sale and save. for a limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need >> 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." the top stories this tuesday, emerging markets remain under pressure. turkey's thousand new policy -- turkey vows new policy. argentina faces judgment day, trying to balance the budget. officials had to the ims. -- imf. ramy: i am ramy inocencio in new york. golf.trumps mexico says canada must be in a post-nafta deal.

china rebuffs criticism of the belt and road initiative. xi jinping says he's not interested in "vanity projects." yvonne: to start things off with breaking data in south korea. inflation numbers for the month of august, month on month-wise, ticking up. year on year, the 2% target. seen mixed signals where inflationary pressures are not there anymore. square that with some of the rebound we have seen in exports as well and we see that in these gdp numbers. ramy: taking a look at the gdp revised numbers, quarter on quarter, 0.6% according to --

that is against consensus, 7%, so just .1% missing that. against 2.9%ctual for the consensus survey. all right, off of those raking lines out of south korea, let's get you up to speed with what has been happening in currencies. in the united states, we are still on labor day holiday weekend. that's bring those up and talk been really a story about dollar strength as well as about crises in emerging markets. .1%,berg dollar spot up by 11.83. we did see record weakness for the argentine peso. right now, we are looking ahead to tuesday, when officials had to to the ims -- head to the

imf. the turkish lira moving 6.6 .ight now there has been speculation that the central bank will actually hike at its september meeting. the british pound catching a little bit of a bit. theresa may's brexit plan is taking some slack with in her border and without. yvonne: some speculation as to how bit of a hike that will be. here is the set up when it comes to its a. slow going and asia. asx futures pretty much flat. lower by .5%. we are not getting direction from the u.s. markets. not a lot of conviction here. take a look at the offshore renminbi. we did see strength coming through overnight and we have the ascotmy against stabilize as well. that is online in the sand. dollar chinating

tactically and dollar asia should follow tactically. -- should follow. $.60 for the kiwi now. haslinda amin joining us from singapore now. mexico's president says the potential nafta replacement must include canada, and in ricky the mexican- president says it is important to keep canada in the agreement. he says mexico has not accepted any restrictions in the current talks with the u.s. president trump indicated he might exclude canada from the potential deal. president trump has again attacked jeff sessions, blaming justice department indictment against republican light makers for endangering their seats in the midterms. withtopher collins charged

insider trading. the president tweeted "democrats must love him now." brent crude rose to its highest in two months on slumping exports from iran, as asian buyers order less. all traders are watching saudi arabia and russia for signs they will fill any potential gaps in supply due to restrictions in iran and the meltdown in venezuela. opec output was the highest this year. is using a meeting of african leaders in beijing to counter criticism that its development plans and the continent are settling emerging economies with debt. the cooperation provides a high-profile chance for president xi jinping to defend initiative. road

he told his audience he has no interest in forming an exclusive club with competing vanity projects. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 120 countries. i am haslinda amin. this is bloomberg. emerging markets remain in the spotlight and are likely to take their cues from turkey and argentina as each takes steps to shore up the currencies. turkish central bank vowed to reshape it stands next week after inflation accelerated to the fastest pace in 15 years. the meara suffered its biggest drop since 2001 -- lira suffered its biggest drop since 2001. argentina plans to tax exporters to fix is worsening financial crisis. hip president hopes to w finances into shape a year earlier than planned. >> we are seeing the technical

details that will be ready in a matter of days, and this will allow to definitely clear up whatever doubts exists regarding our financing in 2019. yvonne: argentinian officials discussed faster payments from the $50 billion credit line. let's go to one of cyrus -- to buenos aires and kerley know -- carolina. new packageiled a of measures that includes cutting the amount of ministries by half and most importantly putting in new taxes which will allow the country cannot only reach a primary fiscal deficit of zero next year but also to reach a surplus by 2020 thanks to an additional $9 billion that was not previously seen. this is to shore up confidence for regular argentinians who have seen some alarm in the

spiraling peso in the last few days. andne: it is hard to see gauge reaction given how trading in the currency was thin on monday. do you think it has been enough to calm the markets? were there any magic bullets? carolina: certainly the proposals were ideas that investors have been asking for a long time. they had been hoping for argentina to cut its government spending, which has been increased over the past few administrations, but those decisions have been difficult to execute. investors are praising this latest move away from -- it was one of his original the ses when he came into power. shock there. -- therapy. ahead, one of the next events that we really should be watching for that could affect argentinian assets then? carolina: government officials

are traveling tonight to meet with christine lagarde and officials at the international monetary fund. they are going to be looking -- lineagreed to the credit earlier this year. that may involve some additional questions or reforms from the imf to include different inflation targets, but the next thing going forward will be discussions which will be held at her this month, and that is a newhey will face political task where he has to agree with lawmakers. that's without having a congressional majority to cut spending for the year 2019. hey: looking even further, faces elections in 2019. caoline a milan for us -- rolina milan for us in

argentina. andy capron, good to see you again. we have got a hot spots in argentina. add another hot spot in turkey. in termsyou looking at of assessing risk, assessing how this impacts market analysis? andy: the most important thing about emerging markets today is to address them as two separate cores. there is the debt market on the one hand, the equity on the other. they have fallen in tandem. anytime there is a crisis in one market, it tends to infect the whole asset class. debt is where you have trouble. caseis where the basket economies -- don't take offense when i say that -- there are genuine problems with export growth in debt. those are the markets that have issued the most dent. that his wife -- debt. that is why they are in trouble.

