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 500 toppling to three-month low while the nasdaq saw its worst day in seven years. president trump saying he thinks

policymakers have gone crazy. >> let's get a check on major markets in the u.s., it was a sea of red across markets as we saw every member of the dow fall , the s&p 500 falling 3.3% on a three-month low. rising, wee tensions heard that customs officers and china were being a bit more strict. jewelers like tiffany and other brands took a hit. the nasdaq falling the most since june 2016. take a look at what futures are doing, under a little bit of pressure. the s&p 500 futures flat at the moment and the dow and nasdaq also sort of flat. remember the nasdaq 100 fell the most since 2011. we will see how the markets

shakeup in asia and how it all comes back to the u.s. the next day. let's see how asia is shaping up. so to: asian stocks are set to track the losses we saw on wall street and investors will take their cues from china later this morning. futures lost 2% or more overnight. nikkei futures trading in chicago with little change after that drop of about 3% we saw overnight. offydney, we are kicking with declines, aussie bonds are with the boost in demand for haven place. falling about five basis points. over and wellington, kiwi shares of the most in about two years. will keep an eye on emerging currencies as contracts are signaling more pressure.

the offshore you want heading to a new high. thei: let's get you to first word news now. next president trump saying he thinks policymakers have gone crazy. he repeated his view that the pace of rate hikes is too fast. he also said wednesday the stock selloff was a correction 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. >> i think the fed is making a mistake. i think the fed has gone crazy. is a lot of safety, but i think the fed has gone crazy. reachricane michael's florida, the most powerful storm

on the u.s. mainland since 1942. -- it couldg to drop 30 centimeters of rain across the panhandle before moving north across georgia, alabama, and the carolinas. the price tag for the olympics has ballooned to $25 billion. and if his report shows that at the current exchange rate, cost or nearly four times higher than the initial winning bid of $7.3 billion. the organizing city said the budget is $12 billion before tokyo was governor said $7 billion more would be needed. china is said to be planning to increase the number of companies deemed systematically important. it's a sign that policymakers are earned about ballooning national debt. we're told regulators from the say it is important.

those names will be subject to extra capital arm may face new rules on leverage. saudi arabia' is person is less rich today. his fortune is followed to $15.2 billion. the lowest since the bloomberg billionaires index began tracking him back in 2012. his private office said the value of his portfolio is public me dollarsll by 760 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. this is bloomberg. that's get marty tell on the biggest plunge in u.s. stocks and eight month. the s&p 500 ended almost 5% off its september record all all 30

blue chips on the dow fell and continue to fall in extended trading. then there's tech, the nasdaq suffered its biggest loss since 2016. su keenan is here. we saw bond yields rise in the beginning and then for the end of the session at the equity funds stevens, even yields went down. su: but still above 3%, which is a concern. we have some bond options that some say are important to note, chart, whatt this you have is the nasdaq 100, that's where the focus is, down with the worst performances 2011. let's go through number of charts to get the size and scope of the decline. this is the philadelphia semiconductor index, charting what has been the worst five day since april.

the next chart will show you some of the big names that fell. these have been the momentum trades, i guess there is a lot weighing on the stocks. many think at this point, analysts coming out after the bell said the selloff is now overdone. the amazon ceo and founder lost more than $9 billion in this one session. and again, the stock showing the kind of one-day declines you normally would see in a month. this is rather dramatic. let's go some of the other stocks, the companies who have come out and said the tariffs are hurting. fast and all, the international company that has construction rated materials said 10% of their products come from china but the tariffs on china are hurting their customers. another talking about the board-checks in china being for more strict and adding angst to the trade war concerns, tiffany and estee lauder, luxury goods

falling in kind. been the big movers, sears edging toward bankruptcy. a big decline. twitter showing some of the tech momentum players and dsw, a retailer that has been favored on wall street, announcing an acquisition and slammed in a big way. the only green on the screen is marijuana stocks. the 10 yearentioned yield still above 3%. what our strategy saying about confidence ask selling off at the same time? su: first of all, it rarely happens. ,hat's go into the bloomberg for them to trade in the same direction is a concern. it heads foruch of goldmans, and secondly,

sachs coming out after the bell with a message for the bond market, they say keep calm and carry on with the yield curve flattening trade, there read on the selloff that began last week at least into the steepening that you mention ahead of the option sales, they believe is somewhat technical in nature. let's go to one more bloomberg screen and that has to do with the vix. the summer doldrums are over. i talked about a cyclical pattern for the vix. is it seasonal or is it indicative of far more volatility ahead? that is the question the market is now wrestling with. gaining onactually hurricane michael this week. it tumbled overnight for the same reason. su: this is very interesting. is a hurricane hitting ground, it did not

damage a lot of these platforms so the original concern about damage to oil output is not shut, plus we had oil rigs down ahead of the storm. bottom line, there's concern about demand at the same time we had oil inventory data that got overlooked, showing huge buildups. let's talk about the fact that here.xtended its gains again, a lot of it has to do with the fact that the rates are not as big a concern as the safe haven. we've got all the bank for an on friday, so it will be interesting to see the commentary they come out with on this. thank you so much for that. we will discuss trade policy and .rexit as the clock ticks down bank of america merrill lynch is positive on the outcome. shery: will emerging-market sink lower before your in? find out why fidelity international expects one more drop.

