haidi: very good morning. girl -- shery: good evening from new york. >> our top story this tuesday, technology in general. apple supplies in -- under pressure as reports show a weakening demand for iphones.

goldman sachs -- malaysia demands a full refund for deals .nvolving the investment fund onlet's get a quick check markets in the u.s. not that they have closed. the dow and s&p 500 closing their session lows. 2.8%.sdaq fell stocks are rising to record highs. we have seen some indications that iphone demand could be weaker. apple and apple suppliers taking a hit. 2%.s&p 500 also fell the only one gaining ground was the real estate sector. ge taking ahead as the ceo investorsreinsurer

but fell flat. across marketslt in asia. sophie: we are set to inherit the selloff on wall street. we are seeing that the the case in sydney. we have shares up by 1.3%. this is the biggest drop since october 23 for the stocks in new zealand. tremors.tech big names like ge and goldman and the eu budget showdown with italy. there is little on the data docket today. we will be getting a read on confidence from australia and money supply data at 11:00 a.m. hong kong time.

when you look at the agenda, keep an eye out for chinese .ending on the earnings, we will beginning reports from the likes of samsung, mitsubishi and noble airlines. plus the summit kicks off in singapore today. attending andl be trump's stead. as japan and south korea are seeking investments on this front. but get you the first word news. month euro sank to a 16 low. the deadline for the populist government -- government making a u-turn on the spending plan. the european union prepared to

take disciplinary action if necessary. minister as said he will stick by his plan, come what may. and sterling fell the most in a minister theresa may faces a midweek brexit deadline. she believes she is edging toward agreement with brussels but conservatives are threatening to vote against her. minister theresa may faces a midweek brexit deadline. wednesday is seen as crucial. >> i have the feeling that we tiptoeing toward a definitive agreement that we will conclude in the coming weeks. brexit is a tragedy for europe and we must not add to that with the drama of the u.k. departing in a unorganized way. -- potentially opportunity for the idea to hold rates.

the weaker readings put pressure on the r.b.i. to hold pressure for a second straight meeting. california have 31 lives.d at least that makes the deadliest in the state history. the cause of the fire isn't known but wildfire experts say share thee and humans blame not forest mismanagement as claimed by president trump. areas affected by fires in the u.s. of more than doubled in the last 30 years. globalist way four hours a day bytictoc and twitter powered 2400 journalists and analysts in more than 120 countries. started --. stock opec shores -- shares leading

the way down again. when it comes to tech it was certainly story -- investors behaved as though that were the company mentioned in the report. what happened was, they are holding their supplier for apple -- for apple. when you hear that things aren't going well for one of the suppliers it will drag on apple -- he said there biggest customer they wouldn't name who, but many assume it is apple because they are there biggest company or commit that if they don't need as many shipments or products, you would think that that sheds light on what it means for iphone demand. are would mean people worried that conflict as consumers are not buying as many iphones and it is weighing down on apple price today. >> you saw those losses in small

caps as well. >> absolutely. a lot of people have been looking at small caps now saying that they have been under the weather and we are going to see the small caps take a boost to say we are out of the words from october. a thirddown for straight day. we are not out of the woods but a lot of -- lot of investors caps pute to see small into those gains to do solidify the fact that we are higher. -- ge -- the ceo coming out talking to investors. -- what is interesting about ge is it is not just the extent of the declines. they are at their lowest since 2009. at one point it was down about 10%. we are seeing some huge blocks

if the tea. of the 12 largest today, nine were for ge. what people are saying this means is you could see some of ge's largest investors want to get out and head for the woods before it gets any worse because you have the likes of j.p. morgan analysts quick putting that shares -- another cut at credit suisse earlier today. it seems people are not expecting the shares to climb up and get away from these 2000 lows anytime soon. >> president trump seems to be hedging the possibility that we could see further market decline. tweeting it is the presidential harassment by the democrats causing the big headache. timothy is switching who the to say that the

democrats taking the house is the reason for the selloff -- probably not. a lot of people pointing to the fact that there are concerns that are still out there. whether it be the trade or the fed raising rates or the fact that earnings guidance hasn't been as good as some would have hoped, but i will say that ahead of the midterm election some were talking to me about the and moref tweet risk volatility and headline risk should the democrats take the house because that means you did have people going back and forth with more subpoenas and more >> justations stop looking at the losses across the energy sector. trump not limiting the tweet risk to just equity. just thinking to equities. going across assets. -- it seems i can the morning we are going to see a pickup in oil prices.

