"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. haidi: welcome. executives around the world are gathering for this conference. >> good evening from the inomberg global headquarters new york. ahn.shery >> and i am sophie. >> asian-pacific markets remain under pressure as president trump is ready to ramp up his trade war with china. the dow dipped briefly into a

correction. the nasdaq is the lowest it has been since may. no progress has been made at the 's top-level talks. itsctober is living up to medication of being about a month. this ended up percent lower, losing more than 200 points for the dow. the s&p 500 is nearing correction territory. it is getting closer and closer to that round numbers. the 2600 level. it grew 7/10 of 1%. energy and tech stocks declined. we have those reports that the trump administration is preparing to announce tariffs. sentiment --idden hitting sentiment in the u.s.. we will see how asian markets react. today,ke your red colors

sherry. the china traits that is making itself flag itself. the ceo remains optimistic, saying that the mood is good in china. you can see china leading the electric vehicle revolution. the is an update from aussie lithium player. we have korean media reporting this company is in talks with vw for a battery trading factory. wellingtoncks in looking to snap a today advantage. so, is in tokyo as were as they are looking to extend losses on december of 2016. sydney arerrell in

still not anticipating this. we have origin energy here. this is as cap telecom, honda, sony. big banks andave oil workers as well as chinese carriers. japan, jobless data is due out in september. -- for september. aussie approvals are expected to be the first increase. the aussie dollar is trading near a 32 month love -- low. shery: we will be watching those numbers closely. in the u.s., the dollar rose. all three major benchmarks had arrested their gains and then some. to quote one chart watcher, it was a technical disaster. pullout -- plunged

below friday's reversal. that thisalysts say pessimism has been hanging on the market for a wild now. the stocks were digging their way out. a lot of green on the screen. the trump news pushed the selling into a higher rate. let's go into the bloomberg. the title of our screen says it all. -- this has been one of the worst months in the decade. it has been that bad. look at the big bread downturn downturn. this is the five-day chart of the snp. back to friday. it was hoping that this monday momentum could raise some of those losses. we plunged back down. look at the far right of the screen. it bounced off the bottom.

that kept them from going down into a correction. let's look at the snapshot and what you will see with where the real red is. the dollar is higher. you are looking at bed after hours. info technology is down by almost 2%. the nasdaq has a heavy confrontation -- concentration of tech stocks. shery: we are seeing a lot of hedge fund holdings. >> there was no secret in the trainings. look at the size of the -- trai -- tradings. these were called hedge fund hotels. a lot of hedge funds moved in on these. these were the big sellers. in the hedge fund community has been significant. but at some of the other big

decliners. tech is heavy in the mix. look at the game stocks, videogame stocks were big decliners. boeing had the disaster. acquisition of red hat by ibm. let's look at the moves higher. this is what many people say is the key news in the market decides the text selloff. those are the value stocks. it could be a retailer like macy's, it has been badly beaten up. indicate a shift away into the value stocks. we talk a lot about the national team in china. there is a growing debate about whether they will come in and rescue stocks. also whether we will see a surgeon corporate buyout. is this likely?

is it wishful thinking? we could see a corporate buyout. this is in terms of the questioning of whether the fed will go forward with the december rate hike. that is a growing question. greenspan did something called the greenspan put. it was said that bloomberg saved -- it was said that he saved the market on this bloomberg. the s&p 500 has plunged. many economists say that is so unlikely to happen. the fed has indicated that this market correction is par for the course. if it continues, but the great -- the debate will grow louder. that was the recap in new

york of a volatile session on wall street. let's go to first word news with jess. atthis plane hit the sea many kilometers per hour. it was carrying 189 people. all our field dead -- feared dead. shortly after leaving jakarta, a pilot requested to come back to the airport. that indicated a failure. angela merkel said that she will stand down as leader of the cdu after eight years. being chancellor in 2021. she wants seek any other political office. she won't seek any other political office. her party has been punished in state elections.

there is a sliding auto market. this has been damaged by president trump's trade war. carmakers surged around the world after bloomberg reported the idea. this was a market they increasingly relied on for growth. ford and gm rallied. another sign that the world's least affordable property market may be heading for a correction. the value of transactions are 1.4 billion u.s. dollars. once holiday extortions are excluded. -- distortions are excluded. they are down by almost half from september. global news, 24 hours a day, on tictoc and on twitter. powered by one and 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is

bloomberg. >> these renewed trade views sent stocks lower overnight. investors were spoken by bloomberg reports that the white house is preparing to announce another round of tariffs on china. whether that happens or not depends on this meeting between president trump and president xi . greg sullivan has the latest from washington. in terms of expectations, it goes down to what defines a circuit breaker run. what would be a failure? greg: the trump administration does not define what they would consider a win. they are demanding deep concessions from the chinese. including wholesale changes to how they conduct trade and their model. the trump administration has worth of250 billion tariffs on goods.

they will continue to move forward if china does not come forward with concessions. those are steep concessions. some have signaled they are willing to try to outwit the trump administration -- out trumphe administration. they will meet in windows areas aires. azeris -- buenos the white house is ready to move forward with another batch of tariffs if they don't put to rest the tensions. they are hoping to wrap up the pressure on the chinese side to make concessions. -- ramp up the pressure on the chinese side to make concessions. trump relishes his role as a dealmaker. he has commented publicly about

how he values his relationship with president xi. that being said, he did now that the u.s. would win this trade dispute. has yet to behere seen. it looks like they will come to some major agreement on the trade front given how aggressive the trump administration has been. >> them were -- the more immediate circus is on the elections coming up. it feels like he has the stop -- hasn't stopped campaigning since he won. -- he ising a last making a last-minute double down push. he is trying to get his voters to the polls. say thatse reporters he is going to have a busy day. his schedule over the next coming days shows that he is avoiding competitive house

districts in favor of states with competitive senate races. states like missouri and montana. he is campaigning in areas that are very friendly to him. this will determine the fate of the house. polling shows that democrats are poised to put the house. a havethis will a really good sf doing that. it is not guaranteed but it looks like they are very close to being guaranteed to pick up the seats to do that. this could be president trump trying to shore up that republican majority. it is already razor thin. democrats are hoping to chip seatsot one but two house . what we will be watching on election day is a larger turnout. president trump is trying to motivate his supporters to go to the polls.