this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." haidi: emerging markets have also had a rough time of it lately. fidelity says things could get worse before they get better. in terms of what we saw overnight, it doesn't give a great deal of confidence that the u.s. will continue to be the driver of market growth around the world. let's start off with the news .hat the day someone say this is a correction that has been a long time coming. >> absolutely. ,f you look at what's happening there is a complete dichotomy in performance. developing markets led by the u.s. have had a massive run and when you look at valuations

especially, there is a big divide. what we have been seeing overnight is a natural correction and it's likely to continue, but at the same time, there is a lot of sentiment back in the market and we expect the volatility to weigh on investors and how they are thinking of equities. are we talking about markets like the yes compared to the likes of china? this is a chart in our library looking at how cheap relatively they wish and's are in emerging markets, the cheapest since 2008 against u.s. equities. the selloff that investors would take the next opportunity to buy back into u.s. stocks, or should it make investors consider more of a value-based longer-term proposition in e.m.'s? when you look at the

valuations chart, without tough it's been, what is compelling is really that the risk off and reward profile for asia, led by china, is looking very attractive, purely on and he prices as well. when you go down into the investment universe, fundamentally, some of the companies are strong. when you look at balance sheets across asia, there are signs of stress. , that's likelyl to have an impact on government don't sheets in certain countries. when you look at china, for seeking we are opportunities across the board because we are seeing some good quality companies that are trading it very cheap valuations now. so it's likely that it has already started as investors are putting money to work, because the u.s. is still relatively speaking looking very expensive

compared to some of the other emerging markets, especially china. we have breaking news on the bloomberg, family mart is to for ¥212 20% stake billion. we will get you more details as we get them, but let's talk about the japanese equity markets. a rally inng japanese yen, and the equity market seem pretty resilient. where is the market finding support? medha: what we are seeing in japan, when you look at the equity universe, it's very interesting. market, andgood when you look at companies and balance sheets, but we see is a

very favorable all right, which is cash buildup on balance sheets. and the cash is not been put to work. we've been talking to japanese companies, and there's a clear ,ign of corporate governance payouts to minority shareholders increasing. when you think about the midsize companies to more the cash will be put to work, because you're not seeing signs of increased lending across the board, but we are seeing companies willing to talk about increased buybacks, payouts to shareholders, and that is really what we are most interested in. from a bottom-up perspective, we think midsized companies offer better value in japan, and that's what we are focused on. shery: when it comes to topline growth, it seems like it's starting to slow its peak in asia. where are we seeing the risk?

medha: the risks are still very much external for the region. what's happening with respect to the uncertainty over protectionism, trade wars, and words likely to lead, that is driving the negative sentiment also rising commodity prices and their impact on certain account deficits like india and indonesia. in closer to home, when would of china, we are really focused on policy direction. unlikely the chinese will come up with the big bang stimulus, but we're seeing signs of policy loosening. if there is a misstep or a step backwards, then there would be a creationif credit continues to increase, that's the key risk. at this point time, we think beijing is focused on control of shadow banking, credit creation and financial the leveraging.

it is unlikely that this is likely to materialize. what are your assumptions when it comes to the u.s. dollar? it's tied up with where the greenback goes from here. think the strong dollar is likely to stay, but we also believe it comes back to pricing and valuations. at the extreme bear market sentiment about asia led by china, that is priced into equities. so all this uncertainty that currencies, about emerging markets, some of the as humans take any hit, we think it will come back to valuations and bottom-up opportunities. this chart is showing how valuation is working for asian markets.

e.m.'s having a tough time but still trading at the steepest since 2008 compared to the s&p 500. which brings up my next question, should we then consider a rotation for value from high-growth stocks when it comes to the asian markets as well? medha: when we look at asia, as i said, there is topline valuation, but when you go underneath and start looking at sectors and companies, let's say market, it'sore the cheapest key global market that we have. there are some really good quality companies there that are not likely to be impacted by the trade war, companies focused on domestic consumption. we are thinking the rotation has taken place because there will be a lot of investors out there who are putting their money to

work in areas like this. it's really about the consumer in asia, the domestic story, the government is running consumption in china, there are still so many opportunities out there where the external headwinds are unlikely to touch them. shery: thank you so much for that. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. you can customize your settings so you only get the news on the stories you care about. this is bloomberg. ♪

haidi: bmw group is to buy a stake to take a 25% stake in the chinese joint venture there. that just crossing the

bloomberg. euros.lion we will get you more details as that becomes available. broadcom says it is the victim of a fake memo raising national security concerns about its attempt to buy ca technologies. the u.s. department of defense said the rumor circulating is likely a fraudulent document. we don't know who did this, so let's start off with the question of why they did this. about a coupleng of ideas here at bloomberg. one, is someone trying to derail this merger between broadcom and see technologies? or is someone trying to trigger a share price fall to take inventive that if they have shorted the stock? you can see it is down by about 5.25% today. keeping this up on the screen,

there's an interesting narrative to this. you can see it falling right out of the gate earlier this morning. that's when senator rand paul of kentucky called for a new national security review of this merger. a couple of hours later, you see the stock start to recoup some of those losses. that's when the question of that fraudulent memo was call that much by the department of defense. then you saw shares give up the ghost. that's when market momentum across the board took a, and then down by more than 5%. the worst fall in the past three months. one thing a lot of folks are pointing out is that broadcom did re domicile itself earlier this year. mean you are actually an american company. broadcom wants to push back against that and they did issue

a statement saying that broadcom , they are both american companies in there's no basis for the review, and in addition they said they look forward to completing the transaction in the fourth quarter. saying thatks are even know it's a fake or fraudulent document, rand paul has pointed out just today that ca technology systems have really been deeply embedded in national security, in u.s. infrastructure, and in addition, ofnuclear reactors and 60% electric consumers actually use ca technology. it does raise some kind of issue, and broadcom must pointed out that the united states has already green lit and approve this and they are just waiting for approval from the european union and japan.

