>> good morning. asia's major markets are just one hour away from the open. sophie: welcome to daybreak asia. haidi: our top stories, asia-pacific markets faces in mixed open after a mixed open in new york. set to extend its advance to the 1991 high. president trump hailed his new trade pact. corporate america also welcomes a deal that safeguards global

supply change. showingl change at ge, the door after just 14 months in charge. shery: let's get a quick check of how markets ended monday in the u.s. u.s. stocks ended mixed. we had some optimism over trade after the 11th hour agreement on the trade deal between the u.s., mexico and canada. dow gained for a third consecutive session while the s&p 500 was higher. energy also led the gains. oil was higher on concern over a slowdown in u.s. drilling. the nasdaq fell a 10th of 1%. also worth men thing -- mentioning domestic focused stocks took a beating after improved outlooks for trade deals. we also have some data out of south korea. we are seeing industrial production out of south korea getting ground and beating

expectations, going month-to-month. 1.4%. the expectation was growth of 0.4%, which would be in line with july. also the previous month has been revised upwards to 0.5%. production year on year in south korea also beating expectations, jumping 2.5%, beating the estimate of 1.3%. much faster acceleration in the previous month of july, .9%. we have seen some weakness on investment in south korea. but right now the numbers seem pretty solid coming out of south korea. let's see how all this data as well as what u.s. markets have done overnight. sophie: with that solid each in the numbers from korea in august, one to highlight what is going on with the korean yuan. we are seeing some strength coming through.

back below 1112 again. some potential for this coming through on the korean yuan. this comes after we got some export numbers that were not that optimistic. when you take a look at the details of that set of data, we did see the chip segment coming through fairly strong. that has improved the outlook for chipmakers like samsung as the industry faces concerns about slowing demand. this morning we also got some business confidence data coming in better than expected for the month of october, but it did stay below the reading of 100, which indicates pessimists are outweighing the optimists. we also have more companies complaining about korea's weak domestic demand. let's check in on the futures to see how this is setting up investors in korea. we are seeing futures nudging lower, more losses potentially. several carmakers also posted

weaker september sales. in japan, stocks could be in for more gains. trading at a 27 year high, while the yen slips to an 11 month low. no change expected. in wellington we are seeing marginal gains. the kiwi is slipping after business confidence fell to a nine-year low in the third quarter. when it comes to markets that are closed this tuesday we have china and india off-line. hong kong set to reopen. stocks to finally get a reprieve as we have seen over the past two years. the fourth quarter has been kind to the hang seng. haidi: thank you so much for that. let's get you the first word news with jessica summers. jessica: the international is set to cut its forecast for global growth. three months after discussing she says shesions,

is no longer so optimistic. refunds will update its outlook next week ahead of its annual meeting. regards to warnings earlier this year are coming true. tosix months ago, i pointed clouds of risk on the horizon. but it is not boring, but -- pouring, but there's a bit of a drizzle. today, some of the risks have begun to materialize. in these, there are signs that growth has plateaued. jessica: u.k. premise of theresa may is said to be offering an important new session to win a deal with the european union. sources inside the government tell us it covers the so-called backstop that ensures an open irish border. the u.k. would back down on goods moving between the british mainland and northern ireland. may than once brussels to hold the u.k. stole in --

government says china's steel market is about to go into reverse. the world's top iron or exporters as chinese production 1886 million metric tons. this is because of capacity parts -- cuts. australia sees iron ore prices falling accordingly into the $50 range next year. at least four people were killed and hundreds injured as a typhoon swept across southwestern japan. train services were disrupted and power was cut to more than one million homes and businesses. retailers hoping to benefit from the golden week holiday in china may cause havoc for travel plans. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm jessica summers. this is bloomberg. scoop on brenta kavanaugh. a college friend of judge kavanaugh telling bloomberg that judge kavanaugh has frequently been belligerent and aggressive after drinking, and that the judge lied to senators about his experience with alcohol. this friend is a former yale basketball player who is now a college history professor. he described one incident where a fight erected at a bar, now he said the police had been called in new haven, connecticut. amount of drinking by judge kavanaugh was a key part of that drinking. president trump even acknowledging his nominee had a little bit of difficulty with

alcohol when he was younger. we are now hearing bloomberg report that the former college friend said the judge was frequently belligerent and aggressive. so, bringing new light into these allegations of the judge's behavior once he starts tracking. sort of saying it was a general feature of hanging out with the brexit in college. really characterizing this as more than just a one-off. interesting to see how this plays into this. the fbi investigation has been limited. they have already said they will not be interviewing brett ,avanaugh or his main accuser as part of this investigation it just earlier today we heard from senate majority leader mitch mcconnell saying the vote on kavanaugh's nomination will take

place this week. he says enough of the delays. it is unclear as to whether that means the fbi investigation is close to getting wrapped up. shery: a key point is how those senators will vote if that vote takes place. we have also occurred a few minutes ago -- we have also heard a few minutes ago, he said he will take all the facts into account and he will listen to all west virginians on kavanaugh. of course that will be a big factor when the senators go to vote and when the vote happens. mitch mcconnell saying the vote will happen this week. back into the u.s. markets where the rally sparked by the trade deal feted by the close. measure both close lower. su keenan has the latest. there was some optimism over trade but at the same time

domestically focused stocks took a hit. su: there was an upbeat note to start the day. let's go into the market snapshot. it looks like after all the handwringing over trade, the bark is proving worse than the bite. the lowest we've seen since july. the 100, though, did eke out a gain. let's go to some big movers. 15% on amuch as surprise ouster of its ceo. a new ceo in place. it shows restructuring that there is urgency to right the ship. cash flow was an issue. ge is serious about turning things around. also papa john's, a very big day in court for the founder of the company was trying to get back control. it was revealed he had a couple

of nondisclosure agreements with women. taking on a whole new level of the sexual light of assault issue that is so big for comment ceos and even supreme court justices. there were questions about why there was a nondisclosure agreement and he did not describe it. boeing rising on -- rising. this is a stock in the crosshairs of trade and yet it is doing well. shery: we are also seeing treasuries hitting background highs. notehat is interesting to is 10 year treasuries have been renewed by a lot of these funds. the latest trading data shows we saw a 10% increase right ahead of the fed meeting. what that tells us is the path is now clear. this trade is not coming to an end. a lot of people shorting the

