haidi: welcome to "bloomberg daybreak: australia." shery: i'm shery ahn in new york. sophie: i am sophie kamaruddin in hong kong. we are counting down to the open. ♪ here are the top story spirit u.s. stocks extending a rebound from a rough october. apple is the loser in middle day training. -- trading. it's a just weaker demand for the iphones. andident trump listing them

saying he has had good talks with his chinese counterparts and it seems they are moving ahead likely. shery: let's get a check of how markets close in the u.s. for a thirdgrounds session. continuing the recovery from the worst month since 2011. we sell the dow gained 1% as well as the s&p 500. we had some positive earnings including semiconductors, which rally in thekers session. the nasdaq also gained one point 8%. of course, we did get to make a cap texts, under performing such as microsoft and up -- and also that. ahead of apple's earnings report which in the after hours trading session, is not faring well. since aprillevel after we heard opec's production climbed again and also to the highest level since 2016. all of this will be felt in

asia. let's see how things are shaping up. of november.wo the rebound looks set to continue barring japan. we have naysayers piping up. them, not convinced it will continue. as well as rising treasury yields. we can't neglect the rest of softer pmi data from across the region we got on thursday. plus apple's disappointing outlook. that may be a headwind today. will be watching for reaction to u.s. auto sales. coming in with a surprising day. keeping and i on telco stacks. this as they will not follow arrivals. is the highlight earnings coming in this morning. haveding is profits capital markets, businesses. in new zealand, we are seeing shares set for a sixth day of gains. despite consumer confidence hitting a wall, falling to a three-year low in october.

also, aussie retail sales and ppi sales due out at a 30 p.m. -- at 8:30 p.m. it faces a credit rating downgrade as it widens its fiscal deficit targets. later this friday, we are counting down to alibaba second-quarter results which will be a barometer of how china is very amid this trade thing with the u.s. shery: sophie kamaruddin there in hong kong good let's get to first word news. president trump has tweeted he has had a long and very good conversation with his chinese counterpart. with a heavy emphasis on trade. he added discussions are moving along nicely ahead of their planned meeting at the g20 at the end of the month. chinese state media saying president xi is open to talking trade. the u.s. is said to slap tariffs on all chinese inputs -- imports if the talks fail.

sterling strengthens despite down reports that a deal has been reached for financial services after brexit. we shall buying brussels is really ready to have close talks, claiming to have access to the single market after the split. u.k. officials also laid down the issues saying the time reports was unsubstantiated. scandal has landed its first director blows on goldman sachs. the former senior banker has pleaded guilty to u.s. bribery and money laundering charges. his former deputy has been arrested in malaysia. other senior goldman banker in asia has been put on leave. joe blow, the alleged mastermind of theimpossible -- embezzlement scheme, was charged. indonesian investigators have begun's -- have begun searching for the crashed lion air craft

in finding out what caused the plane to come down soon after takeoff. the 730 seven next eight plunged into the java sea after the pilot asked for permission to return to jakarta. the plane had suffered problems with altitude, but had been checked and cleared to fly. revised its has overhaul of government and the economy, lowering some targets meet reality. the scale back program was posted on announced online and does not affect major fiscal or energy reforms, but the lower bar is a sign that the original plan was overly optimistic. the prince has also been weakened by the killing of jamal khashoggi. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jenna dagenhart. this is bloomberg. thank you.

apple is taking a beating in late trade after posting an underwhelming forecast for the period. shares were hit by the surprising news that the company will stop providing unit sales numbers for iphones, ipads, and max. they explained the decision in the earnings call. the decemberor quarter, we will no longer be providing uniface data for iphone, ipad, and mac. many times,tated our objective is to make great products and services that enrich people's lives and provide unparalleled customer experience so users are highly satisfied am a loyal, and engaged. let's discuss that with john butler of our bloomberg intelligence team. investors concerned that they are not disclosing the numbers because they do not want to show weak numbers. does it make sense if apple does not want people to entirely focus on their phones? me, it does not make

sense to pull back on transparency in the business at a time when they are shifting their strategy from growing iphone revenue using basically unit growth to now shifting towards price. if you look at the latest iphones, the price points are moving way up. they are driving overall revenue with price. very low, butn positive single-digit. this change in the way they will report tells me, it is likely to move into negative territory. you could hear it in the q&a. i think other analysts suspect that as well. looked on thes lighter side as well. does that continue to cast a shadow over what all of this means for apple? john: yes. services obviously is really the future of apple. they have a huge installed base. they put a lot of emphasis on growing the services business.

