haidi: good morning, i'm haidi stroud-watts in sydney. shery: i'm shery ahn. welcome to "bloomberg daybreak: asia." haidi: our top stories this tuesday, asia-pacific markets, amid great concerns taking a toll on confidence. washington stopped short of labeling china a currency manipulator but the treasury

says it's keeping a close eye on it. if i must is pursuing a deal to buy -- despite the escalating trade war. a volatile session, we sold the downfall 4%. a mixed bag of earnings, ibm disappointing results waiting on the doubt. the s&p 500 ended flat, financials gained ground but energy stocks pulling back as we saw oil hit a one-month low. tech stocks were also under pressure so we saw the nasdaq not changing that much. the fed minutes were also in focus. some are just been saying the rates will eventually have to move up. above 3.2% andld also the dollar gaining the most in three weeks, but of course aina no -- not being labeled

currency manipulator will all play into asia. haidi: it should be a breath of respite for those worried about the trade war. development.at that will affect some small operators in china that do business with the u.s.. take a look at how it's playing out in the early part of the aussie in kiwi sessions. a strain trading just getting that second start underway. the jobless rate holding steady at 5.3% is what we're expecting. were seeing it pretty unchanged when it comes to trading on the asx. we'll give that a bit of time to percolate through. new zealand just coming off session highs at the moment, keeping its head above water. we did see the kiwi dollar as well as the aussie dollar declining overnight.

falling in tandem with oil prices. let's get you the first word news with jenna dagenhart. >> a way of breaking the deadlock in brexit talks. bloomberg -- bloomberg is told theresa may's considering extending for 21 months. the trump administration is warning against putting u.s.-saudi relations at risk because of the jamal khashoggi affair. secretary of state mike pompeo said turkey will publish its investigation to what allegedly happened to the writer at the consulate in istanbul. president trump is claimed to withdraw the u.s. from 192

nation treaties. it gives chinese companies discounted shipping rates for packages sent to american buyers. officials say the administration tried to revise the universal postal union last month. manufactures groups say the discounts are subsea for chinese shippers and it cost the u.s. postal service 170 million dollars last year. president trump is asking every government department to make budget cuts, saying he believes he can cut out ways to reduce spending by 5%. he told the cabinet he had not asked for tighter budgets earlier because he was negotiating with democrats in congress for more funds for the military. the 2020 budget is due early next year. it will cover the fiscal year that will start on october 1, 2019. 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. the treasury department

has stopped short of declaring china a currency manipulator in report on exchange rates. thus averting a further escalation of the trade war. that's go to greg sullivan for the details. does this have the potential to help ease tensions between the two countries? greg: i would say that had they declared china a currency manipulator, it certain he would have increased tension between the two countries. the report declines to name china a currency manipulator. actually said that no major u.s. trading partner was need relating their currency. it's a semiannual report that comes out. treasury secretary stephen mnuchin has been under pressure from the white house to shame certain legaler a framework, china didn't quite cross the threshold to be labeled by this report as a currency manipulator and the treasury department did not do so. in some ways it does give a

amid rising tensions on multiple fronts with china, but it was also somewhat expected. so we cannot say it will significantly ease tensions going forward. shery: secretary mnuchin has been talking about currency manipulations is back in july. a receiving any sort of consensus building within the white house when it comes to its approach toward china? greg: we have heard from president trump that he himself has called china a currency manipulator. he has made those comments, and in some ways what is interesting is that the report continues to contrast with his own treasury department, which is saying we are very concerned about the yuan depreciation. where watching china. the report warned that they would continue to watch china and their currency moves. the report said that while china intervention any

of the centric was limited, it warned against further interventions. so you have the treasury department saying that manipulation doesn't reach the legalistic framework to be named a currency manipulator. but president trump said yes, china manipulates the currency. it looks as though the white house will continue their pressure on china on front from trade to the military, but at least on the front of currency many place in, they are holding their fire for now. haidi: as you say, the administration able to get a jab at china on another front. they previously given them discounted shipping rates, so what is the issue here? greg: it's another front for president trump to escalate his economic confrontation with china. the president at the white house today said they would -- give

china a discounted shipping rate on small packages to the u.s.. business groups were happy with the decision, saying they amount to pretty much subsidies for china. it's another way that the president can say the playing field is tilted against the u.s. in favor of china and he wants to take action everywhere he sees a potential tilted playing field. here he perceives that china had an unfair vantage and it looks as though the white house will move to take that away in their efforts to rebalance the trading relationship. greg sullivan eric, thank you. thatreasury report, refrain from naming china as a currency manipulator coming after the close of trading. and a stocks edging lower day we saw a mixed bag of earnings.

su keenan is with us now. this raise the odds that we may ahead.es above had filed their way back from earlier losses. they did not manage to go into the green by the close. a big mover was the bond market, you look at the five-day chart, notice the spike to yields right at 3.2%, as sherry mentioned. that was as bonds sold off. it appeared they didn't delve into a debate as to how high they could raise them, but many believe this was not an eventful seven minutes. as go to the snapshot, the dollar rose, the bond yields you see a 3.2, but the big weakness in the market was tech, and

that's a concern for market watchers. we did not extend big gains from the prior session. notice the volatility was lower. let's go to some of the big movers, earnings continue to be a driver. ibm was down in a big way. positive, the entire airline industry managing to eke out some fare increases and a researchr travel, also positive for some of the chips, but again, chips were a source of week. let's look at some of the other big movers. caesars up in a big way on speculation the golden nugget could be talking about combining the two companies, and check out an eco-friendly buildings product that secured an acquisition that caused it to skyrocket higher. lowertocks seemed to move

, the legalization in canada of cannabis, and campbell soup, by the family founders of campbell doing their best to fend it off. haidi: and the latest housing data showing a slowdown when it comes to new homes being constructed. what are the concerns in this space? su: it's been a rough year for homebuilders and analysts say going to get worse. thelatest data showing --tember housing markets stocks were all lower. showing construction was weaker. and's go into the bloomberg

take a look again. president trump has talked about how he's concerned about interest rate, he says the biggest threat is higher interest rates. the blue line's is mortgage applications. you see it plummeting lately. next, we will discuss china.ning in this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." trump has notnt been shy of criticizing fed policy in recent months. just yesterday he called the fed's biggest threat, saying income growth is threatened by rate hikes so the release of the latest fed minutes won't make easy reading for the president.

