again. the united states was not respected. everybody was taking advantage jobs androm taking our taken her companies and not paying the price to so many other things. even military protection. i told a number of countries over the last few days. i said listen, you are a very rich country. without our protection, you would have real problems. usaid you should reimburse for this protection. why are we protecting you? you want to know what they said? after about two minutes of talking, they agreed with me. you can ask this group of very talented people. they agreed with me. but one of them said, mr. president, nobody ever asked us that. nobody has ever said you should pay. these are really wealthy countries. i'll be honest, i just asked

japan. i said we are defending you, you are wealthy country, your sending us millions of cars, you are making a fortune. have a tremendous trade deficit with you. we are defending you and subsidizing your military. i said to south korea. they are very wealthy. great countries, very wealthy countries. i said why aren't you reimbursing us for our costs. a look at me and they cannot answer it because there is no answer. if they are a poor country and they need protection in the going to die, i'm all for protecting them and i don't want $.10. but when wealthy countries that have massive trade surpluses with us, and on top of that, we are paying for their military or a lot of their military, that doesn't work. >> you said you feel a kinship .ith brett kavanaugh

false allegations that you fill it were made against you make you feel like you don't want to believe these women. president trump: fake news, i didn't say that. i didn't say that. i think you do a good job, but i didn't say that. i said i look forward to watching her. i do want to hear what she says. i could be convinced of anything. maybe she will say something, but in the meantime, i have to tell you, he is one of the highest quality human beings. he is a tremendous man. he is a tremendous genius. he is a great intellect. never one at yell, is that a correct statement? he was -- i believe number one .t yale i didn't know him until this whole thing. i heard his name for 10 years. everybody was saying we should

be on the supreme court. i said, who is he? his name is brett kavanaugh. he is the most brilliant person, the most brilliant lawyer. they were talking about him on the supreme court 10 years ago. with all of that, i want to hear what she has to say. >> if you like there are numerous false allegations against you. president trump: i've had many false statements against me. i think john roberts would tell you, and you covered the story where the women were paid to say bad things about me. sean hannity covered it. i will tell you, when i saw that on sean hannity, i actually called him. believe it or not, i don't be to him very much, but i respect him. i called him. i said this is a big, big story. he agreed with me. the next day i picked up the papers, there wasn't one word about it. the next day i watched abc news,

nbc, cbs. i didn't watch cnn, but next time i'm going to. i watched everything. there wasn't one story other than fox. and it's a big story. and it's a shame. please.'s enough, good job. sinceld i ask a question i am from the new york times? i am actually from the new york times. we miss our former colleague. president trump: i will let you do it after he does. in honor of a paper i once loved . [laughter] with someonemet from yahoo! and you brought up that you supported tuesday's

solution for the palestinian crisis there. can you give us any more preview of what this great deal is? >> i would love to make a deal with the palestinians and the israelis. i think health care is probably tougher, if you want to know the truth. but we are to take care of that, that's going to get taken care of. i've always heard the deal between israel and the palestinians, that's like the toughest deal. every possible thing is tough about that. i think we are going to make a deal. i think we are going to make a deal. at one of our many meetings netanyahu.s with very happy we did the whole thing with the embassy and jerusalem which we got open in four months for less than $500,000, and the budget was over a billion dollars. and it's open, and it's

beautiful. , the question, somebody said today, this is the first news coverage in a long time. every time i sit, i take a lot of questions from people that are screaming like maniacs in the back of the room meeting reporters. one of the reporters, i won't say it was john roberts that ,hat that, so don't feel guilty john. one of the reporters that was screaming ask about the one state-two-state. i said i think the two-state will happen. difficultts more because it's a real estate deal. need lots of carveouts and lots of everything. another way it works better because you have people governing themselves. so they asked me about that. i said, well, i think the

two-state will happen. i think were going to go down the two-state road. i'm glad i got it out, and jared, who is so involved, he loves israel, but he is also going to be very fair with the palestinians. twonderstands it takes groups of people to be happy. everybody's got to be happy, and that's why it's so tough, because there has been so much hatred and anger for so many years. that's probably the number one ingredient. i said i think it's going to be a two-state. you know what i did today? by saying that, i put it out there. if you ask most of the people in israel, they agree with that, but nobody wanted to say it. it's a very big thing to put it out. the bottom line, if the israelis and the palestinians want one state, that's ok with me. if they want to states, that's ok with me. i'm happy if they are happy. i'm a facilitator.

