>> welcome to day break australia. are counting down to asia open. storiesare the top covering. president erdogan demanding a cut. president trump ahead of new talks.

he feels no pressure to deal with china. millions of people on the opposite of world brace that impact florence. bring death and destruction. on major quick check market. we are seeing u.s. stocks higher rally. by a relief we so you the dow gain for the third session. 500 gained half percent. we had down pressure today from tweeting thatp the u.s. isn't under pressure to reach an agreement with china on trade deal. still, we had slowing inflation which helpedning keep stocks in the green. percent. .8 of one see how things are shaping up in is sophie.here >> this is market like a trade talks and that turkish rate hikes. pointing mostly higher

here. the region -- looking at a flat start to the day as you wait for japanese production due 1:30 p.m. on thursday chinese in hong kong rose with bargain hunters out. >> let's see if we can continue this relief rally. much needed for hong kong stocks. to bloomberg news. turkey moreank of than expected. monitory policy

24%.ttee raised it sterling rose to its highest weeks. the dollar in six this is the u.k. government pledge to provide information. eu officials are writing key part of the agreement to make it u.k.ble to the the two sides are expected to hold a summit in november to outline the brexit aaccord. edge of hurricane florence reached the carolina coast. category downgraded to 2 but still forecast to deliver more than meter of rain.

florence is seen causing damage worth $20 billion more than a thousand flights have been canceled. duke energy said three million people could lose power. the philippines is bracing for highest typhoon. sustained winds of 255 kilometers an hour. rated a super typhoon to maintain that strength. thousands of people have been andred to seek shelter government office and schools are closed. up adent trump whipped storm about comments about last year's devastating hurricane in puerto rico. the official death toll almost 3000. are paddingnemies the number to weaken number. 2975 people died. the direct result of hurricane from september last year

through february. hours and on4 twitter, powered by more than 2700 journalist and analyst in a 120 countries. >> thank you. president trump talking tough ahead of new rounds of talks china and tariffs. he boasted on twitter that he upper hand. haidi: joining us now from washington is bloomberg. out a messageing is very characteristic of president trump. he likes to enter negotiations strength. i think he was worried because these talks are coming at the states.on of the united they didn't want to be perceived to be entering these talks from

>> he's facing cross pressures on these tariffs. his blue collar base and the industrial midwest tough trade talk. tough stance on china. there's very, important republican constituencies farm belt states that worry about chinese retaliation. haidi: mike thank you so much. bloomberg white house deputy team leader. joined by our guest host, president and ceo rhodes.

welcome to the program and thank you for bringing me your book. it.very excited to read we're talking about china u.s. trade relations intentions right now. concernedple are whether or not this can be the start of new cold war that from these trade dynamics. >> i think it will all depend on how far president trump wants to take this. i think the chinese really want sort ofto some agreement. when i was on that program about i mentioned that the vice president of china, gets getting, then they're serious. they announced a round table table to meet in the heads of the major u.s. banks who have operations and it will be cocared co-chaired by the governor and he has ana

here.istory involved.ery much in on him tonping calls get involved, then you know they are serious. problems.their on debt to gdp reached 300%. they have problems in the real and the state on enterprises in municipalities. theyhese areas and what don't want is a continuing trade if mr. particularly trump does what he do and puts levies on the chinese exports in .he united states haidi: president trump tweeting that saying the chinese are under pressure to make a deal u.s.the the markets are collapsing. they are going to take in tariffs the u.s. from china. that everything else will be home here in the united

states. is a calculation from the chinese that they will not be win a trade war against the u.s.? especially given the different economic conditions of two nations. >> i don't think the chinese said, theycause as i economic program. xi jinping wants to keep growth 6%.e we need china on north korea. people tend to forget that. goes throughade china. if ewith want -- if we want an agreement with north korea, kim jong-un have to deal with china. is how farn president trump is going to take this. he's got elections coming up but got lot of pressure also from some members of congress and from manufactures get and importers to try to an arrangement. him said, when they get

involved, the chinese want to do deal. haidi: do you think there's a great appreciation in the white house of the destruction of asia.relationship in not just in china. he's talking about relooking at relationship with japan when it comes to trade. has direct impact on security arrangements. do you think a conversation is now? had >> i think we made a mistake on tpp at the beginning. if we're really concerned about china and trade and security in asia, we should have followed through on that like we're nafta.ng through on everyone that was involved wanted to get a deal. pain they'll put it on the table. i think yes, we've got to be allies.eful with our notably japan, south korea, thailand, all of them. i think there's a real reason to and come to some sort an