see the 10th straight day of losses and debbie ti crude for oil. we did have the opec meeting over the weekend and saudi arabia did come out and say they would be willing to cut output or exports. like he said when president trump came out and tweeted that he hopes opec and saudi arabia don't cut output that oil prices should be low because of the amount of supply without their. -- we were talking about this earlier, we should definitely get the tweet risk index. we have indices for everything on the bloomberg. thank you so much. goldman sachs shares tumbling the most in seven years and to the lowest in two years after the bank said it could face significant fines linked to the malaysia scandal.

plea on friday and the shares are reacting. >> reacting in a big way. past two days they are down by 11% and this is there biggest fall since 2010. hop into the bloomberg terminal. i wanted to show you this in graphical form. the fall we had today is matched only when we go all the way back to late 2011. where we stand now is the fact that there is this desire from malaysia, the finance minister saying we want our money back, to the tune of $600 million. regard to three deals that goldman sachs did for $6.5 billionaling

in terms of debt deals. the finance minister has admitted culpability after heterday's report that entered that guilty plea, conspiracy, lying to conceal wrongdoing and he is relying on that there is a semblance of culpability and that there is a kleptocracy, meeting theft by the government. that is something they don't want to be having. one other aspect that complicates matters even worse is that lloyd blankfein is also with what isnked happening here. helpedmer ceo personally forge ties with malaysia.

lloyd blankfein himself can't get away from this. he was asked earlier what it meant for his bank's reputation. he said, 'iit's not good. goldman sachs said they believed the proceeds were for development projects. they say it wasn't us, it was just tim leistner who hid the information. he is blaming goldman's culture of secrecy. pointing fingers every which way and everyone trying to get out of it. >> they have a lot more risk to contend with. >> bloomberg intelligence did a study on this. the number we have out there is to $2 billion. $609 in regard to --

$300 million in regard to cdo's. bad, $1 billion linked to suits in investigations regarding platforms like u.s. metals and treasury securities. this is getting bigger and bigger with the possible $2 billion risk hanging over its head, along with lloyd blankfein, along with a guilty plea. it is no wonder we are seeing shares fall as hard as they are. still ahead, we will talk oil with the asian market. of supply coming from the u.s. next year. >> next, more on that they selloff with main street capital. our guest says the boom market isn't over yet.

shery ahn: this is daybreak asia. haidi: despite a tough day for u.s. equities, our next guest says the hurt to the ruble market has been exaggerated. let's bring in the chief investment strategist, david. do you think that this is an expected correction within this last leg of the bull market? >> i do. investors have a lot to deal with. always deal with a wall of worry and right now that is high. withve the issues in china growth concerns and the issues in europe with the battle between italy and the eu and the u.k. getting ready for brexit

and the overall growth concerns. we are going through earnings season. the obvious problem today with apple and the supplier issue and the concerns raised. have led the market and they are concerned by investors. leadership or where would that come from. investors looking for these high valuations. there is some guidance lower on earnings and the federal reserve that is insistent on raising rates. there is a lot of ingestion -- indigestion among investors. looking at this part of the world, a couple of markets in asia and hong kong and japan. there is a sense that investors are trading water looking at tht

clarity on the trade story. when will that come? mutterings a lot of and tweets and talks but not a great deal of indication but where the central baked -- breakup will come from. >> i don't think we will have clarity for quite a while. pretty quickly when talking about nafta with the u.s., mexico and canada. struck october 1. there has been a handshake deal with europe but with china and the u.s., which is the big battle, the number one trading partner for the u.s. is china. we are talking about a lot of alreadyariffs imposed and pretty much still at a standoff. it goes on for a while yet and those implications for the , china, andhe u.s. globally stand to have an impact that is a concern.

