welcome to daybreak australia. we are counting down to asia's major market open. these are the top stories. u.s. stocks plunging the most since february as renewed concerns about the trade war. the s&p 500 tumbling to a three-month low while the nasdaq saw its worst day in seven years.

from a storm in the markets, the most powerful hurricane in 25 years. >> let's get a quick reminder of how stocks here in the u.s. closed. it was all in the red. they fell the most since february. as the equity sales deepened, we saw the 10 year yield dipped below 3.2%. the members of the dow falling falling more dow than 3%. the s&p 500 also falling as much. thead a lot of pressure on luxury makers such as tiffany. that was one of the big losers. the customs restrictions are being enforced more at the chinese border. trade tensions remain quite high. all of that is impacting the market. tech also saw a big selloff.

the nasdaq following the most since june of 2016. let's see how this will play out in asia. i have my red pen at the ready because we are looking at a red day here in asia. we have most asia dollar contracts -- pressure for e.m. currency. nikkei futures are pointing sharply lower mirroring the drop we saw from u.s. benchmarks. more pain is expected from sydney shares that as sherry pointed out, we are seeing a move down when it comes to bond yields. the treasury 10-year note retreating.

>> let's get more details on the biggest plunging u.s. stocks in months. the s&p closed down. the nasdaq suffering its biggest loss since 2016. we knew that 2018 was going to be more volatile. be thected that it would bond market selloff to spark overbut it is the concerns trade. >> many would say is a combination of things. we had a number of companies all citing the tariffs. no group was spared in this selloff. the buyers typically come in at the end of the day were not there today. check out these numbers. we have the bond yield coming in just a bit but still above 3%. the nasdaq is the teller.

that is the worst drop in seven years. the biggest drop since 2011. let's take a look at the stocks. this was one of the hardest hit areas. you can to the size of the drop in that individual semiconductor stocks. the size of the drop is telling here. suddenly investors are risk averse. the stocks they love have become the stocks they hate. the faang stocks, the bleeding has accelerated. bezos lost 9 billion in this single day. all hard day for him and a lot of the investors of these

stocks. just one backs it -- basket of this group fell as much as 4%. that is the biggest loss for the group since july. let's look at tariff concerns. these are companies that are directly citing their losses to the tariffs. sellsnternational company construction materials. 10% of their products are made in asia. they say the duties on china are hurting their customers. look at tiffany. also, lvmh. they confirmed that china is a starting to crack down on customs restrictions. that they say is hurting their bottom line. let's look at some of the other big movers. sears edging toward bankruptcy. twitter, part of the tech selloff. , falling outmpany

on earnings. the only green on the screen was a cannabis related stock. resilient to a lot these days. we saw bonds and equities fall together through most of the session. saw bondsernoon, we get a pot given -- pop -- >> let's go right into bloomberg. gtv is where you can find this. the one we have for you now is called the treasury route. it shows how it is weighing on equities. it shows the correlation has been positive. they say that is not good normally. most of them move in opposite directions providing a hedge. that is not now being seen. that is concerning investors. there is no place to hide here.

when you talk to analysts and they said this was not a panic. they did not have investors panicking so much as looking to deleverage and reduce gross exposure. some longs, buying ink and removing some shorts certain areas. you saw a lot of adjustments. if we go into one more bloomberg , the spike in the vix, we talked early -- the other day about the super spike. the timing is the issue but these charts are telling us the volatility is likely to continue. >> thank you so much. let's bring in wells fargo investment president. thank you for coming in today. what a day for the market. sue was telling us about the

bond and equity inverse correlation area did when we see such an environment, what does it mean for earnings? >> earnings are really important because that was part of the concern that sparked the selloff today. it was a concern about how much trade and tariffs would dent our earnings. how much stronger u.s. dollar was going to impact forward-looking guidance. a lot of what you saw today related to the bond market we were just talking about was the risk parity trade was long bonds. they spent most of the day squaring those positions. that created a cell action in bonds. week,forget later this starting as early as today, there is big issuance coming out of the market. those positions flipped in the last hour of trading and came back and started to give long

bonds a safe haven. that is an explanation for why rates went up and bond prices correlated so heavily with equities today. $230 billion of treasury auctions this week alone. they seem pretty solid in terms of demand. >> the bid to cover ratio was strong because of the backup and rates, you are getting a lot of foreign demand because of that rate of torrential between us and the other countries. those rates are becoming attractive again. what you saw for the first time is the disruption and credit spreads. if you think about people not wanting to be long duration -- that is tech stocks. both of those were the hardest hit today. they are long-duration assets and those get hit hardest during a stressful environment. talking about it for so long, is today an indication that some investors

