save. for a limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need this bed. haidi: a very good morning. i am haidi stroud-watts in sydney. just an hour over from the open. shery: good evening from new york. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, asia-pacific stocks look set for a muted stock. hong kong and philippine markets are the world's worst over the last five days. oil jump in the most since june as hurricane florence hits

gasoline markets. it could be one of the biggest storms in history. trading up -- canada seeks to bolster. president trump threatened to quit altogether. shery: breaking news on the bloomberg. south korea's unemployment rate rising to 4.2% in august, the highest level since january 2010. we are expecting it to come in at three point 8%, the level for july, but unexpectedly rising more than expected to 4.2%. the highest level since january of 2010. manufacturing jobs have taken a not torecent months, mention that youth unemployment has hovered around 9% in the last few. also, we are seeing the rise in unemployment wages reducing the odds of the bank of korea raising rates which has been stuck at 1.5% since november. south korea's jobless rates for august rising to 4.2%. also rising from the previous

month. the highest level since january 2010. let's see how things are shaping up for the market open in asia. sophie kamaruddin is here. sophie: another weak economic indicator that could be a headache for moon. the focus and korea could be on the potential tech rebound on the back of apple snapping a four-day decline ahead of its product reveals. the kospi could be nudging higher at the start of the session, but overall, we are in for a muted session. one potential catalyst of note saide rising bets on two rate hike -- fed rate hikes. a two-year yield is at a fresh decade high. relief could be looking fairly tenuous with asian stocks trading at around their teen mudflows and the hang in a bear- market.

asia, matters may be obligated for indian policymakers with expectations that inflation may be slow in august. haidi: thank you so much for that, sophie kamaruddin, taking a look at what we are setting up for in the asian session. stocks posting gains for a second day. tech rebounding. oil surging. yields on the 2-year note surging. su keenan joins us with the details. we getthe top story as that battering from hurricane florence as well as the sanctions on iran. ahead of thee supply report on wednesday, but let's get right to the market close. again, it was a search for the afternoone in when we were higher across the board. big push from energy related shares. notice the nasdaq 100 has the biggest gain of all, the highest concentration of tech stocks, so you see the gain there.

let's get into some of the other moves on the market. again, we noticed the surge in yields on the two-year, which is the most sensitive to interest rates. the fed is going ahead with its pash to raise rates. also notice oil near $70 once again and with a bullet is what a lot of analysts are telling us. we get to the fang stocks -- f aang stocks, and it was a rebound ahead of the iphone rollout. to be able to rebound from that selloff. it goes to second-quarter earnings, he says, which were exceptionally strong. get rid of the trade headlines, and the market wants to go higher. board look at the other of stocks. we have a mix of different things. microsoft relocates or puts its headquarters in canada, which investors seem to like. integrated devices. the chipmaker agreeing to a

buyout. yum plunging. tesla taking a dive as one of the bullish estimators takes his estimation to neutral. let's go into the bloomberg. we are talking about the hurricane. the strongest to hit this area in 64 years.oast it is expected to cause billions of dollars of damage and once again, we are seeing a lot of home supply and hurricane related docs surge. -- related-stocks surge. a are seeing gasoline move in big way because of the hurricane and a couple other factors. if you look at the energy across the board, we saw oil futures, gasoline futures, moving higher. yes, the hurricane is part of the reason we are seeing the sanctions on the iran exports.

also it affects supply, and ahead of the big ones they supply data, we get a private report that shows us there was 8 millionion -- barrel drop in oil that was supportive of higher prices. let's go to gasoline again. this is the big story. a dramatic spike possibly expected again for three reasons. you have the torrential rains coming because of a hurricane that could threaten the pipelines in the area. you have a mass exodus of people out of the area that will take on the gas that is available. you have fundamental issues of the supply that will push prices higher. for now, the bulls are in the driver's seat. shery: su keenan, thank you so much. first word is with jessica summers. jessica: china and russia say they will strengthen ties in the face of threats from president trump. presidents putin and xi held talks at the economic forum and said they trust each other in politics, trade, and defense. neither mentioned the u.s.

directly but later, xi underlined that they agreed to oppose bilateral action and protectionism. it is their third meeting this year. >> china and russia both bear the responsibilities of maintaining world peace and stability and promoting development and prosperity. we share similar views and common interests which form a strong foundation. a super typhoon is brewing in the western pacific, threatening the philippines and taiwan before heading to hong kong and seven china. to bring winds gusting to 230 kilometers per hour. it will be the strongest storm to hit the philippines so far this year. it is threatening rice and corn harvests in pushing up prices. launched its biggest ever wargames. they are in collaboration with chinese forces and some units from mongolia. feature hundreds of thousands of troops as well as

warplanes, military vessels, and 36,000 tanks. is even larger than the soviet union's 1981 drill. it is seen as a warning to the u.s. to stop threatening russia. is is proving -- and fear proving incredibly popular. the book about chaos in the white house foldout hours after its release. it is only available to kindle and other audiobooks. the website says the earliest buyers can pick up a hardcopy september 20 sixth. barnes & noble says it is available at their stores and customers will receive orders on time. 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 jessica summers. this is bloomberg. ♪ haidi: thank you. canada says the latest nafta talks were productive and there is goodwill on both sides.