10-year. back-and-forth about where oil goes next seems to be looking more bullish. renewed talks of $100 a barrel. we saw a renewed futures hitting the highest in four years. su: intermediate trade in the u.s., a big surge. declining.e rig that is creating a bull market. a noted hedge fund he said -- said because of the tiger supply issue. brent, a lot of calls for $100. etf, you had a big exodus in terms of the money in there. of analysts have identified this as a short-term trading tool for a lot of hedge funds and other professional investors. you can see, that also reflects the rise in oil prices. haidi: thank you so much for

that. back to one of our top stories, there is a new nafta in town. the freshly named u.s. mexico canada agreement was reached after one year of negotiations, although it still needs approval from congress. wilbur ross said the new deal will revive the u.s. auto industry. >> we have lost a couple quarter million jobs were more in the auto parts sector. you are going to see the vast majority of those coming back. more isith us now for mark mckee. great to have you with us. by any other name, nafta? >> by any other name, although people have had a lot of fun with the new name. about, it is always fun at the usmca. this is really more a cosmetic name change, a little paint. maybe a little work on the undercarriage, but it is not

really a new treaty. it does not make a lot of changes. it does add significantly in that it updates the treaty for an e-commerce age. but that does not make a huge number of changes that as his secretary says, will create jobs. that is very open to interpretation at this point. haidi: we have for from the president and his treasury secretary saying this potentially is proof that the tough line stance using tariffs to renegotiate trade is a strategy that works. does this emboldened the administration to take an even harder line stance against beijing? mike: that's a good way to ask the question because it probably does, given that the president believes in tariffs and has always believed that the chinese cheat at trade. so he probably would follow through on that. what is going to be interesting to see is how the chinese feel this game goes. japanese,uropeans and

who are also talking about trade deals with the west because what happens -- with the u.s. because the president put out tariffs than made very strong demands he would back out of. other countries in the new nafta agreement did not have to concede much. so the chinese may say, we would be willing to get into negotiations, figuring they may not have much to lose. it could go either way. shery: with this trade agreement cannot nowmbers negotiate a trade deal with the nonmarket economy, aka, china. also, it strengthens intellectual properties. so, will the chinese feel that this is sort of a quality than against them -- coalition against them? mike: the u.s. would like to see them think that that way. the more countries that gang up on china, the feeling is the easier it will be for the chinese to give an.

they cannot go against the entire world. the intellectual property issues is something the u.s. of course is very strong on with china, although the changes made in the new nafta agreement do not adjust the kind of thing that we are talking about with china, where the chinese make companies, giveaway trade secrets. in this case we are talking more about copy or and protections. -- copyright protections. but definitely if the u.s. can get companies go along with it is something the chinese have to think about. shery: how much political capital the president trump gain from the usmca, whether it is the upcoming midterms or with more negotiations with china? mike: that will be an interesting question that would take some time to play out. obviously we have little more than a month to go before the midterms. the issue for republicans has been democratic enthusiasm. this gin up in the enthusiasm

among the republican base, we don't know. we will see how it plays. it may be seen as good news in some areas. it is also possible to labor unions reject this. some areas the president carried might not be as enthusiastic. it is going to be a real question as to whether this gets ratified by a new congress if the house of representatives turns democratic. we're not sure yet where labor will turn -- will come down on this. thank you so much. you're watching live pictures of president trump at a rally right now with supporters in tennessee. he is talking about make america great again. that is johnson city, tennessee. he is taking part in a rally for public and candidates. still ahead, i told you so. christine lagarde flag growth

warnings weeks ago. now they are ready to cut forecasts. next, see how stocks are beating the big guns. this is bloomberg. ♪ s is bloomberg. ♪

haidi: this is daybreak asia. shery: the s&p 500 is near its record high, but the markets steady march higher is lacking some key support. the percentage of companies trading above the average has been declining, even as the index continues to rise. let's get some insight with ben laidler. he joins us here in new york. you say u.s. stocks are shockproof. at the same time we are seeing this narrow bull market, whether in the u.s. or developed

economies. is this a risk? ben: i don't think so. i would argue the earnings story is much broader this year than it has been. the biggest driver of earnings this year is going to be financials. earnings for the u.s.. valuations have come down. think that gives you support. also think the u.s. earnings story continues to extend. quarter.h last shery: outperformed emerging markets. i understand you just changed your call from neutral to overweight. why? ben: em is the opportunity. em has underperformed a lot. a bit of capitulation from investors. 10 times earnings. investors have the biggest underweight of emerging markets they have had in five years. the u.s. is going to cool.

i think it will gradually come down. china has a lot of positive. they will reflate. commodities as well. it is all very good for em. em is worth a second look. shery: we have also had cheap violations. u.s. market valuations have come down a bit. when it comes to relative attractiveness, where would you go? ben: they are both very different. i think they have been over discounted. a little bit less bad news in em. u.s. obviously spent a lot of money over the years. earnings are much higher. expectations for earnings growth next year will be low. the u.s. overweight i think his defensive. a lot of share buybacks. there he domestic equity market. 8% upside to the u.s.

