to "daybreak: australia." ahn ati'm shery bloomberg world tech orders in new york. sophie: i'm sophie kamaruddin -- at bloomberg world headquarters in new york. sophie: i'm sophie kamaruddin in hong kong. opene counting down to the of major markets. here are the top stories we are covering over the next hour. a secondks come down day with the s&p in its longest slide since 2016. its best gain in two years.

and president trump keeps up his attack on the fed, saying he knows more about monetary policy than jay powell's team does. let's get a quick check of the major averages and how u.s. docs closed -- stocks closed in today's session. the longest losing streak since president trump took office. falling more&p 500 than 2% for a second consecutive session. the s&p 500 breaking through that 200-day moving average. the nasdaq fell 1.25%. we had energy stocks leading the sectors down, as we saw crude just sink on risk off sentiment. the volatility was high. levelx surging past 20 and gaining ground for a sixth consecutive session. take a look at what 10-year yields were doing as they were again under pressure today.

we saw it at around 3.15%. we saw yields lower throughout this week after that selloff last week. treasuries also got a boost from a 30-year option. -- auction. we did get the dollar reacting to u.s. inflation missing expectations. gold was higher. right now, flat. a slight -- flight to safety. crude at $70 per barrel, but still flat after sinking the most in three weeks. let's see how all of this will play into the markets in asia. sophie: after thursday's bloodbath, the shanghai composite fell to a four-year low. the taiex fell. we are looking for asian stocks to end the week mixed after the worst week since february.

losses looking to revert for the tokyo session. nikkei futures in chicago pointing higher. futures indicating the kospi could break out of the doldrums. september unemployment data is on tap. that will be closely watched. over in sydney, aussie futures pointing lower before home loans approvals for august in new zealand. pmi falling for a fourth month. kiwi shares continuing to slide. keep in mind it is the only asia-pacific market that is still in the green for 2018. we have indian inflation on tap later today. to report trade balance data for september. bloomberg economics expects export growth to slow significantly in the second half due to trade risks. we do have singapore and third-quarter gdp due out at 8:00 a.m. hong kong time. haidi: more details now on yet

another of the u.s. market session. it was highly volatile. each time the market tried to erase losses, a fresh wave of selling would hit. su keenan has the details. suffice to say that the vix is at the highest level in how long, in eight months. su: it was the whipsaw action of the market that has many veteran watchers very concerned. let's go right to the market snapshot. you talked about the index is being down against the longest run since president trump's presidency. gold is soaring for the most since 2016. $71, making below energy stocks the worst-performing sector. bonds gained, the dollar fell. let's go to some of the different sectors. energy was clearly the worst-performing sector in the

s&p 500 and the dow. oil stocks, oil service stocks, they were all hit hard. 100 -- the nasdaq 100 really took the brunt of selling yesterday. the rally could not hold even though we saw a rebound earlier in the session. losses, as you can see, have been significant in these past five days. we are still 9% from the record. let's take a look at some of the .ig decliners oil, big oil, exxon, marathon oil taking large drops. nvidia, one of the chip stocks, that's another area that just collapsed. j.p. morgan chase, the whole banking sector, even though they are set to present earnings and would normally benefit from rising interest rates, they were hit as well. let's go to the next panel a big movers. facebook and delta, which reported positive pricing control, they are raising fares.

berkshire hathaway and amazon, some of the big decliners. let's take a look at square. this is a fascinating stock. it is a momentum stock. it has more than doubled year to date going into this week. it has lost $13 billion in market value this month alone. as much as 16% intraday, which got pared by the close. isn't this a sample of a stock that is being oversold? or perhaps this is the beginning of a slide that is here to stay. volumes, surging above the 30-day average. the s&p dropped below the 200-day moving average for the first time since april of this year. what are the technicals telling us? su: this is the big concern. let's go right into the bloomberg. gtv is where you can find our

library of stocks. s&p 500, dropping below the average. where you can see this slice right here, this moving average is supposed to act as support. when it is cut through like this, analysts and traders alike ask these questions, is it the beginning of a steady downtrend or is it just a correction? we should have gotten that answer late today, many would say. this and theike question will be, we could be looking at a steady downturn. one more time back into the bloomberg, where you can find these stocks. this is an etf that represents the momentum stocks that have led the record rise we saw just weeks ago. decline. leaving the that kind of says it all. >> kind of says it all. su keenan there in new york with another day of tumult when it