>> there will be campaign donations. right now, the biggest spender is one industry in particular, health care. how much money are we talking about? >> health care companies are spending a lot. .7 million. that comes from the political action committees from these groups. leading the way is groups of positions. even more so than pharmaceutical companies. it is a significant sum. health care has dominated the campaigns. this is protected -- projected to become the most expensive campaign ever in a midterm election. they are looking for protections for people with pre-existing conditions. democrats charge that republicans have saw to chip away at obama's health care law.

turn, they have threatened them. wins, they want a seat at the table. lawmaker's et ears is to spend money in elections. >> cold hard cash. coming up next, we will speak about strategy and the sweet spots of the market. be joining us in melvin. >> plus, we will drill down the future of sustainability. this is bloomberg.

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>> this is daybreak asia. haidi: i am haidi. shery: i am shery. merkel's decision to enter political career -- and her political career in 2021 has caused panic. who may take over? >> the decision will be made in early december when the party .athers in hamburg > some people who have stepped forward is a close angela merkel ally. she managed to get this job -- this would allow angela merkel to hang on longer as chancellor. two rivals have stepped forward. -- one isval frederick. rivals.them are seen as

should one of them when that position, it will be much more difficult for angela merkel to hang on as chancellor. that is bloomberg news, berlin. >>'s reaction to the surprise news -- here is some of the reaction to the surprise news in germany. >> she had a big role in being a stabilizing role in europe. the markets will react. >> this is why it is a belief relief thatis -- a merkel is in the job still. this is a relief. the distribution of outcomes. risk appreciation will be slightly higher in europe. >> one of the other reasons why the bond yields are rising in this slow because policy era is coming to an end. whether it is because of the

angela merkel move. i think the tide is changing. >> it is a lame-duck chancellorship. the question of whether she can get anything done depends on the social democrats. they like the idea of a post angela merkel era. today's edition of daybreak. this was available on mobile. you can customize your settings. you will only get the news on the industries and the assets you care about. this is bloomberg.

♪ this is daybreak asia. haidi.i am >> snapchat's parents tumbled.

tumbled. he changed his mind, rescinded the offer and he picked jeremy gorman instead. he has left snap. -- it saw a lossthat of 90-100 $50 million in the three months through september. this is a filing to the singapore exchange says operating income was hard. the company is still being expected by constraints on liquidity. outside investors may not be the only ones coming money from bill gross's bond fund.

about $566 million at the end of last month, down more -- this fell to about $566 million, down more than 200 million from last year. the u.k. is targeting global tech giants including facebook and google's parent, alphabet. on the other side of the break, several side of the world, several governments in asia are watching to see what happens. ramy inocencio has the story. let's get started with this. chancellorritish spoke to parliament early today and he said listen, the tech giants out there, a lot of them are based in the united states and are not paying their fair share. they say that has got to change. that has to change in the law. on these been focusing

big ones that have annual global revenues of more than 509 pounds -- 500 million pounds. these are the amazons, netflix is amazon,his netflix and facebook. mr. hammond is following through when hedge, a threat said that the u.k. would go it alone if the eu version saw this. there is an eu version out there. it turns out that some countries are blocking that. the czech republic says the cost of tax collecting is more than its revenues. of course, there are a lot of people out there who don't want this to happen. including an industry body in the united kingdom. the tech london advocates are their name. they say it is a prudent step but it is a wrong approach.

there has not been any comment from google, twitter or facebook. mom is the word. we saw their share prices fall today in the global tech route. just some numbers to share with you. google page $16 million in u.s. corporate taxes. -- google paid $69 in u.s. corporate taxes -- $16 million in u.s. corporate taxes. tripled in that same timeframe. a lot of people are wondering if they will be willing to pay more or if they will start to push back even harder against this. >> we are seeing several governments in asia watching this very closely. they are debating whether or not to impose similar taxes. what is growing -- brewing?

focus, inorea is in addition, malaysia. they will release their next budget for 2019. they could introduce their own version of this digital services tax. the finance minister said that something, hedo thinks they will actually be losing revenue. that is some kind of support. southsouth korean lawmakers are meeting with the heads of a lot of these companies. they are saying and pointing out that foreign tech giants made 5 trillion yuan in revenue. if this had ashley been applied companies, they actually paid over 25% in terms of what they actually needed to pay out. a lot of people are talking about this, india, thailand, mexico and chile. breaking up next, we will

japan's latest jobless numbers and we will get the lowdown on the central bank meeting. that is this tuesday. this is bloomberg.

♪ ofa gorgeous live picture tokyo. nikkei futures are down slightly. they are down .4%. it has been a difficult day in wall street. we have breaking news when it comes to japan's labor market. look at the jobless rates coming in at 2.3%. weaker growth than we saw in the previous month. the september jobless rate is 2.3%. lower than analysts had estimated at 2.4%. the jobless ratio is coming in at 1.64. the previous number was at 1.63

in august. slightly higher than what we expected. 164 means that you have jobless applicants for 100 jobs. sinces the highest number the 1970's. their importance to keep an eye -- important to keep an eye on the jobless rate. especially in a week when we see a boj policy decision. they willecting that leave the policy setting after they back their two-day meeting on wednesday. forstors are watching out bloomberg -- for this. this is an extraordinary stimulus and a critical role of

wages. what would you say about the latest numbers. ? >> he would be clapping. marketut it, the labor has gotten even tighter when you look at these numbers. 2.3 percent on the jobless rate, it keeps falling. that job to applicant ratio is rising. this is very important. it is widely expected, even though inflation is far from the target. these markets are going to increase wages in japan. told me that this is probably his biggest focus. let's listen. >> basically, i think wages , sustainablemain factor of inflation.