16% for em but with a different risk profile. haidi: do you feel like the markets broadly are pricing in a worst-case scenario and it comes to trade between china and the u.s.? ben: i think so. china is one of our key over weights of em. china is overwhelmingly domestic. overwhelmingly domestic stock market. only about 10% of corporate chinese revenues come from outside china. the worst-performing global market in the last quarter. 15 on percent earnings growth this year. china has a lot of policy flexibility. our gdp expectations have been reasonably stable. i think we will see a bit of fiscal stimulus, maybe more structural reform. i want to get your views on what has been going on with the japanese markets, which have regained for an investor attention. i know you have a neutral position when it comes to japan.

but let's look at this chart. as you take a look at relative strength, we are on the cusp of being overbought at the moment. a 27 year high. we are pointing out because of the weighting of two stocks, they both rallied about 30%. it is not exactly a broad-based rally. does that suggest there is room for that rally to spread? ben: we are neutral japan, but consensus is very underweight. em five-year underweight. japan is not far off. you see a little buying but investors are long way from being bullish on japan. the problem is japan you have no earnings growth. we think globally, valuation will come down as the fed keeps tightening. volatility maybe picks up. the problem with that low earnings growth number in japan, it gives you a very low insurance policy with multiples coming down.

governance reforms under the surface. a bit more upside in japan. because there's no growth in japan it also means the boj will not stop easing. which also means because you have weaker yen helping giant exporters. ben: we think the yen is in the right place. you are right, if it were to weaken it would help japanese corpus a lot. the all-time high is the yen weakness. again, it is very difficult to see how you get much more earnings growth out of japan. obviously there are risks for that. it is coming from industrials, tech, things very exposed to the trade agenda potentially getting worse. shery: you were neutral or selectively -- you saw selective

opportunities in mexico. now that we have the usmca deal, does that change or outlook? ben: obviously has done very well as a relatively defensive market. china,ooking at russia, because it performed so badly and valuations are solo. and places like brazil. a lot is going on. 20% earnings growth this year and next year. we think some of these high markets are worth a look right now. haidi: thank you so much for joining us. ben laidler there. let's get you a quick check of the latest business flash headlines. u.s. overlty from the historical breaches of sanctions on iran. the fine could be as much as $1.5 billion, although final negotiations i get to begin. as allegations release --

shery: india is season can stroll -- seizing control of il&fs, whose missed payments caused widespread upheaval. the new board will meet this week. they include india's richest banker. india has sucked to take control of the company twice, and done so wants -- once in 2009. ramping up theis fight against fake accounts ahead of the u.s. midterms. they removed 50 profiles in august that misrepresented themselves as members of republican groups. twitter says it is finding ways ways toifying new identify fake accounts. next, it is out with the old at ge. we asked whether the new ceo can jumpstart the embattled behemoth. this is bloomberg.

♪ this is bloomberg. ♪

haidi: it is 9:30 a.m. here in sydney. a bit of a muted response. mild positivity in the wall street session overnight. thatrelief than rejoicing the revamped nafta deal has been finalized. still a question over whether it can be pushed through congress. setting up for a mixed picture as asia gets underway today. shery: it is 7:30 p.m. in new york or markets closed higher. -- where markets closed higher. of course we saw the 11th hour agreement on the usmca trade deal. at the same time small caps ticket beating. -- took a beating.

i am shery ahn in new york. haidi: and i'm haidi stroud-watts in sydney. let's get you the first word news now with jessica summers. confidencemeasure of returned to the markets as the u.s. and canada agreed to the new trade deals. is essentially a reworking of nafta. attention now moves to president trump's steel and aluminum tariffs, which are not part of usmca. the administration also says that is too soon to talk to china without evidence of real change. >> we are not going to hold back these tariffs for just promises. china needs to have real action. the president has said if china wants to put proposals on the table where they are willing to make meaningful differences and protect our technology and have fair and balanced trade, we will listen. but we are in no rush. jessica: italy's attempt to sell a new budget to the eurozone ended in failure. hoped toce minister

win acceptance for substantial increase in the budget deficit, but won little backing. france said eu spending rules apply to everyone. economic commissioner said italy's plans almost certainly break the regulation. production -- the growing loss from iran was offset by other members. the 50 nations pumped more than 30 million barrels a day in september. output fell to 3.3 million barrels, the lowest since 2016, but that was countered by other countries. supreme court nominee brent kavanaugh is facing new questions about drunken behavior after claims from a former fellow yale student. chad told bloomberg about in 1985 bar fight involving wasnaugh, who he says

frequently belligerent and aggressive after drinking. he also says cavanaugh lied to lawmakers about his alcohol use. the senate is set to vote on his nomination this week. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. thank you for that. the majorown to market opens across the asia-pacific today. let's did it over to sophie. asian markets could be in for a tepid session. u.s. showed not a great deal of enthusiasm. we do still have chinese markets out of action for another day. sophie: that is a fair representation as trade euphoria may prove fleeting. it looks like stocks may be lacking conviction. surging oil prices may rein in bullishness.

this morning we got mixed data from across asia. in korea we did see the uptick in factory outlook for monk -- for august beating estimates year on year, with that could not be much. today, they are nudging lower. we saw confidence taking a hit, dipping to a nine-year low in the third quarter. that is putting pressure on the kiwi dollar. we are seeing stocks and wellington off by 1/10 of 1%. a lot of focus will be on japan. we are anticipating whether or not because he that rally continue. there is concerns the gains have been too far and too fast. also hong kong reopening this tuesday. plenty of catching up to do. sophie: plenty indeed. when it comes to where these pockets of pain could be, watch

hong kong property stocks. may be under pressure after gaming revenue slowed in terms of growth in september. the slowest pace in two years, due in part to the typhoon signing down -- shutting down casinos. let's take a look at the hans saying -- hong sang. the benchmark has only posted a quarterly drop six times in the past 12 years. shery: general electric shares rallied as much as 16% after the company ousted the ceo. the company was delisted from the dow after more than a

century during his term. they were not happy with the pace of the turnaround. ramy: no. they said after the past 14 months, they decided they just had to move faster. enter the new guy. he is known as the turnaround guy,. a lot of folks are optimistic on what he could bring to ge because of the turnaround he did at his previous company, which when it started it was a very small company and then became global. i want to show you the slide we are dealing with in terms of the losses. ever since of the peak of the market cap in 2000, that was a long time ago. lostver since then ge has nearly half $1 trillion or

thereabouts. you can see over the course of , this isnery's tenure a latest in the long slide of the past 15 years. but enter larry. let's take a look at what he is all about. he has ascended to the role of ceo of ge. former ceo of dan or hurt. let's flip up this board. i want to show you this year price. -- the share price. look at that number in the greed. 1100%. then flip up one more time. over that same time ge fell a little more than 75%. not going the way investors would have wanted them to. the big question is what he has to do here.

