yvonne: we are live from bloomberg headquarters. welcome to "daybreak: asia." president trump turns up the heat on canada. what he calls years of trade abuse. about u.s.stions commitment to the region. in new york it is just past 7:00 p.m. on a sunday. the sterling retreats after the government rejects the next boat. and the fastest-growing major economy.

dark clouds are gathering on the horizon. good morning to our viewers across the asia-pacific. is -- was here and in the northern hemisphere, countries with canada and mexico , we are not exactly sure what is happening here. the big question is will that happen this week? week,: it will be a huge thatountdown for when

consultation period finishes up. it will be pretty key. it was a mixed session on friday. it had been up and down. technology to the upside. the dow is a hair below the nasdaq. i do want to show you what has been happening in terms of the s&p and how volatile it has been. we can see the volatility here that i am highlighting in green.

last time this happened was half a century ago. as we know, hitting record after record, after record. ifnne: you have to wonder the rallies can't continue. the labor day holiday in the u.s. and canada. the setup is looking pretty mixed. 1% afterwn 9/10 of reaching record highs last week. japan pretty much flat. it will all be about the currencies we have been watching. drop in thehly onshore. the dollar-yen not doing a lot. the aussie pretty much flat.

a new fiscal plan on monday. we continue to see a little bit of strength heading in to the peso this morning. cut are the fiscal plan. the agency lowered its credit outlook. many.sion lorded by campaign onnt infrastructure programs. economy expanded at a fast pace. gdp grew in the three months from june, faster than the estimate in a survey.

they expect growth of more than 7.5% in the fiscal year to march 2019. says minister abe relations with china are back to normal and he hopes the president will visit soon. he is expected to go to china next month. dispute to resolve the & an official peace treaty. shipped just over 2 million barrels of oil in august. the lowest amount since 2016. -- if its own

deliveries are restricted. 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 on men and this is bloomberg. i'm haslinda and this is bloomberg. trump wroteent there is no necessity to keep canada in the new deal. he warned congress not to interfere or he would simply terminate nafta and kerley -- entirely. like the proverbial rug has been pulled. it really does. my way or the highway view. this is what he laid out.

he really did say this is what i want. congress, get out of the way. thear, it is the end of nafta talks. seem late in the day on friday. he saw them come back on that optimism whether president trump has turned the applecart over once again is hard to say. there are those who are urging the president not to focus on minor points but to talk about the 600ter about billion in bilateral trade that they have every year. is unclear who in the

administration is possibly giving that message to the president. there seems to be a disconnect between what the president and congress expect out of these talks. does he have the authority to do so? >> it is a founding fathers being. he could certainly go ahead and negotiate whatever he wants, but the senate must approve. the separation of powers works that way in the u.s. and i think coming out and saying that canada can be out and this is what i want -- we have not heard much from lawmakers this weekend. strongly come out more ? what is their right?

perhaps with congress coming back, we will hear more. it is an interesting situation. clashcould be quite a big if this goes down to the wire. joining us with the latest out of d.c.. public consultation period ends on thursday. sources say president trump may order new duties is public requirement are met. >> it is going to get interesting. sources telling bloomberg news that donald trump will likely order these new tariffs on the

chinese imports to the u.s. as soon as the public consultation period finishes up. that is when it gets really interesting. $60a is said to be readying billion, so it keeps getting amped up without any official negotiations. rightonald trump saying now is not the time to have thes face-to-face with chinese. the last set of talks did not go very far. two camps, if you will. you have more moderates who want more time instead of putting the gun to the chinese's head.

yvonne: he has more of an upper hand. about therning more company's falling victim and trying to navigate the attention. >> there was 25% imposed on chinese made cars to the u.s.. land on making its scv in china to export to the u.s. starting next year, but this is a small portion of the 2.5 million cars that for itself in the u.s. it might be the tip of the iceberg. general motors also said to be u.s. ng it buick for the if these caps on autos continues and escalates -- canada has auto-parts factories that supply toyota. they have parts for the chevy

equinox. looking volvo. chinese owned. the u.s. maine market. faced with severe problems. company is an american and getting taxes on that company. with thehead to today comes in beijing, this trying to move that narrative back to china. the possible support for china to advance. >> it is an opportunity for president xi jinping to tap his highly ambitious initiative.

meeting for the summit. there has been surprising criticism and a little bit of seeing her about the ambitions and the debt that could add up. the $20uch canceling billion project and deriding china as leading a new form of colonialism. this is a project for the world and it will help global trade. as you mentioned, donald trump to xiting that role jinping in the next month or two. chief north asia

correspondent stephen engle, thank you very much. how the worsening trade war could derail the fed move towards higher rates. you look at the outlook later in the hour. yvonne: a downward trend ending? why he sees yields moving. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." yvonne: for asian investors keeping an eye on the final stretch of 2018. the asia-pacific index has done gains. trying to embrace

earnings pessimistic on the dollar strength. great to see you. as we approach this thursday on tariffs on chinese goods, can this risk aversion continued into september? it seems -- >> it seems to be the case. we have the dollar rising from the ashes. hand, it is another positive. i'm going to bring up a chart for our viewers to he. .hey are at odds analysts have cut their 2018 estimates, but then you see this divergence that is diverging.

they are trying to razor targets. the divergence? do you think it is sustainable? ofthe dollar has peaked as last month. i think we're looking at the far.lation so the question is, which one will likely turn first? expecting to more rate hikes to come. for the meantime, between the two, the dollar is likely to stay strong. in terms of em, there is that question of further contagion. these are specific stories? could spreadike it

further. momentum, the trains have put their major high a. we will likely get deep corrections. did corrections there. it is interesting because we are forady seeing deep losses these currencies. hop into the bloomberg terminal. we will show you and our viewers. index and inhe blue is the currency index. some countries are idiosyncratic. the baby is going out with the bathwater right now. what opportunities to you see? is it best to stay away? >> the most attractive trade at the moment is on the short-term

side, potentially across developing markets which have not fully priced in the em spillover. best to sit and wait. ramy: one thing we were looking at was the indonesian ruby dropping to the lowest in 20 years. it was interesting. when we were talking about turkey and argentina, for the most part we were not talking about contagion, but it seems like it is finally going through. is there any concern that this will continue forward for any other parts of the asia-pacific? >> at the moment, the markets are showing volatility contagion, which is the one thing that does filter through market psychology.

