haidi: i'm haidi stroud-watts in sydney. asian markets and our only from open. shery: good evening from bloomberg's headquarters in new york, i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." shery: our top stories this friday, asia-pacific markets to extend gains after highs on wall street as optimism that trade tensions may ease. the dow writing a seventh game in eight days, finally a long slow from the january rise. the race is on to strip chinese

goods into the u.s. before president trump's new tariffs arrive on monday. sophie: let's see how the u.s. markets closed this session. u.s. stocks setting new records. the dow now gaining 1%. the s&p 500 was led higher by financials, tech, and health care. markets shrugging off the latest trade headline. not to mention the nasdaq and tech stocks are on the rebound, gaining 1%, the most in more than three weeks. risk appetite surging, falling to the lowest level since july. let's see how this will translate into asia, here is sophie. sophie: with the softer dollar and rally on wall street, we are looking at a happy friday. that may see gains as we have seen in recent days. bargain hunters are on the prowl, valuations look very cheap. more voices say don't sleep on the rest of the world, even as

u.s. stocks hit fresh eyes. as we can down to the u.s. tariffs on monday, and the fed rate hike that is next week. it could be moved along by speculation that chinese will cut tariffs for most of its partners. stocks have been back in with a vengeance after a rally in about two years. more friday.l have japanese inflation data due later this morning. shinzo abe extending his tenure at the top of the game. a word of caution for chinese and hong kong stocks after the recent rally fizzled out. near historic lows and anxiety around chipmakers. they may also be revived after the stock guidance. they may see some moves coming in from samsung, reportedly planning to lower apple to keep supplies site. shery: just some after the bell

announcements when it comes to electronics. this is a medical product developers set to buy major robotics for about $1.64 billion. that is about $29.29 per share. andsraeli robotics company those two parties entered a strategic agreement in may 2017. let's get you to first word news with jenna dagenhart. jenna: canada admits the nafta talks are dealing with tough issues, but all signs are working towards a deal. christopher even has had days of meetings with u.s. trade representative. she maintains her sole aim is to include an accord good for canada. the teams are in a phase of continuous negotiation, more talks are expected in washington next week. the u.k. is promising fresh plans to break the brexit

stalemate after eu leaders rejected prime minister theresa may's blueprint and warns time is running out. two days of talks broke up without progress. leaders piled more prone -- pressure on the pm to shift her stance. a deal will only go ahead if the u.k. makes more confessions next month. five-star movement is threatening to torpedo the governing coalition if they cannot carry out its election promises. and its partner are struggling to find resources for three key pledges, lower taxes, andce the retirement age, basic subsidies for the poor. the deputy prime minister told radio 24 he will walk away from the coalition if the money can't be found. facebook risks an eu regulatory clampdown and sanctions unless it yields to an ultimatum to stop misleading users on how

their personal information is used. the bloc justice and consumer affairs commissioner says she is becoming impatient with the social network after two years of talks. the threat comes as airbnb agreed to change its terms on pricing to meet eu standards. 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 jenna dagenhart, this is bloomberg. shery: it looks like the 9.5 year bull run in u.s. stocks is secure, for now. the dow finally exceeded as january top the last of the major branch marks -- benchmarks. some people feel cautious. the bigger the rise, the bigger the fall. >> there is concern that it is 166 days for the dow to post a new record. could be the bull market is getting long. trade risks posed a bigger

concern than currently being acknowledged. the bull market in place with this record it is a celebration. the dollar weakness is a big part of the story. the 10 year yield is above 3%. this is the level that triggered the selloff in february. the market shrugging that off, shrugging trade concerns and the s&p banking index winning the day, the nasdaq 100, and heavily concentrated tech index showing great strength. let's look at libor, which has spiked. marketsecause the u.s. traders are seeing for rate hikes. next week it is baked in the cake, then it is one more, libor catching up. let's look at some of the big movers on the day. so knows having a major reckoning with the giant that is amazon, which announced it is

entering the home with all kinds of uses of its voice technology. the clocks, the migraines, and also the audio systems with sonos has been a giant and taken a big hit. this is a pc and multimedia company. big upgrade, in terms of price. health has -- first day of trading, big win. we have a deal to tell you about, wells fargo will cut jobs over the next three years. adoba and a four point $7 billion deal to get another marketing firm. shery: it is not just the markets where we see the optimism. the u.s. economy is doing so well. we now see more positive data flowing this morning. >> if you can take those negative trade headlines out of the mix, the market will rise.

let's go into the bloomberg. gtb is where you can find our charts. republicans get more comfortable is what this is called. it is our weekly bloomberg consumer comfort index. high, spiked to a 17 year in terms of outlook on the economy. of's look at the headline the job listing thursday. jobless claims fell for a third straight week. .ow a 48 year low continuing claims the lowest since 1973. that indicates a tight labor market, supports tight economy, and another rate hike by the fed. opec: taking a look of the meeting, the president has renewed the attacks on twitter. he is attacking opec, saying prices must come down. what is the situation? > it was another dramatic

tweet. west texas intermediate is the oil most used in north america. it actually retreated, but has been up near 72. let's look at brent, close to $80. the saudis are comfortable with it close to 80. then you have this trump tweet. a lot of economists and strategists point out he has issued a number of tweets to bring oil down. it has ignored -- in other words, these tweet messages don't have an impact on oil. you may recall one of the moves the trump white house made was to increase engines on iran, oil, but it increased the price. shery: thank you so much. lower costking steps for its consumers amid the escalating trade war. beijing plans to cut the average theff rates on imports for majority of its trading partners as soon as next month. at the same time, raising duties

