yvonne: a very good morning. i'm in melbourne, where executives are around the world. good evening from bloomberg headquarters. >> i am sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: asia." >> our top stories, asia-pacific markets show signs of optimism. a tough october draws to an end with the yen trading around 113.

strong gains for rebounding in the u.s., down 8% this month, all most flirting with a correction. despite rising costs in slowing too.h, user numbers rose let's get you the latest breaking numbers on the bloomberg right now. ,outh korea september industrial production dropping the most since 2009. industrial production month-to-month down 2.5%. this is after rising 1.4% in the last month in august. we are seeing that the drop in september was bigger than expected, estimate was a drop of 0.5%. year on year, drop of 8.4%. 2.5%,ber, after a rise of a much bigger drop than what was expected, around 5%.

ofwas the biggest drop factory output for south korea, the most since 2009. there is distortion in the data we had the autumn holidays in south korea, and when it comes to the numbers for this month, we saw them rising about 26% for the first 20 days of the month. there could be distortion on the september data. industrial production number dropping the most since 2009. in's get a check on markets the u.s. session. it was a very volatile session. we had earnings season in full swing, ge sinking to a nine-year low. we saw the dow ending higher by 1.8%. the biggest gain in two weeks. erasing gains before ending in the green, every sector rising. the nasdaq gaining 1.6%.

caps stock gaining 2% reversing two sessions of losses. earlieroff the lows this year, it could be an indication the large caps could follow. the 10 year yield gaining ground. new 2018r claiming a high. this will translate into more optimism for the asian markets. sophie: optimism at the start of the session. we see a third of a percent. mixed and to the october, and across the region. aside from earnings in australia, we are looking for cpi data.

the aussie dollar may drop to a nine-year low of 67 u.s. cents. for a fourth straight day, new zealand posted a budget deficit that came in wider than the third quarter. we are waiting on the boj decision as economic headaches mount for governor kuroda. set for gainsd be despite the industrial output data we got this morning. that is a potential achilles heel, managers remain negative on the kospi outlook. results will be closely watched. expect to post record profit, shares have tumbled 70% this year. we have quite a few earnings out of south korea and japan.

bank prospects are muted because of wholesale and retail businesses. let's check in on the banking stocks. in sydney, picking up earnings for aussie banks come up full-year cash profit did fall 16%, dented by the misconduct charges and the housing market. we are seeing a bounce of the stock up 1.3% at the start of the session. bank, --lth shery: let's get the first word news with jessica. jessica: president trump is trying to talk up the economy and divert attention away from social divisions a week away from the midterms. he tweeted consumer confidence is at its highest level since 2000. consumers are not worried about volatility in the market.

the s&p 500 has lost 10% of its value since closing at a record on september 20. dimongan boss jamie says tariffs have already damaged the chinese economy. describing it as a skirmish, he says the tariffs are small the wider effect is diminishing confidence. he wonders if relations will worsen dramatically. affect are very small, but the secondary effect is bigger. the secondary effect is of supply, change lines, willie get worse, what are the odds of a trade war, what are the odds of something going south, that is what causes -- that is more negative than the tariffs. italian: economy

showed no growth for the first time in four years. populistlow for the government expansion plan, and ministers at knowledge it could be a problem. italian bonds fell after the preliminary numbers. it is an underperformer of the eurozone major economies. are inofficials indonesia to help the investigation into monday's lion air crash. authorities have not found the data recorders. it may describe why the plane came down after takeoff. the lion airplane had been delivered in august. reporting suggest the pilots faced a problem almost immediately. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. shery: facebook shares swung wildly after mixed third-quarter

earnings area revenue and user growth fell short of estimates, although profit was a be. here is what zuckerberg said on the call. >> i want you to know looking beyond 2019, i know we need to make sure our cost and revenue are better matched over time, and that is something i am focused on as well. shery: let's bring in bloomberg intelligence analyst. what stood out to you? >> like you said, it was mixed. if you look at the profits, it rates.om lower tax better guidance for the fourth quarter, but if you look at the 2019 expectations, what it is showing, facebook is going through a transition from a newsfeed where most of its revenue comes from to life stories.

it is that shift happening on instagram and other platforms. life stories is not being monetized yet, they are in the process of figuring it out. 2019 story, but if you look at the guidance for expanding it suggests will continue. we are going through uncertainty over here, especially for 2019. shery: what does that tell you, the fact we got an uptake in north american users? how positive is that? --f yo >> even if there is a boost, it will not be sustainable. whatest case scenario is they are trying to do is shift a familyention to audience number, around 2.6

billion monthly active users across platforms. the hope is that instagram, messenger will pick up the slack encore facebook. the expectation was that there will be a decline in north america, so holding that number was a positive, but a good penetration rate, growth needs to come from other avenues in the long-term, and that is where the focus in 2019 will be. shery: in order to monetize, does that mean costs will increase? yes, cost increases now because these services are not monetized. what is happening is they are piloting a few things, launching payments in india to enable different services on messaging. one service they are pitching is paid messaging for businesses. than ave messenger, more few million, they are still and

pilot phase. this reminds me of the post-ipo low that facebook had. until that visibility came through, we saw the multiples flatline in a way. that is where they are at the moment. mark zuckerberg is saying, give me a year to figure out these things beyond security. and hopefully those results in 2019.show up and that long-term expectation, we will have to wait to see how this idea of monetizing messaging, and how much it can scale. shery: thank you. the latest series of price swings in u.s. stocks, all major benchmarks ended with gains after a very volatile trading session. the dollar hit its highest since 2017, and treasuries fell.