this is in recent months. whether this continues or not will be very critical. >> of course, seeing these numbers, knowing it is tougher for companies to find the right worker for the job sounds like the united states. that does not mean that the wages automatically rise. japanese companies have been reluctant. they put those wage increases through. this is something that remains to be seen. predictionroda's will hit that inflation target and make a timeframe come true. you spoke about the other man's concerns about the bond market. to that be reflected -- could that be reflected in the boj's actions tomorrow russian mark --

tomorrow? >> it is anchored at zero but it can go as high as 0.2%. 0.1%.s double the boj is concerned about sustainability. the bond market is not trade as accurately. -- does notoda is trade as accurately. governor kuroda is concerned. they will keep buying bonds. that is why he is concerned. kuroda: this is the biggest point. how narrow it is, sometimes there are buyers and

no sellers. , thekind of market function is not good. importantly, bloomberg news broke the story that some of the officials of the boj are in favor of moving that top of the 0.25.0.25 -- to they reported that the boj is going to discuss ways to make trading more active at this meeting. lawyers reported that they are looking at changing the way they do their bond buying operations. it seems to me there is a chance that we will hear something. >> you will keep us updated in japan, a week. thank you for that. let's toss it over to haidi. in melbourne. haidi: this is the managing

director. this is a metals and mining company. , this ises aluminium graham. you just came fresh off the stage. you are getting a gauge of what the mood has been. graham: a lot of uncertainty. there are a lot more people here than in prior years. even though there are uncertainties, it has been a wild year. >> a wild year for the markets. >> we produce aluminium. chainpart of the value moving in this direction. i was going to ask you how you are catalyzing and maximizing with how tight the

market is. >> we are long in alumina. to have allowed us higher prices. haidi: we talked about how you spread your travel. what is your fear on whether things have changed? graham: i think that china's economy has evolved over a long. -- ame -- along time pe long period of time. environmental policies have had an impact on what they have purchased. it will be interesting to see how the winter cups fall into play. you have been talking and thinking about how to align your

portfolio of assets along with climate change issues. what kind of strategy are you taking? graham: this is three different directions. one of them is the opportunities it presents. we have 18 expiration projects on the way. they are predominantly biased toward metals. there is going to be more demand for those products. we are doing lots of things about making sure our own operations are resilient to climate change. that ranges from putting a solar farm in canton. is continuing to look for ways that we can mitigate our current situation. haidi: investors are looking at investments that don't align with that strategy? graham: though idea is shifting expectations. there is no doubt that climate change is real.

i would have said that at least half the questions were around climate change and how we would do with that as an organization -- deal with that as an organization. haidi: is that a pessimistic view that you share about china? graham: we think about mining over many cycles. you have high-quality operations. they see prices go up and go down. we are focused on how we go to business. it is about continuing to live -- produce high-quality. haidi: what are your forecast score element him? -- four minum?um -- for alu graham: i see a tight market. haidi: what about the coal

business? graham: we are executing the way we thought we would 12 months ago. thee two was to transform ownership of the group of businesses. we are putting out expressions of interest. we have many who are especially interested in looking at the business. haidi: any interest in keeping that business? isham: the number one focus building something sustainable. we have no plans to exit south africa. project in about a the u.s.? graham: we have been consistent from day one. we are trying to complete the first study. the third piece is to continue to understand everything. haidi: do you have a further appetite in north america?

graham: a large majority of those are based in the americas. including north america, our best one is in alaska. a strong interest, yes. significantat a geographic base for the company? graham: we will have a greater presence in australia and the americas. haidi: we have been talking about the focus on sustainability and technology and have a traditional mining sector can bridge that gap. you guys have a partnership with the ge. graham: we are running a number of projects with ge at the moment. weis using big data and how use our equipment and how we maintain equipment. we are also using some of that they did it to make sure that we can manage manganese.

of re seeing big wins out that. significantis a investment in mining? graham: it hasn't had a big impact like other parts of the industry. we have not seen that kind of huge change. i think it is coming very rapidly. haidi: as the leader in business that develops on the fate of an emerging market and developing markets out of china, how much time do you think about the economic future -- macroeconomic features? graham: there is a lot of work that goes into understanding the fundamental drives. we do a similar thing in india. that is growing at a smaller rate but they have a stronger growth profile. haidi: how should a company beat tapping into the smoke stacking industries in china?

what about the more electric side of things that they are try to innovate and push? talked aboututler the need for more copper. when we think about our projects, they are focused toward that and base metals. like -- in places like china and india. haidi: in terms of the production pipeline, there is a lot of concern and expectation that we will see outside pressure and commodities prices rise? do you think there is enough investment in future assets going on? graham: in the last four or five years, there has not been a lot. i think in that respect, there will be a gap. i think that will ultimately trigger some projects. day one ofow it is

the compass but do you collect the transition in that mindset from caution to investment -- in the conference but you think the ofnsition from that mindset caution to investment is smart? is the trade war your biggest challenge? graham: we watch it with interest. the impact it has on places like china and india and the other issues going on are the biggest impacts. haidi: great to have you with us on daybreak asia. that was graham kerr. he is joining us from melbourne at the money and resources conference. shery: coming up, we dig deeper on sustainability and the future of mining with the international counseling on mining and metals. this is bloomberg.

