haidi: good morning, australian markets have just open for trait. shery: good evening from new york, i'm shery ahn. sophie: welcome to "daybreak: asia." haidi: asia pacific stocks may struggle to match wall street's gain. a denver on the friday session. amazon delivering a while day, leading gains in the regular session and plunging after hours as sales and revenue missed.

alphabet paid more to partners but charges less for each at it runs. when check's get it of markets. we saw confidence return to the markets with the dow gaining 400 points after that selloff of more than 600 points in the last session. we also saw the s&p 500 gaining for the first time in seven days. consumer discussed -- consumer discretionary gaining ground and energy stocks up as oil recovered slightly. 2.9%, almostining 3%, which was the biggest jump since march. we had some positive earnings coming from microsoft, twitter, and tesla. after the close we got alphabet and amazon's overseeing a bit of pressure in s&p futures at the moment. let's see how it will translate into asia as well. u.s.e: some pressure for

future so the struggle could be real after a harrowing week. major benchmarks in the region in oversold territory . in sydney we could see stocks higher after losing 2.8% thursday. kiwi shares are looking to snap a five day decline but sentiment may remain fragile as were seeing the dollar at a fresh high in light of the recent fed ecb speak regarding monetary normalization. also that makes that from u.s. tech heavyweight but keep an eye on what's going on with intel, after the chipmaker did provide a bullish outlook. when it comes to the earnings stage, that's building in asia. let show you some of those highlights from across the on resultsre waiting on the radar.

and on the eco-agenda, some heavy hitting points. and a half hour will get cpi nubbers for tokyo for october and will get the inflation update for malaysia along with factory output from singapore. haidi: a lot to look forward to their on the markets for us. let's get the first word news with jenna dagenhart. >> former vice president joe biden an actor robert de niro mailhe latest targets of bombs. a suspicious package was removed from a restaurant owned by robert de niro. the new york times says investigators believe some were mailed from southern florida. saudi arabia has all but admitted the murder of jamal khashoggi was premeditated. state media say prosecutors have theynce from turkey that

intended to silence the writer. the shifting narrative has sparked international criticism with the u.s. under growing pressure to act against its leading arab ally in the middle east. european central banks confidence in the eurozone economy is about to face a seven-week test. key data over that time will end with updated forecast from the bank's final policy meeting of the year when mario draghi and his team must judge whether to halt their bond buying program. for the time being, he admits recent week this was either temporary or remains manageable. that's incoming information was somewhat weaker than expected. it remains overall consistent with an ongoing broad-based expansion of the euro area economy and gradually rising inflation pressures. >> the most powerful storm to

hit u.s. territory since 1950 has killed one person in the northern mariana islands and is now on track for the philippines and taiwan. the super typhoon passed directly over taipan with winds of 290 kilometers per hour and dropping almost 20 centimeters of rain. it cut all power and local authorities say could be months before electricity is restored. japanese prime minister shinzo lobby interstate two of his landmark trip to beijing, tiesng to bolster warming for china. he marked the 48th anniversary of a peace and friendship treaty and will hold formal talks with president xi later friday. relations were strained over a maritime dispute but have improved as a consequence of president trump's trade war. 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.

bank stocks are near session lows, those decline coming after amazon album bit disappointed investors with the topline numbers. let's get started with amazon. ramy: it differently was a revenue missed. interestingly, this was something that was still in terms of the double digits growth that were seeing, it still wasn't enough. you can see the growth is happening at 29%, just a little more than that, but it's at its .owest in the past 1.5 years third-quarter net sales came in at 56.6 billion, that was shy by about $1 billion there. so investors are latching onto this miss, even notes considered light, it is still $1 billion. with that said, they're still

the net profit that amazon also pulled in. if it were the earnings story for net profit, maybe we would see shares rising, but $2.8 billion is what they pulled in. that's more than 10 times what they had in the quarter year on year, which i'm highlighting right here. estimate was for something much less, $3.11. data you need to know, operating income was a eat, three point -- was a beat. the fourth line i think is the most interesting because for the fourth data you need to know, operating income was quars guidance the issue, it was under by as much as several billion dollars. morningstar is saying that investors are likely worried about the profit outlook. hasmber the fourth quarter the christmas and holiday sales season. what is really going on? is it investment into amazon second headquarters, or related

to raises they gave to their workers? there are couple of saving graces. 42%on web services rose to from the same quarter a year ago. last year the consensus was from microsoft and google to cut into amazon web service league, and were seeing that just didn't happen. amazon after our shares falling by more than 7%, looking ahead to tomorrow, the active trading session could get ugly. alphabeten it comes to , a pretty similar story in terms of a miss and of the there. , thewhat we understand cost of what investors are most concerned about. the has to do with the traffic acquisition costs, what they have to pay out to get those clicks for sales over and back into the company.

the trafficow you acquisition costs are at the highest we have seen in years. here, and the strange thing is that they are actually getting less back for what they are also putting into it. ahead, isid looking something they really don't want to hear and wall street doesn't want to hear, is going to continue to rise, so that is likely weighing on sentiment. my last chart is with sales for alphabet google. revenue is rising at 21.5%. you can see that growth is petering off, at its lowest at least since 2017 if not 2016. looking ahead, there is this fear that revenue is now seeing is best for the foreseeable future, but one possibly positive thing is that

third-quarter paid clicks on google properties is coming in pretty high, 62% there. that has been described as incredibly positive and maybe getting support for the move into mobile search. but looking at the share price for alphabet as well, we're seeing that fall in after-hours trade and also seeing it have a knock on effect in after-hours trade and looking ahead to tomorrow, i think we'll have to hold onto our hats to see a possibly negative start. holding onto our hats is what we have been trying to do all week. that bounce from tech has been a big disappointment. we will look beyond the headlines, next. and coming up, if tech isn't going to turn markets around, then what will? will ask sylvia jablonski.