on american goods to retaliate against president trump's latest tariffs. let's get over to washington, joe has more. what is the impact'when it comes to chinas'latest move? >> it is not clear that the reduction in tariffs will have any impact on u.s. imports. there are already retaliatory tariffs on u.s. goods. the chinese do not import that much from the u.s. compared to what the u.s. buys from china. as much as anything else, it is girding the chinese system for a continuation of the trade war that the government has been trying to spur more consumption as they move away from exports as the main driver of growth. at the same time, the economy, while it is cooling in china, it is growing fairly briskly. it is an interim move. it probably helps china

internally as much with the situation with the u.s. shery: is the u.s. still perceived to have an advantage? >> the u.s. economy is humming along nicely. u.s. stocks have risen about 10% since the first round of tariffs were imposed in march. that is going to be eroding overtime. one factor is the effect from the tax cuts this year will begin to wear out over the next two years. the fed will continue to raise rates as the economy is booming. president trump is continuing political pressure, both from members of congress, voters, and the business community, over the tariffs. there will be some lessening of the leverage that he has over time to keep these tariffs in place. shery: we just got the latest headlines.

the supreme court nominee brett kavanaugh writing the letter to the senate judiciary chairman saying he wants to have a hearing on the sexual assault allegations as soon as possible. what is next? >> this will increase pressure on his accuser, the california college professor, to come in and testify before the judiciary committee. she had been through her lawyers resisting coming in. there was a bit of a breakthrough where they said they would be willing to, but not on monday, which is what the original time was set by the committee. those negotiations are still going on. the letter makes it clear that he stands firmly with his denial of any such behavior or actions, and he is ready to clear his name. the next step will be for his accuser and her lawyers to come

up with some sort of agreement with the judiciary committee for her testimony, whether it is in public come a private, or in some other form. shery: thank you so much for that update. bloomberg congress editor joe sobczyk in washington. amazon is going all out on alexa, and betting big on the future of voice command, even in your microwave. more later this hour. i' not sure if i wantm to talk to my my grave after a long day. haidi: the pinnacle of laziness. more to talkto get about bonds and high yields. consciously constructed in the high-yield base, next. this is bloomberg. ♪

haidi: this is "daybreak asia," shery: the stocks may have

finally arrived in the world's biggest debt markets. longer data rates meeting the charge higher. that's despite the warning by jeffrey goodlatte that a massive increase in short positions could spur a short squeeze. let's bring in married hours, .sbc senior great to have you in the studio. we saw yields rise sharply in february. it fizzled out. could we expect this to be different? >> this time around, as you mentioned earlier in the year, when yields had really quick spikes, that spooked a lot of risk assets. we saw big outflows come out of the market. this time, it has been different. high yields continue to hold in well. i think the market has seen rates at 3% before. are we going to break out higher?

that could be a headline for high-yield. i think it seems the investment committee is taking a wait and see approach. another factor is supply has been quite low in u.s. high-yield market. 30% lower than we typically see. i investors are reluctant to sell bonds before they are sure this will move into a higher range, in terms of treasury yield. shery: the high-yield market has been incredibly strong. this chart showing you the gap with the high-yield market outside of the u.s. on the rise. a sign of weakening. we see the gap at extreme levels right now. how constructive are you? >> from a fundamental okspective, everything looks in high sprayed second-quarter earnings were strong. in the last four quarters, we have seen leverage remain steady. we haven't seen a lot of the leveraging we saw at the peak of the last cycle. spreads are back to year to date

types. while the high-yield is cautiously constructive right a little bitking more of a cautious view, in terms of positioning, given work evaluations are. haidi: a pretty substantial part of the story has been the issuance. do you expect that to go back to normal? do we see an adjustment if and when it does? >> so far, we haven't. september seems to pick up in the market. we haven't seen return to normal supply. we have seen some larger lbo's getting priced in the market. if we were to see more high-yield newish owns come back, it is likely to be driven by m&a. ,hat could derail the picture where we have seen in terms of

quality and leverage, high yields be pretty stable, in terms of fundamentals. shery: what is the biggest risk we are not talking about --haidi: what is the biggest risk we are not talking about? >> with the tariffs happening and the back-and-forth with em, things have seemed to come off of the cliff a bit. we have seen some moderation and gm's had a much better month. there are still headwinds across risk assets. with everything priced to perfection, there are a lot of things that could move spreads wider. the thing that keeps us constructive on a market, at least near-term, is the fundamental picture. and the fact that from what we are hearing, there is still a lot of money on the sidelines. as we have seen across all risk assets, there is money waiting to buy the dips. that has kept spreads in a narrow range for the second year

in a row. shery: this chart showing etf's tracking emerging markets lower currency back. you see the flows right there, more than $6 billion in local government bond etf's. emerging markets when trade tensions are high. mary: in terms of emerging markets position in, we have been cautious in our own global high-yield portfolio. we have been underweight. we covered a bit of it back in june. that has been a volatile market since then. we are not jumping back into emerging markets, but we do see there is potentially some value there. when we divide emerging markets have-nots, haves and it is really the problem stories for emerging markets which are causing issues and wider evaluations. when we look at the stronger em, a lot ofhin

that looks pretty fair value. it is tough to say. shery: what about -- i was wondering how much of an the movement in the u.s. dollar has been? >mary: for emerging markets, ye. haidi: for emerging markets, but also for foreign ownership. mary: certainly we have seen the ownership within the u.s. increased significantly over this cycle. obviously in this continued low rate environment outside of the u.s., it makes sense investors will reach down the credit curve to pick up the yield. with the dollar trading where it euro,, the costs into the or even the yen, it is

expensive. it does eat away at a significant amount of that, almost 2.5% to hedge dollars back to euros. when you look at the euro high-yield market, given that spreads have significantly underperformed for a foreign buyer in europe, it probably makes as much sense to stick with your home market. haidi: what about valuations in europe? we have seen investors be more cautious on that front. mary: in terms of european we are not as far along in the credit cycle as we are in the u.s.. leveraged trends there are quite stable. european high-yield tends to be a higher-quality market, and a shorter duration market. given where spreads are trading now on a quality and duration adjusted basis, it looks attractive. that has to be tempered when you look at the all on yields for