it's a very different composition. turkey and argentina together do not even make up 1% of the total equity opportunities. what are you looking at? taiwan, south korea, as well as a handful of other nations around the world. competitions, markets, but the biggest thing emerging markets have which hurts them is tourists. we are in new york city today. word.t is a dirty tourist investors is a dirty word, too. too much of the equity ownership is done by foreigners to these markets. that means they do not have the guts to stick with it when the going gets tough. ramy: one question a lot of investors always ask is -- is this going to hurt me? is what's happening in turkey going to hurt argentina? are these idiosyncratic? andy: because so much of what happens in the emerging markets

is a domino effect, it will absolutely affect you even if there is no direct connection between turkey and argentina on the one hand and the chinese stocks on the other. you have to be aware of it, but here is the other thing. it will not be a fundamental impairment. it will just be day-to-day volatility. i would buckle up. i would prepare for a volatile september. if this bad news coming out of turkey and argentina is not followed up by bad news from the fundamentally stronger and bigger markets that stock investors actually own, it is ripe for a rebound. yvonne: what matters most to the market? do we take cues from argentina or turkey? andy: i would take my cues more from argentina today. turkey has been a known risk for a fairly long time. the economy has not done a very good job. the central bank has not done a good job of building credibility on inflation control. so it is not so much new bad news. it is a simmering crisis.

in argentina, there was real help with the president's that they would turn new leaf. that could be an indicator that there will be further problems in other weaker players within emerging markets that say of than, say, other players. part ofargentina is not the msci emerging-market complex, but of course, we actually do see that it has been contagion of that you are alluding to. the correlations have gone to a quite positive in the last couple of weeks or so. how much more downside could we see? i am wondering what needs to change in sentiment. reach a little bit more of a peak in dollar? or more of the fed story? andy: the fed story is important. every other time we tighten financial conditions in america, it has been bad for the emerging markets as an asset class.

the biggest thing i worry about is there is no one good catalyst that could take us out of this. we need a break from the bad news. unfortunately, investors do not care about fundamentals in emerging markets. they care about risk. risk is there for everybody to see in turkey and in argentina, as long as those two countries are in the news i might be to stay that way for the next few weeks. it will be a tumultuous time. yvonne: are you buying anything in the em space at the moment? andy: i am absolutely. the things i like the most are the things most insulated fundamentally from the volatility coming from argentina and turkey. i like the most is the emerging markets small caps space. why are they better than large caps stocks? they are more focused on the domestic consumer and all these markets. china is a lighter weight within emerging-market small companies. once you get the been tightening of industry, you see that it is a much broader spread with a

better geographic representation. andy, we will have to leave it there for now. we will bring you back on the other side of this break. we will be asking why he says trade tensions are more bark than bite and unlikely to hurt markets in the long-term. yvonne: why the escalating trade conflict is affecting southeast asia. this is bloomberg. ♪

ramy: welcome back. this is "daybreak asia." i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. president trump made a surprise cancellation on monday as he prepares to confront china and canada this week. the white house says trump stayed up a white house to make calls on trade and other international issues. trump's trade negotiations are

in difficult talks -- negotiators, i should say -- with canadian counterparts. trump is said to be prepared to slap tariffs on $200 billion worth of chinese good by weeks end. ramy: let's look at the market reaction to the widening trade war, yvonne. we will bring back any cap bring, still with a -- andy capron. let's hop into the bloomberg terminal. i want to show our viewers a quick recap of where we are in terms of the deficits for trade. mexico is in white. canada is in blue. you can see notably that it is much less than mexico here. as we look ahead to talks this week that are restarting, will we see a breakthrough? this is all about optimism on your part. a breakthrough or breakup of trade ties between the u.s. and canada? andy: i do not see or breakup in trade ties with canada. it is too fundamentally disruptive to our automobile industry and a whole host of industries that are

interconnected and have been built on this agreement for the past 2.5 decades. does that mean we will have a breakthrough? it might not be that easy. i see a case of gamesmanship on both parts. not have canada as unfavorable trade terms with us. let me give you an a stringent. if you look at auto parts imports, all these components that go into cars that we assemble here and we want to assemble here, 50% of auto parts

come from either mexico or canada. mexico is a bigger supplier for the bread and butter. canada 10 to supply more of the higher end and complex components. to undo those deals would make it unprofitable and disruptive to produce a whole host of cars here in america. ramy: it seems like it is a too big to fail kind of relationship if we hearken back to the financial crisis with the banks. when push comes to shove, it seems to me like it is a similar situation with the united states and china at least on the numbers aspect of things. washington can push really hard, but canada can shove hard, but they are not going to equate that strength. andy: i think canada has actually more leverage in negotiating than china does. they are almost equal in terms of the size of the trade punish it. ramy: go deeper to that. why so? andy: canada is a more critical

trading partner because, well, they depend more on us and we depend more on them for our high-value industries. heavyalking about machinery, automobile manufacturing, assembling. when you look at china, our trade deficit with china is so enormous relative to the deficit, it is hard to do. they have a secret weapon that they have not really deployed yet. china's secret weapon is currency value. of we keepase talking about how hard or easy it might be to win a trade war. it is impossible to win a trade war if you lose a currency war. china has the ability through central bank to exert much greater influence on its currency value than many of the other trading partners that we are trying to renegotiate things with. yvonne: do you think that is quite likely? most people have said that the nuclear option at this point -- we are still haunted by what happened in 2015.

andy: i do not think it is likely unless we really back china into a corner, where we get to the point where the terms of trade are no longer fair. we have not gotten there yet. and a lot of what has happened in tariffs is more bark than bite. the illustration is if you do a sum total of all the tariffs that have been proposed to date so far this year, it totals to over $1 trillion worth of traded goods that could be subject to a tariff. the amounts imposed today have been hard to keep track because there's so many differences between what is proposed and what is imposed. the actual imposition of tariffs is less than $200 billion. the details on this are incredibly important. yvonne: i know you have been wanting inflation a little bit. should we be worried about tariffs-induced inflation? andy: tariffs move the needle in an immediate way on the cpi, the consumer price index. let's thinkre,

outside the trade war and think about the state of the global economy today. there is real risk and there are no known watchdogs committed -- real watchdogs. i realize the fed has been hiking rates for a while. it's been going fairly slow, at a steady pace. look at the state of the global economy. unemployment rates are pretty low. growth globally is pretty darn good. we are not quite in the state that we had about eight months ago where all three major parts of the world were chugging along, but the u.s. is doing incredibly well, europe is doing ok and so is asia. the biggest problem is productivity growth has slowed down dramatically. this is the problem that became a problem in the u.s. first. it is starting to impact asia. productivity growth will allow more economic activity without bigger price growth. if we do not figure out a way to get productivity moving, and