this is bloomberg. ♪

haidi: this is daybreak asia. shery: i'm shery in new york. the tech driven u.s. stocks surge looks to be setting asian markets up for a strong end to an otherwise rocky week. that could change if we see many futuresure on as were seeing right now, after amazon and alphabet had disappointing results. the managing director sylvia jablonski joins us now in new york. great to have you with us, thank you for coming in. we're hoping the tech earnings face the equity route but it seems like were seeing disappointing results. can we expect things to change, or is this volatility just quite

normal at this time in the cycle? sylvia: i think this volatility is slightly surprising. today we came in and saw a lot rallying, the major indices rallied and i think investors were hopeful that if anything can reverse the market and get us back into it up trend, it will be tech. expectations were high and they were not met. what we see now is the probably will be some volatility in the sector. we saw it on our side, we saw from bear funds fun this morning based on expectations for positive growth from alphabet and amazon, and that didn't happen, so i would expect some volatility in tech tomorrow. renouncing financial conditions around the world continue to tighten. this chart showing u.s. liquidity falling, global

financial conditions and all this as the purple line, which is the fed rate hike, continues to go up. what does it say about the outlook for markets in the next few weeks? sylvia: i think it is volatility and uncertainty. if you look at the fundamentals, they are still pretty good. john numbers are good, consumer sentiment is positive. quarter up until this have been stellar and up until the end of the day today, over 80% of the names that reported are positive. interesteadwinds are rate hikes, trade tariffs, geopolitical tensions and overall what investors worry about is that even if we get a and we end up in the green on all the major indices, what does the outlook look like for next year?

i think investors are looking for at least a slowdown into the next year. haidi: are we optimistic in thinking there will be a circuit breaker when it comes to u.s.-china tensions are is that something markets need to further price going into next year that there won't be any kind of compromise reached? sylvia: i think the markets remain uncertain in terms of what will happen between china and the u.s. was trade negotiations. some sort of compromise or conclusion to this before additional tariffs going to play toward the end of the year would be a positive momentum factor for the market. there's a lot of chatter that perhaps the presidents will meet at g20, but there's no specific plan and outlook. clarity around that would be beneficial for markets. time: do you spend

thinking about the impact of the trade war? the narrative of washington is that it will hurt china a great deal more than the u.s. and they are not feeling it at all stateside. the fact is when something hurts china, it hurts the rest of the supply chain. you see that reverberating through asia, whether it's because of the manufacturing are the demand side. is that something investors are perhaps not fully considering at this point? sylvia: i think investors are considering it. i read that from the first day of trade talk, if you look at the performance of the dow, it's up about 1.5% whereas shanghai is down double-digit's come over 20%. so the trade tariffs talks and implementation have her china in theory more than it has hurt the u.s.. time, we see companies

and large manufacturers coming on everyday insane if it continues, they will have to look to plan b and move business out of china. i think there will be an impact .n u.s. companies in china the two largest economies in the world. shery: the cleveland fed president speaking just now, saying financial markets turbulence is far from a scenario where it could hurt the u.s. economic outlook. but then add onto that the trade tensions, what can we expect in terms of economic growth in the u.s.? we have third-quarter gdp numbers coming out tomorrow. still the highest gdp growth we've had since 2015.

the economic fundamentals remain strong to the end of the year. we see that the job numbers of their. we see that consumers have been spending. the pullbacks are around tariffs and interest rates. that's what continues to scare investors. in like that, they have to look at other opportunities for alpha. look at the defensive cycles, look at inverse interest rates and things like that. haidi: we weren't expecting much, we were expecting a cautious tone from mario draghi, and that's exactly what we got. were you surprised that he didn't see more perturbed by the italian fiscal risks? sylvia: i wasn't too surprised in listening to him speak about it. givingded like he was -- there a sense of

was a lot of rhetoric around global we are aware of tensions pulling down stock markets in the u.s. and china and that may further trip into europe. that's something we will be cautious global tensions pulling of before we go the tapering and something we will consider. there is definitely a hedge of let's wait and see what happens in the rest of the world before we fully taper. haidi: great to have you on with us, sylvia jablonski there in new york. get a roundup of the stories you need to know in today's edition of daybreak. mixed messages when it comes to the rally and in after-hours session reversing course. it's also available on the mobile app. this is bloomberg.