our own bloomberg intelligence researcher said throughout his of covering his previous company, he showed he could achieve stable margins, margin improvements as well as good organic growth. the question moving ahead is over the next few months, up until december when they lay out the strategy, they have this kind of thoughtful period to figure out the next steps. of course a lot of investors will be looking ahead to see what he might come out from that. shares today rallied as much as 16%, but they did settle a bit lower, but still up by about 7%. this was also a unanimous board decision, ousting the former ceo. in terms of analysts, they seem to be quite happy with the new ceo. ramy: they appear to be happy

with him, but not so much with his prospects for the company. the gist of it is the negatives could outweigh the positives. specifically near-term eps, a dividend cut possibly again, as well as changes in the our business. let me run you through some of the analysts that are weighing in. jpmorgan is saying while the thege in leadership brings company closer, there's a potential equity raise. ubs saying a new ceo might not change current headwinds. deutsche bank says we are sure the change of narrative around the story, even with the help of its ceo superstar. while folks are positive on a man, they are bearish on the company. haidi: ramy, thank you so much

for that. fund is said to be seeking to invest half $1 billion in chinese education. the move would give the fund a stake in china's vast education market. our tech reporter joins us now from tokyo. what do they see in the start up and opportunities in the chinese education center? >> right. as you mentioned, it translates as homework help, apparently. to company uses a mobile app let users upload answers to homework as well as search results. it has already 300 million users in china. likes fairly firm bankers goldman sachs. in fact, this would be softbank's first bet in educational space. it is clearly a bet on the future of massively open online

courses. particularly, the future in china, where the competition for college entrance a james -- exa ms is notoriously fierce and only a small population gets a higher education. haidi: china seems to be a pretty major investment destination for the vision fund. >> right. if you look at the number of deals, the u.s. is by far the most active market but china is a close number two. they have already invested in online insurance, autonomous driving. there have been reports another investment of as much as $500 million -- billion for a food delivery company. one is not officially on the vision fund books, but they are not known for making hard distinctions.

he tends to talk about it as one big family. shery: when it comes to vision fund investments, we find their smallest investments are around $100 million or so. they have a pretty big hand. tell us a little bit about his strategy and his vision. every time an ecletic -- down toer can be boiled two themes. the cluster of number one strategy. picking the winners in a given industry. and a theme that ties all of these disparate companies that range from used cars the vertical agriculture to ride hailing, according to him, is ai. areof these companies leveraged to do something that has not been done before.

now, the question is of course what kind of synergy can you produce. he insists they are constantly in touch with founders to make two plus two equal five. it is a fun game to play to see what can they possibly do with different integrations. microloans for tuition. have notest, there been any examples so far that have delivered the synergies he promised. one thing we know for sure is he tends to supercharge their growth strategy. it will be interesting to see what happens. shery: the way he did with yahoo japan or alibaba. thank you so much. a georgetown professor and lead asia policy in the obama white house talk straight. this is bloomberg. ♪

his is bloomberg. ♪

haidi: this is daybreak asia. consumers,h american businesses and policy makers have breached a sign of relief over the revamped north american trade deal. but champagne corks are not popping yet in asia. kathleen hays are here -- is here. is this all about trade again? kathleen: certainly . of thisspecific aspects revised deal, usmca. she is encouraged by this. she likes it. he is getting more concerned by the trade war, what we have seen

for the global economy. she thinks compared to six months ago it is a bigger threat than she anticipated. what she is talking about is something i think we are going to hear a lot about at the imf next week in indonesia. not only will it curb growth, and particularly may hinder growth in emerging markets, like nations in large parts of asia. let's listen to what she told bloomberg earlier. >> countries need to work together to build a global trade system that is stronger, fairer, for the future. the stakes are high. the functioning of global value change could have a's devastating -- could have a devastating effect on many countries. it could also prevent emerging countries from reaching their full potential. she is warming up the

audience. nearly 200 nations around the world. it is very important and it makes sense. as global supply chains -- they will be disrupted. they may help north american companies, but even that is a mixed bag. once the price changes start shifting it is clear that will be disruption and certainly some losers in addition to winners. the commerce secretary wilbur ross is concerned about the usmca. why? kathleen: he also said they could hurt asia, these new rules. particularly looking at what they could mean for auto. he spoke to bloomberg television this afternoon. first of all he said it is hard to say how much the u.s. will gain from it. how many billions of dollars he said the trade deficit will be reduced. but he does admit that these new usmca will drop businesses away from asia and from europe.

here's what he said. also there is the negative implication for china and new rules of origin, because they have been shipping a lot of parts in through the nafta regime. kathleen: as mr. ross explained it, he said there are rules in place, somewhat antiquated about where they have to be sourced. he said a lot of them did not really come from within the nafta region. they came from other countries. now that will not be as possible. bottom line, automakers will not be able to source their parts as freely. and this is going to hurt countries like china. i think it just opens the door to this of her -- this other even bigger threat to the global economy of what happens next between the u.s. and china. so far i don't see people concerned too much that there is a deal ready in the wings for the u.s. and china. haidi: you have got to be

extremely optimistic to draw that correlation. thank you so much for that. president trump is certainly hailing the new north american trade deal as historic, but it is too soon to talk to china. with one trade dispute settled, can we expect any progress on the big one? let's bring in our next guest. evan, really great to have you on. extrapolate the positivity. some sort of structure around japanese, u.s. trade ties as well. any kind of positivity around china? evan: no. i think it will be the exact opposite. all these recent deals give trump confidence to think he can withstand making a quick deal with the chinese. i think it takes pressure on trump, especially the nafta deal takes political pressure from the farming community, and it

just emboldens him to take a really hard line. so i think we should expect an increase in the tariffs on $200 billion to go to 25% in january. i think the trump administration increasingly wants deep, large structural changes in the chinese economy, and they are not going to make a deal until he gets them. they feel the wind is at their back, because they have trade deals with south korea, canada, and mexico, and they are starting talks with japan. haidi: you certainly get a sense of vindication hearing from president trump, hearing from his treasury secretary saying this is evidence that the tough stance on tariffs is an effective strategy. when it comes to china, it is a wildly different and more complicated beast, politically as well as the trade relationship and fundamentals. what can beijing do?