we talk about as optimistic as we are on the markets, it is one of the things we are watching closely and are concerned about going forward to 2019. in the what is more important for investors. trade or fed policy? >> still fed policy. there is the concern about when we look at what the fed is doing we know that they want normalized rates. but when we look at where inflation is at the what are they fighting, we are always do they raise rates too much or too fast or too far? there is the concern this time with sovereign debt around the world holding the u.s. 10 year and 30 year yields down so much, they are raising the short end of the curve to my do they invert the yield curve and bring on the next free session? the number one concern is that policy and how aggressive do

they continue into 2019 on raising rates if global growth, which is slowing and u.s. growth starts to slow as well. >> within the u.s. equity markets it seems that some of the most rate-sensitive stocks are already reacting. this gtv library on the concerns aboutng fed policy, the ratio on the s&p 500 for until it is fell almost 2000% last week from a 10 year high in march. how worried are you about rate-sensitive assets? treasuries,omes to high-grade corporate's, when we are looking at debt, we are very these bonds.ut

the 35 sector bull market in bonds that we have from the summer of 1981 into the summer of 2016, rates are going higher from there. out of been interest-rate sensitive bonds. we continue to stay away from those. about any ofned those interest rate securities because we think that rates continue to go higher. that is our concern as we look across. that's our asset allocation use?egy, what do we we are talking about diversifying risk in the equities portfolio but how do we diversify that risk? where can we look among bonds to do that? david, you said the post-midterms pop was pretty short in duration and sustainability. you're now getting the president

turning his attention to another scapegoat which is the prospect of presidential harassment as he put it in a tweet. is domestic policy within the u.s. a major source of concern now that we have the midterms behind us? cyclehave the election that has been a pretty good predictor. it has been pretty consistent in every midterm election since world war ii, going back to 1946. 18 midterm elections. measured by the s&p 500 has been higher than the average return has been 15.3%. will this time be different? will we not be higher one year later? we were concerned about that pop we had after the election but we have given that back. there is a big ball of worry. we have a president who talks a

lot about the market who tweaks a lot. there are new dynamics entered into. that is something we have a lot with this president. that is yet to be seen. if we are still looking forward at the fundamentals overall but we are constructive on u.s. stocks specifically. we think domestic policy will play a factor. typically the u.s. markets have learned to largely ignore politics and the government to a large degree compared to just five or six years ago. when we are talking about the trade, that affects real economies and becomes quite important to the markets. the question now is how much noise investors can put up with these days. roundup of the stories that you need to know to get your day going. bloomberg subscribers can't better gtv .

the big question is about apple, apple suppliers driving the tech route. you can get this on mobile and in the bloomberg anywhere app. can customize its aegis get the news from the industry and asset classes that you care about. this is bloomberg. ♪

shery ahn: this is daybreak asia, i am shery ahn in new york. haidi: let's look at how the markets are trading in asia. the biggest declines since october 2015. despite the fact we have seen a 5% rebound since the close of the session yesterday. seeing five days of gains and a day of losses down by over 1%. the futures looking pretty mixed.

continuing with these declines seen in the u.s. overnight. >> although the u.s. futures are pointing higher right now. coming up we will be talking about softbank and what could be japan's biggest ever ipo. this is bloomberg. ♪

10:30 in sydney, markets trading for 30 minutes time. seeing quite a bit of downside with the asx, 1.5% lower, the biggest decline since october 25. and tracking losses in tech, we see financials with the biggest losses in the early sessions so far. york, seeingn new futures climbing higher. this is after the s&p 500 and the dow lost more, falling the most in two weeks. losing more than 600 points. i am shery ahn in new york. haidi: i am haidi stroud-watts. you are watching daybreak asia.