it did come in a little bit like this quarter, i think the main concern was services. and that slowdown in growth has to do with the fact that certain segments are elements within the business, may be slowing a bit. like the app store sales. icloud. applecare. -- folderall over services that over time, are just naturally going to move to a more mature phase of growth. bloomberg intelligence john butler their setting up disappointing set of numbers out of apple pay let's get analyst reaction. i am joined with ivan feinseth, it chief investment officer. what do you make of all of this? we have seen the market reaction. doesn't look like it will be a great open for apple when trading begins. are we making too much of these figures or will it be disappointment going into that holiday season? ivan: i think it was a good quarter. apple always guides conservatively. tim cook is probably the most

conservative ceo in corporate america. but i also agree with what john said before. i think more transparency is always better than less. and when you are the world's largest and most highly valued company, i think you have a responsibility to your shareholder base to provide more information so they can better value the investment that they are making. i am a little disappointed in the fact that they will be cutting -- or doing away with the guidance. on the that is weighing stock. i think the quarter was good. i do believe they will have a very strong holiday season. the sales demanded the new iphones is very good. i thought the services revenue was slightly better than estimated. i think it came a -- under 10 million. the estimate was just under 9 billion. this service growth remains strong. the profitability on services is tremendous.

the run rates probably takes them to close to a $50 billion a year business. which is more than probably over 400 plus of the other s&p 500 companies on a standalone basis. the unit you look at sales, fiscal four, the year on year, was disappointing. articulately when you consider this year we had the new iphones. last year, we did not. those unit numbers barely budged from year-to-year. ivan: it is both a function of a new product, people like to get the latest and greatest phone. what dictates people's upgrade cycles are their contracts. as their contracts expire, they can upgrade their phones to them is important thing about the contract is it allows you to purchase a phone on a monthly basis. even though the retail price may be anywhere from $800 to $1200, nobody spends that much. month in youra

plan and on a minute -- and that enables you to purchase an upgraded iphone. people are willing to pay up for the monthly overall service because people's phones are such an important part of their personal and professional life. a lot of consumers have cut back in other areas. they are spending more on wireless services, and on more powerful phones. china came over $11 billion in the quarter. up 16% from a year earlier. this seems to be a strong number. could we assume that their higher end, highly priced phones are paying off? ivan: yes. people prefer to buy the more expensive, more powerful phones. the first time apple came out with a cheaper phone, when they introduce the iphone 5, than the iphone see, the two profound did not sell as well. people preferred the more expensive phone that had more memory, better screen, better camera. and a faster processor. shery: what does it tell us

about the market share of apple going forward, given there are so many other stronger players and china like a both? apple does have a very loyal customer base. once he begins with an apple phone and you invest in cap's for the phone and you get used to the functionality, it is hard to switch. the installed user base of android phones bastad of apple. there is competition. apple also has a nice niche. market.e a nice they also have a tremendous ecosystem. because people that by iphones tend to buy ipads, they buy macs, a buy the apple watch, because they all integrate. aidi: i want to throw up charge. i want to get your views. but this is looking at the cash hoard that apple still has. is there too much cash? this is the company's cash holding debt outstanding. what should they be doing with this cash pile? ivan: they are returning cash to

shareholders at a significant rate. they keep increasing that. the one other thing i think will support the stock, and that is why i think it is a buying opportunity, is because they continue to buy back stock at a rapid rate. they havew, after announced their earnings, they can buy back stocks tomorrow morning. they have to by over 53 billion dollars worth of stock between now and the end of the year to meet their stated goal of returning $260 billion in total cash to shareholders since they started to pay a dividend and buy back stock about six years ago. you so much. always great to have you on here. , mulling this apple numbers. stella had come interview with the australian prime minister scott morris and a i asked him whether his government needs to rethink its relationship with china. shery: first, the u.s. says chinese state-owned company

compliant -- conspired to steal secrets from macron. we look at the details next. this is bloomberg. ♪ t. this is bloomberg. ♪