and president trump both weighed in on the stakes of the negotiations. president trudeau: we know there is a good deal for canada, the united states, and mexico. trade is not a zero-sum game. it is very possible and even outon to get win-win-wins of international trade deals. pres. trump: canada, they want to make a deal very much. me, if we make it, that is good. if we don't make it, that is ok, too. canada wants to make a deal. we will see if we can get them into the deal we have with mexico. i think the deal with canada is coming along well. we have all been dealing in good faith. haidi: let's get more from our congress editor joe sobczyk. justin trudeau said no deal is better than a bad deal. we know that is pretty much how president trump feels about trade generally. where does that leave the likelihood that we do get a nafta deal? joe: the good news is the tough talk is being followed with talk

between the two sides, and there is some pressure in the u.s. on president trump to get this deal with canada done despite his willingness to walk away from it in order to get the whatever comes comes about -- pact about with mexico through the congress. there are outstanding issues we are told including canada's protected dairy industry, intellectual property, and pharmaceutical patents. but despite whatever they are saying about we are willing to walk away, both sides to keep saying they are bargaining in good faith and making some progress in these talks. they are continuing to go on and both sides say they are willing to keep going. governmentcanadian is set to release a blueprint for reforms that the wto. what more do we know? joe: this again is a factor of donald trump. the trump administration has refused to appoint a nominee for

one of the bodies that rules on appeals of wto rulings, and the work to unravel that the wto does. trump has said he is willing to pull out of the wto if things do not get -- if they do not shape up. doing that would possibly have more far-reaching consequences than the burgeoning trade war with china. because it does undermine some of the international rules of the road for trade that have been in place for almost a quarter century. so, there is some impetus for canada and other like-minded countries to get some reform done. this is something that has been while.about for a it is not going to happen quickly. they will meet later this month. it's going to be a long-term project. wto onchina going to the a 2017 ruling. what does this accomplish? to: china has asked the wto

allow it to impose retaliatory tariffs or get the u.s. to comply with this ruling from had that the u.s. improperly imposed anti-dumping penalties on some chinese goods that are coming to the u.s. so china wants to, within the framework of the wto, impose the retaliatory tariffs. they have not yet complied with the ruling but says they are still talking with interested parties about how to go about remedying the situation. so that is out a bit of a standoff. it all comes amid the entire trade tips with -- tiff with china that is escalating. shery: thank you, joe sobczyk. still ahead, opposition to trump unites as putin and xi pledge closer ties. russia and china working together -- what it means for

u.s. interests. haidi: looking back at the financial crisis. it has been 10 years. a guest joins us next. this is bloomberg. ♪

>> i was traveling from zurich to frankfurt when i got a phone call from our u.s. head telling me it is over, and that was really the worst-case outcome. we have not expected that. >> it came home to me when my neighbor knocked on my door and said i have money -- she named the money center bank, a really important one -- and said should i take it out? you probablyell, want to leave it in, but if you have money in the neighborhood banks, take it out. >> a friend of mine said i am down on paper 100 million quick today. it was not a particularly pleasant experience. >> i don't think anyone in the

world was prepared for the devastation that hit after the bankruptcy of lehman brothers and the chaos in the markets. they bought the bank essentially for half-price only a few days later. but the hangup on the barclays deal was that people in the u.s. wanted the british government to underwrite any potential losses from lehman brothers. >> i remember sitting down with mervyn king. we had dinner together on the night of september 23, and it's pretty obvious that there are three levers available. central-bank liquidity support government guarantees, and recapitalization of the banks. >> we are living through a financial crisis and we might be heading towards the great depression even if we do not act very forcefully. the contagion from the u.s. to other countries around the world.

major financial markets around the world. and that is when you realize this is no longer a problem in the u.s. housing market. this was a global financial challenge and that completely changed the ballgame. shery: those are some of our bloomberg guests on when they realized the scale of the lehman brothers collapsed 10 years ago. with us now is someone who was right in the middle of it all 10 years ago. former lehman brothers global chief economist and former s&p global vice chairman paul. 10 years went by pretty quickly. are you seeing any of the risks we saw back then? paul: i do not think the same kind of risks. this has been a pretty -- 10 years. on inot -- a lot going the world. if i look for any sort of potential big picture imbalances or troubled spots, i would not look to the u.s. at the moment. i would probably look at china.

you have some pretty big domestic imbalances. i would look to europe as well with the eurozone, where they still are working to put a banking union in place, for example, to complement the monetary union. there is a lot of work to do. >> yet here in the u.s., after the financial collapse, we saw some mechanisms in place in order to protect the united states financial systems from that ever happening again. we are seeing more deregulation, an overhaul of the dodd-frank. is that a risk? paul: the lessons from the crisis had to a large extent been sort of encapsulated in institutional frameworks. mentioning dodd-frank, i think how do youcus is stop a financial crisis from happening? make sure the banking system is holding better assets, make sure they have enough liquidity, make sure they have enough equity.

macro prudential policy. the other lessons were what do you do when you get into a financial crisis? the focus was much more on the idea of getting rid of too big to fail, orderly liquidation. do not have a lehman-type event. the lesson that was underappreciated was how important in a financial crisis it is to have a lender of last resort, the fire brigade which can put out the house if it is blazing. the lessons learned there have not been internalized as much as one would have hoped. it's: you know, interesting because on the one hand, we look at things like capital buffers for banks, and clearly, we are in a more resilient place than we were 10 or more years ago, but i want to look at what could be done from central-bank policy makers if we were to face another crisis. take a look at this gtv chart in our gtv library. it has been calibrated to look at what global rates have done

since mark carney became president of the boe. if you take a look at the 10 years ago, they were able to do this to be able to counter the effects of the global financial crisis. there is not much room to move if we were to face another situation like that. paul: a very good point. what you are focusing on there is the sort of conventional monetary policy ammunition that central banks have, and clearly, some of the banks are doing quantitative easing. the bank of japan, the ecb, it is figuring that out. it is still in place. there is a substantial stock of qe on the balance sheets of major central banks, so i think, definitely, if there were to be another great recession type situation, a monetary policy ammunition is not there to the same extent. it does beg the question, could central banks do more qe? could they do something like helicopter money? that was a debate that flared up a couple years ago. i think there will be the kinds of ammunition available, but not the same kind.

on the lender of last resort issue, which i just mentioned, that is more about -- does the central bank have the legal authority to move in and essentially liquefy the system? dodd-frank actually place to some constraints on the fed's ability to do that, and i think that point is not really adequately recognized. the other lender of last resort or stabilizer of a financial crisis that is very useful is a p authority, troubled asset relief program, the ability of the government to recapitalize the banking system. that was a very effective policy in the u.s., but also very unpopular, and that whole framework was closed down. haidi: going back to your point about the financial crisis potentially emanating from china and not the u.s., potentially, a financial institutions have been acting as lenders of last resort throughout this entire shadow banking crisis.