will be reminded that maybe it is time to beer away from buying everything? >> we are starting to see some of that. i don't know if we were are quite there yet. i would say through the you will of this year, probably see some people coming back to the same trades. back to the faang stocks and tech stocks. value shopping in financials and industrials. i'm not sure they are ready to make the wholesale growth to value trade yet. there are encouraging signs today. the fact that the yield curve steepened is a bullish trend not a bearish trend. seasonally into a good. of time for equity returns, both of those probably have some element of maybe creating a mentality of this latest selloff today. the issue oft trade and how that will weigh into future earnings, this is a long-term thought that washington and beijing seem to

be setting up for. how difficult is it for investors or for companies to be able to price that? >> trade has been known and with us for some time. there are two schools of thought out there. a lot of people think that a trade deal may have or at least the rhetoric will soften post-midterm elections. a lot of this is trying to be tough on china. think that we will not see a full on trade war. it will create some trade conflict and made dent some of the direct numbers like gdp, but we do not see it escalating into a full on issue. economy withargest us, the second-largest with

china, we cannot afford to break china. >> what does it say for emerging markets going forward? this chart showing the outperformance of u.s. equity markets against the line and white which is msci emerging markets. now you see the s&p 500 and a huge drop. is this the beginning of the end for u.s. exceptionalism? 2018 has been a story completely about u.s. and u.s. equity markets. it is the only place you have seen positive rates of return. two globalonly been equity markets that have been positive and u.s. dollar terms heading into today's selloff. now you are seeing brazil down downrussia down 54%, india

, china down, there is some good value there unless you believe the dollar will continue to strengthen forever which we don't believe. will flattendollar out and commodity prices can rebound. china is going all in on the stimulus measures. they just cut rates over the weekend. they are easing the bank credit standards. down 25% which makes their e-sports cheaper. -- exports cheaper. the u.s. is simultaneously tightening policy. >> how much of the fed tightening and the expectation of it happening had been already priced into the market? >> that is an excellent point. we think a fair amount. of chairman powell's hawkish comments last week, on top of where the recent fed plots at, we the

think there is a greater likelihood that the fed may have to break -- back off of that stance. you have a maximum hawkish to the marketsn now. based on the belief structure of what the fed is going to do. if they can't meet that, that is bullish for emerging markets. >> thank you. ahead, linkedin cofounder joining us at the world knowledge forum. out how he is putting his business knowledge to use. emerging markets fight the fed. we hear from the deputy governor of the philippine bank. this is bloomberg. ♪

we are bracing for the start of trading in sydney. we are looking at a drop at the open of trading of about 2%. we are trying to get underway here in asia. u.s. stocks are plunging the most since february. the s&p had its biggest losing streak since the trump administration. been peppered by public holidays. we are getting a miserable picture out there. look at the nikkei down by three and a half percent.

we are seeing new zealand looking pretty dire as well. we have these commodities linked currencies and markets are faring not terribly well in this part of the world. >> just when the msci was able to finish flat after seven sessions of losses, you get a day like this in the u.s.. >> we will take flat at this point. for the philippine central bank, it is not the height themselves that matter as much as their fees and predictability. he made it clear that more rate hikes could be on the way. if the philippines has to

move, he made it pretty clear he ,s ready to pull the trigger inflation is surging in the peso is weak. all of these threaten to push inflation higher. people are saying maybe the cpi is peaking at this point but when i asked the deputy governor what about the peso, what is your bet on inflation is wrong, he jumped in and he was clear that he is ready to go. will pinch our ability to maintain stability prices, we will not hesitate to sustain our toilance and continue heighten monetary policy. primary mandate is pricing stability and we intend to do just that. thing that the deputy

governor made clear was his view of white inflation is peaking, there have been tax hikes on drinks,sugary cigarettes. once those tax hikes, it is in the cpi figures. as a factorop out pushing the cpi higher. there was no hesitation at all. he realizes that if the peso weakens too much and pushes inflation higher, they will have to move. governor takety issue with the fed continuing to raise rates? president trump said he thinks the fed has gone crazy and what they are doing is incorrect. stream of consciousness from

the president of the united states. he thinks it and he says it. don't think emerging-market central bankers are so critical of the fed moving. you have to do it you have to do. you have to take into account your impact in a globalized economy. governor, even of the peso is down 7%, he puts it more thehe context of as long as fed is doing what it has been doing, we can factor it in and deal with it. we can do what we have to do. >> from our perspective, the gradual approach to interest-rate tightening can provide us with additional space for addressing issues of andility and prices stability in the foreign exchange market. >> we touched on the subject of raising interest rates rapidly at a time like this. is he worried about the economy