i want to see if i can get a deal done so that people don't get killed anymore. in saudi arabia we had one of the great conferences in history. probably all of you were there. it's one of the most beautiful two days. that and china, two of the most incredible events i've ever seen . i've never seen anything like it. i believe we had 58 muslim countries, their leaders. , theings, the emirs absolute leaders. there was nobody in second place. tist leaders ofli the whole thing. unbeknownst anyone else, people would come up to me and say, sir, you can have peace in the middle east without peace between the israelis and the palestinians. i said why, why does that matter so much? they said it just is impossible to make peace in the middle east

unless you have it between the israelis. i heard that from the king of saudi arabia, who is a great guy. and then somebody else came up. i know where they are coming from. it,st've had 12 leaders say and they just said it. i started to realize that peace between israel and the palestinians for the middle east is a very important thing, and we are trying very hard to get it. i think probably two-state is more likely, but you know what? if they do a single, if they do a double, i'm ok if they are both happy. if they are both happy, i'm ok with either. i think the two-state is more likely. i would have gotten a bad story in the new york times, but i will anyway. we're kind of writing, not

failing these days. >> you're doing very well. mr. trump.ou, >> i think i will stop short of that. >> i have three or four a day and they are all negative. but you know what? that's ok. i still love the paper. go ahead. >> i want to come back to china. i think what you announced today was really aren't. you talk about this project you have with xi, and yet essentially what you did today was accuses government of interfering in our internal affairs, hurting the democratic process, and doing it to hurt the republican party. how can a guy who does that be your friend? trump: maybe he's not anymore, i will be honest with you. i think we had a very good relationship, we understand each other. , trying doing studies

to figure it all out, because this has never happened to them before. think of it, you've never seen this happen. they are having big problems. i don't want them to have problems, but they forgot to make a fair deal, just like canada has got to make a fair deal. i believe we have a very good chemistry together. i contended that about many leaders. i continue about a few that i don't want to have a chemistry with them. for those people, i will have , i will have a general, or if i can do it, i will have sarah huckabee do it. i am verye most part, good with prime minister abe. what president moon said last i am very goodnight, brett baer interviewd him last night and asked him about me. i cannot say, because you would say i'm too ragged osha's, but

what he said about me last night was an unbelievable thing. it wouldn't have happened without president trump and it never would have happened without president trump. take a look, but i will tell you , china is very special, very special. they are incredible people. it is an incredible country. but they have done is unbelievable. and it all started with the wto. it was a defective deal. without the wto, china is not china as we know it today. and it started also by our people that are standing right in this position in the oval office, it allowed them to get away with murder. allowed a lot of countries to get away with murder. have a we still probably very good relationship, but in honor of you, tomorrow i will make a call to him and say, how are you doing? you don't mind paying billions

of dollars -- smallust have two follow-ups. how do you compare the level of inner energy see from china to what russia did in 2016? president trump: think it is different. if you look at the des moines register, they have ads that are made to look like editorial saying you got to stop trump, you've got to vote against him. these are patriots. on a network that doesn't like me very much, which is most of them, but a network that doesn't really treat me very good, they interviewed farmers. because all hurt, of a sudden -- by the way, all of a sudden they have started buying again, so things are going up. we've had very little hurt him what i've done. in fact, the markets have gone up, and the farmers are going to do great. but they had farmers, and these

guys are amazing. and they voted for me and they love me. they said we don't care if we get her, he is doing the right thing. it's a complex game. a lot of people don't know exactly what it is. they don't know how to define tariffs. they know that for the first time in many, many years, they have a president that is fighting for them, that's not letting their jobs be taken to other countries, that's not -- iing the kind of abuse mean, when you look at the happen, as an example, with nafta, and for years, nafta was a defective deal today it was signed. tax of 17%, and nobody in this country knew that. by the time they found out a week later, nobody went and

changed it. so they went many years and never changed. there was a vat tax that mexico got. nafta was a horrible thing. way,e farmers, and by the the steelworkers, i stopped the dumping, the dumping was horrible. and now if they want to don't, that's ok, but that got to pay the united states of america 25% on everything they don't, that is ok. but the farmers say this man is fighting for us. no president has ever fought for us before. you really have to study what has happened over the 15 years. the farmers have been decimated over 15 years. the farmers are going to come out great. these are great people. they are great, great patriots. i think we should finish with that one, is that ok? go ahead, let's go, fast.

