an offset to the trade tensions. in the next couple of weeks, these discussions taking place within the united states and between the united states and china will end. we are in that period a consultation where the $200 billion based for tariffs is under consideration. it is an extreme number. we probably won't see it materialize. but while that is going on, the rnb weakness will occur and that will also the tariffs. they have just about offset the

degree of u.s. tariffs in the last few months that have been imposed. remember, the u.s. tariffs are only fully imposed on $34 billion of chinese exports at this time. so it is still a fear thing because it is not a big number. but it is being discussed as a big number and the headlines are frightening. yvonne: we have not got to that point yet. i want to focus on where you are domestically at home and what a crazy week it has been in australia politics. safer choice -- have we reached the stability point when it comes to aussie politics where we can move away from that of focus on the fundamentals? us, i included, were very surprised last week at the level of support for the extreme right. the fundamentalists, populist, christian right which really, in australia, is a very small movement. there were votes for her mr. dustin and his challenge did produce some support.

the surprising thing for many of us was that that got to the point where it was and that people like ms. bishop, who is foreign minister, is now the backbench. so there are quality people like bishop who will not be in this government. but at the same time, we have the energy minister who is now the deputy leader. he is an exceptional person, and exceptional politician. and given his experience in the treasury, which is the portfolio he has taken, he will enrich his ability to be a future leader. this is all positive. but the markets at the moment are taking the view that this government, at most, will be in power until may and at least until the election, if it is called early. so they don't have a year. they have less than a year. it will be very unlikely if this government won the next election. ramy: that is nine to 10 months away are so.

polls at least imply that that is the case. is there a way to play this that investors can get in now and wait for the change and then split? seen thee not yet arkets take a second guess at backseat position. the markets are quite strong. they were strong at the end of the week in spite of what happened. i do expect, in the next few weeks, the markets will settle down a bit because they will the that the future of franking privilege, which is australia's mechanism that eliminates double taxation may a in danger and may cause selloff in estoril in market. -- in the australian market. we will have to see. i think there will be caution in the next few weeks.

when it comes to the rally in the aussie, should i be selling? >> the aussie dollar is strongly with price moves. if you were looking for a conviction trade, overweighting the aussie is a good position to take right now. yvonne: interesting. thomas murphy joining us from sydney. don't forget our interactive tv function, tv go. you can look at past interviews and bloomberg functions that we talk about. become part of the conversation as well. you can send us instant messages during the show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

yvonne: this is daybreak asia. ramy: over to tesla. the company is facing possible bumps in the road after elon musk did an about turn and dumped his plan to go private. followed by news that a senior exec is leaving the company. su keenan has the latest twists and turns. preplanned. it was let's take a look at the chart. the big question is how wild the right get? year to date, it has been volatile. but look at the peak on the far right hand side, august 7. that is when elon musk tweeted he was taking the company private, that he had secured financing and later came out that he had not. look at the blog posted friday night.

knew the process of going private would be challenging, he says, but it is clear it is more time-consuming and this tracking than initially anticipated. he told the board the best path was to remain public. let's take a look at where the stock has been in the past week. late in the week, musk had secured morgan stanley to advise on going private, possibly through m&a after the saudi arabia and sovereign fund appeared to have been spooked bile the publicity. people close to the matter say what also weighed on his decision to abandon the plan to go public is that many key investors he thought were behind him were not. questions to the board in the stock face? say thisech analysts

is not going away. this is an about-face. it raises questions about the ceo. is there an issue of him being erratic and perhaps overworked at this point? does the boarding to rein him in -- does the board need to rein him in? the fact that the sec is now probing the announcement that was made on the seven that indicated an actual price that 7 thatck -- on december indicated an actual price of the stock may go out at. this is a decision aco would never make and would never make -- a ceo would never make and would never make publicly because it would put the board in legal issues. we also have production issues. that's where many believe the company needs to focus. yes.sts say in october, they will be reporting their third quarter deliveries and production numbers. and those will be very much in