this is something society at large needs to do, we are going to have a problem with inflation in the next few years. yvonne: always great to have you, andy kapyrin, director of research, joining us from new york. do not forget our interactive tv function, tv . you can catch up on past interviews and the securities and functions. send us messages or instant questions you want during the shows as well for bloomberg's its his army. check it out at tv . bloombergoomberg -- subscribers only. check it out at tv . this is bloomberg. ♪

yvonne: a quick check of the latest business flash headlines now. jd.com's billionaire founder has returned to china. richard lugar was reportedly declaimed for sexual misconduct involving a fellow chinese student at the university of minnesota where he is a doctoral student. police declined to give any

details but they they have not impose any travel restrictions on him. ramy: tesla has reported -- is reported to have missed its target last month but is seen hitting its overall goal in the third quarter. transport podcast electric says the company has been aiming to or model threes. sources say it turned out about 53,000 so far. that would be the same total as tesla produced in the entire second quarter. generale says to settle u.s. investigations into alleged sanctions violations in the coming weeks and any final penalty will be within estimates. the banks as it entered more active discussions with authorities, looking at dollar transactions involving countries under u.s. sanctions. socgen has set up 51 $.4 billion for the fine. $51.4 billion for the fine. ramy: the belt and road initiative.

more on why beijing is promising debt relief to poor african nations. this is bloomberg. ♪

yvonne: 7:30 a.m., tuesday, in hong kong. it looks like we broke to this spell of bad weather. 30 minutes away from asia's first major market opens. watch them closely em and the hong kong dollar. some saying it will have to be pretty busy in september. the currency intervention could intensify as we prepare for the fed to probably raise rates this month as well. is 7:30 p.m. monday in new york. markets closed last friday, just a fraction -- we will call that flat right now, actually. labor day holiday is what we are going through. you can see the red, white, and blue lighting up the empire

state building. a lot of folks coming back from the final official end of summer holiday here. there is a lot of the volatility. we may have to contend with not one but two trade talk issues, tensions, that we have to go through with canada as well as with china. i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." first word news with haslinda amin. haslinda: argentina -- ruled out ant fiscal plan after the peso investorsast week and grew worried about the ability to finance itself. other proposals include eliminating half of the current ministries as argentina prepare for talks with the imf about tapping a credit line. turkey signals higher interest rates after it accelerated. the central bank said it would use all the tools after

next week's policy meeting. the lira strengthened after the announcement but later reversed course and weakened. one of thailand's leading political parties says it's its electionsg -- will take place in the first half of 2019. he told bloomberg he is optimistic although he has yet to say if he will run for office. however, he says the democrat party offers the best alternative. >> i do not think that the country has to choose. -- choose between a corrupt regime and the dictatorial one. the thai people deserve better and the democrat party will do its best to represent a better alternative. kong's de facto central bank is expected to

intervene in the currency markets even more. the monetary authority spent more than 4 billion u.s. dollars in august to support the dollar. they expect one of the same this month as the fed prepares to raise rates, keeping its currency at the week end -- weak end. diamond buyers reject a lower quality stones, highlighting the state of the low-end diamond market. they made a similar gesture in on highn india's ban denomination notes depressed demand. it has been hit by two much supply and man-made stones -- and man-madely stones. colin kaepernick struck a new deal with nike even of he is not playing in the nfl. he posted an ad featuring his "believe ine words something, even if it means sacrificing everything.

#justdoit." global news, 24 hours a day, on twitter,t tictoc on powered by more than 2700 journalists and analysts in more than 120 countries. i am haslinda amin. this is bloomberg. yvonne: we are counting down to some of the major market opens in the asia-pacific. let's bring in sophie kamaruddin. we do not get a whole lot of direction, so i guess we have to take our cues from e.m. sophie: that will be playing large into sentiment with asia. the dollar holding gains as well. any attempts to push higher in the region could be difficult to sustain. in asia, we are home to five of the 10 worst-performing market your today. sentiment asn on we get ready to start the day. it could look like a muted start to the session, and from japan, we are going to be waiting on the bond buying operations. the yen looking fairly steady

ahead of that. the rba expected to keep rates on hold as the domestic rate picture is looking more fragile. they do not expect any chance. the aussie dollar looking steady ahead of that as well as the latest current account data. the deficit is expected to have widened due to weak commodity prices. we are going to be gauging reaction to korea's final gdp growth for the second quarter, revised lower on the quarterly basis. we have inflation figures for august. core cpi coming in at their weakest since 1999, rainy. korea, acking to south person at jefferies was saying the economy shows signs of a silent recession. what does that mean? sophie: we have seen a laundry list of weaker data that points ansubdued growth and uninspired job market. firms are continuing to cut headcount. jumping to give you a snapshot of weaker data points,

manufacturing pmi has been below 50 for five straight months, which darby says is unprecedented among developed markets. the confidence has contracted over the course of 2018. are excessive relative to shipments and order backlogs are falling. an absencethere is of stocks with a technical picture remaining lackluster. the kospi down 7% year-to-date, so quite a bit of headwinds, one could say, for the korean economy, rainy. ramy: so -- ramy. ramy: thank you very much. switching to the u.s. week ahead, the u.s. market, looking at earnings as well as geopolitics among the drivers here as investors return from the labor daybreak. there is also the august job numbers and a technical factor some call post holiday cheer. su keenan is here to run through

all of those highlights. su: we know the president canceled his holiday plans to focus on trade issues. there's been a lot of tweets coming out. this could be a week of headline risk. there has been a tweet regarding the syria's president, a criticism of the u.s. attorney general, criticism -- the dollar has been holding steady. bonds expected to be in focus this week. we have got a number of options. the futures were up on monday. we did not have trading. oil above 70. let's go into the bloomberg though,cause -- ho because the holiday cheer -- there is a technical view that a bull market after labor day will see stocks continue to go higher. if you look at this chart on ' target hasysts steadily climbed.

