>> good morning. australian markets have just opened for trade. >> welcome to daybreak asia. inocencio. haidi: asia pacific stocks look set to fall gains of the last day of the month. investors are awaiting the outcome of the g 20 summit. president trump doubts on a deal with china, saying he is happy with the current situation.

and reading between the lines. ramy: u.s. stocks ended the session across the board, the three days we saw in the green were snapped today. it was a whirlwind of interesting headlines, most dealing with trade with regards to trump and china. the s&p 500 was down 2/10 of 1%. nasdaq was down by one quarter of 1% with market whiplash. one of the headlines was trump with a positive reaction, saying he would do something with china . there was a report that peter navarro would be joining him at the dinner on saturday, which would make a three is a crowd situation. we can see anxiety weighing in the market.

function. at the map of the 11 sectors ended in the green. energy was up the moats with six tent -- up the most with 6/10 of 1%. saudi arabia is considering cuts ahead of the opec meeting. an info technology down the most , by 1%. it was the leader yesterday. trend inch bucking the australia. it is a staggered open. ozzie stocks, mine and we see oil pushing $52 a barrel overnight. oil and the talks between saudi arabia and russia are expected to be on the agenda.

trading at 73.ar watch for reaction on that. continues to weigh on the domestic structural issues in china. new zealand is a bright spot. 2/10 of 1% higher. dollar, 68.61 is how we are trading. -- 6861 is how we are trading. on the trade front, the latest out of argentina, the location of the g 20 summit. we are seeing the chinese president saying that -- president just landed. we are expecting them to deplane imminently. some ceremonial music taking

place. let's listen. ♪ haidi: the weekend festivities before things get down to business. we are talking about this highly anticipated dinner date between the chinese and u.s. president. expectation has been muted in terms of the outcome. a positive would be a broad framework or conciliatory tone when it comes to trade. trump has suggested he could perhaps push the tariffs to the spring of next year. overnight, he said he is close to doing something with china but then backtracked and said the current situation with the tariffs is working out well for the u.s., at least according to president trump.

maybe he does not want to move off of that. wait for the president to deplane, let's get to the first word news with jessica. forica: robert mueller has the first time publicly connected the 2016 trump presidential campaign and the property business to the russian government. admits hehen now spoke with trump and russian officials as late as june 2015. they discussed a potential deal in moscow that cohen told congress had ended months earlier. the ecb has singled out italy of an example of how quickly investors lose confidence if they are confronted with policy uncertainty. the ecb says concerns relating to liquidity in investment funds has risen since the previous report.

china is said to be running to end their $175 billion experiment with peer-to-peer lending. anger, by investor authorities are planning on winding down small and medium sized peer-to-peer lending nationwide. this suggests president she is not finished with his crackdown on banking. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: let's get back to bonus ra's -- back to argentina. the doors have been opened and the stairs are pulled out. we are waiting for the president to deplane on his way into a series of talks. the highlight of the agenda is

the dinner date with trump on saturday evening where trade is expended to top the agenda -- expected to top the agenda. eric, who isr to covering the g20. as usual with the summits, we see the pomp and ceremony. eric: it is. the way they have organized aires is toenos make sure no leader arrives the same as the other so each is accorded the appropriate amount of respect and pomp and circumstance. we always knew heading into the g20 that the bilateral meetings would overshadow -- overshadow other things. the trump meeting on saturday is

most in focus. it is also possible that president trump and president putin will have a bilateral meeting. it was tentatively scheduled for saturday. they were going to down on a one-on-one. before boarding air force one in washington, president trump tweeted, saying he canceled the meeting with president putin. he cited russia's unwillingness thus far to release the ukrainian ships and sailors it seized days ago near crimea. and the other thing in the background, which some people think may have played a role in the decision is the guilty plea cohenhael: -- michael lying to congress about trump's conversations and investments in russia all the way through june of 2016, only months before the

november election when president trump to power. in terms of expectations, we know the apac meeting ended with acrimony. there is concerned this issue of trade will continue to be thorny. , there we go,g the president is accompanied by the chinese first lady, deplaning the air china flight. the leaders arrived separately, as eric pointed out, so they get the pomp and ceremony. festivity and the band playing earlier, greeted by delegates and children. that is the tradition. eric, this is the nice and easy part of the weekend, right? expectations as we get into the nitty-gritty, particularly when it comes to potentially trade hawks being

president -- being present at the dinner? navarro, who we know is a trade talk and has been whispering in the presidency are, advising how to handle china as a trading partner that potentially sets the stage for disappointment. there is reason for optimism. andnow the white house trump administration is looking for more than a trade deal. they would like a more comprehensive series of economic or macroeconomic agreements between the u.s. and china concerning not just trade, but protection of intellectual property, forced technology transfer. the wall street journal and bloomberg reported today that negotiators on both sides have been talking at the very least about some kind of agreement. that agreement could take shape in the months in the winter and

spring. and in exchange for some kind of indication that the chinese are willing to contemplate nothing like that, it is possible the white house might put a freeze on further tariffs on chinese imports. trump has threatened 25% imports on top of the billions. maybe at this meeting on saturday night, they will agree to put that aside and work on a comprehensive agreement and give the chinese several months to do it. so i say perhaps there is a reason for optimism, but similarly there are other people who are important to president trump who have shaped his thinking on the subject of trade who will be there with him. at this point, with trump yet to arrive, it is difficult to say. we may more -- we net -- we may know more tomorrow. it leans more toward the positive in terms of possibly

suspending further tariffs on chinese imports into the united states. what have people been saying? are they on pins and needles, or are they saying they are optimistic that there could be a breakthrough? eric: i have spoken with some as i say,timistic, without more information, it is hard to speculate. people are optimistic that even without a breakthrough at the dinner saturday night that the chinese and americans can find a way over the next several months to resolve differences and put the global trading system at least a little closer to where it was before president trump started slapping tariffs on chinese goods. ramy: the bar is also set pretty low. if anything comes out of it, i think a lot of investors will see that as a positive.