comes to trading. president trump certainly does not hold back with his insinuations that beijing is purposely weakening the yuan, but the u.s. treasury is said to be advising steven mnuchin that china is not a currency manipulator. could be seen if china is named a currency manipulator? despite it not fulfilling the technical requirements to have that label. >> the best place to start is emerging markets. a lot of the reasons why you sought emerging markets, under so much pain this summer was because china's currency was weakening so dramatically. the first order in effect, you might see that in emerging-market currencies and emerging-market bonds. another currency that would bid particularly vulnerable is the australian dollar. given how closely australia's economy is linked to the chinese economy. on the positive side, you might

see treasuries get a big bid as investors seek a haven. >> we are seeing paula me -- policymakers in the u.s. say the yuan is too weak against the u.s. dollar. is that true? >> the yuan is weakening largely due to market forces. china has been a big target of president trump's. when you have a country get sanctioned, this is what happens to the currency, it weakens. president trump has made clear how he feels about the currency. treasury staff today, we learned they don't believe that china qualifies as a currency manipulator. we will hear steven mnuchin's verdict next week. >> you talked about the impact on e.m.'s and the yuan is seen as an anchor currency in asia as well. it could have an impact on the greenback as well. >> absolutely. it's a bit of a debate. the dollar has this tug-of-war.

it's a haven currency. investors tend to seek shelter there when markets are under acute stress. if china decides to actually push back and perhaps weakens their currency or strengthens it on the other end, that will clearly have an impact on the dollar, given how important china is in fx markets. is this a signal that the central bank does want to keep stability in the yuan, despite the market turmoil? >> for sure. the pboc's mission is to keep the yuan stable. it would not be a good signal for the chinese economy if the chinese currency was to weaken significantly. that's definite leave the message that markets received, that the pboc is seeking stability. >> thank you so much for that. we await the treasury report.

let's get you to "first word news." >> u.s. authorities have opened investigations into whether shares in broadcom and pa technologies were targets of a scheme. the inquiries are related to the announcement wednesday that the pentagon memo circulating in congress was fraudulent. it raised national security concerns over broadcom's plans to buy ca. president trump says he won't fire fed chair jay powell, but repeated criticism of his policy, claiming -- blaiming -- blaming, quote, "an out-of-control" bank for the selloff. his attacks are a market change from recent white house policies -- a marked change from recent white house policies. >> he has never, never attacked the fed's plan or strategy.

he has never interfered with that. he is giving his opinion and it's an informed opinion. , i frankly i think that think people should listen to what the president is saying. but the fed is independent. we have always said that. >> prosecutors in new york city abandoned part of their sexual assault case against harvey weinstein after revelations that a detective coached a witness to stay silent about evidence casting doubt on one of his earliest accusers. weinstein is still accused of raping another and offended -- raping an unidentified woman and performing a forcible sex act with a different woman. he denies any wrongdoing. the troubled f-35 fighter jet has been grounded after a crash. plane crashed in south carolina last month, and the pentagon says grounding is to allow a complete fleetwide check.

more than 320 jets are operating around the world. lockheed and the defense department are struggling to resolve deficiencies. global news, 24 hours a day, on itter,d @tictoc on tw powered by more than 2700 journalists and analysts in more than 120 countries. haidi? haidi: the trade war is dominating conversations, as you can imagine, at the ongoing imf world bank meetings. we will be live in indonesia a little bit later. >> next, more on markets after that turbulent u.s. session. we will talk strategy with advisers asset management. ♪

we are counting down to the open of trading in sydney for the final friday fray of this week. it's a drizzly, miserable day in sydney.

