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.

tesla slums on a criminal investigation into last month's funding secured tweet by elon musk. shery: a quick check. stocks gaining ground. the s&p 500 gaining the most in three weeks. they shrugged off the latest trade tensions between china and the u.s.. we sawtek leading the gains -- saw tech leading the gains. netflix won 23 emmys, showing streamingof this service these days. here is sophie. bit of we love a little netflix, and when it comes to the session in asia, risk appetite, that may be impact, although there could be a hint of caution. looking mixed while u.s. contracts are pointing higher. is looking flat after a four-day advance, and this morning, we did get data showing the current account deficit

widening more than forecast. they had quite a bit to chew on today from the boj policy decision to august trade data. we have the yen trading your a two-month low as we set up -- near a two-month low. geopolitics will also loom large as we enter day two of the moon/ kim summit in pyongyang. we have the press conference on the schedule after a closed-door meeting. let's check in on currencies on our radar. the aussie and the kiwi dollar continuing to rise on that perceived measured response from china to u.s. tariffs and the pound getting a boost, rising to a july high, potentially on a report that a brexit deal with europe is virtually agreed. haidi, the offshore yuan is looking steady after moving closer to the 6.90 handle on tuesday. the question is if chinese stocks will extend yesterday's bounce. this amid speculation that the national team came to the rescue

to lift us and we -- lift soe and infrastructure stocks. haidi: let's get you the first word news with jessica summers. tesla has confirmed it is under investigation by the justice department and says it is cooperating fully. the criminal inquiry is looking at public statements made by elon musk over his original plan to take the carmaker private. plus, he tweeted "funding secured" before backing away from the idea. it sent the stock higher but tesla has since fallen more than 20%. north korean leader kim jong and withhis june summit president trump has stabilized security on the divided peninsula. made korean media say kim the comments during his latest meeting with president. reports say he thanked moon. they will meet wednesday with moon returning to seoul on

wednesday. former argentinian president cristina fernandez has appeared in court just one day after being indicted for corruption. the long-running case confirmed money laundering and bribery claims. they relate to government contracts during her time in office from 2007 to 2015. she is currently a senator, rolell that grant -- ar that granted immunity. the federal reserve has completed a sale of securities acquired a decade ago. closing a chapter in the history of the financial crisis. the bank said the transaction had been running for several months and the final sales in the last two weeks saw a net gain of 2.5 billion dollars. full details of the transaction are expected in december. has announced a supercar that it builds as the closest thing to a formula one racer ever built for the public roads. cyber -- fiver

-- the car is part of the new ceo's ofn to broaden the portfolio limited edition supercars which typically sell for more than $1 million. 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. shery: jessica, thank you. trade and tariffs remain a top story as the spat escalates. china i retaliated with levies on $16 billion in u.s. goods following yesterday's move by president trump on $200 billion in chinese imports. now the president is threatening to go even further. aes. trump: if there is retaliation against our farmers and our industrial workers, if any of that goes off, we are going to kick in another $257 billion.

and that will be also at 25%. we don't want to do it, but probably we will have no choice. shery: bloomberg washington reporter gregg sullivan joining us now. safe to assume that that potential negotiation between treasury secretary mnuchin and vice premier -- is off the table? not lookcertainly does promising, though not yet completely off the table. chinese side said they are still willing to try to negotiate a way out of this trade dispute. that coming after the tit-for-tat terrace iffalations, -- tar escalations. but as we heard president trump , is beijing does retaliate and target u.s. agricultural products, he would .espond with even more tariffs beijing said that they would reject the talks if the u.s. moved forward with these tariffs, and it appears they

are. those talks to diffuse this trade tension hangs in the balance. haidi: a lot of whether this gets resolved or not depends on what trump actually wants. do we know what the president is trying to achieve? greg: we have some clarity on some things, but there could be more and other areas. we know the trump administration wants to affect chinese -- trade in the chinese practices. on the one hand, president trump frequently aired grievances about the u.s. trade deficit with china, even today saying he cares a lot about the trade deficit and want to narrow it. in may, we saw the chinese proposed to boost purchases of u.s. goods to try and window down -- winnow down that trade deficit. we know the trump administration has issues with trade practices such as ip theft. they aired grievances about the forese industrial support

industry. that being said, some in beijing are starting to wonder'if the administrations goal -- wonder if the imagination's goal -- if the goal is to restrain the rise of china. they are preparing for trump to move ahead with tariffs, so clearly, they are preparing for a long term dispute here. shery: what is the problem with that when secretary ross was saying because the 10% tariffs would be spread, it would go unnoticed? what are businesses and the american public saying about all of this? greg: that's right. we heard from ross saying consumers would not notice these tariffs. indeed, they did try to exclude certain products from the list of chinese tariffs to protect consumers and shield them from the pinch. that being said, these chinese tariffs will hit u.s. agriculture. some of those states are big

trump supporting states. they can feel the pinch from these tariffs. some analysts point to consumers feeling the economic effects now about the latest round of escalation is happening, and all of this of course as midterm elections approach. for members of congress. trump himself has said that farmers and ranchers, and those in the industry understand what he is doing, and they will stick with him, but that remains to be seen as the tariffs began to bite on the u.s. economy. haidi: certainly a bit of bravado from the president. thank you so much for that, greg sullivan with the latest on these escalating trade tensions. the u.s. market reaction to the latest round of tariffs and the retaliation from china was muted. we had a rebound in tech that helped push the s&p higher. su keenan has been looking at the latest market action. there is a sense that the market wants to relentlessly push

higher ir investors have -- or investors have -- kathleen: we are seeing the correct assessment that there has been ratcheting up of the trade talks, but that the size of the tariffs from the u.s. are less than expected and the byunt of goods tariffed china are less than expected. it could mean there is a de-escalation in the works, and that is definitely a positive for the market. look at the nasdaq 100, the most heavy concentration of tech and the stocks are semi--- and the semiconductor index, strong. volatility is the name of the game. our chart that gtv. look over here. a big drop recently. this is the jpmorgan global volatility index. the vix shows there has been a reigning in. look at this. earnings played a role. positive reviews.