if you are looking for long-term changes to be made so trump can claim that as a political win, they cannot and probably will not do that. evan: it depends. there are structural changes and there are structural changes. if china wanted to a good quickly liberalize their services or. not just allowing foreigners to invest in sectors previously cut off but make meaningful commitments to allow foreign companies not just to invest, but almost guarantee market shares. there is definitely steps the chinese can take. big structural changes like liberalizing the exchange rate, or opening the capital account, that is probably not stuff the chinese want to do. it is certainly not in america's interest for them to do it. so, i would say there is a sliding scale of changes. i think the problem is the chinese are resistant to doing

anything because they feel they have a gun pointed at their head. shery: all structural changes you just mentioned, it is not like the chinese have not tried. they have tried, but at the same time there have been limitations and they worry about destabilizing their own economy. so, how much can china realistically do without hurting their economy when it comes to opening up their own market? evan: you have to separate liberalization of the financial sector from liberalization of the broader services sector. if they wanted to liberalize transportation or health care or logistics, they can absolutely do so in a meaningful way that would have a significant benefit for americans and a lot of other foreigners. that would not detail the kind of systemic financial risks involved with liberalizing capital accounts. the chinese recently announced within the last few months liberalization of the financial

services sector by raising equity caps. but america has been down this road before. even though they lift the equity result inesn't ever meaningful market share for american banks or insurance companies. even in the financial sector where there is some risk for china, there is more that they can do. shery: right. we have seen from this new usmca deal is that the reputation of u.s. trade representative will probably get a boost. know who exactly was leading the trade negotiations with china. control, how much of an impact will it have on china's talks when you have a hawk like that? evan: at the end of the day the chinese will respect a person that represents the president's authority. so, as long as trump's at -- trump has his back, regardless if they like him or not, but as

long as he has the confidence and authority of the president and he cannot be circumvented, the chinese will have to do with him regardless of his reputation as a hawk or not. if you approach this from a narrative that this is an ideological war about china in the global balance of power, does that make it less likely we will see a compromise? evan: i do believe there are elements of the trade conflict that really are a proxy for america trying to adjust to a rising china, and are very uncomfortable with some of china's policies and practices as a rising power. that is your he different than u.s. china debates being about ideology. i don't think it is necessarily about ideology at. it is -- yet. it is much more about the u.s. resisting that transition and trying to figure out what a

rising china means for american economic interests. haidi: it was interesting a few days ago we had china again pointing out that even with poverty, overall gdp growth, it can't aligns with gdp growth is very low. are they reasonable in assuming these kind of the fact of bonus developing markets get as they rise to the top should still be in play? evan: i think that is when of the problems at the heart of this issue. from the u.s. perspective china should really longer be treated as a developing -- no longer be treated as a developing country. yet the chinese have a mixed identity. part developed, part developing country. one of the fundamental sources of disagreement on both sides is this issue of which should it be

treated as. increasingly, the rest of the world, not just the u.s., has come to the conclusion that i simply the dint of the size of china's economy and the impact it has on global markets, that china has to be treated as a developed country and can no longer expect the special treatments and carveouts as a developing country. and i think the chinese may be willing to move there in certain respects. it's just going to take time to negotiate that. haidi: professor, thank you so much for joining us. shery: of course we are -- haidi: taking a look at some stocks where washing. what is on your radar? sophie: japanese auto stocks in the back of the nafta deal. also looking at korean automakers as several reported

softer september sales. also japanese retail on the back of cutting forecasts. this is bloomberg. ♪ ♪

haidi: good evening. i'm here with the markets open. hery: i'm shery ahn. sophie: welcome to daybreak asia. haidi: asia markets facing a mixed open. the nikkei 225 set to extend its advance. john flannery is out after 14 months in charge at ge.

jerry cope now takes the wheel. : president trump says it is too early to talk to china. u.s. stocks higher with the s&p and the dow moving higher. let's see how this will translate in asia. sophie: a mixed start to the tuesday session, kicking it off with korea. looking little changed, but could be heading lower. this as digesters digest factory output. in tokyo, we are seeing the nikkei 225 extend gains, at 827-year high. -- trump says the u.s. is working on a trade deal with japan. sumitomo mitsui cautions that

the climate slow. speculative shorts are on the rise. now with the kiwi dollar 90ding, confidence fell to a below. 23% of companies reported weaker earnings. see ang in on bonds, we overnight drop in treasuries. risk appetite is picking up. traders will be focusing on 10-year debt. demand could be healthy as investors shift away from that superlong sector which has pushed 30 and 40-year yields. gains onl building on ongoing supply concerns. handle.eing the $85 iran's exports dropped to a 2.5-year low in november.

for the month of september, opec production rising perhaps offsetting the losses we saw in iran. : let's get you to first word news with jessica. jessica: brett kavanaugh facing new questions about drunken behavior after claims from a former fellow gale student. he has told bloomberg news about a 1985 bar fight involving kavanaugh who he said was frequently belligerent and aggressive after drinking. he says kavanaugh lied to lawmakers about his alcohol use. the senate is set to vote on his nomination next week. >> i watched him. vocal heprised at how was about the fact that he likes beer. and he has had a little bit of difficulty. he talked about things that happened when he drank. this is not a man that said that alcohol was -- that he was perfect with respect alcohol.