i always like to finish with a good one. elton john said when you hit that last tune and it'si alwaysa good, don't go back. everyone goes crazy, and then they go back and encore, right? and they don't hit it. everyone leaves and says that wasn't a very good concert. let's go. >> you were asked earlier news conference about the hearing tomorrow, about the message you are sending to the women of the country. what about the message that you may be sending two young men? you are a father. what is this called for a moment that we are in? >> you are right, i think it is a great question. it's a very big moment for our country, because you have a man who is very outstanding, but he's got very strong charges against him. that nobody iss

going to be able to prove. for aould have you chosen position, i could have you are anybody come and somebody could say -- and it's happened to me, many times, where false statements are made. honestly, nobody knows who to believe. i could pick another supreme court judge, justice, i could pick another one, another one, this could go on forever. somebody could come and say 30 years ago, 10 years ago five years ago, he did a horrible thing to me. he did this, he did that. and honestly, it's a very iod in our country, and it's being perpetrated by some very evil people, some of them are democrats, i must say. because some of them know that this is just a game that they are playing. it's a con game at the highest

level. we are talking about the united states supreme court. this can go on forever. i can pick five other people. at a certain point, people are going to say, no thank you. this is most coveted job probably in the world. and you know what? i would honestly say, because i interviewed great people for this job. i interviewed other great people for this job. i could conceivably imagine going to one of them and saying, it's too bad what happened to this wonderful man, but i'm going to choose you, i want you to go. and i could conceivably be turned down by somebody that desperately wanted this job two months ago. this is beyond supreme court. this has everything to do with

our country. when you are guilty until proven innocent, it's just not supposed to be that way. always i heard your innocent until proven guilty. i've heard this for so long, and it's such a beautiful phrase. in this case, you are guilty until proven innocent. i think that is a very, very dangerous standard for our country. with that being said, i look forward to what she has to say. i also look very forward to what judge kavanaugh has to say. i think it is going to be a very, very important day in the history of our country. i want to thank you all. question nothing to say to young men? >> you been watching president trump's news conference right there in new york. he was talking about everything

from a potential meeting with north korea's kim jong-un to a potential election meddling by china, saying he's got evidence and that it will come out. he was also talking about a potential meeting with canada's prime minister, justin trudeau, saying that he rejected an offer to have a one-on-one meeting with canada's prime minister trudeau, but now we are hearing from the toronto star quoting a spokesperson saying prime minister trudeau did not request a meeting. president trump was clearly not happy with the ongoing nafta negotiations with canada, saying they are not really liking canada's negotiators. he was also talking about the mystic political issues including the fate of deputy attorney general rod rosenstein as well as what's going to happen to the supreme court nomination of judge brett kavanaugh. a senate judiciary committing is scheduled for

thursday -- committee meeting is scheduled on thursday on allegations of sexual assault. .elcome to daybreak asia haidi: it feels like quite a long time ago but at the beginning of president trump be he -- beginning to speak, launched another sort of attack on the federal reserve because we had the fed decision on moving interest rate up as expected and heralding more to come. president trump saying he doesn't like the fact that interest rates are moving higher . he knows it's happening because the economy is doing so well, but he would rather use the money to pay down debt. so having a little bit of a stab at the federal reserve at the start of his speech. let's get more on this wide-ranging delivery of comments from the president that we've just heard. cirilli.s is kevin , in particular,

that throwing out of the timeline for negotiations with north korea was quite interesting. that was definitely quite interesting. i think the dominant storyline would be his defense of brett kavanaugh. mr. cavanaugh's accuser is still scheduled to testify before the senate judiciary committee. the president said he wanted to hear what she had to say, but did offer an unapologetic defense to brett kavanaugh. on the issue of trade in particular, the president criticizing china and the chinese president, walking back some of the warm relationship and rhetoric we had seen the president extend to the chinese for quite some time. the president said he will be in contact with president xi phone call on trade. the president hitting hard against canada, saying he would

