>> welcome to "bloomberg daybreak: australia." >> were counting down to asia for major market opens. haidi: these are the top stories we are covering in the next hour. war, back in the trade targeting 60 been dollars worth of trade war goods and global equity markets rising.

slumps in a criminal on finding secured by elon musk. manus: we saw u.s. stocks shrug off the tit-for-tat terror between the u.s. and china. leading gains and the nasdaq up .7%. one of the big movers on the they won 23etflix, me last night, shown in the power of streaming services. see how all this plays out in the asian markets. shery: it doesn't look like we may see a midweek slump as china hit back at tariffs and trump warning of great retaliation which does have some countries playing it cautiously. india planning to defer its rally tory terror plan against the u.s. on november 2 and the second round of u.s.-japan trade

talks reportedly will be delayed until those levies go into effect next week. take a look at the set appeared asia, we could see some softness in tokyo despite the yen trading near to my flow and we do have one index gaining ground marginally after a four-day advance. , consumerellington confidence falling to a six-year low for the third order. elsewhere in korea, day to of the moon nothing kim summit with a joint press conference to be held after a closed-door meeting. we do have the bank of thailand and the boj expected to keep steady on policy. ahead of the boj decision will get a check on japan's august trade performance and this reporton, malaysia will on cpi inflation expected to have slowed last month to the weakest pace since february 25. thanks so much for that,

a lot untapped for investors this wednesday, not just trade of course. as get you caught up with the first word news with jessica summers. said theyim jong-un stabilize security on the divided peninsula. state media saying the comments were in the latest meeting with president moon. he thanked moon for brokering the summit in singapore. they will meet again wednesday with moon returning to seoul on thursday. the former argentinian president appeared in court just one day after being indicted for corruption. the long-running case concerns money laundering and bribery claims. they relate to government contracts during her time in office from 2000 700-2015. chargesorters say the are politically motivated. the federal reserve has completed the sale of securities acquired a decade ago during the

rescue of bear stearns. theloses a chapter in history of the financial crisis. the bank said the transaction had been running for several months. the final sale in the last two weeks saw a net gain to u.s. taxpayers of $2.5 billion. full details of the transaction are expected in december. and european union is investigating whether bmw, daimler and volkswagen colluded to limit development of an emissions control system. thee's information that companies held meetings to discuss the technology. the inquiry is looking at whether they agree not to compete against each other in developing new technology. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: diving back into the u.s. markets now and the stockpiles

can thank take. a surge in many of the same shares a sold off on monday help the s&p 500 to its biggest gain in almost three weeks. the weaker than spect a 10% tariffs seem to come as a relief to many. su keenan the latest. markets were able to keep their cool. it seems like we'll must follow china in terms of shrugging off what many thought would be a big flap on the market. analysts point out that weaker tariffs and a small amount of goods being under tariff by china could indicate a tapering down of the trade dispute. let's take a look at the market snapshot. the dollar was in focus here and bonds. note the yields on the tenure bond back above 3%. that is something that is closely watched because it triggered a big selloff earlier in the year.

pretty decent gains. what is important to note is that over on the right-hand side, this is the jpmorgan global volatility index declining. you see that and here with the white index, which is the vix, declining in this latest market. let's look at some of the big movers. macron getting a big move higher , one of the analyst says they -- this is the pot stop that continues to move higher. it has exceeded of $14 billion valuation and it was only ipo just two months ago. it now has a greater market cola, whichan out assassinating. a lot of companies in the u.s.

expressing interest in being a line there. fedex and general mills, both disappointing earnings stories. general mills just coming in with a tepid forecast. wasne stock that took a hit tesla, down more than 3%. more problems for elon musk. we knew there was an inquiry because of that infamous tweet about going private -- going public, and now we hear there is a criminal probe. >> i have a two day chart up tesla but you can see on the intraday, this is the bigger picture chart, a rough front for tesla investors. hase the august 7 tweet, it come down almost 21%. the probe has been confirmed by the department of justice. or department of justice tesla ceo has confirmed that they asked for documents which they say they will voluntarily comply with.