do you think the pboc and policymakers in china have the ammunition? ago said the days policy parities should be to contain an asset bubble. the policy priority is to maintain growth. paul: policymakers and ascends sense always have ammunition, instruments. the question more is will they bm -- will they be able to use them and diagnose the problem sufficiently quickly and the ploy the ammunition they need? why i mentioned china is that if you're going to worry about something, you would probably start there. there is a big buildup of debt and credit in the system but it is a transitional economy that the financial industry has not been stress-tested. most financial crises will happen as financial markets are developing or, as we saw in 2008, more sets of insurance

come that are new to the marketplace, so i would go more comfortable about china if i have the confidence that they have already been stress tested in terms of their own domestic financial crisis and come through that in good shape. tory: if the meltdown were happen in china, does it help that the markets have not been as open as many other investors would have liked? aul: innocence, it does -- in sense, it does. getting back to ammunition, if you think about asset prices in china, people start to worry about their deposit, start to try to pull them out. you would see a rapid response from the chinese authorities, something that looked a little bit like what japan did in the mid-1990's, which is guarantee everything in sight. the challenge for china would be that buys some time, but you to attack these issues head-on, restructure balance sheets, restructure management teams, we inject dynamism into the economy. would they be able to do that

the same way you are able to do in the u.s. market based system? shery: especially when you have a trade were going on in the background as well. paul, thank you so much for that. former s&p global vice chairman, paul sheard. if you missed out on any of the charts we showed you, gtv is your function. you can go into the charts and also open them, save them for future reference. live from new york, sydney, and hong kong this is bloomberg. , ♪

haidi: a quick check of the latest business flash headlines. alibaba is setting up a $2 billion joint venture with the internet services firm of russian billionaire -- merge their online marketplaces to strengthen alibaba's presence in russia. it is backed by the kremlin. in london and

jumped as much as 12%. >> we want this to be a russian business because we know it is a russian business and we combine the capabilities of the people and the businesses that this table. it will truly be an outstanding opportunity for both businesses and consumers. shery: three days after the u.s. open, the company that makes rockets for serena williams and other tennis dollars is detracting attention from china. it has served up a $5.5 billion bid for another sports company which owns wilson rockets and a ski brand. they closed 18% higher in helsinki. haidi: a top investor in cbs says the company of viacom probably cannot go it alone. the two could still merge but may need partners to compete against larger, more global rivals. cbs and viacomat

need to develop a new worldwide consumer strategy and that cbs needs to find a new leader with the programming prowess of the ousted boss. up next, russia and china planning to bolster ties. what does this mean for washington? ♪ shington? ♪

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sydneyit is 9:30 a.m. in and we are 30 minutes with from asia's market open. another day of losses here in asia, on track for the longest losing streak in 16 years despite tech rebounding in the wall street session. shery: it is 7:30 p.m. here new york where markets closed higher. the s&p 500 was up for a second consecutive session, being led higher by energy stocks. oil rallying. we have hurricane florence coming to the u.s. eastern coast. it is pretty foggy out there. haidi: you're watching daybreak

asia. let's get you the first word news with jessica summers. florence isricane expected to be one of the most powerful storms in history and is strengthening as it heads towards the eastern seaboard. late thursdaybe or early friday with north carolina as the target. at least one million people have been warned to leave the coast and -- canada is seeking to reform the wto to adjust to a newly protectionist united states. it is seeking an alliance of like-minded countries to restore confidence. ottawa says nafta talks with the u.s. have been productive. however, the nations remain at odds including -- know there is a good deal to be had that is good for canada and the u.s., and good for mexico.

trade is not a zero-sum game. it is very possible and even win out ofget win-win- international trade deals. jessica: china has asked the wto to hit the u.s. for illegal antidumping regulations. they ruled in 2017 at certain u.s. actions broke the rules. an arbitrator calls for compliance by august 22. five days later washington admitted they had not complied. they will ask to approve retaliation against certain american products worth up to $7 billion. the u.k. and the year of union are said to be preparing for a special summit in november to sign a brexit deal. several key issues remain to be resolved, but they are scheduled for a one-off gathering so they can agree on terms to the split. plans may be announced in austria next week. sterling has risen recently about optimism for a deal.

global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: as pressure from the u.s. grows, china and russia have pledged to strengthen their ties. russiaresidents met as held its biggest military exercises with china in four decades. both china and russia are facing tensions with the u.s. what kind of message does this meeting and these joint military drills send? >> that's right. the deterioration of the relations they have with the u.s. has really been the main focus as xi and putin meet. it is historic as this is xi and putin's third time meeting this year alone.

alongside this strategic it's not just business anymore. it is political and military. trump ornot mentioned the u.s. directly, but xi spoke about how russia and china are against unilateral issues as well as protectionist measures. take a listen to what he had to say yesterday. >> china and russia both bear the responsibilities of maintaining world peace and stability and promoting development and prosperity. we share similar views and common interests, which form a strong foundation. annmarie: the two have always been partners in terms of his this. putin also said trade with russia and china would grow to $100 billion u.s., up last year. it looks like this partnership is definitely moving towards

more of a friendship politically and with wargames militarily, not just business as usual. haidi: the biggest drills and 40 years. tell us about the significance and the messaging behind that. it is kicking off as they both meet here. the russian defense minister said they are mimicking it to us close to war as possible. years,uge because for china was viewed as an aggressor and a possible threat to russia. now they are fighting side-by-side with russian soldiers, 300,000. it is really a massive display of force. they are viewed at this point now as an ally. in terms of beijing, the message it sends to the u.s. and its allies is a strong one, especially in the south china sea. for moscow it is a strong message to nato, which has condemned these drills.

