haidi: a very good morning. asia's major markets are one hour away from the open. shery: good evening from bloomberg's global headquarters in new york. sophie: welcome to daybreak asia. haidi: our top stories, trade makes the headlines once again in a few deal with south korea -- new deal with south korea. the tension is still there as tariffs could send the rising dollar back down. asian futures signaling a muted

opening. oil though, near a four year high. shery: let's get a quick check of the markets in this monday session. mentioned, trade tensions and political drama in washington around rod rosenstein also hitting sentiment. s&p down.d most in the red except for tech. oil topping $81 a barrel. comcast the biggest loser on the nasdaq. what ofaq was flat, course some investors were worried about how much comcast paid. did it overpay? here's sophie. sophie: this trade reality check may continue to weigh on

optimism, especially with the likely fed rate hike on wednesday. a subdued start for sydney stocks potentially. in japan we're seeing futures in chicago higher, this, after a long week. the yen is trading near two-month low as trade deals are staying elevated. we are waiting on the boj policy meeting. we are also waiting on the second round of u.s. japan trade talks, which have reportedly been postponed from monday to tuesday. china also returning to the fray, haidi. this could see them pickup in value, but hong kong markets will be closed for a day off. a bit of a breather for the yuan monday after china canceled talks with the u.s., adding to concern around trade. south korean remains closed for the mid autumn festival. analysts are saying changes are likely cosmetic.

haidi: thank you so much for that. let's get you the first word news with jessica summers in new york. jessica: thanks. china says the door for trade talks is always open, but negotiations with prior -- require mutual respect. beijing responded to the latest trump tariffs with its own on $60 billion in u.s. products. it also released an eight point -- papersing toer promising to protect core interests. president trump has been briefed on last week's inter-korea summit and said he expects a second meeting with kim jong-un soon. he met his south korean counterpart and was told kim indicated he wants to reach a deal on the nuclear program. the president said a second meeting with probably these -- be similar to the previous one but held somewhere else. >> i believe north korea has

tremendous economic potential. andlieve chairman kim people of north korea want to see that potential arrived at. we will help them to that end. the relationship is very good. in fact, in some ways it is extraordinary. we will see what happens. but we will be having a second summit in the not-too-distant future. jessica: iran since the weekend open -- opec plus meeting proves there's little support for president trump and u.s. sanctions. they sidestepped the president's demand for cheaper oil, instead saying they would react to market needs. sanctions are due on a ready and oil in november as the white house sees to cut exports zero. tehran says that will not happen. >> the united states is not capable of bringing our oil exports to zero. this is an empty promise, and it's a threat that is empty of credibility. perhaps on this path we will

sustain certain pressures, but certainly the united states will not reach its objective. jessica: the jpmorgan boss says it could take a generation before angry taxpayers are ready to forgive the big banks. he says washington did the right thing to avoid another great depression. however, he admits it could take 25 years for people to accept that. he also says president trump is connect -- correct to admonish china on trade, but tariffs are the wrong way to go. 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: we have breaking headlines on the bloomberg right now about president trump meeting with president moon jae-in of south korea earlier on this monday. we are now hearing from south korea's presidential office saying that president trump and president moon discussed continuing sanctions against

north korea. they also discussed cost-sharing of u.s. troops in south korea, and that they both agree that north korea has a bright future if it does indeed denuclearize. we have seen president trump meeting with president moon jae-in later today. those pictures are of the signings of the renegotiated korea u.s. free trade agreement. we are now hearing that they have continued to discuss continuing sanctions against north korea, as well as cost-sharing of u.s. troops in south korea, haidi. haidi: yep. and of course coming on back of the announcement from the white house, president trump touching on that earlier, potentially setting up a new leadership summit between kim and trump to talk about things like logistics and venues. president trump says he is a meeting with

rod was a scene thursday to discuss his future. let's get to our congress editor who has the latest from washington. joe, what is this all about? looks like this might have been has lots they on the job of the is hanging onto it for now. overall we are looking at really what this means for the mueller investigation. joe: that's right. rod rosenstein is the supervisor of the special counsel robert mueller in his investigation, of the trump campaign and russian interference in the 216 election. now -- 2016 election. we were told he had discussed his resignation with chief of staff john kelly at the end of last week. this all stemmed from reports that he has said in meetings with justice department officials that maybe he should record his conversations with the president. some people have said that he was joking. --enstein has denied indicated that he would record

trump. this has all come to a head. white house officials expected him to be turning in his resignation this morning, and that he would be gone by the end of the day. but rosenstein and trump talked by phone, and they set up this meeting, and this is where it will all come out. shery: joe, we have president trump's nominee to the supreme court brett kavanaugh now making headlines coming out on a tv interview talking about the and how hegations wants to fight the charges against him. joe: that's right. taken -- house is taking an all-out effort. this television interview with setthat judge kavanaugh forth with his wife was part of the effort to make clear that he is not intending to withdraw or go anywhere, and that he wants

to clear his name, calling the allegations a smear, denying he ever sexually assaulted anyone at any point in his life. so, this is part of the campaign as this comes to, again on thursday, there will be a hearing in which the judge and a professor in california who is a contemporary in the washington area when they were both in high school. so, they will both be speaking to the judiciary committee on thursday, at which time they will try to proceed with this nomination. shery: president trump also tweeting just about an hour ago, saying this is an outstanding family who must be treating fairly. how committed is the white house to back this nomination? joe: well, the white house has stayed pretty firmly united, and this effort putting the judge on television, rounding up gop allies to make the case for him,

suggests that they feel like they can get this through, and need to get this through. so, there doesn't seem to be at least any signs that they are rattled or ready to make a withdrawal of the nomination. no, it seems pretty clear that they are pushing ahead and want to get to a senate vote as soon as possible. haidi: joe, thank you so much for that. shinzo labbe vows to defend japan's interests ahead of this week's summit with president trump. we will look at u.s. japan ties as they deal with these trade tensions. shery: the fed is widely expected to raise rates, but with -- the outlook and analysis, next. this is bloomberg. ♪ s is bloomberg. ♪

haidi: this is daybreak asia.