eric, thank you. let's talk about the federal reserve. central bank is signal cooling -- signaling a more flexible approach in rate policy after an expected hike next month. kathleen hays has minutes from the meeting and the words and phrases that matter. signaling aey are more flexible policy path. this is so important because they are getting more cautious, not dovish as the fed nears neutral. we will be emphasizing data dependency to ease away from the commitment. , if the rate hike incoming information will be in line with expectations. they talked about modifying the

gradual rate hikes of language as we move on to this next screen we can see that. it might be appropriate to transition to policy statement language that praise -- places greater emphasis on data dependency and assessing outlook. it would convey the fact there is no preset course. remember the new fed vice chairman yesterday said he is adamant we are not on a preset course. rate thaty neutral jay powell said is near neutral, trying to wean everyone off the idea we will rate hike every quarter and backed the idea that we will watch the data before deciding what to do. ahead, biging numbers coming out of japan. bank of korea decision day.

we are expecting to be ok after signaling from governor lead to join the ranks of ages hikers. bankeen: we will look at of japan first. the later -- the labor market data will come out in a few minutes. that will rebound. manufacturing was hit by natural disasters. let's look at the bloomberg. at 2.3%,pposed to stay a record low. the job to applicant ratio is supposed to move up. and the bank of japan chief is counting on tight labor market to force companies to pay more to attract workers. that will push up wages. the bank of korea has not raise their key rates since november of last year. now we will take a look at a bloomberg survey sing 14 of 17

says they will do it. of 17 will do it. subdued inflation is something they are watching. they are back up to the bottom of their target, that gives governor leah little room to make a rate hike. a little room to make a rate hike. he has been talking about concerns of rising household debt. and what will the rate hike in december do? create -- increase the rate differential. that is another big reason. is very important to the people's bank of china. if we see more deterioration and signs of trade wars, it is an issue for them. and we will be watching india's gdp data. it is supposed to slow. it has been over 8%.

but they will probably keep their rates on hold at the next meeting. fewdata coming up in a hours. haidi: a lot to look forward to. those numbers will be out of japan. we are looking at china pmi later, as well. ramy: next, market perspective with guggenheim partner scott minor. this is bloomberg. ♪

haidi: this is daybreak asia. u.s. stocks fell for the first time in four days as anxiety ways on sentiment. the fight extends a rough november with markets trying to turn positive. our next guest says there is

still room to run but there is a recession on the horizon. minerdeim partner scott joins us now. you joins us now. you say this could be the last hurrah for the bull. >> we are late into an expansion. the federal reserve, though they are emphasizing data dependency, are clearly in the path of increasing interest rates. the physical stimulus that came as a result of the tax cut will turn into fiscal drag in 2020. we are on a collision course. if the fed keeps raising rates and the fiscal stimulus proceeds, that leads to recession. ramy: let's look at the bloomberg terminal. we can take a look at what is happening with the yield curve. we have been talking so much about it.

it is about 21%. a little more detail about that recession. as the economy is exceeding output at this point, we are overheating. unemployment is lower than what the fed deems to be full employment. the data seems to support the fact that employment growth will continue. ultimately and is currently putting pressure on wages. as we increase wages and bring more people into the workforce, that will increase demand. as consumers demand more, that will obviously put more upward pressures on prices over the next year. i want to remind people the fed has a dual mandate. priceave the objective of stability and full employment. they have surpassed full

employment and price stability could be an issue over the next year. that is the sort of data that chairman powell is talking about that they will keep an eye on. we have been monitoring events in argentina much of the meeting, how impact are you assigning to this one particular event, or is it such that markets have priced in and things will get a little worse at the start of next year with the tariffs before they start improving? think a lot of the policy uncertainty we have today is the same policy uncertainty we had back in august. we knew the trade war was escalating. we knew there was a lot of uncertainty coming out of washington. that is why i think we finally had a correction. the market realized it needed to

price for the uncertainty. i believe as the uncertainty dissipates, given the strong economic growth and earnings, this can give a lift to the market over the next six to 12 months. as far as what is going on in argentina, i find it very interesting. andlieve both president xi president trump are looking for a victory. i would not be surprised at the end of the weekend if the u.s. ad china did not announce concorde, that basically sat down and passed to help resolve the trade fiction. -- friction. i do not think much substance will come out of the meeting, but i think there will be a set of principles that will be established to start the process of bringing an end to the trade war.

if we get that sort of event over the weekend, that should be good for risk assets next week's -- next week in u.s. stocks and global equities. haidi: this is the second to last trading month of the year. what are your expectations going into next year? volatility as we get closer to the end of this cycle? >> i think so. we are in the midst of a santa claus rally. stocks tend to rally going into christmas, especially when retail sales are very strong, which all indications are very strong in the u.s. market. so i think that will continue to push as higher next year. one thing i want to point out to , whileis that this rally encouraging, has some disturbing characteristics.

volume is light. there are growing concerns around credit risk, which i think are substantial and real. as we get into the latter part theext year, i think reality of those risks in the credit market are going to come home to roost. that will put more pressure on risk assets and ultimately make stocks choppy and the second half of the year. as we start 2019, the u.s. government will have delighted -- divided governance in the congress. what should investors look out for as we try to figure out where to go and place positions? place wherehe one the democrats and republicans can actually come together and get something done is on the infrastructure side. that will be good for

infrastructure stocks. it will be good for companies which support infrastructure, companies like a calm should do omm should doa-c very well. ont leaves a question mark technology. we have had a great run in tech and media. if some of the darlings from 2018 will probably go into the doghouse, if they are not already there, and the real performance will come from industries that are basically materials and industries that support the infrastructure bill, which will be anticipated if congress and the president can get together. haidi: great to have you with us, as always. let's get you a check of the business headlines.

china's group is showing more asns of stretch -- stress they search for a new loan at their flagship unit. hna has sold more than $17 billion of assets this year to lower one of the biggest corporate debt piles in china. investigators searched deutsche bank frankfurt headquarters. they were fined $600 million last year for allowing money transfers from russia and what regulators said was highly suggestive of financial misconduct. aidi: softbank will announce reports theymid hit their sales target of $21 billion.

one brokerage completed half their volume on the first day. rivals doc america in america -- in response. this is bloomberg. ♪

haidi: we are just getting the latest numbers when it comes to the japanese labor market crossing the bloomberg. and we are getting tokyo november consumer prices rising 1% year on year. the october jobs to application ratio for japan is at 1.62, slightly lower than the 1.65 estimated. price inflation and energy rising to 6/10 of 1%.