we can't know for certain, especially with the greater fall in the market today, but let me bring into the bloomberg terminal, i have two charts, one on short interest. if anyone were to gain from broadcom stall, it would be those who shorted the stock. i think it is interesting, short interest has risen ever since september and ever since late august, short interest in total has also risen. take that as you will, i will show you the numbers here. in addition, i want to show you the supply chain function on my second bloomberg terminal chart. broadcom is in the center here and at the bottom, these are its peers in the industry. microdevices, marvell technology, nvidia and others. let's say someone was trying to derail this broadcom deal. these could be the company's that are at the heart of it.

we will have to look ahead to see who is going to be hurt. taking a look at the open in japan, it is flat. losses in seoul and tokyo. ♪

haidi: markets in sydney have been trading for about 30 minutes. it's been a painful start to the asian trading day. they are playing follow the overnightthe session resulting in the first offer u.s. -- worst fall u.s. equity since february. looking ahead to japan as well opens, it's not looking positive in this part of the world. shery: the s&p 500 at a three-month low. it was the third time this year

the s&p 500 fell more than 3%. 7:30 p.m. here in new york. i'm shery ahn. haidi: you are watching "bloomberg daybreak: asia." let's get you the first word news. >> hurricane michael has reached florida, it's been the most powerful storm to hit the u.s. mainland since 1992. it's one of the four strongest in recorded history. windsor requesting a 240 kilometers per hour and we could see a storm surge more than four meters high. michael is forecast to drop 30 centimeters of rain on the panhandle before moving north across georgia, alabama, and the carolinas. president trump has ruled out any relaxing of sanctions on north korea after seoul said it is considering easing some of its own restrictions. the president said that won't ok, addingout a u.s. they do nothing without our

approval. seoul had said it was discussing lifting sanctions after the sinking of a south korean warship back in 2010. president trump's former strategists steve bannon has told bloomberg that next month's could reflect a referendum on the administration but he thinks republicans still have a shot at the house majority. huge debtid china's threatens problems both at home and abroad. >> what we know is china is just another financial scam. be bashedon in aren in rmb. now we are heading toward another financial crisis, and the debacle that will be upon us in china very quickly. singapore airlines is reminding its nonstop service to , the new york flight

will take only 18 hours and 45 minutes. is waiting toines fly nonstop to l.a.. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: that relief rally in australian markets did not last that long. australian markets again under pressure. here is sophie. sophie: what relief rally? , headed for al 2% weekly decline of more than 4%, now trading at the lowest level since april. check out what is leading that decline, it's the tech space, all by 4.2%.

when you take a look at equity the worst losing streak on record. that stock falling over 8%, falling to its weakest level in seven weeks. we check out what's going on with the leaderboard, gold miners are shining today, as bullion nears $1200. let's check on nikkei futures trading in singapore. falling by 3.4% overnight. losses in expecting tokyo when trading starts there. let's put some stocks on the radar when it comes to the tokyo session. family mart is to report earnings today and is said they will by 20% in a stake in offer that's a 9% premium to the last

closing price. and keeping an eye on japan's second-largest industrial robot maker. second quarter profit missed estimates and it cut its full-year forecast. it should not come as a surprise with investor anxiety. haidi: the philippine central bank says it is ready to further tighten monetary policy to curb inflation and support the peso is needed. it has already delivered on 150 basis once of rate increases since may and the deputy governor told us exclusively that it is having the desired effect on price stability. >> from our perspective, the can provide ush with additional space for a dressing issues of stability, a prices, and in the foreign

exchange market. >> as you said, you've got inflation above target. some say it may have peaked. i think he made it clear that it sounds like you are fully open to the possibility that there are more rate increases to come. >> we said the september -- you will see that inflation month on month has slowed down from .9 2.8%. the reason for the slowdown will be traced to the so-called nonmonetary measures. that's 150 basis points. that's not a small move, but , we shouldant

address inflation. public --ment of the republic of the philippines announced measures that are starting to take effect. to be aboutflation 5.3% this year. next year is 4.3% and the following year, 8.2%. in terms of the weakening of the peso, i think based on the september figures, we've seen a relative jump in the foreign market. the philippines continues to be one of the best-performing in the world in the fastest-growing region. , is veryof growth

healthy. it's very stout -- sound and stable. a stable foreign-exchange i think is there. >> are you prepared to take further measures to intervene in support the peso? >> yes. this will impinge on our ability to maintain stability of prices, we will not hesitate to sustain our vigilance and continue to tighten monetary policy. we intend to do just that. there are always the critics who are second-guessing. say do you say to those who they should have started tightening sooner, because now they have more work to do then they would otherwise. what would you say to those? >> i would say it is a manifestation of tyranny of the

markets. that was kathleen hays. will be as the have to hike again? theleen: that is certainly debt that our bloomberg economics team is making right now because they are not convinced that we have seen the peak of inflation. things like a drop in your currency and the philippine peso down more than 7% this year, you cannot go out and fully translate through the price level. hikese said about the tax and how they would have more transitory impact once they are in place, you can step away from that of it. acknowledged they have factored it into a weaker peso next year. team is analyst and our

betting that another rate hike is coming. they are in good company in asia. it's not as though they are andg to suffer, indonesia 70 countries are having to raise , but if and when the bsp does have to move, is pretty much factored into the market. other people are pointing their finger at president trump himself. he called the fed tracy today for raising rates. are these constant threats becoming a real threat to the fed's independence? kathleen: certainly if you look at the law, it's not a threat. the fed is set up to be an independent institution. in modern central banking, that tenet around the world.

in varying degrees, according to people who closely watched the fed and have been central bankers themselves, they find this kind of thing up setting. they feel that even if it's just donald trump venting publicly about raising rates and maybe usenet as an attempt to deflect attention from the stock market and the big decline, which many say has more concerned with how the trade war will impact u.s. companies. to put that on the fed and maybe distract the audience. i think many people view this as there's nothing serious trump is doing to go after the fed, but the more he does this, at a time when there is already a lot of uncertainty, maybe it doesn't occur to him that there is so much uncertainty over the trade war.

