heidi: i am haidi in sydney. australian markets have just opened for tray. shery: i am shery anh. >> welcome to daybreak asia. shery: asian futures are lower following a mixed day on wall street. the rand continuing to stride. -- continuing to slide. the fangs fell, facebook closing at its lowest level in six months.

tensions are in the air as mike pompeo visits beijing. the u.s. is accused of meddling in chinese affairs. quick let us get you a check of markets in the u.s. the dow and s&p 500 clawback some of their earlier losses with the dow gaining .2%. unchanged, finishing some of those investors piling into sectors like utilities. the was a headwind for markets, we saw them plunging, nasdaq falling to the lowest level since august. no direction coming from the bond markets. they enjoyed a respite. let us see how all of this will translate into asia. here is sophie. >> after losing ground on monday, all of the shares opening little changed. later, we headwinds

are going to get a sense of how business sentiment is faring. not too far off from the capital .17.et of $ check in on australian banks, morgan stanley moving further underweight amid uncertainty of final recommendations about the government wrote -- government probe. cba bears watching after the lender said it is taking further action to improve its wealth. a quick check on japanese futures, pointing lower as investors returned from a long weekend and a yen moves towards 113. in wellington, the kiwi is falling for a seventh straight week.

you do have oil trading for a one-week low. happening as it warns of a supply storage -- shortage in the coming months. to focus will be on china see if the ketchup was a one-day event. shery: thank you. us take you directly to president trump at the white house, swearing in justice brett , aanaugh in the east room supreme court justice who was nominated more than three months ago. president trump about to speak in a ceremonial swearing-in for justice brett kavanaugh after he was confirmed by the senate saturday, earning 50 votes. he was administered the official constitutional oath by john kennedyand anthony after being confirmed by the senate. this is more of a ceremonial

swearing-in by the president. let us listen in. >> members of congress, members of the cabinet, guests, and fellow americans. it is my privilege to address you tonight from the white house. we are gathered together this evening for a truly momentous occasion. i have been told that the most important decision a president can make is the appointment of a supreme court justice. in just a few moments, we will probably swear in the newest member of the united states supreme court, justice brett kavanaugh. [applause]

>> joining us for tonight's ceremony is every sitting supreme court justice, chief ,ustice roberts, justice thomas breyer ginsburg, justice , justice alito kagan, andjustice justice gorsuch. [applause] >> i would also like to send our deeper appreciation to maureen scalia, the wife of the late,

and alsotonin scalia to our white house counsel, don mcgann. thank you. [applause] >> we are thrilled to be joined this evening by justice anthony kennedy. justice kennedy, america owes profound debt of gratitude for a lifetime of noble service to our nation and i want to thank you very much. [applause] very special and treasured are justice kavanagh's

amazing wife, ashley. thank you. [applause] and their beautiful daughters, margaret and liza. liza. [applause] we're also joined by justice marta ans mom and dad, d ed. thank you. i would like to begin tonight differently than any other event ofsuch magnitude on behalf our nation, i want to apologize to brett and the entire family for the pain and suffering you have been forced to endure.

step forward to serve our country deserve a fair and , not aed evaluation campaign of political and personal destruction-based online and deception -- based on lies and deception. what happened to the kavanagh family violates every notion of decency and due process. in our country, a man or woman must be presumed innocent unless or until proven guilty. [applause] >> with that, i must state that you, sir, under historic scrutiny, were proven innocent. thank you. [applause]

margaret and liza, your father man ofeat man, a decency, character, kindness, has devoted his life to serving his fellow citizens. now, from the bench of our nation's highest court, your father will defend the rights and freedoms of all americans. [applause] >> we are joined tonight by a leader who has never wavered in his support and devotion to the role of law and to brett and he has elevation done an incredible and wonderful

job for the american people, mitch mcconnell. stand up. [applause] >> i think that is the biggest hand he has ever received. they do not get it. thank you, appreciate it. i would like to think another man whose leadership has earned widespread admiration, the chairman of the judiciary committee, senator chuck grassley. thank you. [applause] we are grateful to all of the

senators on the judiciary committee who fought hard for this confirmation. senators lindsey graham, john cornyn, orrin hatch, mike lee, ted cruz, ben sass, jeff flake, mike crapo, tom tillis, and john kennedy. [applause] >> and thank you also to rob portman, sitting here. [applause] indebted toare senators susan collins for brave and eloquent speech and her declaration that when passions are most inflamed, fairness is most in jeopardy. how true. [applause]

brett kavanaugh is a man of outstanding intellect, a brilliant scholar, and his credentials are unsurpassed. yale collegef both and law school, he has taught at both harvard and georgetown. he is giving back to his community. spent 26 years in public service and just like justice gorsuch, he clerked for justice kennedy. wasthe last 12 years, judge -- heidi: president trump speaking at the ceremonial swearing in of of theest justice supreme court, brett kavanaugh. in that3 weeks ago that room, the nomination of brett kavanaugh was announced. a lot has happened since then.

it has been one of the most divisive confirmation processes seen in america along with the allegations against brett fbinaugh and an fbi fda -- investigation. ceremony takethis place after the actual swearing in of brett kavanaugh which occurred hours after that senate vote that he won. retired justice hisony kennedy and with appointment, we do see this consolidation of the conservative leanings of the u.s. supreme court. let us get reaction from greg sullivan. what do you make of this? greg: both parties are trying to

make the confirmation fight in tean issue. you see president trump apologizing for the tense and dramatic allegations against him. also see him blaming partisanship and chalking it up to politics. democrats see this as working in their favor. they hope voters are disgusted by how this nomination came to be and will turn out to support them as a check on power. republicans are arguing that their base is motivated. said, this is cementing that conservative majority on the supreme court and that is a and states. trump they are hoping that will turn out voters. heidi: you mentioned the apology

from the president, which you ered off script, that you have a presumption of innocence. brett kavanaugh is innocent and apologizing to him and his family. extraordinary. greg: it is. saying he is found innocent and these proceedings. some who have supported kavanaugh's nomination argued there was the need for fairness. only one senate democrat voted for kavanaugh's nomination and that is joe manchin who is up for reelection. west virginia was president trump's second-best state in 2016. he was threading the needle between his base of supporters who are angry at this nomination and a lot of republicans who are

happy with president trump and want to see that conservative court. trump right now swearing in justice brett kavanaugh at the moment. let us listen. >> and do equal right to the poor and the rich. thankfully --will faithfully and impartially discharge and perform all the asies incumbent on me associate justice of the supreme court of the united states. under the constitution and the law, so help me god. [applause]

that is justice anthony kennedy swearing in justice brett kavanaugh. his retirement led to the appointment of justice brett kavanaugh after three months of his nomination, his family shaking hands with president trump. greg, we were talking about these senators that voted for and against his nomination. one democratic senator, joe manchin, who voted for his nomination. there were other senators who are running in states where the president won i double digits. what is the outlook for democrats? greg: the senate map is bad for democrats. runninge 10 democrats for reelection in states trump won.