pictureinto the broader when it comes to price pressures. we will get analysis when it comes to eco-data out of japan. the are expecting china pmi in an hour. let's get you to first word news with jessica. castca: president trump new doubt on a trade breakthrough with china at the g20, saying he may do a deal but is happy with the current situation. he has also canceled scheduled talks with president putin and has no intention of meeting with the saudi crown prince. the prince will hold talks with president macron, with paris calling for a full investigation into the murder of jamal khashoggi. there is a more flexible approach in interest rate

increases after a december hike. another rateagreed increase is likely to be warranted soon but said the language regarding expectations for further gradual increases may need to be modified in a coming meeting. ukrainian president is calling on nato to send a warship as relations with russia worsen. he says moscow is blocking ukrainian ships. have beenan ships prevented from setting sail. they say russia wants to annex more of its territory as it did in crimea. -- allegedlys hiding payments they receive for promoting investments. the regulator found the sales disclose payments through at least i -- three ipo issuers. mayweather agreed to pay a

$300,000 fine and callan 100,000. id $100,000. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. more now on wall street's latest wild ride. stocks were all over the map before closing lower. su keenan has more. su: trump said he might do something and stocks were up, then there was word that his political advisor was going, and they were down. by the end of the day, the speculation was that trump may not be able to tamp down the trade dispute. .he dollar was lower

it dropped in the regular session and is rising after hours. treasuries rose in the regular session. financials were leading the way. notice the semi conductor index is down. let's go to the movers, because the size of the moods -- moves are notable. aluminum demands because of the trade dispute. deutsche bank, legal troubles after a raid of their german office. boeing and transocean moving higher. a wild ride in oil. let's go to the library. strategists today asked if the market got it wrong. the s&p 500, the blue line, has been tracking with fed expectations. it was up and then slightly lower. there has been a change in expectations of what the fed will do.

also volatility in oil. we are expecting discussions to be held at the g20 as to where the market goes. big players will be at the g20 and that led to some of the optimism. let's go into the five-day track of oil. it has been a wild ride all week. a big drop on the far right panel was oil below 50. then it shot up almost 3% and ended with a 2.5% gain. this was a reaction to a lot of trade dispute headlines that russia may join with saudi arabia and do some of the cuts. this is some of the tracking -- ashat shows that china u.s. oil falls. up is the title on the

charts. u.s., which is the yellow, has briefly eclipsed saudi russian oil output. u.s. thatrtant to the russia and the saudi's treatment -- trim it. there are signs this might happen. trade obviously is the hot topic right now. city, theern chinese biggest technologies companies are gathering. tom mackenzie is on the ground. what are you hearing? tom: it has been interesting. there are u.s. and chinese executives here. front and center are the concerns about the trade war and the impact, the uncertainty is a focus. and the fear a continues to erode the business sentiment.

here to get a sense of how the trade war is playing out in china. they have skin in the game. ia. is a potential flashpoint between china and the u.s.. -- artificial intelligence. this is a potential flashpoint between china and the u.s. and a topic for uber. artificial intelligence is central to what they do and they are concerned if the trade war continues a could erode the collaboration in the ai space they say is so important to continue to develop the area and add benefits for the businesses they do. execs are trying to way this out. they will be looking at this g20 meeting. no one i spoke to think that

will be resolved by the end of the weekend. they are trying to plan how this will impact their business five years from now and how concerned is the u.s. when it comes to chinese tech ambitions and what steps will they take beyond the restrictions we have already seen? it is less about power and more about the environment. ramy: trying to game this out could be a fools errand, because it could turn on a dime. or a tweet. >> some commentators and analysts have speculated should the 24 continue, one weapon china has is restricting the number of tourist going abroad to the u.s.. spend more than anyone on the planet when they travel.

i put the question to the ceo of one of the biggest travel companies in the world. they go up against expedia in terms of competition. i asked how they are positioning their business in light of the trade tensions. >> we are cautious. business travelers are probably more resilient. no matter what happens, they have to fly all over the world. we target made to high-end customers. these customers are more resilient than the rest of the market. but plenty might be trimmed down. instead of going to the u.s. or europe, they may go to thailand or singapore and nearby cities. or instead of going to asia, they may stay within china to travel.

so we need to prepare for the worst but hope for the best. i think there are environment issues as well as industry related. macro look at the environment, all of the chinese internet companies have a similar decline. forerms of industry related the air industry, the rates were lower this year. that has contributed to the weakening. slowdown, there is a we grasp it as an opportunity. so we are very well prepared when everyone else goes down, we will advance more rapidly in the field. reporter: what are your priorities for 2019? >> to achieve more efficiency for the massive market.

and the efficiency can then be used to explore new markets. kong, japan,hong all of these nearby countries. everyone should be watching the global because collaboration between two major nations is good for everyone, not only good for china, u.s. it is good for europe and u.k. and everyone. we will have to focus on the commonality and results. she told me she things they have the contingency in place to whether any slowdown in the chinese economy and increase in tensions between washington and beijing.

in south korea, when chinese political tensions increased, we have seen it before, but she says it will not happen the u.s. funding for venture capital in china has fallen 17% in nine months. we will be talking with jim emnd, a major player -- g fund, a major player, later in the day. will go to tokyo to break down the latest japan jobs data and what it means. this is bloomberg. ♪

ramy: breaking news crossing the bloomberg terminal in terms of

the company autonomy. michael lynch has now been indicted for fraud tied to a 2011 deal linked to hp. he is a british entrepreneur and former ceo of autonomy corporation. prosecutors had long identified him as a co-conspirator along with the cfo, who was found guilty in april of orchestrating accounting fraud to arrive at a $10.3 billion price for hewlett packard back in 2011. michael lynch indicted for fraud ind to the hp deal they did 2011. haidi: let's get back to the japanese data we had over the last little bit. the latest job numbers coming in at 2.4% in october. slightly higher than estimates. let's get more on the implications of numbers. i want to bring in the managing