♪ >> welcome back. asian stocks fall for a fifth consecutive session. let's see how the other markets are doing. this is sophie. >> we are seeing weakness from in sydney.arkets this is coming off a session low and heading south after the release we saw on monday. the aussie dollar is as it off the 42 month low we saw overnight. this is ahead of data that is due out. we were expecting the first rise in three months for that data set. we are checking in on the asset to hundred -- afs 200. this is the wednesday will call for the sector. that will kick off. when it comes to leaders,

holdings are getting 9.6%. this is after an eight-day decline. this is the moving and record -- equipment rental business. they had a fairly decent set of results. it is getting upgraded to neutral. goldman raised the stock. when it comes to the laggards, i want to highlight consumer retails along with car sales.com and goldmine minors. -- miners. they are sliding. this fell for a fourth day ahead of its quarterly report, that is due out this afternoon. we have building product makers bowling to a near two-year low. that is at the results from the first quarter and into october amid estimates that the company is expecting strong earnings in

the second half. >> think he so much for the latest on the markets. let's go back to haidi in melbourne. haidi? haidi: i am here in melbourne. this is australia's largest gathering with most of the top miners in the world attending. one of the groups represented is the international council on mining and metals. of theler is the ceo company. he joins us now on daybreak asia. you have been getting started this morning. what is the main thing? what are the most pressing concerns from the people you have spoken to? tom: as i was saying, it is about changing the way we tell our story. there is still a big gap in how

people perceive the mining sector and how we would like to be. it is about articulating our society withgning us. we need to deliver a lot of metals for the modern way of life. in order to do that, we need support from financiers. i don't think we are yet fully aligned. >> is there a misconception when it comes to the technology side of things? >> not so much on the technology. -- we aree perception a very -- there is perception that we aren't an innovative industry. we are a very innovative industry. there are all sorts of other innovations going on. from that point of view, anybody wanting to work in high tech, mining is a great place to be. seeingare you sayin --

return on investment? tom: this means optimizing the use of resources, not wasting anything, minimizing the impact of the planet. that is one reason. it is cost driven. you can get more from driving your costs down. -- about using benefits fairly and making sure that your impact on surrounding communities are as positive as possible. yes, of course, everyone has to make money. not just mining companies but all companies. the way that is done has to be fair and balanced. it has to be on a partnership basis.

that i wasthemes talking about is that we need to collaborate and engage much better with communities and other stakeholders to make sure that we are treating them as true partners. sidewho --s a csr sideshow. haidi: do you see the widespread, mainstream adoption of using tribunals -- electric vehicles? >> our friends are already building all electric underground mines. during our meetings with our member ceos, we will be discussing an initiative to limit carbon emissions from all vehicles. that will take time but i think it is time we started that journey. haidi: what about safety technology? there is a gap in the developed -- in the developed

world versus the mining world. safety look at statistics all over the world. the telly rates are moving in the right direction, downwards -- the fatality rates are moving in the right direction, downwards. of the things that we have identified that is the biggest cause of fatalities -- interaction with mobile equipment. one of the things we will be focusing on is what we can do to reduce or eliminate interactions between people and things that are moving. that will account for a significant portion of the fatalities. haidi: what about innovation and new technologies? you look at cobalt.

there is lots of concern over where that comes from and where it comes about. is there enough focus going on in terms of that? do investors and stakeholders care about the origins of where the commodities are coming from? tom: i think that has been hugely topical. amnesty international put a report together that focused on the issues around the art is no artisin- arch is not -- al mining of cobalt. view of andnt of consumers, apple is concerned about their reputation. our performance expectations and it has been the otherlot of commodity associations and how they think about it as well.

that is going to change. -- there be a lot more will be a lot more pressure on other users. they have to demonstrate that their supply line is properly clean and that there is no child labor. haidi: there is something about blockchain that to be meaningfully implemented to stop that from happening. tracelockchain can only from the entry point. you need someone to be the products that has been mined and certifying that there is no child labor involved. it is a combination of blockchain and human intervention at the beginning. haidi: we are looking ahead to the couple of days ahead of you. we are covering some really interesting topics.

we have been talking about the trade war, the slowdown in china, some of the headwinds when it comes to the demand side of things. there are existential questions about sustainability, diversity and have technology creates ettore and is -- better industries here. >> let's get a quick check of the latest business flash headlines. insurance will be want to watch later after reporting a jump in third-quarter operating profits. many say it better reflects performance. operating profits increased to more than $12 billion in the first nine months. implying a rise of 12% over three months through september. morean is focusing on technology.

this is a slowing economy. meet more help stringent requirements. separately back of china reported an increase broadly in line with estimates from bloomberg intelligence. >> let's get a quick check of the asian markets. we are seeing australia and new zealand, the only two markets that are trading down. about 2/10 of 1%. losing groundare after two sessions of gains. we had a 1% gain in the last session. nikkei futures are pointing down .3%. we had better than expected job market data with 2.3% rates for the jobless numbers. the futures are also down. facingup, the challenges the sector. we have hsbc's chief economist

with us in the forecast and market trends. the open is next. this is bloomberg.

a gathering of the international mining resources companies. shery: good evening. i'm shery ahn. sophie: and i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." our top stories, asia-pacific market look set for declines amid fears that president trump is ready to take the trade war to a new level. the s&p fell from an all-time high. the dow dipped briefly into a

correction. the nasdaq hitting its lowest since may. shery: saying the u.s. will slap tariffs on all chinese imports if there no progress at top level talks. investor sentiment in the u.s. pushing the s&p 500 closer to correction. see how things will be shaping up in asia. sophie? sophie: shaping down is the way we are going. red is how asian markets are feeling. the nikkei is. the kospi lower by 0.3%. it has fallen below 2000 points, and extending losses at a 2016 low. watch for reaction to company results like uncooked tire, which did see operating profit miss. aussie shares under pressure as well after that brief respite on monday. we're seeing australian banks

gain ground a day ahead of the roll call for earnings as banks kickoff on wednesday. we have wellington shares snapping a two-they decline. we do have the yen holding the worst loss in two weeks. have a slight improvement in japanese jobs data to container. the jobs rate falling in september, showing some labor market strength. let's look at some stocks we're keeping an eye on. sony, honda, nintendo. goldman saying that sony's valuations are not keeping up with earnings growth, and the company is to invest over three years in chipmaking, which is under pressure, off by 0.9%. fromwatch for results machinery makers. both gaining ground so far this morning. thank you for that. shery: let's now get to the

first word news with jessica summers. jessica: an indonesian airliner hit the sea at hundreds of miles per hour. the flight plunged from 1500 meters in just 21 seconds. people.arrying 189 shortly after leaving jakarta, one of the pilots requested permission to return to the airport. the crew may have been struggling with some type of failure. bank of america plans to pay special bonuses for a second straight year after seeing profits jump on tax cuts. inh bonuses will be paid december two eligible staff earning less than 100,000 others annually. employees willny receive a reward early next year. the u.s. treasury says government borrowing will more than double this year to $1.34

trillion as the trump administration finances a rising budget deficit. the department expects to issue $425 billion in debt from october to december. that is lower than the estimated $440 billion forecast in july. angela merkel will stand down as leader of the cdu after 18 years , but says she will remain as chancellor for the rest of the current legislative term. merkel says she won't seek any other political office. her government has been weakened by infighting and coalition parties were punished since the election. bloomberg sources say some google employees are planning to walk off the job, unhappy the report aboute to a alleged sexual harassment. we are told the protest may happen on thursday.