many say this is yet another sign that some of the activities have been damaging to the stock. here he is giving a tour of the actory which shows him in positive light, but it was just recently that he was on a podcast smoking marijuana and many thought that raised -- some ofbout his the decision-making that goes on , whether he is overtaxed at this point, and the stock continues to be very much shorted stock. sanctions also still an issue when it comes to iranian oil. su: we saw oil back above $70 a barrel. interesting to note that some of weeklyculation about inventory data that comes out wednesday, brought the after-hours trading down a bit. there's concern that it will

loom large again. we've seen supplies globally down almost at a 16 year low and there is concern or lack of concern that any of the china tariffs will affect copper, so the bulls are happy about that. the dominant story when it comes to the markets, although not negatively terrorists,ade and is that escalates further. china retaliated with 60 been dollars worth of u.s. goods behind yesterday's move by president trump on $200 billion in chinese imports. no -- no president has threatened to go even further. there is retaliation that goes on, going to kick in and

billion and that will be also at 25%. we don't want to do it, but would probably will have no choice. haidi: greg sullivan joins us now. , sinceretty much a given president trump already said if there is retaliation, it's basically the kitchen sink when it comes to the next round of tariffs. is there a chance we can get back to the negotiation table? greg: here again we have the president threatening further tariffs. the chinese retaliated against the trump administration move on tariffs this morning and they will impose tariffs on $60 billion in u.s. goods. just heardrump as we threatening to counter china if they target u.s. agricultural products, and it does look like the chinese will with products targeted for sanction.

we've heard this threat before and if he does move forward with this third round of terrorists, that would be pretty much all chinese imports covered by tariffs. as for talks, beijing said they were willing to negotiate an end to the trade standoff, but they will reject new talks if the trump administration moves forward with the round of tariffs announced earlier this week. haidi: there is no goodwill at the moment. what is trump trying to achieve, given that we see continued escalation? greg: and that's it from earlier, we heard trump say he is concerned about the trade deficit with china. he has urged reduction in the trade deficit between the two countries. we know that the administration we know that the administration has significant problems with some of china's trade mechanisms, including what are called force technology transfers, problems in the i.t.

realm. some in china are beginning to wonder if the goals of the administration go beyond the readdressing trade grievances and if the administration is looking to constrain the rise of china, possibly a longer-term goal there. so unclear exactly what they are after, what kind of concessions, but there clearly are several issues they are trying to colors china to address. >> we heard from an official at the ministry of finance saying there is no goodwill toward the u.s.. that keep stressing dialogue and consultation based on equality, good faith and mutual respect is the only way out of the trade dispute. with the u.s. is doing now shows no sincerity and goodwill. haidi: and yet we have seen the beijing measures being a little bit more restricted or limited. they did not announce 25% tariffs as they had outlined back in august, but only 5%-10%. why are they holding back?

greg: chinese dealing with a bit of a dichotomy. outwardly they are projecting confidence and strength that they can outlast the u.s. in any kind of traits that. they don't want to project weakness. what we have seen the chinese economy start to slow down a little bit and they do worry that the effects of the escalating trade war could impact their economy down the road. a chinese official told bloomberg that the government is prepared for the u.s. to impose further tariffs and of course we heard jack ma today saying the trade war could go on for 20 years. so it does feel like it's becoming more of a long-term prospect for the trade war. haidi: thank you so much, greg sullivan. and we have breaking news, confirmation saying that trading is begin cash expected to begin september 20.

