welcome to daybreak australia. we are counting down to asia's major market open. here are the top stories we are covering. treasury turmoil amid further evidence of the u.s. economy stocks. asust payrolls and services the fed indicates it will press on with gradual rate hikes area cruise control honda decides to

ride with gm after a lengthy evaluation of a partnership with waymo. let's get you started with a quick check of the markets. it was a mixed session with the doubt gaining up 2/10 of 1%. that strong data on the economy being felt, we saw yield rising and that catching up with the stock market. the s&p was higher most of the day but then he gave up all of its games and we saw heavy yield or select utilities real estate just weighing on the index. we saw the 10 year yield the highest levels of july. all of this laying into the markets with a chair now saying they may move past neutral to a level that could restrain growth. we did see the dollar track that jump. we saw a dent in currency.

unlikely to cem assets catch a break today. we have the yen backup. we are seeing futures looking little changed. this korea reopened thursday. the trade balance is due at 9:30 a.m. hong kong time. in wellington we are seeing stocks slide for a fourth straight day. the commodities complex does bear watching. we saw indian stocks fall by the most in six months on wednesday. chaos in theesh aluminum market. the world largest refiner shutdown. >> thank you.

>> jpmorgan is downgrading longse stocks citing apel trade war next year as its worst-case scenario. it will only escalate as the u.s. raises tariffs on chinese goods. biggestt shares of the chinese etf tumbling to a two-week low. u.k. prime minister theresa may one unit support today. she made the case for pragmatism over the split from europe. her speech was welcomed by business the critics were not impressed. she said a good deal is possible. >> what we are proposing is very challenging for the eu. hold stick together and

our nerve, i know we can get a deal that delivers. >> reports from washington say the fbi has not interviewed brett kavanaugh or his accuser. sources tell us the white house has not given the bureau authority to speak to them saying their senate testimony is sufficient. it is not clear if the fbi looks to receive specific approval from the white house to speak to them. mike pompeo is backing away from the goal of north korea. he says 2021 is not his target. that echoes the president, that he doesn't want to get into a time game with the issue. in ao had mentioned 2021 statement released weeks ago. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700

journalists and analysts in more than 120 countries. this is bloomberg. bombay ayers are on attack. two big economic reports came in stronger-than-expected and in italy also backed away from the budget battle the eu. how strong is the u.s. economy? >> is it really worth all that. we saw it torpedoing the bond market. the 10 year benchmark yield that you just mentioned, the highest closing around 3.18% up from may. as 30 year bond got as high 3.34. let's see what caused this.

start with a bloomberg chart from our library. the 80 he came in stronger than the forecast area the number there is a private estimate of jobs. it came in at 230 topping the estimate of 184. the one year is the white line. how closely do these track? big jump in adp, you get a big jump in jobs. the manufacturing index also topping forecasts. indexs. and service rising to 61%. anything above the 50 line signals growth. report is due out on friday. people are now wondering if there will be a stronger gain. we are watching wages very

closely. >> yesterday we talked about chair powell having a goldilocks scenario. today talking about getting past neutral. >> he said that before. evans the president of the chicago fed says he sees policy moving to restricted. the president of the philly fed had a different view. he doesn't seem like he is on board with a rate hike yet. is three this year, to next year, to the year after. three i have not seen acceleration yet. we still see these good job numbers. i don't think there is a rush. i am open-minded.

its inflation starts to accelerate, i could support a december increase. >> probably a minority view. ast fed members are expecting december hike. hadtaly's budget woes markets a bit shaken. it seems like that seems to be settling down a bit. what has changed? >> a concession of smart government that they are bowing to eu pressures just to pull back the populist party spending plan. the italian government is aiming to cut its budget shortfall. macros former head of the division said he thinks the data were stronger, it was

the markets getting upset by italy yesterday and getting reassured today that cause people to sell bonds again and that is the main force to push the bonds higher. wet a selloff in was area >> will talk more about this selloff overnight. we saw stocks giving back to gains. the s&p still closed short of an all-time high. highs, weith a record see a tug-of-war between rising rates and the equity market play out once again. >> it seems that the bond rally in stock rally could exist side-by-side. take a look at the market snapshot. ist is interesting to note that the bank stocks, the s&p 500 were one of the leaders here. rising on the increase in rates

even though they were declined in the prior session. notice crude oil which is trending a bit lower. if we look at some of the big movers, you will see the theme of the day is utilities and real estate socks that are most sensitive to rising rates are in the red. the regional banks in particular that were rising on this bond rally. let's take a look also at some of the other stocks in focus theytwitter moving higher, have come up with an announcement that they will allow those who publish twitter videos to monetize a globally across all platforms. moving what were prior restrictions. the china tesla one of the, that will begin to be covered by analysts as of monday. it is expected to come under scrutiny. jcpenney is rising on a restructuring trend.