investors are still on edge. rallies. two 1% facebook could be a shot in the arm when we kickoff trading tomorrow. let's look at the snapshot, and notice as mentioned, the russell was the strength of the market. the crude humming back after falling to a two month low. the question since friday, and again monday and we broke through the friday lows, is cameron market stay above this blue line of correction? it did it today. rest of the week is the question . the big movers, tech and earnings with a major movers. under armour, the apparel company, big win on earnings. as was the video company take two. intel came in strong. ge fell to a nine-year low. accountingo the

scandal continues. much for theyou so wrapup of the earnings season. still ahead, we will talk about president trump talking about the stock market move taking a pause before the midterms. this is bloomberg. ♪

shery: you are watching "bloomberg daybreak: asia," i am with you in melbourne. the mining conference here. and policymakers and their customers. moves have been buoyant despite the headwinds present from the u.s.-china trade war. with me is elizabeth gains --elizabeth anne. we were talking in the brink about the mood. it feels like there has been a shift.

more investment despite everything going on with the trade war. elizabeth: with china we are seeing strong demand and record highs. sector, that is on the back of his jump in steel production in china. we are feeling buoyant. our project is another indication of confidence. >> we are starting to see the seeingf iron ore, it is some love, we have been focusing on the higher grade because of the environmental curve. elizabeth: what we saw in increase of12.5% our price to $45. there was a 12.5% increase where 2%.index increased only by that demonstrates strong demand for our products. there is always a debate about

-- what happened in china is structural in nature. seeing steel mill profitability is the key driver in all products, and we are seeing improvement. >> was this seasonal, frontloading before the environmental curve six in, do you think the price is sustainable? bezabeth: that will interesting to see. we do not know what will happen in the next few months. we know steel production into the first part of october is running at a very high level at an annualized rate. it is high rates currently. we are seeing the environment restrictions during the winter will be more targeted. there are steel mills that have made improvements and their performance.

others may not have invested as much. said itsebastian bach is working well from his position. feel there is optimism over china with demand, and you expect the government when it comes to stimulus? elizabeth: i have been in china recently. certainly, the customers i was meeting with our positive and buoyant about the current economic environment for the next 12 months ahead. i think china has a number of ways it can stimulate the economy. the outlook is positive. there is strong demand for iron ore. >> you're talking about steel mill profitability in china, do you think the move to more consolidation of the private players will be impactful to your business?

there has been some consolidation in china that will strengthen the steel mill sector, that is driving the strong production and demand. the consolidation has been a positive today, but what happens in the future remains to be seen . we are positive about the outlook in china. >> do you expect that to continue to narrow the gap? elizabeth: it is hard to know about the discount. we focus on things we can control. import me for us as well, we are introducing our new product at the end of this year. that is a higher content product, and we expect the price -- buyback made a lot of headlines, will you be continuing that? elizabeth: we only just started. 2016er demonstration, in

we saw it trading at a 20% discount, so we bought back debt at a time when we were generating cash flows, but the markets had a disconnect of the value of our debt, so we got in there and bought back the debt. insee an opportunity to be the market of buying back shares. part of that is capital management. we take those opportunities when they arrive. -- we talk about whether it will move away from iron ore, with the m&a deals we are seeing, and the returns the positivity at the end of the cycle. elizabeth: it is based on m&a and exploration. we are interested in growing beyond australia. we have sessions in ecuador. we have been working in country about a year and need the

improvement to drill and ecuador, but we are excited about south america more generally. that is an opportunity for us with copper and lithium and other minerals. we are positive about the outlook for diversification, but it is a disciplined approach. >> are there particular geographies you are looking at? elizabeth: south africa at the moment. we thought operations in ecuador, colombia, and we have some interest in argentina three at south america currently, but we are not constrained where we might look in the future. do you think there is disciplined despite the euphoria returning to the sector? elizabeth: everybody has learned from issues in the past, but having a strong balance sheet is important as we move into the future and our in investment plan.

we have capital programs ourselves into the reinventing of our business. strong capital plans in place at the moment. i think we will focus on shareholder returns in the future. >> another major theme at the conference this year, a woman youheads up a mining major, are still in the minority. are you seeing signs of that changing? elizabeth: i think 30 years ago i would've liked to have thought butouldn't talk about this, we are still here and looking at the numbers. it is not just the mining sector. if you look at corporate australia, there are more with names of john and andrew, than women. more can be done for women. getting to positions of influence and there executive

careers, we still have a way to go. >> enjoy melbourne and shanghai next week. elizabeth gaines, ceo/managing director, fortescue metals group joining us here at the mining conference. this is bloomberg. ♪

shery: president trump says he plans to sign an executive order that would terminate birthright citizenship in united states. the president told axios is part of an effort to stop anchor babies and chain migration. i thought this was part of the constitution. as the authority to do this? >> that is right, that is definitely the question. hesident trump telling axios plans to sign an executive order to clamp down on birthright citizenship, this is the way citizenship has been handled for

a a while. it has been challenged any court case, and the courts found that children born to people who are not u.s. citizens in the u.s. are indeed u.s. citizens. any move that trump would make, while having the potential to come looking at life for immigrants trying to live and work here, would likely face a tough court challenge. there are lawmakers who have proposed legislation to try to clamp down on birthright citizenship in the past, that has not gone anywhere. that would also likely face of legislation. critics of birthright citizenship say this constitutional right to citizenship does not apply to people who are here in an unauthorized manner, such as undocumented immigrants. still, would likely face a tough road to become policy. know that defense chiefs from the u.s. and south korea are meeting in washington. president trump trying to negotiate that unification of the korean peninsula.