they are said to have compiled a list of requests for the company aimed at helping anyone affected by sexual harassment or power dynamics at work. 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 jessica summers. this is bloomberg. haidi: thank you. news that president trump may ramp up the trade war fueled a turnaround on wall street. investors were spooked by a bloomberg report that the white house is preparing to announce tariffs on all remaining chinese imports if talks next month fail. an announcement could come in early december, with tariffs hitting in february. let's bring in our chief asia economics correspondent, enda curran. we're seeing economic data out of china slowing, not to mention turbulence in the markets. what impact does this uncertainty have? : it is a reminder that the

stakes are very high. if we don't get any breakthrough, then we are on tariffs on remaining chinese goods, and then we head into january and we get a further increase in tariffs implemented on chinese goods. then there's always the risk of retaliation from the china side. they've made clear that they are not going to take this lying down. it shows you that we are still somewhat at the early stages of this trade war that has much further to go. washington is trying to manage expectations, talk down prospects for a major breakthrough. i think there is a feeling among analysts that the best they could hope for is a meeting of ways for some kind of negotiating framework that maybe both sides can agree on starting further talks that may slowdown

implementation of tariffs. the news is a reminder of how far apart both sides remain. shery: we had heard that they may not bring up the subject of trade at all in the agenda. going forward, where do we expect the talks to occur? will it be at the high level or the working level background talks? are there any ongoing? enda: it has been a very stop and start process. the chinese complained that they have been promised deals before only for those to be rolled over by president trump. it is critical to see what kind of mood comes out of the president trump and president xi meeting next month. if that meeting goes relatively well and they agree on a framework, then one would expect the requisite officials to come together and start hammering out how they can go forward. if those talks do not go well,

we are pretty much back to where we are at the moment, stops and starts, and the implementation of tariffs continue with no real end to the deadlock insight. shery: president trump already has a deal with canada, with mexico. the u.s. is also talking with the european union, they are starting talks with japan, so how much is at stake for china here if president trump actually manages to form a coalition against the chinese? enda: very interesting question. at the beginning of the year it appeared the u.s. was going to a trade war with just about all of its major trading partners. manageden, the u.s. has to at least ease tensions or agree outright deals. there is a feeling that perhaps they are managing to isolate china. whos not just the u.s.

complains about some issues with china's economy around market access and forced sharing of technology. other industrialized nations including germany have long been making the same complaints. we have yet to see this kind of concerted approach towards china. it still very much remains the u.s. on its own. i think there is a feeling that the u.s. approach has proven to be somewhat antagonistic. they have yet to fully sign up to the message that president trump is using. a space toy is watch, whether all these sides come together. thank you so much for that. asiaurrent, how chief economics correspondent. china is considering measures to help the slowing economy. we are told that there could be a tax cut which would be aimed at reviving the car market, being damaged by the ongoing

trade tensions. tom mackenzie joins us with the details. what do we know at this point? tom: this is a lever that chinese policymakers have used before. we are hearing that the state planning body is proposing a cars, smallto 5% on passions are -- passenger cars, which is about 70% of all the cars sold here. it is just a proposal at this stage. we don't know if it is going to be put into practice. you saw that positive reaction from the car stocks in europe and the u.s. yesterday, the daimler ford, vw, and rallying on this news. we are now potentially looking at the first slowdown in the chinese auto market for over two decades. this is the world's largest auto market year after year. we've had record sales.

monthsad four straight where the sales have dropped. their had vw cutting forecast for sales in the chinese market. this tax cut would provide relief for this market according to the analysts that we've been speaking to. in terms of the dealerships in china and the number of cars they've been purchasing in september, that number dropped 13%. some are expecting this could be the perfect tonic to revive this market. to what extent can we say that the slowdown in the car market is a symptom of the trade war? tom: it is hardly the trade war. that is dampening consumer sentiment. it is also the gradual slowdown in the economy here and the impact that is having on consumers. you've seen the rout in the stock markets here. you are seeing pay rises growing

at a slower pace. all those things factor into the confidence of china's consumers. it has also been the policy reaction from some of the officials. carve had the china passenger association saying the decision by policymakers to ramp 40% on cars being imported from the u.s. and cutting those from other countries to 15% has confused consumers and led to a dampening of demand. cut is part of additional measures that chinese authorities are looking to rollout and are implementing to try to stimulate the broader economy, whether that is cuts, support for bond issuance, this is the latest move. we should be looking at those chinese automakers when they start trading later in the day, as well as the dealers and suppliers, to see if they see

any upside from this news. beijingom mackenzie in with the latest on these tax cuts directed at the car market. the trend for commodities as trade tensions continue to simmer. s where theysee are going in the year ahead. shery: plus, we discussed china's banking industry. this is bloomberg. ♪

haidi: bank of china's lenders shore up capital buffers, billion share17 sale in the face of a slowing economy. stephen engle joins us with the earnings rout. what do we know? pretty: bank of china much in line with estimates from

analysts surveyed by bloomberg news. p 5.67%.ncome u income, 13.1 9 billion u.s. dollars. ratio holding steady at 4.13%. npl's have been rising at the big state bank. that ratio 1.43%. that was the same as the second quarter. capital advocacy ratio falling from 14.19% at the beginning of the year. the trade war, there is some impact there. that could stoke corporate defaults and eventually be reflected in nonperforming loans. you mentioned about that private share placement shoring up capital buffers in face of the slowing economy, and of course calls to help support the economy with more credit. bank of china is joining the