hearing they are raising net $32.6 billion hong kong in their ipo and that the prices will be shares at 69 hong kong dollars apiece, that the hong kong i retail portion has been 1.5 times described. there trading is expected to begin september 20. no policy change expected after the boj two day meeting. but as japan's central bank already on the path of tapering? will speak to an act for on monetary policy who once worked with the governor. and the outlook when it comes to global markets as the trade tensions continue to escalate, next. this is bloomberg. ♪

haidi: we are counting down to

the sydney open. futures higher this morning. of course we had the tit-for-tat tariffs by china and the u.s.. investors keeping their cool and shrugging it off. .he rate was lower at 10% also the chinese retaliation much less than expected. watchingu're "bloomberg daybreak: australia." rematchtock markets shrugging off the latest salvos in the trade war. i guess joins us now in sydney this morning, far away from the usual base in new york. >> a pleasure to be here. >> let's start with the chart taking a look at trade policy. were looking at this chart as it has hit of the. interestingly, it has actually fallen. , i don'tind of see

know if this is the market pricing in trade uncertainty or the trade hawks taking over the white house. do we know anymore about what to expect? trump isthink mr. probably more unpredictable than many of our past presidents, or sure. with respect to trade, the biggest danger in trade come you have to realize the trade goes back over 200 years, the so-called law of comparative advantage. it has worked for over 200 years. you can see that we have had a significant win-win for the past 30 years. the law ofnd comparative advantage, it is very damaging to both parties. no one wins a trade war. we've been speaking to a lot of analysts and business leaders who are to much

unequivocally expressed that view that no one wins in a trade war. agopoke to alan a few hours every let's take a listen to what he had to say. >> i think we all know that tariffs can have a dampening effect on the world economy. that's not good for the airlines and generally for businesses. with the exception of the occasional fall back on u.s. stocks, is this a market that just wants to push higher? not just the u.s. economy but global supply chains. : if you were to look at profit margins for the s&p 500, starting in 18 not -- 1989 when the berlin wall fell, you will notice the pretax margins for companies in the s&p 500 have almost doubled. they benefited from for things, lower taxes, off shoring, supply chains, and lower interest

rates. three of those four are changing . tax rates are going to stay low, but supply chains will become more difficult, because of tariffs, you're going to have the offshore and factor will be gone. i would think he might very will see by the second half of next year, peaking profit margins in the s&p 500. markets,oking at the 70% of s&p 500 stocks are not trading above their 50 day moving average. taking your little bit into the technical library showing that, about 42% of nasdaq stocks are not trading above their 50 day moving average, which means more are below that level. here inw big tech is the u.s., what is a big potential for downside risk if the trade tensions escalate and tech is an easy target? take is an easy

target, particularly to the semiconductor industry. one thing people overlook is technology itself. tech is really a new macro. we have written extensively on this topic. essentially what you are doing, if you can substitute technology for labor, your profit margins go up, assuming revenues are constant. if you can substitute technology or physical assets like ricks and mortar, your asset turnover goes over. there is a significant move afoot in almost every industry to become capital like. but that means is you can protect margins and turnover rise simple substitution of where technology is today. that will allow companies to have less capital in their business. you will see payout ratios go up and you will see a record year for stock buybacks. one of the things you will see happen, a lot of dividend strategies that basically lagged

the market because of text and some other forces will be back in vogue next year. >> so with this i and strategy going into the next few years, how should investors position to take advantage of this? bill: first of all, it's not so much buying tech stocks, although some are quite attractive. microsoft, for example, on the other hand, the key is to make sure, and the biggest question is one we ask all the potential investments we make, what is your business strategy in the digital age? that is the key question for every corporation to address. in the investment business, it productso do with issue be sure and more importantly, messaging. more and more companies are trying to substitute technology for labor. of bits ortitution atoms.