european high-yield, just above 3%. wholee think about that market of global high-yield, em could have value in terms of valuation, but we have to see more of these clouds surrounding em really clear for high-yield. u.s., therero and is positive and negative, mostly the negative around the valuation not really leaving much room for error in markets where we are having a lot of macro volatility, in terms of headlines. haidi: as we get to end cycle, do you see a market rotation back inro some of the quality names? back into the government bonds, for example? we have seence value in the market this year,

where we like to hide out in this rising rate environment, is the short and of the high-yield market. when we look at the flatness of the yield curve, we are not alone in seeing that while we wait and see the trajectory of the fed inflation, what the ecb is doing, hanging out in the short end of fixed-income probably continues to make sense. shery: thank you so much for your time. , portfolio manager for global high-yield portfolio joining us. there's more to come on "daybreak: asia." this is bloomberg. ♪

shery: this is "daybreak: asia." i'm haidi stroud-watts in sydney. shery: i'm shery ahn in new york. let's get a check of the business flash headlines. samsung electronics set to reduce chip reduction to keep

resources tight as demand expected to go. about 30% for nan flash. it's down from forecast many are. the growth moved from memory produced and is a key barometer for engaging markets. haidi: uber is in early talks to severaliverroo for billion dollars. it would be a bold attempt by uber to dominate the sector in europe. food delivery has been a top priority ahead of a planned ipo next year. deliver was last valued at $2 billion. any offer would need to be considerably higher. coming up next, we are counting down to the latest inflation numbers out of japan. we are looking at a pick up, thanks to higher food, energy, and oil prices as a big component. 2%tainly far away from that

inflation target from the bank of japan. we will be getting you the latest numbers as they cross the bloomberg, and immediate reaction. this is bloomberg. ♪

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"daybreak: asia." we are just getting some breaking news when it comes to japan inflation readings. national cpi, excluding fresh fruit, 0.9% matching expectations. the national headline ppi numbers 1.3%, slightly faster clip than expected of 1.4%. i am picking up on july's .09 growth. two of the most volatile components in the inflation basket. we are looking at growth of 0.4%. matching expectations for the month of august. let's get you -- we will get you market reaction shortly. e, let's get youi'

to first word news. jenna: president trump is attacking opec. he is demanding lower oil prices as branch card -- brent crude reaches $80. iran added to the pressure on opec by saying it will be till any decision consider harmful. the oil minister says the 2016 supply deal is in tatters and the cartel has no authority to impose a new one. tesla can finally enjoy some good news. the model three has aced all u.s. crash tests. emulated --sts' simulated collisions, and the car earned a top five star rating on each one. it will be a relief after the crash is making headlines,m particularly with incidents involving the controversial system.ss autopilot

shell is said to be in talks with its interest in a gulf of mexico oil field to focus oil to help pay for the takeover of bg group. the deal could value shall's stake in the tom the field at $1.3 billion. talks are ongoing and could still collapse. a sale would help shell pay down debt after is spent more than $50 billion buying the group in 2016. soccer has scored a victory for a quality. fifa agreed to fund business price for the team at the world cup. total prize money will increase. we don't know by how much until late october. france earned $38 million for winning in russia. the u.s. took him just $2 million for winning the women's trophy three years ago. 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 jenna dagenhart, this is

bloomberg. shery: we are counting down to some of the major market opens in the asia-pacific. we already had data out of japan with the august or cpi coming in in line with estimates. let's get sophie kamaruddin for a check of what's happening. sophie: it has been a busy week for japanese investors. the cpi data the latest to add onto the layers we have had over the past few days. the boj decision among them. we have little reaction in the yen to the cpi data, trading around against the dollar. futures are nudging higher in tokyo, along with sydney and seoul. overall, we do have positive catalysts to help drive the risk on moved from a softer dollar. speculation that china will cut tariffs rates for trading partners, particularly even the united states. we have south korea's finance minister saying preparations are

being made for the possibility of a prolonged trade war. japanese terms of stocks roaring back to the line, we are looking at what's the best week in about two years. can it be sustained? sophie: with policy normalization unlikely anytime soon, it was made clear this week, plus signs the economic recovery will continue, and chief stock valuations, these could be important to help japanese shares outshine the rest of china. if you look at the world equity index f function and compare what we see for japan to other major benchmarks, in the bottom part of the panel we have the nikkei up about 2%. that's the only major benchmark in the green this year. we only see these types in the u.s. with the dow jones and s&p 500 hitting fresh eyes. year today, we have seen an exit us of $40 billion.

they are probably looking at the current situation scratching their heads. the display shery pressure has heard japan, even as we have seen some signs that economic recovery is underway. when you take a broader view, investors have been gun shy when considering the boom of japan. taking it back to 2012, when investors started betting on an up election. despite the quadrupling in earnings, that's the line in white on the top half. that far outpaced the s&p 500. that's the net relatively moderate shareprice gains for the japanese index. it does suggest with few hurdles, japanese shares could have more scope to rally. stocks in tokyo are less than 2% away from a 27 year high. haidi: taking a look at the next couple of trading sessions to hit that. thanks so much. let's get some more reaction when it comes to those cpi

numbers. no more security chief market economist joins us now. i want to set it up in terms of the bigger picture, look at what cpi has been trending over the longer-term. in the white, we have the core inflation. coming as seen expected, 0.9%. very far away from that 2% inflation target set by the bank of japan. if you strip out energy and oil prices, which have been rising, is there much of a reflation effect going on in china? >> i don't believe so. if we look at the major components of cpi, it is energy components that pushed up the defense cpi. the sector cpi, about half of the basket, is only growing by 0.2% over the past few months, and also the durable goods price has declined slightly over the past few months.