it's probably not the best time to create another element of uncertainty in the next five bashing the fed. shery: kathleen hays, thank you so much for that from valley, indonesia. -- bali, indonesia. there's another deal for family , donto sell its partner quixote is making following arrangements to sell the remaining stake, according to nikkei reports. family were will wake up official decision in mid-october. we're now hearing that family make ait holdings will tender offer for don quixote shares.

making it a fully owned unit of that retailer. i used to love going there when i was back in japan. bmw group to buy 25% stake in their chinese joint the stake in takes brilliance to 75%. the concert -- it comes at a cost of billions of euros. it also comes after meeting between the ceo, harold kruger in china yesterday. announcing that bmw will open a there.actory auto plant kind of an interesting time.

we have heard that bmw is looking to have difficulties exporting tv's due to the trade tensions of the terror war. it may be expanding its presence in china and moving some of its factory presence there to try to get around the tariff restrictions. we are looking ahead to our interview, the conversation we had with howard kruger coming up later today. we will get more details on his plans in china. let's take a look at how markets are looking in asia. sluggishaland, we had home sales come in. the kiwi dollar is seeing a little bit of rebound after the commodity linked turn sees are getting sold off against the dollar overnight on account of the worsening trade tensions. this,lia is looking like

downside extending close to session lows. were also seeing the aussie dollar keeping its head above water. remember the tech selloff was one of the big drivers, the nasdaq 100 seeing its worst day in seven years. ont is likely to weigh markets like soul as well as tokyo. we also had a three-week high for the japanese yen. trade will resume in tokyo. more to come on the markets. this is bloomberg.

haidi: this is "bloomberg daybreak: asia." says asiannext guest fx will likely weaken further against the dollar.

thank you so much for joining us today. let's take a look first at this chart on the bloomberg. i want to show the comparison asiann asian fx and nine em currencies. on-asian currencies are paring losses compared to asian currencies. volatility still remaining pretty high. what are the headwinds for asian em currencies going forward? >> clearly the trade policy uncertainty is a key factor here. the expectation is that it could get worse before getting better. if you don't get a deal between the u.s. and china by the end of the year, the next escalation in tariff rates will have more

severe implications for the economy and lead to more retaliation for escalation. this will be early next euro full-blown trade war between the u.s. and china. this is the key concern for emerging markets and particularly in asia. is is the main market concern at this stage. and when you take a look at the short-term risk as well, onhave cpi numbers here thursday in the u.s.. what sort of dollar outside risk could you get just within the week? >> clearly a major market selloff, i do not expect sales being driven because of the with highnd, hikingon and the fed

more than the market expects. from this point of view, i think we are at the threshold in which further increases would raise pocket concerns. it's a smaller difference this would -- suggest that monetary policy could be too tight. we believe the u.s. fiscal policy speaking now. on,elieve that from now gradually the u.s. economy will slowing growth. by the end of next year we will be at 2%.

price is the greenback worsening with a more protracted trade war that we are seeing now? athanasios: it depends. you could argue that are trade that there's more direct invocation for emerging markets. however, will more optimistic and the consensus is that all the u.s. policy has been aggressive, so far we had a with mexico and with mexico and canada, a cease-fire and continued negotiations, and the rest of the world is willing to meet in the middle. we are optimistic that we will see something similar with china support thech would

effects more broadly. things will get worse before the way theer, but rest of the world to deal with these trade policies is not to retaliate, but to try to find common ground. shery: what about the risk emanating from the u.s. trade policy? you have a president who doesn't the strong dollar. it's debatable whether it's logical or correct, but the risk is there, right? athanasios: definitely, u.s. comments about the dollar and about the fed increase uncertainty further. but the actual policies are consistent with a stronger dollar, the fiscal stimulus at the time the u.s. economy is overheating and the fact that the fed is hiking.

view, thepoint of dollar has been appreciating despite such comments. i think it would send a negative signal if china does not meet that thel criteria u.s. has included. we believe it will not happen, but if it happens, it would be a further escalation of a trade war that would increase uncertainty further. we have still the italy fiscal risk. what does that spell for the euro? athanasios: mary negative rates for the euro. there's no way you can let italy get away with this market, they are in clear violation of the

fiscal rules. however we believe the times of trying to see what they can get , but they don't want a crisis in italy. increase in further weakening of the euro. we believe that by the industry will have an agreement that will satisfy both sides. this is why in the middle term we expect the euro to start strengthening. shery: thank you so much for your time. more of daybreak asia next. this is bloomberg. ♪

inflation dream remains intact in japan pages getting some of these producer price inflation numbers coming out for september.

beat on 3% year on year. of .3%, month is a gain also slightly better than the estimated .2%. picking up the pace from zero gains in september. you're on your figures, the 21st consecutive month we have seen when it comes to gains in that ppi number. slowly but steadily were seeing producer price inflation picking up there in japan. taking a look at asian markets, a rare bright spot it comes to headwinds, or tailwinds, i should say. dollar yen at close to the three-week high. sydney stocks off the session lows but still down by 1.9%. futures setting up for a decline of 3% plus bosses going into the open. shery: we will keep an eye on

all of that. asian up, the head of investment strategy will talk china, next. this is bloomberg. ♪

haidi: good morning from sydney. shery: good evening from new york, i'm shery ahn. sophie: welcome to "bloomberg daybreak: asia." haidi: our top stories this thursday, orchids break for lot -- brace for losses but as you can see more restrained decline. a bad day on wall street, the s&p 500 seeing a three-month low while the nasdaq 100 had its worst session in seven years.