thank you for your time. minutes asee the fed meaning more rate hikes will come. they took it as a hawkish sign. would you say that was the case? minutesld say the didn't actually tell us anything we didn't know already. it did crystallize some of the takeaways and that's natural in light of the data we've been seeing in the u.s.. for theded our forecast target fed funds rate for 2019 and i think it's consistent with the data and consistent with the minutes. shery: we're seeing the library on the bloomberg showing a theoretical neutral rate versus the fed rate. we are probably getting closer to that level, and now some officials saying we could possibly move above the neutral level.

indication of that for markets and the rest of the u.s. economy? sonia: the u.s. has been enjoying low levels of rates throughout this business cycle and that's consistent with the fact that we can coming out of a very severe financial shock following the global financial crisis. it's also consistent with strong cyclical growth that we've been witnessing. in2017 and even more so 2018. i think the economy can very well with standard and i believe fed officials also think the same. haidi: i think in that chart that sherry just brought up, the idea that the neutral rate is a concept rather than a level or number, do we really know the implications and the meaningfulness of that level until we hit it and grow beyond it? don't, and in that respect even we might not know the exact level, but it's a very

useful theoretical concept. both for the fed officials when they assess the invocations of their policies stand on the real economy as well as for the markets when the fed is trying to communicate whether they think they're currently in an accommodated stance or in a restrictive stance, in which direction they expect to be moving in. important asnot as indication of the direction in which the policy is moving. how much do you think the fed needs to worry in terms of the impact of a terrible war? with a be looking at short-term inflation coming up, the potential for longer-term drive from the trade war -- the impact of a trade war. or the impacts going to be so staggered that it won't be reflected in either the data or the policies? sonia: that's right.

the u.s. economy at the end of the day is a fairly close economy. with respect to business confidence, if there were strongly to business confidence and we were seeing evidence of that, i think the trade war would be a bigger concern both for investors and fed officials, but we are not really seeing that in the data. that's one reason might affect is estimating the impact of the trade war will not be significant to the u.s. economy, at least in the near term. shery: what happens if the tariffs on china are doubled next year? that could stoke inflation when we have job numbers coming in the lowest in years. sonia: is somewhat of an upside risk, but the fact that the economy's doing very well, consumer spending a strong, we're seeing the benefit of tax cuts and consumer spending as

well. and employment come as you mentioned, is it very strong levels. historically that the strongest indication of consumer spending in the united states. tolically, upside risks inflation come from the strength of the economy domestically more than anything else. >> so you're looking at what the fed is doing, where are we in the business cycle? to tell, i think a lot of indicators, including unemployment, tell us that we are quite late in the business cycle, but the fed mentioned yesterday in the minutes they with it's consistent expectations on the private sector site, that of business investment continues to surprise to the upside, if it broadens out, the productivity enhancing sectors such as intellectual property, computer equipment, which is something we saw for the first time in 2018, if that continues, we could see some capital deepening in the u.s.

and that would extend through this cycle. i wonder what your some sins are when it comes to the u.s. dollar and the behavior respective the trade war deepens --.her not and the tariffs do expect the u.s. dollar will continue gaining and do you expect the administration or president trump to at least continue to verbally tried to talk it down? think for the u.s. dollar, what is important in the near term are central-bank expectations. we saw limited reactions to the minutes. that expectations for the fed to continue to hike are pretty much baked in. unionforget, the european , the eurozone is growing at a healthy clip.

maybe not firing on all cylinders the way the u.s. is, but europe is also growing healthily. an upside surprise from the ecb would be dollar negative. shery: earlier i mentioned president trump criticizing the fed. we've heard from former fed chair janet yellen saying this would be damaging and unwise, yet you have us stanford university professor saying this was an ongoing discussion. in your view, what he is saying the president's rhetoric could do not only to the fed but to the rest of the economy? the fed has a mandate of full employment and price stability. they cannot deviate from that mandate, irrespective of rhetoric, especially given that we're seeing strong growth on a cyclical basis in the united states. our expect that to remain the case based on the actions the

fed has taken so far. shery: it was not at all discussed in the latest fomc meeting, according to the fed minutes. thank you so much for joining us from singapore. up next, canada becomes the first g7 asian to recognize recreational marijuana. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: i'm shery ahn in new york. canada has become the first g7 country to legalize recreational sale of marijuana. i line scores -- stores across the country have begun sales in a historic moment for the sector. however, stocks fell head of an impressive run of of legalization.

a reporter joins us from our calgary bureau. canada,at happens in other countries could be re-examining what they will do with their own policies. u.s., ninet in the states and the district of columbia have legalized these sales. go?how did the first day carlos: the first day went well, things went smoothly. people were comfortable going in and buying, a lot of people were saying how this was a historical makingw it was them history, of course. but there's also the concern that is still a bit expensive, and these shops have to compete with a black market that still exists out there. i believe there were about 17 stores opening in alberta. you spoke to the boss of a

calgary chain. what did you learn? ceo's, i spoke to two and one of them was speaking about that, the competition with the black market. he was optimistic because he thinks that on the one hand, they will always be able to have promotions and sell a certain strain of pot for less than the black market, so they are really coming in to compete with the black market, and on the other hand, there will be a bunch of people who prefer to buy legally , but if they are paying a little bit more. another ceo was talking about supply because another concern is, with this growth of legal pot, in the coming weeks and months, will the industry be able to supply them? and he was very optimistic that they will. because things have been well-planned, and they are taking one step at a time.

despite all the excitement in the stores today, most pot stocks actually fell. carlos: look at the two biggest, ,wo of the biggest producers one of them fell 6.4%. his stock is up eightfold since july when they started trading. increase in the run-up to today. today was definitely a bit anti-climatic, for sure. carlosthank you so much, , on day one of legalization of recreational marijuana in canada. coming up next, tesla's drive into china shifting up a gear.