director and chief economist of japan advisors. thank you for joining us. other changed expectations in terms of inflationary pressures in the labor market? 3.3 23.4 isfrom just a statistical let. i do not think we -- statistical blip. we do not have to worry. we are facing a labor shortage problem and that's why the immigration bill is trying to get past. passed. haidi: that is politically difficult to do in japan. >> it is a surprise. structure reform that prime minister abe is trying to propose. i am surprised that he went

ahead and proposed the immigration bill. out: i am trying to figure the job to applicant ratio we saw. 1.65. help me make heads or tails of it. it has been rising. but this seems to be some good news. sure. there is 1.6 jobs for every job seeker. the job market is very heated. puzzle is why it is not leading to inflation. but the tight labor market is good news for japan. ramy: i want to talk about wage pressures. this is the terminal. jobless rates, 2.4%. talk about wage growth and pressures. the labor market is tight but

it is not reaching the regular full-time workers. when you look at the part-time workers, weporary see relatively high wage growth, over 2% in the last two years. so there is evidence that tightness in the labor market leading to a rise in wages, but it has not reached regular workers wage yet. is inflationary pressure strong enough and their recovery to withstand the hike next year? that is the billion dollar question. that is still concern fiscal tightening due to consumption could derail or

delay the 2% inflation. so there is a concern and still a chance that prime minister abe in the end will decide to postpone the tax hike. haidi: if he does, the window closes quickly. by 2020, we are expecting trend for economic growth to turn downwards. politicians will always find a way to stop something from happening at the last minute. i do not think timing is an issue. haidi: at the end of the day, it does not change the bigger picture in terms of what boj does, which is exactly what it is doing. creating more structural concerns within the market. japan isk bank of

powerless right now. they have more or less given up raising inflation. the hope is on the fiscal policy and trying to make sure japanese economy stays healthy enough in the next three years. by the end of that time, hopefully inflation will come back. but there are some risks. the trade war is a risk for japan. president mentioned a potential hike. that is a big concern for the japanese economy. but hopefully the economy will alongong for the -- hum for the next few years. ramy: hold that thought. we have industrial production numbers across the terminal. month on month, 2.9%.

year on year is 4.2%. expectation was 2.5%. i know you are predicting a possible bounce after october into september. what do you make of this? another positive news. a 1% surprise is not a huge deal, but it shows the state of the japanese economy, having labor shortage problems and growing rapidly for next year. japan is expected to grow above potential growth. that should increase pressure on wage hikes. japan is on a desirable path toward restoring itself eventually, but it needs more time. ramy: the desirable path in my head appeared to be a very long path.

in terms of yield curve control, we know they would like to break out of it, but how long is the path to get out of that? boj can decidenk to abandon yield her -- yield curve control. they have actually given up doing anything more aggressive toward reaching inflation, that they cannot withdraw the existing matter besides the easing they have already put in place. ramy: always great to speak with you. thecan get a roundup of stories and get your day going in today's edition of daybreak. bloomberg's of primers can go to tv . it is also available on our app. customize the settings so you get news only on the industries

and stories you care about. this is bloomberg. ♪

haidi: this is daybreak asia. ramy: let's do a quick check of the latest headlines. there is an -- the unit of drugs to ensure the conglomerate owns the resort brand is offering shares up to 20 hong kong dollars each. hong kong ipo has already totaled $33 billion this year, or than double 2017. buyer is to cut thousands the -- they say they are leaving the sun care

and footcare sectors. the layoffs represent 10% of the workforce. investors are not convinced of the plan. ramy: jaguar land rover is taking a pause in making in the u.k. as it faces wavering demand and falling sales in china. this will affect 500 full-time staff at the plant. all workers will remain on full-page. another facility had a two-week shutdown last month and they plan to shift some production to slovakia next year. tumbledeutsche bank after a police raid in potential money laundering. they searched the bank's headquarters and seized paper records. they were fined last year for allowing money transfers from russia after what -- in what regulator said is highly suggestive of financial

misconduct. early trading is getting underway in asia. australia, we are seeing a downside close to 1%. we see this despite gains in oil overnight. the energy sector is not seeing a bright light. new zealand is bucking the train -- trent, up 3/10 of 1%. nikkei future indicates we could tokyo.upside in the kospi is optimistic. it is bank of korea decision day. let's look at commodities. we see for the most part they look negative. new york crude is $51.38 a barrel. we have been talking that as long as it maintains the $50 mark, things should be ok. gold and silver are down. hour, at in the next

of the latest pmi readings in china we will have the views of the chief greater china economist. our get open is next. this is bloomberg. -- market open is

♪ haidi: a very good morning. inm haidi stroud-watts sydney, and asian markets have just opened for trade. ramy: and from bloomberg headquarters in new york, i am ramy inocencio. welcome to "bloomberg daybreak: asia." ♪ haidi: our top stories this friday, asia-pacific stocks look set for small gains. investors are awaiting the outcome of the g20 summit. cast doubt on a deal with china, saying he is happy with the current situation. things could get frosty in

argentina. carmaking by committee. era led byrlos ghosn the three ceos. ramy: let us take a look at how asian markets are shaping up. we have bloomberg's asia across asset management analyst. theave most from japan in last hour, what is the reaction so far? >> that's right, china is later in the day. japanese economic data came in on the positive side, looking at industrial production in particular. it is arguably the single most important indicator for japan. more than 1% increase in production in october, which suggests that the contraction we saw in the japanese economy in the third quarter probably will not continue into the fourth quarter. what does this mean for markets? to be honest, not a lot. japanese indicators do not tend

to be a big market mover. inple are pretty comfortable looking at the japanese stock market as an essentially an export play, rather than a domestic growth lay, and the are comfortable with the idea that the weaker yen should help support the reduced valuations for the time being. haidi: chris, as you mentioned at the top, it is china pmi day, and bank of korea decision as well. there was a lot of distraction coming through from g20. kind of trying to work out what our expectations are at the end of this weekend. a framework for a deal, or just niceties between a president trump and president xi jinping, what do you think markets are expecting? chris: we are kind of in transition day, to be honest. yesterday, the big story was the , maybe a fed pause

giving a boost in particular to u.s. markets. that has been basically been played out. , there is a little incentive to make any kind of big bet on any market, before we find out the result of that residential jinping-president trump meeting. -- president xi jinping and president trump meeting. one investor i was talking to earlier pointed out that this is really a binary event. it will either result in some sort of a thaw or cease-fire that takes the can down the road and leaves markets space to continue recovering from the november lows from a couple of weeks back, or, there is a breakdown, and the focus, again, is on escalation of tariffs, scheduled to kick in a january 1. and we could see a significant selloff monday.