shery: let's take a closer look at the u.s. market close after political and s&p 500 lower. comcast plunged after agreeing to buy. let's bring in su keenan with the latest. had controversy over rod rosenstein possibly resigning. now we have speculation of who could take that role. abc news is saying matthew whitaker, a former u.s. attorney, could be a possibility. mas in these political dra washington playing into the markets. su: that is real drama because if trump were to replace rosenstein, what you would have is a possibility the whole mueller investigation could be called off. that would be a big turning point in history. let's go to the snapshot and focus at the bottom, the s&p

500. the big mover of the day directly impacted by those tariffs, the s&p energy index a big winner, impacted by the rise to four year highs in oil. tariffs and other trouble. aluminum taking a big drop. not just because of the aluminum tariffs, but part of a problem in the industry is a big old up and supply. andnt down 1500 chemical plastic imports were targeted by u.s. retaliatory tariffs from china. dupont right in the bullseye. ge down to a nine-year low. looks like they are going to lose a bidding war on a contract for a power plant in iraq. starbucks down on a big reorganization, possible layoffs. investors are concerned. let's go to merger moves. because of a there

huge jump in price on a fish oil found to have an impact in reducing heart attacks. michael kors looking to buy versace. --ius radio being bought out in a deal to buy pandora. antitrust concerns are pushing the stock lower. they love that they are preparing to buy their rival and predicting $13 for ounce for gold. we also saw on the nasdaq the biggest loser being comcast. they won the bidding war against 21st century stock -- fox. su: what they lost $12 billion in market cap. let's go right to the stock. i have a one-month chart. small loss on the month. bigger than 8% loss at one point.

the concern is they may possibly join the $100 billion debt club, a very small group. it certainly challenges their credit rating. could their credit rating fall? that is it a concern. major shareholders say, hey, this grasp for global diversification is a big win, and they could possibly be able to pay it off in the short-term over the next five years. and it is worth hanging in on cam cast -- on comcast. haidi: very interesting to see where oil prices go. brent soaring to the highest since 2014. major trading houses are seeing $100 a barrel. su: they are saying $100 a barrel by the end of the year. be rally likely continues. take a look at brent crude surging to a four-year high. we have not seen these prices since 2014.

it was as oil was on its way to $80 last week president trump to opec., urging -- tweeting this is widely traded in new york and used in the u.s. surgingsee oil also above $72 in a letter session. the issue is opec's spare capacity. gtv is where you can find our library. capacity is the difference between the amount of oil being pumped and what they can pump more. it has been going down. so, the question is whether opec is not only willing to pump more, to bring the price down, the question is if the even have the ability to. gapn, primed to fill the from iran oil given the u.s. sanctions. back to you. haidi: investors will be looking

at the impact of oil and inflation as will be the fed this week. let's get more on expectations. great to have you. we talk a lot about trade tensions. a lot of it appears to be noise depending on who you ask. for the fed, is this a central bank that is determined to go twice more this year, then a couple times more next year? guest: i think so. it is baked in the cake that they will raise rates wednesday and expect additional rate increase in december. they relates to trade, have not seen a big impact in terms of any slowing of economic activity. and away from trade, economic activity has accelerated. so i think they are more than convinced that they need to get to a neutral fed funds rate. stated that the economy is so strong and needs no additional support or stimulus from the fed.

i suppose the question would be, at what point in the growth cycle are we? we are late cycle. just how late in the cycle potentially do you see a surprise vote on inflation's from trade tensions, or trade wars, and how does that inform policymaking? bryce: i think the real wildcard is if they are going to go beyond neutral. if they start talking about that, they see an increase in inflation beyond 2%, and we think it could be as high as 2.5% next year, given the scarcity of labor and some other things we are seeing in a index data which eventually leads to higher cpi. so, they are probably going to feel out, how will the market react if we start talking about going above 3%. they can did at the need for need-- they hinted at the

for that in the last fed meeting minutes. that might come out tomorrow. i think that would be a surprise, but it is tough to tell. if it looks like they are too soft on inflation, that will spook the bond markets. if it looks like they are too hard, it may send the stock market down. so they have to walk this tight rope, if you will, to get it just right. even though it is widely expected that they will raise rates on wednesday, it does not mean it will be a volatile day. shery: talking about surprises, let me look at the surprise indices. of course the actual versus the estimate, and how economic data compares to that. this gtv chart on the bloomberg library showing you how city economic index for the u.s. was rallying after the election of president trump. converging with the indices for emerging markets as well as major economies. when you take a look at the broader global economic growth

if this i just wonder is just tempering off expectations about u.s. economic growth. bryce: countries that follow a similar policy, they are doing well. other ones maybe are not but maybe have a lot of debt and the u.s. dollar is really suffering. they could have a crisis on their hands. it is very different from a year ago where everyone was kind of similar, and we were going in the same direction. i think when you look at other surprises, the trade issue is going to create other surprises. we struck a deal with south korea, we may strike a deal with

canada to get nafta going. china has actually reduced their tariffs three times since last december. not with the u.s., but other countries. and they are talking about doing it again in the next quarter. if this continues that you can have a more broad, consistent support. but there's still a lot of areas of weakness. there is too much debt everywhere, that is the biggest concern for us. shery: if you are talking about weak data and trade tensions, could that mean we will see yields be suppressed? bryce: it could be. what has really changed things in september is that in september, this is the first month in years that the federal reserve will by no treasury bonds. i think we have seen yields go up with that lack of demand. and again, that is due to them accelerating the balance sheet induction. it jumps again -- reduction. it jumps again next month.

you will see the treasury buy $50 billion fewer government bonds. that is starting to weigh on yields. i think another reason that yields have been suppressed was because of the trade tensions as well as there was a cutoff, a deadline of september 15 from you couldon plans -- contribute money into your pension plan up until september 15 and still deduct that expense of the old 35% corporate tax rate. a lot of money went in there and a lot of that went to buy long bonds. in the last three weeks oro, yields have jumped significantly. there is nothing left to suppress those longer-term yields other than trade tensions, but it seems like there is starting to be some traction, some success on the trade front. if nafta gets done, i think yields could spike again.