at the moment, certainly currencies are leading the way. yvonne: you brought up a chart press to show. thecally, it shows greenback continues on its rise. ofsee a little bit divergence. what does it signaled to you when you see a chart like that? now, there is a little bit of divergence. it suggests that the fed may be under pressure a little bit in terms of the rate hikes ahead and the trade war looming. side, it looks like we have made a short-term peak as of last month. we might have closed that gap.

technically, this is still quite positive. the one to like watch out for. a tight range when it comes to tenure treasuries. in terms of on alongside, if we get further contagion or just general volatility increasing, also good to mention that september and october, volatilityly this is across the board. and the fed is easing crisis flow continuing, there seems to be a further storm ahead. does it look like to you in the markets?

>> the u.s. stock market -- nasdaq continues to be very strong, but potentially mispriced. complacency is approaching all-time lows. yvonne: where are you looking at buying ahead of these trade tensions? volatilitythose transactions would be attractive right now. potentially, the dollar or the yen, depending on which one has the best safe haven play. to steer clear from em currency right now, but maybe for the volatility to continue. bloomberg users can interact with the tribes we just showed you. on bloombergd television. catch up on some of the key analysis. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." let's do a quick check of the latest business flash headlines. an investigation has found no evidence of wrongdoing during a business trip. the new york times says he was detained late friday on a charge of criminal sexual misconduct. he will continue his visit and they will take legal action against rumors against him. managing to shrink the pile of debt for the first time after selling dozens of assets to stay afloat. down more than 8 billion from the record set in 2017.

saleof it coming from the of its holdings in the hilton community. yvonne: chinese food delivery site setting up terms for a hong kong ipo worth more than $4 billion. attracting cornerstone investors like tencent. ramy: up next, risks are building for the world's fastest-growing major economy as india cements its position. pmi data out later today. the expected survey would be a tad lower than the prior month. we are expecting that in about two hours time. more ahead.

this is bloomberg. ♪

7:30e: good morning, it is a.m. monday in hong kong. keep in mind u.s. markets closed for labor day all the day, so illiquidity is what we should be facing for the month of -- ramy: despite markets being closed, we are still at bloomberg global headquarters. 7:30 in new york, where the markets closed, you can see that the week. the empire state building not yet lit up. taking a look at where we are heading today, trade is in focus , not only with what has been happening with nafta talks but also because of the public

commentary to end on september 6 and tariffs being set ahead on $200 million worth of goods from china. this is ramy inocencio in new york. yvonne: i am yvonne man in hong kong. you are watching daybreak asia. let's get to first word news. haslinda: president trump has slammed what he calls decades of abuse by canada and threatened to cut ottawa out of any new north american deal. he said there is no political necessity to keep canada in the new accord and warned congress not to interfere, or he will simply terminate all discussions. on friday he told supporters other countries have been taking advantage of the united states. china welcomes african leaders to beijing later monday amid criticism that its development plans on the continent risk settling countries with debt. president xi jinping is facing growing criticism with some

chinese academics raising doubts at home. his keynote speech gives them a chance to defend the belt and road initiative, and he will stress cooperation and consultation. the u.k. prime minister theresa may has seen a brexit strategy come under friendly fire from a conservative lawmaker who criticized her plan for a split from the ua -- the e.u. criticism has come from hardliners who want to distance the u.k. from the single market. a former minister said he cannot support the plan either because it will humiliate britain, and brussels dictates the path of departure. crazy rich asians landed north american box office for the just led the north american box office or a third straight weekend. are the movie took $22 million in the u.s. and canada for the -- as the monster shark

film in second ahead of mission impossible fallout. crazy rich asians has taken $111 million in total. 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 haslinda amin. this is bloomberg. ramy: thank you. we are counting down to some of the major market opens in the asia-pacific. let's bring in sophie kamaruddin . we are kicking off september with the same headaches that plagued to investors through the summer. they did not go away. what is the mood? sophie: those have not go away. looking at futures, there is a mixed start with plenty of regional data to get things going. pmi readings from china, korea, taiwan, southeast asia, and inflation figures for taiwan and indonesia. for theget a look at

second quarter, vehicle sales later. capex for the second quarter and vehicle sales. there was rose for a second straight month after contracting in june. the australian second-quarter gdp, we are also seeing house prices and retail sales later today. yvonne: the data dump in australia comes before the rba decides on tuesday, but the governor has been clear they will stay the same course. sophie: with economic growth expected to slow over the course of 2018, some of the data points we are waiting for might further reinforce that case, so we have capexg funds -- slowing funds. when you look at how the aussie bond markets are erring, yields are sliding, .3 basis points so far and the are the aussie dollar is trading near a january 2017 low after losing over 3% in

august. we had a touch of year to date low at 71.76. day of losseshird for the second quarter terms of trade, below focused -- forecast for the kiwi. the british paul -- british pound falling the most in a week after this second brexit vote talk. we are seeing the yen trading at 111.17, not much reaction when you consider the bond buying plans from the boj released friday. the central bank expected to buy fewer bonds. yvonne: checking what to look out for in the markets today. busy week on the data docket, we have a day luge of pmi in asia, central bank from the rba, the startf canada and let's with india. it defended its position as the fastest growing economy with gdp

at 8%, but the risks are mounting at home and overseas. let's get to the correspondent joining us with more. seems like strong print, but not as rosy as we first thought. enda: it has been a strong run but economists are pointing at key risks in the second half of the year, higher oil price, weaker currency. india has a worst-performing currency in asia, and broader emerging-market volatility. the three of those combined could put a dent on india's performance. the weaker rupee will exacerbate the effect of higher [indiscernible] there are several challenges facing india in the second half. the view is challenges might outweigh the ending. yvonne: there are some bright spots. you wanted to mention stronger demand. policyhere is a feeling paralysis will be one of the negatives going forward, but the