where are we now? on wednesday the defense chiefs from the countries will meet here. this will be a different meeting than in the past. in the past the militaries had strong coordination, exercising wargames. have saw tolitaries hone their military preparedness. but as president trump negotiates the denuclearization with kim jong-un, has canceled some of these military exercises. it leaves some generals and military experts to question whether that could threaten preparedness, readiness of the military forces on the korean peninsula. the u.s. has troops there, and president trump is questioning the efficacy of that. some tension between the two, but both sides maintain they are a strong defense. shery: those military drills are

more than drills, they send a message to the world about the alliance between south korea and the u.s.. greg sullivan, thank you so much. coming up, revenue is hit by a slowing economy, and trade war jitters. we will discuss. this is bloomberg. ♪

melbourne0:30 a.m. in at the international mining and resources conference. a fully and move despite the u.s.-china trade war weighing on demand and supply. we are seeing positivity when it comes to trading early. i am haidi stroud-watts. higher, asiaosed helped by the optimism in equity markets. in twothe biggest gain weeks for the dow and s&p 500,

erasing gains the four every sector rising in a volatile session. get first word news now. >> thanks. janet yellen has warned president trump to steer clear of commenting on policy, saying he could undermine confidence in the institution. she says she expects to rate hikes in the coming months, yet added the fed is trying to take its foot off the accelerator. the president has said he is not happy with fed policy. saudi arabia's top prosecutor has visited the istanbul consulate where jamal khashoggi was murdered. reveals the kingdom to where the body was hidden. the own sayggi's calling on trump and world leaders to prevent a cover-up.

were killed people as a typhoon swept across the philippines. thousands fled to safety as the storm hit the country already devastated by another typhoon. it buried a government building and a landslide. more than 20 people are thought to be trapped inside. the storm has weakened considerably from super typhoon status. winds have and high killed 11 in italy. tide in venice left three quarters of the city underwater. famouser damaged the mosaic floor at st. mark's basilica as well as the doors and columns. it also closed the highway connecting italy and austria. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries.

>> asian stocks gaining ground in early trading. we have positive numbers and that the u.s. session. sydney, early, but in gains for a fourth straight session, the asx 200 gaining .3% , banks in focus. , one healthf note insurance provider gaining 7.5% its target in what it calls a benign claims environment. we have a permit granted for tempora storage of waste. firmaining, up 3.5% as the moves to rationalize the sale of its life insurance unit. we do have one lacquered of note, corporate travel falling

14%, earlier falling 28%, the biggest drop on record as the company is refuting claims made in a short seller's report. to draw youri want attention to the korean sharemarket in the set for the worst month and a decade after a 14% drop as investors are anxious over long-term growth of the economy, and that will be exacerbated by industrial output falling by the most in nine years in september. 17% of companies have missed estimates so far. hyundai motors among the heavyweights to deliver sub our results. subpar results. remain negative ,fter the past month accompanied by an earnings downgrade. that is what this chart is

showing you, the average 12 isth forecast for the kospi that a one year low. shery: 80 and said feeling -- of theling the effects housing market, reporting a fall of 16% over the past year. let's crunch those numbers with our reporter in sydney. this is insult to injury given that we have been dealing with lenders trying to escape these headlines. >> it is a sign the pain is not going anywhere soon. results, are not great but given stock market reaction relatively flat means it is in line. the 16% drop in cash profit is down to the housing market. anz said they made a decision to

be risk lending and focus on .wner-occupiers there are also the compliance costs, the scandals, but is a result that anz is trying to become a simpler bank, selling thosesets, particularly overseas. that means this is a smaller bank. they released cash from continued operations, it is down nowhere near as substantially, more around the 5% mark and which shows you where they are looking to grow, at the smaller business to deliver growth. in terms of trying to slim pains?re these growing are we expecting them to improve? >> investors are hoping things will improve.

there is a lot of restructuring. anz has been trying to move to a new way of working internally, getting rid of staff. everyone knows there are problems that rank is trying to address. the future depends on your view of what will happen in the australian economy and housing market. market is falling and people expected to keep falling. real rates remain low because the economy is strong. small businesses are not as profitable, but decent earners and paying out those dividends important to retail shareholders. if you think the housing market is on a more severe slide and a you are less confident in the future of the banks. >> thank you so much. reporter.inance

for the latest numbers on samsung, third quarter consolidated sales at 65.4 6 trillion won. operating profit at 17.5 7 trillion won. we have their preliminary numbers before topping estimates. we had seen resilient sales of memory chips, easing concerns about a drop off in demand. now the final numbers from samsung, consolidated operating profit at 17.57 trillion won, the same level we saw when they reported their preliminary inbers, around $15.5 billion u.s. dollar terms. consolidated sales 65.4 6 as well.won

there has been pessimism over demand for memory chips, but there could be some doubt whether customers will continue buying later in the year and into next year. samsung struggling with smart phone sales as well. pretty positive numbers, the final numbers for the third quarter. let's turn to other earnings. chinese search giant baidu forecasting revenue less than estimates. our china correspondent tom mackenzie joins us from beijing. give us the details and take us deeper into the numbers. m: baidu reported better than expected revenue, but the outlook for the fourth quarter disappointed. -- 28 billionon

yuan. they are expecting fourth-quarter revenues of 25.5 billion yuan. this is on concern that and the sales will slow amid the weaker economy and trade tensions. is a sense that customers are becoming more cautious around the two key drivers for revenue for baidu. one analyst said the chance of more this is expect haitians in terms of ad revenues for the search and newsfeed products for baidu going forward. there is also increased competition. there is increased competition from other tech startups starting to carve out market share in the space.