inflationary -- the underlining inflationary pressures are quite limited. that will be over the case -- that will be the case over the next year or two, at least. haidi: what else can the bank of japan do, other than more of the same? tomo: that is a good question. the boj really needs to maintain accommodative policy for the foreseeable time. it made a really big commitment in late july. sent aread is the boj message to the government that it will not hike rates until the consumption tax hike, which is scheduled in november 2019. toy may have an opportunity slightly change the interest rate after the economy

stabilizes in probably 2020. at that time, i believe the u.s. interest rate may have peaked. that puts the bank of japan into a difficult position, in a sense that if u.s. interest rates go down, the difference between japan and u.s. interest rates narrows. that creates appreciation pressure. i think the boj really needs to stay at the current course for quite some time. shery: we do see china-u.s. trade tensions weakening the yuan. that seems to be translating to yen weakness. how much is that going to help policymakers? tomo: the yen depreciation really helps the exporters. why i believe the biggest concern for the japanese economy is the imposition of additional tariffs on automobiles and

automobile components by the u.s. government. in that sense, i think it is quite important to watch what the u.s. will likely say in the trade talks in washington. and next week,k i think there will be a u.s.-japan summit. that is really important development to watch how the u.s. will do with this. haidi: if we see these trade tensions and tariffs materialize, what will be the numerical impact on gdp growth in japan, which has already seen the fastest growth in more than two years in the second quarter? growth wasapan really high in the second quarter, 3%. it is really exceptional. i think it will come down gradually. on the other hand, the

imposition of additional tariffs by the u.s. on japan's automobiles, if it is implement it, it may reduce japan's gdp by 0.5%. exports, thes automobile occupies a very big share. it is about 0.9% of gdp. if half of japan's automobile orts are cut, that will have quite a substantial impact on japan's economy. the market looks optimistic at the moment, but i think we see a pressure onward equity prices next week. if the trade could be threatening this run of economic

growth japan has managed to secure, does that mean the window for structural reform for the third arrow is closing? the economy may not be able to withstand another sales-tax hike ? tomo: that is a good question. strategy seems to have lost to some extent. it puts downward pressure on japan's growth in the medium term. on the other hand, due to various structures, the private investments in japan have picked up quite sharply, helped by rising corporate profitability and the great state of the global market. also the shortage of labor province. i think private investment is really going to lead the japanese economic growth over the next one or two years. even though we see some soft patch in the private consumption i japan due to the disaster,

think the economy should do quite well, even if tariffs are imposed on the automobile experts. -- on their automobile exports. haidi: it looks like shinzo abe has a political mandate to potentially become the longest serving ruler -- premier that china -- premier that jeanette -- premier the japan has had. does that give him the political impetus, or mandate, to look at the politically unpopular things, like addressing foreigners in the labor market, the demographic struggles japan has? are you not so hopeful that will happen? has think the government done a pretty good job in trying to mobilize the fema workforce. we had some success on that front.

as far as the negative impact is concerned, i think japan needs to do a social security reform and other reforms, which may hurt the population. that type of reform should be postponed until the end of sometime next summer, when we have the upper house election. hasall, i think shinzo abe an additional three years, that is good news for the continuation of a growth strategy. alternativemportant to shinzo abe. on the matter of international arena, i think he did a good job. it should help japan navigate over the next one or two years. shery: we have seen the 10 year yield in the u.s. top 3% for our

bloomberg subscribers, the gtd chart showing the 10 year yield testing its uptrend points right there. we have seen a small reversal of the relentless curve flattening we have seen this year. does the curve flattening spell trouble for the u.s. economy to you? does it spell recession? what is the risk of that? tomo: the curve flattening seems to be a bit of noise for the japanese financial market, in a sense that it affects the long-term japanese bond yield. within 0.2% ra, nge that it may affect the 20 year or 30 year long-term bond yields. movement is important for the profitability of financial institutions, which

monetaryer hurt by the policy. rise in the u.s. bond yield, that is good news for the japanese financial market, and also the japanese economy. shery: thank you so much for your time. nomura security's chief market economist. we showed you several charts through the programming. do make sure to check them out. you can go through the charts, you can save them for future reference, as well. the function gtv go. this is bloomberg. ♪

shery: this is "daybreak: asia." i'm haidi stroud-watts in sydney. shery: i'm shery ahn in new york. the race is on to bring chinese goods into the u.s. before president trump's new tariffs kick in monday.

10% duties will hit 200 billion dollars of imports, rising to 25% in the new year. ramy inocencio is here with a cargo phrase to beat the clock. ramy: just imagine crossing the pacific right now, or air china planes, full of cargo along with south korean ships from here and eight crossing the pacific -- hyundai crossing the pacific full of chinese made goods, trying to get their way, by trying tory likely get there by the turn of the new year. this is all related to trump's tariffs, $200 billion we have been reporting. were talking we about can be seen in the bloomberg terminal. i have sent this to the u.s., these are imports by country.

than $500ittle more billion. all the consumer goods we are talking about that could be ofpacted are about 25% 0 these total imports, coming in at about $160 billion. i want to show you the bar chart for the breakdown of the stuff made in china that could be impacted. cell phones and other household goods, one of the biggest here. $70 billion is their worth. toys from china coming in at about $25 billion. the $505ion total auto billion, in terms of imports coming into the u.s. a lot of numbers, a lot of value at stake. workshop,as santa's which is what it is when you are going to the holiday season.