like to have a trilateral deal but is not so optimistic. he said he would not refer to it as nafta. and of course the federal serve. -- federal reserve. it was not our normal kind of press conference that were used to seeing from the president of the united states. he criticized the fed, breaking with long-standing precedent. he said he believes the interest rates are going up because the economy is doing so well. it was interesting to see the president can of questions about how he might've been laughed at by the yuan general assembly. he said they were laughing with me. we saw the dynamics between the president and normally what we would consider strong allies. especially when it comes to the president's treatment of prime minister justin trudeau. he already had quite an awkward hand straight -- hand-checked

this morning. kevin: i think the backdrop for this is so crucially important. this was an hour-long press conference with the global press corps, a global summit at the united nations. wide range of questions including on the issue of whether or not he was left that. at the same press conference, talking about domestic issues, the issue of sexual assault, and the meeting he has tomorrow with deputy attorney general rod rosenstein. he said he would not like to fire him but said he will have to wait and see and hear him out. this was so wide-ranging. unusual for the president of the united states to be at a global forum and to take such a wide-ranging level of topics in front of a global media for more than an hour. and we talk a lot about

election meddling, this is the first time we've heard essentially president trump accusing the chinese of meddling in the midterms essentially without any evidence. it really does mark a turning point in terms of the relationship between the u.s. and china which is resident has sought to portray as a positive relationship despite the ongoing traits that, the president saying he has 250 be in dollars worth of additional tariffs ready to go in the pipeline. the president seemingly is accusing the chinese without releasing evidence suggesting that they are targeting specifically red state republicans ahead of the midterm elections. he said it was a different type of meddling in what we saw from the russians in the last previous election cycle, but are marked turning point in u.s.-china talks. as we know, there are no scheduled talks between the u.s. and china at this point. we just heard president

trump's reaction to the fed raising rates, saying he doesn't like it. here is su keenan with more. su: for most of the day it being like the fed was watched, wait and see. then the decisions come out, it's what everyone was hanging on. let's take a look at the market reaction. usually the stocks fall and the yields fall as well. these were unusual times. let's go to some of the big movers. , analystsaw was gopro saying they have new products out, nike beating, very impressive, and quickly to some of the other big movers. , surveymonkey took off

with a bang. schlumberger falling with oil, brent crude coming off a four-year high, and u.s. oil actually declining and rallying after hours. that had a lot to do with the fact that the -- you saw the big stock at the top, it's a , the new drink marijuana high in terms of rolling into these stocks. haidi: thank you so much for that, su keenan. coming up next, french president emmanuel macron says he won't do a trade deal with the u.s. unless trump respects the paris accords. more from that interview, next. this is bloomberg. ♪

haidi: it is 8:30 a.m. here in sydney. the futures session shaping up. a lot for investors to get through. really something for everyone in terms of different viewpoints in the fomc statement. moving ahead with another hike. another one seeming to come in december, and more to come next year. a little bit of downside for the futures, 3/10 of 1% lower. im in new york, where it is 6:30 p.m. you are watching "daybreak: australia." let's get to first word news. reporter: china will cut input -- import tariffs.

the move will lower costs for consumers and companies with a deepening trade war with the u.s. of these andon other cuts would lower the tax by the equivalent of $8.7 billion u.s. the reserve bank of new zealand has kept its key interest rate on hold. feeding downside risks, the outlook remains. however, it is assuming growth will pick up in the coming year with indications that core inflation is rising for the midpoint of its target range. they say the next rate move could be up or down. they are leading rate decisions in indonesia, the philippines, and taiwan thursday. supreme court nominee brett kavanaugh has been accused of the most lurid sexual misconduct yet, as senate republicans go ahead with plans to hold a hearing thursday. a new accuser says he was part

of efforts during high school to get girls intoxicated so boys could have sex with them. latestgh rejected the claim as ridiculous and from "the twilight zone." roundup of rupees have caused india to raise prices on products in an effort to support the currency and narrow the current account deficit, and inputs of the goods were valued at $12 billion in the financial year through march. a five-year high in the current account deficit is a key weakness and white -- one reason why the rupee has been the worst hit currency in asia. 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. so much for you that. of course, in addition to the broad scope of geopolitical and domestic issues, president trump in his press conference a few minutes ago addressing the fact