take north dakota, heidi heitkamp has been trailing her republican opponent in the polls. president trump has traveled to the state to hold rallies. the senate map is hard for democrats. in a year that should be good party in the opposite power, it is going to be a tougher road to the majority in the senate. us listen to justice kavanaugh as he is speaking. [applause] i am honored to serve on a supreme court headed by chief justice john roberts. chief justice john roberts is a principled and inspiring leader for the american judiciary. as a country, we're fortunate to have john roberts as chief justice of the united states.

honored to serve alongside all of my new colleagues, each of whom i know, and each of home i admire and respect. all nine of us revere the constitution. article three of the constitution provides that the judicial power shall be vested in one supreme court, the supreme court is an institution of law. it is not a partisan or political institution. the justices do not sit on opposite sides of a nile. we do not caucus in separate rooms. a team ofe court is nine and i will always be a team player on the team. [applause] >> as a new justice on the

supreme court, i understand the responsibility i bear. ago, standing in the east room with president reagan, anthony kennedy took the oath to be a justice of the supreme court. justice kennedy became one of the most consequential justices in history. i served as justice kennedy's law clerk. to me, justice kennedy is a mentor, a friend, and a hero. on the supreme court, he was a model of stability. -- stability. he zealously guarded the individual liberties secured by the constitution. justice kennedy established a legacy of liberty for ourselves and our posterity. i will always be humbled and proud to sit in justice kennedy's seat on the supreme

court. [applause] >> i think the members of the united states senate, mitch mcconnell, for his leadership and resolve. i think chuck grassley for his wisdom and fairness. give special gratitude to rob portman, susan collins, joe manchin, and lindsey graham. they are a credit to the country and senate. i will be forever grateful to each of them and all the senators who considered my nomination. presiding over the final vote on saturday was vice president pence. i'm grateful to the vice

president for his advice and support. to the counsel president, don mcgann, who was a warrior for fairness and performed his duties in the finest reductions -- traditions of our constitution. [applause] i think all the outstanding people in the department of justice and the senate who worked a m naik on this nomination. judges mostederal important responsibilities is to hire new law clerks each year. they are recent graduates and they work for one year. there are among the best and brightest young lawyers in america and they become the future leaders of the legal profession. thank my former law clerks who voted so much time and energy --

who devoted so much time and energy to support me in the confirmation process. [applause] >> inspired by my mom, a trailblazer for women, i have worked hard to promote the advancement of women. women still face barriers in the workplace and all of us have a responsibility to address that problem. during my 12 years on the d.c. circuit, a majority of my law allks were women and almost of them went on to clerk at the supreme court. a clerkship on the supreme court is one of the most coveted achievements in american law. i am proud that all of my newly , aed law clerks are women first in the history of the supreme court. [applause]

>> tonight, i think my friends, so many amazing and fearless friends from my high school days, college, law school, the white house, including president george w. bush. [applause] from the judiciary teaching, coaching, playing sports, the loyal in tightknit half the community here in the area and so many others. ashley and i are grateful for their prayers and the prayers from thousands of people we have heard from. when i give advice to young people, i tell them, cherish your friends, look out for your friends, lift up your friends, love your friends. i love all my friends.

[applause] >> i thank my family. my mom and my dad are here. was one of maryland's earliest women prosecutors and trial judges. my dad taught me his work ethic and love of sports. they've given me a lifetime of love and i am grateful. [applause] >> my daughters are smart, strong, awesome girls. they're looking forward to the

upcoming basketball season. i think their teachers for giving them the day off tomorrow so they could come watch two cases being argued at the supreme court. [applause] my wife is a proud west texan, a graduate of abilene cooper public high school. she is the dedicated town manager of our local community. she has a deep faith. she is a great wife. she is a rock. i think god every day for ashley and my family. god every day for ashley and my family. [applause]

>> the senate confirmation process was contentious and emotional. that process is over. my focus is to be the best justice i can be. i take this office with gratitude and no bitterness. i will seek to be a force for stability and unity. my goal is to be great, for all americans and for all of america. i will work hard to achieve that. not appointed to serve one party or one interest but to , america'sation constitutional laws protect every person of every belief in background. every litigant can be assured that i will listen to their arguments with respect and an open mind.

every american can be assured i will be an independent, impartial justice, devoted to equal justice under law. although the senate confirmation process tested me, as it has tested others, it did not change me. my approach to judging remains the same. a good judge must be an umpire, neutral and impartial, who favors no litigant or policy. must be independent and interpret the law, not make the law. a judge must interpret statutes as written and a judge must interpret the constitution as written, informed by history and tradition and precedent. in the wake of the senate confirmation process, my approach to life remains the same.

i will continue to heed the message of matthew 25. i will continue to volunteer to serve the least fortunate. i will continue to coach, teach, and tutor. i will continue to strive to be a good friend, colleague, husband, and dad. as in the past, our nation today faces challenges and divisions. i am an optimist. i live on the sunrise side of the mountain. i see the day that is coming, not the day that has gone. i am optimistic about the future of america and the future of our independent judiciary, the crown jewel of our constitutional republic. as a justice on the supreme court, i will always strive to preserve the constitution of the united states and the american rule of law. thank you. [applause] you have been listening

to brett kavanaugh. he was giving a speech after a ceremonial event swearing him in as a supreme court justice at the white house. he was already administered the official oath after being confirmed by the senate saturday. this is a ceremonial event. it was a good chance for him to say what he thought about the process. he thought the process was contentious but he will try to be the best justice he can be. theakes no bitterness to court and his approach has not changed. he must be neutral. to some of the criticism that has been out there. some people were worried he could not be impartial after this bitter process. his and hised about mother's work in advancing women in the legal profession.