it may have a buyback in the works. continues to have an outsized valuation. $14 billion valuation. that's after only two months post-ipo. yes, fedex and general mills, disappointing on the earnings front. >> they were comparing it with chinese tech stocks surging. to commodities and talk oil and copper, because they are also ignoring not only the trade tensions, but also the iranian sanctions. su: absolutely, what we had in the u.s. market is oil back close to 70 for a second day in and that is a, positive. we did see selling off later in the day and in post-market action because there is an expectation that we will have a bearish supply report in the u.s.. take a look at the brent crude.

that again was moving higher on what we saw. the saudi saying they would be saying they would be comfortable with oil at $80. at copper, robust demand. the fact that you have a big drop in inventories, at the lowest globally since 2016, and the window for negotiating tariffs is still open, according to deutsche bank, that is giving copper a bit. i don't know if we have time to look at the s&p 500 chart. what we have -- perfect. jpmorgan warning that the rally will not last. it's contrary and in that the bank of american survey shows they believe it can but the s&p up some 8% year to date. you believe at j.p. morgan should cut stocks. they think u.s. assets are in a "sugar high," and that is about

to come to an end. shery: the longest ball cycle in history. -- bull cycle in history. we chart the emerging markets hawks and currencies that are eking out gains. despite these escalating tensions, asian-pacific equities look set to extend the rally. this is bloomberg. ♪

haidi: "daybreak asia this is." i am haidi stroud-watts -- this is "daybreak asia." i am haidi stroud-watts. shery: the latest tensions in the u.s. china trade war. let's get inside with george schultze, the founder and ceo. great to have you with us. let's get started with these trade tensions. right now, we only have more and more uncertainty. will the markets be better off

than before this all caps started? -- got started? george: eventually, they will have a deal where there will be a negotiated solution. it might take longer than people were expecting. the latest tit-for-tat on tariffs seems to make it that we are going in that direction, so -- shery: how positive was it that the tariffs were not at the original 25% level. we feel they are being more conciliatory towards each other? it feels a little bit, but not very much. i think investors should know that in the history of the united states, tariffs have been around for a long time. in fact, the first action by the first u.s. congress after passing the united states constitution was to pass the thisf act in the 1700s, so dispute could go on for sometime. there was one person today, jack ma, saying it might last 20 years, so you never know. maybe it is an all of branch to only implement the 10% tariff

for now through the end of the christmas season am a potentially ramping up to 25% after that. >> i was just about to point out that -- i think everyone gulped. time foris a long markets. 20 days is a long time for these markets. what happens then if it is this long, drawnout war of attrition? does it just become background noise, or does this kind of destroy some of the supply chains, pending the structural aspects of how growth is happening in places like china or across asia? does it really gives a grounding to the next global downturn? certainly no is possibility, but it is our belief, and we have been telling is clients, that it likely there will be some negotiated resolution coming in the near term. we believe cooler heads will eventually prevail because otherwise, both sides are shooting themselves in the foot by taking these extreme stances and going back and forth with tit-for-tat tariffs.

>> what you look at being the most likely outcome going into the midterms and i suppose more significantly after midterms, what the outcome is likely to be and where investors will find themselves? it is looking increasingly likely that it's possible we will have a situation of policy paralysis following match election. george: we shall see. there are 60 seats in the house that are potentially under contention in the midterm election in a couple weeks. changehouse should control, that makes it much more difficult for trump to pass legislation and to continue with his deregulatory push, and so you could see some gridlock in washington after that. i think the markets might actually appreciate that because sometimes, uncertainty coming out of washington is favorable for the markets because generally, businesses do not like uncertainty, and the uncertainty of new legislation one way or the other certainly creates risk that ceo's, you

about, andpositive clearly, that is what you are seeing with the tariffs so far. you have seen a big selloff and emerging-market currencies and what appears to be a bear market in china. and i think until there is a resolution of the -- resolution, the bears have it for now. shery: inflation in the u.s. has been sort of a case of waiting for -- are we going to see tariffs push prices higher and how would that affect the fed's evaluation? george: the fed will have to act. i believe they will act next week and raise rates again from the reference rate of 1.75 to 2% up to about 2% to 2.25%. that will be their eighth increase since 2018. remember also, the fed is reducing the size of its balance sheet, so although monetary

policy is extremely accommodative still, they are on the path to tightening. and you know, one of the things the fed is concerned about, and you saw it in the fed minutes from the last release, is what happens with the trade wars and tariffs. now, if, you know, if tariffs are implemented across hundreds of billions of dollars of industry and imports, you know, that is a potential big jump in inflation, and that hits right to the core of the fed's dual mandate to manage growth and full employment but keep inflation in check. shery: will this put at risk of potential of december hike? george: i think it is too hard to say. i mean, you could have the site come to an agreement at any point. for now, the u.s. economy is veryng their the robot -- robustly. if things continue the way they are going, economists are expecting the growth rate increases to 3.6% next year. things seem to be cool right now. inflation seems to be a check,

depending on what measure you work on. preferred measure is saying they are worried about 2% inflation, so for now, i the fed will continue raising rates moderately. longer-terme a value investor, it's hard to get past how tantalizing valuations are in places like china and other e.m.'s, but are you opportunistic or is it too risky? george: it's time to start looking for sure. i think there will be some interesting opportunities available in emerging markets in the next couple months and weeks. but for now, it seems like it is a bit of a falling knife in certain countries, so you have to tread cautiously. one thing to be on the lookout for in emerging markets is marketss in overseas where the currency is selling off that have u.s. based dollar-denominated debt. the cost of repaying the debt

has just jumped. in china, it is 5.5%. in other markets, it's much more. that could eventually cause the faults and create opportunity in the longer term. haidi: george, thank you so much for that and for joining us today. george schultze, founder and ceo. there is plenty more to come. you're watching "daybreak asia," of course. ♪

haidi: this is "daybreak asia." i'm haidi stroud-watts in sydney. shery: and i am shery ahn in new york. it has confirmed its pricing shares in its ipo at 69 hong kong dollars, with trading expected to start on thursday. the chinese food delivery an service says the retail portion is 1.5 times oversubscribed.