is essentiallyay free. it is stored in the cloud in the form of a bit. because it is in the cloud and it's free, you can use it again and again, each replication of a andcan be used infinitely, is of the same quality. it is also available instantly through the internet. when you think of a bit, it's free, it's perfect, and it's instant. that's not true of atoms. you actually can have your cake and eat it if it comes in the form of a bit. technology is disrupting a list every business model that we have known. >> it tech is the new macro, the central banks need to completely change or economic modeling when it comes to labor market assumptions on inflation and where we expected to be? bill: that's a good question,

and you can demonstrate that. there's the digital price index and the consumer price index. you can see the effect of amazon when you look at consumer goods, or when it comes to leisure and travel, you can see tripadvisor and the effect it has had. prices are down. -- household income hasn't risen that much over the last 10 years, but the quality of goods and services that the median income can buy significantly higher than 10 years ago. the iphone came about in 2007, not that long ago. grexit feels like it's been around forever. great to have you here with us. , billl let you go now priest here with us in sydney. if you missed part of the conversation, catch up on the bloomberg and take a look at the charts and browse the charts featured on bloomberg tv.

you can save them for your future reference as well. this is bloomberg. ♪

>> that's get a quick check of the latest business flash headlines. these and mastercard and , but the suit plaintiffs are gearing up for the next round of their fight over business practices. they're accused of legally on every these purchase transaction. report that a bipartisan group of u.s. senators is planning legislation that could reinstate sanctions against gte. president trump imposed 1.3 been dollars fine on the chinese telecom company. reportedlyl would reimpose the sanctions if they

impose any conditions. coming up, the tesla share cease all has sent them plummeting, this time as the justice department chimes in. that is next. this is bloomberg. ♪

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haidi: it is 8:30 a.m. in sydney. markets open in 90 minutes time. positiveooking more than yesterday. we were one of the few asian markets to succumb to these trade wars and been lower, but we are looking at indicated upsides going into the open. it is a beautiful day in sydney. 19 degrees. i am haidi stroud-watts. shery: i am shery ahn in new york. a rainy tuesday evening. you are watching "daybreak australia." first word news with jessica summers. china has confirmed it will retaliate against president trump latest harris targeting 60 -- terrorists targeting -- tar i

iffs targeting imports. on measures take effect monday, although beijing says it is still open to negotiating a resolution. president trump has threatened tough action should china oppose the new tariffs. keep stressing that dialogue and consultation based on the quality, good faith, and mutual spent is the only way out of the trade dispute, but what the u.s. is doing now shows no sincerity or goodwill. jessica: the u.s. justice chinesent has told media to register as foreign agents. we are told the operations are required to disclose information about their funding and expenditures as well as their ownership structure. the order comes under the foreign agents registration act which covers organizations which attempt to influence u.s. policy or public opinion. crude oil climbed again on indications that saudi arabia's

brent prices pushing past $80 per barrel. markets are adjusting to the loss of iranian supply due to u.s. sanctions. oil exports from that nation plunged 35% since april. saudi arabia, russia, and other major producers are scheduled to meet sunday in all cheers to discuss -- algiers. the u.k. and european union have signaled willingness to break the brexit deadlock as leaders prepare for a crucial summit on wednesday. michel barnier offered to rewrite plans for avoiding a hard border with ireland. the original idea was rejected by theresa may as unacceptable because it involves keeping part of the u.k. inside the you customs zone -- e.u. customs on. >> we are ready to improve this proposal. goods clarifying which are arriving in northern ireland from the rest of the u.k.

it would need to be checked and where, when, and by whom these checks could be performed. we can also qualify that most checks can take place away from the border. jessica: and for murray has supercar an open top that it builds as the closest thing to a formula one racer built for a public road. in different versions. it is part of the new ceo's plan to brought in for murray's portfolio -- for murr -- ferari's limited editions. global news, 24 hours a day, and -- 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. shery: global stocks gained

ground between the u.s. and china. couldsee how all of this play out in the asian markets. here is sophie kamaruddin. neijra: perhaps investors -- sophie: perhaps investors could keep their cool this wednesday. futures mostly pointing higher as we wait on key data points and the boj decision. we have nikkei futures perhaps signaling a softer open, but we have the yen trading near a two-month low, so keep an eye on how that might influence sentiment in tokyo. we could perhaps see that asia's stock rally extends despite the tit-for-tat between the u.s. and china. we have geopolitics on the radar as we enter day to of the moon owns the summit. we are seeing the nzx 50 eke out some marginal gains. this morning, we did get consumer confidence, a read on that, falling to a six-year low for new zealand. some data points for traders in