i thought he was actually going back so many years excellent. sophie: -- jessica: three months after expansion,a 4% christine lagarde says she is no optimistic. the fund will update its world economic outlook next week ahead of its annual meeting. set to be may is offering in important new brexit can section to win a deal with union, sources inside the government tell us it covers the so-called backstop that ensures an open irish border. down on would back goods moving between the british mainland and northern ireland. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

haidi: a 30 tepid said accused asian stocks today. mark cranfield joins us from singapore. that situation is something we have been keeping a watchful cautious eye over. is there a chance of a spillover? certainly, if they do not get a grip quickly. we saw what happened when greece issuelowed to run on the of european markets for weeks. it is spread to most things and became a very big risk off event. the job for the european leaders is to try to isolate italy, to try to convince people that they can get on top of the budget situation with italy and treat it as a separate case, and that it does not need to impact other markets. that has not been the case for

the past couple of days. we could see them get onto it quickly. once markets become disorderly, it gets the attention of the european political leaders. the last couple of days, the italian bonds have been very disruptive to what is going on in europe. politicians will get the message quite quickly and they will start to talk about solutions for italy. then the rest of the world can carry a looking at many other issues, regardless of that. haidi: getting back to the perennial catalyst or not when it comes to trade wars. we had a tepid response. is it fair to say that market participants are not really extending this positivity into any sort of idea that we will get a similar compromise when it comes to china? mark: china itself is probably still a long way off. i don't think that is a surprise

to anybody. attention will shift more to japan now, now that we have seen south korea get a deal with mexico. there must be more optimism that japan will get something out of the united states as well. there's also good timing from the point of view that shinzo abe has another period as head of the ldp. we will see the changes to his cabinet. fiscal stimulus is probably not too far off. we have seen the yen is relatively weak, which is happening as well. japanese stocks look on a good run. there's a lot of incentive for japan to get a deal with the united states, to try to keep the bull market conditions going in japan as well. it looks as though that will be on a country-by-country basis. but china, it is a long way before we can start talking about a serious trade between the united states and china. shery: thank you so much for that. let's talk about the new nafta in town. the freshly named

u.s.-mexico-canada agreement was negotiations, although it still needs approval from congress. naturally, not everyone is happy. canadian dairy farmers are calling it a slap in the face. josh were, thank you for rushing into the studio -- josh win grove, thank you for rushing into the studio. there is so much going on right now. i want to take your canadian perspective. we have been talking about china, the possibility of a china-u.s. deal, now that the new nafta is in place. but canada is pretty much on the fence -- the defensive throughout the nafta negotiations, whether it is on nafta or chapter 19. how much did they get out of it? >> i think they got a deal they can live with.

the response from dairy farmers and other groups have been positive. for example, chamber of commerce, big banks, union leaders, automakers, manufactures, all pretty happy. has been locked in a trump. contest worth -- with trump. they managed to get their deal. shery: we still have the steel and aluminum tariffs in place. >> that is a big question mark. we are all prematurely celebrating the end of the tension. though we have had reports that we will see where that happens. agreed to a quote of 40% above current production.

>> in terms of the difficulties will there be difficulties in terms of getting through congress? >> we have already seen some members of congress expressing skepticism about the deal. it's an open question. in this press on -- conference, there was a point to pump the brakes saying this is a preliminary deal. >> where the talks between china and canada go now that we have this deal.

>> canada basically shrugged it off. it -- if this closet gives them a reason to exit because of another partner, this would be blamed on them. >> josh, thank you so much for joining us and coming directly from the airport. more on this still ahead. we will look at how it could affect tensions for china. >> and is it time to dive back into emerging markets? why a turnaround may be on the horizon. this is bloomberg. ♪ kathleen:

asia." is "daybreak:

emerging markets may be staging a turnaround, our next guest says. a capital partner joining us from hong kong. you say china-asia is looking attractive. these are battered valuations we are seeing. the turnover is the lowest in four years. investorsout foreign make up about 7% when it comes g. chinese equity tradin isn't this a domestically driven, sentiment driven market? >> it is. that's why it's an interesting emerging-market. onare extremely dependent

bund flows. chinese asian-markets are driven by retail investors. this is the fact that foreign investors own seven percent of the free flows. some changes in the structure. retail investors in china feeling down? are capable of being exuberance when it comes to chinese equity markets. the way this trade war has been going, they are not feeling so great, maybe a little bit dejected about the upcoming growth going on in china. >> you are right. whichhe asia markets, has a lot of companies exposed

to the domestic growth, p be -- noti might not being a friend of president trump anymore has little impact. seen --raging we have this deleveraging we have seen has been going on for some time. investors are less excited. it is more difficult to borrow money to invest. healthy environment for investments. >> let's talk about the broader oil environment -- oil market environment. we have seen gains for a fifth consecutive quarter. how would oil play with the risk environment that is here?

a verylways been important element when you invest in emerging markets -- it's always been a very important element when you invest in emerging markets. places like india, china, net importers of oil, have become more important for global emerging markets. oil prices are worth watching. this has an impact on other things such as emerging market flows. talking about russia, it's important for the russian finances when you have an oil

price has -- as high as it has been. we have tight supply in connection to this engines from iran. hery: how is the strength of the u.s. dollar going to play and we emerging markets? -- into emerging markets? karine: we are monitoring this all the time. the dollar isof an important element. regarding the strength of the dollar can be decided by other things, including what is going on in the united states, in terms of priorities and reforms. we are not making bets on what the dollar is going.

will probably see some support for the dollar in the coming months. aidi: even if you put aside you still have the rate divergence situation. it's already putting pressure on emerging markets. investors are asking us, why in a year like 2018 has emergingifficult for markets. people are really worried -- and wondering what is going on in these places. the u.s. tax cuts and reforms

imply a stimulus that is the biggest in 50 years. markets such as china are reforming and trying to cool down a bit. bets were the main reasons for this -- that's one of the main reasons for this divergence. -- will we receive see more risk emanating from turkey or argentina? karine: argentina and turkey be no weather countries -- ellweather countries. we're worried about a dominating for emerging- markets that we did not necessarily believing. -- believe in.