basic structures have been put in place in terms of a u.s. japan trade deal, saying the focus will be on automobiles, and an agreement has been reached with japanese prime minister shinzo abe to open trade talks between the nations. this dialogue has been happening with a great deal of progress since last year. shinzo abe also giving a press conference of his own, saying trade talks will be different from being a full free trade agreement, and wanted to create a win-win economic tied to the u.s. with respect to the auto sector in particular. clearly, the u.s. wants to import more -- export more cars into japan. s will abe says the tariff not be applied this round and round go forward with farm and other sensitive areas yet. seems like something is coming together but very light on details so far. shery: interesting to hear the prime minister say that trade talks are different from a full

fpa, and a key point that japan will not go further than the current deal on farm tariffs. of course, the u.s. has been pressuring japan to open up its agricultural markets, but japan at theo keep that level negotiated level for the transpacific partnership. japanese equity markets have been doing pretty well. the last session, they fell after a seven-day rally. let's see how things are shaping up for the asian trading session. here is sophie kamaruddin. reporter: the stock market may be taking a breather. lower. looking plenty to digest when it comes to shinzo abe's comments this morning regarding auto tariffs not being applied to japan while bilateral trade talks with the u.s. are underway. on the domestic front, shinzo abe saying he plans to keep cabinet members after the reshuffle.binet elsewhere, we do have plenty to digest when it comes to trumps wide-ranging comments.

he touched on china, north korea, as well as canada. today, korean markets are back online after a long break. lots of cuts to catch up on from the reside -- gdp growth forecast in south korea. ,lso on the radar today planning to announce including chinese air shares to global indices at the 7:30 a.m. hong kong time. later this morning, china will report industrial numbers for august, expected to decelerate. we are on central bank watch today after the fed decision. you have the philippines and indonesia expected to increase rates. the central banks making efforts to defend ailing currencies. they are at the bottom of the heap in asia along with the indian rupee.

nice trade quarter of unchanged rates in taiwan. reactionin the way of for the kiwi dollar as we did have the governor discuss prospects for inflation as well as downside risks to the economy in new zealand. haidi: thank you for that. lots more for investors to digest in what has already been a busy morning. let's get more on what asia will be watching. was sort of something for everyone in that fed statement. they plan to keep plowing ahead, but inflation is seen as mild. reporter: that's right, but i think the underlying commentary from the fed is that what is driving the u.s. economy and fundamental factors that continue to make them normalize policy, that is still intact. we had a little bit of a move towards more people thinking we get a hike in december. you can have a look at that. it is in the library on the

terminal. we updated that dot plot chart. now the markets have moved into that already.we already had a big selloff the last couple weeks. it's interesting the bonds rallied a little bit on the statement today, but of course, maybe that is more to do with the inflation. enforces thely, it short treasuries trade and how people want to be playing some of the emerging asian markets that have been under a lot of turmoil, and how that factors into where the dollar position is. the u.s. economy is doing well and the fed continues to hike maybe once or corridor, and they are keeping an eye on the data, but that is still tilting risk assets back into emerging markets. people want to take a little bit of income as a risk, but the broader question for the bond

market and u.s. assets generally is whether we get a push on that 10 year that starts to test 3, 2, 5, 3 point 3%, that level by the end of the year, or whether you have to wait six or 12 months before you get there. and carry trades are back in session. reporter: it is remarkable. they get heavily played, then the emerging-market turmoil comes along and they get tardily lacked -- totally whacked. the chart here shows you the reemergence of risk of wanting to take back incrementally a little more risk in emerging markets. just kind of winding back up the carry trade in certain parts of the world. going tohat we are hear from the likes of the philippines and indonesia today what weully more of have been hearing over the last week or two from key emerging-market central banks, that they are taking policy action, they are aware of what with theing

fundamentals of how capital outflows are hedging their economies, and i gives investors -- and that continues to give investors a little faith that what they are doing is enough. thank you so much. adam haigh, bloomberg global markets editor. check out our library, some of the charts and functions that adam just referred to on the bloomberg terminal. shery: french president emmanuel macron has emerged as one of president trump's biggest nationists of the united and says he will do agree to any tree deals with the u.s. until it respects the paris accord and climate change. he spoke with bloomberg at the one planet summit. america disrespecting the paris agreement for sure, i cannot accept. reporter: you would not do a trade deal with america? >> if it is not compliant with

objective, it would be inconsistent. we are investing a lot. we are investing in our farmers and cities. if you open your markets are products and goods coming from countries which decided not to respect the constraints, it would be totally crazy and inconsistent. we have ongoing decisions precisely to avoid a trade war. i think it is good to have these decision. this issue with president trump two days ago. i think if we can fix the situation on cars, industry -- reporter: it could be a transatlantic trade deal. it would be how to find specific arrangements to avoid a trade war. like the one from the former administration for me could be acceptable, if the u.s.