justice brett kavanaugh responding in his speech to concerns thrown out there. out, he isou point at pains to get past some of the concerns. he did at one point, accused the democrats of forging this conspiracy on behalf of the clintons and that led to people suggesting he is not impartial and will vote down party lines. in his ceremonial swearing in speech, seeking to move beyond that. trumpomes after president apologized to brett kavanaugh for everything they have had to endure in this divisive nomination process. there you go. brett kavanaugh sworn in ceremonially.

othere head back to our top story, tensions between the u.s. and china continuing. secretary mike pompeo had a testy exchange in beijing. there are fundamental disagreements between the agreements. the u.s. of escalating trade disputes, meddling in china's internal affairs. joining us now is ben jarman. away this point of having fundamental disagreements. it does not tell us there is much of a circuit breaker. ben: no, there is not. of revisions in terms of tariffs does seem inevitable. u.s. will end up terror thing all chinese imports. we push that through our forecasts and it does mean we

will be needing to see more of a policy response in china to offset the drags we expect to come through channels. .eidi: we did see the policy that did not manage to support sentiment in the markets. do you expect to see more aggressive intervention on the fx side? we do expect to see people here. that they come earlier. it was more forceful than we thought. we expect on top of that, points nextasis year. locale already seeing government body issuance ramp-up. a devaluation in the yuan another 8%. china's rest property

sector was a bright spot when we had this instability. we are seeing protests erupt because property prices seem to have fallen too much. emanaterld the risks from -- where will the risks emanate from? going through this year, real estate has a price on the upside in terms of real estate related investment. that has been an upside. we do not expect much more because the regulatory arena, in termse tightening of building application controls. we think that area has scope to slow. the manufacturing sector is going to be under more pressure to reduce capacity. that is an area of downside risk.

we are the offset in the fiscal arena. around 3% or 4% growth currently in annual terms, that can turn up to about 7% or 8%. shery: looking at the rest of the economy, this chart showing the pmi levels for china underperforming. the u.s. seems to be outperforming. a look at the manufacturing arena, where have you seen the pockets of weakness around the world and how surprised are you about this softness? ben: i think the biggest source of surprise has been the euro area. we entered the year pretty bullish on growth. had been signaling that end is still signaling that. months, the number

dropped off a lot. think that is due to temporary disruptions in the auto sector, as automakers struggled to comply with new emission standards. temporary but be that is going to take a few months to work through. in terms of how the global industrial production numbers are paring at the moment. heidi: thank you for your time. ben jarman, senior economist coming to us here in sydney. let us get you the first word news. thatijing has confirmed meng hongwei is under investigation for bribery and other investigations. the in months and comes more than a week after he was detained -- the announcement comes more than a week after he was detained. the corruption campaign has swept up more than 1.5 million officials.

microsoft is reported to be investing $200 million in singapore-based grab. in a deal, they will collaborate on a range of technologies, including big data, artificial intelligence, and connected car platforms. rab is working with a major shareholder. alphabet said it found a software glitch in google back in march the could of exposed data of 500,000 users. it withheld the information out of concern it might trigger a backlash from regulators already critical of facebook. earlierlosed down after dropping to their lowest intraday price since july. has broughtson welcome relief for the world's second-largest gold market. imports into india have more

than doubled for a second straight month in september. shipments were 94 metric tons. august to 92ed in tons. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is "bloomberg." let us check in on how the australian markets are faring so far. sophie is in kuala lumpur. sophie: i.t. shares are leading the decline in sydney. the asx 200 is headed for a second day of losses. this, as the share sale cartel case has adjourned. looking at the aussie dollar,

holding steady. short your positioning has hit multiyear highs. elsewhere, checking in on kiwi stocks, falling for a seventh japanese markets will be playing catch-up as futures point lower. offshore yuan sticking about 600 92, not too far off the 2018 low, more weakness seen ahead. the focus will be on chinese stocks today, the worst drop in more than two years. 4.3% ased more than foreign financers joined local investors to dump shares. shery: thank you. taking a deeper dive into the u.s. markets, we stop stocks -- we saw stocks battle back and tech take a hit.

we have more on these. headwinds ont more the bottom market. anxioussets up for an tuesday. stocks close off the lows of the session which sets us up for a stronger session tuesday. bonds unchanged. because of the holiday, the a big weaknessnd there, closing off the low, this stockst of the momentum lower. notice the vix spiking to a four-month high. gtb is where you can find our library of stocks. spike -- theuper vix, a super spike. we have seen this pattern, complacency followed by volatility spikes. in 2010.nother wedge

here's another one that happen before the volatility in 2015. here it is, setting up for another super spike. matterists say it is a of not if but when an timing is difficult to determine. are strategists that point out what we typically see with a spike in the mix is that it is quite in the summer and seasonality could be at play. let us go into the stocks on the move in the latest session. an example of the size of declines we saw. commentary about weakness in the resorts. we had a lot of tech under pressure. a lot of the mobile pay stocks down. , investors look for

safety in defense of stocks. that is an interesting play. , this is a the faang one-week chart of the losses. look how large they are, particularly with netflix. what you're seeing is a lot of the hedge funds taking hits in the stocks, these momentum stocks that are favored, and many of them unwinding. that could be adding to the tech selloff. taking a quick look at energy futures, oil taking a tumble. it is interesting natural gas spikes. look at a board of the energy futures, west texas intermediate and bring crude were down. -- and brent crude were down. natural gas is trending up after hours. in a regular session, it was up more than 4%.

a couple of factors, natural gas is up 18% year to date. forecasts for chilly temperatures in the midwest. you had a run-up at a time when inventory was low. field was eclipsing the west texas intermediate trade. thiss take a look at how -- this is west texas intermediate used in the u.s., a big drop in the recent session has to do it with the fact that shortage, those peers have been reduced. thank you. a wrap up of wall street action overnight. there is plenty to come. this is "bloomberg." ♪

heidi: this is daybreak asia.