shery: i am shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. you are watching "bloomberg daybreak: australia." company --tate-owned shery: has been charged with conspiring to steal secrets from micron technology. the indictment is the latest fact that -- faction in the pursuit of china for suspected economic espionage. bloomberg news enforcement reporter david mclaughlin joins us from washington. could you explain this indictment and who has named, and what are the charges? david: the charges are conspiracy to steal trade secrets from macron, as he said. the companies that were charged --re chinese company called

i am forgetting the name actually. the other company is taiwanese. united microelectronics. a very well known company. individuals, three individuals who worked at those companies who were alleged of taking the technology, the ip from macron. shery: what technology does this indictment cover? david: macron makes what is called dynamic random acts of memory. it is a type of computer memory. it is the only u.s. manufacturer of these types of chips. it is very important to the united states. and china, on the other hand, is trying to build its know how in the semiconductor market, and many different types of

semiconductors. the allegations here are that the chinese government as an important technology that the government should be able to produce. that the country should be able to produce. and so, it set up this company in china to help do that. haidi: i find it interesting that this kind of comes of the back of a bloomberg story talking about the alleged chip infiltration into companies, as massive as amazon and apple that reported a few weeks ago. how does this factor into the broader picture of whether we are seeing this industrial espionage in the tech sector increase how the u.s. is reacting to it? david: i think you have seen more and more u.s. government officials who are increasingly ofcerned about the safety the supply chain for u.s. technology companies and we see that when chinese companies try

to buy american technology companies which we are seeing the government raise numerous concerns about. and, this is now part of that effort. lot of cases -- several cases where the -- hasent is charged charged individual chinese individuals over theft and trade secrets. there was one the other day regarding aviation technology. jeff sessions, the attorney general, announced today that this was going to become a bigger priority for the justice department. and the fbi. i think we can expect more cases like this in the future. it's sort of, i imagine, plays into one of the trump admin complaints against china, the theft of its intellectual property rights. i find it interesting that the state owned company that was set up specifically to manufacture

technology, not technology that china possessed before this alleged theft. is is likely to play into the current tensions we see between washington and beijing? david: yes. the tradetory and war, of course, is the tariffs that each country has placed on the others product. piece of it as well, as he said, the ip theft. that is one of the administrations concerns about china. one of their grievances. i think this is part of -- this iport to get tougher on theft, theft of trade secrets, is part of that. we have also seen it in another terms of chinese investors trying to buy american terms of chinese investors trying to buy american companies. that has become almost impossible for china right now. these are parts of the same

thing. haidi: david, thank you so much for that. david mclaughlin there in d.c. don't spent -- don't miss our special election coverage. president trump will be front and center. with -- midterm coverage starts at 7:00 eastern. a u.s. -- a miss bag and overall deliveries may have led to negative territory. we will take a look at the state of it next. this is bloomberg. ♪ is bloomberg. ♪

haidi: i'm haidi stroud-watts in sydney. shery: i'm shery ahn in new york. you are watching "bloomberg daybreak: australia." let's get a check at the latest business flash headlines. google staff have walked out around the world in a mass protest against how the company has handled claims of sexual misconduct by some top executives. starting a nation and spreading through europe and on to the u.s., social media posted photos with the #walkout.

it was sparked by reports that google paid millions of dollars to some executives in secret exit packages. tesla investors are calling on the board to simply grow up. some shareholders say a deal with the fcc that requires the company to replace elon musk is a new chairman and add two independent directors does not fully address tesla's corporate governance issues. musk's run-in with the fcc over security fraud has added urgency to the changes. investors say they are long overdue. fourth-quarter revenue forecast fell short of some projections pay the company says it expects to make a 1.5 -- $1.5 billion to $1.7 billion which is at the bottom of expectations. investors are looking for a payoff from spotify's push into alternative forms of audio including podcasts, which relies on music. haidi: u.s. auto sales on the upside last month with

reporting's today. ramy inocencio has a look at what we are looking at. the road in october was not as bumpy as expected. we saw more acceleration, if you will. ramy: we sure did. it was definitely expected to be rough month. if you took away two things from october, one is that bigger is better when it comes to the bottom line. let's be honest, this is a storyline we have been reporting on for a long time. in addition, while we are looking for sales on the screen, more executives are saying it is not so much as sales, as long as we can raise the prices and people still buy. that is key. for now, we are taking a look at sales in the top three companies you are seeing, were beat. fourth, yet chrysler as well as toyota, honda, and nissan. worse than expected there. let's go to ford. it again was the u.s.'s second-best's automaker last