ahead.t all the details this is bloomberg. ♪

haidi: it's 10:30 a.m. here in sydney. markets have been trading for about 30 minutes. a downside when it comes to a strange docs, u.s. stocks ending off their session lows but still all major indexes lower their overnight. was a volatile session in new york, fluctuating throughout the day. based on earnings, investors keeping an eye on the latest fed minutes and ibm disappointing, that's weighing on the dow and s&p 500 being pulled lower by energy stocks. i'm shery ahn in new york. haidi: i'm haidi stroud-watts in

sydney. you're watching "bloomberg daybreak: asia." let's get the first word needs from jenna dagenhart. the treasury said it will after its recent site. secretary steven mnuchin said he's particularly concerned a china's lack of transparency over the yuan fall. the report to the u.s. is disappointed that beijing doesn't disclose currency intervention. u.s. commerce secretary wilbur fragile up transatlantic trade truce under pressure right accusing e.u. of dragging its feet over pledges to open markets further. speaking in brussels, he saying --ne leader twitter has published millions of tweaks, images, and videos of

thousands of gases says is based in russia and iran and or malicious. decided previously disclosed the illicit activity that goes back to 2016 but is now making the data public to encourage independent inquiries. big tex has been deciphered slow response to meddling in politics in the u.s. and elsewhere is allowing u.s. users to download a copy of data via a single online portal that was introduced in europe as part of data protection rules that arrived earlier this year. before come they could only access the data by contacting apple directly. 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. dagenhart. this is bloomberg. howi: let's take a look at

trading is getting underway here in australia. in the early part of the session we are seeing .1% lower on the asx. , bitussie dollar holding of an underperformer as we saw currency when it comes to risk currencies and commodity currencies falling alongside oil prices as well. heading over to new zealand, this is the picture when it comes to kiwi assets, modest gains when it comes to the anz. a little bit of a decline there. bloomberg markets global editor doesdney, the question is, this show bias?

>> this is the year that being characterized by generally very low volatility across asset classes. last week was a notable exception to that, as was the spike we saw going into early february in the first of the inflationary worries started, but certainly after the spike we saw last week, and currency markets and bond markets were seeing volatility coming back and looking like it could get through the end of the year back to these low levels. treasurieshighlights and global currency markets and in a sense it giants with what we're hearing from investors who have been sane this program, a lot of people are expecting not much of a move in 10 year u.s. treasury yields, around where we are now. no one really expecting any

sizable breakout of yields now. the thinking at the moment is we have gone through that uptick in volatility and we may be able to sustain that for the foreseeable future. shanghai composite losing more than 20% this year. so where is the national team? >> that the question we always ask during times of volatility and turmoil. in china, the national team has been known in markets as an extension of the state authority apparatus there. they come in and support markets like they did in 2015 in times of distress.

what we have seen this time around and are reporting has shown is a lot more of a localized regional field and a national feel. in beijing, what we've seen is that officials have helped their locally listed companies to really give them some support. that is very different from what we saw in 2015 when it was a far more national effort when brokerages were asked to pledge money to a market risky find, and there were many critics of that kind of approach. you get a lot of wasted funds when it goes into that be collected hot. but happening now, are reporting shows a lot more specific, more localized and more tailored, but clearly sentiment is still very fragile in chinese equities and retail heavily driven market that continues to weigh hard on

the fact that we've got this bear market, we've been in this protracted bear market for some months. 25% or so off the highs. sentiment remaining fragile, but at the margin, this localized, tailored support is starting to help. adam haigh, thank you so much. you can find that on the bloomberg. tesla announced a big break in china recently but the timing may not be ideal. rainy, what is going on with tesla? >> a star with a positive news. the company announced a deal in shanghai for the latest factory. that's the good part of things. the bad part of things is it comes at a time when china's automobile consumption is starting to shrink, possibly as 1990's was the last

time they started to do that. purchases of passenger vehicles are down for the third straight month in a row in september. in addition, local competition is increasing as well. it's still not a done deal in terms of production. elon musk himself is said it would take maybe three years for it to come online. you're seeing pictures of the factory in nevada. maybe it will look something like that. talking about for years with local competition on the rise, the prospects for tesla look that much more challenging. so tesla vehicles in japan will be rolling off the line anytime soon, but another executive has driven away with some degree of secrecy.

>> this made headlines earlier today. another executive adding to the several that have departed over the past year. talking about the vice president of manufacturing. apparently email sent to his accounts have bounced at both tesla has decided they don't want to reply to anything here. it adds to the growing list of departures. the chief accounting officer, the chief of supply management, finance, hr and well as as as well as communications, they have all left. it has been a recurring theme in far -- as far as elon musk trying to retain his senior management. it comes at a time when the share price has not done so well. littleday it's down by a -- a little under 21%, after some recent that can for.

hit $380 after that funding secured tweet. we know how that all ended. there's a lot of headache happening here. the latest positive news out of china may not be able to staunch the leak. the latest on tesla's victories and continued woes. coming up next, china escapes being labeled a currency manipulator. this is bloomberg. ♪

shery: president trump plans to withdraw from global treaty that rates,iscounted shipping firing yet another shot in the trade war. tom mackenzie joins us now from beijing. , we do need to.

know about this post a treaty, but apparently it's one hundred 44 years old, he makes a big difference for chinese firms shipping into the u.s.. yes, we are all now experts on the slightly strange treaties. in the 1960's, apparently, this allowed for developing countries to be able to ship their goods into the u.s. market. that's what the trump administration is taking aim at. postal union headquarters are in switzerland. inleaves a 12 month window which the rates can be negotiated. the trump administration said they tried to start negotiations in september and were rebuffed. i say they were forced to take this action to pull out that it does give a timeframe in which the rates can be negotiated for renegotiated. manufacturers in the u.s. welcome this move.

