, the wto.s president trump invites bloomberg to the oval office. >> stocks slump on fears of additional measures against china. as tradersrallied sold riskier assets. >> emerging markets tumbling. a key interest rate at 60% a short confidence. >> but warren buffett is still buying stocks, saying he is in for the long run.

he things apple is heavily underpriced. >> hello from sydney. this is daybreak australia. we're two hours away from the opening of asia's first major market. >> just past 6 p.m. in new york. i'happy friday. the action on wall street will stocksto your asia friday. the s&p 500 down by nearly half a percent after hitting two new records in two consecutive days. today was a pretty broad fall, rather. materials falling, the most. financials, also, as well as industrials. the dow falling by a half a percent, the nasdaq seeing a hit down by a 1/3. this was all because of donald saying regarding china he is ready to move ahead with tariffs on $200 billion of goods by next week. those a bit of a win for

strategist who were cautious and extrapolating the optimism over with mexicoa daeal and the potentially canadian deal with any progress for china. take a look at the set up in asia. a pretty bearish session. is the end of the week, we have secondmi as well as the quarter for india. we are seeing negativity for kiwi stocks, a market that is trading close to a record high. 67, afterollar general economic confidence falling to the lowest in a decade. futures looking positive.t h the rare bright spot in a ship it we are also watching the aussie dollar. risk currency saw decline, falling 1% overnight as we had broad-based strikes in the u.s. dollar.

72.67 is where we are seeing trading in the aussie. trump has told bloomberg he will pulled the u.s. out of wto if it does not start treating america better. in an interview with our editor-in-chief, he said the united states has been treated with disdain for years. president trump: the two wwto ws the single worst trade deal ever made. if they do not shape up, i would withdraw from the wto. get straight to our washington bureau, joined by her editor-in-chief. john, what stood out in this wide-ranging conversation? on one of theed big things, is that he is completely unrepentant in terms of looking at the global trade system. a dealw is he has done with mexico, he is going to get canada onside pretty soon, as early as tomorrow. but he wants to take on china and he's also very cross for the

europeans. and the wto. this is not someone who thinks the current trade system is something he wants to keep, and the general sense is of a man who's. it's. not entirely the way the rest of the world looks at him -- a man that is full of confidence. that is the way he feels pity think of the economy is great, it is all his achievement, of course. the tradeo hgeget deals that he things america deserves. there is a lot of buts in those sentences but that is the way he looks at it. haidi: john, did the president have anything to say about our story, our sources telling us that he is very much prepared to move ahead with the tariffs on the further $200 billion of chinese goods as early as next week? john: the fair approach to what you said on that was that he did not contradict that. he went out of his way not to contradict it. he did not officially sanction

that view, but he understood it, i think. at the very least, it is extremely likely. he told a letter people inside the white house that is what he intends to do. is over,comment period september 6, he wanted china with those tariffs. and he absolutely straightforward that he thinks that america is stronger than china. it does not matter that china's -- doesn't matter that mr. xi has matched him tariff for tariff. in the end america is stronger. ramy: it is not just renminbi happening with china. -- tariffs happening with china, is also tariffs happening with the auto sector and with a e.u. let's listen to that. president trump: it is not good. nope, nope. because they do a lot more out of business than we will ever do. first of all, it is not just

tariffs. they also have barriers, they will take the various down and they will -- not good enough because they will also sell more cars. consumers, their habits are to buying their cars, not buying our cars. ramy: listening to that, he sounds confident, they will take the barriers down. they will charge us no tax. what further details to the president say regarding this? john: it is interesting on this. this morning, the european car stocks on enthusiasm because the europeans came out with the offer of having zero tariffs between america and europe. and most people looked on that as the europeans giving a concession, giving trump something he wanted and basically he shot back with this is not enough. a starting point. there is a sense in which your is moving into being his next big problem. he talks about the europeans being almost as bad as china, that things have to change

theirre, too. can question about this, but this is the way he is coming. ramy: close to home for the fed with jerome powell, i understand that he was basically saying him, evens ok with though we have been reporting in the past, he was not ok with all these rate hikes affecteing the possibility the dollar would go stronger. what else did he have to say? johbn: i think he learnt the think he's critical of self-restraint. where you ask a child not to say something and they are desperate to say it. he is very keen. he is a control free president. he thinks he should have more, there should be more accommodation for him in the him credit onve