is missing on adjusted earnings. that shows you how tough the market can be on the earnings reports. finally, if we look at the faang trade, many of the major stock dids that were underweight poorly in august when the stocks were on fire. in septemberrmed when the stoxx did not do so well. you are looking at the one-month performance and you can see why some of the shares did not do quite as well. it shows the over influence a lot of analysts are saying in the rain trade on the market. the biggest eldin in u.s. fuel supply since twice 17. always behind the move that we saw. normally we would see the oil

futures just plummet and stay down throughout the day. we did not see that here. if you look at the big picture for oil, we were at the high of the year above 76. that has a lot to do with the iran supply gap being the story that overshadows the u.s. story. a lot of other news hitting the tape has to do with the fact that both russia and some other countries are pumping above their outputs that again would normally be of concern. this goes to the fact that there is a concern about the u.s. sanctions on iran removing oil from the supply chain. blaming thein rising oil price on president trump. if you look at the one-month chart for oil, you can see the story there. >> should we be concerned about the hedge fund industry?

>> this has been an ongoing story. major hedge funds losing. it is a calculus that if they are below the calculus and have a negative return they will not make money in the next year. this one is noteworthy. the ceo john jacobson put out a note to a lot of the clients saying that after three and a years, the past three and a half years of tough environments he has decided to close shop. they were down 1% for 2018. , it showsior years you that recent years have been very brutal for these hedge funds and when a big one closes shop like this, it is noted. back half ofinning the returns by the end of this year and the other half next year.

>> thank you. ahead, the self driving race heats up. as the u.s. 10 year yield hits 2011 highs, have we seen this all before? more insight from our guests. this is bloomberg. ♪

we are seeing a bit of a cloudy outlook for sydney right now. futures are looking slightly higher. equities taking a beating. today we have u.s. markets mixed and the spike in yield catching up.

you're watching daybreak australia. being told the fbi has not interviewed brett kavanaugh or his accuser. have cleardoesn't authority from the white house to do so. meanwhile senators on both sides of the aisle are blasting resident trump for mocking dr. ford's 10 -- testimony. see this fbi and will the public have access to it? >> none of that is clear. supposed to be turning it over a soon as this evening. that will a summary be locked up in the senate judiciary committee and senators will be allowed individually to go review it. not decided whether they will release any part of it. some senators insist that they

should do that, release it to the public. right now it is being kept under wraps. what about the white house? is there a strategy because president trump was saying that dr. ford was credible, then he mocked her. >> the white house has calculated that this issue is one thing they can use to fire up their base. they have closed the gap a little bit with the kavanaugh issue in terms of voter between democrats and republicans. the democrats had already been fired up for this election. they were concerned that roll up does republicans would stay home and would not be interested. trump's actual words, it does fire up his base. it is unclear whether that will have impact on the soft republicans. those who are not quite as fund of trouble they want to vote for

the republican candidates. the issue of the supreme court mostation has energized republicans. anything they can do to fire up the base and get people to vote is likely to benefit them. there seems to be a great deal of conflicting signals about how hard at the eye can or will go. outis that likely to play for the confirmation vote area? >> there are three republican senators who are undecided. flake, lisa murkowski, and susan collins. suggested that he will review the evidence and decide based on that. murkowski and collins has stayed mum and are keeping close counsel with each other as to where they will go with the vote. theher or not the rest of

at the file contains enough information for anyone to make a decision, it still remains to be seen. the rest of them are pretty well set in stone. it will come down to a handful to girly those three. >> give us a broader context. why is this nomination important? >> it was a key part of president trump's promise to his voters that he would appoint justices who would be conservative. wadents to see roe v. overturned. it was a very animating issue for republicans in particular. sides areection, both very motivated by the supreme court issue. democrats want to be able to

overturn the senate. so they can block further appointments. races, democrats are making this an issue. it is big for both sides whether or not they can get their way and what they want to see in a supreme court justice. >> thank you so much. there is lots more to come on daybreak australia. this is bloomberg. ♪

you're watching daybreak australia. upbeat profit an forecast for 2019. indicating they see robust demand. the stock jumped after the company said net income would be two dollars 12 place to share.