the blue line is analyst estimates continuing to go higher. that also suggests we could have a strong end to the year. however, a lot of general theorists say september 10 to be a bad -- tends to be a bad month for stocks. let's look at social media in focus midweek, tomorrow, wednesday, as we have the heads of all the social media testify before congress, which is back in session, about the role of social media in the election. quickly, back to the bloomberg, if you look at the way social media stocks have run up, there is a big question for many analysts as to whether these are starting to become overvalued. dtv is where you can find our library of stocks. yvonne: a pretty busy week, too. jobs data on friday plus a new round of earnings as well. what can we expect? su: on jobs, the expectation is for about 192,000 jobs again and

unemployment rate at the lowest we have seen since the 1960's, which sends a message that the economy is doing well. take a look at earnings. we have the drumbeat of earnings, and tech earnings are in the spotlight. broadcom. there we go. onto oil, above 70, as we mentioned. many analysts believe that the iran sanctions issue could be a game changer. oil was week in july -- weak in july. it is up 21% year-to-date. gold, meanwhile, weighed down by the broad strength in dollar, but losses have been restricted given worries about trade tensions. some believe we could catch a business week for gold, except for citigroup who says who needs gold when you have got rising yields and a rising stock market? nobody.swer, they really do not think that gold is the place to be right now. back to you. yvonne: does not sound like it.

thank you, su keenan, joining us from new york. xi jinping is promising debt relief for poor nations in africa as he pushes back against criticism of his signature belt and road initiative. he alleged new financing for the continent at the opening of it in beijing. tom mackenzie has been watching all of this. what is the biggest take away from the president's speech? tom:resident xi -- president xi is taking on the criticism of the flagship program he put his name two, the central witticism being that his plan to build infrastructure across asia, central europe, parts of africa, that it is leading many of these countries heavily indebted. he took that criticism on and said what he was going to do was pushed through some debt relief african nations.

he did not name which ones. he outlined a plan for an additional $60 billion worth of credit. some of that would be interest-free loans. some would be grants. outlined what he china would not be doing in terms of its financing for some of these african nations. take a listen. if five -- a low five no approach. no interference in african countries' internal affairs. no imposition of our will on african countries. no attachment of political strings. no seeking of selfish political gains in an investment and financing corporation with africa. tom: it's not just indebtedness the likes of the european union, the u.s., at the imf, and the

likes of the pie minister are concerned about. it's also their lack of transparency and bidding process. when you speak with some of the african leaders, the nigerian president said it was crucial to building out some of their pipelines around the oil and gas in nigeria as well as if a structure within the heart of the country to open up trade flows. he said it was helping his country shed off or shake off the legacies of colonialism. ramy: nigeria being one of them, but how significant are trade ties between china and africa when we look at it on the whole? tom: really, it is boiled down to a relationship in which china said to these african nations, and sure we get supply -- ensure we get supplies, and in exchange, we will provide financing to build out some of this infrastructure. betweenseen the growth china and africa grow in terms intotal trade by about 14% 2017.

it is worth $170 billion according to chinese statistics. in terms of the financing china has been offering, it increased tom $100 million in 2000 more than $12 billion in 2015, and that is certainly up from those numbers. the trade relationship is deep. there are geopolitical concerns for china. they are the only overseas military base in djibouti. we expect this to become increasingly enmeshed. we have the likes of ghana a $2 billionl with infrastructure program china will be heavily involved with. i was just one of the memorandums. there -- it was just one of memorandums. we are expecting more. relationshipf building happening between china and africa. tom mackenzie, thank you very much. coming up, a look at how southeast asia is working toward regional trade deals amid the worsening u.s. dispute with

china. we will hear from the u.s.-asean business council, next. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. ramy: i am ramy inocencio in new york. president trump's decision to skip two meetings in asia has raised questions as to its reliability as a counterweight to china. let's discuss those implications with a guest who previously served as u.s. ambassador and was a union official to aipac. michael malik, now senior vice president at the u.s.-asean business council. good to have you on the show. when you first heard the news that donald trump was not going to asean, was not going to aipac, what was your reaction? michael: my first reaction was what a mistake.

this is just the wrong time to do that sort of thing. he had a chance at this point to go to both asean and aipac, and at least at the summit, he would've had a chance to meet with xi jinping and talk about the issues between our two countries, but i am afraid that opportunity is gone, and although vice president pence is going to be a good channel to carry messages back to the president, without the president there, there is very little chance that there will be breakthrough in terms of the trade issues between china and the united states. ramy: we have couched this as a counterweight, asean to china. when we see the retreat or the optical retreat at least of the united states from the asia-pacific, from the indo pacific, through the lens of china, how do you feel about that? what do you think beijing us thinking -- is thinking as it sees these geopolitical risks a ign? -- ali

michael: this is a chance for them to show by comparison that xi jinping says that he will support an open trading system, open economy, more transparency, free trade for everybody, and i think that he sees that he can make a lot of soft power points with this kind of comparison. last year at aipac, the comparison was very favorable to xi, and he has continued his charm offensive going forward, and even today in beijing, at the china-africa summit, talking about pledging not to interfere in africa's affairs with a lot of loans. yvonne: do you think this is the u.s. essentially abandoning that approach to this part of the region? and you think open the door

further for china to flex its military and economic muscle in the region? no, i do not think it is abandoning the in the pacific strategy at all. we just recently had mike pompeo coming through the region and a number of other american officials coming through the region to talk about the additional aid numbers and some of the additional programs, particularly in energy and infrastructure that the u.s. government intends to go forward with. that continues to go ahead. you will remember that last year, at least, the president came through with one of the longest asian trips ever, visiting five countries and over 10 days and whatnot, and it is just too bad he cannot do it this year because the here, it is much more critical as the trade war enters a very critical phase, because of the additional of another -- addition of another $200 billion worth of