given the kind of binary outcome, it would be surprising if we got a major move in todayp. one thing to keep an eye on though, late in the day, the bank of japan will be releasing its monthly on the purchase plan . we anticipate that there will be some sort of tapering indication , some sort of suggestion that they really would like to scale back their bond purchases a .ittle bit in coming weeks haidi: chris, thank you so much. of market action, not much to write home about. flaccid to stuff, tokyo clinging onto early gains, a flat start in korea, and an extension of declines here in sydney. let us get you the first word news with jessica summers. >> special counsel robert mueller has further first time, public way connected the 2016

trump presidential campaign and his property business to the russian government. the president's a lawyer and fixer, michael cohen, now admits he spoke to trump and russian officials as late as june, 2016. they discussed a potential deal , something that trump had told congress had ended -- something that michael cohen had told congress, and it earlier. minutes from the november meeting, say that almost all participants agreed that another rate increase is likely to be warranted soon, but they also said that their language regarding expectations for further increases may need to be modified incoming meetings. the ssc has settled with florida -- floyd mayweather, boxer, for allegedly hiding payments they received for promoting initial coin offerings. the sec found that both failed to disclose payments from

issuers they promoted on their respective social media accounts. ayweather agree to pay $300,000 fine, and dj khaled, a $100,000 fine. threats to financial stability in the market have become challenging. in its twice yearly financial stability review, the ecb said that concerns related to debt instability and liquidity in investment funds have risen. and come at the back of korea is expected to end a year-long hiatus on friday, by raising its benchmark rate. that would add to a flurry of interest rate hikes this month markets.emerging the governor has issued concern debt.rising household he also needs to ensure the gap between korea and the u.s. rates and does not widen enough to prompt sudden capital outflows. lobaglobal

-- i am jessica summers, this is bloomberg. haidi: jess, thank you. we have just learned that president trump, the canadian prime minister, justin trudeau, and the outgoing mexican president, will be attending the signing ceremony for the new usmca trade agreement tomorrow. erik schatzker is in buenos aires for the summit. talk about the symbolism of the signing, as we start the weekend, with potentially tough trade talks with china. k: everyone is looking for signs that progress will be made on trade here, and this is an indication that perhaps some will. ?hy because it was uncertain up until minutes ago whether trump himself, whether trudeau, and

to,, the heads of state, the leaders, would attend at the signing of this replacement deal for nafta. knowing that trudeau, trump, and pena-nieto will be there, sends a signal that trump will support a global trade agenda, more than he has been in recent months. and does not tell us anything specific. about what might happen with president xi jinping on saturday, but it is something and it allows us to look at the tea leaves and maybe draw a conclusion. haidi: yes, we are just getting these lines, the canadian prime minister, has spoken to the president of the you carrying the us of the ukraine, saying that he supports in ukraine getting these lines but the canadian prime minister has spoken to that

ukrainian president, saying that he supports ukrainian sovereignty. putin, are not going to meet. they were supposed to have a meeting on saturday here in the sidelines of the g20 meeting. trump, even before he got on air force one to fly to buenos aires, canceled the meeting, citing their russian seizure of ukrainian ships and sailors, and their unwillingness to return them as of the reason for canceling the meeting. there is speculation that perhaps, michael collins guilty plea may have played -- michael cohen's guilty plea may have played into that. trump saying that russia's aggression relative to the ukraine -- let us not forget that it was the invasion of the crimea that forced rush out of the g8 in the first place -- as

the reason for canceling that meeting. he will be meeting with angela merkel on saturday for one hour, vladimir putin, and this is perhaps a much more important note that she is scheduled to sit down with mohammad bin salman of saudi arabia on saturday afternoon -- trump is scheduled to sit down with mohammad bin salman on saturday afternoon. if saudi arabia and russia can agree to production cuts, if they can agree to that, that for a veryhe stage quick and easy opec meeting next week. ramy: quick and easy, hopefully it will be. erik schatzker, thank you for that. still ahead, president trump is set to arrive in buenos aires in about one hour. that, after mixed messaging on possible china trade breakthrough. bruegelspeak to director, guntram wolff.

haidi: coming up next, though, i look at china's pmi data, due out in the next hour. what the numbers may reveal about the pressure from the trade work. this is bloomberg. ♪ ♪

♪ haidi: this is daybreak: asia," i am haidi stroud-watts in sydney. ramy: and i am remy innocence you in new york. china's pmi data is about to come out, and it will be an important gauge of how much further the economy might have deteriorated. joining us from hong kong is raymond yeung, anz banking groups chief china economist. let us start out with expectations, manufacturing pmi. 50.2,rvey is coming in at and it looks like it might be .xactly the same this time

>>. >> we believe the gdp in the fourth quarter will come down to 6.4%, which is below the official target of 6.5%. i think the november pmi 50,res, even if they touch and does not mean the economic outlook has any signs of improvement, especially as you look at the new export order, down to a low level, below 45. it means the outlook in the next three months will continue to be very challenging. ramy: i would like to show you a chart, along with our viewers, help me make heads and tails of this. the small company pmi, it is just under construction territory, i suppose. but medium company pmi's are really falling below contraction territory. what is happening to medium companies that is not affecting the others? there isit seems like

something going on in the funding structure of chinese companies. many of these medium-sized companies have some combination of harvard sector and also state owned participation, and for those companies who have been relying on funding access -- have some combination of private sector and also state-owned participation. for those companies who have been relying on funding access, they are suffering from the deleveraging process in the last few years. when you relay the money supply to the corporate cash level, if is verye cash level low, below 3% now, we are concerned about whether these companies are facing some sort of liquidity shortage. to some extent, they medium-sized pmi's, can be reflected by the change in liquidity position of these companies. the pboc,you expect