this, he has sort of realize that there is a value in having an independent central bank. and, despite some grumbling about powell, before, and this one come he came out clearly saying, he thought powell was a good guy and had no regrets about putting him there. but he's definitely frustrated about it. that would be fair. haidi: john, it looks like coming out of your conversation that sessions at least has a job until november. john: jeff sessions, the attorney general, much criticized by donald trump. and in a rather strange development, he has reportedly rude about his own attorney general, especially over the issue of the probes into his own behavior. what is happened here is that basically he seems to reach the point where he's said, i will keep into the midterm spared we did ask him how much longer after that. he declined to answer. what i think this is deal h he's done with the

republicans. he could get rid of sessions tomorrow but i think by doing this, he is trying to get it passed the midterms. stoop thp that being an issue in tilde. haidi: we appreciate your time on then. we will be getting lot's more content from that interview in the oval office. let's get you to first word news. jenna? plunging currencies in argentina and turkey triggered a selloff in emerging markets. it stumbled to a new low prompting policymakers to raise key interest rates to 60% in hopes of shorting out the confidence. in turkey, a report that the central bank governor was set to quit. iran -- controversial land report. china is calling on the u.s. to do the right thing with president trump said -- to do tariffs on $200 billion of

chinese imports next week. public comments wrapup on september 6. we're told the president intends to slap more tariffs on china once the deadline passes. the yuan fell while the dollar and the yen rose as investors saw safety. the e.u. says it is prepared to lift tariffs on all industrial products, including cars, if the u.s. does the same. the two sides are expected to hold talks in the coming weeks. built on a loose agreement last month to work towards a zero levees. a trade commissioner denice -- saying they're simply trying to find a positive agenda. president trump told bloomberg he does not think the offers good enough. oil says it will block exports in the gulf if it's shipments are halted by u.s. sanchez. -- sanctions. the head of the armed forces warned washington that the strata for mous would be close to oil tankers if iran is

threatened. the u.s. reimposed sanctions after dropping the 2015 nuclear deals. measures against iran's oil industry are due to take effect in november. global news 24 hours a day on air and online and on tictoc and twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ramy: the u.s. close now, and it was a mixed day for stocks until the trump headlines and then it was down from their. -- from there. the s&p extended losses on reports the donald trump wanted tot $49.9$200 billion in taris be imposed on china. su keenan has the latest. su: the market has known this was coming. it was a date certain, although there was optimism that perhaps there was wiggle room. we've known how often trump changes his mind p let's go to the markets because the news did land with a side of the market.

100 down,e nasdaq that is tech heavy. as well as the semi conductors. let's go into the industrials index and you can see exactly ba-boom where that news hit. this sector the most it because they are exposed to the tariffs. let's go to the act is where you seem retail take a big hit, in addition to u.s. steel in the bullseye of those tariffs. dollar tree down because they do not have an online sales strategy. michael's disappointing with eeir third quarter adjusted ps. bloomberg. the wall street has been upping his estimate, look at this blue line. stocks are coming close to the year-end target. two of the bullish analysts, there are starting to be a question on the market, are stocks all your valued -- are stocks overvalued?

haidi: in terms of specific movers, moves on these tariffs, what do we see? su let's through: some of the different categories. a lot of it is the multinational stocks getting hit. hit the most.ting boeing not taking as big ah it. let's look at another panel. you can see's the size of the declines, they are similar. black & decker is a global to a stock. and quickly to oil. we talked about how ir could seea. also hearing the has been a decline in u.s. apply. that has oil above $70, the biggest jump in a month. haidi: thank you so much for that. very, very quick set of changes when it comes to the markets on account of this change in trade story. still ahead, the stronger

dollar, does it prompt an intervention from the u.s.? goldman sachs weighs in on president trump's currency comments. ramy: up next, markets keeping an eye on the president's response to a widening trade gap. we'll look at how the response could shake the markets in the coming weeks. this is bloomberg. ♪

haidi: i am haidi strivers in sydney. ramy: you are watching daybreak australia. equity slumped. on thursday after president trump was said to move ahead with a plan to impose $200 billion in tariffs on china as soon as next week. our global in strategy president and founder and bloomberg opinion columnist. a lot of ands there. i think we can also call you friend. >> that is very -- i like that. ramy: sounds good. before we get into all that, of