nato next week will be kicking off its own drills in norway, which of course is right on putin's doorstep. shery: what other meetings are left? ismarie: the big event today a session where putin, xi, abe, the mongolian president all take part. we'll have the south korean prime minister meeting with putin. they will likely discussed north korea. it is important to remember we are really at the board of the russia, north korea natural border. about 80 miles from where i am now. this is key for the meeting next week between moon and kim. the leaders are then set to watch a soccer match. yesterday xi and putin made pancakes. they are having a little bit of fun amid all the business and geopolitical discussions happening. shery: i wonder if they actually

did eat those pancakes. of course we'll be hearing from some big games at the eastern economic forum later. stay tuned for our interview with russian energy minister alexander novak. argentina's embattled central-bank -- despite the rapidly worsening -- our global economics and policy editor has a look at this and other emerging currencies. so, what did argentina have to say after this? the bcra, for one thing after keeping the key rate at 60% they pushed it up after they appeal to the international monetary fund to speed up

payments that they need to not default on their debt. that is what investors are saying anyway. they fear with session starting the -- this year continuing into next year, even of the confirmed no rate cut until at least december, possibly because they see surging inflation. jump into the bloomberg terminal with me. an what you will see is inflation rate that is certainly had its ups and downs. right now that rate is around 31%. you know what they are forecasting? a move to at least 40% by the end of the year. of course that is probably one of the reasons they are expecting a recession. when you have inflation that high, clearly that will hit consumers and businesses. and ahead of the bcra -- the head of the bcra has already hiked rates repeatedly to stop the freefall the peso. he sold the dollar to boost the peso, trying to keep money in

the country. nasa's incentive that cutting plans, basically doing everything he can. at this point people figure yes, they probably will not have to raise rates again, they will try to do is something to support the currency and hopefully should stabilize -- shery: remember the argentinian debt crisis in 2001 was pretty bad. now we are seeing that spread into other markets as well. this week brazil took a big hit. kathleen: we talk about idiosyncratic stories. certainly you have a trade war, this is been a pressure on emerging-market currencies around the world. in brazil it is the election. there is so much uncertainty about what will happen. it got hit again today, the rial, as the workers party who is the former mayor of sao paulo, he actually was endorsed by lula today.

people were waiting to see what he would do. he is in prison, convicted on corruption charges. the 55-year-old workers party candidate is still in a statistical three-way tie. two are far behind. a former military leader who is socially conservative is leading with 26% approval ahead of the first round of the elections next month. in terms of what this means for emerging markets, i want to look at emerging-market stock markets in latin america. what you'll see is they have all been hammered. you will see on this chart, you have got the brazilian white line at the very bottom. it is the most beaten up. mexico, turquoise, stabilizing a bit. chile and peru above. one thing they have in common is a study downturn, and this is one thing hanging on everyone.

and everyone is waiting for the turkish central bank meeting on thursday. we have some big was of course. the boe and ecb, but turkey is being closely watched now. haidi: we have another post a chart. he reports out of inflation. indications for the rupee. kathleen: the rupee is asia's worst performer this year. let's start with a trade deficit, because this has been widened by oil prices. india is very dependent on imported oil. it will remain wide in august. prices is a big reason. oil prices rising. banks deleveraging, that is not a plus. dpi, although it is expected to fall below the 4% target in the latest report. if anything, people are not

looking for a rate cut. the pressure is on to take more aggressive steps. maybe not only a rate hike in october, but many other special measures they are taking to try to stop the outflow of the currency, to put on some kind of control. in the meantime, another tricky balancing act and another idiosyncratic story that feeds into the bigger one, emerging market stocks under pressure. haidi: kathleen, thank you so much for that. coming up next, russia and china pledging to both fight in the face of u.s. tarrifs and sanctions. this is bloomberg. ♪

haidi: this is daybreak asia. shery: the eastern economic forum is taking place.

russia and china pledging -- robert.us is professor how much of this meeting is russia's give it to asia as its relations to the west decline? robert: i think this is a step of russia moving closer to china. been going on for some time and it is quite serious for the united states. i am glad you are having this broadcast because we have a lot of policy debates about russia talkhina, but we do not about what this cooperation means for the united states. and that is very much needed. shery: let's discuss the implications for the u.s., especially at a time when the administration seems to withdraw from the asian region. what does this mean for ongoing relations? robert: i am not sure the u.s. is withdrawing from asia, but

the point is russia and china are coming closer together. this has been coming for many years. we have been studying it in a project with the national bureau of asian research, and there will be a new report this week on this matter, laying out our findings and what has happened, and it is serious. this episode this week is just the latest page in a book and beenhe two sides have working closely together in ways that undermine american interests in asia, in europe, and they back up each other in various challenges to the united states. it is a very serious situation. this: by some accounts would be the kind of warmest relationship between beijing and moscow since the 1970's, so-called access of autographs. -- autocrats. what do you say with president trump pulling out of various high-profile events he was meant

to attend over the next couple months? robert: that disadvantages the u.s. and asia temporarily, but we are dealing with a strategic problem here, and we need to -- number one, there is no easy fix to this. this project we have an working on involves 100 specialists, and we found no easy fix. the basic message is strengthening. the united states has to strengthen its military, its economic and diplomatic profile over time. -- there are three lasik basically as we can follow over the long-term to work on this issue. probably the most promising is to work with the countries around the rim of russia and china that are directly threatened by russia and china, and there are a lot of them. with those countries, i think we can have an effective counter position, along with various strengthening of mechanisms that are needed measures needed by the u.s. to be in a stronger position to deal with these

countries. when you look against the background of a worsening trade war not just with china but multiple trading partners around the world with the west, are -- the u.s. are we entering a stage of u.s. isolationism? robert: i don't think so. i see the year security policy is very -- the u.s. security policy is very active, moreso than in the past. it has grown over the past couple years. i see the trade issue is a very big problem and it is conflicted, and i agree, it is a confusing situation. in the main, i see the united states not withdrawing in a fundamental way, and we need to do more of this type of strengthening if we are going to deal with russia and china together in an effective way. shery: how much of the -- haidi, i was just

wondering how much of the helsinki meeting between mr. putin and president trump has helped bring back russian leaders to the world stage, given that russia has been sanctioned and condemned by the west? robert: we have a situation in washington where there is a split between those in the u.s. and congress and within the administration that advocate a tough policy towards russia, and mr. trump and those people that back him and his most soft approach. this couple kids the situation in dealing with the russia china challenge as well as russia itself. haidi: i was going to ask, do you think there is enough appreciation in the white house as a septic lamonica -- set diplomatic policy, of the implications of drawing from trading investment in a region like asia? robert: i take your point.