they have described it as an outdated treaty and say it led to a lot of these accounts being dumped into the u.s. market. they said essentially it led to a subsidy of about $170 billion chinese manufacturers last year. it's been broadly welcomed by many factors. other countries were also impacted by this. administration said it wants to remain ultimately in the treaty if it can renegotiate these rates. haidi: a sigh of relief at the u.s. treasury not naming china a currency manipulator in the report announced a few hours ago. it's not a complete free pass to beijing though. >> the language was squarely focused on china, steve mnuchin said he was still concerned about the weakness of the yuan

and concerned about the lack of transparency around the policy china needs to push through market orientated strengthn order to add to the currency and improve around the renminbi. that was his policy prescription to the chinese. the chinese would say they are faced with the starting economy. the pbc oh -- pboc governors saying they continued trading within a stable range until the end of the year. others in beijing have said for a number of months they will not weaponize the yuan and not devalue it to get a competitive edge in the trade war. haidi: thank you so much for that, tom mackenzie. in our guest from singapore. great to have you on with us.

were you surprised the treasury report, the definition of the criteria for currency manipulation is quite limited. where you surprised this was not more politicized? >> thanks for having me here. the fact that the u.s. treasury department is not label china as is within manipulator our expectation. we think it is highly unlikely for china to be labeled a currency manipulator. china the -- fulfilled the first criteria which is at least $20 are the third come repeated intervention in the currency market.

so we felt it was unlikely for the u.s. to label china as a currency manipulator. haidi: does this put them in the clear? any manipulation or any intervention we've seen has been to the upside. weaken,uan continues to we talked about it being a line in the sand. that seems a little uncertain at this point. do you expect authorities will step in a little more aggressively to support the currency? think we have a strong line of defense this year. think seven still remains a ,trong line of defense [indiscernible]

since been declining 2017. if you look at the latest data, it 8.2% in august. so the supplies really low. that's the first reason why we .hink seven is a strong number if you look at the recent , it'scement from the pboc a direct measurement of liquidity. how they managed a liquidity onshore is strong. we see the tightening of liquidity as well. we do expect to see rising capital outflow in the coming quarters. in august, the

outlook is not there yet. data, thek at the monthly outflow is around $66 billion u.s. per month from june to august, we only see monthly outflow just more than $10 billion u.s., so the outflow is still -- because of tightening come and supply relative to gdp this year. if you're seeing authorities prioritize growth , and you alsoves have more trade tensions, and the example of what happened in japan in the 1980's and 1990's when the end appreciated oh drastically, do you really expect the pboc to be in the

mood for a stronger yuan? lemon: we wouldn't say they are in the mood for stronger yen. we think like the pboc governors want volatility, [indiscernible] they are actually doing this. to slow down the piece -- slow down the pace. capital measures, so it's a friendly gesture in u.s.-china trade negotiations. so it's a very slow pace. we think that is what the pboc

ones. shery: hang around for a second because we have breaking news out of japan. the trade balance coming in at ¥139.6 billion, that's a surplus of ¥139.6 billion instead of an ofimate, a fall to a deficit 45 billion and much higher and a jump from the previous month of august when we saw the deficit of ¥440 billion. so it looks like the surplus is billion yen139.6 for the month of september. of course we had higher oil works and other factors into the export and import numbers as well. haidi: are starting to see that drag when it comes to exports, not just because of the typhoon effect and two days of public holidays in september in japan, but also underlying demand starting to show through. are seeing that construction --

contraction of 1.2% after 21 months of gains. a pretty we miss given that that's pretty big miss, sliding into contraction after 6.6% growth in exports in previous month. the imports coming in at 7%, pretty much half of what were expecting. oil prices don't seem to be contributing that much comes to oil as well as lng imports. shery: pretty interesting that exports fell and contracted instead of rising, especially when we saw the weaker yen and the experts were there that exports would rise. about thatking appreciation of the japanese yen back in the 1980's and 1990's contributing to the economy there getting hurt. what are your forecast for the japanese yen and also the u.s. dollar?

yen, weor the japanese don't like the long yen against the u.s. dollar. theike to swiss franc and yen. apparently with the u.s. midterm coming up and the global equity we see more downside for the u.s. versus yen. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. mobileso available on

and you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: let's get a quick check of the latest business flash headlines. united jumped the most since july, hoping pay the rally for wider aviation stocks. booming travel demand let the wither raise fares aggressive expansion plans. saw an increase on nine carriers. pizza hut is offering posta, wings, or medium one topping pizza for fraud dollars when customers buy at least two orders. dominoeso discount at

while burger king's advertising one dollar chicken nuggets and mcdonald's has a revamped menu as well. sales declined in the last quarter. the area covered more than 210 acres and tesla said it is accelerating construction of giga factory three. tesla is allowed to use the land for 50 years. elon musk announced plans for the china factory back in july and has gone a set -- gone ahead despite the escalating trade war. let's look at asia market so far. what we're seeing when it comes to trading in australia, it's been a down day across the board. when it comes to the picture tokyo as well, we could see some downward sentiment given that numbersrt and import

out of japan were nothing to write home about. when it comes to exports, we've seen the first decline in 21 months. no consensus on whether we will see a hike or hold. this is bloomberg. ♪

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haidi: good morning, i'm haidi stroud-watts in sydney. good evening from new york, i'm shery ahn in new york. welcome to "bloomberg daybreak: asia." haidi: our top story this thursday, asia-pacific markets as wall street as lower. of lateon stopped short in china currency manipulator but the treasury isn't happy and says it's watching the u.s.. shery: in the power women may

have expected benefits. japan's drive for gender balance can pay off, literally. it's get a check of how markets are trading in the asia-pacific region. seeing the nikkei gained ground for a second third consecutive session. japanese yen a little bit weaker, holding steady but only after weakening for two sessions. we've seen exports contracting for the first time in 21 months. trade balance data just a few down inago, the kospi early trade and the asx 200 also losing ground. aftertreet pullback fluctuating throughout the section -- there's a session. more rate hikes could come in the future. session after those fed minutes.

mark cudmore is in singapore with more of what is moving markets now. will he be the same story as it was here on wall street, what's happening on wall street and what the fed minutes really mean for monetary policy here in the u.s.? mark: first of all, on the equity side, it will remain similar to yesterday. there's been slight trepidation to take too much risk to investors have been kind of scared by the turmoil of last week. were seeing volumes way down and there's a lack of enthusiasm that we saw the start of this week. even a we saw good early start to the week, people have not been rushing back into the market. it's helped by the fact that we've have the fed minutes that are hawkish. we do think there might be a slight softening in the yield picture as we go through today, but nothing too much.