month. it outsold the other two companies, fiat and toyota. they reported sale gains for the month. ford's f series pickup, the top-selling vehicle in the country. had its second downloads in a row. sales were off by 7%. i talked to you about the sales price. the average selling prices all -- is actually at a record. people are buying 7000 bucks in change. that is $2000 more than pickups from its other rivals. take a look at fiat chrysler. they did not disappoint. they actually surprised the upside. 16% year on year change could the expectation was 12%. the jeep and ram brands, the big autos, up 9%. and 14% respectively. that is really the story. if you have a big auto, you are probably doing well. a.l. molly surprised how

much americans love those big cars. they are the size of two cars in asia. [laughter] ramy: you are right. the thing is, if you are a purveyor of a sedan, you are still getting slammed. for example, when we are talking about honda, toyota, those are the cars that are actually getting hit. toyota, they did see some big numbers in terms of the big companies here -- big car companies that the corolla, as well as the prius, both of those fell in addition to the jeeps as well. were just the name of the game. also with honda, basically americans hate those small cars. those are the ones you see right there, the smaller ones that are so popular in asia. ramy: fuel-efficient. i like that personally. shery: thank you so much good rainy inocencio, with the latest on carmakers.

there is a new global's arm race. it could be a major factor in determining the next economic superpowers. we will discuss. this is bloomberg. ♪

is 9:30 a.m. in sydney care markets open for the final week and 30 minutes time. we are looking at a flat open when it comes to trading in australia. about 1/10 of 1%. despite the broad-based rally we had overnight. the s&p 500 seeing its best three-day advance and about two years. the one to watch is the quarry. coming out with a robust raising of its full-year profit guide. financials for the and trading begins today. i am haidi stroud-watts. shery: i'm shery ahn in new york. let's get to first word news. here is jenna dagenhart. trump'sespite president assertion that discussions with

china are going nicely, the u.s. is keeping up the pressure. the justice department charged state owned company of conspiring to steal secrets from macron. they were indicted in california. the u.s. says it is stepping up measures to respond to alleged chinese that's. -- thefts. the u.s. and opec are raising supply and reduce sanctions against iran will not cut its exports to zero. opec production climbed to its highest for two years as saudi and libyan supply offset the loss of summer rain improved. a bloomberg survey says the cartel boosted it by 430,000 barrels a day to more than 33.3 million a day last month. that is the highest since november of 2016. a gauge of u.s. manufacturing fell more than six month lows with order hiring and pooling trade tensions with china escalates.

the institute for supply management factoring index dropped to 57.7 last month from 69.8 in september. the measure of new orders also fell sharply. a two-month decline of almost 8%, the steepest since january of 2015. jamie dimon warrants the financial and political strains in italy may trigger a severe crisis in the european union. speaking to germany, he's as he is not making a firm prediction, recent global product -- problems have not been handled well and one of the issues is italy. new populist government is under fire from investors and the european union and its own central bank. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jenna dagenhart. this is bloomberg. shery: thank you. for the key questions today for asian markets, whether or not

the gains from wall street will carry on, we have three specials of games for u.s. markets. still, ran outcome asian markets, more than half of them in the territory. let's see how they are faring. what are we expected? sophie: we have 40 trading days left in the year. we are seeing november looking kinder than october. asian stocks set for a fourth day of gains. the best weeks in september. earnings very much remain in focus paid you have apple that will have holiday sales. that will weigh on apple suppliers. starbucks coming out with fourth-quarter numbers. we did hear recovery in chinese sales and counting it down to alibaba second-quarter results which will give us a gauge to how chinese consumers are faring. over in australia, the earnings highlight we saw it rising 5% to beating estimates. we do have the boost coming through from the commodities and capital market's misses.