climbed to the top of the pc market by overhauling its line of pcs. shipments rose after years of decline. aston martin's trading debut hit the brakes after investors balked at the trading price. shares closed down almost 5% in london. james bonds favorite car company had already scaled back. lead the selfto driving automobile space is revving up. billion toed $2.75 gm.

a surprise tos industry watchers. honda had been checking out waymo from what some time. >> a kick in the tires of waymo. that was 2016 when both companies waymo and honda were saying we are thinking about doing some research together to try to get this up and running. now new announcement surprised a lot of people. $2.75 billion as you said. it really makes this a competitive industry now between waymo and crews. at 14.6 ninevalued dollars. that is $3 billion more than what it was valued at a few months ago. softbank which is also a backer of cruz decided to throw in a couple of billion dollars there. this major investment

really brings up the timeline for some kind of launch for a self driving car. you better get ready for that. he spoke to bloomberg television talking about what that $2.75 billion really means. >> 750 million is a direct equity investment. cruz is getting a 5% stake. they are bringing another $2 billion to the table in conjunction with that in terms of supporting development and other financial streams that will accrue to the benefit. a great partnership. >> let's look at the share price. out at fivebroke and a half percent. to stay up by 2%.

every time we see an investment in terms of self driving unit, we do see a pop again. capital,ll of this new how does gm measure up? >> everyone wants to know who is in pole position in the self driving he there appears to be no leader yet area this makes the space more competitive. mike ramsey said this is a big vote of confidence in gm. as well as their technology. isry major car company working on this technology. someone has to break out of this waymo may still be ahead in terms of technology. there is also over, which got out of this race after there was an accident earlier this year. >> thank you so much. ahead we will talk about the

roadblocks for the auto industry. we will continue with the association of global automakers next area this is bloomberg. ♪

markets open in 90 minutes in sydney. futures looking modestly positive. looking to build on the 3/10 of 1% gain yesterday. one of the out performers and what was a down day. is set tosentiment continue. >> it is 6:30 p.m. in new york. you are watching daybreak australia. lines report a overshadowedh

again in u.s. oil stockpiles. attending u.s. sanctions on islamic republic were steering buyers away from iranian embargoes. current levels may be a little bit high. levels probably a bit lower than what you see today. aboutesident has spoken 65 to $75 which seems to be an acceptable level for producers and consumers. -- aluminainate market faces turmoil after a refinery shutdown. closing theporarily refinery in brazil because the only area it can use for waste processing is close to capacity.

aluminum prices jumped as much as 4% while shares of other aluminum producers also gained. prosecutors will charge the wife of former malaysian prime minister with money laundering. she was detained after testifying in front of the commission. her husband has pleaded not guilty to 25 charges related to facebook ceorea mark zuckerberg is hunting for a chief investment officer -- cheap investment -- chief investment officer to have their philanthropic investment initiative. his wife manages the initiative which holds much of their $63 billion fortune.

onbal news 24 hours a day air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's look at what we are setting up for in terms of the asian market open. we have futures looking up against cautiously optimistic. >> going into the session we have that jump in treasury yields as the bond bears are coming out of the woodwork. also we have a stronger dollar. that is putting a dent into the currency space area you have the aussie and kiwi dollar under pressure. we have some muted optimism when it comes to the session. we do have sydney looking perhaps to make some gains this morning ahead of trade balance

due ahead in hong kong. we aren't seeing nikkei futures higher just yet. i want to show you what is going on with oil. it is pushing higher. turning the em space. costlier oil on the likes of india, that is outweighing the potential boost to exporters like russia. em stocks are continuing to diverge from crude. this after breaking their positive correlation. at this chart is showing you. you can find this on the gtv library. em stocks slumping to a four-year low in relative numbers.