i assume you are referring to the tpp. i am sure the administration knows very well of the implications of that. i am not sure how we can compensate for that at this point. i think we are in a position where today, where the united states, the government sees itself disadvantaged economically and is trying to fix those imbalances in trade relationships that are the problem. that is another agenda item on the list of the administration. my argument, though, is just that on that list should be, how do we deal effectively with this r-closerh for -- eve chinese russia relation. this is not happened and i think it should. if we don't, i think we risk a thatroblem, a big failure

will have implications for us for a long time. shery: we are just hearing from the russian energy minister speaking right now, saying the oil market is still vulnerable in parts due to geopolitics. also that the opec deal was absolutely the right decision. supply increases was also the right decision. russia supplies oil and natural gas to china. how does this relationship affect the market? robert: how it affects the markets i am not certain, i am not an expert on that. it is just an element of close russia china relations. eir economic relations are very compatible in many respects. the main point i would make here is that russia relies on selling its things to china. china likes to get the oil and gas from russia. it can get oil and gas from other people as well. but the amount of money being transferred back-and-forth is much more important for russia than it is for china.

china's trade is so much bigger than russia's trade. shery: professor, thank you so much for that. plenty more coming up on daybreak asia. this is bloomberg. ♪ this is bloomberg. ♪

haidi: this is daybreak asia. the most read story on moreloomberg terminal, the -- the stock is no longer investable as share prices drop more than 4% before paring losses by the close. remy inocencio has the story. elon musk better stay away from twitter for a while. remy: i just checked twitter. interestingly he did not say anything about this. maybe he is taking some thoughts

to see what transpires. when you say no longer investable, when you downgrade the company to a neutral to buy, when you cut by $100, all of this is just the latest proverbial nail in the coffin on tesla. hop into the bloomberg terminal because i want to show you what is happening with the latest. look at the white bar. the superlative i want you to remember is tesla is leading the s&p 500 in terms of so from analysts. there are reasons for pessimism and optimism. pessimism definitely outweighs optimism. in the past few days he was on that podcast where he was smoking marijuana. a lot of investors do not like that. he also called analysts and critiqued them on earnings calls.

called that hero diver a pedophile. he says there are fundamentals for tesla that actually have never been better. he says it is better to remain on the sidelines until there is better leadership. haidi: wow. it is not all negative at least. at spacex, the president throwing her. or behind elon musk. support for elon musk. she says people should not focus on his triviality. she says there is no chance musk's conduct will impact spacex's ability to win contracts. while she says she supports, she is also pushing back fear of

contagion from musk and what is happening at tesla. ever since august the stock is down about 25%. haidi: let's take a look at how the markets set of is. we are minutes away from the major market open across the asia-pacific. let's go over to sophie. sophie: i want to focus on some stocks to watch in japan. big pharma players we are watching. the government is considering a second straight jump in drug prices. in korea watching -- october 10 is the date for an advisory to discuss the company's proposal. five similar cases and lost only one. in sydney, they posted an annual loss of nearly -- shery: the market open in japan just ahead.

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haidi: a very good morning. asia's major markets have just opened for trade. shery: good evening from new york. sophie: welcome to daybreak asia. haidi: our top story, asia-pacific stocks are set for a low start. they are the world's worst performers or the past five days. oil jumped the most since june as hurricane florence hits gasoline markets.

it could be one of the biggest storms in history. shery: china and russia aim to strengthen ties to counter threats from president trump. they say they enjoy growing bejewel trust. asians -- mutual trust. the lowest in 14 months. let's see how things are shaping up. sophie: we have seen asian stock valuations are at 2016 levels. it does not look what people are stepping in to buy yet. pointkkei 225 adding one 3% extending gains for a third straight session. in sydney the mood is looking somewhat cheerful, up 6/10 of 1%. stocks are looking more attractive after that selloff. in korea, adding 2/10 of 1%. investors will have a surprise uptick to digest, rising 4.2%.

taking the prospect off the table. rising bets on two fed rate hikes this year. 10 year yield is nudging towards 3% again. dollar trading, little has changed. dollar-yen looking flat, holding a three-day decline. energy markets are on edge with hurricane florence making its way towards north carolina. a barrel. cusp of $80 let's get you the first word news with jessica summers. jessica: canada is seeking to reform the wto to adjust to a newly protectionist u.s. they are seeking an alliance of like-minded countries to report confidence in the multilateral

trading system. the foreign minister has announced a deal with the u.s. is still possible, although she declined to say when talks would resume. sticking points include anti-dumping measures. >> we know that there is a good deal to be had that is good for canada, good for the united states, and good for mexico. trade is not a zero-sum game. it is very possible, and even common, to get win-win-wins out of international trade deals. jessica: south korea's jobless rate came in at 4.2% last month, the highest since january 2010. that ends the prospect of a central bank rate hike and a green light to push yields lower. they will target specific measures to rein in the real estate market while keeping fiscal and monetary policy to a slowing economy. a super typhoon is brewing in the western pacific, threatening

the philippines and taiwan before heading to southern china. it is forecast to bring winds gusting to 230 kilometers per hour with heavy rain and storm surges. it will be the strongest storm to hit the philippines so far this year. it is pushing up prices. say they willia strengthen ties in the face of threats from president trump. talked atputin and xi a forum and said they trust each other in politics, trade, and defense. neither mentioned the u.s. directly but later xi underlined russia and china agree to oppose unilateral actions and protectionism. it is the third meeting this year. both bearnd russia the responsibilities to maintain world peace and stability and promoting prosperity. we share similar views and common interests, which form a strong foundation. jessica: sears is proving incredibly popular.