plus, the fiscal year 2019 results are looking to rise 10% on a yearly basis. we have a quarry graphing its share buyback plan. over the past year, it has been a rough ride for the stocks. 18% in quarry shares up the past 12 months. plus month, we did see macquarrie along with its share peers falling into a bear market territory. still some ways to go there. sophie kamaruddin there in hong kong. let's get more on what you should be watching. kathleen radicals is here. is trump's tweets enough to extend this rally into asia? >> it would certainly seem so. you look at the aussie dollar and kiwi dollar -- and kiwi dollar. it went up 1.9%, 2% is. that is the best since march 2018. in the kiwi's case commences after brexit, 2016.

there are a lot of worries about the edges out there. the apple earnings, maybe that will take some shine off. this looks like a strong friday. shery: what does this tell us about the importance of trade tensions for the region? could we see more outside if something actually does come out out of the g20 plena saris? garfield: absolutely. there was some initial welcome that came. if we look at -- we got a chart we could show you. if you look at what went on overnight in china related assets, and how they just took off on this comment cut it really demonstrates, and we talked about this yesterday on the blog, when you look at what went on with the aussie dollar and pound on brexit and other assets, that everything is so beaten down, it means something to give people a chance to start looking at those cheap

valuations and go, maybe it is time to buy. you can get some strong rallies. even the trade tensions that have been showing up in the economic data, the biggest hit has been to sentiment. sentiment can turn much faster than economic data can. we get more positive nodes out of china about what trump has been saying, and we can see some of strong gains today in risk assets. shery: sentiment is key. because although we are seeing a bit of a positive start to november, we do know that the asian markets have wiped out $5 trillion in market value this year already. garfield: yes. and they have a lot further to go up than the u.s. we have another chart, if we can show you that, comparing how the s&p 500 has done this year and the asia-pacific. hascan see how the s&p 500 sort of bounced back up to regain an area that has acted as a support.

it has been tough for the s&p 500 to fall through that area. once it has a barbican made is tended to rally. in the same area for the msci aipac is a long way higher. you have to see strong sustained gains in asia before you can start to relax in any way. shery: garfield, thank you so much. garfield reynolds. you can find all of those charts ont garfield just showed you the gtv library. that would be gtv go on the bloomberg. the world is witnessing a new global arms race. it does not involve traditional weapons. but it could be a major factor in determining which country -- --ntries become dominic dominant superpowers we are talking about artificial intelligence and data is the key. head of digital industry claire curry joining us now. claire, when you take a look at who has the most data and who has the most to gain when you are developing ai, who is winning? china isight now,

certainly ahead. it has very lax data restriction on collecting personal data. and a very powerful tech company, namely tencent, which has so much personal data. china is ahead. if we believe the data is the key to unlocking the potential. shery: it would not be that hard for china. their people seem to be accustomed to being constantly watched. i guess this also applies when it comes to the collection of data. how aware are they, or how concerned are they about their own privacy? claire: good question. it is unclear that there is that much concerns. there is surveillance all over china with cameras everywhere. now, thatome so good they can identify people spaces and they can start tagging the basin what they are buying and doing. seem to be as not huge amount of concern about that, as long as the government is using it for public good. haidi: what are other countries

doing about this? was a: recently announced potential coalition, hopefully signed before the g20 between the u.s., japan, and the european union. to develop some sort of standard for janice -- for data sharing. right now, those regions don't share data. it means they are limited on how much ai they can build. if they were able to share, they could compete with china. that brings up challenges around security, data formats. the fact that the u.s. is behind the rest of the world in any sort of data privacy regulation. haidi: we have seen the downside of all of this. in the privacy debate over the likes of google and facebook. is there a sense that regulation and what authorities are able to do in terms of creating more of a global framework around privacy and how to manage this enormous amount of data security

-- and securely, is that liking the technology at this point? claire: quite possibly. the european union with its gdpr regulation that came into force in the spring is ahead. japan has one similar. yesu.s. as a whole has not discuss that. that is certainly a challenge because without standards and how you collect and save and secure data, it will be dangerous for big tex tech companies who want to play with personal data. shery: it doesn't look like the chinese will be giving up their policy of leading china in 2025 anytime soon. what does the u.s. have to do in order to compete against them? the china policy is very ai heavy. where they are trying to do is bring a lot of the chip manufacturing onshore cannot u.s.ze -- not relying on chip manufacturing. they are developing ai chip a.p.. which are chips that ai algorithms run on.