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haidi: this is "daybreak: asia." shery on in new york. let's get it quick check of the latest business flash and lines. spacex is said to be pursuing funding of a half billion dollars. the companies hoping to take advantage of a borrower's market in leverage finance. firms such as uber and test lab and burning through cash. climbed toation has about $28 billion as it repeatedly launches in lands rockets for reuse. chinese conglomerate is said to be in talks to sell a fleet of private jets. from airbus and gulfstream.

the lineup is said to include a luxury 787 dreamliner that we ather cost $70,000 an hour to run. they are used by over wealthy clients. ubs produced a solid base in the third quarter, reporting income that topped estimates and trading results that were better than most peers. the share prices fall and 25% this year but the ceo says it's doing fine. >> when i look at an absolute basis it's very disappointing to me, the stock being down, but what is very important is to see how our stock is performing versus our competitors. if i look where we trade in

ares of multiples, price-to-earnings basis, were trading at a premium to our european peers and very close to our u.s. peers. so i think that over time the market and investors will eventually recognize the value the cashanchise and our franchise of and the diversification that put on the table. haidi: let's talk investment banking as well. outperforming wealth management in the last set of numbers. which parts of the investment banking business model are most attractive for ubs right now? , 75% of the focused years where we complete -- were

to, where the top five globally. from execution and research, equity trading, equity derivatives, and goes into fx, where were one of the largest players in the world, and on the other side, m&a advisory, our sweet spot are those activities within the investment bank where be a bank aiming to offering all the products, but actually want to stay very , always making sure that not only would give the best service to clients, but also and adequate return on capital for shareholders. >> we talk in the midst of a global equity market selloff. generally, equity markets

globally have been down in october. you've talked before about the impact of trade wars on client activity. to current market conditions pose the risk to ubs profit? we've had ups and downs in the market, it's fair to say the u.s. market has corrected, but broadly speaking, we are flat year on year. more than market corrections, what is really impacting her that if, you can expect there's any correction in the , we've been going through a long bull market, and if thinks any adjustment, i it may be will compensated by an increase in volumes or least volatility in the markets, which is quite positive for our business. up, the first

speech by the fed vice chairman. this is bloomberg. ♪

have: in sydney markets been trading for about 30 minutes for the final session of the week. the major benchmark up by modest .25%. a little bit more positive sentiment seeping through to the asian session but ultimately a rebound of wall street. lots of question marks over whether this is just a dead cat bounce, given the week we've seen with global shares. 7:30 p.m. here in new york where as haidi mentioned, we saw that confidence turn to the market. the dow surging 400 points after losing more than 600 and previous session and the s&p 500

gained 1.9%, rising for the first time in seven days. i'm shery ahn in new york. haidi: you're watching "daybreak: asia." let's get you the first word news with jenna dagenhart. joe biden and after robert de niro are the latest targets in a series of suspected mail bombs sent two of opponents of president trump. new york city police removed eight suspicious package from a restaurant owned by de niro. similar package were addressed to joe biden. the new york times said investigators believe some were mailed from southern florida. saudi arabia has all but admitted that the murder of jamal khashoggi was premeditated. kingdom shifting narrative has sparked international criticism with the u.s. under growing pressure to act against

its leading arab ally in the middle east. stumbling brexit talks are said to of been put on hold with theresa may's cabinet unable to agree how to advance talks in brussels. sources say no new british proposals are expected before monday's budget announcement after anger erupted in a stormy cabinet meeting earlier this week. plans to discuss the widening split on thursday were abruptly canceled. consumer confidence in argentina plunged to its lowest since the 2002 economic crisis as the country edges toward recession, despite the peso gaining 11% against the dollar this month as ae central bank implemented new monetary policy. economic activity fell for a fifth straight month in august. officials estimate argentina will contract both is your and next. china's purchases of gold from hong kong declined in september to the lowest in more than seven years. themberg and officials say

mainland's top consumer imported just under 11 metric times, well below the 31 times in august. gold prices fell of the six months through september, the longest slump since 1997. 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. shery: with the recent selloff, australian market bowing to a technical correction and the most oversold level since 2013. here is sophie kamaruddin. sophie: we're seeing marginal gains for aussie stocks today, uplier rising by 2% but now less than .10% as we see that weakness come through in utilities and industrials by gains are being led by health care and tech shares along with financials.

the benchmark does remain in correction territory with the asx looking the most oversold since 2013. looking at some of the movers for the benchmark, go producers under pressure after gold corp. fell after posting a wider than expected loss for the third quarter. butstock was cut to neutral we do have the mining equipment provider gaining ground, helping to lead gains of nearly 8%. i want to highlight anp, which is recovering from the loss we saw yesterday. thursday's plunge did see the stockpile to a record low, falling the most in 15 years. sellis the deal to

australia's life insurance business and it was seen as costly and complicated. it's the second worst performer on the asx 200 in 2018. it has been a fairly rough year for the stock amid revelations of wrongdoing. ,hery: i did so much for that sophie kamaruddin checking the markets. let's dive back into thursday's session, the s&p 500 and dow erasing most of the previous day losses and the nasdaq seeing its biggest increase since march. whether that momentum continues is a key question for friday. let's bring in su keenan, sayingy analysts were this is a story of volatility, both up and down, likely to continue. let's take a look at some of the big leaders. it was the green that was really in focus and the size of the

gains, you have various tech stocks leading the s&p higher, although it still down for the week and probably facing its biggest monthly decline in years. let's look at some of the big movers, international paper at the top in terms of size, tesla was up big, and twitter, monster gains that help carry the nasdaq 100 higher. if we go into the bloomberg, we also saw the dollar which has been range bound all summer, breaking out and reaching the highest level of the year. 100, better than 3% gain and the philadelphia semiconductor index, rebounding strongly in this session. shery: that after we saw a lot of weakness when it came to chip

stocks, but were getting a bullish outlook when it came to intel. it had been up significantly earlier. a bullish outlook are surprising jump in pc demand, increasing sales of more expensive chips and saying the data center unit is continuing strong. it's been under pressure, falling off a cliff in the past couple of weeks. , thisconcerns mounting may go a long way to offset that in the friday session but check out some of the other after hours trading we talked about. century aluminum down, they beat earnings but there were other concerns, and snap, this has lost about half its value since its initial ipo, down in a big way as it says it is losing users and will continue to do so. amazon and alphabetic, you've heard their stories.