shery: without the treasury report out of the u.s., not labeling china a currency manipulator, but that came after the markets closed and we didn't see that much of a movement and offshore yuan. but we are watching the big things after that report. mark: in many ways, the yuan should not have moved too much, but it often does after these headlines. control by where the pboc date -- sees things going and how they want to play this. overall there's a perception in the u.s. that the yuan should be weaker and therefore u.s. based investors tend to be biased against the you want and there positive jump on the surprise that we got here. and overall, more positive for

the idea that the eeoc will retain that level. on the macro front we had a pretty shocking set of numbers on japan trade. it would make people start to think about where were starting to see the impact of the trade war laying out for some of the trading partners in asia. mark: i think you are exactly thet, this is distorted by natural disasters, both the typhoon and the earthquake last month in japan. therefore it's hard to read too much into the data, but that won't stop -- stop people from taking a negative interpretation of the trade war arriving in japan. it adds to the overall tone of being slightly negative on equity. a slightly more hawkish fed in a nervous is in the market from the turmoil last week and now

another negative set of data. it's adding up to a slightly negative start for the morning. haidi: thanks for that, mark cudmore. let's get to first word news with jenna dagenhart in new york. a longer delay in breaking the deadlock in brexit talks. bloomberg was told prime minister theresa may is extending -- a proposal to extend it for 21 months. to give willingness ground during top-level talks in brussels the last few hours. the trump administration is warning against putting u.s.-saudi relations at risk because of the jamal khashoggi affair. saying turkey will publish its investigation into what happened in istanbul. turkish police have searched the building and residents of the saudi consul who left the

country on short notice tuesday. president trump is painted with raw the u.s. from a 192 nation treaty that gives chinese companies a discounted shipping rate for packages sent to american buyers. officials say the administration tried to revise the universal postal union last month, but was rebuffed. manufacturers group saying the discounts are subsidy for chinese shippers that has cost the u.s. postal service $170 million last year. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. ♪ back to our top story, china managing to escape from being labeled as a currency manipulator by the u.s. treasury. continuen says it will to monitor the line. tom mackenzie has the story in

beijing. ,aying the criteria wasn't met but it doesn't mean the tone was a happy one from the treasury rick or. tom cole and -- from the treasury report. : given that -- tom they don't meet it, at least two criteria. three the language was pretty strong from steve mnuchin, saying he still concerned about weakness and the lack of china's transparency in the currency regime. he said he would continue to talk with pboc officials and they would keep an eye on that you wind going forward. he also said it's time for china policies thathe would give improved sentiment around the currency. modelying the economic

post a long-term threat to the global economy, so taking a swipe at china in the statement, steve, terms of the pboc. saying he expects the currency to trade in a rumble range until the end of the year and he has repeatedly said the currency would not be devalued to give competitors an edge to exporters in china. accusedt trump has long china of manipulating the currency and has suggestions past that may change the criteria of how we assess the currency manipulator label. so broadly positive, given the potential pressure points the treasury and the trump administration could afford to not beingthe criteria met by china at this point. the u.s. is apparently preparing to withdraw itself

from a postal treaty which is a jabber aimed at china as well. china, aher jab at benefit for amazon, it could prove a disappointment for e-commerce giants here like alibaba. involves 192 that different countries and was essentially giving poorer, developing nations cheaper rates when a ship small parcels into the u.s. market and to customers there. the trump administration seeing it as another example of an unfair playing field, saying they try to renegotiate this in september or wanted to bring it up as a point of renegotiation and were rebuffed, and then decided to pull out of the treaty. there's a 12 month window in which they can negotiate with the other nations around this universal agreement to try to change the rate and level the

playing field. that wouldltimately stay inside the treaty, that is their preference, but they want to see these rates changed. manufactures in the u.s. welcoming the change saying it was an outdated treaty that led to counterfeit goods being and sayingthe u.s. it costs the u.s. postal service about $170 billion last year. chinese dealers could get discounts of up to 40%. to we know how this would affect chinese exporters? tom: we've got a team down at the canton fair in southern china. it's said to be the largest 25,000air in the world, exhibitors and about 200,000 customers. many of china's manufacturers and exporters are being hit by the tariff proposed by the trump administration on $250 billion worth of chinese exports.

so this is an additional factor they now have to weigh up. our team is been finding out there's another things going on for china's manufacturers, they have to factor in higher prices, many telling reporters on the ground they will not be able to swallow those additional costs and will have to pass them on to the tumor, saying that the yuan volatility is a concern. many saying it's more of a concern to them. many of these manufacturers have had to go a number of years with rising labor costs and now they have tariffs so too difficult environment for them. other saying they are looking to move some of their supply chain two countries like vietnam which are not affected by these u.s. tariffs. so additional concerns for chinese manufacturers amid a slowing economy. beijingo we will see if comes back in and offers more tax rebates like they have so far.

tom mackenzie, thanks so much. president trump cautions against putting the u.s.-saudi a radio relationship that -- saudi arabia risk. latestup next, but the fed minutes may mean about the timeline for future rate hikes. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: i'm shery ahn in new york. japan release numbers in the last few minutes that fell short of estimates. september exports saw the first year-over-year decline in more than 20 months. ryan fowler joining us now from tokyo. do we know if this point how much it had to do we just natural disasters, seasonality, and how much is because of trade tension? ryan: it looks like most of it

was due to the one armed bankers from the typhoon and an earthquake we had in september. those affected factory output as well as a lot of activity in ports around the country. still waiting to see what sort of impact and trade friction it had, but so far it looks like china has been frontloading a lot of output in order to get ahead of the latest batch of tariffs and the impact on countries that supply china have not been affected. shery: so what does this mean going forward then? to watch and see what happens with china output going forward, but of course we had the u.s. and japan starting bilateral trade talks after the u.s. pulled out of ccp. we will see how that goes, but so far japan has had a bit of reprieve in terms of trade with the u.s. and we will wait and see how mr. abe does with trump

on that. haidi: were looking ahead to the bank of china decision. what are the arguments? brian: i was just in sold two days ago and i was talking about this with the j.p. morgan economist. he was pointing out that the market has become more divided in the last few weeks, after we saw inflation data accelerate faster than anticipated in september. we got up to 1.9%, which is close to the target. a lot more people are calling for a possible rate hike this month. mr. park himself said he thinks they will refrain an issue language that signals a rate hike. he thinks the move will not come until next month. haidi: thank you so much for joining us, brian fowler.