then, and the authorities, to resort to the playbook when it comes to stimulus? raymond: i think the central bank will continue to accommodate the to have an accommodative bias -- will continue to have an accommodative bias. they don't want to in just massive liquidity in the markets, but the reality is that aret of these liquidities ordered. you can see that the interest rate levels are low. in the 10 years -- and the outlook is that we see the interest rate continued to come down, which means a lot of ranks don't actually want to lend and support the real -- a lot of banks don't want to lend support

to the real economy. state wantsthe to continue to cut this. i believe that will continue to be the policy with the pboc, and the next year, we are looking at three more bond cuts. the most likely happening in january. haidi: i would like to bring up this chart, looking at export orders. reasonsit is one of the we saw relative resilience in the pmi data, despite all the trade actions. it has decided to come down quite a bit, you can see the decline in the yellow, new export orders. are we at the peak of the frontloading? what do you expect when we get into early next year, when we run into that chinese new year period? raymond: that has been a puzzle. the first half year, we have seen a very strong shipment and but at the same

time, the export orders survey is points off. of course, the explanation for this divergence is the frontloading come but at the same time, we have to be careful and cautious in reading the data, because the pmi data is a fusion index. the majority of the companies in the outlook, exportersme of these still have strong exports. an expertxpressed values. also, when you look at chinese exports, very often we see strong exports between hong kong and the mainland. how does that come into the equation of these numbers? i think that needs further investigation. ramy: i am glad heidi asked that question, because i would ask

about the frontloading shipments for 2019. hop into the bloomberg terminal really quickly, what we are seeing is positivity with taiwan, south korea, japan, thailand, hong kong and here.ore, where you're talking about is that there will be an inflection point with this front loading of shipments. because you think that this could come off. at what point do you see the green bar start to possibly turn even red? raymond: in terms of the negotiation between china and the u.s., i think the next trigger point will probably happen in january, if president trump is going to increase tariffs on a $200 billion of chinese goods, 25% of tariffs, as opposed to the current level of 10%. we believe the strong shipments is because of frontloading, and

we will continue to see very strong export numbers in in november and december, before they impose of the tariffs on chinese goods. to know that there the $267 billion that has not been discussed, that will also be another point about a lot of exporters and manufacturers worry about. if there's any fan of escalation of the trade war between the two countries, that we will continue to see lots of unloading happening -- lots of frontloading happening, a lot of divergence between the new export orders and also the .hipment numbers haidi: raymond, we always appreciate your time. group chief china economist, there in hong kong. users can interact with all of our charts shared here on bloomberg tv.

this is bloomberg. ♪

♪ haidi: this is daybreak: asia." i am haidi stroud-watts in sydney. ramy: and i am remy innocence you, and new york -- i am really innocencio in the new york. are right on deutsche bank and deutschey, bank was fined $600 million last year for allowing money transfers from russia, and what regulators that was highly suggestive of financial misconduct. china's struggling hna group has shown more signs of stress with the search of a new billion-dollar loan at its flagship unit.

is stepping down, and the vice chairman also no longer be president. sold more than $1 billion of assets in china. remy: softbank will announce the price range for its upcoming telecom unit ipo this friday, on reports it hit its sales targets anyone billion dollars. sources tell us that lead underwriters had little trouble placing sales, with one brokerage comforting half its volume on the first day. it saw its highest intraday share in a month. haidi: you could call it car making by committee. nissan, renault and mitsubishi say that their chief executive will jointly run their alliance, this as carlos ghosn faces to go troubles in a japan. our correspondent, stephen engle, has been tracking the story.

see the suspected fireworks at the board meeting in a japan. stephen: and they seem to be on the same page publicly. of course, there are underlying issues nissan would like to address, such as a equitable structure within the alliance. the japanese feel that the french government and renault have too much control over the alliance, with voting rights that nissan does not have. that may get pushed to a later date as in the sun gets their ducks in a row to take this on that later on. keep in mind, the three main players attended the meeting in amsterdam by videoconference, so it is kind of hard to have fireworks when you're not actually face-to-face. so you have the three ceos right now, ceo of nissan, as well as mitsubishi, and terry ball array , the interim ceo.

keep in mind, renault has not hosted carlos ghosn as chairman and ceo yet, they want more proof of the allegations before they made any kind of move. the nissan ceo spoke to reporters and said at three leaders are aligned on the direction of the alliance. renault also said it is committed to the alliance. we heard from the mitsubishi motors ceo, he said it is important to restore a sense of normalcy. he also said that the board discussed on the operations, not personnel matters. and guess you could say that this diffuses the question of leadership for now, but it will be pushed down the road, because it is an issue nissan wants to address. ramy: as you talk about folks who are possibly heading toward some kind of leadership, carlos

ghosn, is still in jail for the past few days. what do we know anything new about him? stephen: we do know that he and his fellow detainee, greg kelly, have maintained their innocence. extension of their detention expires today, but we are hearing that it will be definitely extended to monday, 10.mber i just saw a tweet saying -- even though detention expires in december 10, he could be arrested again on separate suspicions and confined for up to another 20 days. this is according to the nikkei asia review tweet i just got in the last few minutes, so it could potentially be as late as december 30. ramy: all right, the latest there on talks between the nissan, renault and mitsubishi, talking about feature leadership as carlosliance,

ghosn still stands in a japanese jail. -- plenty more still to come. this is bloomberg. ♪

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haidi: it is 8:30 a.m. and hong kong come a half an hour away from china's pmi coming in. we have the christmas tree up in hong kong, hard to tell if investors will be feeling festive going into a weekend of the meeting, with with president xi jinping and trump on trade. i am haidi stroud-watts, here in sydney. inocencioi am really innocencio herey

in new york. let us get the first word news with jessica summers. >> trump has said he is happy with the current situation, and also canceled scheduled talks with russian president, vladimir putin. the prince of saudi arabia will hold talks with president macron of france, who are calling for a full investigation into the murder of jamal khashoggi. the new north american trade deal will be signed on friday after europe's top negotiations and white house threats to kill it. we are told the u.s., mexico and canada will sign the agreement in buenos aires, though it is not clear whether that will be at leadership or cabinet level. , andsmca is to be ratified the fine print is still being tweaked. the ukrainian president is calling on nato to send warships as relations with russia worsen. blockadingoscow is