focus and could redeem or further put the stock and company in turmoil. yvonne: su keenan joining us from new york. a quick check of the business flash headlines. unicredit continue to discuss a possible merger. italy's biggest bank has to probe rothschild the delicate nature of these discussions. unicredit shares climbed in milan after that latest report. didi isty to showing -- suspending services after a woman was allegedly raped and murdered on friday. the company says it failed to respond to a complaint about the driver when day earlier. the killing comes three months

after another murder was committed by a didi operative. abe putp, can shinzo scandal aside and win another term as party leader. we will be live in tokyo for the latest. this is bloomberg. ♪

yvonne: time in hong kong. ramy: i'm in new york. you are watching daybreak asia. haslinda: the european union faces a new threat with italy's saying it is prepared to veto budget of illegal immigrants. it will look at all measures considering the zynga market finances and oppose anything that isn't convenient -- the market finances

and oppose anything that isn't convenient. the lira has fallen sharply this month, half as much again as the next worst-performing currency. the imf expects saudi arabia's budget deficit the fall below 5% of gdp this year, the first time it has done so since the all crash of the kingdom finances. narrowed to 4.6% of gdp and 1.6% in 2019 on better collection of a new value-added rises,re energy price and hyper spending. several people are reported dead in a mass shooting at a mall in jacksonville, florida that was

hosting a video game tournament. police say one suspect is dead at the scene, but it is not clear if there were other shooters involved. the sheriffs office want people to stay away from the area around the landing mall and use social media to tell others hiding in the mall to wait for help. this is bloomberg. ♪ --global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ politics playing on market sentiment when it comes to australia. let's get to sophie. some relief on the aussie dollar. sophie: the bonds have gotten worse in the attempt to unite the liberal party and to convince that he is the one for the job. it could be set to shrink further as appetite for

australian bonds. at the broader picture, asian stocks are looking mixed while the dollar is losing ground. extending,re yuan trading at its greatest level. the kiwi dollars moving higher against the u.s. and aussie dollar. shares in sydney are resuming losses. consumer staples and financials on the asx 200. the kospi is on its seventh day of gains. that is being weighed by the decline in so-called peace talks -- peace stocks. we look at some of the stock movers in korea as well as elsewhere in the region. linkedtocks have been

through the potential peace prospects on the korean peninsula. gso want to highlight education, tumbling to a 2013 though after seeing a material improvement in market improvements as a childcare industry faces consolidation. and you have reliance worldwide following by 5.73%. -- at 7.3%. these are moving lower so far early on in the asian session. ramy: thank you very much. let's head to japan. bidzo abe has launched his for an a story third term as liberal democratic party leader. he he hopes to put -- he hopes to put scandal behind him. isabel reynolds joins us from tokyo. the ldp leadership election

seems to be a foregone conclusion. is there anything we should be looking for in the details? >> yes, absolutely. abe's timed this decision very well. the scandal has stayed in the background of the last couple of months and we have three weeks until the election day. so there's time for any emerging controversies. we look at the policy issues that he emphasizes during his campaign. two big issues coming up, one is the issue of immigration. japanese government is considering bringing in lower skilled workers in areas of the economy that are short of labor. and the other issue that he has been keen on is changing the constitution. so we may get some picture of her whether he is prepared to sacrifice some of his political capital in order to achieve this

goal before 2021, when his next term will end. yvonne: he wants to at least stay in the job for another three years. who likely is in a succession route right now? who might be in place for him after he steps down in 2021? >> that is another key issue to look at in this election. this time around, he faces one rival, a former defense minister. badly in they selection. end his attempt in the leadership. but we could be looking at someone anointed by abe. looking at a former foreign minister who has -- you is a potential leader. abe's rightre is hand man, who is not only an policies, bute's

andiving force in policies tourism and this drive to have more foreign workers brought into the economy. yvonne: thank you. watchdogea's antitrust a family-run, bomber in the crosshairs. engle for a stephen closer look. obviously, we have the table -- that the-- chaebol president campaigns on. steve: the samsung heir apparent , who wasresident