government is pushing ahead with key infrastructure projects and public spending. aat demand is expected to be driver of growth, so you are right. there will be stronger planks underneath of setting the headwinds. ramy: looking ahead to china pmi, what are we expecting and put it into context? enda: this is the kind showing ng pmiading -- kaishe reading. we are expecting a slowdown. analysts will look for the index on export orders. that will be critically engaged going forward, but there is a sense that we are really going to start seeing the impact of the trade war over the coming months. it may or may not have shown up in august, but we are heading into the age -- the end of the consultation time with the latest tariffs, so i think the real impact of the trade war on

china's exports will start to be seen september through december into the backend of the year. out, pminumbers come will capture the broader tensions. ramy: that bites gets deeper. enda curran, thank you. this year's relentless climb in u.s. rates may be about to take a break, giving traders a chance to take a breather as well. we will explain more on bonds with our next guest. this is bloomberg. ♪ ♪

no for look at stories trending on the bloomberg universe. why the trump presidency may be the biggest legacy of the financial crisis, and how forces in the u.s. past administrations have failed to reshape the world we live in. how public housing in particular

in singapore, a far cry from what you are used to. the lion city is known to be clean and well-maintained. and users reading about how bond traders will be looking for a breather this week as the u.s. treasury pulls back on a key sale ahead of next quarter. those stories are trending on bloomberg online or on the terminal. still on bonds, there may not be much of a reprieve for traders especially with a string of fed speakers and the august jobs report later this friday. let's cross to tokyo and loomis sales vice chairman. good to have you back. i understand what has been happening with the trade war here in the u.s., canada and mexico as well as u.s. and china , all of it could be working to derail the current set or intent for rate hikes. tell me more.

i do agree with that. the question is how much it derails. i think that is too strong a word, but slow down might be good. the economy in most measurements is strong. at inflation rates are picking up, so the fed should raise, but this is a big uncertainty with the trade war. ramy: let's hop into the bloomberg terminal because i want to show you and viewers the expected number of rate hikes for 2018 and 2019. 2018 is in white, 2019 and yellow. 1.34 for 2019. when can we finally figure out if there is any possible downward tick in expectations? we are looking at the tariffs on $200 billion in chinese goods as early as this week, once the commentary ends on september 6,

but looking ahead, what are your mile marker's so to speak? markers are everyone hundred yards. i watched the speeches of the voters and the nonvoters, anybody that could be a voter, and see what they have to say, because the regional bank presidents are going to be talking about their own areas with information along with their national views. they have certain biases, and the basic think the fed is supposed to do, keep the banking system going with inflation promoted employment, that is all going fairly well. to keep the banking system going and fight inflation, they really do need somewhat higher rates. that is the way they express it. i think that is reasonable.

if aroblem you run into is trade war or whatever it should be called -- that is a good term for it, trade slowdown possibility from tariffs, etc. and sanctions as well. so what grows, that takes away your certainty of the economic growth, it does not take away your guesses as to inflation. it increases the possible inflation rates. it puts the fed essentially in a quandary. they say to themselves, are we going to fight inflation, or are we going to support employment? right now we are in an election year. we will get past the election without this being an issue, but it is an issue now, and

[indiscernible] yvonne: this relentless rise we have seen in shorted rates, how much could it go and do you think we will hit a stall? teeth in this business when we kept marking up the estimates, so they got to [indiscernible] and all was low. i don't expect anything like that, but we have similarities in the past, not major, but some similarities in that the labor 1960's, second half labor force was pretty tight. we were fighting a war without finance, so the budget was not in good shape, and the inflation rates were starting up. at first it was seen as helpful. not for very long. in the inflation rates were

currently -- clearly getting out of hand, yet as we were fighting a war without war finance, it was impossible for the fed to step in and really tighten. they had to stop, and this memory i am sure lives in the institution, not as much perhaps with many of the individuals, but it is there because once inflation gets going, it is very difficult to stop. in the current setting, with the geopolitical stress, it would not be helpful to have the u.s. i, i feelnk, and so bad for the people making these decisions. my guess, and this is capital letters, my guess is they will bump again later this month, and

then possibly in december. and then next year is ready much up for grabs. if the trade war impact does not get out of hand, you can look , andrd to three boasts then about that point i think they would probably rest. but we do have to watch this because the implications of the stress coming from the tariffs and any of the other recruiting sanctions, they are serious. the fed is trapped by this. they have to keep playing it by year. -- ear. yvonne: do you think the fed should knowingly let the curve invert than if we are still seeing short and right going higher -- short end rates going higher and people flocking to safety, do they let that invert? dan: the curve could invert, but

there are other pressure, and that is more than seasonal, but not structural. it is not structural for a long time. stronge the very, very pressure on at the long end of the curve for the liability matching going on, both domestic in the u.s. and foreign in u.s. dollar, and that affects the long data into the market. notice there is not a long dated income low investment grade, so at the long end of the investor great market, heavily impacted by that. as that wayne's, and that is -- with, and that is obligations from corporations, it is sensitive to the stock market. as long as stocks keep going up,

and you can tell the s&p 500 to buy long treasuries and convert corporate's, you have very unusual pressure at the long end. with the law -- with the maturity of the plans imposed 20 years ago, now you have that pressure working its way in to is -- year, and the net you say long treasuries, that is an unlimited amount here that is not true. the treasury may choose to issue more for long, and corporations have been. but you call that technical. i call it the intermediate term structural that buys the long. and no matter what, liability matches area some day that starts to go the other way. wherever the center of gravity is, i don't know. you don't have this pressure as