stronger oil has pommel. since 2015,ion argentina and turkey among the worst hit. the rupee is the worst performer in asia. the line in yellow on this chart. things may get a lot worse in the fourth quarter for the rupee. try to just say they are playing catch-up to recent declines. >> thank you. our next guest says the new step deal is an important for the cost and complexity of complying with the new order roles will pose a serious challenges for u.s. automakers. ceo of thethe

association of global automakers. automakers can breathe a sigh of relief. listen to this. >> what is relevant as we have an agreement that will give the relationship between the three companies for many years to come. now that we know exactly what are the roles because knowing what the rules are we know how to investe our plan more capacity in the u.s. or mexico. >> how positive will this new deal be? what are the downsides? he said it exactly right. we do have the certainty and clarity of seeing the roles and looking at the text and understanding what it will take for the company's operating across the region to comply with the agreement. that said, this is an agreement that is much more complex and

the agreement that it would replace if and when it becomes ratified. that complexity may lead to more costs and more challenge for the industry as it figures out how to comply. more regulatory demands. could this hurt the competitiveness of american companies or foreign companies working in the u.s.? and their potential to compete with rivals in china? >> that has been our concern all along. the current nafta has gotten the competitive balance right. we have more companies producing here in the u.s.. what we want to see is the new u.s. mca contain that balance. they're clearly will be adjustments and the supply chain, and adjustments in the manufacturing footprints for companies to comply.

it is really too early to tell. companies are just getting familiar with the text now. >> it sounds like you are saying the devil is in the details. you are tempering your enthusiasm at this point. >> that is right. important that we make sure we understand how the rules work. knowing the rules is not the same as having a business case. it will take some time for companies to understand how to thiste in this market area is an important market. when you look at china, china is a 60% larger car market in the u.s. maintaining the competitiveness of this region is important for our companies. the positivity that comes from having this deal done, do you extend that to more of a it means it isbe

more conciliatory approach from the trump administration? he came out and said that the national security roles that he was citing was just a negotiating tactic. >> i am not sure that it is. that is relief and knowing we have these roles and we can understand them. let's declare about these national security tariffs. this aluminum tariffs remain in effect here in the u.s.. that is increasing the cost of auto production here in the u.s. steel produced here in the u.s. has increased in price almost to the level of the tariffs imposed on imported steel. seeing thosey remain in effect. there are side agreements. we seek to address auto tariffs if they go into effect but it

does not eliminate them. it is really unclear to us what will happen with these punitive tariffs and how they will get resolved ultimately. >> those tariffs on japanese cars seem to be on hold while the trade talks continue. how positive is that? that we areood news beginning a conversation. the u.s., japan automotive .elationship what we need is to resolve these tariffs. they are supporting a robust industry here in the united states. >> we have u.s. auto sales being disappointing.

what are your members saying about the future of the u.s. car market? >> we have had a tremendous run-up over the last eight years. from the debts of the financial crisis in the u.s. to this moment where we are still close and ofrd levels of sales exports and production. we are starting to see some cooling now. the question is, what does that mean over the long run? clearly interest rates are creeping up a bit which will create a pinch. we are cooling from a very significant increase over several years. on how weyour take are hearing honda is putting money into gm's self driving unit area i know you are big on ai. how much of an impact will this have on the self driving market?

this is really another indication of this incredible transformation we are seeing in the auto industry. we are seeing a lot of investment and a lot of innovation around crash avoidance technologies and ultimately highly automated vehicles. is, there is a lot of opportunity for companies .o innovate together we will have to see who the leaders and of being. >> what is your best guess in terms of how far we are from this coming mainstream?

>> you are going to see regions locations cities primarily were werey automated vehicles solutions will come into reality in the near future. . the technologies are being used to assist drivers and make things more safe. it is the same technology and same sensing capabilities but applied to different business models. industry wille develop. >> thank you so much. >> this is bloomberg.

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welcome back. you're watching daybreak australia. thaturies deepening selloff on wednesday was our made market study. 10-yeareeing the aussie lane catch up. we continue to watch for the reaction across asia. let's look at the sustainability implications of this research founder. great to have you with us. repeat of what we had in february? >> it comes down to what inflation does. what has been driving rates over the past few years has been inflation expectation. out to the highest

level in seven years. that is being confirmed across the world area unanticipated higher interest rate and inflation. if higher inflation manifests itself in rates will keep going higher. if not, we might see the pattern we have seen over the last couple of years area everybody gets excited with the breakout then we fall back into the range. that is my guess right now. is notions are that going higher from here. interest rates are going to get a little ahead of themselves. i think we are near the move. maybe a little bit more capitulation. you look at the tension between where the next leg of the stock market rally goes. you thinking it is too early to reconsider a reallocation of your portfolio? >> it might be. the relationship between stocks and bonds, everybody thinks it is all set. dots bonds go down and vice