goldman sachs, morgan stanley, and bank of america merrill lynch are joined sponsors with the full financial advisor. reports a bipartisan group of u.s. senators is planning legislation that could reinstate sanctions against the te -- zte. site: a chinese parenting backed by alibaba saw downturn during the first half. clout in the prospects for its upcoming ipo. the data seen by bloomberg. the average monthly users monthly users- almost halved. qualcomm ceo says the chipmaker reached a point where they could reach a settlement. >> we have a dispute over the price of ip. we think that is moving now into

a period of time where our strategy is unfolding and the environment is such that i think you are in a position where a deal could get done. at the same time, i think there is probably no better opportunity and partner for work withhem to apple. it makes sense that the technology leader in mobile should be partnered with the product leader in mobile. work out,gs tend to but the way we think about the business is eventually that you get the disputes figured out and you move into a different period. >> so you believe apple will remain a customer? steve: i believe if you have leadership technology that your dominateill eventually the business relationship between companies, and i think that there is no reason why that should not be the case here. you're taking on the world's most valuable company. they stopped putting your chips in their phones. they say the patents that they are paying you for are invalid. how does something so bitter get

resolved favorably for qualcomm? steve: well, i think bitter may be the long-term. we have had disputes with licensees in the past as well over the price of ip. really no different than that here. it's just bigger companies. remember, we're both big companies. we are not a small company really in terms of being able to execute strategy that we have. those things will get resolved. i think, sometimes, they get resolved on the courtroom steps. sometimes they don't. strategies playing forward, it's kind of the way we always thought. haidi: that was the qualcomm ceo speaking exclusively to emily chang. tesla faces a justice department investigation over elon musk's private and going funding secured. the very latest in the carmaker's increasingly confiscated legal troubles, coming up next. this is bloomberg. ♪ ♪

is 9:30 a.m. in sydney about 30 minutes out from asia's first major market open. resilient seems to be the theme of the day. tech rebound, rising gains in the last -- in the u.s. pretty sanguine of the worsening of the trade war between china and the u.s. shery: s&p 500 gaining the most in almost three weeks. we will see if all this positive sentiment is translated to the asian markets. in new york markets close higher. haidi: you're watching daybreak asia. let's get you the first word news with jessica summers in new

york. jessica: thanks. china has confirmed it will retaliate against president trump's latest tariffs targeting $60 billion worth of u.s. imports. that is in response to washington's measures against $200 billion in chinese goods. the measures take effect monday, although beijing says they are still open to negotiating a solution. president trump has threatened tough actions of china imposed new tariffs. >> we keep stressing that dialogue and consultation based on equality, good faith, and mutual respect 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. just department has told china tv to register as a foreign agent. they are required to disclose information about funding and expenditure as well as ownership structure. the order comes into the foreign agents restriction act. it covers or ministrations --

organizations that attempt to influence u.s. public opinion. crude oil climbed on indications saudi arabia would be happy with prices pushing $80 a barrel. adjusting to the loss of iranian supply due to sanctions. from that nation they plunged 35% since april. saudi arabia, russia and other major producers are set to review sunday to review the state of the oil market. union isean investigating whether bmw, daimler and volkswagen colluded to limit development of control systems. they received information that the three companies held meetings to discuss technology surrounding auto exhaust. the inquiry is looking at whether they agreed not to compete against each other in developing and introducing new technology. 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. shery: thank you. we're counting down to some of the major market opens in the asia-pacific. for more here is sophie kamaruddin. sophie: we could be looking to live on the hope that the u.s. and china can come to an agreement. but even as a sign of retaliation, we saw data showing china held treasury loans to a six-month low. we are seeing investors be assured that the latest tariffs are not as severe as anticipated, so futures are pointing higher. they may see a strong start after the session on wall street. we have the yen trading near a two-month low. towards sees a move 113. let's check in on other currencies on the radar. the aussie dollar is climbing to a two-week high.

the kiwi is set for its sixth day of gains, after measured reactions from china against the u.s. tariffs. the pound hitting a july high on the report theresa may is set to rule out a sex it brexit vote and an exit deal from europe has been virtually agreed on. the turkish is set for a fourth day of decline. this, as rate hike euphoria continues to fade and dollar demand persists. lastly, keeping an eye on tesla reports suppliers after they are under investigation. they are on the radar, they rely on tesla for 20% of the revenue. world'sc, which is the largest supplier of electric car batteries and is one of tesla's longest standing associates. haidi: thank you so much for that. tesla has been moving the market.

the justice department is said to be investigating the company over tweets from elon musk. this has created such a ripple. ramy: this was the two weeks heard around the world. much to the annoyance of investors, hope to some, but it definitely caught the board by surprise. this is now causing consternation over the department of justice and out to his left is said to be under a criminal probe. let's show you what is the actually said after bloomberg had the scoop on this after that bloomberg news report came out. they said last month following elon's announcement, tesla received a voluntary request for documents from the doj and they say that had been cooperative in responding to it. we have a second page saying we have not received a subpoena, request for testimony, or any

other official process. we record -- actually what happened after the bloomberg news report. then while that statement came out. highlighted in white the fall in the sure place -- share price, down nearly 9%. it did pay her losses to close down a little more than 3%. you can definitely see this really moved the market on the story. i am going to hop into another terminal and we can see this against the five-year history of tesla shares. 284.96. if you take a look at this, we are actually hitting lows that we last hit back in the spring of 2017, around march or so. really, if you had gotten in in march of 2017, you would've gone up, been quite happy. $420, but youhit

basically would have gone up, down, then lost everything you learned. shery: you never know when elon musk is going to tweet again. how much does this have to do with elon musk shooting the car company in the tires, and more of a fundamental. what are analysts saying? ramy: that is a good metaphor in terms of doing it for his own company to his own feet. interestingly, a couple analysts did come out over the pastor vote hours on bloomberg television and they are saying the fundamentals are good, but it really is musk causing this own storm for himself and for tesla. hop back into the bloomberg terminal. i have the analyst recommendations for you. now, they do stand at nine buys in green, 11 holds, and 12 sells. we can see the share price here in yellow. the 12 month price target is in white. this is still higher by $315.