that is why you see baidu repositioned to artificial intelligence. those bets are more forward-looking. we will get some sense of how much progress baidu on ai. we will see more products unveiled. for now, disappointment in terms of the outlook for the chinese search engine for fourth-quarter revenue. >> it is a different story for ! china.ina -- yum what were the surprises? >> kfc saw in store sales ticking up 1%. there had been expectations they would fall. they have been offering things like coffee and dessert to bring in customers in the early part of the day. that seems to be paying off. pizza hut saw in store sales dropping 5%. there is some expectation that

um! aspected from y they remodeled these stores, trying to revamp here that will impact margins going forward. there are greater demands from chinese consumers for healthier products, some of the yum! china franchises are having to repositioned for that. yum! china shares were up in late trading in the u.s., partly as a result of this announcement of a share buyback program will toextended from $550 million $1.4 billion, giving investors some optimism. an interesting set of results an interesting set of results from baidu and yum! china at of new york. >> thank you very much. china leaders have pledged to avoid a flood of stimulus. threateningnt trump tariffs on all chinese imports

come up beijing's patience is being put to the test. let's get started with the pmi numbers we are expect today. what impact could we see from the trade war? >> we expect to see in earnest pressure on manufacturers. we know it is smaller and medium-sized businesses that are export-oriented, they are starting to feel the pain now. the tariffs are only kicking in now. the real pain will become apparent over the coming months. the downward pressure on china's economy is gathering momentum. we are seeing forecasts for this quarter and the start of 2019, and one estimate from bloomberg that if president goes ahead with tariffs on all chinese goods, it will have a material

impact close to 5%. the pressure is significant. >> that graphic shows if you have the 25% tariffs on the chinese goods right now in place billion, that would drag 2019 gdp growth by .5%. withe at that second level $50 billion worth of tariffs around 25%. on $200 billion. that could rise in january and be 25% for $250 billion. given the economic impact on the chinese economy, won't china eventually have to resort to those big measures we saw in 2008 or 2015? >> we are not there yet.

there has been an element of china slowed down due to domestic policy reasons, the deleveraging campaign, also the trade war. policymakers are not taking all of stimulus measures. , tax targeted, nuanced cuts, measures for exporters. say, we get to the next stage in january and are facing higher tariffs on all chinese goods, then the question will become how do policymakers respond. there will be pressure on the currency and markets and officials in beijing to start spending more. that goes against the grain in terms of combating debt. the stimulus story in china the stimulus story in china might be relatively measured, but one to watch over the coming months. >> we have this gtv chart showing it is 260% debt to gdp. the bulk is corporate debt.

what are we seeing so far? we have seen authorities try to rein in debt. >> they had been making some progress. it had been flagged as a critical necessity by the highest levels of china's government, de-risking shadow banking, wealth management products and the like. there is the feeling the that story remains and total debt continues to increase. worrieshose risks and have not gone away. it is one reason they are trying this current round of stimulus. if we are back to the scenario ,here growth is under pressure then china will probably have little option but to resort to the borrowing and spending type

of stimulus we have seen in the past. >> thank you so much. coming up, boj decision day and governor kuroda's thoughts in focus. we are life in tokyo next. this is bloomberg. ♪ ♪

>> we are waiting for the market open. this is what we are looking at. the japanese yen at 113. some weakness there. we are waiting for the open. we are also waiting on the boj latest policy decision later wednesday. observers aren't expecting anything dramatic, but the yen may take its cue. kathleen hays in tokyo for that meeting.

policymakers concerned about rising risks. does seem it will be on the agenda. report,onetary policy the last one of 2018, and when governor kuroda faces reporters later today, we want to get to those rising risks and how it might affect where the boj is now and where it is headed. is our guest. it is great to have you back. rising risks, one thing is this global stock market selloff. japan has not been immune. when we got the monthly report on etf purchases, we saw they were the most since 2010. besides the fact the boj has the , how to support the topix

does this fit into the outlook? bought close to 90% of their annual target of ¥6 trillion. tweakimportant the boj ed the rate in july. the markets assumed it was more ifut stealth tapering, possible. correct,es continue to the market will be watching if the doj will continue buying etf's. >> that may bring you the latest industrial production numbers breaking. year on year falling 2.9%. it is a thicker fall than estimates of 2.1%. for is preliminary data

september. month on month, industrial production falling 1.1%. much bigger than the expected .3% fall. a bigger fault than the previous month of august. this has a lot to do with the fact we had some natural disasters, including typhoons, earthquakes, some disrupting factory operations and supply chains. let me get back to you. the boj is saying market volatility, and that because if this we won't see significant changes. there is a consumption tax hike coming next year. can we expect anything before the hike, or does it have to be after that? >> right. that is a good point. the boj presumably wants to enhance the jgb market and

improve the functionality of the market. it is possible to stealth taper jgb purchases, but we have the consumption tax hike, and the boj does have new forward guidance from july in which they say as long as there is uncertainty, they will keep the existing target level for shortend long rates. because we have the consumption rising over the past couple of months, i don't think the boj will make any formal policy change, beside around jgbweaks purchases. >> the tension is building for the boj, the whole question of financial stability, not just the functioning of the bond market, but the health of the

banking system, in particular regional banks. the latest report said things are stable for now. the you expect to hear anything about that in this monetary policy report or governor kuroda's remarks and is it a concern to share? >> in the latest report, the boj increased their caution about the financial stability. at this point with this degree of uncertainty, both domestically and externally, the majority of the board probably go higher. i think they will maintain their view that japan's financial system has been maintaining the stability on the whole for now. >> let's take it a step further

and broaden out a bit, because there are global risks, the chinese slow down, the trade war that keeps going. it hasn't been such a big deal. for emerging markets, the fed her rate hike has been a big deal. more next year, how does that affect the boj's policy path and does it come through in the yen? >> that is a good point. one of the reasons the boj broadened its target range for july may bejgb in can risehe jgb yield if foreign yields continue to boj tout for the formally change the policy because of looser financial conditions, the yen should be

weaker than the current level, i is more likely it if the dojund 120 wants to change policy because of the external conditions. lastly, we are one week away from the midterm elections. ,epending on what happens whether democrats have a sweeping victory or republicans hold on to the house, what are your projections for japanese equity markets and the yen? yen inink japanese japanese equities are very sensitive to the u.s. treasury curve. in case of a republican sweep in both houses, it will be positive for dollar-yen and japanese equities. a democratic sweep will be perish for dollar-yen and equities through the flattening