much in the public sector because they are still funding, but people miss this point, and this is true outside of the u.s. as well, but using u.s. investment grade, long-term -- they say noncall, but it runs out 10 years, on treasuries it is noncall light. take ar words don't .ossible inversion to seriously normally inversion tells treasury can't issue debt. that is not true. that is not it right now. yvonne: going to leave it there. usmis vice chairman joining out of tokyo. we have breaking news from tokyo . capital spending numbers for the second quarter, beating expectations in a big way, up 12.8%. it was 6.5% print, and picking

up 3.4% in the first quarter. 17.9%, 0.2%rves from the first quarter and sales picking up 5.1%. looking like a better picture when it came to these plans -- these capex plans. certainly a good set and robust set of numbers area plenty more to come from daybreak asia. this is bloomberg. ♪ this is bloomberg. ♪

welcome back. this is daybreak asia. i am ramy inocencio in new york. yvonne: i am yvonne man. the bank of england over and ecb councilmember is pushing back on trump's accusations europe is manipulating the currency. the presidentng

to stop his trade war rhetoric. >> the european central bank certainly is not manipulating the euro. our starting point of taking this is based on the economic growth,of europe, both employment and achieving our targets. we don't usually comment on other central banks, other currencies, but my reading of the situation is in fact the chinese yuan, renminbi has been weakened because of the effect of escalation of trade war, not because of manipulation from the central bank. rather to the contrary. reporter: do you expect trade war to cause risks to the european economic outlook as well? >> we don't seek direct impacts,

and they are fortunately rather limited. on the other hand we have seen confidence impact. on the other hand which is potentially damaging for growth and employment. on the other hand the cease-fire with -- between the e.u. and the u.s. conceived by residents younger and trump -- ju president juncker and president trump has ceased, but more recently there has been more concerned, and [indiscernible] this unnecessary rhetoric to peace, and we would isolate the trade war is because that would damage the whole global economy for the u.s. and europe. matt: what about the other direction? it was suggested in front of

parliament not only could the e.u. do away with tariffs on cars but all tariffs could be brought down to zero if the u.s. would respond in kind. how would that affect the european and global economy? olli: to my mind the initiative of the commissioner was a very commendable one and important. it shows the european union is in favor of free and fair trade, and it would give a level playing field for both the u.s. manufacturersar and let the customers decide. they decide. let's believe in the market economy, who produces the most cars, best quality and succeed to the benefit of consumers and businesses. yvonne: that was the bank of england governor and ecb governing council member speaking to bloomberg's matt

miller. we are counting down to the market open, three minutes to go. we are set to mixed results. we saw the s&p ending pretty much flat as we entered labor day, so markets closed monday. nikkei futures pointing negative as well as seoul. asx futures looking positive. but as we count down to thursday, where we could hear the president's slapping tariffs $200 billion worth of chinese goods. that will be the focus the next week. we are joined by an author and bloomberg opinion columnist to talk about trade tensions and possible escalation in the u.s. and china. what happens when president trump is now having talks with mexico? could that be felt the hardest in beijing? and the head of china equities joining us.

he will tell us how msci's position of chinese stock will play out in the market. we will ask about winners and losers from the trade war. this is bloomberg. ♪ xfinity mobile is a new wireless network

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>> :00 in hong kong like in bloomberg headquarters. i'm yvonne man. president trump turns up the heat on canada, blaming years of trade abuse. he's warning congress to keep out. he's skipping an important summit in asia. that raises questions about u.s. commitment to the region. i'm ramy inocencio in new york. markets faced a mixed start to the new month. the dollar holds gains but the sterling fell the most in a week on brexit friendly fire. china's hna group cut some of its debt but liabilities are

still almost $80 billion. so the asset sales will continue. ♪ yvonne: the u.s., mexico, canada talks resume this week after they broke out on friday. the elephant in the room is going to be what happens on thursday. will we see more tariffs on chinese goods after the public consultation period and later this week? that will be a key focus for many of us watching the markets. but: trade not with one eye with two eyes here. we saw it fall a little bit when donald trump said basically he could move ahead without canada. we have geico data coming out, pmi's across the region. the jobs report.

we are expecting a move from the fed. yvonne: it's interesting with the president canceling the summit in asia, that emanates more opportunities to meet with shooting paying and hammer out -- president xi and hammer out. we are starting september with the mood we saw across august. some pessimism this monday despite the helping of data we are anticipating from korea. we got august trade figures for a second straight month by 8.7%. the cost be off by .03%. you can see from the far side on the panel right here. .03% despite5 up second quarter profits rising 18% while went far more than expected.

we are waiting on similar data from australia along with retail sales and home prices. we have aussie trading year to year low. slow economic growth through 2018. that's spurring harvey norman to look abroad for opportunities at the weekend. the company's chairman said operations will flatline due to wage stagnation and heightened competition. some nerves coming through from the aussie corporate space on tuesday. also keeping an eye on nidec after they plan to buy five german firms that focus on robots and machine tools. first acquisition since subsidiary. this is to build up the supply chain amid trade uncertainty. as off 2%.nes they integrated device technology to make an offer

value at $6 billion by this week, the second-biggest supplier of chips used in cars. the deal is to make it extended the on the automotive sector. those are stocks to watch. ramy: looking ahead to the first trading day in september. shouldet more on what we be watching as trading gets underway in asia with bloomberg's global market senator, adam engel. let's take a look at e.m., markings taking a battering in august. is the room for any kind of september rebound? like we certainly feels are getting to a tipping point. just in terms of the extremities of sentiment, that beating assets have had in the last few weeks and months. of feels like we are reaching an inflection point, but it will take more than a feeling for that to play out in markets. what is becoming increasingly part of the mexican is your view -- lexicon is your view on the

markets. have they gone far enough to warrant coming back in? that's the case of black rocks and timko's of this world, talking about incremental opportunities within the emerging markets to come in and buy equities. a lot we saw on friday, of turmoil in places like argentina and turkey spilling over into asia. we saw the bank of indonesia really struggling to support the repair on friday. and that's really the bigger question of contagion and whether or not this remains a largely emerging-market kind of phenomenon, or whether it stops having a knock on impact in developing markets and other emerging markets that don't have the same kind of fundamentals that we know in argentina and turkey, for example, have been negative for a long time.