shery: i'm shery anh. imf will release its world economic outlook this week which protects a track global economies will take. sheaves are heading to bali for the world bank meeting and to discuss the state of the world economy. david, great to have you. let me get started with this chart on the bloomberg library. you can see how much liquidity central banks have come into -- up pumped into the world markets. situation from when the global financial crisis struck. changing to quantitative tightening, is there a risk there will not be enough firepower as there was in 2008 if something goes wrong in the economy? david: that risk is there.

we think quantitative tightening will keep us cautious on risk assets. we have been are going we should be rallying and selling risk assets. in the united states, equity and credit are expensive. whenever the next downturn comes, central banks are not going to have firepower. the fed is trying to build some. ecb has had little firepower. markets, they could cut rates. that depends on how their currencies are faring. this will also decide the path of the u.s. dollar. how big of a risk is the strength of the u.s. dollar per emerging markets? david: we think it is a big

risk. our baseline is benign. we expect the euro-dollar to trade at 120 at the end of this year. think there will be resynchronization next year. the dollarrong and keeps going up, that is a major risk for emerging markets. emerging markets are showing the strain of the strong dollar with capital outflows, we are seeing banks that have to tighten policy and that leads to more capital outflows. emerging markets have a lot of exposure to the dollar imbalance side. we hoped the dollar does not value further. i want to get your thoughts with this chart. blackrock the latest

voice to say emerging markets are on sale. valuations.rgue they are so cheap. this rally we are hoping for is a hope and a prayer at this point. does the selloff in china make this less likely we will see a recovery? the valuations look at taxes. not a short-term trading mechanism. term stuff can get cheaper. compared to the u.s., or merging market equities and bonds are cheap. perspective, it looks good. thet-term, it depends on dollar. china has been selling off because of dollar strength and week data.

our call is for the dollar to year and q4 and next for china to stabilize and improve by the end of this year, early next year. that is the foundation of our emerging-market call. em has moreong, downside. em should bel tainted by the same brush. there are some emerging markets in asia that still look like they have solid fundamentals and good demographics. david: undoubtedly, the remainsm story for em in play in terms of demographics, especially asia. asia, beyondgh on the dollar, is that the euro

price is high. thatyou would require is the dollar weakens and that helps to balance the high oil price. front, we are not that supportive of our view because we think that the oil prices likely to go further up. brent to goll for above $100 by the first half of next year. rally, you need the domestic picture to improve. saw the spring imf meetings in washington, d.c. be the turning points for emerging markets. what do you think we will learn from the bali meetings?

with hindsight, the last imf meetings in april were a big sell signal. emerging markets were crowded. at this stage, the tourist investors are those that are not dedicated to emerging markets but have largely exited. dedicated emerging-market investors have the same amount of money invested at the beginning of the year. at the meetings, the key topic is going to be about what scope torging markets have overcome the tightening that is happening in the developed world. the number one topic will be how , givenn china stimulate

its constraints in terms of balance sheet and exchange rate, to revise wealth and that could compensate for the tightening coming from europe and the u.s. the other topic will be trade wars, where we think the next day to watch is the summit between the president of china and the u.s. at the end of november, where we hope there could be a beginning of conversation. another big topic will be the financing of the imf. it could become more pressing into 2019 if emerging markets continue to be under strain. the imf looks like it will not be able to cope with the crisis because it has been too much money on argentina. heidi: thank you so much for that.

just a bit of data crossing the bloomberg. the current account surplus 89 trillion yen. it is more or less in line with expectations. the previous number for july was just over ¥2 trillion. trade balance on a balance of payments basis is coming in at a deficit. we are continuing to see the impact of oil prices when it comes to that balance. on theld not be weighing markets as we get into the first day of trading for japanese markets. plenty more to come. this is "bloomberg." ♪

shery: this is daybreak asia.

i'm shery anh. look at hows take a things are shaping up on this tuesday session. a continues to be a holiday interrupted trading week. we have got korean markets off for a holiday today. australian, the downside, .7%, continuing on those declines. new zealand also seeing declines. , 1.2% lower.s whether weing at will be able to stem some of these losses we had at the start of the week. shery: we will continue discussing that on daybreak asia. thatll discuss the role investors played in the markets. goldman sachs's chief asia

investment strategist overweight on china. we will ask why. daybreak asia is next. this is "bloomberg." ♪

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i'm haidi in sydney. shery: welcome to "bloomberg daybreak: asia". -- welcome to "bloomberg daybreak: asia." ♪ haidi: asia-pacific markets are set for the kleins after a mixed day on wall street. the dollar edged higher but the yuan continues its land. tech maybe under pressure. -- facebookalso close to the lowest. kavanaugh has been

proven innocent, president trump says. we have korea out on holiday. japan coming back from a holiday. let's think -- let's see how things will ship up. your sophie kamaruddin. reporter: japanese investors playing catch-up. the nikkei falling nearly 1% at the start of the session overall. it looks like weakness is ahead for asian stocks which are set for a seventh day of decline. u.s. futures also nudging lower. excellence that helping sentiment -- overnight tech slumps that helping sentiment. stocks wellington, kiwi are the worst losing streak -- in the worst losing streak since august 2018. you do have the yet headed for a fourth day of gains rising to the strong is level against the dollar in nearly two weeks as tensions flare up between the u.s. and china. the offshore yuan setting above six. 92.