tariffs. it will cause a lot of competition because china cannot retaliate using traditional trade. they want to use something else. canne: do you think asean actually benefit from the trade tensions between the u.s. and china? talked aboutve moving sourcing away from china just because of higher asia costs, higher commodity prices. could that speed of that acceleration and move more of these manufacturers to your part of the world? i certainly think that it can. in vietnam, we have already seen some yarn producers coming to vietnam and making investments there to try and take market share basically away from china during what is happening in the trade war. we have seen some other people looking now to move their supply chain. the problem is that with supply chains, they are very complex

and particularly anything involving manufacturing has some long lead times, and ultimately, until we actually see what happens when the tariffs going to affect to see the secondary it will bey effects, difficult to know exactly how to do that in the best way possible, but everybody is talking about it, and people are already starting to put out feelers for more investment, more trade, and more adjustments to the way in which they do business in southeast asia. ramy: so that is the negative -- excuse me, the positive side of things in terms of what could be happening to the benefit of asean. we know that there are no winners or losers, so to speak. everyone loses, really. in terms of that, where do you think could be the biggest hurt for aussie on -- asean then? michael: if you look at the direct fx, the direct fx will be the loss of trade and the trade.ed cost of

then have been 30's i have seen, but most of the studies put at 2% of most of the gdp of nations within southeast asia. i mean, there are certain countries like malaysia, where you have got consumer electronics, hard disk drives, and things like that. singapore will be hurt by a lack of trade. one other thing i think we have to look at is to look at where some of the commodities prices and the other contracts that are denominated in dollars.as the price of the service on up, debt contracts and other things is and this isup, going to be another hit to some of the economies within southeast asia, and again until it actually happens, we are not going to know how bad it is going to be. ramy: very quickly, we will that you go. tariffe new -- this new

round of into effect, it will be broken up into batches, not one lump sum. michael: that could be. there is some sort of logic to doing maybe half of it first as if you do have of it first, then the total of goods under tariffs 160 billion, but if you go over that amount, then china has to look for other avenues for retaliation. and this could be in terms of adding new nontariff barriers to american companies or putting them through various regulatory harassment or looking at idr issues with them -- ipr issues with them. there are a lot of asymmetric kinds of fields in which they might move forward, and that would be very problematic, i think. ramy: the drumbeat continues to september 6. thank you very much, ambassador michael michalak. more to come on "daybreak asia." this is bloomberg.

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ramy: let's do a quick check of the latest business flash headlines now, and few chinese companies divide the markets like ping an insurance. the most popular stock for foreign investors who bought almost $2.5 billion of the shanghai traded shares via the hong kong connect -- it is being ditched in hong kong by chinese investors who sold more ping an shares than any other company apart from tencent. they are selling on the mainland. competition to manage the money of asia's burgeoning army of millionaires is pushing pay hikes for wealth managers to the highest in more than a decade. those willing to jump are being offered at least 30% in hong kong and singapore. cap gemini says 2000 new millionaires were minted in the year.acific last

credit suisse says the two cities have fewer than 10,000 wealth managers. yvonne. yvonne: we are counting down to the market open in japan, south korea, and australia. three minutes ago. a muted start when it comes to the region, although these wobbles we see in em could mean any kind of raleigh we do see could be pretty short-lived. nikkei futures pretty positive. we pretty much flat on the coffee futures. we did get inflation numbers. it should pour some cold water on the hawks out there that the bok may start hiking later on this year. asx 200 futures pretty much flat right now. continuing to watch the rba decision happening a couple hours from now. talking markets, we want to a guest. dominic snyder from the head of commodities will join us. talking about hedging the asian

currency exposure with more short-term dollar strength on the way. the market open, coming up next. this is bloomberg. ♪

yvonne: we live from bloomberg's asian headquarters. welcome to daybreak asia. emerging markets remain under pressure. inflation at its fastest in 15 years. argentina faces judgment day. officials look to the imf for faster access to credit. ramy: i am ramy innocencio in new york. trump trades golf. the president canceled a labor day round to work the phones as

mexico says canada must be in a post-nafta deal. the minnesota police say their investigation is ongoing. ♪ ramy, it seems like we are taking the cue from emerging markets. inflation spiking to that 17.9%. a lot of talk about what that central bank is going to do next week. are reacting to those emergency measures from the president. ramy: it is going to be judgment week in terms of trade in the united states. u.s. and canada talks ongoing this week. in addition, there is a drumbeat continuously toward september 6

with that new tariff around on $200 billion -- round on $200 billion worth of chinese goods. a lot going on this week. yvonne: let's get you to your market open. >> we do have that overnight e.m. casting a bit of shadow. some caution for the asian session. futures are nudging higher. we are seeing divergent between -- divergence between u.s. stocks into their asian counterparts. traders are going to be waiting on the first bond buying operation from the boj since their september plan last friday. back, givingscale more reasons for investors to go short.

yields, hedging back below 2.51%. 72 dollar hovering around u.s. cents. we are seeing the korean yuan back above $11.11 against the dollar. a rate hike taken from the korean bank this year off the table. cut might be the next move unless the job market in korea improves. ramy: thank you. ramy:it is judgment day for argentina. deluge of emerging-market news. let's go to our lives strategist. mliv strategist.

sentiment is so important in a situation like this. is goinghat situation to be set by how things go before hand. there are some fairly radical moves. it might give them breathing space. investors are going to be looking for the odds that macri can get done what he wants. even if there is a slight bounce, this is the bounce that use asse investors will

a time to get out the door without having it slammed it shut on them while they are moving. ramy: looking at emerging markets in total, will september be equally as cruel as the summer? >> it is possible fall will bring a rather vicious harvest after the summer. of these videos syncretic concerns in turkey and osyncratic-- idi concerns in turkey and argentina, and not emerging-market difficulties in europe. the easy money of the past in argentina encouraged some big because being unwound the regime has changed from the way it was when those big bids were made.