if china and beijing could say it is time to hurry up and get going, you better get cracking before the deadline hits by the end of the year. literally sounds like a workshop, if you have seen pictures of the factories and shops that sell the christmas tree decorations. this really does go a long way to explain why the ports along the u.s. west coast have been so busy. we actually some record imports rising at the port of oakland. ramy: that is the general trend. not just oakland, the port of los angeles, the ports all along the u.s. west coast see this big jump, in terms of volume and goods that are arriving from china. this is some video of the port of los angeles, which is the biggest u.s. port. while we see these volumes rise, that does demand a premium, in

terms of getting them over there. i want to show you the freight charges going from asia to the u.s., specifically from shanghai to los angeles, nice and white. the shanghai to rotterdam route, in terms of the rates, they are falling. we are almost nearing $2400 for a 20 foot container. a few months ago in july, it was just the $1600 mark. the $2400 mark is at its highest ever since december 2014. we can see the divergence that all of the efforts, all of the goods, all of the energy as we raced towards the end of this year towards the trump tariffs coming online that this divergence could very well continue. haidi: thank you so much, ramy inocencio taking a look at one aspect of how this trade war is

playing out. let's take you through the stories trending across the bloomberg universe. over on tictoc, one small tries to navigate the confusing waters of an international trade war. terminal subscribers reading all about how women are accusing supreme court nominee brett kavanaugh of sexual assault, who is ready to testify if the terms are fair. analystberg.com, one left his job days after downgrading. we'd stop has taken investors on a ride over the past few days. check of those stories trending on the bloomberg, online, and the terminal. more still to come, this is bloomberg. ♪

shery: this is "daybreak: asia." , i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. let's get a quick check of the blizzard/headlines. electronic has agreed to buy

electronics for about $1.6 billion in cash. the acquisition is expected to close during their third fiscal quarter. they have embarked in a multiyear expansion plan to improve its operating margin and have more net income to free cash flow. the deal will modestly weakening its 2019 earnings per share. flashy emirates airline is considering a takeover of unprofitable neighbor, a move that would create the biggest carrier in the world by passenger traffic. the talks could see emirates supplier main airline operation leaving the abu dhabi carrier with its maintenance arm. both airlines declined to comment. sources say the talks could still breakdown. haidi: wells fargo is planning to cut staffing by about 5%-10% in the last three years as a tries to recover from a series of scandals and a sagging stock price. the bank had 265,000 employees as of the end of june, but that

has declined. the ceo moves to boost the company's image and streamline operations. pledgedplays -- they for billion dollars in cost cuts by the end of next year. shery: the market open in asia, let's take a look at stocks to watch. here's sophie kamaruddin. sophie: chip stocks will be hot on the radar this friday. this after semiconductor equipment shares fell in the u.s. on macron's soft guidance. macron also warm tears --tariffs will hurt profitability in the first quarter. on the flipside, samsung's american rivals did rise on reports the company is planning to curtail growth in chip output amid slowing demand. bloomberg intelligence pointing out samsung the first to keep supply high and prices high, rather than taking market share to see lower prices. refiners, theyse have temporarily halted oil imports from iran ahead of u.s. engines that are to take full

effect -- sanctions that are to take full effect in november. the government announced plans to supply more homes as part of soaringefforts to cool prices, particularly in metropolitan areas. construction stocks have been the focus with the two korea summit, where they pledged to build links. in sydney, keeping an on miners after bernstein forecasted top iron ore players will boost exports in the third quarter. opens ine market japan, south korea, and in sydney. let's look at how we are shaping up. we are getting strongly from wall street overnight. up 1% highertures out of the gate. we had inflation numbers that met expectations for the month of august. watching chipmakers and the kospi session, looking for weakness. sydney futures see another strong session when it comes to materials and iron ore prices continue to rally. the aussie and kiwi dollars holding onto the gains as some

of the risk concerns fade over the trade war. a quick look at currencies as we get into the open. watching the you want as always. a risk factor in the trade war. this is bloomberg. ♪

haidi: good morning. asia's major markets have just opened for trade. sophie: welcome to "daybreak: asia." haidi: our top stories this friday, markets set to extend gains. stocks are close to that 27 year high. inflation picking up in japan last month but prices are a long way from the 2% target. samsung is set to be

cutting production on and lowering demand. let's see how the asian markets are shaping up now that we saw u.s. stock markets setting new records. after the rally on wall street we could be set for a happy friday. -- stocks on the back foot. when you take a look at what is going on in japan, we see gains extending. nikkei 225 up .7%. this while the yen is set for and improving risk sentiment.

extending thursday's rise. rebounding producer prices that we got could give investors a reason to buy yen before the holiday that kicks off on monday. it could bode well for manufacturers profit and help analysts escalate their earnings forecast. in beijingavyweights and seoul. keeping an eye on screen holdings as well. on an stanley deteriorating view for supply and demand. dodging thertainty space regarding the timing when it comes to the chip market. we will get more on that should outlook from the chipmakers in a moment.

with the first word news jenna dagenhart. jenna: president trump's former fixer. the meetings have him pleading guilty and violating campaign-finance regulations. you interviewed involved in the business dealings the president had with russia. ofusing brett kavanaugh sexual assault, she made testify next week. she would be prepared to face the senate judiciary committee under fair terms and if her security is guaranteed. fresh plans to break the brexit to after eu leaders rejected prime minister theresa may's

plans and warned that time is running out. leaders piled more pressure. a special november summit to sign a deal would only go ahead if the u.k. makes more next month. italy's five-star movement is threatening a coalition i cannot carry out its election promises. they are struggling to find resources that has lowered taxes, reducing the retirement age. said he willister walk away from the coalition if the money cannot be found. 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 jenna dagenhart. this is bloomberg.