haidi: i just want to throw out this chart. he talked about the spiking yields we have seen, and we have not yet seen a corresponding lack of volatility that we saw in february, probably because we have not seen a massive degree in the move. in terms of the downside to the dollar, as that surprised you? charts a sharp -- comparing bullish bets on the dollar we saw last week. is that something surprising to you, given that we are ratcheting up trade tensions, which has in the past led to a strengthening? bryce: it has been surprising. i am not sure how long that will last and i'm not sure if that is a gauge of people not being as concerned as maybe they ought to be. maybe there is a risk that the get worse and we do not have additional success

likely. and maybe that is what we are -- that is indicating, because that does surprise us a little bit. we have not seen enough material come to fruition to justify it. shery: thank you so much for your time. and of course plenty more coming up on daybreak asia. this is bloomberg. ♪ s is bloomberg. ♪

haidi: you're watching daybreak asia. get headlines from brett kavanaugh's interview from fax news accompanied by his wife, getting on the defense when it comes to these twin allegations of sexual misconduct dating back to his high school and college years as a student at el. he says -- at yale. he says he knows president trump will stand by him. he says he is not perfect but he is telling the truth. he had no physical conduct with ford.

they may have met but they did not socialize in the same circles. also denying accusations made by the second accuser, also saying no such thing happened. plenty more to come. this is bloomberg. ♪ 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 9:30 a.m. here in sydney. closed asntinue to be korea is on holiday and hong kong closed on account of the midautumn festival. and japanese markets are returning after being closed monday. shery: here in new york markets closed lower. we had not only trade tensions, but also political drama in washington weighing on stock markets. i am shery on in new york. haidi: and i am howdy -- the first word news with jessica summers in new york. jessica: supreme court nominee

brett kavanaugh is refusing to calls accusations of sexual misconduct smears. he said he would not be intimidated in what he called a character assassination. at least two women claim kavanaugh assaulted them years ago. one in high school and one at yale university. afterro jumped recently bcb boss said he sees a relatively strong pickup in inflation. he also signaled the bank remains on track to raise rates next year. he said projections show inflation averaging 1.7% through 2020. that is below the 2% goal, but an improvement in fundamental price pressures. >> the measures of underlying inflation remain generally muted what have been increasing from earlier lows as domestic price pressures are broadening.

underlying inflation is expected to increase further over the coming months, as a tightening labor market is pushing growth. the argentinian president told bloomberg there is zero chance of a default given continuing support from imf and others. he declined to give specifics but set a new deal should be signed soon and it should bolster confidence. the failure to pay debts has halted argentina since 2001 following another imf loan. >> the level of support that we are receiving from the country's, at best -- countrie s, especially from the u.s. [indiscernible] so, we are balancing our foreign accounts. jessica: the u.k. is warning that flights may the grounded if

there is no reciprocal deal with the european union on air travel. they will continue to recognize european aviation safety standards for two years after brexit. thathere is no guarantee crew will be recognized by brussels after march 29. 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. we're counting down to some of the major market opens in the asia-pacific. south korea and hong kong are closed for now. for more let's go to sophie kamaruddin. fadethe post holiday glow weekly for japanese stocks? sophie: one would hope not too quickly because we are seeing japanese futures in singapore nudge higher. given the decline on wall street

and continuing trade concerns, we could anticipate stock mists es in japan ands elsewhere. the yen trading near a two-month low, while u.s. yields are staying elevated ahead of the fed rate decision, likely to see -- hikes much as predicted by many. elsewhere we are seeing futures in australian nudge lower. overall, it could look like a risk off day. haidi: it looks like we could have a bumpy session when it comes to some asian currencies. the dollar has had a bit of a revival, but wells fargo saying it will be a temporary phenomenon. sophie: so far this year the dollar has extended the decline in 2017. up more than 2%. a global fixed

income strategist at wells fargo sees risk building for the dollar in the wake of the u.s. midterm election. he predicts the dollar will start to falter in 2019 amid political and trade woes, and the dollar strength is based on macroeconomic and military -- monetary policy has almost run its course. that could go a long way towards using pressure on em assets. i want to show you this chart. em currencies are facing a trade reality check after rising last week. put it closer to breaking above its 50 day average, the line in red on this chart. the last time this level was breached in november, that was followed by a four month rally that drove this gauge to a record high. for now, that is looking a little over exuberant given the question marks around trade. haidi: thank you so much for that, sophie.

the midterms in november could be trade for the trade story between the u.s. and china as well. digging in for what could be a protracted and bruising trade war, beijing morning -- warning tariffs are blocking new talks. tom, this beijing waiting for the u.s. midterms before re-engaging? in the meantime, is this just a war of attrition now? the view, certainly increasingly in beijing is they will not be any traction on the negotiations around trade until after the midterms. that is one reason beijing pulled out of these proposed talks that were lined up for this week. the chinesee to, are also building up their defenses. they are planning additional stimulus to try to offset some of the pain. of course trump has said he would hit back with additional tariffs on another $267 billion worth of chinese goods should

china retaliate, which it has done on $60 billion of u.s. goods. it looks like both sides are becoming more entrenched. we have heard from bloomberg economics, writing, for the moment the advantages with the u.s., largely as a result of the tax cut fueling pickup in u.s. equities. but that dynamic may change, particularly if you start to see tariffs eroding corporate profits in the u.s. if you see the political landscape change after the midterm elections. and if you see an impact on u.s. equities, potentially the advantage could switch to the chinese. for the moment it is the u.s. that is in a strong position. seen: we have already federating downgrade global growth forecasts for 2019. how bad could it get? tom: counting their forecast for 01.1% but say by

the risks to the downside are to the downside. hearing from the retailers association in the u.s., they are saying their members are facing a tsunami of tariffs that has left them scrambling. we have also seen the energy sector in the u.s. starting to be impacted as well. we're talking a lot about oil as well for all the obvious reasons, but we heard that a trading arm of opec will delay plans to import u.s. crude. china is the largest buyer of u.s. crude, about 15 million barrels in june. it could impact that. china has imposed additional tariffs on u.s. energy. it is starting to make an impact. bloomberg economics again, they said in china you will see a drop of about 0.5% of gdp. it will lead to a cut of about

0.5% in the second half of the trade war, and it continues to grind on. we will get a detailed picture of the impact, particularly with china's manufacturing sector. keeping a close eye on that to get a sense of how much of an impact it is having on the ground in china. shery: tom, thank you. in south america, the brazilian rial has seen violent swings ahead of presidential elections there in less than two weeks. the brazilian president says this year's election has split the political landscape into a stream. i spoke exclusively him -- to him, and said if it is dangerous. take a listen. [indiscernible]

i am not criticizing them. to reach outseems [indiscernible] seems to be moving towards a different political sector. candidate might be the more populist sector of society. in one way or the other it is pretty good. voters can make a choice. it will be easier for them to make a choice. it will be useful for brazilian voters. r partysome believe he would have lost if she was still in power.