agreement. thathinese take long view they can wait anything out. as i said, there's certain the table by xi jinping and i think he wants to make sure a he gets that growth to satisfy the chinese population. remember, china today is a yearsent china from 25 ago. you have a rising middle class and they have great demands. of them is on the economy. ago, thingsears were different. the other thing is, he doesn't want chinese moving their money. remember what happened in 2015, the chinese dropped from in reserves to $3 trillion in a rapid period. people around them like people's bank of china, former governor who's now starting this

and, all of them want to make this thing doesn't get through an extreme stage. -- both sides want to negotiate, it's like nafta. look where we were a year ago with mexico and today. my friend christa freeland will come to some agreement. it won't be easy to get canadian. in the united states, i don't think u.s. congress wants to do one off with mexico. they want nafta, which is mexico states.nd the united >> is the problem not that the seems to beump demanding of beijing simply not due to the nature of the economy and its place in history at the moment. somewould a road map to sort of conciliation look like. be political wins with s.ump in the midterm

>> i think there are two thing that the u.s. is looking for. whole questionhe is intellectual property. that resonates with republicans and democrats and most ceo's in the united states. there has to be some understanding. we go to your point on change. been 20 years since he led into the world trade organization. i was involved in the in the private sector side. he was going to open the services up. successors did not open them up. there's a lot of pressure to side.p on the services frankly, it suits china. i know people's bank of china that. with they think this will make the robust.more i think this is something that would be also in china's interest. haidi: you mentioned nafta earlier. we don't have a trilateral deal.

what are the chances there won't be a trilateral? democrat will take over the house. they won't want to sign on anything new that the president brings forward. we'll remain with this status uncertainty.just >> i think that both parties, got to talkrties we about mexico, canada and united states, they want to get some agreement before the elections. think the real issue in canada canada, almost psychological. percentage of gdp is very small. intelligent tough negotiator, christa freeland who is an old friend. they will come to an agreement. i think congress won't pass one-off with mexico. they want nafta. america.w latin >> there are legal implications can do.gress

bill thank you so much. our conversation with bill continues. storm clouds gathering over emerging market. turkey rate hike bring calm. after the financial crises we'll be asking if the markets are safer today and what prevent ae done to rate pay.

>> merging markets rose by the month.is >> historic day here on the banks initially expectations were fairly muted what the

up doing.nk might end you had a speech from the turkish president just two hours the central bank decision. after all, to complete the you did getr ride, an answer from the central bank therest rates up to 24%, average expectation was for 21%. slightly higher than anticipated you saw aesult, relief rally across turkish assets. about theremain accurate representation of pricing and foreign exchange from the government. also the president warned that further measures will be taken .o prevent fluctuations companies will be required to foreignntract not in exchange.

>> bill, thank you for sticking around. look at theke a become cases in the emerging markets. we've been talking about argentina. very solid move there to take rate up to 60%. we had that unexpected move from bank 24%.h given that turkey is still dealing with fundamental for possible more sanctions from the u.s. that diplomatic spat is not resolved. it is going along without the international monetary fund. go far to shore up confidence. turkeyreal problem in apart from the central bank, it shows they are semiindependent

erdogan's attitude. difficult for it borrowers who borrowed so from turkey and foreign countries. the real fallout is the private sector in borrowing which i've seen in 1994 and 2001. in each case, they decided they go to the international monetary fund. erdogan said he will not do it. i think the problem in turkey is

term.ort it's longer term. that's true in argentina. this play out? we'll talk more about the lessons learned 10 years after lehman. in term of how this process was streeto play out, wall bank and u.s. economy and then in europe.t crisis third act was meant to stem from emerging market crises. crises will come from a messy unwinding of pines debt. playing out in that manner? >> as i said, you know because discussed it before, the let their debt to gdp go up 300%. people'snor of the bank of china, made the comment in thehook everyone up outside of china and maybe in china. be carefulhave to with its economic measures.