new zealand to consider. taking a look at the currency markets as we set up for this wednesday's session. the kiwi dollar and 66 handle. the pound trading around a six week high as u.k. e.u. officials worked for the november brexit deal. technical indicators signaling it could be on the verge of entering a bullish trend. the aussie dollar above 72. the offshore yuan could be set for a third day of gains and the question here, haidi, is can chinese stocks to mount the tariffs? as we saw, the shanghai composite rebounded from a four-year low. some strategists are warning of more volatility ahead and yuan evaluation risks are rising. haidi: let's get more on what we should be watching us trading gets underway in asia. adam haigh is here with us. we have seen a little bit of

serenity and the emerging markets space. not so for india. adam: in india, it's largely a question of what is happening with the rupee and the equity market and can you separate the two? the rupee has been under a lot of pressure of late and the equity market has largely been resilient to that. india has been on this great bull run for a long time now, and people are starting to question whether things are lining up against that. this is a great chart, in your gtv library, just shows how the volatility is really picking up of late. central to this thesis is the fact that you have elevated evaluations in the equity market . you've got upcoming elections that may only not introduce another -- may or may not and ance instability uncertainty that investors continue to have to price into the market. and you have also got what has been a very stellar and elevated, protracted long bull run in india.

it has returned the global equities over the last four or five years. you take those three things together, and i think it starts to stack up for a pretty tricky time for indian equities. indeed, goldman sachs, the other day, they were downgrading their bullish stance for the first time in four years. anry: we are now getting interesting call from jpmorgan, advising people to cut back on u.s. stocks and by e.m. shares. this is really interesting, because there are so many money managers that still embrace the u.s. stock record highs we are seeing. adam: absolutely. and of course, the u.s. stock market continues to be that stand out, that safe haven kind of place, where people are willing to incrementally continue to take a bit of risk. they have been pulling out of emerging markets. clearly, that is where the pressure point has been over the last few months as the dollar has rallied.

maybe three hikes from the fed next year. that has shaped up against the emerging markets. this stellaraying run the u.s. economy has been on somewhat ando ebb that relative gain of the economy in the u.s. relative to the rest of the world is starting to lose its footing, so you should be looking to dialback u.s. equity exposure, and indeed, look to profits on some of these valuation opportunities that are rising in the emerging markets space. but of course, it's been a really tumultuous period for emerging markets. thinking when you want to get in, that is still for the brave. sure. at least asian valuations are still the cheapest in more than four years. always great to hear from you. bloomberg's global markets editor adam haigh. you can find his charts we just showed you on the gtv library. gtv on the bloomberg. let's talk about one stock in particular, tesla, because it

could be facing a legal roadblock. shares fell. a justice department investigation into'elon musk -- into elon musk's tweet on taking the company private. they are said to subpoena goldman. joining us now is cried crude oil -- craig. mattershis complicating for tesla now that you have come on top of things, a criminal probe? >> the criminal probe is a really significant development today. with the goldman and silver lake subpoenas, i am not surprised that they would have received that because one of the things he confirmed last week is tesla's largest outside investors set into elon musk also received a subpoena, so the fcc is goingto -- to anyone they know who was involved with consulting elon

musk or tesla about the short-lived go private exploration. in terms of the justice department, it is important for us to keep in mind the possibility here that this could be criminal rather than civil, which is what the fcc would involve. that prompted the big move today in tesla's shares. shery: also remember we are pretty skeptical about what the fcc could actually do because they would be outmatched by this giant. how does that probe compared to the criminal probe by the justice department," we see an extension of the review, not only -- and could we see an extension of the review to other things as well? craig: after bloomberg's report today, tesla did confirm they had received a voluntary request for information, so they were downplaying this. they were portraying this as stopping short of a subpoena, and sort of talking about this as something that they hope