course, we just heard our editor in chief talk about his interview with donald trump. the most interesting thing for a global audiences is that donald trump said he will pull out of the wto if things got bad. what your thoughts on this? >> i think it is very serious. because even more important than the $200 billion tariffs he would impose on china as early cameext week, the wto into being into 1994 at the behest of the united states. we brought china into it in 2001, which essentially brought the country into the global trading system, the global economy. not only the chinese but we have benefited from it. the wtoing ride o of would be extremely serious for the global trading system. be, it is there would fair to say donald trump has infused a lot of uncertainty, a lot of volatility into the market, into the global sphere,

but there seems to be certainty in the u.s. markets. let me go to the bloomberg terminal because i want to show it as well as the viewers here, parade. we can see that wall street has been raising its forecast for the end of the year for the s&p 500, up to 3000. we can see in the blue line. s&p.hite line is the we did pull back a little bit. are you confident we can get there by the end of this are? >> well, it is a matter of how long it takes before all of these trade restrictions have an impact on the equity markets. if you look at what happened here, two famous instances from history. one is the smoot-hawley tariff of june of 1930, which essentially substantial increased tariffs to protect american farmers. and the initial impact on equities was extremely, positive because it reduced competition, it made the stock market actually behave positively in

response. took another three years before the negative impact came out of that. second that is the george w. bush tariff on steel at the beginning of the century. there again, you had a good impact initially before it all fell apart. he had to end the tariff very quickly. so, it is hard to say whether it is going to be a year and 2018 or early 2019, but you have to pay the piper eventually for what is being done. haidi: i want to drop a quick shot. ramy was talking about resilience when it comes to sentiment and the u.s. that cannot be extrapolated we talk about chinese asset groups. this is looking at chinese stocks, severely underperforming the global gate. -- the global gauge. a diversion path when it comes to what china is doing. do expect this gap to start closing as we start to see the

effects of tariffs into supply chains and into emerging markets and asian markets? thisthink, haidi, that as goes on, there is more downside in china. i have said this is not the end of it. if you see the chinese renminbi -yuan go beyond 7 and weaken because the chinese cannot match dollar and for dollar for the $200 billion that president trump is going to impose, so they have to respond with a weaker currency. it does not matter that president trump mentioned to john mickelthwait a few minutes ago as he discussed that this is not something that trump likes. he clearly is indicating he does not like what's happening on the chinese side, but they are going to claim it is because of market behavior. the market is reacting. i don't think the chinese situation is ending anytime soon. so, the answer to your question

is, i think the gap between the fall and the chinese equities and what is happening to morgan stanley world, or morgan stanley europe is clearly going to remain quite broad for quite some time to come. haidi: have we heard the end of the currency wars or the accusation of china as a currency manipulative? when china supports its currency, it is not manipulation. when it allows it to depreciate, it is. there is confusion over the definition of currency mutilation. is this likely to become a weapon on either side? >> the chinese currency is not in free float. it's a managed float. whether you see it as beneficial to the united states when the renminbi appreciates or whether it is detrimental to the united states when the renminbi weakens is in the eye of the beholder. so, i don't think currency manipulation is going to be easy to determine. i would mention that, as the

currency weakens further, that is going to be criticism probably from mr. light heiser and united states and from president trump himself. that is not going to stop the chinese from going ahead. so, the answer to your question is, you're going to have many manipulation in the downward direction, or the weakening direction, and for several months to about april we have it until the upward direction. i think this is a trend that is going to continue for more time. ramy: going back to donald trump's interview with us at the oval office, he said, of jerome powell. "i put a man in there who i like and respect." he vacillates between praise as confirmationmuch but saying, i am not liking what he is doing here. with regards to that, that surprises me because he is also saying are you are saying that you think that we might be

seeing some global synchronized easing. you think the fed is going to do that? >> i'll answer you in two parts. when i wrote that for bloomberg, i was not saying jerome powell is going to buckle under to all the jaw boning president trump is doing. the issue is that the global economy is not going to allow the fed to continue to increase interest rate several times. just now, a few minutes ago, the two to 10-year yield spread for the u.s. treasury is 20 basis points. e-curve ifrt the we go ahead with a rate hike, or if not sometime between september and december, then we will all be worrying about the recession at the end of next year. that takes you back to the question you raise before. we'd be worrying about whether equities can continue to maintain the situation if that were to happen. that is the first part. the second answer to your