pushing it into a downturn? gdp shouldthat the be shielded in part by the strong infrastructure spending in the philippines. that is an important push. i would say that the takeaway is cautious realistic but still somewhat optimistic that the philippines and the at the point where they don't have to hike rates anymore. we shall see. the imf world bank meetings continue. what is on the agenda? one person is speaking several times today. see what kind of questions she gets on that. the warnings from the report yesterday about investors being too complacent about stretched asset valuations, stocks being overvalued in the u.s., presumably she will get some

direct questions on that. it was not that they were forecasting this would happen right away. never were said and medians in the short-term look good. it's is what they are worried about down the road. it is a coincidence that the imf it's this front and center. raises a red flag. >> things can turn very quickly. thank you kathleen. we will be getting back to kathleen throughout the course of the day. she said it was a pretty rough day for u.s. investors. it is all looking pretty patchy in the asian market as well. over 3%was down plunging the most since february. tech sinking and industrials as well. boeing and caterpillar fell as well.

fell as well. this is bloomberg. ♪

watching daybreak australia. a brace yourselves. it looks like it will be a difficult session going into trading. that was quite a lead we had from wall street overnight. it wasn't just the bond markets, it was really these concerned that the trade war will weigh on future earnings as well. take a look at the set up. when it comes to australia, we look at it indicated drop of 2%.

in new zealand we had some pretty bearish sales following the lowest since january. that is proving to be yet another reason why we are seeing a selloff in the aussie as well as kiwi markets. >> let's get a quick check of the business -- headlines. the stock has now lost nearly $230 billion. since january all-time high. it shed more than 13% of its value over the nine session losing streak. one of america's most iconic

retailers is closer to the long goodbye. sears is said to be preparing a bankruptcy filing they could come in the next few days. debt also facing a crucial maturity next week. we will have plenty more coming up. this is bloomberg. ♪

markets are bracing for the open here in sydney. futures are following the most since the end of march. we are looking at an open where we see a decline of 2%. when a gets underway. elsewhere in asia looks like they will be following from the losses in the u.s. it is 6:30 in new york. let's get the first world news. >> president trump has stoked a simmering battle with the fed is saying he thinks policymakers

have gone crazy. that theed his view rate hikes are too fast. he thinks jay powell is too tight. selloff was a correction that we have been waiting for for a long time. the president has repeatedly criticized the fed saying he is a low rate kind of person. is making ahe fed mistake. i think the fed has gone crazy. you can say that that is a lot of safety. 'margin. i think the fed has gone crazy. >> president trump's former strategist steve bannon told bloomberg that next month's midterms will be a referendum on the administration. stillnks the republicans have a shot at a house majority. china's huge debt threatens problems at home. >> china is just another

financial scam. printed.on they just cut of the printing press and nobody look at it. now we are heading towards another financial crisis brought on by over leverage in the debacle that will be have upon us and china very quickly. >> the world's longest flight is back. even with oil prices near their highest. singapore airlines is starting its nonstop flight to new york. takeew york flight will only 18 hours and 45 minutes. made a viable by airplanes that use less fuel. singapore airlines is planning to fly nonstop to los angeles as well. saudi arabia's richest person is less rich today. fortune fell to $15 billion. that is the lowest since he was tracked back in 2012. fell bye of portfolio

$760 million in the first nine months of the year. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. stocks falling the most since february. the 14 day falling below the 30 mark into oversold territory. let's see how all of this will translate in asia. asian stocks also bracing for losses here after a tepid session we saw on wednesday. staring down a red day. kiwi shares starting falling for the most in two years. losses seen for sydney and soul as well. nikkei futures trading in chicago. not much change. we can see some losses for tokyo

trading. the yen is moving closer to the 112 handle. japan earnings season is ramping up. i want to highlight yes, a lecture. japan'sany is second-largest industrial robot maker. orders are seen to taking more hits. trade temp -- tensions remain. the company has cut its for your forecast by 10%. underock has been pressure over the course of the past year. the valuations have been going down. we are seeing some oversold signals flashing again. let's bring in the global markets editor.

also the asset reporter. what happened? >> many superlatives today. i will start there. if you look at the the and the dow, they were down the most since february. if you look at the nasdaq, it was down the most since 2011. we did see some concerted selling in the tech area. if you look at the nasdaq, where it stands so far this month, we are only 10 days into october. a lot can change. moreech heavy index is than 7%. if you compare this to every month through the entire bull market, that is the largest monthly sell since the start of the bull market. that just gives you an idea of where we are now. why did we see the selloff?