-- 6.92. aussie bonds are nudging higher ahead of business confidence and data for september. oil trading near a one-week low as. -- that is how we are looking heading up for the asian session. word: let's get you first news that with jessica summers in new york. strained u.s.ady china relationships have taken a turn for the worse. bundlemike pompeo cited -- fundamental disagreements. he was there to break china on his short trip to north korea but long accused washington of escalating the trade war interfering and taiwan, and meddling in china's and turning affairs -- internal affairs. the trump and ministration said to be concerned about the depreciating -- you on.

fallen in the last xmas raising regulation that china has deliberately weakened it as straight tensions escalated. we are told treasury secretary steve mnuchin is under pressure to confront beijing. the government of pakistan is to approach the imf for a bailout package to destabilize the economy. the finance chief talk to challenge ist this to ensure structural reforms can break a spiral of meeting and imf program every few years. north korea is being accused of trying to steal some billion dollars by hacking banks around the world over the last four years. called 8238 has infiltrated about 16 organizations in 11 countries including the u.s.. it has already stolen more than a hundred million dollars.

they are the hackers that managed to evade servers at their target. 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 jessica summers. this is bloomberg. ♪ haidi: think is a much. after one of the most confirmation battles in u.s. history, president trump how the ceremonial for supreme court justice brett kavanaugh. the president apologize to kavanaugh or what had to endure and says that he has been proven innocent. >> user, under historic scrutiny, were proven innocent. thank you. he is a man of decency, kindness, courage, who has devoted his life to serving his fellow citizens. now, from the bench of our nation's highest court, your father will defend the eternal rights and freedoms of all americans.

seniorspringer international editor jodi schneider. once again, come to brett kavanaugh's defense and essentially say he was proven and is -- innocent through this process. reporter: it was very unusual. this is a process in which we had the supreme court nominee, judge kavanaugh, defending himself before the senate judiciary committee just after a woman who was alleging that he had assaulted her three decades ago, just after she testified. confirmation close 51-49. the whole thing was unusual. the president is now trying to understand -- underscore what he sees as mr. cavanaugh's innocence in this without apology. hoping that this may may help

going forward in terms of republicans and the base. watchingcking this and this as the midterms occur in just less than a much -- than a month. we have heard from mitch mcconnell say that because of all this process gop voters were on fire. do we have any idea at this point how this may play out in the midterm election? reporter: it is very interesting. in the house, the democrats need just 23 seats to take the majority of the republicans. they appear on track to do that. all polls are indicating that they will get that many seeds or perhaps more. -- many seats or perhaps more. women and independent voters many of home may have been unhappy with the outcome of the judge kavanaugh confirmation

will likely turn out. they're expecting higher turnouts particularly when it independent dutch women and independent voters. it is very hard map for the democrats. they are spending 23 seats. tenant states that president trump one in 2016. there is indication -- there are indications that this confirmation process may have emboldened republican voters particularly with president trump out there trying to rally them in these campaign like rallies. key states like tennessee and texas, where the gap is narrowing, looks like there -- they may be turning the tide and republicans may be doing better there. the senate may be helped by the kavanaugh confirmation process and the house less so. shery: we heard from the white house today that president trump met with deputy attorney general rod rosenstein.

do we know at this point what is going to happen to him after those reports that he wanted to secretly record the president? the new york times said that rosenstein wanted to secretly record president trump and also that to put a process a constitutional process whereby the president could be removed by the cabinet. denied thosen has reports. it looks a president trump a standing by his man. after they met on air force one, they had a great meeting. he has no plans to fire him. he likes mr. rosenstein and supports him. for the moment, his job looks like it is secure even after his and the-- these reports speculation that he would potentially be fire. shery: think you so much -- thank you so much. coming up, we have goldman sachs

talk about fourth quarter market strategy amid volatility to fix cracking of four-month high. hate takeore that we -- we take a long time before we see a turn for chinese stocks. g joins usne -- fan next. this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." i'm shery ahn in new york. haidi: i am haidi in sydney. there have accused washington of escalating trade and interfering in taiwan and meddling in china's internal affairs. we are watching developments in beijing. -- wereceiving a pretty are receiving a pretty frosty reception. pompeo denied a meeting

apparently with president xi seen as snub why some. this is part of course because of pompeo's trying to shore up support for denuclearization plans were north korea. he had been in pyongyang meeting with kim jong-un. he did breathe in south korea. -- debrief and south korea. the cooperation between the u.s. and china on this issue potentially the risks of that being undermined highlighted by this meeting, if you say more risk to the mill for those who see a potential edging toward some kind of cold war scenario. if this trade were between the u.s. and china goes unchecked with tensions really bubbling to the service at this meeting between the foreign minister and pompeo. as you say, he addressed opportunity to hit back and pushback against when he sees as these overtures by washington's taiwan or the south china sea

issues. as illustrated of course -- as well as trade of course. relationship and pompeo saying that they would deep the disagreement between both sides. yes, tensions certainly are the diplomatic mask. area whichat is an is potentially at risk of these relations continue to fail. shery: the chinese markets can back from holiday to become the world's worst performer. >> the were start to the month of october for about a decade -- the worst start to the month of october for about a decade. we've got it terminal chart -- a terminal chart. you saw thena, large gaps closing down about 5%. you saw of course that the

foreign investors who had been holding up much of the equities or to some degree have been china sold off about $1.4 billion worth of chinese shares through that hong kong exchange yesterday. your concerns of course about the yuan that dropped onshore by about 0.70%. views herecreasing from analysts and strategists potentially looking at whether china is going to remove or stop drawing the line in the sand. points asic data well, it is likely to embolden the trump administration given the present -- that president trump does look at the equity markets is an indication of what he sees as strength on the u.s. side. shery: think is a much for the. joining us now is thomas payne fang, head of china

equities. you some investors of a more than a billion dollars of a-shares. this is precipitated following the chinese markets. what will it take to bring them back? has been actually quite strong. 50% -- 15% up the msci inclusion. of august -- period of august and we so hold that view. i think the market share reflects what is the movement around the world. we actually think it is pretty well expected. it is a big move. shery: we saw the csi 300 say the worst they following since 2008. the chart showing the impact of that fall right there. in your notes, you have a very optimistic view of what will

happen to the index by your end. >> we're looking at 3800. we're so holding that you. -- that view. september was a positive performing month. inwas sort of a rough week october. the prius percent best-of-three was percent is catching up --the three plus percent is catching up. >> there is a buyer and then there is a seller. i think your college just mentioned that one plus billion, it was a large fall or about flow but it was the second this year. there was a bigger one of february. -- in february. just reaction to harder market performing hong kong. we do expect global investor will continue to look at it.