i think that's the key to how this week starts out is where you sit on that valuation discount kind of theory. and of course, a lot of these issues are very idiosyncratic in terms of the market and the economies it affects. at the moment, no sign of that spilling over to a letter contagion. yvonne: we start off a new trading month. how you think the new asia session will shape up? july,seen softer gains in but erased everything in the month of august, too. adam: yeah, and we had a decent and to the month in the back half of august. the setups of this week are the fact we've had no incremental news over the weekend on the trade front. nothing that would affect any kind of economic growth projections. it's coming into the data later this week, the pmi number coming out of china later into the week building up to the jobs number

on friday. and whether or not that does anything to europe, overarching estimation of what u.s. monetary policy looks like. we are expecting that hike later this month, probably another hike from the fed in december. the key for emerging-market assets at this moment is what happens to the dollar from here. as we've seen in this recent bout of weakness, it hasn't been accompanied by a rally in the dollar. if we start to see strength in the u.s. dollar, we could start to see more fallout across the em space. haigh, thank you adam joining us from sydney. let's get the first word city with haslinda amin. haslinda: president trump slatted decades of abuse by canada and threatens to cut ottawa out of any future deal. between tweeted there is no political necessity to keep them

in the accord and warned congress not to interfere or he will terminate all discussions. on friday, he told supporters other countries are taking advantage of the united states. china welcomed african leaders to beijing later monday amid criticism its development plans on the continental risked countries suffering debt. with raisingcism doubts at home. the keynote speech gives them a chance to defend the belt and road initiative and is expected to talk the importance of consultation. china published regulations for the stock link with london, outlining how the project will work with capital controls. companies seeking to take part will need to meet a minimum value. there will be limits on how many securities can be issued and how they will be traded.

the system will see listed firms from each nation sell depository receipts and other countries. topped at theans north american box office for a third straight weekend, making the labor day weekend one of the strongest in years. the movie took home more than $22 million in the u.s. and canada. placeg was in second ahead of mission impossible fallout. crazy rich agents has taken $111 million in total. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. on haslinda amin. this is bloomberg. yvonne: big week in the escalating trade war between the u.s. and china as the public consultation period ends thursday on the proposal of tariffs on $200 billion of chinese imports. president trump may order new duties as soon as -- are met.

here's david engel. he has one eye on all these developers right now and thursday could be interesting. david: both eyes clearly on this issue. the big issue, there is no negotiations scheduled. we are going to hit this deadline on thursday or friday morning with the likelihood, according to sources, donald trump is ready to push the button to add tariffs, at least announce them. it'll probably be enacted at a later point, but at least announced he will propose tariffs on $200 billion of additional goods to the united states, tariffs between 50-25% -- 10-25%. sources are telling us he's ready to go as soon as that ends. we are saying the battle of camps in the white house. you have hawks like peter navarro and robert lighthizer. they seem to be winning out over

the more conservatives, such as stephen mnuchin and larry kudlow, who want more time, more consultation on the impact of this. china is also readying some tariffs on $60 billion in retaliation. yvonne: they are running out of goods to tariff. how are they likely to respond this time around? we are talking $200 billion this time around. stephen: they are planning to impose tariffs on $60 billion of u.s. imports to china. there could be other issues, as well. they can recognize the you on -- what a nice the yuan. is a wait and see period for china. yvonne: ford is taking actions in light of this. stephen: this is not a huge move, but perhaps symbolic of what we could see down the road, the proverbial iceberg. they are saying they are focus active crossover suv they had

planted next year to ship to the node stays is built in china desk to the united states is built -- to the united states is built in china. there were imports of autos to the united states, 25% tariffs will basically make that not a good business proposition. for its president of north america said our resources could be better deployed. a could have knocked out fx to other carmakers. expanded tohey are auto parts coming from canada or european union, toyota imports parts for its route for from -- rav-4 from canada, but this could have a knockdown effect. ramy: later in beijing, president xi has a speech promoting the belt and road initiative. what can we expect? is he trying to change the

narrative coming out of beijing versus trump in washington, d.c.? stephen: this is an opportunity as he addresses african leaders to kind of dissuade the fears many people are starting to have about china's rising influence, and the potential rise of debt levels along the belt and road. she's in paying has long used the term "soft power". keep in mind, with donald trump announcing his not going to be notg to papua new guinea, going to the aussie and summit in singapore this autumn, that leaves an opening for the likes of president xi to grab the narrative at a time where donald trump and his tweets seem to be grabbing the headlines. ramy: where one receives, another advances. stephen engle, thank you very much. we will have more on trade in a moment. test says china could face the strongest impact from president trump abandoning nafta.

yvonne: later, we cover round two of the china's inclusion with ubs. find out which sector is benefiting most. this is bloomberg. ♪

yvonne: this is daybreak asia. yvonne man in hong kong. ramy: i'm ramy inocencio in new york. the trade fight between the u.s. escalate asy president trump raises tariffs on another $200 billion in chinese goods. china has about to retaliate with the goods of $60 billion of u.s. imports. joining us from los angeles is christopher balding, a bloomberg opinion columnist. thinks for joining us. i want to get to commanding -- connecting the dots. china could face -- for

president trump abandoning nafta. draghi's lines. -- draw these lines. chris: everything in the agreement with mexico is targeting china, from intellectual property to the environmental protections, it specifically prohibits practices like shark finning, something mexico is not known for but china is. it even talks about where financial data for firms listed in the united states should be held. this has been an on running dispute for chinese firms not being able to turn over data to the sec. a lot of the clauses through the agreement with mexico are clearly targeting china. ramy: interesting. we were just saying $60 billion in terms of u.s. imports could be targeted. $200 billion from the chinese side. clearly there's a huge gap here.