of the treasury curve. given the extent of the equities corrections over the past couple of weeks, the upside has been underpriced by the market. >> thank you so much. of course our very own kathleen hays in tokyo. take a look at how asian markets are trading. .1%.alia gaining ground, we are seeing new zealand stocks as we have positive sentiment children through from sentimentt -- filtering through from wall street. >> that relief rally coming through in the early asian session. coming up, more exclusive conversations here. by guestse joined

cleared lots of confusion over where the price of gold is heading next given trade tensions and the u.s. dollar. we will get their forecast. the asian market opens are up next. this is bloomberg. ♪ this is bloomberg. ♪

i am in melbourne, where executives from around the world are gathered for a conference here. anka: good evening from the bloomberg global headquarters in new york, i am shery ahn. anka: welcome to "daybreak: asia." top stories, asia-pacific stocks face a mixed day. hong kong modestly lower. and china is encouraging funds

near its, theyuan weakest level in a decade. and samsung is the one to watch, profit topping expectations, but the company warns that fourth-quarter earnings may decline. there is a lot of eco-data when it comes to pmi numbers. let's see how markets are doing right now. sophie? ophie: pretty optimistic, the i gaining, butsp falling for the most in years over the month, and we have stocks in sydney and wellington, although the asx 200 is looking little changed, and futures also looking flat at the start of the session here, and we do have the 13.lar/yen back above $1.

on theping our eys aussie dollar, we count down the inflation numbers due out at the bottom of the hour, expected to rise about one point 9% on a yearly basis. let's take a look at samsung, very much in the spotlight after quarterly profit topped estimates, gaining 1.7% this morning. the mobile unit operate profit did fall, but that ongoing boom in memory chips certainly has been good. about 17%has fallen this year, losing about 5% since we got the numbers at the start of the month. looking ahead, samsung expecting overall earnings in the fourth ak, and seasonally we next year, doubts do remain a mid-trade tension, and as we top as we can see on the

panel of this chart, the green bars, analysts had brought in the revenue forecasts. expectations for growth for the year, looking modest, and that, of course, has them suspending. shery, we have forecasted to capex forecasted to fall. anchor: and now, jessica. jess? jessica: the top prosecutor of , with turkey continue to call for the extradition of 18 suspects in the death of the journalist, and they also want to know where the body was hidden. calling on is president trump and others to prevent a saudi cover-up, saying they must not compromise values. with a high level

boycott of the saudi form, achieving nothing. was one of the first to withdraw following the journalist's death, but he does not think there was any difference. there is no way to deal with condoning the saudi actions but that the relationship will continue. officials are in indonesia to help the investigation into the lion air -- ryan air crash. this may explain why the plane came down soon after takeoff, the first crash involving the new series jet, and the lion airplane had only been delivered in august. the pilot faced a problem almost immediately. at least six people were killed as a typhoon swept across the northern philippines. thousands more fled to safety as the storm hit parts of the country already devastated last month by a prior typhoon, triggering a landslide that

buried a government building, and rescuers say they think more than 20 people are trapped inside. the storm has weakened considerably from super typhoon status. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2,700 journalists and analysts in over 120 countries. i am jessica summers. this is bloomberg. you, let'ss, thank go to our strategist in singapore. this month a lot of volatility in the s&p 500, now headed for the worst months since 2009 despite the fact that more than 80% of companies have reporting that earnings beat estimates. what is going on? mark: absolutely. it has been a dreadful month. goingill it be like forward? as you mentioned, the fundamentals are not bad, actually strong, and growth overall is good, even slowing a

bit, and global growth, with u.s. growth may be slowing next year, but not in any major way, and earnings are strong, as you say. the earnings growth is still there. overall, growth and earnings support the idea of higher equity prices. we will see the end of the volatility we have seen, and i think we are getting towards that level at the moment, and i think it will flush out at least the wheat hand, and people have deleveraged a bit. -- flush out the weak hand. now, there is really nothing that could be exciting for investors for the future for a positive catalyst? mark: that is important, the fundamentals, if not exciting, it there is a lack to attract fresh inflow. the one thing that maybe people are looking at is when the midterms are away, there will be the uncertainty removed, and

that may get people to come in and chase returns until the end. we will see kind of a positive not see ae will continuation of selloffs, but we aped not see a v-sh recovery. probably volatility we have to get used to. anchor: we are still close to that seven level. does that make it possible for the chinese to have broader, more supportive measures, much more than what they are doing right now, which is a pretty targeted approach? mark: i do not think it ties their hands too much, but it is true that the market is obsessed with this seven level, so i do think it is distracting. it will be interesting that if the dollar-yuan does not break or breaks quickly and then comes back lower, that might give the market a chance to move on and then suddenly noticed that the chinese government has added a lot of stimulus recently, and

the economic slowdown is certainly happening, but not too much. anchor: that is our strategist, mark cudmore, and you can find more on bloomberg. you can get expert commentary, analysis on assets that are moving at the moment, and what is affecting investment, as well. right, let's turn to samsung electronics now. it just posted orderly profit es,t topped analysts' estimat but it did bring concern for the chip business for the coming quarter. how good are the numbers for samsung? reporter: definitely a record high, both in terms of operating profit and other profit. it has been said that, as you point out, there is some concern , in fact increasing concern, that the prices will start two wing in the next

quarters, challenging for samsung to sustain such high growth rate in terms of profit. quarters,next two challenging for samsung to sustain such high growth. anchor: what about the areas like handsets and the display divisions? any more positive sentiment there? anthea: this is triggered by the new iphone, so we expect operating profit to have a huge effect. next year, there will be more competitors coming out to supply the same apple, and at time for handset, even though it will be the 10th anniversary for the samsung aleksei series, we know that the demand -- the samsung galaxy series, we know that demand is getting slower.