do you believe the workers party will make a comeback? they are taking part in the race. they still have the prestige. i think they will be for the second round of the election. [indiscernible] the more conservative versus the more populist trend. [indiscernible] whoever is elected must be

respected. shery: my exclusive conversation with the brazilian president. very dramatic. the former army captain getting stabbed. the other top candidate being jailed. very interesting that a sitting president talking about the possibility of the workers party taking a comeback in votes. also the president talking about him wanting to continue his push to overhaul the pension system in brazil with the incoming president before he leaves office in january. he is here in new york because of the un's general assembly. haidi: u.s.. along -- yes. a lot to talk about this week, not least of which is trade. trump is set to

address world leaders in his speech this week in new york at the u.n. general assembly. iran tensions. we are to have a preview of what to expect next. this is bloomberg. ♪ s is bloomberg. ♪

shery: this is daybreak asia. trump takesdent center stage littered tuesday at the u.n. general assembly as the world awaits critical u.s. decisions on iran and north korea. trump spoke earlier about it potential -- a potential second summit with north korea. >> looks like we will have a second summit quite soon. as you know, kim jong-un wrote a beautiful letter asking for a second meeting, and we will be doing that. secretary pompeo will work that out in the immediate future. is thejoining us now

head of our national security coverage. that anything significant came from that first summit and now it is full seem ahead for a second summit. bill: the president is talking about a very quick timeline. it will raise a lot of questions about what the u.s. can achieve at this kind of summit. will they convince north korea to allow nuclear inspectors into the country? will north korea provide some sort of a complete inventory of its nuclear material? those are the kind of developments i think people will be looking for to determine whether there is really a chance of success in the u.s. efforts, here. haidi: one of the themes going into this week was the fact the president himself had been selling these he returns with regard to traditional allegiances. is there a sense that that discomfort is likely to play as a theme this week, or is it likely that coming to an agreement with korea on trade

mean this is a more conciliatory approach to rebuilding these coalitions from the u.s.? bill: when you look at the agreement reached today with the u.s. and south korea on the trade deal, it is not really a substantial overhaul of the agreement reached before. it is kind of tweaking at the edges more than anything. if you look at what is going on more broadly with the u.s. and nafta, with canada and mexico, i think you are getting to a few more core issues, and that is why you have seen some of those talks taking much longer. then you have the spat between the u.s. and china, which we have some world leaders here saying this is the kind of problem that could stretch out for decades. shery: of course we have talking aboutp his meeting on nuclear proliferation -- nonplayer for asian. -- non-proliferation.

seeming to look anti-iran. the u.s. has a big iran focus for sure. the president continues to say he is hosting the meeting to focus on iran specifically, at the same time his administration says, no. tomorrow afternoon after the president's speech you have is national security adviser and secretary of state speaking at an anti-iran event. they will host an event that will feature former iranian political prisoners. it is almost iran every day for the u.s. shery: the centerpiece for the un's general assembly is usually around the general debate, a common female share. it seems it has -- a common theme they all share. earlier the brazilian president said this. take a listen. words about a few

the [indiscernible] shery: talking about the multilateral system. of course we know trade will come up. few heads of state are definitely no shows. bill: you don't have president xi jinping of china, putin from russia. he has never been a fan of this. the multilateral system, when you look at things like wto, nato, there is a lot of strain. the u.s. withdraw from the paris agreement. there is a real fear the u.n. itself could be undermined. when you look at the conflict in syria, the u.n. has been unable to tackle that. russia has taken the lead with iran and turkey. light of concerns about the relevancy of the u.n. there are a list questions about

its ability to make a difference on global issues. i think that is being highlighted a lot of the big global crises now. shery: great to have you here in new york. let's discuss a little bit more with our gust -- guest over the jones -- over the phone, bruce jones. great to have you with us. there haselling us, been a lot of controversy over the authority of the u.n. last year we had the speech from president trump having some threats and attacks and highlighting the importance of sovereignty and respecting each country's sovereignty. will this year be a continuation of the same theme from the u.s.? bruce: a settling down, a strong assertion of sovereignty first policy. that is not actually at odds with the reality of the u.n. but it is at odds with the rhetoric of the u.n. he will go out of his way to distinguish himself --

as you said, then the real work is around iran and north korea. shery: we also have president trump meeting with prime minister shinzo abe of japan. treat will be a key issue not only in this summit coming up, also when it comes to other nations as the u.s. tries to change the trade dynamic around the. -- the world. what are we expecting from japanese policymakers when it comes to fixing trade? bruce: let's give them some credit. the pursuit of the tpp 11 and successful conclusion of that agreement. it nonetheless creates an opening, keeps that idea and framework alive. ultimately the u.s. might be able to join it. for now the u.s. is pursuing a bilateral deal with the japanese.

i would be very surprised if the japanese went for that. it is much more in their interest to bring the u.s. back into the tpp. they may make some moves to keep trump warm but i doubt they will open up for a bilateral deal. they have to keep the relationship warm. abe was an early leader to forge a relationship with trump. he has worked carefully. but he found himself left behind when it comes to critical developments on the korean peninsula, in which he has a huge stake. so that will be very much part of the backdrop of this as well. ,aidi: there was a great deal if you listened to the trump administration over the first trade agreement, but most trade experts say this is just a slight tweak to the existing agreement and anything major would require congressional approval. can we take from this and more willing approach to find areas,

common ground and areas where we could see an agreement japan on nafta as well as with china? bruce: i think china is a different story. i think we will get there with mexico and canada we will see a deal which tweaks from new developments to agreements with mexicans and canadians. japan is not likely to do a bilateral deal, rather try to pull the u.s. back into tpp. china is a whole other story. it is very different domestically, in terms of its scale and framework. anre i think we will see escalation of the economic tensions before there is any kind of resolution. haidi: bruce, thank you so much for joining us. you a quick look at some stories trending across the bloomberg universe. as world leaders gather in new york, tictoc is reporting on

these events as the in full, including the u.n. declaring the no cement decade -- nelson mandela decade of these. piece.est -- decade of on bloomberg.com, why investors are nervous about the plan to take over versace. check out those stories trending. this is bloomberg. ♪ ♪

haidi: a quick check of the latest business flash headlines. wants to appear at a private meeting of top republicans on friday and again at a public hearing bit of this year. the wall street journal cites kevin mccarthy. he says google has a lot of questions to answer about reported bias in search of violations of user privacy, and dealings with china.