in terms of other levers, what you think is more likely in order to possibly get to parity? the way china has handled a lot of these issues before, we see this with korea, japan. all of a sudden, there are surprise health inspections or approvals for projects get slow walked. they don't get denied, just slow locked. we've heard -- slow walked. we've heard reports from hong kong that things are taking longer to get across the border and clear customs than they have before. i think you're talking a lot of these types of changes that it's clearly not a priority. they are clearly going to use the regulatory state to target u.s. companies. ramy: do you there is anything that could happen sometime this year for this to turn around? we're talking about, or we were

talking about the possibility that president xi and donald trump could meet on the sidelines of one of those southeast asia summits, but it seems that's not going to happen because he's not going anymore. chris: i think what has been surprising in the past couple months as the trade war continued to ramp up, basically nothing appeared to be happening on the surface between china and the united states. you've heard of lower-level meetings, some talks between various diplomats and things like that, but there hasn't been any movement on top. for the for seeable future, it's difficult to see that changing. china has a much bigger economy than mexico. does it have more stomach and an upper hand in some of these trade tensions to actually stand and fight against the u.s.? chris: i think what has been interesting, and you see this in are both xi, they

casting this as much more than a trade dispute, that this is much more consequential. some of the rhetoric out of china and some of the ways is being discussed online in other areas, this is a consequentialist fight. it's about us as a country and as a nation. when there's that level of stubbornness, it seems both leaders are digging in for a long-term fight. yvonne: could china ever be a global superpower? chris: absolutely i think they can. i think it would be a good thing if they do. china, andprising to taking the world by surprise, there's a different set of values and what type of market they expect to have going forward. if china continues to remain protectionist, and by all accounts they have the most protectionist largest economy in the world, it's going to be very difficult for them to be accepted as such.

ramy: help me get into the heads of american allies into asia right now. with donald trump not going to apax, not going, mike pence going in there. what should allies be thinking? or is this overblown optically? chris: i think trump not going over to aussie on that is overblown. i would say it's a good thing he's not going. pence is more of a seasoned politician, a seasoned diplomat. he could probably walked back some of the trump rhetoric. i think what is important for how we look at this optically, is that even though beijing has been trying to separate some of there's as much frustration around asia and the rest of the world with chinese trading practices. you haven't seen china break off a korea, a japan, other countries like that, away from

the u.s. trading block. ramy: i want to know what we should be thinking about beijing's mind space right now, because in terms of one belt, one road, in terms of the south china sea, the south china sea has not come up in conversation but we do know what is going on throughout the season there. -- seas there. chris: absolutely. they're trying to separate those issues. look at the china and the u.s. are trying to separate the issues because the south china sea's is literally a hotspot. they want to avoid the rhetoric of trade with the reality of the south china sea hotspot, however that is very tangibly a very realistic problem. you seen in vietnam, the philippines, other things, that's a big word. yvonne: when it comes to the currency, is that still the nuclear option what the chinese can do? chris: yes, that is absolutely

the nuclear option. i see less probability they use that as a nuclear option than other people, but that absolutely is the nuclear option. the concern for china is that that's such a plank to the economy that it would really weaken and show that china has possibly caved to the united states. i see a low probability of them using the. -- using that. yvonne: chris, thank you. always great to have you. going to round of the stories you need to know to get your day going. terminal,go on your also available on your t bloomberg anywhere app. this is bloomberg. ♪

ramy: welcome back. let's do a quick check of the business flash headlines.

they topped forecasts for the first time in four months, easing concern of the slowdown in highroller gambling. receipts climbed 17% from a year earlier to $3.3 billion. expectation was for a 15% rise. casino revenue shows 25 consecutive months of expansion but the issue -- industry is facing a slowdown in china as well as president trump's trade war. jd.com says the u.s. investigation has found no evidence of wrongdoing during a business trip. he was detained by minneapolis police eight friday evening on a charge of criminal sexual conduct, then freed saturday afternoon. they say they will take legal action against any untrue reports or rumors. china's site is setting the terms for hong kong's ipo worth more than $4 billion.

sources are telling us it plans to sell shares between a range 60 hong kong dollars and 72 hong kong dollars a piece. onere also being told makes is seeking a valuation of $55 billion. it aims to price september 12 and trade from the 20th onwards. let's do a quick market check right now. markets trading in asia-pacific right now are looking like this. mixed right now, the nikkei down .4%. kospi also in korea looking similarly, but the asx six 200 is the low stand out in the green, up .2%. up next, hna is finally making headway with its massive debt b urden. we will be asking if that's enough to ease investor concerns or if they have to spin off even more. on that soon. this is bloomberg.

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yvonne: 8:30 in singapore. some dark clouds. premixed session in asia stocks, mostly lower with the exception of australia. i'm yvonne man in hong kong. ramy: i'm remy inocencio you are watching daybreak asia. let's get first word news with haslinda amin. good morning. haslinda: u.k. prime minister theresa may has seen her brexit strategy come under friendly fire from a conservative lawmaker who criticized the plan from a hot slip from the eu. most of the criticism has come from those who want to distance

them from the single market. the foreign minister says he can't support the plan because it will humiliate britain and it will hasten the path of departure. iranian exports are tumbling as key buyers order less crudes in the weeks before u.s. sanctions come in. they should just over 2 million barrels in august, the lowest amount since august -- march, 2015. iran vowed to close the street of hummus to all oil tankers if its own deliveries are restricted. racy outlook has been cut over search of the populist policies of the government. they lowered their credit outlook stable to negative, but maintained the long-term rating, a decision lauded as proof of credibility of the spending plan. the government campaigned on infrastructure programs, which analysts say could reach

european union rules. the economy expanded at the fastest pace in nine quarters. a strong demand in robust manufacturing upset worries about a trade war. to june from a year earlier, faster than 87.6% meeting estimates. they expect growth of more than 75% to march in 2019. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. on haslinda amin. this is bloomberg. yvonne: let's see how the asian markets are shaping up so far. let's go to the latest with sophie. sophie: you got the dollar edging higher and a u.s. futures are pointing to a higher open after u.s. stocks hitting fresh high, leaving asia further behind.