into a moment. i think there is a problem there. out whenlso point we're talking about other problems in asia, you take a theirt indonesia, exchange rate went to the lowest since the asian financial crisis. there are other problems that you see in asia. not just china, etcetera. i remember so well i asian crisis with a bottom and going on to korea. problem with emerging markets should be taken more seriously than most people take it. think it's a warning signal for the economy and world in general. china is the key as you point out. what happens in china? >> we have russia central bank decision tomorrow. no change really affected,

7.25%. have seen it taking a hit. is is there any hope for the russian? expecting more u.s. sanctions against russia because all their geopolitical tensions. >> putin made couple of big mistakes in regard to the economy. he has an advisor, he's not listening to him. was the one who got russia out the debt crises when they defaulted. the best finance ministers that russia ever had. he's put forward a program how cut the dependence on oil and minerals. they have implemented it. the economy is vulnerable there. in particular with the expenditures on defense. i look towards continuing theness in russia over coming toes. >> bill, thank you so much. is sticking around with us. if you missed out on any of the gt go is showed you, your function. bloomberg.

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>> welcome back. let's get a quick check of the headlines. goldman sachs group are completing a takeover of their own firm. byee role will be held executives who rose through the unit.aking john walden will be the next and chief operating officer. the second most powerful position. >> the company is talking to investment bank about an offer dollar fund.ion discussions are ongoing. ck infrastructure has built a overe of british assets decades. copper --ng biggest developer reported 17% in

rising. arket watchers are increasing correction in the hong kong property sector. live from new york and sydney, is bloomberg.

>> opens market for the friday frame. looking cautiously optimistic. we are seeing broadly positive looking across rest of asia. in hong kongins and china. fourth day of gains u.s. stocks friday.this >> i don't feel so bad. is gloomy there. it's raining here in new york. you're watching day break.

the --et >> president trump says he feels no pressure to resolve the trade with china. he says it's beijing feeling the make the deal. suggests president trump is determined to enter new negotiations showing strength but risks stoking chinese fears he's not serious about striking a deal. one of the best known investors currencies has called crypto crash in 2018. a snapshot of the bloomberg icieswhich measures curb -- currencies. the bubble.ole in trading higher. malaysian police found $790 million u.s. dollars of

former president. the investigation into the cash was-- said the funneled in a total of 132 involving 64 people. he denied any wrong doing in connection 1mdb. his lawyer has been charged with money laundering. bezos launch a fund to help children. amazon his fortune more than $160 billion has grown alone by almost $65 billion. until now he's been largely invisible in the world of philanthropy. day andews 24 hours a on twitter, powered by more than 2400 journalist and analyst, this is bloomberg.

thank you. stocks managed to halt that longest slide in 16 years. markets eyee u.s. -- higher today help with the there. >> cautious optimism maybe the name of the game this friday. mixed start. the japanese futures pointing to the sessionart to there. changed even as the dollar extending this friday. look in wellington, -- up 2%. up .2%. dollar looking little change. trading just below six. it's expected to show slight

improvements in activity for china. are seeing stabilization over on that. state much.nk you so let get more what we should be with tradingsia and bloomberg markets. it's been a tough year for asian stocks. yesterday we had that recovery rally. week or two we've kind of ended that run of weakness which has been kind of number of things. we had that dollar strength. we had trade worries. what we got yesterday was somewhat of a relief. there's some expectation of a towards the talks. that's part of it. extendedetty evaluation discount level.

therobably shouldn't ignore fact of evaluation. rally isof the relief down to evaluations to an extreme level. isther or not this sustainable now, largely, i on the factor whether or not we get developments on the trade front. are clearly cheap on relativeely basis and to asia itself. it will take more than just give uson to sustainable forward rally here. think, really, unless we get developments in the trade issue, tricky for this to be anything more than that. >> policymakers worked pretty it stable.p it maybe out of their control. the point really from

clsa, something could come out field. escalation another crisis in italy. then suddenly you get back to where we were few weeks ago and you get back into discussion how they have to if that situation. they have done a decent job to stabilize the currency. growth is still under pressure there. ony are moving to spend more infrastructure. they're getting a