starbucks says it is planning a major organizational shakeup aimed at reversing stagnant sales and rekindling investor interest. mmo from the ceo says the company must accelerate relevant to the business. leadership changes will start this week and carry on to november. shery: as we count down to the market open in asia, let's look at some stocks to watch. sophie, what is on your radar? sophie: i am keeping an eye on japanese auto stocks on the next round of u.s. japan trade talks. of the0 shareholder japanese drugmaker is skeptical about the $62 billion deal to take over. in sydney we are keeping an eye on gold miners. this, after a deal will potentially spark the industry. haidi: the market open in japan and australia is just ahead. japan coming back from the public holiday yesterday.

australia kind of struggling to see more than tepid gains at the open. a bit of destruction when it comes to the kiwi and aussie dollars. this is bloomberg. ♪ this is bloomberg. ♪

haidi: good morning, in sydney, asia's major markets have opened for trade. shery: good evening from new york. welcome to daybreak asia." haidi: trade makes headlines once again. a new trade with south korea. the tension remains. wells fargo says a tariff could down. rising dollar back

shery: a big week for central bank. mario draghi sees inflation ticking up. sophie: see how markets are starting to trade. japan back online after holiday. away today on is sophiere kamaruddin. sophie: the mood in japan, opening flat after returning from a long weekend. have jtb traders coming back boj.e waiting on the strategists don't think the surge will last. topix gaining ground a 10th of a percent. plenty for japanese investors to digest, from the uptick in prices to the anticipated second round of u.s.-japan trade talks, until tuesday. shinzo abe is to follow up with he hasn wednesday and

vowed to defend japan's interests so japan will be a key focus with korean and hong kong markets closed. china likely to have a cautious center. .2%.s in wellington off by a quick check on what is moving in tokyo. what's goinghlight on with leaders. you have fuji film gaining and asai, as well. pharma stocks moving on a few themes. the radar as one of the top 10 shareholders of the japanese drugmaker has said they skeptical of reportedly a deal to take over shire. checking in this morning, pressure coming through for stocks, isuzu

sliding. comatsue under pressure this morning, off 2%. a quick look at what's going on one-month korean yuan. we are seeing a pickup after signed a revised bilateral trade pact, although clear ast in the korean policymakers have to deal. stamp the they've said that won't happen imposeu.s. doesn't tariffs on korean it's. haidi: sophie kamaruddin looking at japanese markets rejoining the fray after a long weekend. with jessica summers in new york. nominee supreme court brett kavanaugh says he's not perfect but is telling the truth in denying sexual assault claims from two women. he's told fox news he had no contact with christine were inord when they

high school, nor deborah ramirez. the judiciary committee he would not withdraw the on smears.based >> i've never sexually assaulted anyone, not in high school, not ever. always treated women with dignity and respect. listen to the people who have my whole life. >> china says the door for trade is open but negotiations respect.utual beijing responded to the latest its ownwith duties of on $60 billion of u.s. products. white paper emphasizing the need to uphold and upholdgnity national interests. trump has been briefed on last week's interkorea summit he expects a second

meeting with kim jong-un soon. met his south korean and the president said a second meeting would be inilar to the june summit singapore but held somewhere else. president trump: i really believe north korea has economic potential and i believe that chairman kim and the people of north korea that potential arrived at and we will help them to that end and the relationship is very good. in fact, in some ways it's extraordinary. we'll see what happens but we be having a second summit future.ot-too-distant jessica: the u.k. is warning be grounded may without a reciprocal deal with the european union on air travel. said it would recognize european safety years afterr two brexit but there is no guarantee at the moment that planes, parts, crew and engineers

certified by the u.k. will be recognized by brussels after march 29. global news 24 hours a day on twitter, powered by more than 2700 journalists and than 120in more countries. this is bloomberg. haidi: growing concern about a shadowade is casting over markets but some leading investors, including goldman and morgan says now is the time for little risk. chris is joining us from tokyo. behind their views? caller: we've got a couple of cross currents going on in markets in the past few days. got somee hand, you've big asset managers, including management,s asset some of the folks at j.p. morgan sayinganagement who are that the downturn in stocks

earlier this month, whether it's markets, whether it's anna, has provided opportunity to go and do some in.om fishing and get back the broader context here is that think thatgists we're not yet at the end of bulls been a very long market and so when you've got significant pullback, as we've in many markets, including here in japan, it's time to get back in. morgan stanley also in recent days has been saying that japan is worth a look. valuations have become very attractive. week, saw, indeed, last the japanese market rose the most for any week in a couple of years. but we've got, at the same time, some headwinds. mentioned trade tensions.

looks like china will hold a briefing on trade again this look liked it doesn't there's much prospect in the near term for a deal or even talks between the u.s. and china so that's a concern. political u.s. concerns resurfacing, with generalttorney rosenstein in focus at the moment. the federal've got reserve that continues to raise rates and wednesday we're going new dot plot with 2021, u.s. out to yields rising. that's pressuring some of the risk assets, as well. most, it looks like we've got a positive open in many but there are headwinds coming. headwindspite those and anticipation of u.s. yields continuing to rise, plenty of valuationssaying from emerging markets are so attractive, maybe it's time to

get opportunistic. i think this is one of the points we have been talking divergence between the 10-year yield and what's going -- and this is looking at the gap, going separate discretions. at athis phenomenon stop certain point and do we get to a see -- bondwe market volatility across all asset classes? chris: back back when u.s. throughyields pierced 3% in the spring, it was not good for risk assets and not markets butrging this time around we've had the throughyear yield pop 3% and emerging markets have been coming back a bit. so there's a big difference around and last time the key component of that has

been that this time the dollar strengthening. before, when u.s. yields went that boosted the dollar, on thoseut pressure borrowed in dollars but this time around with a cheapening dollar, that's helped impact but the question is how long it will stick around. we've got even the shorter term u.s. yields like six-month t bills, for example, at higher higher rates getting more and more attractive for a bit more inut so thean consider risk federal reserve is anticipated to raise by a quarter point this week. we've got newd, projections coming out from the for where the long-term rate -- where the rate is going over the next couple of years.

going to potentially test this relationship again between the dollar and yields. point,et another quarter we get a bit more hawkish fed this week,he we could see the dollar bounce back and that would then put on emerging markets all over again. haidi: chris, thank you very much. argentinian president mauricio macri says ofre is zero chance defaulting again. shery: this is bloomberg.