memory chips next year on expectations of a lowdown in demand. sam.ng us is how does this affect forecasting in the market? >> the fact that samsung is cutting it memory demand means it might be bracing for a slowdown. cutting chip output next year in order to cope with the falling demand. bet means there will supplies of semi conductors that will drive up prices. what we are looking at is a or drivingaintenance up of prices for next year. mean forat does it samsung earnings? they basically account for a

good part of the earning. they supply the screens that go into everything from apple iphones to its own smartphones. chips are the biggest strength that the company has. over $30 billion last year just on memory chips. just under 50%. it means a lot for samsung. shery: what about the overall market and should demand? should investors be worried? is the biggest concern right now in the shareholders mind. so wellve been selling in the last couple years that people are worried that we have reached the pic. concerning. is

a lot of demand growing and servers. there is going to be continuing demand. becauseto be worried that is where a lot of the demand used to be. we just had a pretty disappointing august inflation report from japan. kathleen hays is here with the numbers. we saw them in line with expectations. still fairly flat. kathleen: the core rate was supposed to jump to 1.1. i would say that ring flat was quite a disappointment. they thought there was enough to come in with a better result.

here is 0.9 on the court. it was supposed to go up here. the national overall number went from 1.1 to 1.3. this is what the boj is watching so closely. this is the disappointment. keeping the stimulus in place for an extended period of time. they are not going to take that foot off the monetary policy pedal. 2020, you will get to that. abe, validation for the three arrows, fiscal stimulus, getting ready of --

but above all, the monetary policy stimulus. of course, shinzo abe says that will help get rid of deflation. he is going to let the boj run policy. be joined at the hip. shery: the fed seems determined to keep hiking gradually. kathleen: let's also mention that it is not just the fed now. they raised key rate for the first time in seven years. they are concerned about currency getting too strong. they are moving ahead. they have low unemployment and surging oil prices.

to this we have to go another chart because we are going back -- i think i put up the wrong chart. we have been having some technical glitches today on bloomberg tv. i have these magicians in the cold -- in the control room. i love this chart. seehe upper part, you can that highest since may 4. not only did traders price in the september rate hike at nearly 100%, they see a chance of a december hike as well. as itttom line is that goes up, you're going to get this divergence. keeps raising rates and the dollar gets stronger. that could be very pleasing to the boj because it could make it

easier to boost inflation. haidi: before we get to the fed next week, big day ahead. what are you watching? kathleen: what we have seen in the last 24 hours is brazil keeping its rates steady. they are on the sidelines. it is a common story for emerging markets and central banks around the world. , their inflation data was a little softer. people are looking for them to hike their key rate. thing line, the biggest for so many emerging markets continues to be the fed, what might be good for the boj in terms of a weaker yen and a stronger dollar.

invoking capital flows from countries that can afford to lose it. haidi: thank you so much for that. ahead, moving to forge new trade routes. we will have the latest on this tit for tat. we consider asia's outlook on the dollar downtrend. jpmorgan shares their view. this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: new york stocks rallied to fresh highs. global equities would even steeper headlines. is it time for global stocks to play catch-up with the u.s.?

we are joined by janet. but first, sophie kamaruddin, give us some context on inrything that is happening stocks. byhie: fund managers pulled bank of america seemingly went all in on a divergence trade between the u.s. and global stocks. they will extend their performance as illustrated by the top titles. going to be a reckoning for u.s. shares. they are pointing to the demise of dollars showing and a swollen valuation gap. that itth expectation will save. this is making emerging assets

more appealing. now is the time to own assets. it is a once in a few years opportunity. thendex that it -- based on doug jones is staying away from u.s. stocks. from bring in janet jpmorgan to discuss this. which camp are you and with this backdrop? positive on asia. the economic backdrop is still very healthy and asia. earnings have already stabilized and we are poised to grow double digits next year. valuations are very attractive. compelling mobile.

we talk about valuations being pretty cheap, but we are seeing a weaker yuan. wouldn't that make it cheaper? >> we are still positive on china. it should not be a problem. if you look at the corporate that theywe have seen are still reporting in line. finally, the valuations are very attractive. we do have exposure in china. shery: what sectors are you looking at? >> equity income strategy come we have a focus on data and value. for the upside of the value, we would like to have financials

from the current environment of high interest rates and expending that interest margin. overall, we think there are a lot of opportunities in asia. haidi: we had a conversation about emerging markets and opportunities presented. this is very well attuned. take a listen to what he had to say about valuations. >> i do not think there will be a true -- a turnaround in the trade war between the u.s. and china yet. there are winners and losers. if you want to look for signs, you probably want to look at -- thesergentina countries that are really bombed out. it would be a sign that we are nearing the end. haidi: and another part of the conversation he was talking about there are bargains everywhere.

is, how much would you need to get in right now, given that another turn in the trade war could resume selloff? do you think valuations are appealing enough to get in now? >> trade tensions definitely have captured the market headlines but the silver lining is that we have been talking about that for months already. any impact should not be that significant. if we look at the valuations, we believe that the current valuations are very negative. history suggests that on average, we still could get very good returns. what about dollar positioning right now? dollar bulls

carrying their positions and coming down a little bit. where are you seeing the dollar headed? what would it mean for emerging markets in asia? we do think a u.s. dollars should trend down because it has been strong. look at theould fundamentals. fundamentally, the u.s. is suffering from twin deficits. we think the u.s. dollar will will stayr and it positive for emerging markets and asia. haidi: you talk about twin deficits. we see the pressure on markets like indonesia. if you look at fundamentals, it is places like indonesia and thailand that have struggled.

which way would use way? -- you sway? like have some countries thailand. that is why the currency has been holding up. in our equity income strategy, we see some valuable opportunities in indonesia and thailand. we do not have any worries about emerging markets and asia. haidi: thank you for joining us. coming up next, singapore shows the world it suffering in the trade war. he will speak exclusively to one of the leading candidates to the next prime minister. this is bloomberg. ♪

shery: this is "daybreak: asia."