>> adam, thank you so much. don't forget you can check out some the chats that adam referred to on gtv go. >> let's talk about monetary policy. the world's major central banks have kicked into policy making held policyand boe steady. at least for now. ecb seems firm on winding down even when inflation slowing.be we have this looming trade war. >> exactly. is pretty sure there's enough in the economy in terms of growth and labor market in of inflation. to justify this steady glide path. see if this turns out. he did say a growth risk are balanced, however strange insm emerging market, market volatility is increasing. he does expect inflation to rise over the next year. let's listen to what he said after the meeting. it's a press conference earlier today.

outlook isn receding. ahead it's expected to pick up towards the end of the dressnd there after to over -- increase over the term monetary policy measures. >> basically the ecb did signal bondll phase out purchases. signaling rate hikes. england, small increase for the 3rd quarter. talked to the he u.k. cabinet today, warned them deal.etter get a there will be no rate cuts to offset a no brexit deal. hang over the to bank of england. that's why the government asked him to stay on for seven months more. our do want to bring in

guest host this hour. bill rhodes. you take a look at the euro, ecb is firm on winding down. what are your thoughts? >> i think there's so much liquidity in the markets from all of the work done by the central banks over the last decade. at some point in time you have realistick to a market. mario draghi will stop the quantitative easing. happens witht interest rates. he's a very cautious guy. him well. i think we're seeing this. if you're going to get back in sustainedany sort of growth, you have to get back to a real marketplace. he's concerned about his own italy in particular. which is a weak point. muchtalian economy is so bigger than the greek economy. that's one of the things they're

focused on a bit. doubt that hes no quantitativethe easing. >> bill i want to skip ahead. up with the keep federal reserve. insumer price index came weaker. september rate hike, done deal. think there's a chance? >> they will do it. surprised everyone. this is just a one-off. it. not clear what caused i think the trend is -- particularly, i'm not great believer in it, with the and thement where it is need for jobs technical jobs, you willthat i think start to see some pressure building up. is have another area which oil. oil and gas, energy. also.ould have an effect i've been consistent with starting with last year.

four increase this year. every time i get on the program, we're going to have september and december. i don't think he wants to get behind the curve. next year is another story. -- what he'll do next year. that's an open book. estimatinge we under the impact of tariffs and slow down in growth? >> if this continues on, these trade wars, there's no doubt it have an impact. worldwide. to question is, are we going get a settlement of the big one, u.s.-china. i think progress as i indicated before, will happen on nafta. few months to get canadian. -- canada. there's some indication with

europe. will depend on china, u.s. one,question is a good overtime it will have an impact inflation. >> what happens once the tax package that was passed last year starts to fade off next year? >> i think you can say that that was inflation in itself. i think that could push also on prices. i felt we'renows, under estimating the potential inflation. that's the big concern. in the united states, we forget throughod that he went when we let inflation get out of hand. we're far from that now. further fromven that. they made progress on gdp. machinee progress on orders. inflation is not still long way

from 2%. there's no reason for them anything now. what's going to happen when the ready tognal that it's start pulling away? one trillion yen question. is striving for this 2% inflation. it's not clear when it's going to happen. of this continue all stimulus forever. he, himself, can get in trouble there. at some point in the next six months, we'll see something happen. we're following it closely. three months. to that end, do you think the fill up thel five-year term. we'll see him announcing some more substantial change and a get replacement maybe one of the governors? >> he and abe are close.

if abe continues i think probably for the immediate future, karoda will too. sync.o are in you remember that election the liberal party election coming up this month. if abe gets reelected in the party, he'll be running again for prime minster. to keephe'll want karoda. >> bill, one last question before we leave this central power, the boe, he's course.the house prices will fall back 35% we get a chaotic no deal brexit. is that what we should be anticipating that we are deadline?own to this >> i think you're correct there.

theink that's one of reasons they reappointed and carney. he's basically the sign of stability there. that when the election happened and they turned the referendum, they turned brexit down. asked a number of tv shows what i thought would happen. keep marklong as they carney, he will be the instrument and stability. toss up now a whether they'll meet that date or not. the government divided as it is europeans really want to get some agreement here, it parties.h making paralysis how central bank might have their tied. they may not be able to react to policy. us., stick around for

coming up next we'll take a look at lehman. we'll ask how well the world is the next financial crises. ♪