trump stoked is long-running fight with the fed saying he thinks policymakers have gone crazy. we saw the fed raising rates for a third time this year. impact,feeling the overseeing treasury yields rise and weigh on the equity market. let's see how things are shaping up in asia. let's highlight the quantum of losses, japanese stocks falling nearly 2% after that short-lived midweek league that we saw. the ossian kiwi dollars holding overnight declines sparked by the selloff in sydney shares has slipped below the 6000 level, trading at the weakest level since april with tech leading the track. kospi, up 2.5%.

s&p futures looking little changed as we have a war of words continuing between donald trump and the fed. looking at the bond space, 10-year gilts holding steady after retreating from 3.2%. and aussie 10-year note sliding , withut four basis points the bond silla taking a bit of a breather. and brenting further sticking below $83 a barrel. oil prices continuing to slip. let's look at some stocks we want to keep on the radar. family mark in the spotlight after confirming it will buy 20% of done quixote and that will valued at $1.9 billion. and keeping an eye on japan's second-largest industrial robot maker after profits missed estimates and cut its full-year

forecast. the stock has been under pressure all year, down about 35% in 2018. haidi: let's bring in our strategist, mark cudmore. is asia set to follow the losers, or could we see losses stemmed somewhat here? follow think asia will the u.s. in a more controlled fashion. u.s. stocks were more vulnerable for a correction. asian acres will open lower but i don't expect it to spread across assets. contained is pretty so we will see lower prices and they were probably sit there. the next trigger, china markets are likely to break a two-year low.

i don't expect a followthrough panic, but that is what traders will be waiting for. haidi: the topics falling 3%, set for the biggest drop since march. are we going to see cross asset volatility or contamination in the asia session? mark: i don't think we will at all. we will see recalibration of equity markets. we expect bullish equity markets to open sharply lower. we will see a slight tick up across in volatility because there will be portfolio readjustment. overall it's not like fx volatility is suddenly going to take off. i think it will be relatively necessarilyut not volatile trading. shery: equity markets rebounding

slightly but we are also hated to third-quarter earnings. what should investors be watching out for in this environment? mark: there are three things to watch out for in the short-term. will have to see how italian yields react. they are not related to the current stress, but if risk aversion grows, they will be vulnerable to deleveraging. in we go back to seeing how u.s. equities react. --l equities continue to set patty with on wednesday -- session, or will they is off a bit? there is unlikely to be a follow-through panic. overall it's a controlled reaction across assets, despite the large losses we have seen. throught been followed

for past sellers. haidi: thank you so much for that, mark cudmore, looking like more of a contained session. can follow more on this story and all the day's trading action on the bloomberg. get a market run down in just one click. there will be fresh commentary and live analysis from our expert editors here at bloomberg. seeking get exactly what is affecting your investment at any given moment. >> president trump is still doing his better with the fed, saying he thinks policymakers have gone crazy. said the stock selloff was it correction we been

waiting for for a long time. the president has repeatedly criticized the fed, saying he is a low rate kind of person. >> i think the fed is making a mistake. i think the fed has gone crazy. it gets you a lot of margins, but i think the fed has gone crazy. from the tokyos olympics. the prostate has ballooned to $25 billion. an official report shows that at the current exchange rate, costs are nearly four times higher than the initial winning bid of 7.3 billion. --y last december the or organizing committee said the budget was $12 billion before tokyo's government said several billion more would be needed. hurricane michael has reach florida as the most powerful storm to hit the u.s. mainland since 1992. it's one of the four strongest in reported history.

surge moree a storm than four meters high. the world longest flight is back . togapore airlines is trying revive its nonstop service to new york on thursday. the new york flight will take only 18 hours and 45 minutes, vehicles that use less oil. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. a japanese convenience store operator family mart is to

in don quixote. the deal is worth about $1.9 billion. sophie is in tokyo. we are now seeing trading down. faring a little better than the benchmark. tell us a little bit about the deal itself. 's japan'smart second-largest convenience store operator. it has been squeezed by a crowded convenience store market and is looking for new ways to grow. donkey howdy has never to turn double-digit sales growth in quijote is up more than 6% on the news. what does the deal tell us about retailers in japan? reuters story of consolidation in the retail market in japan. themeal will also see

another company to direct -- chance to to diversify. in terms of the market reaction, is clearly quite a bit mixed, given a day like today for the japanese broader market. we do see it is rising today. shares of both companies rose today after the deal was reported by local media. what we saw announced today was mostly in line with what was reported on yesterday. both companies will do a joint produced conference at 2:00 p.m. tokyo time today. we will be waiting to see a bit more the terms of the deal and what they plan to do together in the future.

still ahead, the head of asia investment strategy explains why she thinks a selloff is to indiscriminate. draper, an early backer of household names. this is bloomberg. ♪

at volatility across equity markets in asia. nikkei volatility rising the most since august. pi 200 volatility index has been raining ground the past two weeks. the fear gauge here in the u.s. has been rising for five consecutive sessions, the most since february after seeing this

equity market selloff and also bond yields trending higher. seoul where the world knowledge form continues today. stephen engle is standing by with silicon valley venture capitalists. >> we are here at the world knowledge forum here in seoul. our guest is tim draper, chairman and founding partner of draper and associates and ds j venture capital. thanks so much for joining us. tim. thanks for having me. steven: you are man who likes to take on risk when others are running from it. as the world knowledge forum says, the pandemonium that's happening right now. what is your take on risk? >> what you're really talking about is the markets are falling

today because the interest rates went up. that's because we have a centralized fed and they are determining whether it should go up or down. they always kind of overcompensate and do it wrong or right or whatever. bitcoinre all a economy, we wouldn't have any of those problems. stephen: that's where your next risk is. i believe 27 of the companies invested in have become unicorns. are you still as optimistic about the big one realm -- bitcoin realm, now that we are seeing a selloff? tough, whenings are there is political turmoil, bitcoin does well, because people say, i'm not so sure about my government, my tribe, whatever it is, tied to some