it's been selling off in this market for almost as long as we have had this streak of rainy days. we are looking at an indicated downside of about 2% when sidney gets underway. -- sydney gets underway. chinese markets bore the brunt of the damage yesterday. composite,shanghai closing lower by more than 5%, the biggest loss since february 2016. all eyes on what's going to happen today. i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. you are watching "daybreak: australia." treasury secretary steven mnuchin is said to have been advised that china is not the nikkei leading the yuan -- is not manipulating the yuan. let's assess the implications of this. , it is still possible that despite not fulfilling the technical requirements, the u.s. treasury still come out and label china a currency manipulator. that would not go down well with

beijing. not, even if the practical implications are pretty limited. it is clear that president trump is putting pressure on the treasury department to label china a currency manipulator. the problem is many economists will point out that the fact that china is manipulating the currency to support it. many treasury officials will be telling trump that ahead of this report. the other area that is causing some tension between these two sides, and there are multiple areas of course, is around trade deals, particularly of the second nafta deal, the deal between the u.s., mexico, and canada. it excludes them from striking deals with nonmarket economies, which is seen as being aimed at china. we heard from a spokesman talking about this, responding to this, and pushing back against what he sees and what many here will see as another attempt by the u.s. to constrain china's rise. take a listen. >> [speaking foreign language]

>> there should be no exclusionism. we believe all economies have a right to develop foreign trade. tom: now, one sliver of hope potentially is a report in "the washington post" that president xi and president trump will be meeting at this summit in november in buenos aires. that is potentially a positive, of course, because many have been looking at the relationship and looking for a way to reset this relationship, and there is a view that if the two men get into a room together, there is a scenario that could unfold where tensions are dialed back. president trump puts great emphasis on his relationships with leaders like president xi.

mildtially, some optimism, optimism with a few caveats around this relationship. we see tom, of course, the selloff rolling into a second day on thursday in the u.s. that contagion was evident in the way chinese markets pretty much crashed in the thursday session here in asia. everyone is asking, where is the national team when we get to levels like this? like we are still waiting for the national team to but there are, those analysts who say even if the national team were to come in with real force, it would be unlikely to stop this momentum. the sentiment here is very negative. the markets closing down in china yesterday by about 5.2%, the lowest level since 2016. there was a tech selloff, particularly noted in hong kong. one analyst said even if there is a temporary tick up in equities, it is likely to be

used by investors as an opportunity to spin out their positions. such is the negative sentiment here. we will be looking at traded of later this morning -- trade data later this morning. it will give us an implication as to the impact of the trade war. exports are expected to slow in terms of growth. early indicators are not looking positive. haidi: thank you so much, tom. chiefnow bring in matt, a investment strategist at advisers asset management. thank you so much for your time today. is this just a plain and simple, some might argue even healthy correction, or is there more to it? matt: the technical breakdown has caused a little more panic in long-term institutional investors than normal. retail investors typically are reading the tea leaves, a little more volatility, as being a bigger deal. i think this is a healthy correction inside a bigger bull market. if you look at some of the

recalibration -- recalibration, the risk off that has been building, we have about $1.8 trillion that has risen dramatically in the last two quarters. what you see is a slow buildup to that and a little recalibration from technical trading. with the midterm elections, the post-kavanaugh hearing, the continuation of the trade talks and tariffs, it's a little bit of a fatigue factor. the path of least resistance was down. i think it's more of a correction inside a bigger bull market, even though we are in the late stage cycles, so you have to be a little more pragmatic this time than in past dips. haidi: president trump keeps saying this selloff might have been caused by the federal reserve. he doesn't like the fed's crazy rates. if you take a look at this gtv chart on the bloomberg library, you can see the fed has been hiking rates, but the financial conditions have been pretty loose up until a couple of days ago. they didn't seem to mind so much. why does it matter now?

matt: i think the most interesting part of this is that you look at the rate hike cycle this time around versu the last five cycless. this is the most anemic rate hike we have seen in probably the most forecasted and projected. they have been very clear and transparent about where they are headed so the markets don't get a shock. if you look at when paul volcker was micromanaging rates by 100 basis points, you can see there is a different dynamic. inflation, although it is slowly increasing, it is slowly increasing. it is not very volatile. president trump is playing on the reason -- reasons,e a myriad of not one major contributor to this. the fed has done an admirable job. they projected going forward that they are going to keep raising rates. they are trying to get a normal curve out there. they are trying to get their balance sheet in check a little bit. that will take a while to get there. they want to have some ammunition ready for the next recession when that it's.