singapore has been a star on the international stage, home to the box office hit "crazy, rich asians." talking about the city states role of keeping peace and dealing with escalating tensions with its top trading partners. it does not go well with trade and the world suffers. can talk and have a constructive relationship. you see this going in the immediate term? is this something that is a new phase that is rattling or is it a matter of modeling through? >> in the immediate term, it is

that the economies can bear. might shave the gdp growth by a percentage point of the worry is the longer term. whether they have an impact on investors and global sentiment. i do not think it will. it is something to watch. we cannot let you off the hook without a succession question. thinkndering, what do you singapore hands should be looking for in the next leader? a leader to mobilize different groups, all of singapore. to unite them together. we have a new generation of younger ministers area and we are working together close the,

getting to know each other. these things, you can rush, but in the not-too-distant future, we will be able to select a leader. ministers -- what are your impressions? what should singapore take away from posting that big summit. for globalr piece peace. we hope it continues that way. , iing the evening accompanied the chairman around singapore. .t is quite telling he is interested in how it developed and probably thinking about how to develop his country as well. >> do you feel more or less optimistic from june about how

those negotiations are going? there are ups and downs. we have to keep working at it. we will do our part. shery: education ministers speaking with michelle. let's get a check of what is coming up next. joining us from shanghai, we will ask how he as advising to navigate the trade tensions. here is how asia is looking so far. stock markets rising. the nikkei gaining. the best five-day rally in almost two years. the kospi gaining for a second session. this riskare seeing and rally when it comes to asian equities. holding steady at 112 there.

since 2017. the risk aversion on the back of this trade war beginning to wane. this is bloomberg. ♪

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150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need haidi: it is a: 30 in hong kong. in hong kong. carecial stocks and health adding to the gains. continuing this rally in asia. shery: you are watching "daybreak: asia." canada dealing with tough issues. they are working towards a deal. meetings. tontaining her sole aim is

negotiate an accord that is good for canada. more talks are expected in washington next week. president trump is attacking opec once again. he is demanding lower oil prices . near $80.ches nearnchmark crude reaches $80. says the 2016 supply deal is in tatters and the cartel has no authority to impose a new one. regulatorysks a clampdown and sanctions unless it yields to an ultimatum to stop misleading users on how their personal information is used. withare becoming impatient the social network after two years of talks.

and tesla can finally enjoy some good news. the test simulates head-on collisions. earned the top rating on each one. it will be a relief after months of crashes, making headlines with incidents involving the controversial driver assisted system autopilot. 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. this is bloomberg. haidi: let's get a look at our asian markets. happy friday?a sophie: a strong two weeks.

the green light is on for investors. smug.g fairly a stimulus is set to continue. we have foreign investors looking more positively at the space after an exit is given that foreign investors -- that green light is on. few data points up. the holiday kicks off next monday. the first figures coming in fairly strong. this comes on the back of producer prices. that would be a seventh straight

month of gains. we are seeing some coming through in wellington. up oneating the decline third of 1%. not seeing much in the way of movement. set for the first back-to-back weekly drop in three months. moversheck on some stock in seoul. it signed a $1.2 billion deal for fluid pressure business. facilities.10 we are seeing the bank rising on . report to improveported governance by cutting capital ties with the founding family.

falling as much as 8.4%. haidi: sophie with the check of the markets. the u.s. and china has shown expect as, but few solution anytime soon. let's discuss the impact so far with someone who represents 900 companies operating across china. chairman of the american chamber of china. great to see you again. last time we spoke, you are telling me that your members were yet to see any changes with dealing with chinese authorities. we have had the announcement of

tariffs on goods. six alien to 7 billion more. have things changed? >> things have changed incrementally. tearsariffs and chinese riffs are negatively affecting come. three quarters of our companies will be hurt by the u.s. tariffs . two thirds will be hurt by the chinese. another issue we are looking at is the qualitative trade measures, how china may take measures against companies shery:. -- companies. shery: is there more difficulty

in doing business? >> the short answer is yes. we tried to get in up-to-the-minute tally on how things are going and how half of the companies have been adversely affected by the invisible measures or window guidance, slowing down at customs, last-minute ,nvestigations of factories setting tax audits that were not scheduled. half of the companies have seen an uptick. to be fair, it was not like before it was easy to go to businesses and get things done in china, right? >> that is correct. i think what i am seeing is that the chinese are still being very moderate in their response.

showing that we can put pressure on you if we want to. but we are being moderate and we are being controlled. we are not going with a full-court press right now. are you seeing a reaction correspondingly in terms of investing or making longer-term or medium-term decisions on what to do with their business in china? we are seeing that in terms of the supply chain which are being so disrupted that about one third of the companies are looking for new supply chain from the u.s. fromng for supply chains china and about one third of the companies are putting off investment decisions until they see the dust settle.

are we talking about demand for their product not being as high as before or cost -- as as well to mark >> well? >> less demand, especially higher sales prices. it is hurting the retail people in that area. we are seeing across the board that this is hurting the auto industry, the electronics industry, the chemical industry. components for the input is coming from one country for assembly and then exported back. hit inmpanies are being both directions with tariffs. it is being -- becoming increasingly difficult for our companies.