-- fear is proving incredibly popular. the book sold out hours after his release. it is now only available through audiobooks as amazon rushes through stock. the earliest you can pick up a hard copy is september 26. isnes & noble says it available at stores and customers will receive orders on-time. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. let's get another look at the oil price. crude jumping out. the biggest drop in u.s. stockpile since july. how much of his support for oil prices is the supply drawdown and how much are the recent headlines over the impact of weaqther -- weather in the united states? stephen: right now we're seeing

a jump in oil primarily because of the api report. u.s.said last week supplies of crude fell bite -- b y 8.6 million barrels. that is the largest decreases july. now all eyes will be on what the eia says in their weekly oil report later today. as you mentioned, the hurricane is careening right towards north carolina. that will perhaps be the biggest storm in 64 years. perhaps with the mass exodus of evacuations, you can see a jump, or at least a spike in the price of gasoline as everyone tries to full up their cars as they leave. that is also supporting oil. there are definitely two bullish things pushing up the prices. we are seeing that in wti as well as brent. haidi: what are other factors? we have seen pressure coming

through from sanctions on iran? stephen: that's exactly it as well. we are seeing south korea and france showing they will not import anymore iranian crude for the moment. that means that iranian crude is effectively out of the market, shutting them out of supply in the market and definitely supporting prices a bit more. so, we do have the iranian sanctions going on right there, and also eyes on what will happen with japan and other countries that might shun iranian crude. that will definitely take supply out of the market and further add support. shery: you mentioned hurricane florence bouquet -- pushing up prices. how long will that last? stephen: i think that is -- analysts are looking at one to two weeks. it depends on what the damage will be. there will be an immediate short-term spike. just because of everyone leaving. depending on how long the storm will stay in the region, it could add further pressure to

facilities, to infrastructure, that could boost prices. when you are looking at reports, things are changing on a daily basis, but people are staying it is going to stay. it will be over the southern east coast of the united states or quite a bit of time, more so than normal storms. that could definitely add support for the price of oil in the region, and definitely the price of gasoline as well. shery: sure. stephen, thank you. it looks like a grim groundhog day for asia. strategist joins us from singapore. is this the calm, or the start of a break? mark: i think a lot people would like to think it is a turning point. but pretty much the same as we haven't talking about a couple weeks. the big issues in the emerging market world.

brazil, turkey, south africa, russia. a bunch of those are continuing. if you look across the developed world you have the three major central banks. the fed, boj, ecb. only one is expected to change policy, the fed. they will raise interest rates while the other will continue with their policies. part of the route of the very strong dollar does not look like it will go away in the short-term. the fed are going to help it more. yesterday we saw another job into year yields. 2.74% now. that's the highest in a decade. consider pressure points for the emerging-market in addition to their own local issues, they have just not gone away. shery: of course we have the background simmering. china going to the wto. they want to retaliate against the u.s. on a 2017 ruling. how much will that affect

sentiment? mark: i think it is not a major issue for markets. is trying to china go through official channels to try and settle some disputes. obviously it is hoping for support from other countries. but the amount of trade which is being discussed or represented with the wto is obviously pretty small in relation with the size of potential tarrifs which the u.s. is threatening against china. it is a bit of a divergent. it doesn't mean much, but day-to-day trading. the bigger picture is what happens with the currency. the longer the trade war goes on, the more tarrifs the u.s. slaps on, the harder it will be for china to maintain currency stability. that is a much bigger issue for emerging markets, and probably even for developed markets as well. that is what people will be looking for, any clue that the pboc is giving up trying to keep the yuan in a tight range.

haidi: what are you watching out for today? if we get another day of losses this will be the longest slump for asian stocks in 16 years. equities are probably front and center for everybody. another weak finish yesterday. ago thatly a few weeks so many analysts were saying you must be in china. shares of the best thing to be in the market. the market is even cheaper now, bringing down the rest of asia with it. until we see some sort of balance in the china market, it is going to be very hard for asia. really, everything now depends on the direction of that. at the moment, with the background of the trade war, unfortunately china is not having a great time. you just wonder what is going to turn this around. there is nothing beyond the horizon. haidi: you have not been the bearer of much good news lately, but thank you very much for

joining us. you can follow more on this , holidays story trading on our markets live blog on the bloomberg and live go. there's commentary and analysis from bloomberg's expert editors including mark. you can find out what is affecting your investments at any given moment. still ahead, another day, another ipo attracting interest from hong kong's richest man. we chart the prospects. shery: malaysia's former opposition leader he still expects to be prime minister, but only when the time is right. we are joined to discuss his bid for the country. this is bloomberg. ♪ is bloomberg. ♪

shery: this is daybreak asia. i'm sara rhianna new york -- the women's leaders

summit kicks off in singapore on wednesday but trade tensions and global growth key topics of discussion. >> i am here at the milken summit in singapore with our next guest, the head of financial markets asia. she will be talking later in the panel about the future of finance. it is an exciting day today because all panelists are female. i want to talk about the broader market theme. thank you so much for joining us. strongstill seeing quite growth in the u.s. impact thatt the trade tension has had on the overall global growth picture, is this the biggest concern here and how much of a dent do we see to global growth? >> absolutely. as you called out, the u.s.