let's get to first word news. reporter: tensions between the u.s. and saudi arabia are rising. that is after president trump slams the kingdom proposal to curb oil production next year. he said it should not happen and prices should fall based on supply great west texas intermediate has been declining ahead of the tweet and dipped lower. opec and its allies are debating when and how much they should cut output. a new report from the united nations says iran is continuing to abide by the terms of the 2015 nuclear deal. by -- they are keeping uranium stockpiles below the levels agreed to, and investors could carry out checks on any site they wanted. the report is the first since sanctions were reimposed this month. southerncontinues in

israel and gaza after militants fired rockets over the border and the army attacked military sites. the strikes came after a day left seven dead. cut short aanyahu trip to europe. the force behind marvel comics has died. stan lee was 95 and his work provided lucrative directors for hollywood like spiderman, the incredible hulk and iron men. he was a writer in 1941 before rising to editor at marvel. he made his mark in the 1960's by creating superheroes with temperamental personalities. his other creations include the fantastic four. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am jessica summers. this is bloomberg. u.s. futures higher after the s&p 500 and the dow closed in near session lows. let's see what the australian markets are doing. sophie: muted gains for sydney shares, we see losses resume, the asx 200 off 1.5%. tech shares and banks leading that on the benchmark. when you look at this, we have elders a sliding after a series of stocks downgrades. aspects of a worsening drought in australia is waiting on the rural services provider. and this company says its fertilizer manufacturing plants that gibson island are likely to close on expensive gas prices. ground, 35ing million dollars settlement deal with the corporate regulator, that has been dismissed or the federal court. before i go i want to check in on the dollar to -- the dollar

trading at a may 2017 high. the bloomberg opinion editor thinks dollar strength could be an allusion and comes down to the euro's woes that have been exacerbated by the budget showdown with italy. there is concerned with economic data from europe here that could force the ecb to lower its growth forecast. that could make rate hikes push after the end of 2019. this chart that takes the fight for the euro, we have seen the dollars advance over the course of the year. sophie kamaruddin for us. softbank has announced details of the ipo of its cash cow mobile unit seeking $21 billion which would make it japan's biggest public offering in history and would help shift from telecom to global investment. take a look at this with our tech reporter. highly anticipated.

hardly of the essence for this deal. let's run through the numbers. softbank is sharing 1.6 billion shares at ¥105,000 apiece. that will provide a big stake in the telecoms business, the third largest wild -- wireless carrier. that will bring them 21. this is less than what has expect with media equity reporting the failsafe could be as big as ¥3 trillion, so we biggestparing for the ipo ever but we will settle for japan's biggest for now. one thing investors might be interested in and is the dividend payout your the ratio is 85% of net income which is higher than what is offered by relative -- rival telecom companies, but there is a catch.

94% of the shares will be sold in japan and our sources are telling us most of them will be sold to retail investors and not institutional. this is something banks have been doing for a while, raising billions of dollars selling bonds to softbank customers. it is a way they finance a lot of their business up until now, so much of that stock will remain in japan. risks one of the biggest given there are domestic pricing pressures? reporter: probably never a better time to do this ipo. the carriers have come under severe pressure from the government to cut rates. senior officials have come out publicly and said the bill could be cut as much as 40%. a couple weeks ago, the biggest carrier here, partially owned by the government, followed suit

and said they will return ¥400 billion worth of savings to customers. it is not clear whether they will cover a loan but the pressure is there. next year theet e-commerce giant in japan is going to join the mobile networks space which is only likely to put more pressure on prices. masayoshi son has this $100,000 vision fund through which he finances this start up. is there an idea how this will work out? reporter: it is intimately intertwined. the dividend ratio i mentioned, it is key to his strategy of success division funds. it has contributed to the existing fund and some say eight second and third one getting cash from domestic operations will be key for masayoshi son to

stay in the game. it is also part of his transformation from what would be a telecoms guy for years, built this company since 1981, acquiring sprint along the way but all the time you think the core business of softbank is information revolution. now he is letting go of a large stake in his little baby in japan as well as selling sprint to t-mobile and focusing investments full-time, it will take it. shery: what will this mean for investors? softbank for a long time suffered from conglomerate discounts. the ipo is largely received positively by -- existingnvesting investors. there was severe conglomerate discount. you look at their market capital, ¥9 trillion but the publicly held shareholding alone, not only their