question is there is difference between jerome powell and jeff sessions. jeff sessions serves at the pleasure of the president as attorney general. ll, on the other hand, has a four-year term, same as the president, except that his term began two years after the president's term and it ends two years after the presidential term ends. so, the president cannot fire unless for extremely bad behavior or anything untoward. the chairman is there for four years. my expectation is he's not going to get cowed down. there is a good reason that morals exist. fed with go easy because the global conditions without allow them to keep raising interest rates. haidi: very quickly. the other thing that came out about interview with president trump is -- the capital gains tax break. will this drive the next leg of

the -- or not get through? >> it has to get through congress. it is not clear with all of the other issues and the november election if there is a change in the house, for instance, whether that is going to go through. the second answer to your question is, if there are other negatives which are predominant, the improving and the capital gains taxation may not go far enough to help investors. haidi: always appreciate your time. our global strategies president and founder. plenty more to come on "bloomberg daybreak: australia." this is bloomberg. ♪

haidi: taking a look at this up for this friday's session in asia. china pmi, indian tech reporter gdp and a bank of korea decision. we're digesting this turnaround on trade. we are seeing a downward picture when it comes to kiwi trading

and a bit more upside when it comes to the aussie dollar. coming up, playing along game. warren buffett says he will keep buying stock despite the market swings. our full interview is next. this is bloomberg. ♪

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and free shipping too. sale prices are available right now. go to buyleesa.com today. you need this bed. haidi: it is 8:30 a.m. positivere looking when it comes to sydney. elsewhere around the region, we are setting up for a day of ofses as we have a bit negative turn around and the trade stories. i'm in sydney. ramy: in new york. 6:30 p.m. here. you are watching "bloomberg daybreak: australia." let's get to first word news. president trump is threatening to pull the u.s. out of the wto if america does not get better treatment. speaking to bloomberg at the white house, he said "if they do not shape up, i will withdraw."

h the president said that the u.s. has been treated badly by the organization. trump: i would say the wto is the single worst trade deal ever made. if they don't shape up, i withdraw from the wto. indian rupee fell to a new low as higher oil prices raises concerns about the national finances and the prospects for inflation. the dollar -- couldn't curb the losses. rising interest rates are piling pressure on the budget. although the gdp is helping to mitigate some of the impact. trade talks between the u.s. and canada look like they are going down to the wire, as they try to reach a deal by friday's deadline. theoutcome could hinge on dispute panels the trump administration was to limiting.

a u.s. official says it is and not certain if the american side will budge on its demand for getting rid of them. however, negotiations on both sides have expressed optimism over the talks. former san francisco 49ers quarterback colin kaepernick has to dismissess bid lawsuit, which alleges that the club colluded to prevent them from finding another team. he was one of the first of the players to kneel making him the face of the black lives matter. to see athletes protest these with sports event. trump says they should be fired. global news 24 hours a day on air and online on tictoc and twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. thank you so much for that. we are getting to some fast moving developments in the argentina story. the source of this year's e.m.

selloff. we have the finance minister and the treasurer say he will travel to d.c. to meet with the imf on monday to give a press conference, this after overnight, we had the central bank ther e jacking up interest rates to 60%. the argentinian el centro bank pushing for more fx intervention which we know has had limited effectiveness so far. we're also looking at this overall situation, where president -- asking the imf earlier this week to speed up its payments. that triggered this latest legs of the e.m. sell off. let's get the selloff in asia. i am joined by bloomberg's global markets editor. let's get back to the trade story. you've kind of extrapolated that the deal of mexico would meet it easier start to china, you have been proven wrong by today. >> you would. seeing lot of what we're

in the markets is the sense that people are conditioned to this. we're not seeing huge moves into safe haven flows, seeing a little bit of a bid for treasuries and a move into the dollar and some weakness for stocks, but bear in mind u.s. stocks are coming off record highs this week. incrementally, this does raise the level of concern for investors. they still do not know what the end game is as they try to plot the global economy underneath all this shenanigans of the trade of elements, but the point ofhere that there is a lot condition to the fact that what is going on, we are getting used to it. we are not seeing large movies to see months ago when some of the things that were developing in the trade situation were more of a surprise to us. sa the trade-- as the trading month wraps up in august, we are coming off a decent rally that's