the latest said minute showing every fed policy mr. back raising rates last month. -- it's more of finally balance or controversial prospect. let's talk with the cohead of asian economic research joining us from hong kong. fall after 21 a consecutive months of that winning streak. is it possible to extrapolate that this is the impact of waning demand as a result of the trade war and the china slowdown, or do we need to wait until the seasonality from the natural disaster impact has passed? >> i think still need to wait a little bit. it has the markings of natural disasters all over it. we had very severe weather in september and that certainly affected the numbers. another thing, apart from the trade wars and tariff tensions

is that the global export cycle has already decelerated in recent months, so i think that is often forgotten. we focus so much on the bilateral tariffs between china and the u.s., we tend to forget that global trade has already decelerated. that will be a headwind for japan in the coming months, the terror ofther the issues between china and the u.s. continue to escalate or not. haidi: re: overstating the potential impact of the terror andnd trade war -- tariff trade war? it's been so domestically focused that the tariffs will be staggered in its impact? fred: is likely to be much more gradual than some investors are fearing. is a 10%, not a

25% tariff on exports from china to the u.s.. it's only in january that it will go to 25%. it is already a phased-in approach. and it takes time to--supply chains. supply chains. it will be a much more gradual process. effect, itplay the will be a material track in 2019 but it will not be the sort of hit where we get one export number and say this is the impact. we be concerned that we didn't see any of the frontloading of exports that we have seen in other countries? fred: a little bitter frontloading probably was in there. there will likely be some frontloading, and from that regard you might get a bit of payback, but it's not what drives the numbers in a huge way

up or down. i think we might see some payback in the fourth quarter, but it's not that massive volatility that some people might fear. wiki: let's turn to korea, saying that people are not really decided on whether it should be a hike or a hold. given that were seeing a pretty weak labor market, not to mention trade risk, isn't it obvious that they should just hold for the time being? are they being too ambitious by trying to hike? they've been talking very hawkish lee in the last few meetings. the market is primed to some interest rate hike. ,oday expectations are split but probably within the fourth quarter, most people would expect a rate hike in korea. you are right, the trade tensions are a big question mark here, but on the other hand, you have inflation ticking up to its

target and you have very high leverage. the bank of korea has been looking to normalize interest rates for quite some time now. they see this as a chance that as the fed hikes rates, they can squeeze in one or two rate hikes for financial stability purposes as much as an attempt to cool down the economy. what are you watching out for an do you expect it will study, controlled slowdown we are seeing in china? is likely to be around 6.6, which is not the end of the world, but china is slowing, not just because of trade tensions, but also for domestic reasons. infrastructure spending has weakened. there are some challenges in terms of car sales, which is a big sector in china. we want to look at the numbers

and see which domestic sectors have been hit the most. if you then add trade tensions on top of this, it all points to the need for more stimulus. if you want to put a floor on probablyh in 2019, china will choose to free at the economy a little bit more. time: we always a pre-year -- appreciate your time. coming up next, the lanhee chen for new factory in shanghai was secured. all the details ahead. this is bloomberg. ♪

haidi: this is "bloomberg daybreak: asia." shery: i'm shery ahn in new york. tesla announced a big break in

china but the timing may not be ideal. what is the story? timing may not be ideal because it turns out that the chinese car market may be shrinking for the first time since the 1990's. tesla and elon musk have just signed a breakthrough agreement, 100 $40 million for this new giga factory. with this, it's 200 acres plus in shanghai. while this is progress for china , the fact that it's happening at a time when china's car market is shrinking, not so much. tesla's share prices down by nearly 2% there. one bright spark is in the bloomberg terminal, i want to show you what's happening with china.market for

this is a percent of the global total. you can see they dwarf the u.s., here in blue. by 2020, all50% the way through 2022 at 55%, but then they will start to drop off. that's purchase of passenger vehicle by dealerships. that fell for the third straight month in september. local competition is increasing as well. you are seeing pictures at the factory in nevada. maybe it will look like that in shanghai when it is up and running. one quote says they need to do things fast, in china it's always the fast fish that eats the slow fish. one thing elon musk also said is that while this production is set to start up and running, it may not be until three years from now until the first

automobile rolls off the chinese assembly line. haidi: in the meantime, another off, executive has driven and this is quite strange, this story. a lot of secrecy has shrouded it. ramy: the fact that it happened sometime in the summer and were only hearing about it now, there are so many departures that have happened over the past year or so. the chief accounting officer, vice president of global supply management as well as finance, the heads of human resources, tesla's vice president of manufacturing, email to his account bounced and tesla is declining any comment. this is just the latest negative headline coming out of tesla with all these departures. and the car market in china seems to be shrinking just at the time tesla is breaking through.

coming up next, the trump administration continues to caution against putting the relationship with saudi arabia at risk. we will look at the latest fallout. this is bloomberg. ♪

haidi: it is another gray kind of miserable day in sydney. trading low in the markets. we are getting to the minute. the market conditions report from australia for the month of september. unemployment rate falling to 5%. that's a surprise of expectations of 5.3%. the employment chain just 5600 jobs added to the australian economy in september. it missed expectations for 15,000. a usually volatile gauge.