would be resolved soon, so really suggesting that there was not a whole lot to see here, but that very much remains to be seen. there is a possibility that the department of justice could find information to pursue a criminal probe. it's also possible that they themselves could pursue something civilly the way that the sec is able to, so it's early here, and we may not get any resolution for a matter of months, even for more than a year. so it will play out over a longer term. haidi: protracted. on the upside, the rivals when it comes to tesla's actual product, do not seem to be making much progress, right? if you take a look at audis latest offering? youg: it's interesting that are seeing several german models all caps out really at once. he saw the mercedes-benz within the last couple of weeks come out. tron,aw that each on -- e-

which elon musk may have upstaged with spacex, sending somebody to the moon, and you have also seen mercedes come out -- excuse me, bmw come out and not a model that is actually a production model. into more sort of a look their future, but the germans are all coming out and really trying to put a stake in the ground to say we are here, we with electric vehicles. certainly, they are under pressure to do so in europe because of the diesel scandals that have played out there. there was big news in europe about an e.u. probe into collusion on that. they need to make a statement about arriving in the electric vehicle market and taking on tesla. >> thank you so much for that, craig trudell in new york. coming up next, no policy change expected after the latest bank of japan meeting.

that decision out today, but investors will be really fine coming governor kuroda's message. this is bloomberg. ♪

haidi: i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. you are watching "daybreak australia." will wrap upapan its meeting hours from now while no key policy changes are expected. investors are waiting to see of governor kuroda sheds anymore light on step taken. is here to set the stage for us and bring in a special guest. let's start with you. what should we be watching if we are not expecting any big changes in policy? kathleen: there was a significant change in policy in the last meeting in july. at the press conference after the meeting, we expect governor

haruhiko kuroda to be asked about it. a tiny move towards an eventual exit? let's jump into our bloomberg library, #gtv chart. i want to illustrate where we are and where we have been. as we look at this chart, let's go back to couple years in time, and you can see -- this is where the boj announced negative interest rates. you can see how the 10 year yield was dropping then. now we get the announcement. september 2016, yield rate control. keeping it on 0% on the 10 year jgb. you can see these points where there were bid bond buying operations to keep the 10 year jgb just above zero. the top of the range, 0.1%. here is the interesting point. the last meeting, the boj, starting around here, july 20th, stories and the japanese press say they were getting ready to make a tweak in policy. the top of the range, zero .2,

the bottom, -0.2, you can see how it is trading a little bit even .15and tesla, at times on an intraday basis. ratesre going to keep key low for an extended period, but the question now -- did they strengthen their commitment or have they made a stealth move away from monetary stimulus even?s tightening another question on the table will be the etf purchases. will they continue? let's get to our special guest. the professor of economics at columbia university, widely known in central banking circles, very close to governor kuroda. he was his deputy back at the ministry of finance years ago. look at what the boj did and what they said so far. have they made a move that does take them a little bit further down the path towards the eventual exit of stimulus? has would say the july move

stuff tapering without causing the taper tantrum, so they went on and on about forward guidance massiveing this stimulus going, but you know, the result is as you showed, that the long rate is edging up. and they are reducing the purchase of the long bonds, and also etf's, they hinted that they reduce purchases, so this is, you know, very quiet first step towards exit, but many, many more steps to the exit. kathleen: your argument is interesting. you think that the moment that governor kuroda's team introduced yield curve control, that was the beginning, right then, of the stealth tapering. why and in what form? >> because it changed the instrument from the quantity of

the purchased to the interest rate, so now, back from the quantity to the interest rate. so this is the preparation to reduce the purchase of the long bonds. >> please go ahead. finish your statement. >> it is the yield curve that the regionalt that banks started to suffer. so this is a way to regain the slope of the yield curve. shery: talking about regional banks, i was going to talk about pressure on them. we have this bloomberg chart showing you how japan's assets will soon be as large as the gdp of the economy, the boj buying so much, while the pace of asset purchases is approaching the total. we can pull out the full screen we have prepared, showing you