japanese stocks are on the back foot despite positive data. business investment growing the most in 11 years in the second quarter. company profits jumped the biggest in a year. the one and the kospi are falling despite the latest data showing export growth. check out the kiwi dollar, off .2%. the softer the forecast in terms of trade recovery as pressure on the currency. in sydney, the asx 200 is set to snap while the aussie dollar is looking changed. we count down to the policy decision and gdp data due wednesday. home prices fell for an 11th straight month. .3%,inggit is down slipping to a november low. checking in on some stocks on the move so far this monday, i

want to highlight one mover in sydney, northern star. climbing the most in two years. entered a deal to acquire a gold mine in alaska, jumping nearly 14%. but over in tokyo, we are seeing soupy, flight 9% after the u.s. fda denied the drug application. renesas electronics fell as is considering buying a u.s. chipaker, integrating technology. president moon is sending an advisor and companies spy chief to pyongyang ahead of the planned inter-korean summit later this month. let's get to our reporter joining us from soul with the latest. preparations are underway. what can we expect? pretty much when the blue

house confirmed that the five special envoys will be visiting the north korean capital yesterday, there were a lot of speculation on whether they would be meeting kim jong-un. that in itself is not confirmed as of now, but there are reports saying the envoys will be delivering a letter personally from moon jae-in to north korean leader kim jong own, but we won't know by the end of their trucks to pyongyang. it will be one of confirmation of the summit -- it's unknown when the third summit will be held. we heard from the former defense secretary weighing on the situation. didn't hold back words on how he felt about the singapore summit we had a couple months ago. what would he like to see by now in these negotiations? >> what he pretty much of said

is that it was doomed to failure. the summit was very much handshakes and hugs and signing papers, pretty much a very political show as a lot of analysts say. a lot of people are saying there was an inherent difference between the two leaders when they approached the summit. the two expectations were entirely different. the takeaways were different. kim jong-un expected in normalizing of relations shortly after the summit, as well as shortly after the end of war declaration. donald trump might have expected somewhat of a more immediate progress in terms of the nuclear was asian -- at denuclearization. those were the inherent differences. ramy: in terms of the inter-korean liaison office and how close they are with each other, are they getting too

close? >> there's a lot of speculation on that. there's a lot of criticism toward moon jae-in's administration, saying donald trump's administration might not be too happy and how he's approaching the relations between the two koreas. between the liaison's office, the u.s. secretary has definitely not been shy about resizing that it may violate united nations sanctions. the blue house is confirming it does not violate yuan sanctions. u.n.u and sanctions. -- sanctions. there are close ties with the u.s. and north korea, as we can also see in history with moon jae-in's lifelong advisor. kim jong-un wanting this, rather rekindled brotherhood relationship among the two

koreas after two conservative administrations from south korea. ramy: of course pushing ahead to the summit. china, andears into of the country's struggling hna group is finally making headway. events to bring down the total for the first time in the history, liabilities falling nearly 10%. did mccombs a joins us from tokyo. the question here is whether this is enough to ease the pressure on hna. let's walk back to that number, $79 billion is still out there. david: still a very large number. the pressure is easing, but there's plenty to go around. they are still looking to sell some of their large assets. they've got $2 billion with of property in china they are looking to sell, about $440 million of office space in

london. they've got planned ipo's they may try to rekindle to get going in their main business to raise capital there. this is a company still scrambling. it's still all hands on deck to raise money. that's a very large step. $79 billion, it's a huge amount of money. that compares with a $.3 billion. they brought it down but not a lot. the glass is half-full from the point of view, we could have seen the debt continuing to rise. that would be after selling off some $70 billion this year. it's good news. ramy: fair point. you had mentioned london, the $440 million. what else is out there and along what timeline are we under? is there a pressure to move ahead and move ahead quickly on further asset sales? dave: yes, there's definitely

pressure. we don't really have a timeline for asset sales going ahead. they set a deadline last year. they came close to hitting that. not quite, but close to hitting the for the first half. but didn't quite make it. they have yet to come out and say what the target is going into the second half. we do know their biggest assets have been pulled down. there are looking at the little stuff now and raising capital and capital markets. more importantly is they are trying to bring interest rates down for what borrowings they do have. it seems they do have headway in that regard. yvonne: one potential tailwind may come from support from beijing. the government may come to rescue more. yes, that's what the company has said. with the government support, that makes it much easier for them to borrow from banks and bring that interest rate down.

part of the problem they got into was the debt spiral, where the declining credit worthiness decrease the cost of borrowing to a record. not only with a unable to -- the cash flow was unable to meet their debt payments, but the pile was increasing. that was the real danger zone. with this report, they are showing they are out of that spiral even though the have a huge pile of debt to deal with, and lots of operation issues going ahead, as well. when they were busy buying companies at such a blinding speed, that was an easy way to take pressure off of them to make money operating the company's. now that those big assets have been sold off, they have to look at what their actual assets are in the aviation business and how that's going. there: dave mccombs joining us from tokyo. coming up, we ask equities where

the opportunities are in round two of china's inclusion. this is bloomberg. ♪

yvonne: it is a quiet day in the u.s. market, asia investors are coming back from the summer holidays. what our market watchers paying attention to? i know you are looking at currencies. ramy: there is one currency everyone is looking to, king dollar. pop into the bloomberg terminal. i want to show you what this terminal is in the library. this in blue is the bb dixie, bloomberg dollar spot. we can see arising from february. february low of 2018 low back in february. we can see how asia-pacific stocks have been falling in tandem here. it looks like, at least for the

short term, the dollar is expected to rise higher. not just because of trade tensions, we been talking about how that's inflationary. it's also september and the fed is expected to raise rates. higher short-term rates are expected, too. where is this headed? i'm not going to put in my crystal ball, but let's look at where these lines are going and we might be able to extrapolate from their. yvonne: what does this mean for the em trade and for chinese stocks? the a look at my chart, estimated pe of the shanghai composite. we been talking about whether this is a value trap or an opportunity to pick up on big bargains. we talked about valuations from five years ago. things are looking cheap, but have we seen sentiment turnaround after the deleveraging campaign? the trade wars that plague the chinese market?