faang stocks will clearly be a big issue in friday's trade. haidi: and oil is back near $67 a barrel. we're looking at the significant monthly lost their. su: we've seen oil fall off the cliff as well. oil prices coming back as opec has said that perhaps still rein in some of the output. high, thishree-month has caused a lot of people who were bearish on gold to recover in the bulls feel they have room to write in this current environment. haidi: major central banks are sticking to script when it comes to removing stimulus. the ecb is said to keep tightening even as growth appears to wobble a bit. kathleen hays is here, they start with a recap of the ecb. marioeed ahead for

draghi, not concern about a loss of momentum or italy. getting on the path to normalization, get to the point where you can start reducing interest rates. another central banker would like to get past it. that is the subtext. he's saying they are on track number one to wind up their bond purchases by the end of the year. number two, not raise the key .ate until at least the auto so as early as september 2019. he admitted there is risk, like the trade war. but he seemed to downplay them. as you said, full speed ahead. that's here what he said at the press conference after the meeting. >> incoming information, while somewhat weaker than expected, remains overall consistent with an ongoing broad-based expansion of the euro area economy and

gradually rising inflation pressures. in a red flag on wednesday. is gdp, are seeing here you can see how it as slowed to 0.4% on a quarterly basis in the past couple of quarters. this is the composite purchasing managers index. it looks at manufacturing and services. to the lowest since 2016. the head of the market pmi siri said this is the level that in the past has been consistent with loosening policy. he did sidestepped the question of the budget standoff saying those were fiscal discussions. so now a seven-week confidence test. seven weeks of data to show whether or not they are right to

stay on this track or if they have to rethink it. as far as mario draghi is concerned, no rethinking at all. haidi: he's not the only central bank are sticking to the script 20 comes to policy tightening ahead. kathleen: i don't think he would have gotten to the seat of buys chair -- he did say couple of times the fed is the closest to a dual mandate in nearly a decade. unemployment at 3.7% and possibly falling. the inflation target has pretty much been met. we don't know if it will stay said are not, but he then yes, more rate hikes. in is ie data come expect, i believe some further gradual adjustment in the federal funds rate will be appropriate. as i mentioned earlier, i believe monetary policy today remains accommodating and with

the economy now operating at or close to mandate consistent levels, for inflation and unemployment, the risk that monetary policy must balance are now more symmetric unless cued to the downside. that, donald trump. when asked about donald trump's criticism of the fed, he said it is in no way a consideration. he said they have a job to do and the going to do it. he downplayed the recent market turbulence and said the u.s. economy is very strong. they say the markets are far from the scenario were falling stocks would hurt the u.s. economy. that's the point, you have to have something much more severe threatening u.s. economy for the fed to have any thoughts about not doing a rate hike. we shery: -- close to the 2%

inflation target. what are we expecting? kathleen: were hoping for a couple of things, maybe little more clarity and discussion from the governor about the recent tweet they made in monetary policy. top of the range to trade as high as 0.2. a lot of companies in japan are saying this makes holding long-term yen bonds more attractive. interesting that the deputy governor in a speech yesterday afternoon questioned if the central bank should tighten policy. he is not worried about excessive runs up in japanese stocks. the recent financial system report showed financial stability pretty healthy. and wages, i'm sure he will mention that again.

the boj will stay where it is and let the ecb and the fed move ahead. shery: coming up next, it was a wild day for tech and earnings. the newsp all surrounding alphabetic, amazon, and much more. this is bloomberg. ♪

haidi: this is daybreak asia. officiallyave entered tech earnings season and things are looking interesting. amazon and alphabet reported disappointing results after the bell and both stocks fell significantly. let's look lows are at that with a senior research analyst. daniel, great to have you in the studio. thank you so much for your time. are we overreacting to these earnings? was the expectation way too high? back, someke a step

are saying growth potential is still there in the long-term. daniel: the revenue data for amazon was ok overall. evil world are worried about the guidance. stepping back, if we look at what's happening inside the ,ompany, amazon web services growing over 40% remains very healthy. we advertising business, think they're significant growth potential there over the next several years. while we will certainly see how the next holiday season plays out, amazon remains very focused on making investments for the longer term. we still like the story. if one were to shift to google are alphabet, while the overall numbers for just fine, i think the core search business remains healthy and the company is seeing good strength in the youtube asset in some of their other areas. the cloud business is doing well.