up with more innovative products, and also apple continuing to be a formidable rival, so, unfortunately, smartphone profit growth might be quite slow, again. anchor: all right, so we are talking about the growth and the handset division. what else are investors focused on? anthea: capex companies, that they would cut capex this year, maybe more so next year, as well. that would be good news to given thats' return, samsung has pledged to return part of that to shareholders. even though that profit might not grow much next year, if they spend less on capex, that means they have more cash for shareholders, and that would be good news, given a lot of volatility in the market. much forhank you so that, and, of course, you can go to bloomberg to get the

commentary and analysis from bloomberg's expert editors. haidi? ahead, it is all about gold, the precious metal, with the gulf coast president and ceo speaking to us exclusively here in melbourne at the conference, and before that, we will be speaking to the ceo of another copy, and holland, and we have seen this bust in gold -- the ceo of another company. and we will look to see if whether that is sustainable or not. this is bloomberg. ♪

"daybreak:s is asia," and i am in melbourne at the conference taking place here. we are seeing a resurgence for gold, and the companies that

metals, andcious according to a put bloomberg intelligence," they are looking at the biggest increase since 2017. nick holland is very well-placed to discuss it with us. you.good to have october the first monthly gain than we have seen in about seven months. do you think that is sustainable? nick: i have been in this industry for over 20 years, and i've learned never to predict the gold price. we obviously hope will sustain an increase from here, but there are a lot of factors. obviously, we are concerned about the interest rate hikes in theica, concerned about trade wars. we are concerned about the dollar being the safe haven, the stock markets in the u.s., a lot of factors, but, certainly, if we get all of these factors, that would be something. anchor: the stock market jitters we are seeing, it has not

exactly been a classic response into havens like gold. does that surprise you? welcome not entirely. the thing about gold is, first of all, it has always been a safe haven, over 100 years be of equal invest in gold. i do not think that would change. been a safeways haven, over 100 years. people invest in gold. we do not predict the gold price. we do our business plan on a very conservative basis. we think it will be volatile, growth will go down to the important thing for us is to have a defensive strategy, and when gold goes down, we will still be in business. if old goes up, we can make some money. i think the u.s. dollar is probably the biggest headwind, the inverse correlation between gold and the u.s. dollar is there, and we have to see what happens with the trade wars, and we will see what that does to

gold. anchor: with your presence in ghana, do you see more acquisitions there? nick: we just completed an acquisition three months for -- ago. there is a lot of investment made there. there is a significant position. a 350 also building million dollar capital investment, so i think for now, we are pretty full up, but we will continue to monitor the situation. we have been there a long time. we like it. anchor: the african mining powerhouse? nick: interesting. it has been a gold producing country for many years, and certainly as infrastructure improves -- we are building a new road, for example, between our new mines, and it will create new opportunities, so i am quite bullish about the longer-term prospects in ghana. whether it will be a powerhouse,

who knows, but certainly, it is one of the best economies in africa. portfolio parts do you see beefing up, or are you taking a cautious view? a return to a bit more exuberant level of investment? i think you have to be cautious on investment, because in the past, companies spent too much money, and it was almost betting the farm on some projects, so not bet the farm. even if there are a few bumps along the way, you do not want to do something that only works when all of the stars aligned. we are doing something in chile. it will be one of the lowest-cost producers in the world. to achieve, and we are finishing it right now. i would think that could be a mine we will build in the next couple of years. quite ayou have had

struggle with losses in south africa. you have asked for more time and patience from shareholders. to you think you will get that? -- do you think you will get that? nick: we understand that they have every reason to be. tried it to have avoid this. we are through a restructuring. a third of the workforce is likely to be retrenched. this is going to write to size the cost space to the current production reality -- this is the costright siz space to the current production reality. through this and see any proven, that would be great, because the money is there, and certainly if we can that we then i think can surly have an opportunity, but we understand it has been a long, hard road -- then i think we can certainly have an opportunity. is a new approach

needed, a fresh set of eyes? nick: who knows? let's work through this. we are not wedded to any particular auction. we have never done this before. it is a major restructuring. let's see where we are in the aftermath of this, and early next year, we will look at it again. if by that time things of not turned around, will you think of retiring? the things i would like to do, having been ceo 10 years, is to find a solution. to grow the international business. you know, the last 10 years, we have almost doubled the international business, and we have started making good cash flow, so i would say the remaining piece of the juckes up so for me is to find a solution

-- piece of the jigsaw puzzle for me is to find a solution. there is an economy that is struggling, and you have spoken about the trade war and the stock market and the volatility going on, and when -- look at asia, and uss uss, and you look at china and -- whenre they still you look at asia and assess things, are they still good? nick: china and india are critical and part of that. they are going to grow. 6% growth rates. enjoy the rest of the conference in australia. thank you very much for joining us, nick holland. more coming from the conference. this is bloomberg. ♪

anchor: let's get a quick check of the latest business flash headlines. a goal of becoming one of the world's largest 15 asset managers, with one company buying a group for 2.9 billion u.s. dollars, a deal adding $115 across to assets managed the u.s., australia, and asia, and also celebrates commonwealth's more profitable domestic banking business. baidu, with a fear consumer spending could be hit. china's biggest storage provider and sees up to three point billion dollars in the december quarter, and they dominate desktop search in china, but questions over the ad outlook as

competition grows. energy company has reported rising third-quarter profit thanks to higher oil prices. the tro china -- throw china -- atro china rose, but it is contrasting story at sinopec, where they seem to be losing momentum. is also challenging profits at its refining arm. leaders have vowed to offset trade tensions in the slowing economy, but president trump now threatening tariffs on all imports, beijing's resolve is being to the test. will get the pmi numbers out of china in just an hour or so, but this is the latest read on that elegant ants between policy support and also trade tensions

-- read on that delicate dance between policy support and trade tensions. reporter: smaller and medium size businesses are under pressure, and they are starting to feel the brunt of the trade war, but only beginning, because these tariffs are expected to play out in the months ahead, especially with the impact on confidence in expansion plans. the broader story is that china is under pressure. we seek economists downgrading their forecasts. indeed, we see this from bloomberg where if we get to a point where there are tariffs on u.s., givento the that china is the biggest driver of global economic growth and the world's second-biggest economy, that is certainly material to the story. tariffs,es, at 25%