theeen talking about jpmorgan survey, they think it will rise but 80% say the gains 15%, he more than 50%, -- which doesn't say much because it has fallen 17% this year already. certainly a lot to look ahead to, the trade battle. the shanghai composite, what comes next? coming up is thomas faang, head of china equities. we got that second round that came in on friday. you are telling me how things were smooth. do think the second round could turn around the sour sentiment in the chinese market? guest: our global investor continued to put money into china. we look at data from the loan, the inflow of q related $35 the global investors

are putting money into china asian markets. yvonne: do you think foreign investors have done more homework now? guest: one third of the global investors have been putting money, and there is more coming in. they are hosting a conference in the next couple of days and there is more demand looking at china's asian markets. yvonne: i guess the timing is awkward because you take a look at the trade overhang, the slowing economy right now, what sort of turnover can we expect now that we see these headlands? especially this week, when we are expected to see much harris? -- more tariffs? guest: our view is that it has priced in. we have to look at whether the tariffs will be 10% or 25%. that will put more risk into the

overall economy. clientsitely advise our to look at the overall fundamentals of the company's. of initially the policy easing and the u.s. and china trade war. yvonne: what did you make of this survey? is theere talking 15% most when it comes to returns in the asian market. is that still ambitious given what we've been seeing? or is there for the upside for the rest of the year? csi 300his asx 200 -- is roughly 14, 15%. but the majority of the sentiment is relatively cautious, especially from a domestic investor point of view. we have seen global investors taking up valued stock. if you look at friday inclusion, that represents 4.6% of turnover. yvonne: what are they buying? guest: for friday alone, msci

inclusion related, but we see food and beverage sectors, also nonbank financials has in saying the largest inflow. ramy: i want to hop in the terminal to continue the conversation about inflows. hop into this. for the first round, we saw this bump in terms of equity inflows. what is your expectation for when we see inflows start here? when we fill in this blank area here? guest: i think some of the data we have been looking at has been in terms of inbound flow. with the 17% down year to date for the china asia market, there's only one month we've seen outflow. inclusion the amount of inflow from global investors. $35 billion as i mentioned earlier, double our estimates in

terms of msci inclusions. ramy: the inclusion factor has gone up to 5% from 2.5%. critics will say it's still not all that much. to what degree this has to get up so that investors, if they are not taking notice now, finally say this is a big deal? guest: i definitely agree with you. it has to go up. and with the smooth inclusion from june and now, we definitely see a strong case. it took six or nine years for korea and taiwan to grow from 20% inclusion to 40% inclusion. i hope china will catch up the pace. we definitely see this move inclusion to support the case. yvonne: glass half-full investors look at china and say these are attractive right now. you can find value everywhere.

even adrs are looking more attractive. how do you allocate? guest: for us, we think the cousin of the asian market, and the growth engine and sector leaders, we favor asia more. we have toach year, see how liquidity dynamics is going to be. this year we have seen the volume decline. when he to look at that. there's ar market, lot of leading strong companies, but altogether there's 20-ish companies. going forward, asia will still be the key focus for global investors. yvonne: you mentioned consumer stocks, banking shares, what about tech? is us the one of your conviction traits? guest: we need to look at the leaders. some of them have been under pressure. to us, it creates more value. at the same time, when global investors put chips off the

table from emerging markets, so those larger tech companies tend to be there targets. we definitely see more coming in and set of going out. yvonne: is it likely we will see more tariffs on thursday? what has been priced in? guest: we've been debating, definitely i agree, so i'm more on that 10% in which the pricing top of scenario. relatively solid foundation for markets to go up. yvonne: ok, always good to have an optimistic view. thomas fang joining us. don't forget tv . you can watch us live and catch up on press interviews, as well as they'll into the bloomberg functions we talk about. you can send us instant messages or questions for our guests during our shows. check it out at tv . this is bloomberg. ♪

yvonne: this is the great asia. on it -- this is daybreak asia. yvonne man in hong kong. ramy: i ramy inocencio in new york. to -- canceling products the plan was to import the focus active from 2019, but ford says

duties of 25% mean it is not worth shipping a car that will find only 50,000 sales each year. analysts say other auto firms may alter their sourcing plans. yvonne: reports from the u.k. says explorer may cut thousands of jobs and some popular car models. the sunday times says as many as 24,000 staff could go as they lost more than $70 million between april and june. like other companies, ford is facing the uncertainty of exit, -- of brexit. ramy: china's a struggling hna group managed to shrink its debt for the first time after selling dozens of assets to stay afloat. total borrowing fell 9.5% to 7% in june, done more than $8 billion from the record in june. billionsold more than

of dollars in assets, much of it in the hilton and radisson hotel chains. yvonne: for a look at what is coming up on bloomberg tv, let's bring in david. what are you watching? david: lots of guests. the big one is out of was on a companyozada is the alibaba invested and took a majority stake in 2016. they added to that investment in march of this year. we will be talking southeast asia, when the company's footprints is essentially one of the largest there. what the key challenges are for the company. if people are making any money at all. and where they actually holder market chair. and the key challenge of doing business in a part of the world that is roughly, talking half a billion in terms of population. it's a fairly big chunk of economic growth, but

dispersion with the cultures and how you do business is completely different. infrastructure is a big problem. navigating your way through southeast asia. that.looking ahead to before we hand it to you, let's look at how markets are trading before the top of the hour. the nikkei is down .5%, accelerating losses. as well as the kospi. asx 200 in sydney paring gains, of only about .1%. yvonne: checking asia futures, a very mixed session so far with klci, relation stocks. only one above water. this is bloomberg. ♪

>> it is not :00 a.m. here in hong kong. i'm david ingles. haidi: this is bloomberg markets: asia. david: markets across the asia-pacific as we start off this new month. the dollar holding onto gains but sterling falling. haidi: emerging markets fishing work pressure off inflation data from turkey and a new plan for argentina. da