ukrainian imports. more than 30 vessels, including three german ships, were prevented from setting sail. the world meteorologiscal organization, says 2018 is set to be the fourth warmest year on record. this is bringing devastating fires in california, and is also linked to the drought in australia. the report comes days after climate change -- days before climate change talks in poland. angela merkel says the g20 -- angela merkel's trip to the g20 has been delayed after her plane suffered technical trouble and turned back. nobody was hurt in the incident. ae chancellor plans to take

replacement flight and arrive in buenos aires later on thursday. china is set to be ready to end its $170 billion experiment with p2p lending. are told that authorities are planning to wind down the small and medium-sized p2p lending platforms nationwide, and ask the biggest players to reduce lending overtime. this suggests president xi jinping is not finished with his crackdown on shadow banking. news, 24 hours a day on air, powered by more than 2700 journalists and analysts, in what than 120 countries. i am jessica summers, this is bloomberg. haidi: the last trading day of the month, we are joined by a member of our bloomberg live team. overnighta tussle between the dovish fed story, and the anxiety over the turned story.

is that likely to continue today ? garfield: yes, but -- pretty much all the potential results on the table, we could get a belligerent backstop, we could see a cease-fire in the trade war, and we could get a love-in from president xi jinping and trump. intriguing when people say the results will be binary. with trump, anything could happen. anything is possible. tofield: they also have remember, when you look back at the summit between trump and came in singapore, when there was a good outcome, but in fact, korean assets did poorly, because although the rhetoric was positive, once you looked at not even the fine print, but there was nothing solid after you looked at what had gone on. so you cannot really buy the

rumor, when the rumor is very varied. i think investors will have to wait. ramy: speaking of china, we are expecting the latest pmi reading . 50.2, the same as a month prior. what should investors be wary about, when those numbers come out? [sighs] the obvious thing to be wary about is whether it drops to 50, or even below, the line separating expansion and contraction. we have a chart to show you, and you can see, the pmi has come down a lot in recent months, , coinciding with 50 drop off -- toward that line. coinciding with the drop off in experts. get the as expected

50.2, or 50.1, somewhere around there, it might be positive, because we looking at stabilization. the risk would be if we went further down, that would signal that whatever goes on with trade, there are some poor results baked in two china's pmi and china's economy, and it the outlook of asia's stocks, no matter what comes out g20.e ramy: all right, thank you as always, garfield reynolds. let us go to the central bank. is signalingeserve a more flexible approach to policy after unexpected hike next month, and it is getting more concerned about how to keep its key rate where it is supposed to be. our global economics and policy editor, kathleen hays, has the minutes from the fomc meeting. they turn out to be full of important little messages. kathleen: yes, this is a meeting

with no press conference, so i think a lot of people, until this week, were thinking, it will just be with a plate. -- it would just be boilerplate. the speech from jay powell come i think people were much more geared up to see if they got a message, and we did. and i think we should be careful , it is not so much a dovish message. they may go ahead and raise several times next year, if inflation stays at 2% and the economy looks good. but right now, that is a big if. let us look at one of the quotes from the fomc minutes from the november 7-8 meeting. we know there will be a rate hike december 19, because all participants expressed the view that another increase was likely to be warranted.

does that mean -- the fed minutes also showed concern over tariffs and rising corporate debt, but they did go on to say that there will probably be some modifications in this whole continued talk about further gradual hikes. the chart we were just showing -- -- i will just tell you they want to convey a more flexible approach to policy. numeral people to understand that they are not on a preset course, which is something that jay powell, the fed chair, said yesterday, would he also said that this fed is below neutral on its key rate. with one hike in december, they will be at the bottom range of what they are seeing as neutral. this comes together to put people on notice, that yes, they could be dovish next year, but they may also be hawkish, all dependent on the economy, and the trade war. the fed is having a tough time

with the way the system is working right now, keeping the rateunds rate below the reserves, but they might make a rate adjustment before the next meeting. that is what came out of it. haidi: kathleen, we are it got the numbers out of japan, a bit of a mixed bag. the bank of korea also meeting. what is your take away? ethylene: i think that japan at numbers are interesting. kicked up arate bit, because more people came back into the labor force. so, relative to the numerator, people think it is a good sign. industrial production, the biggest number in what, 3.5 bloombergp into the with me. it is important, because the economy contracted in the third quarter in japan, and that has to be concern. do withave a lot to natural disasters, but it looks like with this big comeback in

industrial production, it suggests that we will see a green bar when we show it again after we get the fourth quarter gdp. moving on to the bank of korea, first rate hike in a year, since last november. i am coming up another chart so that we can compare -- they will raise the key rate by 25 basis taking it right above the blue line. bank of korea governor lee, saying that he is concerned about household debt, about u.s. rate hikes taking a wide differential vis-à-vis korea, so that is a good reason to raise the rate at the meeting. a couple ofthat in hours. i want to follow up on what garfield was saying about chinese pmi. not just for the stock market, but for the people in china, the have already been fiscal stimulus steps taken.

if it continued to decline, the pmi, that would send a strong signal. india,n, hours from now, their july-september gdp numbers are supposed to show a bit of deceleration. it will not make that much of a difference today, however, when you look at rbis, the next policy meeting, that could be a factor, keeping them on hold, even if we see reasons for them to hike. , therekathleen hays talking about the hot topics. guangzhou, where some are gathering for the global tech forum. our china correspondent, tom mackenzie, is there on the ground. what do you hear with regard to these concerns over trade their? , tom?de, there

tom: we will be focused on the g20 meeting, seeing what will come out on the conversations between president xi jinping and trump this weekend. they want to see a lifting of this cloud over the business environment, and they don't necessarily expect any concrete, significant changes, at least, from the chinese side, but they are hoping for an improvement in the business sentiment. it is less about trading tariffs and more about the relationship between the u.s. and china. i spoke to the ceo of a company, which is listed in new york. is a former google engineer, he came back to china and set the company up. ai is at the heart of their business, they produce educational solutions that are ai-powered. he is concerned about if this continues, it could lead to a split between these two powers when it comes to ai