$250 billion of chinese goods already in place, and extra could hit growth by 1.5%. i an not sure that we have that graphic up to show you exactly what we're talking about. thelso have reports of second level of $200 billion and $50 billion, where we are already seeing chinese goods seeing tariffs, but because of all of this, we have seen a series of measures by chinese authorities, not pay, broad measures like we saw back in 2005 or back in 2015 -- not big, broad measures like we saw back in 2015, but policy measures. quiteer: right, it is targeted and nuanced, making it hard for private companies to fund raise in the bond market.

we have seen personal tax and offering exporters rebates, and, of course, we have officials coming out, trying to talk about the overall confidence in the markets and the economy, and as you say, there is the old school of been borrowing and splurge of binge borrowing and splurge spending. the targeted approach, the question is at what point will they have to move away and start resorting to the bigger borrowing and spending plans they have had in the past, and i think that is an open question, shery ahn, that over the coming months, the pain will become more pronounced, and at that point, pressure will be on officials to respond even more, so it is very much a question of watch this space as we go forward. anchor: as trade tensions intensify, that is a possibility. thank you, edna curran.

from the, more conference in melbourne. we will sit down with david garofalo. this is bloomberg. ♪

>> just back from the previous quarter in the second quarter slightly lower from a gain of a half of a percent and now that is in line with the estimates of the third quarter of 1.9%. and deceleration from the second arter when it came in at 2.1

mrs. and bank of australia does expect the 2% on average. and see how markets across asia are trading. >> that is the case. we are seeing a mixed bag for final stocks of a highly worthy october and data among those numbers. and industrial slum ppings the most in nine years. a shocker and that puts pressure on investors that are looking at especially negative at $200 billion wipeout which has made the kospi the worst benchmark in the world. we have it lowered as stocks in sid ni. and we are seeing it maintain

10's of 1%. up by 7/ and aussie dollar down a tenth of 1%, weaker. and adding to the dollar pressure for the currency. and the strayed trading against the dollar. soft economic data not boding well. and taking a look at stocks. and in the spotlight, imagining grouped and estimates, sony climbing after beating its expectations and hit the titles. and after sales consensus and its results on the nikkei news reports are in talks with a merger. and cosmetics and skin care

products following the most for the third quarter. nd income forecast and missing earnings. and the stock is under pressure. it constructs and expects industrial plants. nchor: jeff. >> thanks. president trump has visited pittsburgh where a gunman killed 11 people in a synagogue. the anticipate defamation league said it was the deadliest attacks on american jews and the president. democratic mayor asked the white house to delay the trip to keep ocus on the victims. janetialen has steered to ol policy and undermines. speaking in washington, she

expects two more rate hikes. and the fed is trying to take its foot off the accelerator and the president has said he is not happy. and diamond says the u.s. and china are moving to an all-out trade war. describing the current situation as a squirmish and said the tariffs are small but the wider effect is diminishing confidence. they aren't sure whether it will worsen dramatically. >> the tariffs are very small. but the secondary effect is far bigger. so the secondary effect is confidence and change the supply lines, will it get worst. what are the odds of it going south. that is what is more negative on the tariffs. years.most in nine

ctory output put it the poor figures as south korea's figures are losing steam and plan to raise interest rates. global news 24 hours a day on r powered by more than 2,700 journalists in more than 120 countries. this is bloomberg. libe from ing to you the international meadows conference taking place. we are seeing the resurgence. the companies looking at bloomberg, it is ahead of that is we are joined by the resident and c.e.o. and he has

headed up a company. and number three in north america just recently. >> we have seen a compression of gold sectors in spite of the fact that we have seen it 15% to 20%. we have seen reserves by 50%. we haven't seen that influx you would expect to see. it is in the technology sector. what we offer is an industry. and we remain very stable cost structures and unleveraged balance sheets as the gold price depose up. >> is there anything you will shore up investor sentiment. >> other companies have been shrinking the reserves and our

reserve base and we are targeting 20% reserve goal over e next years as we exist our portfolio in high quality operations. so we are is measured in terms of profitability and reserves on the ground. >> it is interesting that you talk about the caution because one of the things at the conference is across is resurgent to re-invest and seeing a more willingness to put money out there. s that leaving the gold sector behind. >> but i think caution to a certain degree has to be thrown to the wind. we are facing a crisis because the reserves. and we are depleting every day. we have to provide the

generalist of value proposition .nd we have to allocate capital we have to run real businesses. and i think we tidy up our household by deleveraging the balance sheets and it is about re-investing back on the ground as they start to see capital back in the sector. >> are you worried that there could be a takeover? >> consolidation is inevitable in light of declining reserves. we have been there. we have introduced in the pipeline that for our production responsibly. >> what kind of targets or asset acquisitions would you be looking at? >> what we have always done, we have looked at assets to look at

the quality. we trade and over the last three years, we sold as many things as we bought. and we saw something out of the bottom. because management, capital is finite and we have to move the needle in terms of scale. >> i'm sure you are going to talk about gold prices, but what is your outlook? >> historically, as we are experiencing, gold has gone up. 2 1/2 years in this cycle and old prices respond to 15% to 20%. >> enjoy the rift of your conference. kind of in keeping of the themes, gold and copper, we are seeing this downside pressure in some of these metals, it is not

reflected in the funnels. anchor: going from melbourne to hong kong what is built, getting under way. our chief correspondent is standing by at the hong kong center. what is going on there? r. we are at hong kong cente and we are at the border conference. defacto central bank and will be giving a speech entitled the future of digital finance and they have announced they have accepted 29 new police station for the first batch. and to discuss the trends we are . ined by the group c.e.o.