basically by german by the second half of the month. we have seen increased policies in china. loosening polishing there. the fed pretty much largely still on track for a hike next month and possibly a further one in december. in a sense, it has not shifted a huge amount away from that underlying tone that's given a bit of support to risk assets over the last few weeks. just maybe taking the edge off on the final day of trading. ramy: the correlation between the s&p 500 and the fivix index is breaking down. normally they tend to move in opposite directions. but why is this important and why might it triggered some daunting memories of january? adam: normally the s&p 500 and negativeill have this correlation, they will go in opposite directions. 80% of the time. that is largely what we see. we get slightly concern and maybe we should focus a little bit more with things move both

together, which is what is happening at the moment. as you said, it kind of brings back memories of what happened at the end of gender. -- end of january. the sense there might be some concern creeping into the market, given how much stocks have rallied and the back half of august, people wanting to hedge some of the upside risk as people worry they may have missed out on this rally and may miss out on the next leg of the rally. important to note is one little difference to january. curve isutures steeper. there is some pricing of an uptick in the uncertainty in the closer months. that might speak to the fact that if we do have a move, it would not be as big as the magnitude of the move that we saw in late january, early february. we do want to keep an eye on it. haidi: thank you so much for that on a busy friday. as trade gets underway in asia. don't forget you can check out

our live. of these linese coming through from the argentinian finance minister and treasurer. saying that they will be present in the 2019 budget on monday and the economy has strong fundamentals. declining to comment on the details of the budget or the deficit steps. saying the details will be released and there will be a press conference on monday. saying the goal is to make argentina last vulnerable to shocks and aiming to dispel all doubts and investors and argentinian people hold. certainly a bit of jawboning as the central bank stepping into jack up rates to 62%, already the highest in the world. the peso continued to hit record those, spurred by macri turning to the imf and asking for faster disbursements for this a-line. the finance minister, the treasurer also heading to d.c. on monday to continue these talks, which he says will

progress very quickly. you wonder whether this will inject much confidence for investors. reeking ofnitely w some kind of desperation. we will see what happens, and we get more breaking lines as we get them with argentina's treasury minister now headed to washington. meantime, let's shift gears because there is certainty coming from 11 person. that would be warren buffett -- from one person. that would be warren buffett. he told bloomberg he is in the game for the long run. berkshire hathaway has raised a stake in apple with buffet saying the stock remains under priced. warren: i'm buying stocks. i'm buying because i think they will be worth a bit more money 10 or 20 years from now. i do not know if they will go up or down tomorrow or next week or next year, but i know they are good businesses. and, in relation, you have to measure investments in relation to each other. your alternative for most people

is fixed income. you get 3% for 30 years. would you rather invest in a company that is earning 15% and compound -- or a 3% bond? at the same time, there are some stocks that are bargains, good markets. >> when the market is that high, that means guys have gone up quite a bit and you are sitting on a lot of cash, $110 billion. don't we have to have more fear in the marketplace before you are deploying a lot of that cash? theen: i don't love if ro country, but that creates prices that make me want to shovel out the money as fast as i can. but we have been shoveling out money anyway. it is not as attractive as when i was buying a 2008 in 2009 and that was not as attractive. 1974 was the best year for buying in my lifetime. that'll happen from time to

time, but you cannot sit around and wait for it. and everybody will be terrified at that time. we keep buying as long as we find something that is attractive. an attractive business and a reasonable price. juicy it if it's a price. haidi: that was none other than berkshire hathaway chairman and ceo warren buffett with us. come in, ken president trump's comments-- can president's comments on fellow strength lead to fx intervention? this is bloomberg. ♪

recapping some of these lines coming from the argentinian finance minister and treasure, talking representing the 2019 budget later today saying it is going to be aimed at making argentina more vulnerable to shocks, to dispel all the doubts that investors

meet saying he's off to with the imf on monday to further discussion saying the economy in argentina has strong fundamentals and, of course, this is a bit of jawboning, given we have had these record lows for the peso ever since macri went to the imf saying they needed faster disbursement of the monetary aid. we have seen a destruction of investor confidence in this economy. ramy: all right. continue this conversation because our global economics and policy editor has been washing. to theay, an 8% drop peso. today it is 12%. kathleen: at the least we can say went from bad to worse. and, given that, yes, many people have been hoping this could stabilize as they look o the finances that minister is traveling to