i am almost so bearish i am sentiment hasink gotten so down that if we get a move back up, the relief rally could be quite startling. yvonne: thank you, garfield. mliv strategist joining us from sydney. inthe cio of an investment company that manages over $180 billion worth of investments. how are you feeling in terms of the rigidity and situation right now? rightentinian situation now? >> there are a lot of moving parts. we have growth and trade diverging. if you look at emerging markets as a universe, things have

actually improved in terms of interest cover and exposure. in terms of current accounts, in terms of fiscal balance. that universe is more stable. within that universe, we have points.k turkey, argentina, brazil, south africa. get whyates tension to are investors now looking at the rest, more than the opportunities? there is a world where growth is slowing down, apart from the united states. that is the system of this risk aversion we are seeing. there is a lot to fear. we have seen that. in terms of valuation versus growth, markets are actually quite attractive. yvonne: what turns sentiment

around? virginie: the u.s. dollar has been very strong. it was not that long ago people were focusing on the 20%, saying the dollar should be week. either people look at bill rates or growth or deficits. in termse move around of what they focus on. there is a much stronger dollar stronger -- a much dollar will not be good for the united states. the inflationary impact of a -- would not be good for what we have. we will continue to have a stable dollar for a while but we will probably

give it more clarity between november into january, when we start seeing new policies or not. is when new tax cuts come back into the debate. going back to fundamentals, earning risk premiums, that is the other thing. if you have a three-year horizon, you should start picking things up. value-liquidity is very disconnected from growth. ammunition int of terms of what it can do. impact onhave an overall growth and chinese theth, but it is where numbers of flexibility are. it is more if you're that damage this point. -- fear than damage at this point. yvonne: -- ramy: where are you looking at thing, itogy is one

has been under attack under the made in china 2025 regime. virginie: exactly. i am here in hong kong to participate in the convention hosted by prudential. the topic of the discussion is brave new world. one of the things i wanted to talk about is technology. we still like u.s. technology. we are slightly positive on equities, looking to add on any weakness. we are negative on emerging markets. we like china. what you want to do is come to balance that technology growth with some of the most stable sectors in a china's health care and in consumer and as part of the financials and commodities.

would be very, i careful. inflation is being quite we haved, even though had very strong oil prices. financials can be quite interesting as well. ramy: i am glad you touched on commodities. looking ahead to oil, especially supplynctions, and destruction really kicking at the base, what are you thinking in terms of where oil might be going? oil.inie: i am a abear on we have had a lot of oil price increase. to thee to go back short-term disruption issues in the pipeline. it looks like we could have more of those. beyond that, we could see growth continues toale

grow as a percentage of total energy needs being met. yvonne: -- ramy: you are sticking around with us. stay tuned. in the meantime, let's get to the first word news. mexico's outgoing president says the potential nafta replacement must include canada. his country wants to participate in trilateral talks and it's important to canada in the agreement. has not accepted any restrictions in the current talks with the united states. hesident trump has indicated might expel canada from the potential deal. slumping exports from i wrong -- from iran before sanctions take full effect.

russia posted records last month -- opec output was the highest this year. a chance to put speculation about his future to rest. --asury committee questions what he does next has been making headlines in the united kingdom. about been talking staying on as governor beyond his pledge departure date in june of next year. the bank and the treasury declined to comment. beijing is countering criticism its vast development plan -- of its vast development plan of settling emerging countries in the economy with debt. president xi told his audience he had no interest in forming an

exclusive club with 6 -- with competing vanity projects. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. how to still ahead, position in these volatile times and driving trade tensions. ramy: later, we are talking to ubs wealth management, advising dollar investors to stay ahead on asian fx. this is bloomberg. ♪

ramy: welcome back. this is "daybreak: asia." president trump was planning to spend labor day on the golf course but abruptly changed plans to work the phones on nafta, with canada and china.

the president is preparing for a shifting week -- interesting week. >> there have been negotiations with canada. the president hope to tell congress on friday he had a deal on trade. instead, he said he needed more time, though he is prepared to go without canada. mexico is now saying they don't want to do that, and congress does not want a bilateral agreement either. it would be, located. now it is back to the drawing board. is set to -- the united states is set to go ahead with more than $200 billion of tariffs on chinese products. when talks resume on

nafta, what can we expect to happen? >> there are two main sticking points. someone is going to have to blame the united states or canada. has to haveaid it protections for its dairy anti-dumping language that allows for an , whichtion panel president trump to eliminate it nafta. at this point, it is a question the u.s.r how much wants canada in that agreement, or whether they are willing to work without them? thank you. let's bring back virginie. given the prospect of potentially more tariffs,

targeting consumer goods, it is likely there will not be a rally this week. what are you expecting to come out? the trade war between the united states in china is not about trade. in the worldports are linked to multinational companies and a lot of those come from the united states. a certain percentage of exports in china are linked to those multinational companies. view is that this is about global competitiveness and technology in the background. china is wondering if president trump really wants a deal at this point, or not? or if there is a political

element, but there is also something else about forcing this. with artificial intelligence taking 50% of chinese activity, from a technology standpoint, can chinese -- can china afford to challenge what can have a long-term impact on competitiveness? china is very resilient, the economy and country. yvonne: you are saying this is all about the u.s. been concerned about china being a global superpower. virginie: i think so. it is the pendulum swinging back in a way. at the beginning of a new structural era.

those things don't happen rapidly. they are often a little bit painful. the tools to be resilient and help the economy, as we have seen already with some of the adjustments. that, we clearly want a playing field that is level, because it is important for the rest of the world. ramy: you talked about resilient. the word malleable also comes to mind. up-ice china on one side and it goes another way. side, push china on one it goes another way. talk about the channels opening up in the opportunity there, what is most important to be aware of dachau -- aware of? china has a very incentive to create this

initiative, with a very important global assignment. there is an incentive to cap global finances and link insurance funds -- an opportunity to transform that part of the world by bringing in capital investment into climate efficient areas. that is a fantastic opportunity at this time. states will remain partners with europe and the rest of asia, but this is really something we need to pay attention to. some real assets and investments to structure private equities. this is something we find quite intriguing. the position is very interesting.