>> banks today are safer than they were then. they're not safe. what we need to do is to put in place a system in which banks provide the security to ae central bank in advance of crisis. >> we don't have a european team can will be an important element banking unit. >> when banks are selling half book value or less, that is telling you something about the underlying health of those institutions. when we don't recognize that in

assessing their soundness, we make a serious mistake. won't be debts. it will be pension obligations, obligations unfunded obligations. >> we're doing much better job monitoring. we have a bigger intake to the banking sector. ente >> serious experts there participantse key

ago.we were here ten years are we more vulnerable today than we were before the financial crisis. bill i want to start something from an opinion from that editorial. saying overall the global financial system looks troubling it did in 2007. financiala number of institutions globally. there's no political will to find a fundamental fix. heard from the number two yesterday saying, it's human nature to forget about these things and to make the same partly sunny -- mistakest. seeing?what you're

are littlethe risks bit different. thats basically subprime drove this. for yield.d reach that a lot ofgers risk-taking that's not proven happened. i think that's where we have to watch it. almost 9 or 10 years in this. really depends on the type haveedit controls a you risk management and the real risk management

better today. what kills banks at the end of really a lack of capital. it's a really lack of liquidity. depends on of that where banks are and the liquidity side of it. what kind of risk management been carried away. the other thing is, we have a of risk. sort we've had a tremendous growth in the world. we talk about china. systeme shadow banking here in the united states. you have it in europe. lot of it isn't properly controlled. lot easier to control the banks than it is the shadow banking system. differentome from a area. than we've seen in the past. why i'm of the reasons sharing a commission study group at the group of 30 on culture

and conduct. veryf the things that is necessary in any financial institution, particularly banks is you have the proper culture and conduct. because one of the things we found is that the conduct of the banks was really bad theye sense of how culture, whate they thought about making loans the compensation out of line. important today. trump now with the administration emphasizing of deregulation. the overhaul of dodd-frank, do you think that's a risk? >> you have to be careful how far that goes. know there's a lot of pressure rule. volcker things like stress testing are absolutely necessary. very good things after the effect happen, even though the people in the treasury and the fed didn't

believe as i did know that we were going to have a blow up. happened, they took very good steps in recapitalizing the off the bad loans and i think that that's keephing that we have to in mind going forward. one of the reasons you're european banks haven't come back quickly, they took their time in raising capital and writing off bad loans. also a sign, i think for asia. chance two years ago it talk about culture and conduct offront of the people's bank china. andiscussed culture conduct. conduct is key. partve bad conduct on the of banks, you see it in many this really falls out into how they deal with customers, their staff. that's what you have to watch for very carefully. made progress from last

time? yes. but there's still a lot of question marks out there. watch for the search and reach for yield. >> bill, i want to harken back op-ed you wrote in the financial times. march 2007. raising some very important red flag. you said pocket of excess are to ignore.rder problems in the housing and mortgage area like the subprime one example of success. today, hedge funds and those in credit derivatives play important and untested role. threat now? what is this thing we don't see the regulators and federal reserve. had warnings and nobody listened. mentionedthe point i is the shadow banking era. technologyng is the that now exists in the financial system. didn't exist ten years

ago. i think we have to be very careful in that area. because operational risk is risk. you go down and you have market risk, you have credit risk, you have operational risk and if you don't do any one of those correctly, you end up with reputational risk which is very hard to get back. i think those are things that have to be watched very carefully. it's never the same thing in any crisis. different. something the we are concentrating on big commercial banks. we should be looking at other areas. the hedgee size of fund, money market funds. whether to question they're adequately regulated. i think there's a an overconcentration on the big commercial banks and maybe they should be looking at these other areas. in a more profound way. are behindegulators

the latest technology that's going on. i think that's very important also. >> bill, thank you so much for your time today for guest show.g our you. having bill rhodes. be sure to check out his book" the world leadership lessons." we'll talk more about the financial crisis on day break asia next. we'll be joined by asian telling us the next negotiations between the a bitnd china, he's skeptical about where those could go as he thinks neither side has an exit strategy. >> with some of that trade optimism, are interested to see out.t plays proper trading in new zealand way.under just few minutes out from open

in australia. which is looking more optimistic. lots more to come. is bloomberg. ♪ xfinity mobile is a new wireless network

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i'm here in sydney where markets are one hour from open. i'm sophie in hong kong. welcome to "bloomberg daybreak: asia." pacific stocks set to extend the rally of the wall street high on the dollar falling as the u.s. in credit inflation crawled. emerging currencies