thanks for joining us this morning. you have good earnings this week. nine-month earnings. what was interesting to me from a technology stand point was tech units and you have been investing heavily in tech. increase. olet where are you seeing the results? >> we went through the first phase and investing that first face. and a third of our new customers come from our spret customers and that is one of the few things. the second phase is taking that and putting it into it. we have companies. that is a result that inadvised heavily. >> is this a way to diversify

away from premiums grow or does it drive business into your core business? >> it is both. we'll see more and more more contributions but it is a long-term. we are core businesses are doing well. and i think that's one of the things, four million asians and 50% higher than the market. so i think we looked at the profit contribution and long-term sustainable and more exciteable how that technology, the.we develop it for ours and in china. and we think that is excited and hong kong and this is one of the technology stories. a lot of the financial

institutions may not have the capacity like us. >> isn't one of your goals beyond becoming the number one insurance company but to become a tech consultant to businesses and financial institutions? health care >> and smart city. these three are the core areas increasing. see us and is the hong kong platform. we think that is exciting where i think the regulateors long with the rest of the banks have a platform. and select this technology provider to do that. and that speaks to the type of things we can do and unable a lot more in the finance that traditional banking and suddenly

made available. and new opportunities. >> are either one of you of the original 29 applicants? >> ok. chase finance platform. and that is a platform. >> that's right. >> might be something we are interested in but we see this more as -- >> you aren't one of the 29? >> you can draw it. [laughter] i think the opportunity is not so much. nice that hong kong is another bank and more interesting to see the selection of 29 applicants and different types of players. it is an opportunity. if there is a new way of doing banking. it is like how we think about doing, connecting a lot the

trade platforms. different way. we are not one of the banks that are financing the trades. but we see this as a good opportunity where you can help others, because there is a lot more demand. >> how sustainable is your investment in tech as it contributes to profit? because i look at the numbers, they are pretty good. 6.% in contributed profits in the nine months. 17% by increasing use of new tech, how sustainable? >> i think it will be a longer term. the tech is great. they have to invest a lot. each of our companies usually have at least three to five years. and incue bation of a new business. and that is a new proposition

and prove that people who are customer traffic and show there is revenue before you get to profit. >> which divisions are closer to profitability? >> last year, basically, what is profitable. about seven, eight years. they are still in the second, third stage. so we are much more interested in the revenue deproth. >> expansion beyond and expansion beyond the shores of hong kong and china? >> we started in singapore and hopefully do it in hong kong and then in singapore invests in clients and over in hong kong as well. and expanding across asia. and that will be. >> we'll wait for that

announcement. >> we'll let you know. >> back to you. we will have introduce. nchor: coming up next, estimates as revenue hits a china economy. we'll break down the numbers next. this is bloomberg. ♪ ♪

>> coming in anywhere between 3.7 bill joran to 3.the billion. ere qur concerns that they find it. and saying that you could see a bit in terms of expectations of forecasts for sales for the search engine and the news feed. both the main. part of the reason is why you have seen this company joining its search engine to go to a.i. and the bets on those areas are unlikely to hit the bottom line. they are more of a future bet. the focus is on the advertising revenue. the stock is down 25%. deutsche bank is bullish. they upgraded their estimates and could potentially double in

2019. anchor: they reported, what do you see? >> you see a positive activity. sales kicking up by 1% and the expectations is they will be dropped. and china in terms of desserts trying to get customers in longer periods of the day. pizzaveha is a big component. you saw it by 5%. that came in below the estimates. they are rebranding some of the stores and the company did expect that rebranding process to impact margins and trying to expand. about 195 stores in total in the third quarter alone. it is a more competitive space and the demand is becoming more sophisticated in terms of

health-conscious food chases. and they are trying to rebrand. in terms of the stock, they outperformed in terms of e.p.s. but these dividends are better $1.4 pected and the billion to $550 million and we saw the shares pick up. anchor: thank you. you can get a roundup of the story you need to get going. bloomberg subscribers go to your terminals and you can customize your settings and get the news on the industries that you care about, this is bloomberg. ♪

anchor: quick check of the latest. samsung vice president top estimates a reduction in capital expenditure. demands for chips led to a rise through september. slightly. however, samsung says it will fall to $28 billion and warped that overall, earnings will decline. the world's largest maker reported sales in china.

revenue just rose 1% in the three months well below estimates of 9%. profits climbed 19%. china markets said slowing demands for appliances is likely to drag on. lenders owed more than three-quarters of a billion dollars for the asia arm of toys 'r us. 15 mrs partner failed to respond to a warning that its opportunity to match the $ 60 million offering was expiring. they will trade the debt they hold. india is set to be examining the sale of lender as the government trying to stem it with the debt. we are told the plan will be presented to bankruptcy wednesday which inchudes selling

the entire company. other options is shoring up the business. we'll get a check of what is coming up in bloomberg television. what you watching? >> we are looking for a slight deceleration which comes to the manufacturing side and how strong these dollar presenters are on growth. the key thing to watch. and doesn't look like that's the case. and we have a guest to walk us through these numbers. a less than consensus number of 50 funny 3. and d.o.j. and over until tokyo and not expecting much in terms of policy. but we we will talk about the decision around the 11:00 hour.

and firn shal risk these days and even they will be keeping a is. on policy and there it anchor: we will be looking forward to that. before we hand it over. how markets are trading right now. a little bit of a mixed picture. the kospi was falling a little bit earlier and industrial production dropping the most since 2009. and little bit more carbous about the fourth quarter. here's how futures are trading right now. this is bloomberg. ♪ show me movies a grinch would love.

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see the grinch in theaters by saying... "get grinch tickets" into your xfinity x1 voice remote. [ laughing ] uh oh. something in my throat. rishaad: 9:00 a.m. in hong kong. breaking news. china, and out of this, 50.24 august. -- and it is a mess, 15.2 for august. august. rishaad: there is still