says fundamentals are strong heading into the third quarter. constant noise makes it hard for investors to make decisions on those fundamentals. co. sayion, needam and these headaches will not go away anytime soon. more scathing here, the analysts said musk's credibility was already razor thin before these tweets. now just basically he put it over the edge. looking at analyst recommendations souring. one final chart i want to go back into the gtv library and show you social media, the sentiment here is also souring. white is the share price, but the negativity in red, you can see definitely outweighs what is happening in green. today, social postings tripled

after that bloomberg news report. sentiment right now is somewhat negative. you can see with tesla share prices down by 25%. there was a lot of heads shaking right now, wondering when this. . -- this will stop. shery: not all publicity is good publicity. ramy, thank you so much. next, emerging markets stocks to watch and why em's are seemingly shrugging off the growing trade war. this is bloomberg. ♪ this is bloomberg. ♪

haidi: this is daybreak asia. global stocks and ignoring the latest trade tensions between the u.s. and china, but investors are assessing with a new round of tariffs means for emerging markets. let's switch it out with sophie kamaruddin. of ae: some are anxious

prolonged competition between the u.s. and china. that includes xe yuma. 10%s forecasting a further to 15% decline for emi equities. they already dropped 8% over the past 12 months. em countries are continuing to demonstrate agility --for jody from argentina. the government technology and they will fall into a recession this year and next. sustained growth also took a heat. goldman cutting its view on indian stocks on expectation the economy will face headwinds. jpmorgan going against the grain, saying buy em and cut u.s. stocks, warning we will lose our edge after this year's sugar high. oxford economics also calling

for an inflection point here, as the dollar's fate is determined. oxford economics see the key is chinese stimulus, with real estate and heavy indicators 22 support for global growth. lastly we cannot overlook the impact of a trade spat on supply chains. that could see southeast asia capitalizing companies reconsidering business in the u.s. and china. found abouturvey one third of more than 430 american companies have or are considering moving production away from china. with southeast asia topping the list as a preferred location because of low production cost and solid growth expanding at 5.3% on average. haidi: thank you so much for that. we are joined by gary geer brand joining us from hong kong.

you look at valuations across em in china, it is all looking toher appealing compared some of these levels you see when it comes to u.s. stocks. but does this round of tariffs, potentially the next round, present a death knell for any rebound in emerging markets? has been out of favor for five plus years at this point. the uncertainty has also become a constant. and there is a great dispersion among em, latin america where we focus, as well as asia has its issues related mostly to politics, presidential elections, mexico and brazil. wait and see with mexico and brazil. asia does not have that political risk, necessarily. but now it is in the forefront with escalating trade tariffs.

who knows where it goes. we are still pretty excited about the prospects of asia. what sophie was talking about earlier is part of this move towards localization, i guess the reversal of off shoring, but moving to different parts of the supply chain across asia. how does that benefit, how do investors get a piece of that? gary: interesting question. if one were to look at countries like vietnam, which has a connection to china and is a part of the global supply chain in sectors like furniture, furniture making. vietnam may be a real beneficiary of this escalating trade between china and the u.s. volatilityave seen in emerging markets when it comes to their currency. this gtv go library showing you how em foreign exchange volatility has risen to

extreme levels against current volatility now at 2.6 standard deviations above the long-term average. we have not seen this since 2008. will we see a pullback of this volatility, or does volatility spread through g7 nations? so currency not centric because of our duration. we are medium to longer term investor. over that period of time, particularly because we are a private investor monetizing overtime, not tso event-concentrated. so, that currency move is not so important currently. having said that, the rupee in india is the worst-performing currency on the face of the planet. we are long-term bullish on india. we are active in the credit

arena today. and the movement of the rupee absolutely has an impact on that business, as well as our future activities in the country. shery: so how are you positioning for the long-term outlook for the u.s. dollar, because we're seeing tightening moves happening now in an advancing economy. in the long-term what is your base case scenario here? gary: we really think about it in the obverse, which is what are the target markets, what are the most conservative localtions utilizing banks and our own internal proprietary valuation. we know what is cheap, what is overpriced in terms of currency. again, we are not currency traders, but we are a u.s. dollar-based investors. so as responsible stewards of capital, we have to be mindful

always of where we are with the dollar. and the dollar is strong. haidi: you get the dollar right, and few other things can go wrong perhaps at this point. i am wondering how much attention you paid to the impact of u.s. policy, diplomatic policy in the repercussions it is having around the world. theseok a lot of -- at crises and they have a lot of issues. it really was the u.s. which sparked a crisis in turkey. russia, wections in have seen movement in russia as well. will this be an enduring theme going forward? gary: we had hoped actually that the uncertainty caused by these really knee-jerk policy decisions would be softening, or lessening. that is not really the case. the uncertainty continues. for as longxpecting

as we are active in growth markets globally that the uncertainty will be with us. the world is a better place with strong leadership in the united states, and also a clarity of leadership. we do not have that today. shery: when it comes to mexico, for example, we are still not getting any final resolution on the trilateral nafta. what are your expectations of this, and what sort of outlook do you have for mexico if the status quo remains and we just keep seeing uncertainty on what nafta will bring? gary: we are active investors and owners in mexico. our expectations are low with respect to an early or quick resolution of the nafta issue because it really must be tried party in our view. the idea of picking off mexico and forging a separate arrangement than following that with canada is not really a practical solution, at least not

in our view. we are conservative. and if something does not get resolved, then we revert to wto rules, which frankly are not much different than the current nafta regime. shery: gary, thank you so much. discuss some breaking news coming out of japan. the trade numbers for august have come in. big when it comes to exports, which makes it 21 consecutive months we have seen export growth in japan. 6.6% year on year. august beating expectations of 5.2%. imports also strong and 15.4%, beating expectations of 14.5%, no doubt from stronger commodity prices and oil prices. energy as well. the trade balance, $444 billion