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shery: this is "daybreak: asia." says weur next guest should stay invested in equities. joining us, sarah. you. to have just talking about increasingly there is a chorus of voices that valuations in e.m.'s, particularly in asia, looking attractive. you that thern trade war takes another turn for the worse and does it concern dollart the return of strength could mess all that up again? e spring investments we're looking out for the dollar what's goings and on in terms of the discussions andeen the u.s. and china the new trade talk that's come thewith france, to escalate

tariffs into 2019. markets we think when indiscriminately, markets down 7% this year, this presents great buying opportunities and we're looking stocks that aren't grabbing bedlines that tend to underlooked at by the market but with steady appreciation and flow.ash haidi: what's the sweet spot for an investor looking for low good growth and not wanting to miss out on in.ations emily: e.m. sarah: we are showing clients participate in the markets who we think will go up low volatility, equity approach is a very good

way to participate in the markets. we're looking at stocks across the board but in areas that tend to be more defensive -- telecoms, transportation, banks -- steady businesses. good quality for companies, companies where the theiment is strong and valuation signal is strong and that tend not to move around as much in volatile markets because our expectation is that even weugh markets should go up, expect the market to be more volatile over the next few months, into next year, given the geopolitical environment, macro concerns. shery: also you have to think how relative it is, their performance. thechart showing how s&p 500 has outperformed on global stock markets. in blue showing outperformance against emerging markets so when you're talking think aboutnd they volatility, about the

outperformance of u.s. stocks, them that convince e.m.'s will catch up? sarah: that's a very good point, that the u.s. has outperformed all othergly versus regions, in fact, of the world. that as a basis of discussion. typically when you look at valuations at these levels -- so asia and emerging markets, stocks are trading on a price to book of 1.7 times. typically when markets are at these levels, next 12 months, years, tend to be positive so we use that as a starting point. the valuation is the starting point. look -- if you roll back the onion and look at businesses, earnings delivery has been good on many businesses, cash flows are strong. are of these businesses domestic and consumer oriented that really have no impact whatsoever by any sort of trade war, should that escalate. so i think there's a very strong

argument for looking at low andtility equities investing in asia and e.m. at this point in time? the strategyt you're recommending, low volatility strategy, given factor you're sure will continue given the trade and geopolitical tensions? sarah: we have a lot of client at east spring in low volatility strategies. think clients want to be in the markets and think long-term that's the right place to be but at night.to the sleep they don't want all the volatility and we feel there's that could there drive volatility that it's likely, whether it's the fed raising interest rates or trade and or china deleveraging slower great, a number of things could rock the markets. lowy investing in a volatility strategy, it looks thata good time to be in

investment. shery: sarah, does that strategy hold when you get another bout volatility across asia? sarah: the strategy is diversified across currencies. in the asian strategy, we have 13 different markets so the currency volatility or currency effects wash out. wise in global emerging currencytrategy, the effects wash out with so many countries and currencies in the portfolio. so we tend to be more bottom-up, focusing on underlying stock fundamentals and what drives the stock into the portfolio is its fundamentals irrespective of geography, and the currency is. haidi: what are the you -- sectors protected be most should trade talks take a turn

for the worse? domestic demand driven sectors across asia that you be shelter? sarah: absolutely. in the consumer space, space,rtation industrials, telecoms tend to be domestic. inve seen a lot of interest property and real estate portfolios at eastspring. domestically are driven, as well. there certainly are areas that where clientssive can feel more comfortable putting their money at this point in time but overall we think there will be a negotiated outcome for the trade negotiations, that this is a negotiating tactic by donald trump and that things will play and will pan out in an orderly manner over time. it has been a prolonged period escalatingseem to be but our base case scenario is that this will work out and the shrugging this off.

u.s. markets hit record highs in a $200 billion trade announcement so i think the market is tired of the trade and thinks in the end it will wash out and there are focus on.gs to shery: how about specific willts or countries that see relatively stability despite headlines? sarah: in our asia low vol strategy, we're overweight like singapore and malaysia and thailand. stableend to be more markets in asia, less volatile. kong.also overweight hong hong kong currency is pegged to the u.s. dollar. if you look at our gem strategy, we're overweight financials and ofea, seeing pockets opportunities there. also an overweight in brazil. across the board, we're finding but i want to stress it's bottom-up driven, very much about the stocks and andr valuations fundamentals and not so much about the macro outlook or macro

view on the broad economy within country. shery: sarah, thank you so much for your time today. you missed out on any of the charts we showed you gtvgo ishe program, your function. find the charts and save them for reference. sydney andew york, hong kong, this is bloomberg. ♪

shery: this is "daybreak asia." b.p.'sa top executive at trading arm in asia says the real pain of the trade war will it will feelr and like death by a thousand cuts. b.p.'s eastern hemisphere of

with bloomberg outlook meeting over the weekend. >> there is concern other than the iranian barrel. we also have other disruption venezuela, libya, nigeria, you name it. so now the central focus is thely on supply security in market. >> so the global oil supply, we have been talking about how it will go from rebalancing to a tightening. where are we in that cycle? tightening or tightened? >> i think we're going to the market inart of the 2018, mainly reflecting supply you have asked earlier. market is019, the actually looking differently since that is another rebalancing, rebalancing from what we believe will be a tight market, balance of surplus, a range of variable affecting your

short term wenk are looking to be very tight. >> when we talked about $80 a barrel, many said it was a high end. now we're looking at 90 and aboutpeople are talking $100 oil. your thought? wefundamentally, i believe will be tightened quite a bit due to the supply situation. winter months where demand will be quite strong to support the price, as well. but i don't believe we're at necessarily sustained crunch period. biggest risk for the oil market? will it be the u.s.-china trade war? u.s.-china trade war is in terms ofred prices in the market. that.are good reasons for we will probably see negative u.s.-china trade war more likely in 2019, not 2018. estimate,k at i.m.f.