washington meet with the imf is very important. let's also put in the background this happened today as the central bank raised its key rate to, guess what, 60%, not 6%. jump into the bloomberg with me and look at one of our terminals. you can see the orange, excuse me, the turquoise, that's the currency. look at this massive move up. now up to nearly 34 to the dollar. that is a record low. here is the central bank rate. it was just race back here from 40-45%. here you go from 45% to 60%. here is the axis for that. if that does not stop the peso, what will? anything it is egging investors on more. the peso lost half its failure this your. this is the steepest losses macri took office in december, 2015, people thought it was

a crash then. so, i think people are wonder, can macri, can he bring it under control? inflation running at 30%, economy headed for a second recession in three years. yes, they got a $50 billion package in june. that is the biggest and imf history. inrequested to speed up payments hoping to reassure investors they would not run out of money, but instead, it seems to have unnerved investors even further. as a matter fact, the last currency default in 2001. the good news is they were -- they don't have a lot of debt they owe. defaulty have had 8 since they declared independence from spain. clearly, this is something that the imf has to get attention i know and argentina going to washington part we will see it happens. more news on friday. haidi: in fact, we are getting

more news now from the finance minister, really talking up saying that argentina is competitive when it has a stronger peso. the current fx rate is exaggerating economic fundamentals of the country. saying reducing volatility is going to be -- the peso's ceiling will depend on how well things carry on. inultimately saying they are all working together and the idea that communication is key, saying the government needs to speak publicly. we are also still watching turkey. more headlines about argentina, negatively this week that turkey. little consolation when it comes to markets that-- investors that are still long turkish assets. een: absolutely right. of course, the argentinians are talking up their fundamentals. they do have some good fundamentals. the problem is now that the argentinian government has to cut spending. they have are to cut spending. marci's facing reelection.

in the background, there is a political scandal. cristina kirchner is possibly going to go on trial for all kinds of bribery. there's so much going on in argentina that undermines sentiment and confidence, and maybe they will be co undermined they'll say macri is our only hope. in turkey, the deputy governor is considering resigning. very volatile as that controversial land appropriations program appears to continue. and i think, overall, donald trump said today he is going to go ahead with $200 billion worth of tariffs. this is another one of the global forces. we know a lot of individual stories about emerging-market nations and their central banks and their economies that are driving their currencies, caseng the crises in the of argentina and turkey, but there are big global forces that are all fighting. and that is why the sudden interesting -- such and

interesting a difficult time for emerging markets. haidi: difficult. one never said that being a central banker was an easy job. taking us through some of the turmoil we had overnight in the e.m. space. joining us out of new york is our panel. goldmanhead of globa sachs -- looking at the correlations between the decline in the yuan and asset classes. we're started to see that for the argentine peso. you see this correlation jumping despite the peso not being in the emerging markets currency index but still seeing the spillover. arealk about not all em's created equal. is there a sense you cannot bring -- the likes of turkey, the likes of argentina and not risk off still over to the rest of that space? >> you can't entirely bring fence these issues. they are special issues to a

degree. i would emphasize that, despite the contagion we started to see to get. the fact is not every investor can to their positions at the same time. the exit door is too small. so, investors look for other estimates to hedge their argentinian or their turkey exposure, whether it be in the mexican peso, the brazilian real. and those types of things cause contagion throughout the emerging markets. asyou say, argentina technically is outside of most, outside of the standard benchmark indices. haidi: if you -- longer-term, idiosyncratic stories, turkey and argentina, that you get more opportunities across e.m., you should be rewarding the particular e.m.'s they do have solid fundamentals/ >> i think it is right. you have to be careful in these moments not to be carried away by the negative moves. a lot of money can be made when things going from a challenge a