up our core an system friday, sentenced to 25 years in prison. this employment between big business and government has been going on for a long time -- this nt between big business and government has been going on for a long time. wiley -- jae of j wai li's strategy. ftc, the chairman of the ftc says the new rules will make it harder for the chaebol to make mergers or spinoffs without the

market or the shareholders. ramy: those are the words, but does it have teeth? the influence of the chaebol have been under constant criticism to rein them in. stephen: it is a tricky balance. do you change the practices that have eroded the public trust in korea incorporated or do you basically choke off the golden goose? look at the pie chart that shows the percentage of this chaebols makeup more than half of the weighting of the cost be -- the kospi. they absolutely dominant. six samsung companies are companies just with the samsung

name it are in the top 21 in though weightings of the kospi. they make up more than half. tings ofee the weigh samsung electronics alone. the next biggest is sk hynix, which is also a part of the table -- the cahaebol. family-run businesses use their influence at the expense of minority shareholders -- like us. yvonne: thank you. coming up, the yen will weaken another 2.5 percent is the trade war deteriorates. this is bloomberg. ♪

ramy: welcome back. this is daybreak asia. fedne: the pboc and the delivered a one-two punch on friday. on the chinese side, angst will resume given the -- banks will resume given the countercyclical factor when raising rates. tell us more about the significance in this move. >> it is a broad technical move. policymakers are really keen on putting a florham were the yuan is headed. they made it more expensive for banks to short the currency. they advise against heard behavior. -- herd behavior.

the losses over the last few months are just enough for authorities to cope with. the message out of jackson hole seemed more dovish. >> it will definitely help the yuan. mr. powell came out and said it is steady as she goes. that signaled a more moderate dollar. that will take downward pressure off the yuan. the the fed move and technical adjustment by the pboc putting a floor for the yuan in the near-term. ramy: trade talks, will this move by china influence those at all? >> the yuan, on one side of the debate, people say they can use it as a weapon in the trade war. trump saying they are manipulating the currency. on the other side, this goes to

show perhaps it is a goodwill gesture from china. they are not going to let weekend to where it becomes a tool to leverage in the trade war. perhaps it is a goodwill gesture. either way, it does feel like we are heading toward the next batch of tariffs on yet more goods coming out of china. right here, right now, the yuan is not the primary factor in the trade negotiations. yvonne: thank you. .et's bring in max linn he joins us now from singapore. what we have seen in the past, when china interviews this countercyclical factor, we did see the bloomberg dollar -- we did see the dollar slide. the yellow box is when they eliminated that. we see the moves here and what we saw over the weekend. does this mean the renminbi has bottoms?

i do the near term come think that 6.90 is the floor for the onshore spots. but i do note that the pboc overall is very reactive and its policy. there are discussions that maybe they are tried to give the u.s. concessions here. i think they are preparing for the worst to come for the next $200 billion in tariffs. because the fundamentals still point to a more hawkish fed with gradual hiking and the pboc within easing bias, i think the fundamentals still point towards the u.s. dollar seamy higher. counter google sector does see that down. [indiscernible] will the near term, it 6.90. because there is a differential in cnh, when the market does tend to panic, i thing set -- i -- k cnh will stick to

680, iu get cnh practice think it would be a good time to go along the dollar against asian currencies again. yvonne: what does this mean for the rest? the think they will still take a cue from what the renminbi does or is this more of a dollar liquidity story still? >> it is still both. seehe trade war side, we countries like singapore and south korea are integrated into the supply chain. on the fed side, because liquidity is being withdrawn, that does hit a live asian currencies. we know the asian currency trade has been a popular one for investors since 2010. withdraws clarity, it gets hit from both sides. ramy: we see the two w top

conviction calls with the dollar and the yuan. >> because cnh is more expensive to go short against the u.s. long., we like going those are two carry positives of that trade. you do get some of that impact from china. headlines be less directly toward what is going on in china. chris singapore, it is still at the upper hand of the band. expensiveion is still compared to the current currencies. bringing this back to the bigger picture in terms of u.s.-china trade tensions, how skeptical, how might -- how confident are you that we can get to a resolution sooner rather than later.