the marketing to appear in the states, we will see investors are looking at increasing allocating to china equity markets. get -- you see that immediately follow through to sentiment. what are we to investors not in china were usually pretty supportive? why aren't they responding as we have expected them to do in the past? the reserve rates cut does i have a direct impact to the equities market. we have seen especially since february and march local retail sentiment has been pretty poor. it is a combination of sentiment and confidence. i would singapore local sentiment especially foreign retail, you fail this three-day. the sentiment can quickly turn. overall, global institutional

investors are really seeing a buying opportunity to so-called china valuation, has come to terms of global valuation. global investors are looking at marketsna equity whereas local sentiment and the confidence has been poor sense the early part of this year -- since the early part of this year. when you say losses on accounts of the csi 300, would you suspect that the national team will step in at some point? >> that was the debate right before the golden week is over but if you traders would sit together. we analyzed whether there would be so-called visible hands or invisible hands if you will on the national team. apparently the not happen. the way i interpret it i think the government or chinese national team probably wanted

the market to take a section rather than be more heavy-handed. which can be interpreted positively as well. shery: the global clear symptom prefer big companies. is that your ascension that large cap should be the way to go if you're getting into the chinese market? >> that has been the case. 2018 2016 -- 2015 cap,equity market, the big ever since 2016, that factor has turned. it is a little bit of relatively bearish indicators of what the market -- of the market. haidi: 11 the selloff in tech and him and china side, they're all these trade tensions affecting -- affecting sentiment as well. it is very challenging to

argue what would be the short-term by an. -- buy in. -- we can look at the macroeconomic environment and sector where the gross continues to favor china equities and consumer sectors. some of the leading men within the tech sector. i think for your centrist rates and u.s. china trade tensions, the sentiment and the confidence can continue to deteriorate before they get better. haidi: always appreciate you coming on. you can get around the the stories you need to know to get your day going in today's edition of daybreak. we're talking about the downturn in tuesday's edition.

you can customize the settings in the at where you get any is on the industries in the assets that you care about. this is bloomberg. ♪

shery: this get you a quick check of the latest business flash headlines. in a five-year it you the two will collaborate the amazon web services among the existing plans of players and have worked with major shareholders. shery: a crucial deal to save the eight 380 is set to have told a disagreement about engines. a potential order from emirates or 36 plains worth $60 million

hit a snag as the airline negotiates with engine maker rolls-royce on price and fuel efficiency. the parties have already missed the deadline which may delay the first liveries and 2020 and could threaten the deal outright. over antitrust division's. citigroup deutsche bank and goldman sachs and jpmorgan may be nominated as global court nader's for the offering. bloomberg intelligence is a trust business in the value of more than $33 billion. .hey recently rebranded shery: the bigger stick miners in the u.s. monday session or tech stocks. fa felln and isg the lowest in six months while google is that is cheapest since the. we have ramy inocencio with

more. we saw the slope in march of the only -- but they only went public today. ramy: that is pertaining to google plus. the interesting thing is that a lot of people use it but with that said, you and i and a lot of people out there are watching probably have dormant accounts out there. google actually is up to -- revealed that it impacted advocate of the people that includes names, ages, occupations, you can see they came out with a on your screen here on a google blog post. they say they fix it immediately be a think what might little bit galling to some folks is that this internal committee actually wrote this back in january and they found about it in march 7 he did not need to disclose it because no proof existed that any of the data was misuse. that might be one level. another level is that they fought -- thought they do not

want to suffer any regulatory backlash. let's bring up one of the quotes there from the blog post. you can see for yourself. is that they can't from which users were impacted by the bug but you can see that 500,000 mark of accounts that were potentially affected. you can also see that they found no evidence that any developer was aware of this book --- this bug. it was not misused in any way or so they think. google plus is now set to go the way of the dodo about the next 10 month or so. it will take it off-line for customers. the business i will still be existing but the question remains whether federal authorities here in the u.s. are going to start to probe a little bit of investigation into this. haidi: good reminder about the dormant accounts. not just google, facebook, the company unveiling a new videoconferencing device called

portal. as with anything near, facebook product related there already new concerns about privacy. ramy: this is coming several months after camera jenna got and the data scandal there. -- cerage analytical ambridge analytica data scandal. saidonsumer tech reporter that this probably could have waited until 2019 for some of the more -- some of the smoke to clear out there. you are seeing a video chat conference i'll on your screen up to six people can use. you cannot call phones yet but facebook is actually using amazon's alexa because it's an us -- does not have its own system to do that. you can say hey, alexa or hey, portal for this. they are moving ahead on whether facebook's portal is going to take or not.

shery: coming up next, goldman sachs equity strategist tim oh moe joins us to discuss rising volatility. ♪

shery: or just an hour away from trading in hong kong and shanghai after really a horrible come back from that october national holiday there. we saw the 300 plunging the most. foreign investors also dumping out of mainland markets as well. could we see a rebound the rest of asia has not given positive cues at this point. you're watching "bloomberg daybreak: asia." let's get the first will do is what jessica summers. -- world news with jessica summers. if something is wrong

it is his job to say so. in 2016, he public -- published a critique for macroeconomics arguing that economic -- oil sales were at a one-week low in new york. it is the disruption caused by sanctions on iran, it may not be as bad as feared. ron takes a different view. is warning that will markets face a severe shortage in the coming month and rising prices to supply are already tight. that, there is a software glitch and google plus back in march that could have exposed the data of about half a million users. the wall street journal says it backlash froma regulators already critical of facebook's privacy failures. they quote 1% down about --

after dropping to their lowest prices july 5. beijing is confirming that former interval president has -- the interval president is under arrest for violations. he was sitting on arrival in china from friends. has rackedhe -- xi's up over one half million officials over the last six years. 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. haidi: our top markets story certainly going into that china open. kenny stocks that suffered the worst start to the month of october in over a decade. in tim moe.bring

he joins us now from hong kong this morning. a big picture first, what are we seeing here about treasuries continuing with volatility jumping to the four-month high in the u.s. and emerging markets not really staging that recovery. investors cannot get out of chinese stocks early enough. what is the behavior playing out? >> i think you put it will in terms of the forces that have an conspiring to drive markets down. is worth thing which mentioning is the sharp rise in u.s. treasury yields. the research we have done shows that one of the strongest relationships between interest rate and equities and the speed of the increase. -- is the speed of the increase. we have seen about a 20 basis points increase in the past couple of weeks. that is generally at a pace which would elicit negative response in asian markets.