what is happening for turkey and argentina is important. what is worth watching is the deals project from imf worth 7 billion u.s. dollars and what is with thein ankara, tension of the united states pastor, which will also impact sentiment. shery: thank you for your time. you can get the stories you need to know in today's edition of "daybreak." it's available on the bloomberg and in the afghans on mobile -- app and on mobile. this is bloomberg. ♪ shery: this is "daybreak asia."

aidi: india is seizing control

of a struggling banker that has missed payments. it's a six-member board will meet this week, which include india's richest banker. shery: standard chartered is being set to be -- is bracing for penalties of deaths from the u.s. over fines over the way it has handled iran. three stocks sank -- the stocks expectationsalyst were beaten. haidi: the treasury -- facebook is ramping up --

twitter is ramping up the fight against fake accounts to prepare for the u.s. midterms. includes stolen avatar photos and intentionally misleading profile information. reportingomberg is details of a barf -- our fight 1985985 -- bar fight in involving supreme court nominee brett kavanaugh. our reporter joins us from washington. a bar fight in your college years is not a big dear until untilcome a sip -- deal you become a supreme court nominee, and then a wanted the defenses around the way you drank. with, gentleman i spoke

charles ludington, said he had planned to not bring this up when brett kavanaugh was nominated to the supreme court. the nomination had been ongoing for a month or two, but after watching brett kavanaugh appear on television in the contentious hearing last week in front of the senate, mr. ludington decided what he had seen of brett kavanaugh's drinking indicated he was not being truthful. he felt compelled to brings information forward. forward.s information >> packaging characterize this habit -- how did he characterize this habit? he used were belligerent and aggressive.

he saw mr. cavanaugh extremely drunk on occasion, slipping his - slruring is -- slurring his words. the incident he had said, brett kavanaugh was not as drunk as he had seen him, but he reciprocated the barroom fight because he threw a beer allegedly at another individual in the bar. i: is a lot of people are saying, you do this when you are in college, so what? does this refer to his character and temperament? paints a little bit more of a portrait of mr. cavanaugh, age,vanaugh, at a young but nevertheless a portrait.

at --s haidi: i have to cut you off. you can read the story on bloomberg. ♪

away fromare an hour the open of trading in hong kong. were closedrkets because of the holiday yesterday. chinese markets will be closed for the remainder of the week. >> you are watching "daybreak: asia." measure of confidence returns to the markets. the u.s. and canada agreed to a new trade deal. be revisions to the existing framework of nafta.

president trump's steel and aluminum tariffs are not part of a.is new deal, the usmc opponents say this is not evidence of real change. the president has said if china wants to put proposals on the table, where they are willing to make meaningful differences and protect our technology and have fair and balanced trade, we will listen. pec's oil production rose higher last month. cartel's 15 nations pumped more than 32 million barrels a day in september. 140,000 utput fell barrels, but that was countered andaudi arabia, angola, libya. see vice chairman

has been sentenced to 18 years in jail and was fined after being convicted of pocketing millions of dollars of bribes and insider trading. at least four people were killed and hundreds injured as a typhoon swept across southwestern japan. powers were disrupted in was cut to more than one million homes and businesses. to visit theset parts of japan battered by the -- a typhoon last month. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: let's take a look at how

asian markets are shaping up. >> asian stocks are mostly higher. we are seeing tepid price action at the start of the session. japan is being set for a third consecutive day of gains. is rising over 1% this morning. we are seeing a two-day drop for despite theuan, benefit of factory output we got in august. real estate offsets the gains we have seen for resource stocks. pressurellar is under -- kiwi dollars under pressure. the yen is trading at an 11 month low. flashing that now the recent decline for the yen

may be overdone. recent gains could be too far, too fast. technicals are at extended levels. point tot .2 rising -- as an yen shorts indicator that a turnaround may be forthcoming. rising twopany percent, the biggest move to the topix this morning. japanese carmakers are watching on the back of the nafta deal, in light of what that may mean for production. i also want to highlight ono pharma, climbing by 7% earlier. scientist won a nobel prize for his work in providing cancer treatment.

this company is conducting treatment in the same field as that nobel prize winner. >> one stock in the united states saw a big move in monday's session. general electric rallied as much after the company ousted the ceo, it lost -- and it lost half its market cap. >> investors are hoping the new ceo is going to bring general electric back to life. that the life really has been ebbing out of general electric for a long time. ever since the market cap peaked back in 2000, general electric has lost $500 billion through today.

yearark purple is the 10 of the john flannery era, where the share price fell by about 55%. we need tore saying, have change and that is where the new ceo is entering. former ceo of a company that has been credited with a major turnaround over the 14 years he was at the head of that company, turning it from a small truckmaker to a diversified giant. he was also a bain capital senior adviser. sky also achieved stability at the company and got margins higher and help the company achieved organic growth. todayn see that from 2002 , -- two today, shares have

risen by 1100%. let's compare that to general electric. different, going down by about 75%. ahead, december is traditionally when the annual report for general electric -- electric is set to come out. we will be looking to see what kind of strategy they will come up with. investors are definitely .opeful of hope is happening that this could be the guy after his very successful track record. haidi: that seems to be the initial reaction from analysts. ramy: the initial reaction has been very alleged on the man, -- bullish on the man, but

remaining skeptical for g.e. show you in the analyst recommendation function. holds have been widening. the 12 month target price is in white. it has been falling since 2016. you can seeprice, the gaps between the 12 month as the sharell price being pretty wide. we can see that there are five cells --holds, three sells. the change in leadership likely includes a dividend cut, which

is not music to investors years -- investor's ears. ceo might not change the current headwinds, p does have a track record of current competence -- accomplishments. see what couldto be the strategy over the next couple of months. in december, they come out with that annual report. there is a lot of hope they could turn this around. it will be a couple of months for them to think about what needs to happen to have a successful turnaround for general electric. haidi: ramy, thank you. hong kong's return from monday's public holiday gives investors a chance to react to the shakeup at tencent.