there were new hardware devices introduced in q4, so maybe some people want to see a better number four q3. ,f we pull all of it together the underlying drivers remain healthy. while we expect continued volatility in the shares, with think if one looks out over the next one or two years, both amazon and alphabet remain attractive names. shery: how are they both doing in terms of reining in costs? output is paying a lot to those partners in order to distribute their search engine and tatts. daniel: that's correct, there were some moderation in the cost acquisition this quarter but if we think about where the company is going in areas like cloud, autonomous driving, there are areas of significant investment that the team is focused on. we expect that to continue over

the next several years. what is funding that is good growth in the core search business and that's generating significant free cash flow. if we turn to amazon, were seeing the upside on the operating profit. we are seeing the fruits of amazon having invested very aggressively in people, incapacity, and various facilities. some of those additions are moderating somewhat this year and that is what is helping to show upside on the operating profit. the past, people would not amazon because they would say there are no profits here. we are beginning to see them, and we think that is constructive haidi:. haidi:are you seeing greater competition from walmart, for example? there are questions when it comes to parts of asia. have we reached a saturation

point for amazon compared to three or four years ago? daniel: i think it is still pretty early. what walmart and others are doing makes sense. they need to invest to build out the digital platforms in bringing together online and off-line. if we think about what amazon is doing with some of their physical stores, they are bringing this together. the shift online is still very early and we think amazon has some important competitive advantages. when they're going into the physical world, it suggests from our vantage point that they still have tremendous growth. competition will remain fears and that's why we would expect amazon to continue to invest aggressively. existing vendors are certainly not standing still. is the uncertainty is a

regulatory outlook something investors in google and alphabet in particular need to be worried about? daniel: when we think about regulation, the technology platforms, these internet giant wheretting to a stage obviously they are in or risk. they are having a lot of impact in various sectors of the economy. in many ways it is like other sectors. if you look at food and beverage, health care, utility companies, these are regulated industries. what we see in them is that companies are still able to generate significant or more attractive returns. i think regulation is important here because it is going to certainly help manage and really provide a framework for dealing with the key issues around data and trust and privacy. as we all appreciate, those are very complex issues and really depending on the society that

you look at, people are governments think about them differently. so regulation is part of the equation, but i don't think it detracts from these companies when we think about their investment returns over the next few years. shery: but it's not just privacy issues, where also seeing more and stronger criticism coming example,ticians, for senator bernie sanders on amazon and of course europe and google's antitrust issues there. how big of a risk is this? daniel: i think it is a risk. amazon has announced wage increases. amazon is demonstrating it is going to continue to aggressively invest in its employee base and that will cause costs to go up. they and others are looking to use robotics and other technology tools to try to manage costs in other areas. that clearly is a risk.

if we look at google and the issues in europe, is something they will have to contend with, if we were to step back and think about what is ultimately key to driving their success is the need to differentiate and innovate with their products. , authorok at gmail different services, those continue to be very popular. regulatorynk the scrutiny and politicians on both sides of the atlantic will continue to hone in on them, i think if they innovate and continue our build on the dialogue that will help them navigate this landscape. we heard from tim cook in a high profile critic of the data retention and collection, and privacy policies of some of his tech cohorts in silicon valley, i guess that position

will be the dominant one going forward as we consider what the regulatory restrictions will look like? daniel: it's going to be part of the dialogue. of the big technology companies need to do, in my view, is to be a lot more transparent with their users and explain to them other business models work. if the going to have free services, the vendors are going to use the data and try to monetize that to help fund their businesses. we may find ourselves in a world where people opt to pay for subscriptions to these services and not have their data used. the discussions and what tim cook mentioned are front and center and we will have to figure out company by company and country by country how we want to address it. i think for the web giants, it's possible to strike a balance, but more transparency and more

open dialogue with their users is really necessary. haidi: daniel, we appreciate your time. looking through the flurry of tech earnings overnight. we have plenty more ahead on "daybreak: asia." this is bloomberg. ♪

>> xiaomi is stepping up the drive to shut its downmarket image. it is launching a larger screen with higher processing. the phone goes on sale next month. struggling to recover from u.s. sanctions.

income for this company was $81 million through september. >> let's get a quick check of asian futures. income forplenty more coming up. this is bloomberg. ♪ this is bloomberg. ♪

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asian markets have just opened for trade in sydney. shery: good evening from bloomberg's global headquarters. to "daybreakme asia." ♪ >> our top stories. struggled tostocks match the gains on wall street. more signs the federal act again this year -- the fed will again this year in the vice chair's

first speech. shery: president trump's trade war leaves china and the united states under pressure. 500, gaining ground for the first time in seven days. we will see how this translates into the asian session with sophie kamaruddin. sophie: futures are pointing to tenuous gains. we are looking to snap a five day decline. seoul, earnings are due today from the likes of kia motors and others on schedule. tokyo, the nikkei 225

with a benchmark that has lost about a 10th of its value. be losing faith in the earnings process for japan. we have had a mixed bag when it comes to results. theing ground against dollar. as we count down to the bank of japan, we had tokyo inflation coming in unchanged. and an adjustment to policy for the bank of japan. let's check on what is going on with the dxy index. it's edging closer to topping its august highs. this could reflect the cautious sentiment when it comes to the backdrop among normalization. and the ecb have spoken of not derailing that path to global tightening.

should not unwind their stock portfolios. the recent a selloff is a temporary capitulation. aidi: let's get you the first word news. tona: president trump wants set drug prices using a global index to avoid freeloading by other governments. the u.s. medicare program pays whenany costly drugs, there are much lower prices in european countries. joint prices have become a major issue in the united states and trump is hammering the topic ahead of the midterms. more fuel tubes in the f-35 may need replacing, adding to cost overruns and delays.