>> i'm very skeptical overall. when you think about what this trade war is about, it is about china reversing its industrial policy that it has had since the founding of the republic. chop doesn't like the chinese government interfering in his domestic industries. i don't think they will talk -- walked back from this. just tariff relief from the u.s.. --ess the use comes especially ahead of the midterms when being tough on china is a important platform for president trump and republicans. yvonne: you mentioned the dollar trade regaining strength once again. at what point do we see this have a trigger? twin deficits weigh on where the dollar goes from here. but it would point do you see that inflection point? >> it's been a little bit tougher recently because we had to loosen china. soundingd chair powell

weaker. once that data starts moving around again, people realize that the u.s. economy is the only economy that is here to hike sequentially. i think you will see the dollar tree become popular again. yvonne: we did see jay powell -- you mentioned a little bit about there is no clear sign that inflation is accelerating past 2%. the risk factor you mentioned at tom, when he can to u.s. housing , abroad as well, to what extent do you believe that limits the oil -- the dollar's gains. there is a question on whether the fed will have to stall those rate hikes for next year. again, questioned his -- my interpretation of fed chair powell' a speech is he is doing a good thing.

instead of navigating by the to look at the data sets. it is all-time back to u.s. data. equities at an all-time high, conference still at an all-time high in the u.s. and the numbers in the u.s. market are so very light. i think the risks still point to you that willie to a hawkish fed and maybe the market reducing its long-term rate in the future. has gottenk esn ask used to it? >> it is difficult to say. willnot sure how the rnb react to the next right of tariffs. seat,e they are in a back they have to let they market push to wherever the market wants to go.

the 6.95, in which case currencies will follow that again. turkey was off last week, so we did not get a lot of turkey risks. you see anything like turkish concerns again, the dollar can strike that broadly. is palling the next central bank to hike? >> i would say they are definitely poised to hike. the likely be ok, even though you have hawkish defense in thailand and people think the hike is overdue, the inflation data is not there yet for the near terms. at least not in the next quarter. you may start seeing more terms of a rental rate hike. yvonne: the latest out of singapore. you can interact with the chart shionogi tv . we've been something -- we've

been focusing a lot on this. you can save those charts for your future reference as well. this is bloomberg. ♪

yvonne: this is daybreak: asia. ramy: let's do a quick check of

the business flash headlines. the world's top oil refiner posted a record profit. sinopec first-half net jumped to $6.2 billion. that is its best half-year profit on record. sinopec flagged the jumped last month, signaling that it's business had improved significantly -- its business had improved significantly on higher oil prices. energy saysld why -- shenhuaois nergy

has lost value, questions about its accounting actresses. yvonne: an eventful day when it comes to noble. the company has requested for the shares to be halted. look at what we can see what the trials entry relations of the company. finallyga -- the saga coming to a close with a $3 billion debt for equity restructuring plan. shareholders will be voting on that. this stock has gone from a peak at $15 to $16 to now close to being a penny stock right now. retail investors hit the hardest from these falls, a lot say this is potentially in favor of the deal because this is a do or die

cap a situation. ramy: just for the survival of this organization. that said, it is time to take advantage of its rebounding commodities, saying we want to get back into it. please do vote for this to make it happen. we will see what happens. shares have been halted. before we hand over to bloomberg markets: asia, let's look at how markets are trading right now. it is green across the board. we have been favorable when it comes to jay powell's china and also the pboc to stem the decline in the renminbi. .utures down 1% xfinity mobile is a new wireless network

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>> it is not :00 a.m. in hong kong, 11:00 a.m. in sydney. mrs. bloomberg markets: asia. -- this is bloomberg markets: asia. haidi: the offshore yuan strengthened as the pboc indicates it will continue to offer support. message outing the of jackson hole. shrugging it off and signals no change in rate policy. struggling noble puts its rescue plan on the line. shares suspended in singa