if china does that, that will be a challenge for the u.s.. if china has the best ai chip, and the u.s. doesn't want to use them, they will lag. ai chips making gp or are key to the strategy that the u.s. has to use. haidi: thank you so much for joining us. about thery, talking really fascinating and fast-changing landscape when it comes to the ai race globally. australia certainly is telling a fine line between washington and beijing as two of its largest trading partners, one a traditional ally, one its largest trading partner are squaring off on trade. following his first speech since taking over as australian prime minister, i spoke with p.m. scott morrison about his government's relationship with the u.s. and china. relationships with the countries are different. john howard used to talk about the relationship with the united states and u.k. which was one that was seated in those deep values i spoke of. that is true.

and the relationship with china is different. but it is strategic, it is important, we stuck it -- we speak to meet on the common ground where we can share those interests. the stability of our region, i think that we hold a very much in a consensus. haidi: what will be your priority and conversations you have with president xi in the coming weeks and months? p.m. morrison: i think it is to ensure and provide a confidence that australia and china can get on with business as usual. the way we run our show is we have clear rules, we welcome investment. there is no country in this part of the world that has a more liberal and open investment environment than australia. you cannot invest as an australian in the rest of our region like the rest of our region can invest in australia. we do that, not just because we are charming and welcoming, but we do it because it is in our

interest to be like that. we have been an open trading nation for thousands of years. sold back before europeans to australia. modern australia, that has always been our way. we want but to continue. but i think what is important in the managing of that relationship is we have to be really clear about the way -- about where the lines are. how we make decisions, and do that by thinking -- doing it in an engaging way. haidi: there is not a great deal of consensus in finding a regional arms on how to deal with china. the group,g about india, japan, the u.s., and australia. talks have been sporadic. i do think it is difficult to get a regional collective sense of how to approach this? p.m. morrison: it is complicated. i think that is the honest answer. you have countries and nations coming at this from different interests with different states.

that is why i think in many cases, what you will end up getting is the amalgam all of their individual responses. whether they can overlap and a line in these forms, well and good, i think that is excellent. four are good and important and we participate in them. a leaper to not engage in these questions and work out your own answers as individual nations. that was our conversation with the australian prime minister, scott marsal -- scott morris and cared we will take a look at friday's jobs numbers reports and ask, can they help calm a market that seems so much volatility? will it have any impact on the week's midterms? that is coming up next. this is bloomberg. ♪

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

york. you are watching "bloomberg daybreak: australia." the latest u.s. payroll numbers. while they are expected to be good, they may not be built to calm choppy markets. let's look ahead to the data with chief financial economist chris rupkey. they to have you with us. -- great to have you with us. how seriously should we take these numbers, given the way we should see hurricane related distortions? chris: there should be a bounce back. at the end of the week, we have had a lot of tweaks this week moving stocks up and down from the president talking about whether or not the u.s. is getting closer to some sort of an agreement or at least talks with china. we have been buffeted back and are noto that people really focused on the real economy. people keep asking me, in front of the midterms, what does the public think about the economy? in the midterms,

the state of the economy, is that how people will vote? i have to say no. at most tomorrow we will see a repeat of 3.7%. shery: what do you mean you have to say no? chris: i think conditions are so good right now, in consumer confidence is so high, it is like at a record high since the last recession that in a way, consumers, voters, no the economy is pretty good. there is always an isolated story that some people were left behind. there is still income insecurity and inequality out there. but the economy, the way i look at it, it can't be any better. shery: will they be looking at wages, wage growth, which seems to have been very tepid? if so, what are we expecting in terms of volume? chris: recently, we have been seeing the bond market trade more off of average hourly

earnings, wage data. average age -- wages in the u.s. is running at $27 per hour, or over $50,000 per year. that particular wage data has to levelsn not back that would be sufficient to make arele think that workers being rewarded by companies with wages. but, this week we have had two additional measures of wages. one today in the productivity report, hourly compensation, and the employment cost index on wednesday. both of those measures of wages, it wages are very good right now. not true that wages are liking. we will see what happens tomorrow. average hourly earnings should be better in the report. more wages. maybe that kicks a bond yields higher. sense, or ist make it reasonable for president trump to continually criticize the fed and criticizing what jay

powell is doing when the numbers are consistently coming in strong to a point where you say it is not going to be an issue going into what is usually a very politicized issue for elections? chris: that is kind of what the president does. he attacks. and is not back off his view. heould be very surprised if changes his view. his idea is that obama had 0% rates to get the economy going. that was unfair. now, powell is raising rates and that will make trump's job more difficult. you can't say no. the theory is that the fed come under power, can raise rates to neutral levels. maybe 3%. it is 2.25% right now. they can raise rates to neutral before it slows the economy. the president does not care about that. he does not like any rate increase. we are in the middle of a strong three-day rebound. the volatility of last month is not easily forgotten.