yen for august. than expected deficit on it comes to that adjusted number, slightly less than expected when it comes to trade balance. despite all these concerns over a trade war, readjustment in relationship between washington and tokyo, you are seeing the 21st consecutive month of export gains for japan. chinese,er the open of looking pretty positive despite the trade worries. more to come. you're looking at reaction when it comes to dollar-yen. obviously that weaker yen has played well when it comes to the export and trade picture. a lot more to come. this is bloomberg. ♪

shery: this is daybreak asia. haidi: let's get you a quick

check of the latest business flash headlines. fedex fell the most in five years on rising they were costs and the rocky integration of its acquisition. to of this causing the stock fall 5%. shares down now 3% this year, while the s&p 500 has gained more than a percent. but fedex is betting on a rebound. shery: mcdonald's staff in 10 u.s. cities went on strike, accusing the fast food giant of failing to stop sexual harassment. allegations include groping, inappropriate comments from supervisors. they also want the company to stop taking sexual-harassment advice from the law firm that is currently defending the weinstein company. haidi: mechanics at southwest airlines have rejected a

contract that would help provide a bonus. the no vote complicates their attempt to make a deal as they try to keep costs in check. wages and benefits accounted for 41% of operating costs in the first half. unions for flight attendants and pilots approved new contracts in 2016. shery: the world economic forum's tech focus summit is underway in china. our chief north asia correspondent joins us now. what can we expect today? stephen: yeah, it is a pretty big date. we're going to have the premier giving a keynote speech at 10:00 and we are being told it is likely to be around the theme of a major trade policy speech. that would be quite significant giving the ramping up of trade tensions between china and the u.s. and of course the trade war be at the backdrop of about

every discussion we have here. we have a good lineup, including the coca-cola china president, and the president of korea. you have been mentioning all morning about this new survey saying some 60% of american businesses that do business in china say they are being hurt by trade actions between the countries. coca-cola has been here since about 1979. a big, big, big beverage maker in this market. interestingn insight into how it is affecting coke. later on we will get our first interviews with the fairly new ceo of china jpmorgan. of course china has the big bang opening up for the financial services sector. take an f made an application for 51% stake in a new securities venture. mark leung has a securities

background at j.p. morgan. we will get his insights as well. a big slate here at the world economic forum. back to you. day, what a year to be there on the ground talking to some of the biggest voices and getting their reactions. stephen engle at the world economic forum. you will be with us throughout the day. let's look at how markets are shaping up. a pretty sanguine reaction. indicated upside across most of the asian markets going into the open. sydni seeing a little positivity. the aussie dollar holding. really shrugging off trade-related woes. elsewhere it is all looking pretty positive. shery: take a look at currencies. the japanese yen holding ground after falling for the weakest in two months to the u.s. dollar. also seeing the korean yuan now

trading at 11.23 after a session of gains. plenty more coming up. this is bloomberg. ♪ ♪

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, china fires back in the trade war. beijing passes $60 billion of u.s. goods and says washington is showing no goodwill. asia-pacific markets set to drive higher today as investors shrugged off u.s. tariffs yesterday and are unlikely to

respond to china's response today. moon say they are both trying to achieve peace and stability in seoul. u.s. markets gaining ground. s&p 500 rising the most in almost three weeks. to see how everything is shaping up for the asia markets open, here is sophie. sophie: no midweek hump to be have yet for asian markets. so it could be extending gains for a fourth straight day, confirming a fresh uptrend as the benchmark its higher highs. the yen is still trading near a two-month low. we had the latest traded up to digest showing exports growing within forecast while strong imports get the -- cap the deficit for the second straight month. see all talk and no action from governor kuroda. extending the gain as

we enter day two of the moon kim summit, which may see a joint press conference this wednesday. also want to highlight the aussie 10 year yield. hit 2.7%, tracking the move we saw in treasuries. in wellington, now gaining some ground up a 10th of a percent. extending grain -- gains for a sixth straight day even know the deficit is widening. haidi: thank you so much for that, sophie. looking pretty bright and positive. let's get you the first word news in the meantime with jessica summers in new york. jessica: china has confirmed it will retaliate against president targetingtest tariffs $50 billion worth of u.s. imports in response to washington's measures against $200 billion of chinese goods. the measures take effect on monday. although beijing says it is still open to negotiating a

resolution. president trump has threatened tough action should china impose the new tariffs. >> we keep stressing that dialogue and consultation based on equality, good faith, and mutual respect is the only way out of the trade dispute. but what the u.s. is doing now shows no sincerity and goodwill. confirmed ita has is under investigation by the justice department answers it is cooperating fully. the criminal inquiry is looking overstatements from elon musk over his original plan to take the carmaker private. quote, funding secured, before backing away. tesla has since fallen was in 20%. the federal reserve has completed the sale of securities it required a decade ago during the rescue of bear stearns, closing a chapter in the history of the financial crisis. the banks of the transaction had been running for months. the final sale in the last two to u.s.w a net gain

taxpayers of $2.5 billion. full details are expected in december. the company formerly known as i cast has agreed to pay $50 million to resolve allegations it helped banks and it really a key benchmark for interest rate derivatives. from 2007 through 2012, they helped banks rig a benchmark valuing trillions of dollars. the unit now known as inter-capital does not admit or deny wrongdoing. for rory has announced a supercar it builds as the closest thing to a formula one racer ever built for the public road. the carbon fiber a 10 horsepower will come in one and two seat versions and fewer than 500 will be built. the car is part of the new ceo's plan to broaden ferrari's portfolio of limited-edition supercars which typically sell

for more than $1 million. 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. the latest escalation of trade tensions has chinese officials warning this may just be the beginning. one saying it is systemic containment and suppression a could come next. issue is ifose the this is more just about trade routes and about containment with the suppression of the rise of china, it could go on for a lot longer. mark: yes. obviously speculation now is beginning to build up as to what other measures china could use to hit back at the u.s. we have already seen they are willing to respond with $60 billion worth of tariffs of their own. we could go further than that. peoplethe first places

are considering is holding of u.s. treasuries with china. start to consider selling u.s. treasury's, selling the dollar as well. maybe they will not be so aggressive when it comes to treasury auctions. really, there is a lot of focus on the treasury market right now. and we did see that treasury yields rose quite substantially in new york yesterday. there are people who seem to be concerned how china will view financial assets. will they start to be precluded -- included in some kind of retaliation against the u.s.? haidi: are investors in that sector shrugging off the latest trade developments? mark: they probably took some heart from the fact that apple reciprocally given a pass by president donald trump. -- was specifically given a pass by president donald trump. some specific items like the i watch were not included in the items.