up the u.s.to back bond market. haidi: i want to get your views on china because this is a market typically the messick investor was. it marches to the -- basically investor wise. a 50 index, we had the largest companies, they are the ones that are usually pretty resilient. these are the ones that usually benefit from the state team coming in and they have not so far. selling off the most since 2016. we had the biggest second selloff this year foreign investors. is it because that triple art was not enough of a signaling -- of a signal if you will? and easing signal? usually see a positive response. >> i think there are a couple of things going on. after a member leslie when the on shore a share market was closed -- last week when the offshore sharemarket was closed.

to a certain extent, there was a bit of a catch them of the asian market after the holiday. the other aspect which bears mentioning is the continuing escalation in trade tensions with the united states. you may recall that vice president mike pence made a speech at the institute on thursday which was taken negatively by the market largely because it seems to be running the trade dispute -- broadening the tape -- trade dispute. i think the perception of domestic investors has been full-time this year than more haveive on trade than we encountered with offshore investors because on short investors have been viewing the china-u.s. trade for action as -- friction as part of a larger gauge between those two countries. i think that vice president pence's speech revert to that and that serves to further

reduce the market sentiment. shery: yet we are seeing the msci china only has about 1% of revenue source from the u.s. can we at least get some solids that the direct impact will not be as big? >> that is true. you are quoting the statistics we have been citing what frequently this year. if you look at the msci china stocks about 1.3% of the revenues come directly from the u.s. in terms of assessing the fundamental impact of the trade friction, it is very difficult to get to a significant impact on earnings purely from a so-called direct effect or first-order effect. that leads to discussion thinking about book of the broader effects be. which will be how much my china's order economy be affected by the u.s. trade -- u.s. china trade friction and what would the indirect effects be either through broader cut slowing or through more specific

aspects like consumption or investment coming of depression. what it be sufficient to question the broader impact of trade even with the escalation to the sort of phase two or phase three tickets a sounder discussion. -- our sense here is we have been looking for reduction in china's overall gdp growth. . that is something which we think was already likely to happen and we have not changed the numbers any further beyond that as a consequence of the trade dispute itself. putting all this together, with regard to the numbers for china earnings, there likely to be about 17% this year or probably come down to about the percent next year. that is still a pretty good rate of growth. 17% to 12%. with the evaluations are making and a lot of discounting for the current trade friction. it is quite topical.

shery: which is why you are over weighing china. tell us about the biggest beneficiaries when it comes to policy easing from china. >> the most direct on we think is going to be stocks that will be directly related to infrastructure investment. that is one of china's go to fiscal policy measures. there is already pretty good evidence that china is easing fiscal policy. one of the lead indicators is amount of mutual bond that are being issued by local provinces. that figure was up in august four times the level in july. if you look at the four-year iseseries, the august number by far the largest. that is in our view a lead indicator that provinces raising the point ofr to interest of your area is very much being encouraged. the numbers will improve in the coming months and stocks that

typically in past cycles have been beneficiaries will start in areas like transportation, will start to do well. that is one of the topical suggestions as well as within the market, one might want to focus. haidi: we're going old-school there. going back to the old economy playbook. two maybe even looking at the liquidity index again. >> will certain degree i guess that is true. there is always been some pressure on the so-called new china stocks which obviously are a long-term strategic standpoint we were a much like. -- very much like. there is a certain amount of regulatory crackdown on a number of industries on the new economy era . they missed numbers because of concerns of the gaming sector. we have seen online education having some issues. health care having some crackdown because of concerns over vaccine formulation.

some of the new china areas have had some clouds hanging over them because of regulatory crackdown. in the longer term, on the broader sense, we think that those will moderate on a central basis but i think in the very near term some of those as you put it, old-school areas, are likely to do better. haidi: it is pretty hard to defend we the in the sand is going to be for china tech when you overlay the geopolitical and tech wars kind of aspect of the narrative as well. >> i think that is right. obviously the article that bloomberg had last week in terms of hardware hacks did not play well for obvious reasons. i think that is an additional deterrent to sentiment even if someone -- some of the china tech companies, the more the software consumer facing once really are not directly -- ones are not directly involved in any of the.

-- of that. sentiment is actually quite negative here. overall in the longer-term, the underlying strength of the opportunity for many of these tech companies will restart itself. will. stay with us if you will that she will explain how goldman sachs will see the fourth quarter in asian markets. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: goldman sachs says the asian market will recover in the fourth quarter as global growth stabilizes and the effects of china's policy easing begins to unfold. let's go back to tim moe in hong kong. usually we see the best returns in the fourth quarter. we could see some tactical

outside but -- upside but how bumpy can the red be in the fourth quarter? i think you hit the nail square in the head. of october was quite rough for markets. the index was down about 5% last week which is totally candid. not the magnitude or the direction we were anticipated -- anticipating. from here it is a good bet that market still managed to recover their footing. and trade further up as we go into the fourth quarter. -- ourhat there will be thesis is there will be a destabilization. the global cycle peaked in december of last year. every month so far this year it has been generally moderating and we have the so-called leading global activity indicator which every month has been tracking lower than where the actual level of growth is.