changede unemployment by just over 20,000 jobs. part-time employment changed by 14.7%. fallingicipation rate at 55.4%. given the backdrop of falling property prices and softening property markets, most analysts say we need to see a hold up in a firm labor market conditions. that will see through to keeping sustainability when it comes to extending overall economic growth in the future. that's what we have when it comes to the jobs numbers. missed when it comes to the jobs added, but definitely an improvement in the jobless rate, falling 5%. let's get the news with jenna dagenhart. jenna: the u.s. is stopped short of declaring china a currency manipulator in a semiannual report on foreign exchange rates. the treasury will watch the yuan after its recent slide. secretary steven mnuchin said he is concerned china's lack of

transparency over the yuan's fall. the report also says the u.s. is disappointed beijing doesn't do closed currency intervention. exports unexpectedly fell last month as natural disasters disrupted economic activities, making it difficult to assess the impact of the u.s.-china trade war on japanese shipments. the value of exports fell 1.2% from one year earlier, compared with 2.1% rise. it was the first fall in 22 months. it leaves a surplus of just over $22 billion. u.s. commerce secretary wilbur that a transatlantic trade truce under pressure by accusing the european union of dragging its feet over pledges to open markets further. speaking in brussels, he attacked the eu trade commissioner by saying the onus -- who said the onus is on the u.s. by proposing tariffs on goods. he wants the eu to act on

standards. president trump is asking every government department to make budget cuts, saying he believes they can cut out waste to reduce spending by 5%. he told the cabinet he hadn't asked for tighter budgets earlier, because he was negotiating with democrats in congress at for more funds for the military. the 20 is due early next year. it will cover the fiscal year that starts october 1 2019. apple is allowing u.s. users to via aad a copy of data single online portal. it already introduced the service in europe as part of the eu's data prevention rules that arrived earlier this year. u.s. users can download data such as contacts, opponent -- and details about product repairs before they can only access the data by counting -- contacting apple directly. you will news 24 hours a day on air and on tictoc powered by

twitter powered by more than 27 journalists and analysts in over 120 countries. i'm jenna dagenhart, this is bloomberg. haidi: let's take a look at the data play when it comes to the thursday trading session. horrid missretty when it comes to japan trade numbers, we are watching for the bank of korea. what are you watching? >> it's been a bit of a mixed day. over in australia, there are a few companies that are surging. after pays are rebounding after hitting a record low on a report that went out stating that payday lenders might be seeing a new inquiry by the senate. australia, there is steadfast that surging and hitting the most on record after boosting its earnings forecast numbers. over in japan, machinery companies are actually sliding

today after a report that china is going to start looking into vertical machinery centers and the dumping position they are at. shery: thank you so much for that, asian equities team leader in singapore. the winehouse has warmed against putting u.s. saudi relations at risk the cousin of the journalist affair. mike pompeo says turkey will investigation into what happened to the writer. joining us is our senior international editor joe snyder. we just got the washington post publisher's last column for the company. it is heartbreaking. it is about his commitment to free press in the arab world. >> it is heartbreaking. the headline is there world needs free expression most.

apparently this was sent to his editors at the post by his translator right after he disappeared. he talks in the piece about the need for transparency in the arab world and for people who have different opinions, those who are speaking freedom, to be able to discuss that and be able to have an open form for that. given his disappearance and likelihood of his death, it is quite a heartbreaking column. it does, this and other things, are raising the pressure on the trump administration to do something, change something in the relationship with the saudi regime. yet president trump continues to send by, saying he will -- stand by saying he wants to see the investigation play out. he reiterated there had been an agreement with the crown parents

to bu -- crown prince to buy $110 million worth of arms, and there is no reason to undo the deal at this point. --pite increasing presser pressure from congress and members of his party to take a firmer stance, he is still saying let's see what the investigation comes up with. shery: one point he made in the thatn that was something is shared around the world is he was expecting after the arab spring in 2011 things would change, but they didn't. we continue to see this freedom pressured.ing exactly what's happening in saudi arabia now with some names, including christine lagarde, backing off of the major investment forum. we still haven't heard from secretary mnuchin, who is expected to attend. jodi: the treasury secretary said he would decide by friday

whether he would be attending. there is a lot of pressure not to attend, given that nature , even- major companies jamie dimon said he is not going . a lot of companies have said they are not going to attend. christine lagarde said she is not going. there is a lot of pressure. we will see in the next day if we hear an announcement about steve mnuchin. it is expected he will not attend. of course, bloomberg is no longer serving as a media partner in that future investment initiative. still, not everyone cutting the ties. some of these people are not so public facing in their wrongs. jodi: that's right. comeof the banks that have out and said their ceos are not going, like hsbc, credit suisse, some of their other bankers are going to be attending.

there is a lot of money to be made in deals and contracts as saudi arabia tries to diversify , change its economy from this great dependence on oil. there is a lot of dealmaking. fore is a lot of respect royalty. if people do not show up, if they are able to support the clients there, that is -- the allies there, it is important to future deals. there will still be a congress. people will named not be coming, the top officials from companies, many of their other representatives will. haidi: thank you so much, jodi seniorer, bloomberg international editor. we continue to watch the saudi situation. meet one of the country's

first female fund managers who sees the campaign as an investment opportunity. this is bloomberg. ♪

shery: this is "daybreak: asia," i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. let's get a quick check of the latest business flash headlines. netflix shares soared, the most since april. there is concern the company is growing faster than even the most bullish expected. netflix shares were up 80% this year. fell the most in four years after missing revenue estimates. that ends the short-lived streak and casts doubt on the strategy of the boosting growth through the cloud and artificial intelligence. shares tumbled 8%, taking offers

to 12%. ibm admits it fell short in the third quarter, but insists business will pick up in the coming months. soft bankers etc. lined up commitments for a loan for thevision fund provided by anticipated ipo of the wireless arm. it.rwriters are finalizing deutsche bank is one of the feel --rkings on the i banks working on the ipo. the drive to says increase female participation in japan's labor force want just growth, it will offer significant investment potential. mellon asset bny management, head of japanese equity investment. she is one of the first few female fund managers in japan. welcome to the program. what is the strategy for your

fund? thank you for letting us talk about the strategy. i think japan has been out of the spotlight for a long time. japan is changing quite dramatically, especially in terms of women. , our workforce participation has picked up since the start. it took japan about 20 years for women's workforce participation to go from 55 to 60. that is now over 67%. with more women working, you can probably imagine the economic power empowerment of women will lead to some companies to benefit from the environment. companies perform women -- promote women and outperform the market. the growth expectations of the