even if we are in the seventh or eighth inning of this late stage cycle, i think you still want to be a little more pragmatic. the fed is doing a very admirable job. i think this is banter more than anything, always liking the spotlight. i think he is a bit wrong in this scenario. the fed has navigated the shark infested waters for the last decade ready well. -- pretty well. haidi: what would make you change your tone asked to looking at this as being a correction that is typical of this part of the late cycle to, hang on, this is maybe the beginning of the end that we are seeing? matt: you have to look at fundamentals, i think. if you look at the nasdaq and use it as a proxy for volatility, you see a tremendous amount -- 31% over the last three years where the monthly close was below 5% of the high and the average correction during that time was 9.8%. you are used to seeing a myriad of corrections inside the longer bull market cycle. i think that's what we are

seeing. if i was to say what would concern me, i would have to see a breakdown in fundamentals. right now we are not seeing it. if i look at consumer balance sheets, the household net worth $11.6 trillionn, plus in household deposits -- lows we have not seen since 1988. those kinds of things are the things you look at. also the sentiment numbers have to break down from it asleep before we start seeing that happen. the leverage isn't necessarily down tremendously before we start seeing that happen. the households and the balance sheets and the sentiment numbers are still pointing higher. i need to see those fundamentals breakdown before i start to think something more serious is in play here. >> are you adding to positions given the selloff or are you rotating towards choices that

are more reflective of late-cycle conditions, etc.? matt: we have been bullish on international. we are still bullish on emerging markets, even with underperformance this year, just because where we think the trade negotiations get finalized and worked out. in america, when you look at the late-stage cycle, we still like financials. a lot of the things that have been under returning this year, energy, commodities, basic materials. when you look at late-stage cycle especially with the current environment, we have had an elongated cycle that is much different than the past, usually value investments crop up towards the end to get some but we are not seeing that. we think that is the best risk-reward scenario. we also have been increasing our credit quality slowly in our fixed income portfolios just to hedge a little bit down the road about when there is a liquidity constraint or a certain ratings cut in certain debt markets. as a whole we would be adding

more to those positions,. we still do like europe and japan and also the emerging markets in general. haidi: on your comments on leverage, when you take a look at corporate balance sheets, we have seen a lot of companies that have gone in this emanate -- on this m&a binge. that does not worry you? matt: i think it does to appoint, -- to0 a point. a lot of that has to do with repatriation of money, that has not quite hit the highs that people thought. if you look at the corporate financing gap that the fed flow of funds reports, we went from extreme highs to extreme lows, which means corporations don't need to access capital markets right now to fund their levels of operations, which is who julie important -- is hugely important. we are not really near there. you look at the cash flow levels, positive cash flow. we still think there is room for them to run on the basic metrics.

earnings we think won't be as high as they have been the last two quarters, but still selling some growth -- showing some growth. if you start getting the trade war, which is more saber rattling at this point, which could turn into a trade war -- once the midterm elections -- it's probably an accelerant to getting that resolved. you should see unfurling from risk off to risk on. that should help with some of the equity assets across the globe. haidi: matt, appreciate your insights and your time. matt lloyd, advisors asset management. let's take a look at how the asian session is setting up. the selloff in the u.s. rolled on for a second day. it's not looking terribly pretty here in asia. a little glimpse of hope from ko spi futures. at the close5, 4% of trade yesterday. sydney. seeing the, we are

only asian market still remaining in the green for the year, looking pretty fragile, a downside of 1% at the moment. shery: coming up, wwi t meeting. trade tensions dominate discussions there. this is bloomberg. ♪

it's 9:30 a.m. here in sydney where markets open in just 30 minutes time. .eatures seem pretty dire it's a gloomy day here in sydney, not much sunshine coming through. the asx off close to 3% yesterday, wiping out the gains on the year and trading lower than 3% your to date. at 6:30 p.m..york you're watching "bloomberg daybreak: australia." let's get the first word news with jenna dagenhart. jenna: steel imports from china and elsewhere -- to avoid the

coming a dumping ground for u.s. duty. the justin trudeau government faces continuing tension with the u.s. with tariffs on steel and aluminum earlier this year. metal duties will be dealt with separately. open access the world will need 900,000 fewer barrels a day of its oil next year due to a weaker economy and higher output from rivals including u.s. shale. the cartel and its allies are under pressure to pump more crude to offset looming u.s. engines on iran and the collapse of venezuela. u.s. stockpiles posted a third straight game last week when west texas crude saw its biggest two-day drop since may. u.s. authorities have opened investigations into whether shares of broadcom and ca technologies were the target of a stock manipulation scam. comes amide concern