beyond a expands parts fuel supply pipe that may have contributed to a crash last month. the f35 program is years behind schedule and over budget. saudi arabia is now saying the murder of jamal khashoggi was premeditated. istanbul withto the attention of silencing the writer. the country has faced international criticism, with the u.s. under growing pressure to act against its leading arab ally in the middle east. key data of the european economy over time will end up with mario draghi having to judge whether to halt the bond buying program. draghi says recent weakness is temporary, or remains

manageable. are consistent wtih an ongoing, broad based euro economy and rising inflation pressures. >> the most powerful u.s. story passed directly over saipan with winds of almost hour and dropping almost 20 centimeters of rain. it could be months before electricity is restored. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

shery: thank you. bank stocks ended near session lows in u.s. after hours trading. this came after amazon and alphabet disappointed with results. let's start with amazon. >> the top line missed. it's been a question for investors whether this is an earnings or revenue story. hop into the bloomberg terminal. you are taking a look at the revenue growing for amazon, by double digits. 29%. you can see that growth is slowing ever since the march quarter. it is at its slowest pace of growth in the past six quarters.

investors are watching on to on to thisatching slowing growth narrative. let's go to the gtb terminal mike brey -- gtb terminal library. this is more than 10 times for the quarter year on year. the estimate was for $3.11. quarter,for the fourth there are questions. the fourth quarter net sales came in at $66.5 billion. the estimate was $73.8 billion. morningstar said investors are concerned about this week profit outlook.

there is also the holiday and christmas sale season. people that are theoretically would be buying from amazon -- w ould theoretically be buying from amazon. there are some saving graces. amazon web and the cloud services -- sales were up 46% year on year. that was compared to 42% year on year one year ago. google would cut into the lead of the cloud service of amazon web services, but with this 46% jump and sales growing, that did not happen. haidi: when it comes to alphabet, there's a similar narrative. costs are most bothering

investors. hop into the bloomberg terminal again. i want to show you this chart. these costs are at the highest we have ever seen. 6.5 8 billion dollars is what we have seen for the most recent quarter. assuaged. no fears of -- fears assuaged. with my final bloomberg terminal chart, we are also looking for the sales. sales are sliding in terms of growth. 21.5% for the third quarter. that is rising. rising and capital expenditures were more than $5 billion. they are giving a lot to get a lot.

costs are going to continue to be a headache. in terms of silver linings, the most important thing is the google properties. they are up 62%. the company is trying to move into mobile search. on our terminals are mobiele phones. revenue is a big cause for concern. gettingng stock is spared in after-hours trade. >> that reversal in sentiment is really driven by the tech story. ramy is wrapping up a flurry of tech earnings. trading in asia is to the downside.

those below par earnings, let's check in with mark cranfield. therillion wiped off value of asia-pacific stocks? traders are just trying to get to the weekend. we are seeing a bit of choppy trading this morning in asia. there is a bit of relief. was the majorday to be movingred from the bottom after a bad month. we have seen some after-hours weakness. we could take a bit of heart in asia.

people have had a terrible month. they would just be happy to get through friday. choppy, certainly. shery: we are seeing higher starts, but now we are into negative territory. the s&p 500 has given up most of its gains. we don't have very good data out of asia today. most traders just want to get to the weekend. what will it take for there to be any lead in sentiment in the market? is there something to take on other than the disappointing tech earnings? k: china is still the focal point for asia, no question. we saw another report from the wall street journal, that the

united states is not ready to resume negotiations with china on trade. china is trying to go behind-the-scenes and find out what's the united states wants them to put on the table. there is nothing to forthcoming on that. dollar yuanhe story came out, people are concerned. if china and the u.s. will not negotiate, the trade war will go on for a long time. this will cast a pall on the asian markets. asian stocks will make little progress until there is clarity on where the u.s. and china are headed. shery: thank you. you can follow mark on the go ons live blog at mlviv bloomberg. you can also get commentary and editors seek our

can find out what's affecting your investments. -- so you can find out what's affecting your investments. hatchet bewill the buried on decades of tension with japan? >> and record-breaking equity highs. this is bloomberg. ♪ shery: this is "daybreak asia."

haidi: our next guest says nasdaq will break 10,000 over the next couple of years when the chinese markets stabilize. el, we are seeing a return to gains.

what gives you such optimism? there are convictions on the global markets. everyone is worried about the tech earnings. this process will last a long time. another conviction i have is that the chinese markets should stabilize, because the government policy is more accommodative to economic growth and they might lower interest rate despite concerns of the week currencies. -- weak currencies. rateer the u.s. interest i think theow down,

wage increase will be quite .imid continuously eventually, we will come to market andon of the over the next couple of years we will see more of a bubble. haidi: let me draw your attention to this part of the world. i want to talk about tech and the supply chain in asia. techis a chart looking at in the supply chain sensitive markets. it has been a pretty horrible weekend month when it comes to asian markets, the worst since onth when it comes to asian markets.

will the positives you are describing flow on to some of these tech driven indices in asia? >> we are focusing on the u.s.-china trade war. there will be cost increases that will lead to a slowdown. i think the u.s.-china trade war will prolong in the future. that is making people worried. the midterms are important. not china will be much more accommodative to the u.s. demand. trade war might have concern to the slowdown of the economy. but they are trying to win the next revolution.