likes of agricultural bank of china in boosting and bolstering its capital. 1.2private placement is for billion shares, one billion of them likely to be sold at home in china. lendersertainly the big are the cavalry. what about the other major chinese banks? stephen: we've had a couple other banks already out. two more report today, including icbc as well as agricultural bank of china. we saw china construction bank pretty much in line as well. up 7.1%.ommunications we had the analyst estimates earlier in the year for the state banks full-year earnings profit growth of about 8%. down to been ratcheted about 5.6% consensus. ,cbc, they are expected

according to analysts, mid single-digit earnings, modest revenue gains. loan charges could climb further on worsening asset quality nationwide. bank asset quality also to be tested. they did see massively improved loan quality in 2017 and the first half of 2018. they may find it difficult to trim bad debt further. let's get more perspective with our next guest. haidi: stephen engle, thank you for that. we have the head of china bank ratings for that perspective. great to have you with us. analysts have been warning of potential weakness in chinese banks. is that what you are seeing as well? >> from the quarterly earnings, we've actually seen margins stabilize somewhat. probably the reason is also the prior reductions that has

alleviated some of the funding concerns within the market. concernsne of our key on the operating environment is the fact that there isn't enough capital to support the kind of growth that the authorities might want to see in order to support the slowing economy, and ratios,ern is capital given that the chinese banks or even the larger state banks, they are barely making enough profit just to sustain their current pace of growth, and given that we've got the big , there'sese banks still a large amount of capital required for them to make the minimum requirements. these banks are going to need a lot more external capital to comply with those minimal

requirements, unless they are to slowdown there growth significantly. shery: this chart on the bloomberg showing how the pboc has cut the rrr four times this year already. have any of the authorities' actions alleviated the funding pressures for banks? grace: they have. the rrr in particular, if we look at some of the midsize banks, we've already seen an improvement in the margins on a quarter on quarter basis. you still have part of that coming into play into the third and fourth quarter. then that benefit is going to die off unless we see more rrr reductions. shery: how is a trade war going to affect borrowers operating in sectors that are targeted by tariffs? is a causeainly that

of concern. for us on a sort of broader picture, our concern is whether these kind of trade tensions is going to result in changes in the policy. at the beginning of the year, we were pleased to see the regulatory tightening having an impact, especially with some of the riskier sectors. for example, shadow banking activities. but as we started to see infrastructure spending coming to see a shiftd in the policy stance, that is now putting the emphasis on banks sustaining the financing into the economy as opposed to tackling financial risk. what we would be concerned about is whether these trade frictions would result in a further slowdown in the economic conditions, which then prompts the authorities to take on other types of stimulus that involve

the banks. chinak what is stopping from engaging in the previous round of credit stimulus, is the fact that the banks do not have sufficient capital. who is going to be affected more, the big state lenders, or medium and smaller banks? grace: it will be the midsized commercial banks that are impacted more. they are the ones that our lending more to the private enterprises. we've been talking about asset quality declining. this chart on the bloomberg showing the amount of nonperforming loans is at a level we haven't seen in more than 10 years. when are we going to see the 's begin from these npl to resurface? grace: i think it is natural to

beect the amount of npl's to rising considering the amount of credit in the system. if anything, we are surprised ratios have not increased further. part of that is because of active npl resolutions that are undertaken actively by the bank. so, any good news for the banks? are there any banks that we are getting earnings out of that could actually surprise on the upside? of thein terms profitability, we have seen some banks really taking advances in the technology to help manage their cost. for some of the banks, despite challenges with the income, they have managed to lower their cost to income ratio. theink going forward

challenge is going to be on asset quality, and not just on the loans, but also from the investments. a lot of banks have increased investment portfolios, and in toe cases, that is going come under more challenges next year. shery: grace wu, head of china banks ratings. we have breaking news on the bloomberg. ask a telecom reporting third-quarter sales coming in at 4.1 9 trillion won. that was below estimates. estimate was for a lower number of 877 billion. third-quarter operating profit coming in at 341 billion, lower than the estimate of more than

329 billion. we are seeing that their results are disappointing and lower than analyst estimates. their operating profit missing their lowest estimate, the stock falling as much as 4% at one point. plenty more to come on "daybreak: asia." this is bloomberg. ♪

twittermusk is back on just days after writing that he was signing off for a bit. he deleted hisay tesla title to say what what happened. he didn't elaborate on what that means. he signed out on friday after tweeting that the $20 million fine he paid to the sec was worth it. snapchat parent tumbles on reports that a new chief business officer was hired on friday and replaced on sunday.

sources say he changed his mind, rescinded the offer, and picked former amazon sales chief jeremy corbyn instead. plenty more to come. this is bloomberg. ♪

haidi: we are in our from the open of trading there. i'm haidi stroud-watts in melbourne. shery: and i'm shery on in new york. let's get the first word news with jessica summers. jessica: sources in washington say the u.s. is preparing to slap tariffs on all chinese imports. that is it talks between presidents trump and xi failed to ease the trade war. the leaders are expected to hold brief talks next month. we are told announcements could come in december. that would mean the effective date of $257 billion worth of new duties would be in early february. china is said to be considering a tax cut to revive the auto

market. support for a key sector that has been damaged by president trump's trade war. carmakers surged around the world after bloomberg reported the idea that would stimulate a market they relied on for growth. ford and gm later rallied in new york. philip hammond has delivered a budget promise of early tax cuts and an end to austerity. u.k. growthite weak forecasts and uncertainty about brexit. he says the country has reached a defining moment and he views the future with confidence. earlier, hammond said brexit might need an extra emergency budget and prolonged austerity. >> i can report to the british people that their artwork is paying off -- hard work is paying off and the era of austerity is coming to an end. jessica: the peso plunges.