is compliant with the paris agreement. reporter: and you have theresa and for have brexit, the first time from the labour party, the hint that you could have a second referendum. my question for you is if the british were to vote to remain, but you have its back? >> for sure. even though you are trying to -- reporter: even though you are trying to lure all the bankers from paris? -- it is notout about domestic interests. i do respect the choice of british voters. i don't want to interfere in the debate about a second referendum. i am respectful, but i did regret this vote for the rest of europe and for our very special relationship, for france and the u.k. think in the very short-term,

what we have to do is precisely to have a discussion following the existing referendum, which and to findeement, the best way to go through the alsophases by respecting the european union and the single market. haidi: fellows french president emmanuel macron speaking exclusively to bloomberg at the one planet summit. coming up, president trump certainly didn't wait long to voice his opinion of the fed's latest rate decision. he let everyone know he isn't happy. and just a moment, we will speak to a former treasury official and get his views on the chances of further hikes ahead. this is bloomberg. ♪

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"bloomberg daybreak: asia." strong no surprises with its third rate hike of 2018 and the strong signal of a fourth one in december, although it did ruffle the president's feathers. it was the decision that caused a stir. kathleen hays is here with what terry jay powell said and what the markets think. investorsds rally, thinking the fed will be less aggressive in the future. reporter: let's talk about what they did. we know they hiked the key rate and they are signaling more. donald trump did say when asked that unfortunately, the fed rate hikes, he's not happy with it, that's all he said. i think it's just a blip on the radar screen for the fed. strong,d the economy is labor market is strong, and inflation is near targets. let's look at the dots. , and in thisgnal

16 plot, it is up to 12 of looking for rate hikes this year. they did drop the word accommodative from their policy statement and say they are describing the stance of policy. here's what jay powell said about why they did it. of the fomc statement likely noted the committee dropped a sentence that indicated the stance of monetary policy remains upon -- accommodative. this does not signal any change in the likely path of policy. instead, it is a sign that policy is proceeding in line with our expectations. reporter: and bonds did rally because they assumed if the fed drops the stands, they might be more aggressive with rate hikes, but jay powell says we don't need any longer, it doesn't make sense, the fed can raise rates are lower than more quickly or slowly. it will depend on the economy. of course, he did say there's a rising chorus of complaints about trade and tariffs that could affect the economy.

there's a tricky path ahead. they have to get to normal policy and not cause a recession. that is the big challenge now. and do it all with the ire of the president, it seems. we will talk about that in just a moment. i want to bring in stanford university economic professor john taylor, former undersecretary of the treasury international affairs. great to have you with us. are we reading too much in the four -- the fact that accommodative has been removed? >> i think too much. as aowell described it word that wasn't necessary anymore and they are trying to normalize. i think the decision today was part of that. i think just clarifying the language, it has been there for a long time. they are on to a new kind of policy. reporter: i want to get right is something that your colleague at hoover, a former fed governor, wrote in a "wall street journal"

op-ed today talking about the neutral rate. the rate where the policy is into restricted or two accommodative. he says it's a useful fiction, and heoutgrown its role said it is unobservable, unpredictable, imprecise, and highly variable, therefore a bad tool that the fed should put to one side. do you agree? >> i think the concern here is the fed following some kind of a rule like policy. i think jay powell has been quite clear they want to try and do that. how you do that is difficult, dependsome extent, it on the estimates of the r-star, which is the equilibrium real interest rate.

idea of that for a long time. there has been some dispute. jay powell has pointed out it is someone at certain. you don't want to go away from the systematic approach jay powell has been following. shery: i think the issue is also that policy haven't really agreed on what to do once they have reached the neutral rate. would you favor a pushing ahead or a pause? >> i think they are making the right decisions. they telegraphed where they are going. they still haven't settled on where things are going to be eventually either with respect to the balance sheet or with respect to the so-called r-star, but in the meantime, it's predictable, understandable, communications are right, there were no surprises today. i think that is good and hopefully they continue that direction. make of thedo you constant jobs we are getting from president trump? may be the most obvious overture was today when he straight up criticized the jay powell for rates? interest he says he doesn't like it at all, even if it is because economic rates are going strong, he says they are better things to do with the money. does it worry you, the encroaching of the fed's independence? >> i think what the fed has