there have been folks who have said this is a neo-colonialism. taking advantage of countries who otherwise would not have access to this kind of money, expanding to africa. xi has beenent addressing that this expands to african leaders. what would you say in terms of addressing this neocolonial lens? have been investing in emerging markets for about 30 years. there are many ways capital can go into investment opportunities. it can be through public markets, through private markets i think for a lot of those countries, those capital investments can really help create jobs and opportunities

and growth. they have to be done within the globally accepted standards, but i've really see an opportunity along climate change in particular to really influence some of those countries and help them. is internationalization the doorway? virginie: it has to be. lot of progress in asia. i think cleraly that is the goal. becoming a fully mature superpower. ramy: -- yvonne: virginie, thank you. bloomberg subscribers can get the roundup of they -- of the stories they need to know in the bloomberg edition of daybreak.

check it out. this is bloomberg. ♪ >> dons the bank is finalizing

an internal investigation into the claim of laundering billions of dollars into illicit funding. the bank admits the situation is complex and says no conclusion can be drawn. its targetsa missed of 6000 model 3s per week last month but it is hitting its overall goal in the third quarter. the company has been aiming to 000 model 3s during the month of december, the

single that tesla has produced producedoal tesla has during the entire second quarter. this is bloomberg. ♪ ♪

>> it is a 30 a.m. in singapore -- 8:30 a.m. in singapore right now. we are expecting to see potentially more intervention into the currency from the monetary authorities, given that fed rate hike is supposed to be priced in. ramy: you are watching "daybreak: asia." a new fiscal plan is being

investors are more worried about the country's ability to finance itself. there is a proposal to eliminate about half of the current ministry. argentina prepares for talks with the imf about capping a billion dollar credit line. turkey is looking for higher interest rates after inflation accelerates. the bank would use all the tools in the box at the next week's policy meeting in the face of what it calls a significant price risk. the lira strengthened after the announcement, but later reversed course. one of the leading political parties in thailand says it is confident elections will happen next year. it should take place in the first half of 2019. the prime minister told bloomberg he is optimistic, although he had yet to say if he

would run for office. he did say the democratic party offers the best alternative. >> i don't think the country has to choose between a corrupt regime and a dictatorial one. party -- but he would do well to represent that better alternative. begunsident trump has blaming justice department indictments against republican lawmakers for endangering their seats in the midterms. representative hunter has been charged with corruption and another has been charged with insider trading. bank is expected to intervene in the currency markets even more. authorities spent more than 4 billion u.s. dollars to support local dollars.

the fed prepares to raise rates. funding out ofng the city. our diamond buyers rejecting lower quality stones? diamond buyers rejecting lower quality stones? the diamond market has been hit by too much supply and man-made stones, such as the lightbox br and. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. time to see how the asian markets are shaping up so far. asian stocks are mostly lower. new zealand is an outlier with activity, a three-day decline.

we are seeing a huge decline in japan. we have the dollar holding steady, while treasuries are catching a slight bed. the asx 200 is set for a fourth day of losses. 72, andie is back below the korean won, resuming losses that downward division in the second quarter. the decline is being led by cosco among steel stocks. laggards,k at some soroka bank in tokyo falling as much as 3.3%, amid news reports it lent about ¥50 billion to 20

companies related to the founding families. the stock is set for a fourth day of decline. value commerce is jumping to the highest level on record. this company offers internet marketing solutions. the stock was rated to outperform. another is climbing after second-quarter earnings beat estimates. another drugstore operator is rising as much as 6.7%. the stock was upgraded to buy at jeffrey. an oem player for sound and keypad devices, a 36% gain for stocks. ramy: let's head to the commodities space. brent crude rose to a two-month oil exportsran ian reached their lowest in two years. highest output is the

this year. what is the reality that buyers are discovering? is a lot to focus on the asian markets. asia is the world's biggest buyer of crude at the moment. china and india had initially come out, they were pushing back quite strongly against the united states, arguing they do not want to cut their iranian --orts, but they have add they have had started cutting. refineries said their ships are not going to carry iranian crude anymore. september would probably be the last time they will imports from iran. even though a lot of countries seems like they've are quite against what trump was doing, the reality is they are having to cut back. ramy: what is the significance

of november 4? >> that is the deadline for when all importers -- all buyers have to stop importing iranian oil. in order to receive that oil by, thet early or mid november, buyers have to decide whether they are going to buy or not this month. there is a lot to focus on how much countries can produce. we have various forecast at the moment. about 2.5ending out million barrels a day and forecasting it might drop to one million barrels a day. everyone is going to be affected. yvonne: what are the broader effects for the market? as to whethererns other opec nations will have to raise capacity? anna: opec has come out and

saying they are going to put more and they have been focused on this for quite a few months. the nigerian minister even said yesterday they can offset, but the losses from iran are quite substantial. we are already seeing this affect prices. are seeing the midterm futures rising higher than the long-term futures. this signifies that there will be a supply crunch later on. there is going to be quite a significant impact on the markets. thank you. of billionaire founder j.d..com has returned to china, even though he was arrested over the weekend in minnesota. he was a doctoral student. this arrest involves another chinese student. jd'sight this affect adr's when u.s. markets open?

expectations seem to be there will not be an overly long term effect on the company. if bets go out the window the ceo of the company is forced to come back for more questioning, or is charged with an actual crime. at this stage, he is only accused, rather than formally charged. this comes as jd is looking to expand internationally. how might this affect those plans? >> a little or a lot. the mug shot of richard liu is all over the chinese and international internet. this is something that will likely follow him for a long time. if he is proven completely innocent of the charges, it will not affect the global expansion, but this is

something for which we will need to be prepared. >> thank you very much. andng up, ubs says the yen the aussie has been hit hardest by trade shocks. we will get behind this, next. this is bloomberg. ♪ erg. ♪ >> welcome back.