versa. there have been indications that that relationship is changing. that happened to stocks, i feel could be rising interest rates. the 1970 to 1990 model. when rates went up, the stock market struggled. we might be transitioning back to that. if that is the case, the careful on the snl decision because it might not work as well as you think. i would go further to say that in our work, the single hardest thing to do right now is the asset allocation division. it is hard at picking stocks and harder than guessing interest rates because that relationship is in flux. how much of each bond or stock should i own? decision is the one that is in flux and is the most

difficult one to make because the relationship is changing versus what it was the last 20 years. >> in relation to the yield curve, chair powell keeps emphasizing or downplaying the significance of the signal that inverted yield curve would send. would that be also your view? pushback one and that a lot. the pattern over the last 30 years has always been the yield curve starts to flatten, the fed says it doesn't matter, they always say that, then it and we have problems. the yield curve matters. if it inverts we have problems. but, it is the 10 year three month yield curve that matters. that one is still 80 basis points. it does matter. has allyear and 10 year the headlines but the other one

matters. 10-year, three month is not there yet. it has been dramatically flattening over the next year and i think it will continue to do so. also getting headlines has been the price of oil. we just heard from russia's energy minister saying that the rice could be a bit too high. >> current levels maybe a little bit high. the market is trying to reach a balance which would be stable and acceptable to producers and consumers. if you listen to the main panel of today, the president spoke about the five to $75 which seems to be an acceptable level. how much of the price of oil has to do with real demand out there and how much is it a supply issue? will this be the big next macro theme? >> a lot of it has to do with

demand. most officials around the world look at it through the lens of supply. if you look at it through the lens of supply, it looks a little elevated. what chairman howell said yesterday about the economy being extraordinary. it is that demand pull that is keeping oil up. whether the economy continues to stay strong is another question. because everyone thinks it is such a great economy, you're going to expect demand to be up and oil prices to be of also. it is an indicator of the economy. it is the way that oil is trading right now. oil and what the dollar does next impacts the next story for emerging markets. >> the dollar has been overshadowed by a lot of the trade talks. there was a breakthrough earlier this week with the deal between

mexico canada and the u.s. to call it nafta 2.0. that is giving hope that all of the talk about trade wars and everything else might not come to pass. you're going to start to see them start to relax. what has been happening is it is been helping the dollar strengthened because most people believe that in a trade war, the losersg markets are more and winners. if we were to get some kind of deal than i think you would see money flow back toward emerging markets and they would start to trade better. the emerging markets have been trading on macro stories around tariffs all year long. if that continues, and there is a believe that we have a light at the end of the tunnel, it would be positive for emerging markets and non-us markets. >> thank you so much. you can see any charts

throughout our program gtv is your function on the terminal. you can look at them and save them for future reference. this is bloomberg. ♪

welcome back. you're watching daybreak australia. a quick check of the business flash headlines. gibson has one approval to exit bankruptcy. plan, this allows them to resurface next month. failed tong tried and rebrand themselves as a lifestyle company. early numbers show a healthy

show up the golden week. this is the best today start to the golden week and six years. stocks closedo more than 1% higher on wednesday. one more story we are watching, amazon is cutting monthly bonuses and stock awards for warehouse workers after they pledged this week to raise pay to $15 per hour. all workers will see overall compensation increase but the issue is, if you have been working with amazon for a long $15 and you already make per hour, you only get a raise of one dollar. people say this doesn't help me if i am in -- a long-term employee. it does help in getting higher pay for new hires.

that is great because you have a tight labor market in the u.s.. there was a catch when it came to this news that amazon was raising their hourly pay. rise -- pay goingentivizes new hires into the labor crunch. , amazon is saying that overall it is a more predictable way of basing renumeration. that is it today for daybreak australia. tradingok at how the session is shaping up in new zealand. we are also a few minutes away from the opening of australia. the trade balance numbers as well. the aussie dollar is trading at

7105 after a jump in the u.s. dollar overnight area we will look at the impact of that. ♪

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>> a very good morning. markets are just an hour away from the open. >> good evening from bloomberg's european -- from bloomberg's headquarters in new york. >> welcome to "daybreak asia." >> asia-pacific stocks looks at first small gains after wall street edged higher. the dollar pushes the end to its weakest this year. theresa may sends up her critics with calls for pragmatic brexit.