the incoming president sl ashed a project backed by the wealthiest people. obrador acted after almost 70% of respondents to a referendum voted no to the project. bezos has set a new world record, but not one he probably enjoys. his personal fortune has slumped more than $19 billion in the past two trading days alone, the most ever in such a period according to the bloomberg billionaires index. mark zuckerberg used to all the record when he lost $16.5 billion in july. bezos is still worth one hundred $28 billion. 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 jessica summers. this is bloomberg.

let's look at our asian markets. get over to sophie kamaruddin in hong kong. sophie: asian stocks are looking next, but we have a cocktail of catalysts that could weigh on sentiment among the renewed fears over tariffs and the yen holding the worst loss in two weeks. , and theeing gains aussie dollar along with the kiwi up by 0.2% even after we got that miss in australian building approvals. on a yearly basis falling 14.1%. that is compared to the 9% drop anticipated for september. we are seeing that mood reflecting in product makers in sydney. we have james hardy sliding in sydney. the asx off by 0.2%. the nikkei gaining ground and the kospi fluctuating after falling below 2000 points. it breached that level on monday

for the first time since december 2016. losses may prompt regulator to see further measures to stabilize capital markets. the chairman did hold an internal meeting this morning. taking a look at some stock movers across the region. most since march 2015, sliding more than 12%. consumer and tourism stocks continuing to slide after we got results yesterday. the stock also tends to move on factors related to tourism. the news reporting that the u.s. secretary of state is to meet his north korean counterpart next week. we also have sk telecom under pressure after third-quarter operating profit missed the lowest estimate, and hankook tires falling the most since january 2016.

cap, falling in tokyo after operating income missed estimates. this amid confusion and apprehension over stricter gaming regulations in china. i want to leave you on an upbeat note. on the some gainers nikkei as sales and profits are rising. a machinery maker lifting its annual target after profit jumped 75% in the second quarter. we are seeing korean and japanese automakers rising. climbingipmakers also there is a hint of another downturn. shery: thank you. beijing is giving a rare clarification on the confusing moves we've seen from the so-called national team. the regulator says relevant

institutions have actually increased their positions. let's look closer at this with our china markets reporter. selloff, notllion surprising that authorities don't want to add to the uncertainty, but what happened to these bonds? >> we actually still have quite a few questions. these are five funds that the government set up back in 2016 when the market was really tanking and panic was a lot bigger than it was now. to create ap just little confidence in the market. we know that these funds have been liquidated. nothing -- it is still quite significant. we don't know where that money has gone. even though china said this doesn't mean the national team is pulling out of the market, we don't know whether these funds have been allocated to other strategies.

we have seen some inflows, but nothing in the billions. we don't know where the money is. know whatn, we don't china has done with it. some theories are that because these funds were set up to support the market, maybe this mission has failed. the shanghai composite is lower now than it was in 2015. we are seeing a three-year low now. maybe they don't want to admit that the mission has failed, but they do need another strategy, clearly. what does it tell us about policy in beijing if the government is stepping in? trend that been a we've been following. about 50 companies have been essentially bailed out. the private sector is a huge driver of economic growth in china. if you compare a list of

companies, state backed enterprises compared with private companies, private companies have done so much better than state owned enterprises in the past few years. that started turning in june when we had these concerns about liquidity and funding. however these private companies that are cut off from state-owned banks going to fund -- how are they going to get cash? beijing does need to help the private sector and david knowledge that. it has been a huge priority for xi jinping. is china's is, this attempt at capitalism. is this a sign that maybe it fails or maybe china is taking more control of the private sector? this could be another dampener on growth, essentially. haidi: thank you.

crashsian air investigators are beginning the grim task of working out why a brand-new boeing 737 jet plunged into the sea just minutes after takeoff. data shows that the airplane hit the sea at hundreds of kilometers per hour after plunging 1500 meters in 21 seconds. all 189 people on board are feared to be dead. shares fell after indonesia's deadliest plane crash in two decades. let's get it over for the very latest to our asian transport reporter. what else do we know now? >> from the date of that was radar, it seems like the aircraft was going at a very rapid speed and altitude, and from the data that was collected, it seems like the

plane was falling faster than it was normally supposed to when it was descending. back, saying they wanted to come back to jakarta. with the speed we've seen in the database, it seems like they have been sustaining a far faster speed than was normal. there's actually more questions right now than answers, and we will have to wait until the search team finds the black box. that is going to answer some of these key questions that i think is really a big question mark right now of what happened in that flight. we know that indonesia has a history of air safety concerns, but it has only been four months since the european union lifted a flying ban. what is the impact going to be

on the industry there? >> obviously they will be more scrutinized, and it is a concern given that they have just come out of the blacklist in the e.u. , and a lot of people will be watching what the outcome of this is. in cases of all crashes, we have to wait and see what caused the accident. right now we don't have any answers. i think a lot of people will watch very closely what they find out from this crash. shery: we also know that lion air is a big customer in the region. do we know what questions this raises for them? isgiven that this aircraft fairly new, only two months old since it was delivered, it does raise concerns, given that this is the newest version of the

737, the best-selling aircraft family for boeing, and the fastest selling as well. it raises a lot of questions. were there any issues with technical, and what sort of event blew into this event that happened? i'm pretty sure a lot of the operators of this aircraft are going to watch closely to see if some of the issues that lion had would- lion air be similar to what they are experiencing. there's going to be a lot of scrutiny given that this is a revamped aircraft and a lot of people, a lot of airlines are flying it. it will be watched very closely during the whole investigation. shery: thank you. coming up next, we will be back at australia's largest mining conference to get an outlook on commodities and how they will impact your streaming economy.