the left mother to the leading indicator has actually popped up above the measure of current growth and that is suggesting to us that in the next couple of we may see some civilization in global growth more bluntly -- more broadly. it will start to fever areas outside the united states and this will also bring in the idea of the china easing policy. china might begin to stabilize. if that happens, that should also have an impact on the dollar. the good part of the reason why the dollar has been strong this year is not just the u.s. is tightening policy, but the u.s. growth has been much better generally than world outside the united states has been. we have become a nation of the stabilization and global growth and the shift in the symmetry of growth. that may also flow back into having at least the dollar range trade as opposed to rise. those are conditions that will be helpful to a revamped an emerging markets more broadly or more specifically in the asian domain. you 10us as you set that

to see -- that seasonality you tend to see in the fourth have had fourth quarter gains 73% of the time for median returns of about 4%. history as on our site. global momentum is on our site. we will see further easing from china about slowing growth there. markets are pretty oversold right now. we can see a list going into the latter months of the fourth quarter. shery: how much will expectations hike in play into sentiment and what is going to happen in the fourth quarter? not to mention that we are going from easing to quantitative tightening in major developed market. >> those are all great questions. we think the market discounting pretty significantly the hike in the fourth quarter, it is probably not too much of a surprise. what is going to be more

challenging is our more hawkish view of the policy and 2019 -- and 2019. -- in 2019. the market is counting one or two hikes. -- or to discountings. as you have said, we are likely to see evidence for the first time since the global financial crisis ended that the combined balance sheet of the d -- of the central bank and the bank of japan, those balance sheets are likely to turn slightly negative. the tide is gradually turning from qe to qt. quantitative tightening. that will be another headwind for markets as we going to 2019. the positive view is equity returns from here are likely to be march -- much more subdued. in the fourth quarter, we can see a tactical balance for the reasons i was mentioning.

what are your assumptions about the impact of tariffs? are they going to be either of the things to the us that we need to see the fed or the pboc reacting by a policy -- via policy? reactingoc is already dovishlysh link now -- now. they may continue to do so. the response to the concerns over the potential impact of the elevated trade tariffs the u.s. is imposing is likely to come through both the -- both fiscal policy as both -- as well as monetary policy. we just have some news this morning as you may have seen the easing of restrictions on redevelopment. that might fall under that latter category. in terms of what the fed is doing, we think that the hurdle for the fed deviating from its current policy hiking one

supporter by 25 basis points, the hurdle for them stopping that is fairly high. enumeratedies have -- economies have enumerated quite frequently that it revolves around the idea that the u.s. is growing above trend. trend is like 1.75, maybe generously 2%. where clearly well above where trend is. unemployment rate in the u.s. just hit record lows. that is suggesting labor markets are quite tight. there in the -- in line with the fed's 2% mandate. they may not be tightening enough given the interest rate is still below neutral rate. they have to slow down to have the fed start using or deviating from the tightening policy. haidi: black hawk is just the

latest in the voices saying look at these valuations. no doubt about it, if you're a longer term or value investor, you have to think about rotating back into em. broadly speaking, it feels like that amount of risk appetite required to call a bottom for the selloff is still pretty steep. this is our chart looking at the em stocks being on sale after losses. seeing this restoration of values certainly. if you look at asia, can you pick out from -- for us some of the emerging markets and this part of the world that might be bombastic when it comes to trade? the dollar is always a key come on it of how much markets go. some have the idiosyncratic problems that would cause fundamental issues. >> it is a great question. let me just answer the and a couple of parts. this book the views on the table. both thehink that performance spreads and the valuations spread between the u.s. and emerging markets is quite stretched.

you look at the rolling chart of six-month relative performance between the u.s. and em and between asia, that is -- that rubber band is really stretched quite widely. we think of bounceback and relative performance is due. that would be the first point to make. second, obviously the reason why things are around the stretches because many of the challenges we have been speaking about in the previous segment in particular, are heightened concerns over the trick on likely to the u.s. and china. that is to my third point that unfortunately the parts of asia which look most interesting from a valuation standpoint are the ones that are in the crosshairs of these concerns. a.k.a. china. they are trading in round numbers both the offshore stocks as well as the on shore stocks, were trading at about 10 times for earnings. our measures of risk appetite are sold down quite significantly and with -- and we

are worried about earnings. that suggests that we have a pretty interesting risk award environment for china. it is hard to convince people to go back into that market right now given all the uncertainty of a trade. that is one of the reasons why we changed the view on singapore to overweight. singapore is relatively less exposed to the concerns over trade. weeklyket has performed and it is one of the cheaper ones in asia. additionally, if you look at the key industries there are a number of industries like property, offshore industrials, that are beneficiaries of the rising interest rate environment and also the increased in oil prices. on a relative basis, the prospects for singapore look more encouraging and it is less exposed to concerns about the dollar and trade. that would be sort of the -- where our user.

-- our views are. we have been overweight for about five years. down to market weight in india. india is one of the least affected by trade but the market has outperformed very significantly with trading and very elevated valuations and for other reasons that are specific to india like slowing in the short-term aggregate as all of -- as the political cycle there. we took our view down. haidi: think is so much for your time, tim, goldman sachs' chief asia-pacific equity strategist joining us from hong kong. gtv go is your function. you can browse through the sharks -- charts and save them for future reference as well. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: the get a quick check of the latest business flash headlines. global has decided not to compete for the pentagon's cloud computing contract. saying it may conflict with corporate values. the project involves moving huge amounts of defensive data to a commercially operated subsystem. the contract is valued at about $10 billion. as are due on friday. google declined to renew a pentagon deal.

stocks falls for a six straight says -- six straight session. investors continue to pummel the company after an fcc investigation as subsequent elon musk's sleet storm -- tweets star. shares turned around and they performed an -- posted an outperformed rating. they have lost end of the and dollars -- they have lost $10 billion in a week. artist future is halting its production in california while the hong kong arbitrations under rolls on to filings. -- a berliner alleges that after the initial a hundred million dollar investment it failed to inject that $800 million investment it failed to haidi: before we had over to bloomberg "bloomberg markets: asia." that signaled but look at how markets are

trading across the asia-pacific. the nikkei 225 coming back from low.hree wake -- week australians share also fell to the tune of 1% there. setting up for the opening in china, looking for any positive direction for any sort of recovery. shery: after we saw chinese stocks the worst october start in a decade. taiwan also is down. down nines future is cents of 1% after losing ground for three sessions. the china open is next. this is bloomberg. ♪

haidi: welcome to bloomberg markets china open. rishaad: the markets are down at its return from the long weekend. if you're long, you're wrong. asia-pacific stocks tumbling a seventh straight session. >> the focus will be and shanghai with mainline equities among the worst performers globally this year. facing more pressure. yvonne: tension as mike pompeo flew to beijing. the u.s. is accused of meddling in china's affairs.