how will do against the upcoming -- shery: how will they do against the upcoming tariffs? >> for the $50 billion, it was 20% that was negatively affected with the $50 billion. with the $200 billion, that doubles. it is a similar response to the chinese tariffs. it will double with this last launch of tariffs. what about sentiment for your businesses? as the trump administration seems to think, when you have short-term pain, it could lead to long-term gain. is there any optimism that that

could happen? companiesw that our have been asking the u.s. for ament to advocate level playing field and advocate for an economic relationship with china based on fairness and reciprocal treatment. this is how the trump administration has responded. it is not the response that our companies expected with these tariffs that are doing so much theateral damage to companies. a response based on reciprocal having basic equivalency of openness in each other's trade markets and investment markets would really be a better approach. the company is now are just .rying to deal with the issues companies are not leaving china. verye finding this

interesting. it is too important. the market is too important to leave. 50% of companies said they are not planning to go anywhere. they mayre 6% said move their operation back to the u.s. that is interesting that you say they are not leaving. the narrative seems to be a difficult working environment is still offering opportunities. if you set aside the trade war, have you seen the impact or a loss of confidence coming from the economic slowdown or deterioration in the stock market, or the weakness in volatility that we are seeing in the currency? have those been factors in decision-making? >> not so much. people doing business on the ground are more concerned with getting their inputs,

manufacturing, their just-in-time inventory. they are still very focused on that. there is less focus in the stock market. there are a number of reasons why the u.s. market is doing well and a number of reasons why the chinese market has been soft. softened some. i did not see that the chinese softmy is going to be so as the trump administration has described it, that the chinese economy is deteriorating. i do not see that is the case. i do not think people on the ground understand that. haidi: have you seen any pivotal waves from businesses focused on bilateral trading and any kind of a shift in focus on what beijing is focused on? our american companies have

not really focused much on the belt and road. involvedanies that are with transportation, construction, heavy equipment have gotten involved. but to a great extent, they do not seem to be a lot of opportunities for u.s. companies to participate. number two, we are still looking instandards and practices anticorruption measures to make sure that if u.s. companies get involved that they do it on a basis of fairness. foras not been a big rush u.s. companies to get involved. haidi: very fair point there. we appreciate your time and your views.

he joins us in shanghai. a lot more to come on "daybreak: asia." this is bloomberg. ♪

shery: this is "daybreak: asia." bloomberg's series continues this evening airing at 7:00 p.m. hong kong time. this latest episode has haslinda opportunitiesor come up betting big on china's signature issue. ♪ the countries, the belt and road initiative offers opportunities. indonesia, from malaysia to

hear and thailand. projects worth hundreds of billions of dollars out of the way. high-performance activity. we can see that it would help. thehis is one of medium-term economic groups. --t year, the broader is specific gain will kick in. is adding bigland on the belt and road, investing tens of billions to turn its eastern provinces into an economic corridor. a high-speed rail from here in bangkok all the way to china.

the mega station will serve as bangkok's rail have heading hoursto china through the -- laos. it will also link the country's airports to thailand's economic corridor. to be ave planned it capital, so to speak. , but withn thailand other countries come all neighboring countries. running through china, south through thailand come all the way. country has to move up their own interest, has to make ans theyt whatever lo incur are affordable for this

generation and the subsequent generation. haslinda: another key route for throughll be a corridor myanmar. providing not only a channel to the indian ocean but also over land west to the indian subcontinent. myanmar's infrastructure is in urgent need of development, making it a prime target for the belt and road initiative. hery: you can watch reporting. friday. also, 7:00 p.m. in hong kong. forget that tv is your function. if you want to what each -- --ch any of the interviewed interviews, it is the function

in the left corner. you can interact with us. do not forget about that. tv . this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: let's get a quick check of the latest is this flash headlines. bloomberg is being told that

uber is in early talks with a company for several billions of dollars. it would market attempts from uber to dominate the market in europe. priority.ry is a top valued at $2 billion. the offer would need to be considerably higher. chinese food delivery company said they too were a listed company with a bigger cut. 5% higher in hong kong, a value $61 billion. made the ceolso worth $5 billion. the airline is considering a takeover from profitable neighbor.

talks could see them acquire the main airline operation, leaving the abu dhabi carrier with its maintenance arm. they declined to comment and sources say they could still breakdown. haidi: american airlines has become one of the last airlines to raise its rates. and delta followed after jetblue took the lead last month. let's take a look at what is coming up over the next few hours. the shot is taking a look. happy friday. rishaad: we are looking at this takeover are the emirates. the world's biggest airline. let's see.

joins us to have a look at this. what would this mean actually? this is what we will be exploring. who really owns emirates? dhabi the other emirate. how would this all work out? what benefits would it bring. how much value does it create for these airlines as well? the other aspect is how does this affect their relationship? with the buying power they have they could put the squeeze on the planes that they get. we have a look at that coming up in a little while as well. a lot to talk about. looking forward to it. over, we hold -- handed we will take a look at how markets are trading at the moment because it looks like hong kong markets could spoil

this rally a little bit. so far, so good. still .6% higher. as expected, inflation rate coming through for the month of august. the kospi trending below. ending a bitocks stronger. we are also seeing gains when it comes to the aussie dollar and kiwi dollar. asia markets taking cues from the u.s. markets where they set new record highs. surge in risk appetite, which is why we could see the taiwanese stock market rebound after falling in the last session. futures gaining. we are also headed to the singapore open. we saw them gain for two consecutive sessions. we are now seeing the u.s. equity rally broadening.

sentiment aslping we open in the asian market. asian stocks now gaining ground for a fourth consecutive session. that is it from "daybreak: asia." our market coverage continues as we look ahead to the start of trade. that coming up next. we will continue to digest the implications of the u.s. china trade war. dollar had sustained weakness of the past few sessions. lots more to come sending by for the china open. this is bloomberg. ♪

>> it is almost 9:00 a.m. in hong kong and shanghai. welcome to "bloomberg markets: china open." rishaad: equities in the asia-pacific on the way up, building on new highs on wall street, japanese stocks nearing a 27-year record. david: when the chips are down, samsung said to be cutting production on expectations demand will continue to slow. >> the races on to ship goods into the usb u.s. before new .ariffs land on monday ♪