artificial geographic border. i might like this decentralized world, and i think that's going to be a really interesting time. i think our next 10 or 15 years are going to be a major human transformation. stephen: we are seeing cross-border trade flows right now. how is the trade war shaping up as far as opportunity or some risk? i still like it's a trade negotiation. they are trying to just figure it out. both countries know they are much better off having open borders, and somehow there are a few things they want to tweak in their trade. i think those things, i hope they will solve themselves. i'm very concerned about the five tons, china, the u.s., russia, all getting

more controlling over their people. if -- freedom equals prosperity. freedom and honesty equals prosperity. if government is free and honest and open, that country will do very well. controllingrship is and they give special treatment ,o some people over others those countries think economically. you still have a call for $250,000 on bitcoin by 2020. over time, it takes a while for entrepreneurs and engineers to create all of the visions that we all have of this wonderful world where we have a decentralized cryptocurrency, and there more open

geographic borders have fallen and all that. engineers take time to develop those products. to buyu are able starbucks coffee and mcdonald's burgers with bitcoin easily, suddenly you will make this trade-off. decentralized frictionless, global currency that i can pull down anywhere, or do i want one tied to fiat and tied to a government that swings back and forth, depending on their political will. south korea has crackdown and others are looking to making their areas and ico, but there seems to be fear from regulators. >> i think the regulators are fearful and they are spreading fear.

they are regulating at their own peril, creating friction items for progress. that, all the great brains move out of the country, so they are losing all their young population. anyone who wants to go start something or do something, of course those people are going to be using bitcoin and all the associated technologies to start their business. it makes perfect sense. korea, when they say were not going to allow bitcoin there, all those entrepreneurs go somewhere else. if north korea were to open up did, bitcoin japan is our national currency, all of a sudden you will see all sorts of activity there. four years from now it might be

the south koreans that want to get to -- get together with the north, rather than the other way. freedom bills prosperity. freedom in an open and fair environment builds prosperity. if you have a dictatorship and you're trying to control your company, trying to over regulate your people, we can now leave. outside of the crypto world and blockchain, there are other industries you have invested in. the founder and ceo has been charged with those allegations of defrauding investors. you have been a defender of elizabeth holmes. are there lessons that need to ,e learned from this situation in a company that you did invest heavily? tim: i'm concerned about people being lifted way up in the air,

saying they are wonderful, they are not just people. great entrepreneurs that are doing extraordinary things. they get lifted way up in the these are the top of the trees, and then they all start getting cut off. you see the attack on zuckerberg, elon, and travis. i think -- >> but if there is malfeasance -- >> the real problem i have is that it started with an obsession, 46 different articles from the same writer at the wall street journal, over and over, until something was done.

it's not a public company. when you are public company in you do something -- when you are still trying to make it all work. tim: what do you make of elon musk's woes? think elon is one of the great heroes of this world. he's one of the most extraordinary people we've had on this earth. we should be building him a castle. [laughter] stephen: tim draper, thank you so much. come back and talk to us. skimmed the surface.

you had somere record conversations after the camera started rolling. stephen engle there at the world knowledge forum in seoul. let's take a look at these asian markets. the nikkei 225 has been trading in tokyo. the topics falling 3%. elsewhere we are seeing that slightly stronger yen. the currency of effect. let's look elsewhere around the region. i down 2.25%. elsewhere, australian trading lower as well, new zealand, the longest losing streak in seven years. this is bloomberg. ♪

shery: a beautiful picture of the harbor there in hong kong, not reflecting what the equity markets could be doing in asia. the msci asia-pacific falling more than 1.5%. take a look at stock markets across asia, the nikkei falling more than 3%. the topics falling more than 3%, the biggest drop since march. kospi seeing the longest losing streak in four years, since 2014. the asx 200 is losing almost 2%. let's get a quick check of the latest business flash headlines. beent a cost of 4.2 dollars, will take its share of bmw brilliance automotive from 50% to 75%. the contractual term of the joint venture would be extended

to 2040. bmw wants to increase chinese production capacity and expand of its models including new energy vehicles. goal: the american express card is getting a major upgrade, but perks come with a higher fee. the card is for customers who want to travel and i like them card users don't need international travel as much as higher spending customers. shery: family mart will take a quijote and will sell the remainder of the supermarket chain. the offer for 20% holding on hisnts a 9% premium

wednesday losing price. coming up next, anymore "bloomberg daybreak: asia." don't go away. this is bloomberg. ♪

is 8:30 in hong kong, and our from open of trading there. open ofur from the trading. the worst slump in the stoxx since february, seeing steep losses everywhere from tokyo to sydney. i am haidi stroud-watts. shery: i'm shery ahn. let's get to first word news with jenna dagenhart. reporter: president trump has ruled out any relaxing of sanctions on north korea. seoul considered releasing some of its own restrictions. trump said they would do nothing without approval.