they're looking at 0.5% global g.d.p. growth, directly translating to demand growth for side.l this is one case where i feel is death by a thousand cuts. people haven't seen the blunt of is impact and the market choosing not to price in of demand being weaker than we thought in 2019. janet that was b.p.'s kong. coming up, mario draghi says picking up, with implications for policy. rally when mario draghi predicted a pickup in underlying inflation. we'll discuss that and look ahead to the fed meeting this week. japan coming back on holidays, well. topics, extending gains, at the

highest levels since may. york, sydney and hong kong, this is bloomberg. ♪

haidi: it is 830 in the morning from hong kong. we are an hour from trading. have hong kong markets closed festival. of the markets up .1% when it to asian markets. topix,eeing gains in the flat. 225 trading and lots to look ahead with a number of central bank decisions asia to look ahead to.

marketwe'll see if sentiment switches in asia. we have u.s. markets closing and but it's been interesting that despite falls in the u.s., sometimes we see a in asian hours. with jessica.news jumped after mario draghi said he saw pickup in the bank and signaled remains on track to raise rates next year. europeanld the showament that projections shows an improvement in fundamental price pressures. >> measures of underlying remain generally muted but have been increasing from as domestic price pressures are broadening. inflation is to

expected to increase further aer coming months as tightening labor market is pushing up wage growth. jessica: j.p. morgan boss jamie amon says it could take generation before taxpayers are forgive big banks. he said washington did the right avoid a great depression but it could take that.or people to accept he said tariffs are the wrong way to go. argentinian president mauricio told bloomberg there is zero chance of default giving theinuing support from i.m.f. and others and said a new deal with the fund should be should bolster consumer confidence. debt has haunted 2001 following

another i.m.f. loan. >> the level of support we are countries,rom other especially the united states of america, and the level of commitment from my government citizens, with this new rate, a very competitive exchange rate, so we our foreigng accounts. the weekendn said opic meeting in algers says there is little support for trump and u.s. sanctions, saying they would needs.o market iranian oile due to in november as the white house bring exports down to zero. promise andn empty threat that is empty of credibility, perhaps on this

path we will sustain certain pressures but certainly the not reach itswill objective. jessica: news 24 hours a day than 2700 more journalists and analysts in more than 120 countries. haidi: a look at how asia shaping up so far this morning, sophie? sophie: a cautious tone set in asia. 200 looking flat and nikkei 225. for the topix gaining ground, up a third of a percent, could be a day of gains, led higher by utilities and consumer staples. offshore yuan, holding above 686 aainst the dollar, holding two-day decline, while hong kong

mean lowy which may liquidity in trading for the yuan. bonds dropping with treasury yields elevated. in commodity, gold holding gains. of citi and b of a -- 1350 nextd averaging year on the widening u.s. budget thecit and trade risks for u.s. economy. as traders see 100 on the horizon due to supply and witharound iran higher oil, checking on oil check in sydney, when you in on what's going on with some of the movers, energy players ground, santos rising 4% in sydney leading the charge in australia. 2%,cpg telecom adding

a date to announce a merge. and investors concerned about the impact on exporters with talks ongoing between japan and u.s. and some japanese falling, suzuki motor giving up 3%. president mario draghi said he sees pickup in move in theending a euro and a signal that the bank rates next to raise year. the euro hitting its highest level since june. in kathleen hays for more. what data points in particular draghi isr what watching?

kathleen: he's looking at inflation and growth. it's when he says he sees a vigorous acceleration in inflation that really gets people's attention. he expects aat tightening european labor further.ush up wages federal reserve expects the same thing. ing, his inflation view contrasts with the e.c.b. 1.7% year over year not sound likees a vigorous drive. bloomberg into our library and what you can see is the headline inflation rate, is just at 2% now year over year. the target is just under 2%. so you've met it on the headline but let's look at a couple of turning down a bit. one, you can see is services inflation, a very important driver of overall inflation,

then the super core taking on more, and it is also pointing downward so i think that raises question. this.r question is he sees a broad based economic expansion. whyd this be another reason he sees inflation rising? let's go back into the bloomberg library, call up another chart at g.d.p. and the purchasing manager's index as we have been seeing lately. year, 0.4 twoer fromers in a row, down last year. year over year, equates to .6. purchasing the manager index. manufacturing, manufacturing sentiment, what they expect, a down trend. still above 50, a good sign, because it signals expansion. as fast. people are asking, is mario casei trying to build a for a rate hike next year? autumn, notthe before late summer?

but another question is this, he did raise the red flag, as many on rising protectionism and what that could mean for the economy. one assumes those are the things he's looking at. wages versus what happens with trade because europeans are on exports and could change his view. shery: another question this week, will chair powell be as as mario draghi was when he wrapped up his meeting this week? meeting ends-day wednesday. it's wildly expected the federal will boost the rate, it will raise the key rate above inflation for the first since 2008 and it raises the question, how much do you need to keep check.on in it's another chart, you can see pce inflation.ne the pce deflator is up to about least in part due to

higher energy prices. aboutre, though, is just at 2%. that's why the fed feels they've alsoheir target but have made past statements, we don't want to be aggressive because we 2%. it to stay at bloomberg economics team has of hawksce tally versus doves on the fomc and the fed spectrometer, you see jay last pressng his conference, slightly hawkish tilt. youou look at the numbers, have four in the middle -- jay powell is considered neutral but you look at the voters, you've got five hawks, three doves. i like to look at everybody because everybody participates in the discussion and it's doves,split between hawks, still more neutral votes. pimco worried that the fed could hawkish turn as the spectrometer indicates because they don't put enough attention lags in monetary policy

questions, if you're looking forward to expected rise in inflation and not paying hike ratesyou could too much. trade war another thing. i think after the meeting, assuming they raise that key rate, signal for rates and could 2019 rate hikes. many say two in 2019, some looking for three. if it's a more aggressive forecast, i think there will be more questions about trade and what powell thinks about that and when and if it would slow the rate hike path. >> that december hike is still in question, particularly if we see increase. shery: mauricio macri has told that his government is close to a deal with the i.m.f. new credit line and