this is bloomberg. ♪

international mining and resources conference is australia's largest gathering of its kind. our guest is here to share his views on markets and expectations to come. , great to have you out in the field. we usually get you in the studio. you think the cycle has turned. paul: that's right. commodity prices got to very low levels and there was a lot of nervousness, but now prices have lifted. we've had mining companies focused on cost-cutting. the mining industry is back to being profitable. the next stage of this story is, given that profitability, and given that markets are looking -- industry has

to do more investment. investment overall has been quite weak because of that big super cycle we saw earlier in the century. haidi: the underexposure is also why we are seeing that tightness. paul: that's right. it's a reflection of what happened during the super cycle. commodity prices fell a long way. mining fell a long way. lifting commodity prices has been very helpful. the focus on cost-cutting has meant that the mining sector is back to being profitable. the resources industry has spent time getting higher dividends, making larger share buybacks, and it is coming to the point where we should be expecting that we will see a bit more investment planning. if we don't see a lot more investment coming further down the track, then you would think commodity prices might rise. that is our central case, that commodity prices will rise. you get askedh do

about the trade war as being a great uncertainty? paul: it is a great uncertainty. i think the one thing to keep in mind is, it is for a range of commodities, certainly in the middle space. what china does is what matters. what happens with china's domestic demand drives the story. if we do see that these tensions continue to rise and china's exports slow, that china's growth shifts more to being domestically oriented, that is something that provides support for demand for a range of these commodities like iron ore, some of the base metals. central case, that we are going to see more support for demand. those markets are already quite squeezed. with got a bit of upside written into our forecast. the trade story could go in a different direction. we could see it weaken global growth. that is where the uncertainty comes from. i think that in large part the

commodities space is looking good. haidi: i think best modeling suggests you might see a bit of stagflation in the medium-term. do you see policymakers being able to react to that? certainly. policymakers around the world are watching this carefully, and watching how the balance between china and the u.s. plays out. we have been watching what is happening in china. one of the things that is most clear is that the resources industry is mostly tied into that chinese domestic demand story. we are seeing a reaction from chinese authorities. they've been loosening monetary policy to try and provide support for domestic demand. that in turn is supporting commodity prices. iron ore prices are rising. haidi: do you think it is sustained? paul: the most interesting part of the iron ore story is we are seeing a lift at the bottom end

of the quality distribution. the most interesting story has been the very strict environmental restrictions that have been put in place in china. there's a high cost premium between the high-grade iron and the low-grade iron. high-grade iron has been selling for quite a while. we are seeing the low end start to pick up as well. the high-grade iron ore story is with us to stay. china is going to focus on trying to buy higher grade material. haidi: what about the commodities that feed into the technology shift? ones thatof the key has been a big story has been lithium. the big shift towards electric vehicles. when you think about how that is playing out, it looks like a super cycle. the demand looks like it is going to pick up quickly. a lot of it is negative. governments are getting involved

in trying to support a shift towards electric vehicles. although we've got plenty of lithium, we haven't invested enough yet. prices are picking up to motivate that. it has all the hallmarks of a super cycle. my view is that has further to run. we are just at the beginning for , thes like lithium, cobalt battery related commodities. haidi: is it your base case that we see an old-school reversion to infrastructure rollout, turning on the taps when it comes to lending, to try to mitigate the natural structure will slow down, but also a potential doubling down of the trump trade war? paul: i think it is a balancing act. i think it is not anything like what we saw in 2009. the reform agenda is continuing, but at the same time it is going to have hallmarks of that.

china is very much driven by its own domestic demand. years, 90%st three of china's growth has come from domestic demand. muchesn't maybe take as support in terms of that domestic story to deliver more of a support for commodities and resources. haidi: a more optimistic note. always great to chat with you. that was paul bloxham. us at the conference here in melbourne. shery: we have breaking news at the moment as well. we are hearing japan's finance minister speaking about the currency swap agreement. that arrangement was up to 30 billion u.s. dollars. saying that this will give local currency to japanese firms in china, saying the agreement is between the chinese yuan and the

japanese yen. the japanese yen currently weakening 0.1%. you see that sharp move over there. after seeing the biggest fall in a week, it has been trading pretty range bound at 112. right now, making comments on the currency swap, we are seeing the japanese yen weaken substantively. saying that it will give local currency to japanese firms in china, this currency swap agreement of up to $30 billion agreed between president xi jinping and prime minister shinzo abe. coming up next, sinopec and petrochina out with earnings later today. how much will higher oil prices have boosted their bottom line? this is bloomberg. ♪

shery: more breaking news on the bloomberg. japan's finance minister speaking in tokyo, saying they are having positive effects from monetary easing, that he doesn't think the direction is wrong when it comes to monetary policy, also saying that wages have been rising, that jobless rates are low. today we got data on the tight labor market that got much tighter than expectations. canof the japanese yen we substantively, right now standing at 112.51.

haidi: let's take a look at oil now. petrochina and sinopec are two of the biggest chinese companies. going to get a preview of their numbers, what are we expecting from these energy giants? heidi. morning, -- haidi. sinopec already put a warning on profit. the quarter specifically, their profit may fall compared to second-quarter, up to 20%. we know sinopec is the world's biggest refiner. much higher price is really more harmful than helpful. a lot of people will be watching in the quarter what they may do, whether they have guidance for the fourth quarter. an petrochina, it is mostly

upstream. most of their income came from oil and gas production. in the third quarter, brent price, the international benchmark, jumped 45%. for petrochina, you don't have to do nothing. the higher oil price will help improve markets greatly. haidi: what can we expect in terms of their fourth-quarter outlook? >> fourth quarter will be all petrochina. we know china has a gas shortage problem. this year, petrochina's parent is projecting around 20 billion shortage. they have the ability to charge people more. moremay charge people 40% for the winter premium. i think petrochina will be doing really well.

they will sell more gas at a much higher price, and the profit will be much better. for sinopec, they wouldn't be much change. whenever the oil price jumps barrel, china will be more reluctant to raise the retail price. that will squeeze the markets for the refiners. >> we have to leave it there, but thank you so much for that. before we hand over to bloomberg markets: asia, look at how markets are trading now. this is bloomberg. ♪

rishaad: welcome to bloomberg markets: china open. utonne: markets mixed b progressing despite president trump may take the trade war to a new level. rishaad: the dow dipped briefly into corrections made of the nasdaq hitting the lowest since may. yvonne: the u.s. will slap tariffs on all chinese imports inthere aris no progress talks. ♪