dollar and the u.s. economy has powered ahead in an upward trajectory. we are concert trade tensions are adding to the downside growth we do think the fundamentals of the asian economy are mostly strong. they have strong external positions and adequate reserves. but there is the risk of going down. juliette: who is the biggest risk here? several economies are doing quite well in asia. we look at japan, asia. andt of this is on china, china is obviously a huge trading partner to a number of asian economies as well. sneha: china as you know has been the epicenter of trade tensions. we don't think that depreciation is a solution for trade tensions. as we see there is a lower risk of capital outflow. downsidenk there is for growth in china as well. that makes the case stronger for

more accommodating monetary policy. and a policy priority definitely -- on top of that, we think that the fiscal policy have to come in and boost domestic demand. juliette: what can the pboc and other central banks do within asia? time when you have these to emergence with the fed looking to increase rates. sneha: they have done a good job with stabilizing exchange rates. there pushing demand. as i already mentioned, their current accounts are quite resilient. and they have adequate buffers on reserves. as you know, no trade conflict is good for business. it is damaging for consumer sentiment, business confidence. whether you are indirectly

impacted or not. certainly what has been the underlying focus of -- asian stocks are rather longest losing streak in four years. one more day and it would be 16 years. what turns this around? what can turn sentiment around? potentially a more reasonable trump administration come midterm elections in november when we see things ease between the relationship? sneha: there is that help. the interesting thing is we have not actually seen the impact of the trade tensions, actually impact the trade data. but it has fed to the sentiment channel already. what we are seeing is the heightened volatility and risk aversion in our financial markets. that trend is likely to continue for the next few you weeks -- few weeks and months.

again, there are no easy answers here. juliette: never a winner in a trade dispute certainly. --'s look at economy we had a very strong gdp number coming through. australia 10 years on from the financial crisis at least showing some signs of a strong economy. sneha: positive growth in 2017. this year it is actually showing the strongest growth among all the g10 countries on a year-to-year basis. interestingly, the currency is the week point -- weak point. i think the australian economy has been very resilient. gdp underscores the resilience of the australian economy. the currency has helped. on top of that the commodity

markets have held up, therefore terms of trade have been very favorable for the australian economy. our economists believe there will be no rate hikes in 2018, or 2019. but we are seeing some heightened domestic financial conditions. juliette: i know you are here to talk about the future of finance. what will finance look like in the next 10 years? sneha: i think that the future of finance is going to be very different from the last 10 years. was we are seeing heightened responsibility, what technology is doing for the markets is important. as we innovate we also need to think if we are harming.

they are collaborating with each other to create a more fun future for us. juliette: i'm sure it will look a lot more different in 10 years from now. shery: great conversation. we will be talking about the chinese ipo market boiling over. we speak -- we will check out the recipe. this is bloomberg. ♪ rg. ♪

haidi: this is daybreak asia. shery: let's get a quick check of the latest business flash headlines. the next move for the dollar may be weakening, which could bring relief to non-us stocks. webcast of the

dollar would probably end the year lower than it is now. speculators on the long side may end up wrong because president trump wants to see a weaker u.s. currency. alibaba is setting up a $2 billion joint venture with a russian billionaire. the deal will merge their online marketplaces to strengthen alibaba's presence in russia. it is also bract by the kremlin. it jumped as much as 12%. >> it is a great representation of what joint investment with russia and china can be with technology. alibaba agree to localize lots of this technology and really benefit with the russian economy. 600 million customers that alibaba has all over the world. for us, it is another example of

continuing strategy to work with best partners in the world. haidi: negative sentiment towards chinese stocks may be getting the lofty ambitions of three soon-to-be lifting companies. the tesla of china is said to be pricing at the lower end of indicated range. stephen engle joins us now. what do we know? we have the chinese market selloff and maybe it is not such a great time to be the tesla of any country right now. stephen: they want to be the tesla one of the of china minus the troubles. mind, nio, they do not have a production license yet in china. they are going to have to farm that out. they have only delivered about 2000 cars. they have a target of delivering 10,000 by year's end, but even their rivals is none of us can possibly do that. a lot of these e.v. makers in

china are riding on the buzz of the e.v. wave, but they do not have much production at all, yet they are seeking pretty rich valuations. yes, we have seen hong kong enter intermarket. negative sentiment towards chinese stocks in new york goes of the brewing trade war. so maybe these factors combining to lead nio to price what we are hearing from the likes of reuters and others, that they have priced it at the bottom end of the range of $6.25. it is still a locked evaluation for a company that has more questions than answers. that stock is expected to start trading tomorrow in new york. billion, with that be too much as well? stephen: the hot pot maker, it's an interesting valuation. that valuation is more than the other 33 restaurant companies

listed in hong kong combined. that have average multiples of about 16. that puts it as high as 30 times 2019 earnings. that is pretty rich for a hot pot maker that you can also get pedicures at the restaurant. it's competitor not doing so well with that rat in the soup story. dialing back when it comes to his uber is associated with this ipo? stephen: that will be the big one. they had been attracting big tycoons. again, revenue surged 95% last fiscal year, but losses tripled and they keep on pouring money into food delivery business, but maybe ratcheting back ride-hailing and other businesses within the portfolio.

haidi: thank you so much for that. coming up next, plenty more to come on daybreak asia. this is bloomberg. ♪ this is bloomberg. ♪

a: 30 a.m. in hong kong, in our away from trading. a pretty lackluster start. i'm haidi here. >> you're watching daybreak asia. >> let's get you first word news. hurricane florence the connected to be one of the most powerful storms in history. landfall is now late thursday.

haveast one million people to leave the coast and businesses have shut down. u.s. job openings rose to a record in july as the biggest share of workers since 2001. action 117,000n positions waiting to be filled. the gap helped explain why wages rose in august fastest since 2009. bloomberg sources say hsbc and jpmorgan are providing the loan. , it was willing to

borrow to diversify the economy. said -- is said to ask the wto for anti-dumping regulation. they ruled in certain factions they broke the rules. five days later, washington admitted it had not complied. the earthquake last week's exec -- is expected to push up consumer spending. pricesvegetable contributed to economic infraction. global news 24 hours a day, powered by more than 2700 journalists and analysts in over

120 countries. >> thank you so much for that. the exuberance, the long side could be caught out. .et's get thoughts it would be -- is great to have you with us. despite a lot of people saying we might see weakness positioning in the markets, pretty much higher, so is the market place for a correction? that? expect