suggests there is zero chance of defaulting again. >> given the pace at which things have deteriorated over five months, it is difficult to predict with any confidence what's going to happen in 2019. if, even with additional funding from the i.m.f., you of dollars?f short what will you do to keep defaulting?om >> there is no chance for argentina to default. >> zero? zero. the level of support that we are receiving from the countries, the unitedfrom states of america, and the level of commitment of my government our citizens, with this new rate, argentina has a very competitive exchange rate. are balancing our foreign accounts, ok. are growing at the speed of 18 to 20% and that shows that the numbers are starting to work

and fortunately, i touch -- i don't know where you can find -- the forecast, the weather forecast shows that we to have neither drought, neither floodings. important argentine grainsion, that is the are going to rocket to a new record. the argentine peso is 50% weaker than it was at the as young of the year and point out, has made exports more competitive, would it make sense to introduce some currency controls to prevent the kind of hastility that the currency undergone over the past five months? really controls, no, not like something related convertibility. there working with i.m.f., i.m.f. team and we are going to

present something that will confidence, more confidence than we have started last 10 dayse because in the last 10 days, markets have changed, turned moving and things are better. >> it's important for people to mr. president, if convertibility is something that argentina has experimented with not a success, what kinds of controls or limitations the currencyose on market to prevent the kind of hastility the peso experienced? wait for the agreement. >> but it will involve some kind foreign exchange control? >> no, no, a very clear monetary that will show where we are going. that's the most important part the agreement, that we show going to dropally

inflation andown our needs for external financial support. shery: that. haidi: that was mauricio macri speaking to bloomberg tv. hear from jon gray next. this is bloomberg.

shery: this is "daybreak asia." haidi: blackstone has held its four yearstor day in and says it's expanding into new earnings asster interest rates rise at home. chiefesident and operating officer said the firm will need to invest in fast growingth results such as technology and

in asia. fees,get base management we also get performance fees. the market puts a bigger feespoint on performance even though we've shown over time we have been able to them.te it's a bit of a sore spot for us but we understand the market likes more recurring earnings that are more predictable so we've said, look, if you look at the shift that's happening. if you went back to 2017, a feed of our earnings were related. we said over time that could grow to 2/3. scale is a word used in blackstone with frequently. you pointed out on friday that blackstone has attracted almost the past fivel in years as your three largest competitors combined. important to be the biggest and grow by the most? us, scale has proven to be over and over again a real competitive advantage so what do i mean by that? one is in buying assets.

if you think about it in public you want to buy $1 million of stock and i want to buy $1 billion of stock, you have a competitive advantage because i'll move the market. if you go to private markets, routers wants to we end upillion deal, in a bilateral discussion, the g.e. wants to sell real estate so scale matters. it also gives us information. think about our portfolio companies, what we're seeing on the ground around the world, allows us to do more and there are all sorts of our scale soainst the reason we have been able to , theinto europe and asia would reason we have been able to expand private equity into privateinto core equity, is because we have this large pace and we can grow off scale is really important. we'll continue to emphasize that our investing and it helps

drive higher returns. >> as simple as bigger is better? jon: over and over again, if somebody needs a solution in a hurry, if you need to boar a bunch of money and you need $1 two billion dollars, you can call us and we can give you a solution. beingt about the risks of so large? jon: if you look at our history been we report all our returns and even though our scale has grown, our returns verycontinued to be strong. if you look at things like the private equity industry and you went back to 2007, you'd say, the private equity industry is 60% in dry powder yet the number of large scale funds, $15 billion, is basically the same so we continue to find the air being thinner for larger and so wertunities

like operating in size. >> all of this dry powder that we hear about and which blackstone has how much? jon: 88 billion today unleverred. $88 billion tot work and five times leverage and of money.rmous amount jon: not five times but fair amount of buying power. you don't feel having that much to commit, if you will, to put to work, is problematic? again, the, because, markets are enormous. that 88 is across all sorts of industries. it's in infrastructure. it's in credit. it's in real estate. it's in private equity. it's in the u.s., it's in europe. it's in yeash. asia. and we've got time. almost all these funds have durations.ear we're not forced to put the capital out. we're being very patient and looking for good opportunities. we're waiting for -- when you're

looking at balls and strikes, you swing at a good pitch. i feel good about our prospects and deploy capital and if the bekets turn sideways, we'll patient. tory: jonathan gray speaking .rik schatzker in new york db go.ction is you can get a summary of all the want and customize it for future reference, as well. from new york, hong kong and sydney, this is bloomberg. ♪

haidi: this is "daybreak asia." shery: let's get a quick check of the last headlines. maker michael kors is said to be in near agreement to versace fashion label. an announcement could come at any time with a deal valuing versace at $2 billion. say donatella versace has called a staff meeting tuesday to announce the sale. her brother have run the company since the murder of sibling, gioni. haidi: and a major aimed ational shakeup

interest. investor a memo from the c.e.o. says the generate business relevant to investors. an up and down day for starbucks, closing lower. shery: and plans to boost improveservices to profitability of banking operations and expand the customer base. to bank is looking digitallization to boost services and customer base among sized company.m ocbc wants to trim 40% fromncome ratio to 43% during the first half of the year. haidi: sirius xm's deal to pandora media suffered a wrong nerve with investors. sirius offered little detail on how the companies would work the deal putting

the satellite radio broadcaster in more direct competition with apple music. what's coming up over the next bloomberg tv, what evonne is watching today. yvonne: weighing the global tourism industry when it comes to hotels. asked a question to the biggest hotel operator in europe, talking more about the asia focus. they've had their pipeline expanded to 51%, representing and their global portfolio, raffles,brands like orient express, fairmont. issenberg joining us for talkingsive chat and about the growth in the asia the theas well as

consolidation he sees further m&a in the industry. haidi: that's it from "daybreak as market coverage continues as we look ahead to the trade in shanghai and shenzhen. we might see positive sentiment markets as nikkei and positive. haidi: japanese markets playing catch-up after holiday of their own earlier this week. looking ahead to a fed decision 48 hours from now and central zealandisions from new and indonesia and taiwan. to come. this is ♪

>> it is almost 9:00 in hong kong and shanghai. welcome to "bloomberg markets: china open." >> caution the word in the market. china returned to trade. >> trade continues to dominate sentiment. andw deal with south korea china says the door to talks is open. could send the rising dollar back down. >> and a big week for central banks. indonesia may act again to support the rupiah.