this is "daybreak: asia." yvonne: the yen and the aussie dollar have been most affected by the u.s.-china trade dispute. the impact of currency moves on trade shows a 7% hit to the yen and a 3.7% hit to the aussie. joining us is the head of the

commodities department at ubs wealth management. see morekely to volatility? i am guessing we could be seen more rumbling. stay, but that will we might get a ball more in emerging markets currency. tariffs on chinese imports will allow additional volatility. exports are keeping up very well in the region. we have yet to see more uncertainty creeping into the numbers. yvonne: does that mean more upside for the dollar? >> in the short-term, we expect the dollar to strengthen. the reverse will still be taking place on the fed hiking. europe, it'sod in not that good.

the central bank in the region could need to hike -- hike rates to stabilize the currency. yvonne: we have been watching what is going on offshore, which we are closely monitoring. the overall basket of currencies, it looks like we have brought them down a bit, after two weeks of decline. emerging markets or even asian fx can take the key was more so than what we are seeing in the dollar? i think there is more to come on the downside. chinese credit data is not turning, yet. we are going to see some of the fiscal and monetary influxes moving into better numbers.

we have yet to see trade numbers that are coming out, on friday and over the weekend. little bitbeen in a of a soft touch. taiwan has been quite good. we are looking at $200 million in terms of tariffs, 10-25% tariffs on 200 -- on the chinese tariffs will have imports -- will have importance for the supply chain. you will see this affecting the asian economy. ramy: what you think about weaponization? we did endorse the devaluation.

if you look at the latest development in china, they have been trying to slow down the decline. you have countercyclical factors . this must induce volatility in the cny. do you think the countercyclical factor has already worn off? the bigger picture for us is to look at what is happening on the trade side. what is fundamentally different running thena is current account deficit in the first six months of the year. their ability to manage the currency is reduced, unless you are relying on capital market controls. that is something we need to track closely. could come down as we

try to stabilize the currency. ramy: your call about the want toty with rnb -- i go to the aussie part of things. folks have said it could go to 70, but they have also said it could go as low as 60, come next year. toi don't did you need to go 60. we are targeting short of potentially 70. australia is a mixed picture. picture we are going to get this week is going to come down from three to 2.8. here, maybe we don't need to do much over the next 6-12 months, but the next move is higher.

intoould take consideration some of the commodity prices have actually gone up, and not down. the problem is, the u.s. rates ae higher, which is creating bit of a drag on the currency. yvonne: do you just avoid most of asia fx? dominic: you can have yen and more portfolio, just as an insurance trade -- in your portfolio, as an insurance trade. the aussie is another way. you can play the currency -- with a dollar long versus the thailand dollar. this is more due to trade uncertainy. don't speculate toward more weakness. the bank of indonesia in

particular, it doesn't seem like intervention has really helped send the declines. -- stem the declines. virginie: -- dominic: we need lower growth. indonesia, we have account deficits. we need to have a more balanced external side. r.b.i. is not done. those are probably the most vulnerable currencies we have at the moment. that is not the case in thailand. it is probably more shielded. but exports, a little bit into question. the current account deficit economy has bomber ability that will show up the next months.

is a chance this can spike into u.s. sanctions. that will weigh on the indonesian currency. there is more to go in the weakness. let's talk quickly about gold. months, west five have seen this fall. is gold over? we're already seeing september starting out in the red as well. is down, but not out. if you have that combination we had, emerging currency market weakness, if you look at gold's is not that bad. if you have that kind of weakness on one side, in the u.s. you have phenomenal equity

markets. but otherwise, not much. if we break down this tough environment in the united states, the risk could potentially hit. but we should accumulate gold for longer-term holdings. ramy: great stuff. bloomberg users can interact with the charts shown using gtv . browse the charts for your future reference. this is bloomberg. ♪

ramy: one of thailand's leading political figures is confident his country will return to democracy early next year. junta has repeatedly pushed back a vote. the former prime minister tells us he believes an election is on the horizon. i am not sure it will be in february. we are confident the elections should be held in the first half of next year. >> why should people be voting for your party? >> we offer a different

alternative. we think the country needs to move away from the centralized which cannot address some of the fast changes happening in the world. the companyink should go back to regimes that are corrupt and centered around populist policies that are not sustainable. shift, to see a paradigm address the issues that matter to people. to have an want elected government that has a clear path of sustainability. win, your party were to you may have to work with the current party, because the constitution has been amended, legal framework is being written up right now to put the military still in charge. how would you go about that? >> if the people give us enough

support, we would be the core of the government and dictate what kind of policies should be permitted. the democratic party is not interested in joining any party that would take the country in the wrong direction. >> the constitution needs to be amended again? some provisions that could be obstacles to the things we want to do for the good of the country. but we seek a broad consensus because we don't want the constitution to be get another conflict point. -- be yet another conflict point. was this a mistake to have the military in power over the past five years? >> i do not accept a corrupt government. the country does not have to choose between a corrupt record -- corrupt regime and eight the real one. dictatorial one.

>> what policies are needed for thailand to go forward? >> a quick revival of the economy, the income for people, particularly in rural areas. they have been hit hard over the last four years. we need a proactive policy that will help farmers, and to move forward to make sure there is better security for people. some people have said your party policies are pretty outdated. >> the policies i have mentioned just now are far more progressive than what many countries are practicing. is the question of having outdated policies. i recognize the appeal of some of our policies will not match

the populist policies of our arrivals. provenolicies have now to fail again and again. they have caused considerable doored and have opened the to poor option. our policies in the past may not have been as exciting, that most of them can be sustained. that was the former thai prime minister and leader of the democratic party. let's get a quick look at how markets are trading right now. down by able to more than a 10th of a percent. -- a little more than a tenth of a percent. >> still to come, ♪ percent. >> still to come, ♪ xfinity mobile is a new wireless network

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>> emerging markets is the story. let's talk a little bit about argentina. trying to bolster investor confidence. competing for faster credit. the president canceling a relaxing round of golf as mexico says canada must bank -- be in a post-nafta deal. >> china's leading online