coordination. he says that coordination is so essential to developing solutions that can improve not just his business, but everyday life. take a listen. >> ai is a human endeavor. we have got to collaborate. tom: it is also interesting and important for ober as well, they came back -- four uber as well, they came back. the head of their business outside america who is here, told me that they were looking to see what they can get from their chinese counterparts year on the ground. there are looking to expand aggressively into countries like japan and korea, and they're are having to weigh out what this means. we also spoke to another ceo, saying they are putting plans in place, because not just because of a slowdown in the chinese

economy, but is trade tensions continue, they say they need to have solutions ready to put in place, to make sure their business is insulated. a are concerned about what that might do for consumer purchasing power there we had so we have a lot of different views, trying to figure out how this affects their businesses. it is about that environment, the sentiment, the dark cloud, still lingering over these two countries. ramy: how are the trade tensions -- how have they impacted the fundraising environment in china as well? tom: this is really interesting. you on the need to look back in 2017. without stripping what you saw in the u.s., in the first nine-month of this year, fundraising has fallen about 70% , about 60 billion u.s. dollars. that is having an impact on the tech scene, a lot of startups are having a hard time fundraising. weaker players in

the vc space may be cleaned out as part of the difficulty. again, business sentiment, people are less keen on chinese tech as they were a few years ago. -- the ceo of some company i talked to, said it is much more about the sentiment around chinese trade and technology. i will be talking to the ceo of a company who has invested in robotics, companies with an ai play, and we will get her sense of what she thinks on the broader tech sector in china. pay attention to that when it comes up in the next few hours. ramy: thank you very much, tom mackenzie. up next, winning friends and influencing people. we look at china's search for new partners. this is bloomberg. ♪

♪ ramy: welcome back, this is daybreak: asia." i am remy inocencio in new york. haidi: and i am haidi stroud-watts, in sydney. let us take a look at the agenda this weekend, with bruegel director, guntram wolff. thank you for coming on to us as a look ahead at a hefty couple of days. let us start with trade, that will clearly be at the top of the agenda. where do you stand in terms of the way we manage expectations? we had president trump saying overnight that the current situation, when it comes to tariffs, is a beneficial one, to the u.s.. think the g20 meeting between president xi jinping and president trump is of course, hugely important, because of the trade issues. but i think the real question is

here is, what is the motivation behind president trump's china?ive stance toward is it mostly about trade issues, about intellectual property rights, about access to the chinese markets, or is it much more a security issue, and geostrategic rivalry issue? i think it is the latter, and that would make the resolution of conflict increasingly difficult, and it will have negative repercussions on everybody and on all the asian, smaller and medium-sized economies and european economies, as well. haidi: if those lucky are in the camp who thinks that a large part of this is ideological -- an ideological battle. and from the point of view, it means that there really isn't a deliverable to be taken away this weekend, because these are things -- ambitions that president xi jinping is unlikely

to back away from. guntram: that is exactly right. that is exactly the risk we face. resident xi jinping was opening up the chinese markets further and increasing access for u.s. companies to china, was protecting intellectual property rights further, all the things the reformists in china would like to see, anyway -- suppose he was doing all of that, would the u.s. president be happy with it? and would the whole thing go away? i think if you read the speech by mike pence, the vice president, or the security establishment, the answer is they would probably not be happy. i think this is a conflict that might last longer than we would like. that means that we are in trouble, and it is not just the bilateral relations that will sour, but it will have

implications for everybody in asia and europe. if the tension continues to last, there is risk the u.s.-china paradigm, and china going elsewhere, mainly europe. where do we see that happening in the e.u.? : the china is in fact, already reaching out actively to the european union. we've had a number of very high-level delegations coming to ,russels, berlin, and so on trying to reach out and saying -- don't you agree with us that 's trade president behavior is unacceptable? mostich, i guess, europeans would say yes, it is not the right approach. they basically say, let us do something together. to which most europeans would

say, well, we have a substantive problem with your corporate culture, your state owned enterprises, and the involvement of the chinese state in really buying strategic technologies abroad. so we do have our concerns as it europeans as well, and that makes it difficult for europe to embrace china. in the end, we are much aligned with the u.s. on the substantive economic issues. ramy: how much of an appetite, or how much is the e.u. willing to accept china's overtures, until there is some kind of push back? telling myat i am chinese interlocutors, is that relativecontinues aggressive stance, in terms of buying technology companies in it europe, doing that with generous subsidies, they will

very quickly -- there will very quickly be political backlash. citizens will start to ask questions. yes, it is far away from where we are in the u.s., where china --clearly among i didn't among the general population, identified as a global enemy, almost. that is not the same in europe. there is still a positive view on china, but increasingly, there are negative reports on -- i don't know, when they robotics kooka, was bought, people are asking questions, and these questions are increasing. haidi: i am wondering how the tension plays out at the g20. you point out, you may not agree with president trump's methodology, but certainly, a lot of these issues on

immigration, anti-globalization and protectionism, are playing out in europe, here in australia, and in the u.k.. guntram: yes, i think indeed, it a strange g20 summit, in the sense that we have a number of new faces, also with the new brazilian president, jair balsonaro, having his people there. so i think the atmosphere over all, i guess, is changing toward on -- less us say favorable on globalization. the bright spot is still that theresa may is going to plead for a global britain, that it will be open for trade, and the au as an institution, will multilateralupport global trading systems, rules-based global trade.

so i think at the end of the day, the u.k., the e.u., and perhaps a number of asian economies, who will be there continuing to sort out a multilateral system. guys, china and the u.s., will be looked upon with much more suspicion than before. haidi: thank you so much, guntram wolff. we appreciate your time. lots more coming up ahead here on daybreak: asia." this is bloomberg. ♪

ramy: as an seo in new york. --di: i'm haidi star barney. haidi stroud-watts a. what are you watching? rishaad: the bank of korea decision should be out any second. at g20, their arrivals, the president coming in 10 minutes from now. theresa may and shinzo abe, angela merkel, few claim she will be late for the summit. the cio is taking a look at what the g20 could accomplish. clyde mcdonald joining us closely after that. ♪

♪ rishaad: quiet day out there, but bits of data out. awaiting decisions and buenos aires. trump castingnt doubt on a trade deal, president trump happy with the way things stand at the moment. ramy: carmaking by committee. the mitsubishi alliance led by 3do's. rishaad: this is the china