that regional banks have been pressured a lot. if you are trying to get out of this, what would be the most pressing issues that the economy will have to deal with? takatoshi: again, if the panic starts, that would be quite bad. and governor kuroda come in july'-- governor kuroda, in july, indicated he will start buying more if the rates start to the wild. so that is the first thing you calm in the the market, but also gradually tapering off the purchase in the quantity, the purchase of the long bonds. >> so already in the july meeting, we saw him dissenting from -- when it came to the vote, 7-2. does that further signal more cracks coming in the next few months? takatoshi: i don't think so.

i think the real side of the economy is doing so well. the gdp gap is almost zero or going to positive, and the unemployment rate is as low as what used to be in the bubble years. the outside is doing well, so there is a good reason that tapering should start now. people focusrt -- too much on the inflation rate, but the modern flexible inflation targeting as two variables, the real side and gdp gap and inflation rate, so this side is doing very good, so there is a good reason that you want to step towards the exit. haidi: professor, i want to talk about external demand, in particular how japan plays into these trade tensions. we heard that response yesterday even though they are not the direct target of the terrace. -- tariffs.

i want to pull up this chart in the gtv library. it neatly tracks the fact that if we get another month of gains, that will be the 21st straight months of expansion when it comes to export growth. it very nicely tracks with the fact that we have seen a relatively weaker again over the course of this 21 month. how au concerned about trade war globally plays out for demand for japanese goods as well as the nature of the supply chain in places like japan and korea? takatoshi: yes, of course, the global supply chain involves so many countries in asia. so japan cannot be outside this trade war. directly, japan is not so much affected, although the steel and aluminum have been hit by the additional tariffs. the biggest fear that japan has

is the automobile tariffs. i think that goes to the really different stage an japan has to make up its mind. if a global and chinese downturn is a real possibility, is it even more crucial than ever before for shinzo abe to actually start making some of these structural changes and reforms? takatoshi: structural changes and reforms are always good. and you want to do it anytime. i think it's probably better to do it when the time is good, and when the time is bad, like a trade war, then you had to be prepared to do monetary policy and fiscal policy to minimize the damage from the trade wars. haidi: a quick final question. i know you do believe that

inflation in the next year or two will get to 2%. let's put that as a given. so does that mean that governor kuroda is going to wait until it hits 2%? to 1.5k when it is percent, that is the point that governor kuroda will say finally met the move towards the exit will be stake in -- will be taken? takatoshi: i think you will be extra cautious on announcing that he has won the fight. he has been saying that he has the forward guidance, and he the economyre that is out of a deflation and out of those under achievements, so i expect, until inflation rate becomes to percent and beyond, that he will -- 2% and beyond, he will keep that rhetoric of the massive stimulus measures, and keeping the balance sheet -- it is massive easing measures.

he will not go to the exit rhetoric. >> professor, it was great having you with us. thank you. professor takatoshi ito. and bloomberg's kathleen hays. thank you to you both. this is bloomberg. ♪

haidi: that is almost it for "daybreak australia" this morning. trading in new zealand is underway. we are just a few minutes away from the market open in australia. we are looking pretty good despite the worsening trade scenarios between the u.s. and china as well as some geopolitical concerns in korea as the into korean summit continues -- inter-korean summit continues as well. a recovery rally when it comes to the kiwi and aussie dollars as well. shery: we will be discussing all of that with a ceo, george.

he says that after the trade tensions, the markets will be better off. we will have more with him in the next hour. that is it from "daybreak australia." we will get all the action in "daybreak asia." this is bloomberg. ♪ to rent a movie?

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haidi: a very good morning. i am haidi stroud-watts in sydney. from: good evening bloomberg's global headquarters in new york. i am shery on. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, china fires back in the trade war. beijing targets $60 billion of u.s. goods and says washington is showing no goodwill. global equity markets rise amid all the noise. traders seem to have priced in the latest trade tariffs.