>> earnings. we are talking about how our earnings have been downgraded going into the season which in earnest starts tomorrow. that is one of the reasons and traders behind the move yesterday. to see a lot of this spilling over into asia today. you pointed to some of the futures moves. it looks like sentiments are fragile. this comes back to the idea of how much you think the andtening of nhl conditions whether or not that can threaten the essence of the bull market. earnings have been a consistent theme of this will run that has gone for years now. collectively a think the market agrees that earnings growth is being dow back going into 2019, it is still looking for earnings growth and still fairly significant earnings growth in

the u.s.. >> i want to get to earnings but i want to check on the vix rising for a fifth consecutive session. the gtv chart showing that expected volatility is still much higher than where we were at right now. whatever happens, the market will still be pretty volatile. >> to give you an idea of where we are at the vix, the average for this year including everything we saw in february is closer to 15. even the long-term average is closer to 19. with the vix, we are higher than the long-term average. investors are expecting volatility. october is known for volatility. should expect it heading into the midterms. it also feels more exacerbated because february was an outside a bank but the rest of the year has been a low volatility year.

any pickup in volatility seems major. >> everything is relative. aboute are talking earnings, where in asia are we seeing earnings pick up the most? when we see the check in -- japanese data, they look strong. do, that is the bright spot. there are lots of areas in markets like japan where the andings look reasonable very discounted valuations still. trading the topix index that is trading below the s&p 500. there are still pockets of areas in asia especially in places like japan where you can get earnings growth that doesn't have to be that good to get a notable re-rating and the equity market giving that the starting

point from a valuation point of view is already very low. >> thank you so much. asian future the session and have it is setting up. it looks like we are bracing ourselves are a bit of pain. particularly here in sydney. futures are following -- following the most since march. the nikkei, you see futures trading in singapore at three and a half percent. we did see some positive feeds for chinese markets.

this is bloomberg. ♪

let's get a quick check of u.s. futures. we saw u.s. stocks fall the most since february. we saw the dow falling to the lowest levels of august. s&p futures right now a little bit to the downside. the dow is also down 2/10 of 1%. the nasdaq lower as well. will keep you updated on how futures are doing and how asia is looking at the open as well. let's look at one company. broadcom. it is saying it is the victim of a fake memo raising concerns about its attempt to buy another company. the department of defense has told broadcom that the bimbo is

likely a fraudulent document. we don't know who did this. why? >> there are a couple of ideas. trying to derail the acquisition between broadcom and ca technologies. is someone trying to trigger share price fall to take advantage of that? falln see that shares did by 5% over the course of today. blocking you through what happened, senator rand paul in the early part of the day said that he wanted a national security review of the deal. on, the fake memo was sayingout by the dod that it was likely fraudulent. shares recouped.

they did and down by more than 5% because that was more of the market momentum that you were when stocks fell the most since february. right now, you can see the statement from broadcom saying that they are both american companies. i am stressing this because broadcom redomiciling itself from singapore to san jose. get out ofattempt to a review process. broadcom is adamant there is no need for a review. it hopes touisition end by the end of this year. >> some investors might be trying to play the fall and the share price? >> hop into the bloomberg terminal, i want to show you two charts that focus on a few possibilities. no connections, but i want to

show you the numbers. you can see that since the start of the summer, it has been rising. that is what happening here. one other chart i want to bring up is the supply chain function. this is the sdlc function. broadcom is in the center. at the bottom of your screen are its peers. it's something negatively happened to broadcom,, these are who theoretically could stand to gain. you are also seeing these in the red. everyone here is getting socked because of what happened in the market. we cannot tease apart what is exactly happening. suffice it to say, there was a

lot of intrigue going on and a lot of people are wondering who sent the memo. >> thank you so much. the world knowledge forum continues in seoul. we turn our attention to crypto. our next guest is a pioneer of social networking. never a dull moment in this world. >> yes. no dull moment absolutely. we are seeing in the crypto world, a bit of a crash in the bitcoin price. as well as the trust deficit guest is onenext of the five cofounders of linkedin. thank you for your time today. the topic of this forum is over