if we do see a return to volatility, people are saying, this is what happens at an aging bull market. at what point will policy market -- markers have to take that into consideration when you look at the trajectory? chris: i guess, interest rates are not that high yet that they would want to do that. remember, the fed funds rate is 2.25%. the fed thinks neutral rates are 2.5%, 2.75%, 3%, probably a majority think it is 3%. their view is that they are not slowing the economy right now. the can kind of stuff over stock market. i was shocked, frankly. first you get about an 11% decline in the s&p 500 in february this year. the fed did not cause. rates were lower than. now we have another selloff. i don't think people realize the 11.5%. spell 11 -- felt that is a big change.

we did not look good in my financial statements. i don't know why the world was not more concerned about that. you are right. at the moment, the fed will overlook this. their attention, stocks would have to fall something like 20%. which is huge. let's not wish for that. shery: i wonder if we will get there at some point because this gtv chart on the bloomberg showing what semiconductors have been doing. we know that they are the canary in the coal mine. good we saw them rally on results. but according to this chart, very discounted to the s&p 500. the last time this happened, back in 2010 and 2011, the s&p 500 fell 15% to 20%. even though we are seeing strengths today and we could see them in the next few days, what are the chances we will see selling into strengths and what was the signal for the broader market? chris: now you are starting to scare me. [laughter] chris: when you go sector by

sector, and look at what oil prices did today, $10 off the highs, yes, when you go sector by sector, there is always one sector that does not look so good. what can i tell you? as an economist, the fundamentals of the economy are strong. the underpinnings -- i found that the treasury secretary, right? as long as the underpinnings of the economy is strong, the fundamentals are there, stocks should not go far south. unless the fed over does it. howss they underestimate tight their policy actually is. it does not feel like policy is that tight right now at 2.25%. shery: chris, thank you so much for that. i did not mean to scare you. great hitting your thoughts. financial economist, chris rupkey. more ahead on "bloomberg daybreak: australia." this is bloomberg. ♪ australia." this is bloomberg. ♪

shery: let's get a check of the latest business flash headlines. black lock -- black rock plunged in october, making it the worst month in the seven-year history. the fund is said to have fallen 8.5 percent as global market sold off, having been at more than 10% in the year through september. it hurt the $3 trillion hedge fund, wiping out most of its gains for the year. hbo suffered its first-ever blackout as programs were pulled from dish network service with the two sides failing to reach a new distribution agreement. it is the first time in hbo's for decade history the programming has been blocked and a distribution partner. was part of at&t time warner acquisition. it is due to concerns at access program leverage. one of the stories we are watching particularly as we are in the thick of tech earnings season is the global walkout by employees. i know we have been covering in

great detail how a number of sectors and industries have been dealing with that, and the me too moments, but i think it is fair to say that silicon valley and the companies within the tech sectors have been struggling with these questions over whether they are -- whether there is sufficient diversity. we are looking at these pictures of google employees starting off in asia and singapore and spreading across the world. walking out to protest what they see as being the way their company has handled some of issues when it comes to sexual misconduct. particularly when it comes to top executives. there have been accusations in a new york times report suggesting they paid out millions of dollars in secret exit deals. shery: no wonder. 47 offices worldwide participating in that walkout thursday. we had the walkout in new york as well. near their chelsea headquarters, also gathered in hudson river park. something to watch out for in the me too movement.

in the next hour, we will discuss implications of apple results with dan i'm spirit you don't want to miss that. this is bloomberg. ♪ this is bloomberg. ♪

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haidi: australian markets have just opened for trading. shery: -- sophie: welcome to "daybreak: asia." haidi: our top stories this friday. extending that rebound from a rough october thanks to earnings optimism and hopes of using trade tension. a fourth day of gains.