future will increase because of these changes. we first launched -- shery: are there any specific sectors -- miyuki: we don't limit ourselves to specific sectors. you can imagine some of the retail sector. they benefit from more women earning more money and being promoted, which will increase income, as well. we attempt to be slightly with the retail sector. also services, which benefit from women spending in order to stay employed. haidi: in terms of structural reform, particularly ones that democrat -- target demographic japan, these are very long time coming and difficult to put in place. when do you expect this will start gaining traction? miyuki: i think they already

are. if you go back to the start of abenomics, the first policy which helped enter the workforce in an accelerated rate is day care facilities were available. in 2015, legislation changed firms and role 100 people to have action plans to actually try to promote women and get them to leadership positions. i'm sure there will be a check of how that has progressed. also, the recent labor reform, that limit overall overtime. not just for women, but for in type are -- the entire labor force. it is going to be limited. it will indirectly encourage more women work participation, because they don't have to work ridiculous hours.

it also allows more equal opportunities for promotion. nothing dramatic, in terms of international headline, but step by step, we see improvements in japan. haidi: what about in terms of the corporate government's culture of japan? we have had many scandals. do you think there is a willingness in boardrooms across japan to welcome more women in their ranks? mindset hasink the changed considerably. if you look at the board room structure, you will see that several years ago, japan had a small percentage of outside directors. that is beginning to increase. there are almost no major companies with male outside directors. that's the considerable improvement since five years ago, when abenomics started. the number of

women in the board room is limited. you need more candidates before that can happen. this is an area where it will take many more years than just increasing participation of women in the workforce. .hat is the first step you need these women to be in a company for a long time before they become eligible for a higher position. it is a start. unless you increase the participation, you won't have a canvas for later promotion. shery: how much of a problem is it that you see investors looking at japan and mainly focusing on exporters and how to play a weaker yen? miyuki: that is always a difficult point for japan. it still has this strong image of being an export, despite the fact that if you compare japan othersrest of the world,

have export ratio is higher than japan. stagnation,ng the exports were the only area of growth for japan. verye's image of that is strong in the mind of investors. consider japan has probably ended its phase of contraction and has began to expand, people often forget that for a country suffering from deflation, its nominal gdp. we have had 21 consecutive quarters of year on year nominal gdp growth. i think that indicates the growth for japan has returned. we should be looking at companies, not just exporters, but companies that benefit from the domestic improvements in the economy. shery: thank you so much. stick around, we are going to preview psmc earnings reports.

more to come on "daybreak: asia," this is bloomberg. ♪

haidi: this is "daybreak: asia," i'm haidi stroud-watts in sydney. shery: i'm shery on in new york. let's get a check of the latest business flash headlines. most sinceed the july, and helping pave the rally

for wider aviation stocks. booming town -- travel demand is letting memories figures even as it beats a major hub and dominates an aggressive expansion plan. there is fear that the growth drive would erode ticket prices. united gained this year the best performance on the s&p index of nine u.s. carriers. haidi: pizza hut is jumping into the fast food war in the u.s. s, oroffering pasta, wing medium five topping pizza for five dollars when companies order at least two pieces. it comes to a discount of dominoes. burger king has one dollar chicken nuggets. mcdonald's is pushing its own revamped dollar menu. thea hut is launching strategy after u.s. store sales declined in the last quarter. shery: apple supplier, taiwan semiconductor is out. the numbers from taipei's largest stock by market cap could be affected by new products.

bloomberg opinion technology columnist keene copan joining us now -- kim goldman joining us now. they had a rough year, how important is the earnings report? there is probably no other company in the world that has its finger on the pulse and is so closely related to every chipmaker out there. big names like nvidia. makesntioned apple, tsmc the chips for them. qualcomm. even smaller companies, those doing bitcoin mining machines. they are all customers of tsmc. when you aggregate that together, they really have their finger on the pulse. people look at it closely. it has been a rough year for the chip industry. people are going to be looking at this for signs of how well it will go for the next couple of months. shery: what are the key numbers we should be watching?

tim: people have looked at tsmc specifically for net income. sales were reported, that is a known entity. analysts are looking at a slight decline, about 1.5% in declines. the team is very good as sandbagging the numbers. don't be surprised if there is upside. the other area is gross margins, that is very closely watched sy tsmc -- at tsmc. they may trump out and bring slightly better gross margins, because they are very good at sandbagging numbers. those numbers will be weak. we are looking at weakness. that is priced into the stock. a lot of investors will be believing if they can get something better, then it will be positive. shery: the investor conference, where are you watching for? i think the key thing to be watching for if there is any

change to capex. they kind of dialback the last investor conference. i don't think they will change the guidance this year. may.nows, they we are already most way through the year. they have already planned out the rest of the years capex. people are thinking about next year. they have already given general guidance of an average run rate. if they give more clarity, that will be interesting. not only from the chip industry, but also the equipment makers like asml. the other thing is they do actually have guidance that they give out often on the wider industry, pc industry, smartphone industry, and the chip industry. are usually very good with the numbers, because they have a complete picture of what is going on. even if investors are not investing in tsmc or the chip

industry, they will still watch that. there are few companies that have that macro picture and granularity that goes with it. shery: tim, appreciate your time. our bloomberg opinion technologist, tim corbin. the next fewead to hours here on bloomberg tv. yvonne is in hong kong. vonne: bank of korea could be getting a policy decision any minute. this is a big nailbiting meeting. the markets feel divided on whether we see a dovish hike or a hawkish pull this mount -- this round. our next guest says there will be a hike one point by year end, given the fact that inflation has been percolating recently. we're joined in the next couple of minutes to break down the bok decision, also reflect on china being spared from being labeled a currency manipulator. you their way, whether it was yes or no, rim and be could

still we can -- weaken. we are asking why. haidi: let's check in on our markets in asia. in terms of having a handover from wall street, it was pretty uninspired as we ended session lows on all major indexes in the reds. ospi is225, the k down. we can down to the bank of korea decision and see modest losses in trading in sydney. shery: let's look at the asian futures. singapore is gaining ground. in front ofhigher future. the china open is next. ♪

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