seoul said it was discussing after the sinking of this warship in 2010. president trump's former strategist steve bannon said next month will be a referendum on the administration but thinks republicans have a shot at the house majority. speaking at the invest london forum, he said china was a huge problem at home and abroad. .> it is another financial scam , cutting up in rmb the printing press. nobody took a look at it. now we are heading for another financial crisis brought on by over leverage and the debacle that will be in china very quickly. jenna: china increasing the number of countries it deems important. regulators planned by the pboc

will -- 50 of the largest banks as important. those numbers will be subject to requirements and may face new rules on leverage. two years out from the tokyo olympics, the price tag has ballooned to $25 billion. an official report shows at the current exchange rate, costs are four times higher than the winning bid. december organizing committee said it the budget was $12 million before the tokyo governor said 7 billion more would be needed. arabia's richest person is somewhat less rich today. thes his lowest since bloomberg billionaires index began tracking him in 2012. his-office said the value of his public equities fell $760

million 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 am jenna dagenhart. this is bloomberg. shery: asian stocks falling for the eighth session in nine days. let's get the details from sophie. superlatives are abounding today given the slump in stock volatility is jumping. and ugly start for equity markets. the nikkei and the topix falling 7%, the worst day since march. in wellington it is the worst run for kiwi shares in seven years. sydney stocks and in april low. set for the biggest drop since early september. shares taking a hit around the region. picture not looking

rough. the yen is moving back to 112. the aussie dollar and kiwi dollar clawing back losses that were sparked by witness -- weakness in commodities. we have the korean won under pressure, falling to the lowest level of the year. we are seeing stocks take a hit, currencies looking steady. stay with us. i want to bring in adam haigh. we talked with mark cudmore about a contained feature with this. it is hard with the degree of losses so far from the kospi to buttopics, but -- topix, could china save the day? adam: it will be hard to call. the national team, they have been absent in recent weeks. in absence of them coming back in, it still looks like sentiment is fragile. a lot of this began in the u.s., the idea of concern around earnings, also coupled with the

idea of tightening liquidity and andfact rates are moving up is repricing the risk-free rate in 10 year bond yields over the last two weeks. it is starting to test a lot of investors' assumptions. this era of quantitive tightening coming to an end. there is a lot going in with third-quarter earnings. it is a tricky juncture for the markets at the moment, and any sense of, any sign of stability, we will watch how training -- trading progresses. haidi: trade ever in the background. that is starting to seep into these concerns about earnings as adam mentioned. japan, taking a look at let's pull this up to show you what is happening. we have seen a continued uptick with analysts upgrading estimates for japan, but that is not being accompanied by a rise in japanese stocks.

the topics seeing a drop of 3%. reasons are piling up for investors to play a cautious going into earnings season. one company, this electric 40%any, losing 6%, down year to date. it cut the full-year forecast given the softer outlook. these are themes that have played out for other companies as well. when you look at what it means for the earnings outlook, along with the anticipated growth drivers for japan, what does that picture tell us? us,: one thing it does tell we want to see the earnings growth coming through. we are coming off the back of discounted valuations in japan. you look at the topix and compare it to the global index or the u.s., the disparity is stark. there is potential for the market to run up, even if

earnings are not stellar, but continue to push up given we have had such a discount and selloff in japanese equities. shery: what should we be watching out for next? we were taking cues from treasury yields, continuing to rise. they have come down with the equities selloff. we have third-quarter earnings getting started in the u.s. adam: i think earnings is the big one. what is happening in the bond market continues to be key. what was interesting wednesday in treasuries is the bond market was largely kind of flat during the day. you had a pretty steep selloff at the end of the day with bonds rallying. there was a bit of steepening, not are may be a sense worry in itself. the earnings picture, we have seen the downgrades going into q3, expecting good numbers.

any signs those numbers are flaky or not as good as people are expecting, that will put the market under increased treasure. shery: adam haigh and sophie kamaruddin, thank you. the microsoft ceo is staying focused on doing good global business in the midst of trade tensions. he told bloomberg american multinational companies need to think about empowering consumers around the world and earning their trust. >> i think about people and institutions people build and think about this globally. those are the three key things we think about when we say empowerment and empowering. being an american company, i say we are a multinational company and american. we are fundamentally dependent on and also proud of the american value, the trust in american institutions and value

the world has. clearly that has served as well and even today it has served us well because our form of government, democracy, will the debate we have, our ability to be able to set an example for what is a place where a lot of people of diverse backgrounds can come together, have a debate and move and make progress i think is what makes america that unique. us being born in that culture gives us credibility. we can't take any of this for granted as a nation or company. is about having values that are consistently applied every day. that is what engenders trust. reporter: are the trade tensions affecting your business? >> we are going through a phase where everyone has recognized -- let's, the phase of

globalization has not created equitable growth in all parts of the world or in any country through all parts of the society. every country is looking at what are the relations around trade that help them thrive, because that is key. every country would put their country interests first and look at what makes sense. what is our responsibility is to say, where -- what are we contributing to each country? how do we make the public sector more effective or the multinationals more effective? if we do that, we are good. if we don't, we have a challenge because long-term stability comes from the ability to create surplus and opportunity outside of what we do. haidi: that was the microsoft -- in a bloomberg excuse if exclusive conversation. this is bloomberg. ♪

this is bloomberg. ♪

asia. this is daybreak i'm haidi stroud-watts. shery: i am shery ahn. declines role on after wall street fell the most since february. our next guest says the selloff is to indiscriminate. we have the head of asian investment strategy from the bank. great to have you. hsbc has been sanguine when it comes to the chinese market, modestly underweight. ? >> the market has got very nervous about the negative , then from trade tensions the rising u.s. rate and ononger u.s. dollar, wage sentiment including in china equity market. we see that in the china equity

market after the sale -- selloff. looking at earnings, the trade tensions, only 1% of the msci china total revenues are exposed to the u.s. market, and that market has already been rated to invest 11 times for earnings. the market is still expecting over 15% earnings growth, and more thantantly -- 90% of china gdp growth. we are concerned about the negative impact from tariffs on the export, exposed to sector including technology, hardware, industrial companies which we like on the u.s. market. but their quality, chinese company which mainly generate earnings from the domestic enjoyedand they also