that is probably a slight conciliation to the tech sector, so that helps. maybe just in general the tech sector is seen as something which can go around some of the issues between the u.s. and china, so that is all helping the general mood in the nasdaq market. shery: let's take a look at the dollar. why hasn't it traded stronger relative to other asset classes in the past few days? mark: there's a few things suggesting we may have reached a turning point in the u.s. dollar. some of the things which were helping boost the dollar, such as the fact fed was on a tightening path, that is well known. even over the last few days the market is not really changing its outlook for the fed. yes, two four hikes are expected this year, but that has been known for some time. one of the things that is changing is it yields in germany are rising a bit. that is good for the euro.

when the euros start to change direction that is negative for the dollar on the flipside. as we have been saying as well, the fact the treasury market is taking a wobble, that is negative on the other side. there are a few things coming to the surface. there are suggestions that jerome power, the fed, is becoming bearish himself. he does not want to see the dollar go too high. there are a number of turning points coming together, and possibly we have seen a peek against the dollar for major currencies at least. shery: mark, thank you so much. there is aight now, briefing by south korea's presidential spokesman. he is now telling us there has been no agreement on denuclearization yet, but nor talks are needed today -- more talks are needed today. also saying there will be another meeting with moon jae-in and kim jong-un.

they will have a second round of talks at 10:00 a.m. also saying there is no agreement on denuclearization yet. more talks are needed today. we know there will be a second round of discussions by the two leaders at 10:00 a.m. local time. there will also be a live broadcast on summit results. the timing has been undecided. south korea plans to live broadcast the results. you are watching the spokesperson there telling us there has still been no agreement on denuclearization. not really surprising, she says there is no progress on denuclearization. they have tried to temper expectations, saying this is the first time they will actually tackle the issue. >> indeed. yes, denuclearization was the keyword mentioned by the spokesperson, even ahead of the summit. himself said

denuclearization would be the main keyword that would determine the success or lack thereof as an outcome of this summit. having said that, this will lead to an alternate summit between u.s. president donald trump and kim jong-un as kim jong-un's commitment to denuclearization will be the premise of the next summit talks between the u.s. and north korea. haidi: what was achieved in the discussion so far other than that flashy parade of the two leaders through north korean streets? anything concrete come out, and what are we expecting now? jihye: well, to answer your question, nothing much concrete as an outcome of yesterday, because we do not know the results, precise results of the meeting that took place yesterday afternoon. there will be another meeting today at 10:00 a.m. local time.

they stated there will be a joint session to specifically state the outcome of the meeting. we will have to wait to see any concrete developments as a result of the meetings between the two korean leaders. haidi: what would count as a success or a win? are we expecting any announcements on the business side? a deal involving the likes of samsung, for example? jihye: well, for the business yesterday the spokesperson specifically said there was going to be no mlu or memorandum of understanding expected as an outcome of the meetings between north korea's fights premier and the business executives visiting from south korea. however, a lot of military talks are on the table in terms of results. we do not know exactly what concrete steps they will take between the two koreas for

economic cooperation, but we will have to wait to see for the joint presser coming up later today. haidi: thank you so much for that, reporting from seoul with the very latest. high expectations but also managed expectations. you can also turn to bloomberg for more on the story. ongoing commentary and analysis from bloomberg's expert editors and breaking news as these develop mistake place. still ahead, what can asia due to whether the escalating trade war? we put that question to the president of 100 resilient cities later this hour. shery: first, economists expect the boj to hold study this meeting. this is bloomberg. ♪

haidi: this is daybreak asia. shery: the bank of japan wrapping up its latest i'll say

meeting in the coming hours. even though no changes are expected, investors are keen to hear where they may be heading next. kathleen hays is here to set the stage for us. of course governor kuroda has to be very careful on his comments. he does not want to spur speculation he will be exiting anytime soon. kathleen: because he does not want to disrupt the markets, that is what everyone is saying. i think people are expecting he will shed some light on policy, particularly the steps taken at the last meeting when it comes to yield curve control. what did he tell us about that? because of that point the boj said the range for the 10 year j -0.1, around that. now it has widened out to 0.2. let's look at the bloomberg now, one of our charts in the bloomberg library.

look at where we are now and where we have been. we're looking at japanese bond yield. this is where the boj went to negative rates for the first time, this is where the introduced yield curve control, an innovation among global central banks. the blue dots, they market tested them to keep the yield there. last meeting when they widen. the range, -- widened out the range, then they announced the move and the yield has been hovering ever since. they also introduced forward guidance, saying they will keep the key rate low for an extended period. now people wonder, did they strengthen their commitment, or did they open the door maybe to the beginning of the exit. we were speaking earlier to a profession of international and political affairs at columbia university, former adviser to prime minister abe and more. he said no way.