tried to do is be transparent about what they are doing. it has generated some complaints on either side. president trump also said something that is good some savers get rewarded more for their savings, said there are other aspects to this. but the economy has been doing quite well because of the tax reform and regulatory reform.i think the fed's policy is about normalizing theolo -- part of that, in markets will work better if that continues and i hope it does. reporter: i want to ask you about your taylor rule, one of the things you are best known for as a prominent monetary economist. we have a chart from our bloomberg library that shows where the fed funds rate target is right now, just moved to 2.25 on the blue line. and then this white line from our estimate, there are different ways you can measure it, says the taylor rule should be up to about 4.5%. are we measuring incorrectly, or does your rule really say rates

should be that much higher or even go that much higher, since most people to hear you are above 3%? >> i think the discussion about this where you're going, right now seems to be around 10% -- 3%, slightly above. there may be some further discussion about what that rate is, because it is a very important part of policy. it is also true for other countries as well. shery: how do you view these fiscal sustainability of what the u.s. economy is doing right now? the u.s.eing that economy will need to sell an additional $1 trillion of bonds to finance itself. we keep hearing chair powell, every time he makes a statement,

that we are not on a fiscally sustainable path. >> the deficit is a problem going forward and spending is a problem. if you look at the congressional budget office, there are increases in spending. there has been attention to that in the last few weeks, but that's another part of the policy that needs to be addressed. there is concern about when it has been addressed, but combining that with the tax reform of last december with regulatory reform, it says we need to focus on the spending side of the balance sheet and i hope that's what happens as well. reporter: tax cut fiscal policy for a lot of people, even the fed, considered a plus for a lot of people. it is trade and tariffs that people are concerned about your are you concerned? is this going to hurt the economy? course, everyone is concerned about trade and how it is going to play out. there is uncertainty about it now. i think some of the announcements about mexico, -- aboutscussions with

earlier progress, the notion of zero for zero, those are pointing in a direction that we are going to solve this, there are still questions about how china will be resolved. there is an element of uncertainty and the data showed that. i think it's important to think about how we are going to get to a better situation with china, and that is being discussed. but ultimately, there's policy, trade, monetary, fiscal, tax. all those are together and we are doing quite well on some of them and we need to catch up with some of the others. haidi: thank you so much for that, stanford university professor john taylor joining us, and kathleen hays as well. get caught up with the stories you need to know. there, anothers hike before the end of the year. tobreak subscribers can go the terminal and it is also available on the mobile bloomberg app.

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shery: welcome back. i am shery and in new york. haidi: and i'm haidi stroud-watts in sydney. you are watching "bloomberg daybreak: asia." a quick check of the local business headlines. car owners to park for up to a month as it seeks to raise the profile of ride-hailing. cofounderago, the predicted auto ownership would be nonexistent in major american cities by 2025, and they are testing the appetites for dropping out of the car world entirely, offering credits of up to $600 if drivers leave their car at home and simply call a ride. shery: fashion retailer foley has found an inquiry revenue was overstated by as much as 90% last year. consultants say 2017 sales in asia where worth about $117

the $1.1far short of billion declared in the most recent financial report in april. the retailers cofounders have resigned and the inch -- including has been passed on to the capital markets positio. haidi: mcdonald's getting rid of some preservative and artificial colors from the burger buns and sauces pet the latest attempt to clean up its menu has affected two thirds of the burger lineup, a complex supply chain change for a company with 37,000 global locations. the pickle slices still have a synthetic preservative and a catch-up still has high for does corn syrup. shery: coming up, the former atlanta fed president. we just had the fed raising rates. the fed at the highest level since october 2008. we will ask if this was the right move. ondi: all the action "daybreak: asia" is next.

nextll be around for the two hours as asia wakes up and reacts to the fed. this is bloomberg. ♪ this is bloomberg. ♪

haidi: good morning. i'm haidi stroud-watts in sydney. asia's markets an hour away from open. shery: good evening from bloomberg's global headquarters in new york. i'm shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: asia." ♪ haidi: top stories this thursday, the fed hikes rates as expected and indicates more to come this year and next. president trump says he's not happy. the president also accuses beijing of meddling in the november midterms. china dismisses that claim as nonsense.