situation to just a difficult situation, from horrible just bad. in argentina particular, there are opportunities for the government to turn the situation around. they're taking a lot of the right steps. hiking rates, going to the imf, looking for accelerated funding. if they are able to step up the fiscal consolidation program, that could begin to turn the currency around. i think today i would emphasize that with today's depreciation, i think you can now say the currency is well beyond our metrics of fair value. also, the currency had been overvalued for some time and now it is overshooting. we're in a territory we can call the currency cheat. we can start to see the government take those steps, we begin to get more constructive on the peso. ramy: i, of course, need to bring in the u.s. dollar here, because this all depends as well what happens with the greenback. we saw it jumped the most in five days or so. donald trump agitating trade every time. we know what happens with the dollar. do you think that rising even higher here, do you see any kind

of stop? zach: we do think the dollar appreciation pauses and it stabilizes first developed market currencies for the last two months. xy has been in the narrow range. the nature of a trade war has really changed. the trade war is evolving in to a currency conflicts. you have seen that with the president's comments to bloomberg today. he's calling out currency depreciation by other markets, is something he is unhappy with. you may see this correlation between higher tariffs and stronger dollar begin to break down. are: i'm wondering if we sunday see that now, at least on a weekly basis. i bring this up because i have this bloomberg terminal chart. let's hop in here. for the past three weeks we can see that the dollar has been falling. the last time this ashley, let me highlight here, the -- actually, let me highlight here, the last time this happened was back in january. you made comments about how

donald trump can be a currency manipulator himself. labelwe would not want to the president anything like that, but i would say we would argue the president has engaged in a type of verbal intervention in th currencies alreadye. jawboning would be another way to put it. the white house and the administration has been actively -- hasn't actively intervened in a currency markets. that is not happened in a long time, not since 2011 in the united states, but he has been verbally intervening, expressing his displeasure with currency depreciation and other markets, particularly in china. that seems to be having some effect. you have seen over the last for weeks the people's bank of china take a number of steps to try to stabilize the currency. we would interpret that as a response to the president's comments. pboc does note want to see that relationship escalate any further than it has. interestings also that we heard from steve mnuchin saying this week that essentially what he said, was when the pboc steps in to

support the yuan it is not manipulation. when it allows it to depreciate, it is manipulative. that is a bit of a cognitive disconnect there. zach: i think currency reflation is in the eye of the beholder. the president wants to shrink the trade deficit. he has been clear about that. both the overall u.s. trade deficit and the bilateral trade deficit with china. to state the obvious, that by dollart helped appreciation. the president has been clear, in addition to putting on tariffs t negotiateo better deals with other countries, he does not want to see the dollar appreciate too much. in that sense, his policies are consistent in a holistic way. haidi: what is your longer-term outlook for the dollar, because it has been a little bit counterintuitive looking again to the dollar as a result of the trade war that began in the u.s. zach: longer-term, the dollar tends to do poorly when the world is doing well. you saw the dollar begin to

depreciate at the end of 2016, beginning of 2017, when global growth started to heat up. since has had a setback, the spring of this year. but we are in an environment where global growth is healthy, then the dollar should tend to struggle, even when the fed is raising rates. to use that a clear lesson from history for the dollar,. ramy: we'll have to leave it there. thank you very much. remember, bloomberg users can indirect with the charts shown using gtv go. catch up on key analysis and you can save those charts from your own future reference. this is bloomberg. ♪

that is the most it for daybreak australia, but if on an ramy are sticking around -- yvonne and ramy are sticking

around. yvonne: focusing on the trade front, we have china pmi numbers coming through later on this morning as well. we are expecting stabilization in the month of august, but i should say july -- the threat of more tariffs on $200 billion of chinese goods the president has not exactly ruled out during his interview with our editor in chief. .hat will be the key focus we will be asking david hsu from anz about that. ramy: we will be talking to the .azor ceo interestingly along with earnings, we are checking out what if any impact there is from the chinese government curves we have been talking about on you games that have hit the likes of tencent. haidi: this is one you don't want to watch -- don't want to miss. the group ceo joining us at 11:30 hong kong time in

exclusive conversation with bloomberg, covering trade war's, profitability in asia and expansion. all of this is coming next. ♪

rishaad: we are live from bloomberg's asia headquarters. i am yvonne man. welcome to daybreak asia. --iffs, wto and terror chairman of the fed. bloomberg at the oval office. asia-pacific markets are bracing for further losses. ramy: from the global headquarters, i'm ramy inocencio in new york where it is passed p.m. .m. -- past 7:00 argentina and turkey fell. the peso saw the falling -- warren buffett is still buying