investments and vision fund and the business itself, only the sticks in a company like alibaba, yahoo japan and others -- twice the company's market cap and someone talked about the state of affairs for a long time. there is one way to do this, and that is to get at that gap and buyback shares. it has been a few years since softbank has done that. last time they bought $500 billion in buyback and it did create a considerable pop. is not likely the money will be used for i bet -- for buybacks or investment or something else that is yet to come. shery: the bloomberg tech reporter in tokyo. let's turn to india because the consumer price inflation eased to a charging month low, allowing room for the central bank -- a 13 month low, allowing room for the central banks to move. kathleen hays is here. we have crude prices falling but

this was november, this month, not october. kathleen: it was supposed to decelerate a little bit am a but it is important to note fell to 3.31% from nearly 3.8% year-over-year. when you step back, it seems this is going to put pressure on governor urjit patel to keep rate hikes powder dry. another meeting because this is not a good time to be hiking rates. let's look at the bloomberg chart, showing what is going on here. inflation, look at the end of the year, it was up 5.25% year-over-year, then dropped down, now 3.3%. it is interesting because it is 0.14%.ices that fell by for where up 3.5%.

housing prices jumping six point 5%. you can see under the surface there are still pressures that would push indian inflation higher. let's remember and put in context this battle between urjit patel, hyatt -- head of the ibm -- r.b.i. and modi's government because they exist -- the august rate hike, it pushed the banking system from surplus to liquidity. this is what the battle is about now, let's get liquidity into the system. we have an index that shows there is a one trillion rupees shortfall now. anyber 5, urjit patel said rate cut is off the table now. if anything rates would hold or move higher. as he sees this drop in inflation, as he looks at this growing debate over the reserve

bank of india, making sure the banking system has liquidity, seems this whole calculus will if not acomplicated lot more for the reserve bank of india. pboc. you don't envy the the rate cut from his beating louder and the risks of a bigger risk slowdown appear to be materializing. kathleen: they are not surprising. so far we have seen some slowdown in china's economy but not much. impact of the trade war hasn't hit full force. even so there are more more ways to say by next year, maybe we will have to get stimulus, not just fiscal stimulus, tax cuts and credit enhancement but something in the way of interest rates. a former bank of china official says next year china could be lowering deposit rates, lending rates, and in fact i want to show you another chart that is a

nice want to see. you have got the reserve ratio requirement for banks, the rrr. it is coming down three or four times, you can see the smaller bank as well. you see how the turquoise one at has notom at 4.5% budged yet. china kept it at this since 2016. people may be saying how can they do this? donald trump talked about weakening their currency. the economy is slowing, there is a trade war, china will have a strong case to make. -- do what any central bank needs to do, protect our economy when it needs help. haidi: kathleen hays. blasting saudi arabia's plan to cut out will -- oil output as tensions rise between washington and saudi arabia. more on this complicated situation with ihs market next.

this is bloomberg. ♪ ♪

asia. this is daybreak i'm shery ahn in new york. stroud-watts.di tensions between the u.s. and its allies saudi arabia are rising after president trump slammed the kingdom's proposal to curb oil production. he said this should not happen and prices should be falling .ased on supply scenario hopefully saudi arabia and opec will not be cutting oil production. they should be lower, prices based on supply. our energy reporter in tokyo. the president has been busy i guess jawboning when it comes to equity price action and the oil markets. theld we expect action from trump administration following this?

seeing this ass more bark than bite. the oil price did decline after trump made that tweet, but there is not much more the united states could do. they put the sanction on iran. they asked for saudi arabia and other opec members to boost reduction which they did, and now they gave waivers to some of iran's oil importing countries like japan, korea, china and india. bearishcreating sentiment in the market as saudi arabia is pumping oil at near what more can the president do is to be seen, but this rhetoric, if tweeting does affect the markets, perhaps we will see more, but in terms of concrete action, it is unclear. tweet, wen before the afterboost to oil prices saudi arabia said there was a need for oil production to be cut by one million barrels a