news of the changes came in the middle of the long weekend. we go to our asian correspondent. what is going on? vid: when we covered the listing of tencent back in 2004, and i was covering that for you can bring up a 20 or a 15 year chart that goes back to 2004. you can see when they have passed restructuring. they launched wechat and reorganized. they are now at a turning point after 2012. every several years, they have reorganized. they are facing margin pressure and have reached critical mass

in wechat, with over one billion users. they are now restructuring again in 2018. they are combining some of the key businesses into other groups. they are facing pressure in have to reorganize. to reorganize.e they are probably going to go into less consumer related businesses. to upgrade from the consumer internet, to the industrial internet. tencent has a history of investing heavily in other companies. what will this mean for m&a? >> they've invested a lot in these consumer platforms for a number of different businesses. has been invested by china

and tencent. what -- what is going to happen is also a focus on the consumer underrms, and more on the the hood build outs -- bu ildouts, emphasis on m&a and research and development. the core technology will focus on business to business and less on consumer. pressuring revenue is this crackdown on gaming, which has been a key revenue source. tencent is going to be identifying where new sources of revenue are going to be coming for the next to six or seven years. haidi: coming up, wilbur ross .c.a. could have

negative consequences for china. this is bloomberg. ♪ mberg. ♪

"daybreak: is asia." shery: president trump is going usmca the calling the s most important thing for him in the negotiations. wilbur ross talks about have this -- how this new impact could affect carmaking in the united states. ross: we have lost one million jobs are more in the auto parts sector. what sort of numbers are we talking about for farming? rules are soe

recent and complicated that we have not had a chance to quantify them. powdered milk, regular milk, poultry, eggs, cheese, wheat, are important items with canada. tariffs whatsoever on our agricultural products and they are revising more favorably so-called -- their so-called rules that had no scientific racists over protectionism. the regulations are good for automobiles and farmers. he president repeatedly spoke about the problem with bouncing the trade deficit. what will be the net effect on

on the united states and canada with this new agreement? sec. ross: tens of billions of dollars. this deal was made at midnight last night. you can't expect us to have everything quantified. we will release the numbers and you will be astonished at how big they are. how critical is the deadline of november 30? do we need to get this thing done before that change? with the incoming president in mexico, he wants this to be through the mexican congress before the inauguration on december 1. that is important to him for lots of reasons.

has been very cooperative and constructive in negotiations. he knows it is good for the mexicans. this will clear the air. been great uncertainty as to what will be the rules of trade going forward. businesses can live with good and bad news. it is very hard for businesses to deal with uncertainty. what effect does this have on the chinese negotiations? -- presidentld trump referred to them as "too smoon." sec. ross: it is. clean up your own neighborhood

first. that is solidified is the north solidifies the- north american base. china in the new rules of origin has been shipping a lot of parts through nafta -- there are also implications for china, because they have been shipping a lot of parts through nafta. these parts are not even used in cars anymore. -- half of these parts are not used in cars anymore. technological improvements have been of nafta origin, even though they weren't. these gains are coming at the expense of not nafta areas --

non-nafta areas, most notably asia and europe. usmca has opened up the dairy market of canada to the united states. coalition, caq, has won the majority government in quebec. it is hold to the majority of homedian dairy farmers -- to the majority of canadian dairy farmers. it was seen as a showdown between the -- the election was seen as a showdown between the liberals and the center-right party. >> a shifting of power after 15 years. disgruntledd the nature of dairty farmers responding to this new trade.

they have said this will lead to the changing of the system currently in place. it is worth pointing out that is less in favor of protectionism been some political parties. catch up on all of this with the tv function. dive past interviews and into any securities on the bloomberg function. join in on the conversation and send us messages during the show. this is bloomberg. ♪

let's get you a quick check of the latest business flash headlines. the mostlectric rose in nine years after a shakeup at the very top. the new ceoill be in an attempt to drive the -- a much bigger turnaround. nd is seeking to invest about half $1 billion in seeks ae bank as it

stake in the country's best online education market. -- vast among education market. one startup has secured investment from goldman sachs. >> instagram has a new boss. he takes over following the departure of the two founders. his title will be the head of instagram. remain committed toits values, in an attempt establish a smooth transition after recent tension between facebook and instagram. there is expected to be no whate in policy -- so should investors be watching

when it comes to the rba? >> we don't expect to get a great hike within the next 3.5 hours. next 3.5ike within the hours. -- we are focusing on what they say about the trade impact and currency. we talk about investment headwinds. we will show you some chart so you can see what this is all -- charts so you can see what this is all about. australia still has a trade but it is good thing, not that big.

and what if the trade war worsens? the lumi is down 5% this year. that could help exports boost inflation as well. what we're seeing is the cash unchanged for several meetings. see how the loonie has been coming down? itwon't have an impact, won't give it enough of a boost. let's go back on the bloomberg. this is a record period of steady.that key rate this is holding at 2.1% year-over-year. you can see the cash rate steady. it will probably be steady all the way through next year.

you see the trade were a more warre impact -- trade having a more severe impact, but for now, steady as she goes. shery: let's see how the asx 200 is doing now. at the highest levels since 1991, extending gains after falling for a session. aidi: let's look at asian futures to set up for the open. singapore and taiwan, looking a bit negative. we are also looking at the start of trading in hong kong.

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not a clock hong kong. welcome to "market makers -- "bloomberg markets: asia." >> japan leading the markets. extending its 1991 highs. perhaps more gains are to come. cent is something to watch today. investors are waiting structural changes. >> president trump hails his new trade pac. he says it is too early to talk china. could spell relief for carmakers in this part of the world.