>> i think the dollar continues to be well supported and also the concern around trade. when we talk about these changes , we typically look at three things. all 3, 2 are in place. own dollars,t our it is almost 80 years high. in terms of positioning, what we are really lacking is a catalyst. potentially be president trump talking down the dollar. it could be u.s. midterm

elections if democrats do quite well in the house. that could mean it turns out to be a positive outcome for emerging markets. it could also be the u.s. and china coming to an agreement on trade. as to what can drive the dollar weaker it is what we will be watching for. thatve you been surprised the trade tensions and the dollar has been the choice. gainse not seen strong when it comes to the swissie. >> you expect the traditional safe havens to benefit, but i think what we have found with how risk assets perform. they are a lot more correlated

in the u.s.. dollar-yen quite well. think the dollar is definitely .ne of the safe havens and if youback home look at u.s. asset performance, that continues to be rock solid as well. yuanw much of the chinese depends on for further decline? >> i think they're trying to balance a few things. we have the ongoing trade tensions allowing the currency to depreciate.

clearly, a psychological whether onshore. it really depends on how trade tensions proceed from here. ande do see an escalation if the u.s. imposes tariffs on all of china imports, i think that would team -- would mean there is a little bit more weakness. we think a more sustainable one is like from next year. when we are talking about the record lows, how much pressure

is there? i think may have been the worst performing in asia so far this year. imports andn oil the trade deficit has widened. i think that is putting pressure. what is also quite interesting is that authorities have not sounded too concerned and i think that is a big distinction where authorities have done a number of measures. seems we are going to see more weakness in the near term. happen overing to

the next few weeks. up withld also come measures like import duties on electronics which are really quite strong. some are going to come, but we are not at the levels where they are getting extremely comfortable yet. >> just looking at how much it has underperformed, you have the forecast of their. record low after record low. it is interesting. both of these suffering. india is the fastest-growing economy here in asia. is there a sense that they are

being smarter and not intervening? i think the rbis strategy has been exactly right. they have widened from single-digit now to $18 billion per month and that level of trade deficit is not sustainable. what we need was not for them to cap, but allow the currency to depreciate. plus, i think they are looking markets.merging it is not going to get easy, so they are trying to save for that and i think that is why they have been a little bit more tolerant and try to defend.

>> could one of those bullets be using a trade war as a weapons? just like indonesia has done in the past? to 2013, thatack is exactly what they did as well. i think if conditions deteriorate, it will be a very sharp selloff. some of those will be back. it will be in the form of high import, but i think electronic imports have also surged quite strongly. that is separately on the table as well, but probably not going to happen in the next few weeks. things need to be worse before we see these measures come in to .equest thank you for your time

more daybreak asia next.

>> this is daybreak asia. hitachiese conglomerate -- theyng to boost as told bloomberg he sees the greatest infrastructure demand in asia. thinkare focused and i these are coming from the same countries. a $1 billionare deal.

everybody has to be involved. think japan is supporting many countries. it isprobably take -- more often than other parts of the world. >> it is pretty high. important realize how sometimes has to be

-- , it is settling emerging markets with that. -- debt. 20 thoughts on that -- what are your thoughts on that? >> it is a big issue with china. total cost of ownership is

important. is it attack -- impacting infrastructure? a major factory in china as well. have also a supply chain. .e manufacture certain parts the parts we supply, that will .ffect the supply chain we don't know because we are

only three months into the trade war. course, stay tuned as we head to the world economic forum . >> that sick a look at some of the stories trending. follow tictoc for the very latest it could be the most powerful storm to hit north carolina and 64 years. is disputing the accuracy. and apple advances five weeks .head of its product launch check out those stories trending

all on the terminal.

>> this is daybreak asia. -- andare taking a long live look at a beautiful shot, but don't be fuld.

of course, not a strong storm. it was not -- alibaba setting up a joint venture. the deal will merge their online marketplaces and is backed through the russian investment fund. it told us why he thinks the chinese -- the company wants to expand in russia. >> they have significant business here. 70% andowing 50% to russia is a very promising market. it is a natural partner.

your the press conference talking about mr. evans and jack ma was involved in this deal. >> for us, it was very important for this discussion. >> we really clicked on this to deliver value for russian consumers because for businesses, it is important and we worked a lot of details. about politicalization, synergies. it took quite some time, but we

have a solid foundation and i business.e current >> does vladimir putin have a good relationship with jack ma? >> he does not think jack ma should retire because he is still so young. i think his passion in the education field and others is shared and when jack ma has finished his presentation, everybody clapped. have a great relationship. we appreciate he is curious about russia and we will build on this. apple will release a blitz of

new products this week and setting itself up for a strong holiday quarter. what to expect from your next iphone upgrade. >> there is no disputing the height that surrounds an apple product launch. last year, tim cook stepped onto the stage to one deal the iphone x. >> it is the biggest leap forward since the original iphone. >> it was touted as the most significant upgrade in the iphone's 10 year history. how will this year's event compete? expected to is

stay. xs.first will be the iphone there were also be a toge-screen version expected come with the name iphone xs m ax. and there is also a cheaper version. don't expect to see any breakthrough major features. those will come next year. >> that was bloomberg reporting and of course if you do want to ,ap -- catch the event tomorrow

bloomberg on 1:00 p.m. eastern. >> who do you have? ? poised and talking perspective. they will get their take and also begin to the minister of finance. they are thinking will the finance industry impose?

big names you don't want to miss. that.king forward to lots of good conversations ahead. that is it for daybreak australia. .arket coverage continues very much looking for the storm .arning taking place it could be the longest losing september 2016. this is bloomberg. this isn't just any moving day.

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rishaad: 9:00 a.m. in hong kong. 9:00 tuesday evening on the eastern seaboard of the united states. i am rishaad salamat. watchingu are "bloomberg markets: china open." ♪ rishaad: asia pacific stocks, a 10th straight day of declines, the benchmark facing the longest losing streak in 16 years. lavid: oi