global -- overcoming global pandemonium. there is obviously trade tension. is there a growing trust deficit? >> i believe so yes you are starting to see that over the last couple of years. the limits of the internet and trust are starting to break down for users who have security breaches and data breaches happening with users data. that has caused alarm. it is a showing the limits of what we can do today on the internet. what are the companies trying to do to bridge and how do you build the trust over the blockchain? >> we are trying to use blockchain to create a new trust layer on the internet. believe that trust is important for economic opportunities on the internet. there is some trust today on it, but when you have more, it creates more economic value and

opportunity. the people around the world all over. >> what are the ramifications that you are seeing from this pandemonium? are you seeing limited opportunities or more opportunities? >> there is a concern among many sectors around the trade wars and how that is dealt with. technology and innovation needs open borders in order for it to flourish. will have to see how long it lasts. with blockchain in particular, there is an opportunity for it to be a global phenomenon. the way ofat gets in that causes it to slow down and for innovation to slow down and for people do not take advantage. >> one of the more successful applications has been cryptocurrency. we saw a crash in the prices and some are predicting a complete

meltdown. had you see it? >> i don't believe we are headed in a complete meltdown situation. classicollows a lifecycle where the initial excitement over technology, is also followed by a despair. where reality doesn't meet expectations. that is the. we are in right now. there are lots of people at work on the fundamental technology creating fundamental value in this technology. we will see the value of that in the years to come. , what arechnologies the lessons learned from a technology standpoint that can be applied on blockchain? >> trust is one of the things we realize is very important for relationships to occur. when you have the absence of trust or limited trust, you have

limited economic value. the opportunity with blockchain is to create more reputation information on the blockchain. to put the ownership and control of the information back in the user's hand so they can share it when they want to. that will bring new opportunities for people and companies the world over. is it a myth that cannot be changed? >> nothing is ever perfect. that is true in technology and blockchain as well. blockchain gets much farther and recording things that cannot be modified or tampered with which is the important aspect of blockchain. when you have that, you have the ability to store things that people care about and -- and to be able to use that for a

later purpose. that is what you have with blockchain. >> how practical will it be to use one sector as an example? building the ledger takes a lot of energy and manpower. the technology around blockchain is still in its infancy. it is coming. there are a lot of companies working on these enhancements so that the cost of putting things on blockchain will be reduced. efficiency will improve. the financial world in particular, that is going to help in terms of having credit scores and so forth that comes from blockchain data and allows companies and users to assess the trustworthiness of individuals. >> it will not replace banks. >> probably not for a long time.

there are processes that have grown up for a legitimate reason. some of them could be improved with the use of technology such as blockchain but it will be an evolution in the coming decade or two. >> thank you. we will send it back to you. coming up, we will speak to tim draper. stay tuned for that one. >> we are looking forward to it. let's take a look at the setup when it comes to asian futures area it is not looking like a pretty picture. terrible lead from wall street overnight plunging the most since february. tech is getting blasted by trade war concerns.

soul is looking like the tech sector will continue to suffer contagion as well. new zealand is also seeing a downside of two and a quarter of 1%. the yen is catching a bit as well and that will drive into the sentiments equities trading. plenty more to come. this is bloomberg. ♪

let's look at the u.s. futures right now. all are on the downside. the dow is down a 10th of 1%. the nasdaq futures are down as well. the nasdaq fell the most since 2011. we are seeing a lot of volatility. the vix rose the most since

february. we are seeing a vix curve already inverted. all of this will translate to what happens in asia as we continue to see asian stocks under pressure. i'm shery ahn in new york. >> the volatility as well as the bear sentiment is spiking here in asia. you're watching daybreak australia. a check of the latest business headlines. lower,ng more than 8% the plunge came as at&t said it would launch video streaming service and the fourth quarter of next year. a new product will be diverted to entertainment and a direct challenge to netflix and disney streaming service is also planned for 2019. warner owns warner bros. hbo and dc comics. will go to arbitration to resolve attacks claim of more than $150 million for 2013 to 2015.

on 35ities have agreed million in tax code but the final claim is still to be decided. on the lira has reached an agreement to build an energy plant at a coal mine which could supply them with power. a singapore-based ride hailer .lumped on a report the stock has fallen 10% since october 3. that is when techcrunch said they may launch a ride-hailing service in singapore before the end of the month. that is almost a four daybreak australia this morning. trading in new zealand is just getting underway with just a few minutes away from the open in australia as well.

as what we are seeing when it comes to sydney. teachers looking on the downside. the downside of two and 3/10 of 1% in sydney. lots more to come. this is bloomberg. ♪

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haidi: good evening, this is "bloomberg daybreak: asia." our top stories this thursday, asia-pacific markets are bracing for losses with new traits for concern -- stocks hunting the most since february. the s&p 5