[indiscernible] from strong, structural growth in consumer upgrading trends. we do see interesting opportunities emerging after the steep selloff. especially in the tech sector. this chart on the bloomberg showing that selloff we have seen, not only in china but also in the u.s. it seems the correlation is beenng up, which -- has picking up which could mean a downside for u.s. tech but maybe positive for chinese tech. >> they are looking at the valuation divergence between the u.s. and chinese tech companies. because of widening the political risk premium that investor attached to the chinese names on the back of trade uncertainty. if you look at the earnings

sensitivity of the chinese tech, because they are sufficient in the internet, in the e-commerce area, which are actually less exposed to trade tariffs. we see the selloff as overdone, and continue to focus on the technology leaders, which are delivering strong momentum. vulnerability comes from regulatory uncertainty in china. that is why we have seen the initial selloff in tencent. do you think that is overdone? if you look at tencent after what it has been through, is it a good entry point? companies, ir tech would trace the regulatory uncertainties. we do see them regulatory

[indiscernible] delay in the to approval of online revenue of monetization opportunities and is probably deferred to 2019. but looking at the strong consumer demand for online gaming and looking at the strong penetration of mobile, mobile epayment, we and continue to see long-term growth in the industry leaders chinese tech space. the selloff actually create opportunities for long-term strategic investors to reveal positions. haidi: i want to get your views on the rest of the emerging in asia are you look at valuations,

they are tantalizing. look at this chart looking at emerging markets stocks, not just asia but compared to u.s. equities, the s&p 500, the cheapest since 2008. are you surprised you haven't seen more investors dipping their toes into e.m.? this was a fear that before things improve, they will get worse. seeing the repricing of the emerging-market risk. there is concern about the policy tightening and stronger u.s. dollar. the relative underperformance of [indiscernible] is also driven by the divergence between the growth acceleration in the u.s. versus the rest of the world. fact tax reform in the u.s., it will be fading going into the next two years.

we expect -- we see growth deceleration in the u.s. in 2019 and 2020, and that is why we expect the fed tightening cycle is going to peak by next summer. we expect there will be three more fed interest rate hikes in december this year ended march, june next year, then the fed is expected to stop. this would imply u.s. dollar strength is likely to slow in the coming months. so with the peaking fed tightening cycle and moderating u.s. dollar strength, this is going to remove a major headwind from emerging-market. shery: you are seeing oil prices rising and yield. environment, isn't it difficult for global investors to take a bold stand on emerging markets including china? wouldn't that delay the recovery

we could be seeing? >> i think the growth convergence between the u.s. and emerging-market will be supportive factor for emerging market asset. looking at equity market, view as stock market, it is likely to see earnings growth accelerating back to 11% this year. that would actually be lower than the consensus expectation around 12% growth for imaging -- emerging markets. the higher oil price will translate into stronger commodity price, and that would bode well for the commodity exporting p.m., and ongoing structural reform in the major emerging economies will continue long-term structural growth.

themehe growth divergence coming in, and as we expect, the fed interest rate expectations willbe taking, and this release the u.s. dollar strength, and this will provide a major driver for recovery of emerging-market asset going into 2019 in our opinion. haidi: are you worried about you weakness? -- yuan >> the chinese government and the pboc make it very clear that they have no intention to use the renminbi, the valuation as a tool to fight against trade war. the pboc have taken measures to stabilize it, the renminbi, so

with introduction of the [indiscernible] for the renminbi we have already seen a stabilization of the currency over the past month. china's policy is going to provide the part of it currency as well. announcedas not just another 100 basis points. [indiscernible] this will provide liquidity for the economy, and we expect there would be further fiscal expansionary measures in the coming months in order to stabilize domestic growth amid the trade uncertainty. provide us theo ability -- the ability for economic growth, and we expect china gdp growth to stay resilient at 6.6% this year.

economists expect china growth would also stay firm at 6.6% after we factor in the policy stimulus. haidi: always a pleasure. msb see private banking head of asia investment strategy, joining us. largely sanguine about prospects in this part of the world. this is not a day for the bulls. the nikkei 225, still down 3%. the kospi off 2%. we see australia down .8%, this as we had the surge in volatility. tracking losses we see with u.s. equities falling the most since you were a. off byt getting sold over 8 -- tech getting sold off

the dow by over 800 points. looking at japanese stages or australia, 20% higher when it comes to volatility gauges in korea. also seeing the cross asset contagion as well, commodities falling, the yen a haven as his gold as well. this is bloomberg. ♪ ♪

haidi: as we continue to watch

,he carnage play out in asia you have some of the world's wealthiest -- we saw a loss of 99 billion dollars wiped off the fortunes of the most 500 richest people, part of the selloff in u.s. equities. this is the second steepest selloff. the steepest we saw in february with the bloomberg billionaires index. we love talking about jeff bezos . he lost $91 million, the most out of anyone on that index. maybe crowd fund to make up for that. shery: not sure if we can be sad . i wish i had $9 billion toulouse. amazon is receiving so much criticism over raising wages and so forth. not sure if many people will be sad at the moment. haidi: [laughter] maybe a little bit of just desserts is what people are

thinking, the workers. let's look at what is coming up over the next few hours. rishaad joins us from the world bank meeting. watching the aftermath of this earthquake overnight. it was very disrupting. having a look at futures and the multilateral trading system, how much is it in danger now. we have several guests joining us. having a look at where we are -- that istensions, on the way. shery: looking forward to it. the china open is next. ♪

♪ david: you produced some of the most famous movies in american history. barry: first, we failed. in order to figure stuff out, you are going to make a mess. david: you did decide to leave. barry: i have certainly been successful, but none of this is mine. david: how did you gravitate towards the internet? barry: i saw screens being used for something else. it was interactive, and it intrigued me. david: is that really how it happened? barry: i know it sounds crackers, but that is what happened. then they said i was crazy. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way? alright. ♪