the china investment will not slow down in terms of artificial intelligence or the autom otive sector. concerns of the trade war will affect the supply chain, but equity related investment sectors should increase. the wake-up point will be in the first quarter of next year. hery: when it comes to stocks in different industries, it is the relative. -- it is pretty relative. these stocks outperformed chinese techs. the blue line is fang and the white line would be baidu and

alibaba. look at thee a sectors in both countries, which one will outperform? in terms of the three industries i look at, the i.t. segments into the bios sector, andnd the bio sector electric cars and alternative market sizes for these are 50% of the global market, except for electric iss, when the chinese market 50% of the global market. if you look at china, you are looking at equity markets down 30% in terms of the shenzhen index. manufacturing industries are

up 60% year on year. people are worried about the lending of the chinese market. i think the government of china has a lot of keys to boost the economic growth. hery: why aren't they doing that now? what we saw back in periods of market decline, we saw authorities intervene aggressively. but in beijing, we are not seeing that much enthusiasm. daniel: this has to do with what the u.s. is doing versus china. 1985. currency appreciated significantly.

intoresulted competitiveness of slowing down and many fracturing sectors -- competitiveness slowing down in manufacturing sectors. china does not want to appreciate the currency. at external debt, china has more reserves. like they will increase the competitiveness of the manufacturing sector. that is why they are not appreciating the currencies. i think there is a case in point. when the economic growth slows thereo a certain level, will be a much more aggressive stance. again. they will do that

people are expecting that growth rate will slow down. what i think, the chinese will uset, the pboc the interest rate to boost domestic consumption. we will also see a consumer debt level increase. this will give a positive signal to the market. shery: what do you like in china? inhaidi: what do you like china? are there stocks that are just too overbought at the moment? china, if you like at the currency has depreciated significantly. relatecinuation is that d exports are good and domestic consumption is bad.

but there will be no more depreciation. economic growth will be stabilized. we will see a continuation of domestic consumption growth. we will like some of those sectors. domestic consumption is related to the auto sector, electric cars, and batteries. the u.s. energy supply is not ample, but china wants to import energies. haidi: daniel, great to have you with us. lots more to come. this is bloomberg. ♪ ♪

let's look at how markets are trading in the asia-pacific. this is bloomberg. ♪

it's 8:30 a.m. in hong kong. we are in our away from the opening of trade there. the resounding selloff continues in asia. it looks like we are seeing a little bit of upside in the msci asia-pacific. let's take a look at u.s. futures. shery: disappointing numbers out of amazon and alphabet. backafter some confidence

into the markets with the s&p 500. you are watching "daybreak asia." let's get the first word news. jenna: the former vice president joe biden and robert de niro are the latest targets of mail bombs sent to opponents of president trump. police removed a suspicious package from a restaurant owned by de niro. believe some were mailed from southern florida. saudi arabia has all but admitted the murder of jamal khashoggi was premeditated. temple withw to his the intention of silencing the writer. the u.s. is under growing pressure to act against its leading arab ally in the middle east.

talks are put on hold with theresa may's cabinet, unable to advance brexit talks in brussels. deal brexit would crush u.k. growth. gdp would rise just 3/10 of 1% next year. consumer confidence in argentina sinced to its lowest 2002, as the country edges toward a recession. the central bank implemented a new imf backed monetary policy. economic activity fell for a fifth straight month in august. argentina will contract this year and next, estimates say. gold from hong kong declined in september to the lowest in more than seven years.

the mainland imported it just under 11 metric times. -- tons. prices fell the most since 1997. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: we expected a bit more of a solid rally in asian trading. putting an end to the party. sophie: fragile sentiment when it comes to the asian session. when you look at the tokyo session, we are seeing slight gains after the drop.

the nikkei 225 is at 3.7%. vents are being led by consumer discretionary and energy stocks. i want to show you one outlier in the ip sector. ech is an e-commerce services provider. it fell nearly 20%. we are seeing gains for other tech players. space, comes to the chip screen holdings are leading the advance. a bullish outlook was provided in light of a recent price drop in the demand for personal computers. i want to highlight

hitachi. the company's to sell most of its stake in cars to a french company for about 80 billion yen. anon is falling over 4% this morning after missing third-quarter estimates and cutting its full-year forecast. a lot going on in seoul. earnings due out from korea. chemicalsd lg among the biggest drag for the benchmark. the likes of hyundai motors on the other side of the spectrum. : the world's three leading central banks are headed into the end of the year on very hs, with thet

federal reserve and european central bank saying they are committed to tighter policy. the bank of japan is signaling it well commit to easing -- will commit to easing next week. should we forget slowdown and continue removing stimulus? governor -- let's take a look at the ecb. a big policy meeting. staying on the stimulus track, they will open the door to a rate hike as early as september of next year. maybe some of the numbers aren't as strong as they could be. draghi thinks the momentum is there. informationing

remains consistent with an ongoing broad-based expansion of the euro area economy and gradually rising inflation pressures. kathleen: there are red flags. the ecb sees them. why not take a look? if you hop into the library, these green bars are gdp. s up arounddp wa .7 the last few quarters. the composite of manufacturing and services fell to 52 and change. it is the weakest since december of 2016. numbers like this in the past have been associated with the ecb leaning toward looser polit ices -- policies.

that's a statement to keep in mind. the health of the banking system, the fact there's monetary policy banking it up, taken, he says investors are confident backing everything up. fed is committed to continuing tightening policy. kathleen: not surprising. --ell's supporters new the knew the new vice president seasoned banking veteran. here is what he said. furtherieve some

gradual adjustment in the federal funds rate would be appropriate if the data does not come in as expected. monetary policy today remains accommodative. with the economy now operating close to mandate consistent levels for inflation and monetaryent, the risks policy must balance are now more symmetric. clarida said trump's criticisms are in no way in consideration with fed policy deliberations. and he is not worried about the strength of the u.s. economy. aidi: the bank of japan walks to a very different beat. extraordinary monetary policy continues. what do you expect when you go to tokyo next week?