day. it wasn't really a strong reaction when it came to prices. if they manage to go through with that cut, what sort of reaction are we expect to? exactly. we only saw the 2.1% bump. they said they would cut half a million from december. it is not just saudi. saudi says we have got to do this, get opec on board but folks in thet of market unsure whether or not they can get russia on board as well. russia's energy minister said the price of oil is fine, this is a short-term issue that will not be a big problem for the market, no need to cap or cut production. it is saudi kind of speaking by themselves at this moment. any more concrete action perhaps

could push up the price of oil more. you have to look at u.s. shale. it is pumping at a record. production continues to increase. united states once the companies to increase. they are doing well at the current price of oil. there is more than saudi in this equation. thank you so much for that. a few more on the market energy. even going for is speculating what will happen next year, opec and russia, just talk about what we know now. saudi arabia could be cutting exports by 500,000 fewer barrels a day in december. will this do anything to prices? >> it will help tighten up the market. it might not be enough in oil markets, look at the proposal feelsaudi arabia and they

-- maybe the minister is talking up the markets. oil cominga lot of to the market, u.s. oil production has been increasing at a rapid pace so far this year, and we have the extensions byen to the eight regions the u.s. for buying iranian oil. looking into the fourth quarter we see global oil inventory increasing. to reduces two years to a five-year average. toy have some incentives manage production to make sure inventories don't increase. -- shery: go ahead. >> i think it will be necessary for saudis and its allies in opec to agree to further cuts

area there is always contention to get opec to agree to cuts. a decision has to be unanimous. a look at u.s. inventories on the bloomberg, showing we have seen the weekly gains continue for u.s. oil. the movers there, yellow showing the price of brent coming down. dynamic, will opec's efforts to retrain outputs even if they work to take all of them plus russia able to cut, will they be enough to keep oil prices from weakening further? >> i think with the naspers if they go through with it when then thatin december, priceslp stop a slide in and boost prices for brent to

the upper 70's to the end of the year. be trickyg to particularly if we look forward into the latter half of 2019. we expect a deluge of u.s. oil to come into the markets when the pipeline will just slowdown production from the ferry and basin. we will have more u.s. oil coming to the markets. that will hold prices further down in late 2019 into 2020. what is the likelihood we are going to get a cohesive strategy out of opec? russia is on the fence at the moment. it is hard to see what the dissuade iraq to come from its record high. is there any incentive for opec and friends to come together?

it is difficult. russia has sent a mixed signal, and now in the current situation we have got iran under sanctions, and they will not any cuts to production targets. they will seek exemptions. as i said earlier opec declines unanimous decision, and it will be a contentious meeting in december to get agreement on cuts, but they are seeing the deluge of u.s. oil coming. that is going to be the incentive to drive opec and its allies to agree to cuts. i don't think they want to build up the inventories. it took them two years to cut so five-year average level, they have seen what prices could

do when there is too much oil in the markets, in particular with u.s. shale growing. there are incentives for them to come to agreement to manage production. haidi: appreciate your time. us from singapore. bloomberg users can interview -- interact with the charts we brought up using gtv . you can browse recent charts featured on bloomberg tv and save for your future reference. this is bloomberg. ♪ mberg. ♪

juliette: haidi: this is daybreak asia. i am haidi stroud-watts. shery: i'm shery ahn. bloomberg sources say chevron and at some mobile are among companies submitted first-round bids for an oil producer. the auction process is expected to value the company at $15 million including debt.

but there controlling family still prefers the option of an ipo next year and continues to work towards that goal. haidi: vice president mike pence amidst -- arrived in asia amidst the is the duration of a draft report on whether to impose tariffs on car imports in japan. this will be on his agenda when he meets with shinzo abe later. that u.s. commerce department is investigating the import of vehicles and auto parts as well. looking at asian markets, taking a look at how australia is trading. seeing declines over 1% at this point, the biggest since late october despite the 5% recovery rally we have seen through to the close yesterday. rest of thethe region, futures might be looking positive but the asian session is not. more: nikkei futures down

than 1% while kospi futures as well. more daybreak asia next. this is bloomberg. ♪ ♪

. >> good morning, major markets just opened for trade. >> good evening from bloomberg's headquarters. welcome. hong kong, in tuesday, technology general, apple supply under ressure today, reports of eakening demand for i've ones