the fact that lawmakers were securityemo containing implications of broadcom tile. the justice department and the sec of growth investigating. newgovernment of papua guinea is facing criticism after bank custom-made maserati's to be used for one week in the upcoming summit. they were flown in on chartered jumbo jets. new guinea is one of the asia-pacific's poorest countries, but the government insists that the private sector is paying the multimillion dollar bill, and it will sell the cars after the summit. 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. at theasian stocks lowest level since may 2017, and here in the u.s., we saw another

blowback when it came to equity markets with the s&p 500 falling to the lowest level in three months. let's see how this will play into asia. sophie: some are calling this the hunt for red october, with the asian benchmark looking at an 8% drop so far this month. references being drawn to black monday that we saw back in 1987. take a look at what's happening with futures, we could be looking at a mixed into the worst week for asia since february with futures nudging higher from both the nikkei and .he kospi some downside pressure coming in for sydney as well as news the love -- as new zealand. taking a look at some sectors to watch and sydney, with commodities caught in the maelstrom as market sentiment had cyber. , rioin and i on miners tinto is forecasting 3.2% annual growth over the next five years

in the aluminum sector. so some light coming through the blue there. gloom.ng through the we could see gold miners gain ground. over in japan, i just want to put some stocks on the radar as earnings season is ramping up. the next big retailer up to bat reported a 40% rise in profit on overseas growth. convenience store profit did fall and it had to cut its annual sales outlook. when company saying excavator sales in china and stuff in september after filing by nearly 10% in august. so little bit of positivity there perhaps. friday, but we have

to get through one more day of trading. let's take a look at what the asian session has in store. chinese stocks for the brunt of losses yesterday. >> the selloff was so brutal, it kind of left the market in a precarious position from a technical standpoint. if you look at any of the 50 or 100 or 200 day moving averages, they are all just blown out of the water. we are down 27% from the january peaks. that chart shows almost moving averages. the reason i discussed that is because it's difficult for fundamental investors to want to get back when momentum is working so hard against you, even if you see value, it's difficult to be able to make long-term sense of it. haidi: when chinese portfolio

manager saying fund managers are or just plain dead in the water. adam: that's understandable, you just need things to settle down but even if you want to make an incremental step back into chinese equities, if he didn't have exposure for interleukin to grow that, or if you been hit during the selloff and willing to take it vantage of some of these discounts, it's very tricky at the moment. the absence of any indication from authorities that they are making some adjustments to policy, it remains pretty tricky. remember the yuan has been weakening still. we had a bit of strength overnight, were back down below that .9 key level, so that may give a little bit of comfort to sentiment. there some indications that futures might get a little bit of a bounce, but whether that is sustainable, it's far too early to tell. haidi: if we're looking for cues from the u.s., technical? adam: if a different picture in the u.s. with technicals.

biggesttainly the discount to that 200 day moving average in a couple of years. marketearly a key junction now in terms of where the fundamental value with. a lot of the selloff in the u.s. is related to the tightening of financial conditions and the repricing of the bond market. the bond market for months had struggled to keep up with the fed and had ratcheted up over the last couple of months an idea of a clearer policy tightening path in 2019. let's now that back a little bit, in the last couple of weeks , a lot of the selloff in the u.s. has been down to highly richly valued tech stocks. in many ways, what we are seeing from the u.s. and those elevated levels is very different from what's happening in asia. it's been a protracted time of weakness here. haidi: thank you for that, adam

p check out our library for those technicals and charts that adam just referred to. shery: u.s.-china trade war is dominating the conversation at the world bank meetings in bali. concern is growing that the tariffs could torpedo the global economy and some experts say it will topple the dollar from global dominance. let's bring in kathleen hays. what are you hearing? from just about every conversation here at the imf, it's not surprising that this global trade war is basically a u.s.-china trade war, it has escalated. the chinese are digging in their heels and president trump and his team continue to push hard, little progress made here in terms of meetings although there was a brief meeting with the chief.