kuroda saysvernor they will reach that 2% inflation target. the critical number he is watching is wages. look at how tight the labor markets are. we are going to get there, he says. until then, yield curve control. until that's yield curve target gets off of zero, no change in policy. it will be interesting to see be policy changes. 's recent financial system report was pretty sanguine. axis can build when you keep rates -- excess can build when you keep rates so low for so long. insurance companies in japan are saying yen denominated bonds are

more attractive. but the focus is nuance. if we did get a tweak, it would be a surprise, with the trade war and the consumption tax hike. 2019, another reason for the bank of japan to sit tight. haidi: kathleen, thank you so much for that. be sure to tune in on friday. up next, trump's trade war narrative is headed for a plot twist. with that could mean for global markets. this is bloomberg. ♪

shery: this is "daybreak asia." incomeubs reported net which toppled estimates, as well as trading results, better than most of its peers. at the stock being down, but what is important is to see how the stock is down on a total share order return less than our competitors. if i look at where we trade in terms of multiples,p we we are

trading at a premium to our european peers and close to the u.s. peers. the market and investors will recognize the value of our franchise overtime and the highly cash flow generated se andof our franchie the diversification on the table. outperformed wealth management again. what part of the banking numbers are most attractive for ubs r ight now? playerre a focused in the investment bank. we compete with the best in the world. it goes from execution and

research, equity trading, derivatives, to where we are one of the largest players in f/x in the world. m&a advisory. we are not aiming to be a large offering -- a bank offering all the products. focusedant to stauy and make sure we give the best adquateto clients and return on capital. markets globally have been down in october. you talked abou tthe -- about on impact of trade wars

climate activity. due current market conditions pose a risk to ubs' profit? flatoadly speaking, we are year on year. if there is any correction in goingrket, we've been through a long bull market. if there are any adjustments, it is quite physiological. volatility in the markets is quite positive for our business. abe will beo

meeting with the chinese premier and hold formal talks in beijing later today. tensions remain over the territorial claims in the south and the east china sea. now is a professor who was also worked at the japanese embassy in beijing. when relationships between beijing and washington go south, china returns to japan. of theseink all geopolitical sentiments remain in the south and east china sea? what common ground will they have to work towards? >> in the short run, this and next year, japan-china relations will be in good shape.

haidi: will that help on the trade front for japan and china given the issues they are dealing with with washington? whether the damage can be offset by the policy coming out of washington, we have to wait and sea. haidi: you talk about these deep-seated issues difficult to get past, like popular nationalsiism. do you see this as being a possibility still, given the level of unpopularity when it comes to japanese-chinese relations in china?

that situation will continue. shery: who means each other more, japan or china -- needs e ach other more, japan or china? akio: japan has always tried to china.s relations with it is quite clear that in the international interests of japan, they have a good relationship with china. china will take up the history and the territory card when it suits them. i think china needs them more at this point in time.

shery: when you have president trump imposing tariffs on chinese goods and trying to ftaly the japanese on the instead of the tpp, who has more leverage in this relationship? between japan and china -- hard to say. for japan, the relationship with the u.s. is of utmost importance, especially in terms of security corporations. they are a very important economic partner. issues of trade, we have a lot of common ground with china. shery: you have a strategic diplomatic balance of power happening in the region.

goes back to japan and then he meets with the prime minister of india. there is a rivalry between india and china. how do you balance this regional power dynamic? rivalry.s not a simple many countries have very good economications or relations with china. but on the security front, there are a lot of issues. having to confront china on need to getts -- we the benefits out of our relationship. this is a very difficult game played at the moment. shery: professor, thank you.

for a look at the stories trending across the bloomberg, -- mberg scriber's buscribers were reading about google trying to assure executive'ster an $90 million exit package for personal misconduct. and why basketball legend michael jordan is taking a leave to e-sports. this is bloomberg. ♪

haidi: this is "daybreak asia." shery: let's get a quick check of the latest business flash headlines. spacex is pursuing funding rate have a billion dollars with goldman sachs. the company hopes to take advantage of a borrowers market to leverage finance. uber and tesla have been burning through cash. valuation has declined as it routinely launches rockets. xiaomi is stepping up its drive to shed its downmarket image.

it's releasing phones with new and higher processing power. released next month start at $75, and go to $720. shery: net income of this company was $81 billion in september. a billiony was fined dollars, accused by washington of lying about experts =-- exports in north korea. haidi: rish? happy friday. rishaad: we are looking at the relationship between shiznonzioe and xi jin ping. the pboc will be talking in

abotu aut an hour's time. numbersimportant coming out of the u.s. and draghi and his comments with the european central bank meeting we had on thursday. to december for the decision on the future of the asset purchase program. haidi: see you soon. tepidmarkets are looking at the moment. ♪

rishaad: 9:00 a.m. in hong kong and shanghai. welcome to "bloomberg markets: china open." yvonne: markets try to in in the green. topixleading, but the facing of 5% slide. david: more than $6 trillion wiped from global equities. adversity,oser in president trump's trade war leads markets under pressure. ♪