let's listen. >> i expect until the inflationary rate comes to 2% and beyond that he will keep at least rhetoric of keeping the massive stimulus measures. he will not go -- kathleen: he also told us that governor kuroda has already led the boj itself tapering, because the more they own the fewer the have to buy. they will hold fewer epf's. more questions on that as well the press conference today. again, most people expect whatever he says about where they are and the changes, probably not even a word that he is ready to move towards the exit door yet. shery: kathleen hays, thank you

so much. first, we want to break this news we are now hearing from supreme court nominee brent kavanaugh's accuser's lawyer, now saying they are seeking an fbi probe into the allegation before there is a senate hearing. of course ford had accused mr. cavanaugh of sexual assault decades back when they were both in high school. lawyer sayse ford's they are seeking an fbi probe before there is a senate hearing. this is according to cnn, who is also getting reports from the new york times. of course this has been a huge ongoing issue, as the confirmation nomination for the supreme court nominee brent kavanaugh, it could have big repercussions when it comes to the midterm elections in november. indeedhuge repercussions as this confirmation hangs in

the balance. ,ust getting that breaking news saying there should be an fbi investigation before senators conduct the hearing on monday. let's get back to the topic at hand. decision, noe boj expectations of a policy tweak after significant adjustments in the previous meeting. sachsg us is goldman chief equity strategist. i want to start off with a chart. we got that bumper set of trade numbers. exports seeing a 21 straight month gains. taking a look at this chart, you can see that resilience when it comes to export demand. that is pretty neatly correlated to a period of relative yen weakness. the average is about that 111. does this give you optimism that

japan can withstand any headwinds that come through from a trade war, in particular with the man's on japanese products, japanese components, and weighs on the asian supply chain in general? >> i do think it is reflective of the fact japan has actually had to live with a stronger yen for quite some time and has had to adjust its cost basis, had to move a lot of production offshore to stay competitive in order to continue exporting its trade business overall. audios --d that, obviously if protectionism comes more severe. autoey decide to put tariffs on japan, obviously they will be hit very hard if that scenario were to come through. suffice to say our own experts in washington dc do not leave that is a high probability scenario, but frankly, heading

into the midterm elections in the u.s., a lot is so unpredictable. so that threat of protectionism becoming more acute is still a risk for japanese exporters. is thein the meantime expectation we just have a bank of japan that stays the course as it can -- crawlspace achingly. with this set of tweets we saw in july, does that suggest to us we are perhaps getting closer to talking about and next it, or its that -- an exit, or is trying to make this extraordinary start more sustainable? kathy: we think it is really more about the latter. at the end of the day if we go by corona -- governor kuroda's word, we are far from that target. keep in mind we have fiscal tightening in the pipeline with the hike planned for october 2019. given also what we just talked

about with protectionist threats abroad and potentially slower global growth in general then i think that is a mix of factors that will probably keep the bank of japan at least with a status quo situation for the time being. obviously if things change, if the yen were to weaken to 125 or something else happens to allow the bank of japan to take additional steps towards a tight tapering scenario that might unfold. but for the time being we think the probability of that kind of scenario unfolding is quite low. again, staying put is how we are seeing the bank of japan's decision today. shery: you mentioned fiscal policy. we are expecting prime minister shinzo abe to claim an easy election victory. will that give him a stronger mandate to pursue his economic goals, and what does he mean for japan? kathy: yes. i mean, i think it is pretty consensus now that abe will win

an easy victory in the election tomorrow, which allows them to stay prime minister through september 2021. given a length of runway to again pursue some of his economic goals. not just achieving higher inflation, sustainable growth, but keep in mind he is trying to form, social security raising the retirement age from 65 to 70, allowing 500,000 more foreign workers into the nation because of acute labor shortages. there's a multitude of economic goals he still has to achieve. but i think with the threats that are in the global backdrop, i said his bias will be to keep monetary and fiscal policy as easy as possible. even know the hike is in the pipeline, most likely we believe the government will be putting together a fiscal stimulus package to cope with the negative repercussions of such a tax hike. shery: we have also heard from

president trump hinting that he wants to fix the trade relationship with japan. how much of a risk will this be for japanese policymakers going forward? it is a huge risk. as i said earlier. i think at this point it is very hard to predict exactly what the u.s. administration is going to do. that report that has still not been released by the commerce department, if that comes out, followed by a statement by the white house that there is security implications from auto imports into the united states, and that results in some kind of increase in tariffs on auto imports, of course that would be very negative for japanese automakers. having said that, we think that similar to the steel example, our view is the ultimate outcome is there will be some kind of negotiated result, where perhaps by example japan and other auto exports are asked to do

voluntary export restraints instead of slapping big tariffs on auto imports coming into the u.s. again, still a cloud of risk that is hovering over this topic, and that is exactly why i think policy will remain loose and easy for a while. kathy, appreciate your time as always. lots more to come on daybreak asia. this is bloomberg. ♪ his is bloomberg. ♪

shery: welcome back. let's get a quick check of the markets in the asia-pacific. getting 1.5%, a fourth session of gains coming back from a holiday and surging. the cosby is unchanged at the moment. 1%.asx 200 up 3/10 of unchanged. haidi: marching ahead with

gains, slight trade growth. they warned the u.s. china trade tussles could last 20 years. details, next. ♪ ext. ♪

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150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need the an hour away from trading in china. looks like a beautiful day. the typhoon over the weekend just a fake memory -- banked paint -- fanked -- aint memory. i'm haidi here in sydney. >> markets here have been pretty resilient. but snug at the first word news.

-- let's not get the first word news. -- value of 6.6% earlier -- deficit ofact $1.7 billion. japan could be enough -- next four president trump's tariffs. the u.k. and european union signaled a willingness to release the deadlock. planes.er two rewrite the original idea was rejected by theresa may as on accessible because they involve keeping u.k. in the eu customs zone. are clarifying which one

would need to be checked and where, when and by whom. that mosto clarify can take place from order. -- to register as foreign agents. they required to close close --on -- and disclose information. it covers organizations that attempt to influence u.s. policy or public opinion. -- south korean media say tim made the comment during his latest move. the two leaders will meet again

wednesday before returning to seoul on wednesday. the european union is investigating whether bmw, daimler and volkswagen colluded. they said they have received information that the three companies held meetings to discuss auto exhaust. aree looking to see if they introducing new technology. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. >> thank you for that. after the strong session, we are seeing some gains in asia even as the export outlook is growing

here. u.s.-japan trade talks were scheduled to take place friday. we do have the yen not any dumber, but still above 28 two month low. to low.nth low -- a two month to low. over in sydney, they are presuming gains and we are seeing regional tracking moves in the treasury. space, want to highlight oil.