nevertheless, avoiding a trade war that gets worse and undermines the global economy, which many people say is still on a pretty solid track, but there are risks. spokeandard chartered she at our bloomberg modern markets event yesterday afternoon, and he isy this is a risk taking seriously, but one he thinks can be avoided. let's listen. >> global growth is going to be that it was in visit to be before hand, but still the growth rate is pretty good. we need to make sure we avoid a recession. i think the first thing is to avoid damaging global trade. >> a very interesting thing i found emerging yesterday, also at the modern markets event but in a couple of events i attended, both of them kind of off the record for the media,

but on the record for bloomberg, -- person was lamenting think about it, when the dollar moves, it can rock asian currencies and indonesia is a textbook case for that. the strong dollar has helped undermine the rupee a big-time. the rate hikes and they think they tried. the idea of an alternative to the greenback was raised at another event i attended where the european finance official was raising the question, is the world on its way to a multipolar currency system? could the euro gained more of a prominent role? the world's% of reserves are held in dollars, but as people get more concerned about the volatility coming out of the policies this administration is pursuing, all the more reason to want to do

more pure business and trading in other currencies if you can. looking at the renminbi, this was raised in the context of the possibility it will rise as it gets more transparent and develops could be even boosted by the behavior of the administration recently. a very specific view, but one that is being bandied about. and president trump continued to put pressure on the fed is crazy come that he knows more about monetary policy then jay powell steam does, and also the big stockmarket selloff. what are people saying they're in bali? kathleen: there have been a lot of references, a lot of people have been discussing what donald trump, his latest that bashing. if anyone is causing the stock market to selloff, it's the

trade war and president trump should take some responsibility for that. i think that is the general view. in terms of the fed been crazy for raising interest rates, we will speak to jacob frankel, arranged to him yesterday at one of the events i attended. he will talk about why the fed is on the right track and why they should not be changing course at this point. and then the question of the spillover effect of fed rate hikes on emerging markets, a lot of people are saying the fed should tread more carefully. will speak to the research director at the bureau of international settlements of this eis. he said is not so much that the fed should change course, but they do need to be more cognizant of how these policies spill over into emerging markets and how that can reverberate back to the united states. haidi: looking forward to that, kathleen hays their coming to us from the imf and meetings in bali, indonesia. coming up, the outlook for

.ussie lenders that's next here in sydney. let's look at asian futures after the selloff rolled up for the second day on wall street. looking pretty grim as we head into friday. kospi looking at little brighter, unemployment numbers coming out later this morning. indicating a downside of about 2% in trading gets underway. we have a recovery rally when it comes to the kiwi and the aussie dollar. they should be out performers in the g10 space. new zealand, asia's only market that remains in the green this year, but seeing losses of just about .10%. this is bloomberg. ♪

shery: i'm shery ahn in new york. haidi: i'm haidi stroud-watts in

sydney. you're watching "bloomberg daybreak: australia." the ceos of the biggest banks are being questioned in a public vendors repeatedly pursue profit ahead of customers interest. matt says he's committed to restoring trust. david, the interim report, as you say, was long on an exposition of what happened, but not much in the way of actual recommendations. it feels a bit like a toothless tiger at this point. david: i wouldn't go that far, but it was full of questions and not so many recommendations. the final report is due in february next year, it will be full of recommendations and it will be up to the government whether -- to decide whether to adopt and implement those recommendations. i want to put up a chart

to look at the teflon effect that australian banks seem to have, even in the face of some of this extraordinary and quite damaging report and allegations we are seeing come out of the testimony. the big four banks rallied after we had the interim report and they haven't done too badly throughout the course of the entire process. is there since that investors are sanguine about what kind of measures could be taken against the lenders? david: if you look at the longer-term, that's the key here. there's going to be a lot of noise and uncertainty the next 12 months or so and maybe even longer. looking longer-term, the outlook for the major banks in australia is really tied to the health of the economy. in my view, the economic outlook looks ok. obviously the recommendations from the royal commission will result in changes to the industry structure, but it will

more affect the wealth managers rather than the major banks. shery: here in the u.s. we've seen complaints divisions work overtime to rein in these banks. we've seen reports that they cannot use swear words over the phone because they will be monitored. how strong is that monitoring in australia right now? in the past, we've seen that they preferred settling with negotiations. if they breach the law, how badly will they be prosecuted? well, that's one of the clear conclusions or outcomes the the royal commission, key regulators will be more proactively and aggressively pursuing any discretions or digressions and any lawbreaking. in the past there has been less of that and it's highlighted by

one of the key points made in the interim report that the regulators were bit too keen to and to negotiate outcomes. going forward, that will change, and i think we'll see far more aggressive enforcement to key regulators in australia. i think there's been a massive debate over regulations versus overregulation. you've take the premise that maybe the problems revealed in the commission so far are structural, to do with the banking system and trying to get sales and commission targets to shareholders, does more regulation actually help change that? david: no, and that was one of the key points of the royal commission report, that additional regulation is not the answer. we've already got complex regulations and the enforcement

is more important. looking at the four major banks in the australian banking system, it would be very easy to get the impression that is a basket case, but australia hasn't had a recession in 26 years, and australia is one of the wealthiest countries in the year. australia has a very strong financial system, led by the four major banks. requires a needs and strong banking system, and australia has it. haidi: always a pleasure to see you, david ellis. you can watch that parliamentary live aty taking place the moment. shery: over in the u.s., earnings season is upon us again. three major u.s. banks report

bank ofn new york, america, goldman sachs and others next week. what should investors be watching out for? >> it seems like no one is really thrilled about anything coming out. it's actually what's happening in the fourth order. were alwaysgrowth, wondering what's going to happen near, and net interest margins. let's go into my first chart, i want to show you what we are expecting in terms of bank revenue growth. mixed bag.s a jpmorgan, we expect a 5% gain in revenue against the third quarter of faster. the benefits coming from higher rates as well as stronger cost control. you can see citibank, it might see revenue rise of about 2%. beingfargo possibly

negative and contracting by about 2%. if he is expected to rise by the 13%. margins,t interest also a bit of a mixed bag. lone fallerthe here. analysts are saying the future is more important than the past. one veteran bank analyst is saying the third quarter is an example of ancient history in that it really won't reflect the interest rate rises that we already have been experiencing. we will have to look ahead to the next quarter. shery: what is important for the fourth quarter? remy: the impact for what it means as far as mortgages and loan growth. i want to show you this chart that shows loan growth over the past several years.

we can see in blue this is wells fargo loan growth, and it is not growth, it is actually contraction. we are expecting more of the same. bloomberg intelligence thinks this could fall by about 6% over the next quarter. looking at loan growth for the other banks, it is still positive in the five it's still possibly could be doing that. u.s. mortgage rates have been rising and they continue to rise. they are at the highest in the past seven years, and as mortgage rates rise, a lot of folks don't buy houses and that could impact the banks. up on plenty more coming "bloomberg daybreak: australia." this is bloomberg. ♪

shery: i'm shery ahn in new york. haidi: you're watching "bloomberg daybreak: australia."

let's get a quick check of the latest business flash headlines. delta pull most aviation shares pricingaying that are power will help combat higher jet fuel costs. higher revenue and cost control adding at least $2 billion to cost this year. advancena said to be in talks to sell its -- offering , backing and check in channeling, cap and cleaning, and other services. it could fetch more than $3 billion. it is selling assets around the world after racking up the largest corporate debt in china. pursuit of his fourth company is said to be moving ahead. were told a group has spoken to banks that financing and

carrying out due diligence. the consortium made a , valuing it ater 4.7 billion euros, or $5.5 billion. that's about it for "bloomberg daybreak: australia." retaking a look at trading in new zealand, were just a view minutes out from that open. friday's session in australia as well, things are not looking terribly positive as far as futures -- futures and currency trading. day inket had its worst over 10 years. the kiwi dollar continuing to outperform against its g10 peers. the aussie gained as much as 1% overnight. sydney futures are looking a little bit more positive but it looks like we will see losses at the open. shery: will discuss all of that would jacob frankel and talk about the selloff, but also about the potential labeling of china as a currency manipulator,

not to mention president trump's comments on how he does not like the fed rate hikes. haidi: that's it from "bloomberg daybreak: australia." we will stick around for daybreak asia next. this is bloomberg. ♪

haidi: good evening. sophie: welcome to "daybreak: asia." . haidi: our top story: asia pacific market set for the worst week so far. u.s. stocks fell a second day. the s&p losing slide.