back below 70 bucks per barrel. we do have it under pressure. exports will be hit by chinese tariffs. >> thank you. alibaba chairman jack ma says the trade war between the u.s. and china could last 20 years with a bigger impact than most people think. since mr. maher announced he will be setting down. he is being pretty candid during >> he did not hold back when he talks about u.s.-china trade tensions. waras saying that the trade between the u.s. and china is

expected to last longer and have a more significant impact than people are expecting. he sees no short-term solution and said china should take this as an opportunity to conduct market reform and also ships its biggest -- business focus to africa and southeast asia. >> what other i listed we get --m the investors conference what other highlights did we get from the investors conference? >> new retail, entertainment and also commerce were set in stone. reaffirm they are expecting 60% growth for the financial year of 2019 and the vice chairman said alibaba is nowhere near done.

we should expect the country -- the company to continue as it builds out across the sectors. it is pretty hard to compete with jack ma, especially since he did not hold back when it .omes to u.s. trade war you are seeing improvement and also a sense of ownership. did not really reveal a new initiative. is the plansaying that help our been set in motion and really taking the company to the next level. we also had a concern

regarding more detail. this is pretty key. they are marching to hong kong. they have not had announced their options for whether they will exercise their option, but expecting that and also getting an evaluation of at least $48 million. coming up next, china has back. bloomberg.

>> does is daybreak: asia.

>> our next guest saying they are cities at risk. president ofw is the non--- tell us how you came to that conclusion. >> when you look at what makes the city resilient, it is not the in terms of stresses, that is things they have to face . you think about how cities responded. those are all things they need to think about. not just this one issue.

city able toe respond? is good infrastructure. then good governance and it is a diverse, economic base. all of those things help. intoen these tariffs go play, will they try to change their supply system? how is manufacturing going to be affected #>> i think this is a for cities tocall look at it a are overexposed. this is a real issue.

about the one u.s. city to almost be wiped off the map. the industry became less and less competitive. that is the worry right now. printingens when 3-d disrupts global shipping? and othersy things throughout the region that are overexposed that need to diversify away from that. >> the last time was over two years in hong kong. what has changed the most for you?

>> i think the chain -- the thing that has changed the most is the protectionist environment globally not just in america, but also in europe and beyond. globally.de they have worked horses that move globally and no more -- nowhere do you see that more than hong kong. say national governments continue to work at odds with each other. a are seeing cities that flood wall, storm protection and so on, they are also building social infrastructure and that is becoming more common. brings a way to

communities together. that kind of integrated planning , design and construction and operation is normal. >> if you take a look, it is being funded. decisions being made and elsewhere taking place right now? say as we certainly travel throughout africa in particular, we definitely see the chinese influence and to that extent, i think some of that is well spent money.

i would leave that to others, but as you go to places around africa, you really see the .nfluence of chinese investment tim cook said i'm sorry to bring it back to the trade story, but this is the biggest story. what tim cookto -- tim cook said. i can try something and we can both win. life will go on. >> they are trying to pursue the initiative so when you have all of these factors combined, what are the major problems facing

the second-largest economy in the world question mark >> i agree with tim cook there in that it is not a zero-sum game. increasingly seeing that. ideas, best practice, mistakes, talent. all of that, they share with each other. the positively see benefits of global markets. >> the trade issue is a man-made issue. we've had her claim florence here. how big of a risk are they? >> i would see the two stories i see konger because

-- hong kong having done exceptionally well. is --s in part because it of his amazing infrastructure. i know it hasn't been smooth for done prettyut it is well. there is also the issue of economic diversity. it helps them get back in recover back to normal. geography is assigned that can emerge in the aftermath of a disaster. >> i have to point out that andey is one of the cities

yet this is a country that has been built on the back of immigration. it is also a country where we don't really have an energy policy. reallyity or country poll by the wayside? -- pull by the wayside? weaknessk australia's in some ways, we are talking council or within the context of the state. all of that is government fragmentation and one of the things that makes sydney and australia generally weaker.

i think running away to come together is one of the things that will help the region. >> appreciate your time or us. don't forget, if you missed part of the conversation, you can tv. on interactive you can also join in on the conversation during the show. this is bloomberg.

>> this is daybreak: asia. let's get you a quick check of the latest is a flash headlines. the data says average monthly users almost half.

into -- 10 u.s. cities accuse the fast food giant of failing to stop sexual harassment. the union backfired also wants the company to stop taking sexual harassment vice. >> mechanics have rejected a to complicate the major and the 41%.oups ofons approved new contract 2016. analysts were suspended on tuesday after racy video of them

partying went viral. we are not going to show you the video. they were trying to win both in order to get to the top of the rankings. time when china is trying to open up in the industry. >> you're probably see more exuberance in these videos. it reminds me a few months ago and markets were booming selling other financial products . that was seen as a little inappropriate. >> you don't want to record

that. i think it should be clear by now. that people doou some silly things on social media. >> be careful what you do in the face of social media. the s&p could be joining us the next two hours and has been talking about how this could the a big shock to not just investors, but also global growth in general. we has seen it weaken the last

six months or so. they don't see anything in the short-term for now, but we are getting closer. ins could pose a challenge the long-term and could lead to more volatility. finally, going to head back to the world economic forum. china has pledged to open up its financial markets by the end of this year. positioned?gan to ast sue look forward trading day gets underway. how markets look at are trading at the moment. frompside surprise coming

21 straight months. we wait some sort of today andnt going on looking pretty happy. -- eppy. -- peppy. >> we will see how they play out as the day goes.

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>> it is almost 9:00 a.m. in hong kong and shanghai. welcome to "bloomberg markets: china open." rishaad: markets extending games, unlikely to worry about china's response. david: beijing targeting $60 billion of u.s. goods, saying washington is showing no goodwill. >> working in concert trying to achieve peace and stability, we are live in seoul, korea. ♪