>> will come to daybreak australia. i'm sophie kamaruddin hong kong. we are counting down to asia's major market open. paul: here are the top stories. optimism in the air as we enter a new week. the u.s. and china agreed to tone down rhetoric and put new tariffs on hold. moscow and riyadh agreed to -- marriott launches an urgent

investigation after hackers compromise the details of half a billion. shery: let's get started with a quick check of the markets closed. we saw stocks rallying on optimism over trade tensions easing. the dow and nasdaq up. -- the s&p 500 saw its biggest weekly gain since 2011, although energy producers were down. that, take a look at the prices. we have heard from saudi arabia and russia that they could be extending production cuts into next year. we will see how all that is dealt with in the energy markets going forward into the week. sophie: we have quite a bit to start off the session. potentially the first trading day of december. some relief on the back of that trade truths. we have some caution in the air.

analysts say most of the outcome from the trump xi meeting was priced in and more volatility could happen. today not much that could drive it sentiment other than chinese pmi data. due out thisding morning as well as inflation figures from thailand and indonesia. australia, building approvals for october. currency markets, we are seeing early markets -- early action. towardsie dollar rising the 74 handle. offshore yuan is back below 690 against the dollar with the yen faltering. that could weigh on treasury. we could see that drop we have been seeing in yields driven by will backup expectations for fed rate hikes. that would see the 10 year yields drop below 3%. we will see whether that

sentiment can be continued this monday. paul: let's get the first word news now with an about. -- >> theresa may is facing a vote to bring down her government should the house of government reject her brexit deal next week. the u.k. would be on course for an early general election with the eu saying the only options are the deal on the table or canceling brexit altogether. the eu is turning up the heat on italy, demanding the cup -- the government lower its deficit target to below 2%. brussels wants spending cuts of at least $5 billion to avoid potential sanctions for breaching eu budget rules. the italian government will debate the proposed budget on wednesday. marriott's is a four year long data breach that exposed

information of up to 500 million guests did not affect its own branded chains. the company says hackers stole data linked to hotels before it was acquired by marriott and 2016. they include w, sheraton, westin, and the meridian. experts say it is rare that a hack would last so long. macau bounced back in november after months of weakness. 8.5%h gaming revenue rose to $3 billion from a year earlier. more than twice what was forecast. the result is the 28th consecutive month of expansion. november was the third month in a row of single-digit growth, with september and october the weakest in more than two years. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. the aussie dollar is

higher, the yen weaker. this is with presidents trump and xi putting the trade war escalation on hold. bring in our reporter who has been covering the meetings. what led to this agreement? well, clearly president trump and president xi found dinnerground at that saturday night here in buenos aires. we can talk about a couple details. they are very important. lastease-fire, as it were, until the end of february. the united states has agreed not to raise tariffs on $200 billion of chinese goods. they were set to go up 25% on january 1. instead they will remain at 10%. in exchange, this is the big deal, the chinese have agreed to a number of things. agreed to start

buying more american agricultural and industrial goods. they have agreed to take action on fentanyl, the high-powered opiate which has been the source of so many crises and heartbreaking situations in the united states and elsewhere. but most importantly, paul, tona now has 90 days demonstrate that it is willing showow would i put it, to some progress on the trump administration's biggest beefs. what are those? not just the trade imbalance, systematic theft of intellectual property, subsidies on state owned enterprises, and espionage. 90 days. it sounds like a long time but it is a lot for the chinese to demonstrate in short order. shery: good enough for president trump to demonstrate a win for his country, when as you mentioned, there is still

structural reform that needs to be addressed. victoryu can call it a because president trump more or less. to do everything on his own terms. he got to cancel the meeting with vladimir putin. he is the one who forced, or at least is a ministration is the ones who forced the chinese to make these concessions, if you will. excuse me, we have some fluff happening here. one wholly, he is the was able to persuade, or at g20 in his the communique to allow the trump administration's policies to show through. he forces them to back down on the wto. he forced them to back down on multilateralism and ditch the mention of professionalism, which had been in communique is previously. you could argue that the only

thing that trump did not get to do that he wanted to do is have a bilateral meeting with mohammad bin salman on saudi arabia. of course that would have been optically too bad. on every other front it looks like victory for donald trump. shery: thank you so much for that, erik. on the sidelines of the g20 meeting, russian and saudi arabia leaders also spoke about the future of oil. both countries agreed to extend production cuts into 2019, providing some optimism to support higher prices. ramy inocencio has the details on this. a key question is, can they get to specifics of this agreement when they meet in vienna? ramy: we only have about a week left for that. that is also a very big order in just the next seven days or so. what we do know now is the term rebalancing is floating in between russian president vladimir putin as well as mbs of

saudi arabia. and they did make that memorable handshake over at g20. talking about possibly doing something here, but in terms of opec delegates they already gave their blessing. now just has to be seen what will actually happen. but vladimir putin came out with a statement saying we are going to do this, but there has to be some details that we have to figure out. he said there is no final decision on volumes, but together with saudi arabia hand-in-hand he will do it. whatever the number, it will be based on a joint decision. we will monitor the market situation and react to it quickly. the fed is independent of russia as well as saudi arabia. hopping into the bloomberg terminal, there is a lot at stake in terms of the oil price. they do not want this to go much lower, but look any gtv library. in november, it had the worst monthly fall ever since 2008.

of course we know what happened back then, when oil fell even worse. they will try to be pushing this higher. ever since september it fell about 30%. let me flip up the chart. and we can see that saudi arabia, russia and the united states, they are the biggest oil producers in the world right now. u.s. and russia here in the yellow and blue, are having the biggest monthly output. the next question is how much will he cut, starting when, and for how long. opec as leaders from prepare for the meeting in the this week, what are people saying in terms of the cuts needed or expected from russia and saudi arabia? ramy: according to an advisory group that has been talking to opec delegates, they need about 1.3 million barrels a day to be cut in order to get the markets so-called rebalanced. we will have to see what happens

in the next week, if they can get to that. when it comes to russia at least one analyst says 200,000 barrels they might be able to see to. still, 1.1 million barrels still have to come from someplace. i want to show you in terms of what is happening on oil price optimism, if we can bring that up, have written over in the hong kong that would be great, i don't have it here. i will talk to it if you do not have it. the biggest tracking of the oil price got its biggest inflows ever since june2017. the fact that happened is there is a lot of investor optimism saying oil has it a bottom. you can see it on the right hand of your screen. optimism were confidence that possibly it might rebound, looking ahead to the next seven days when we see delegates from opec get together to iron out some of those details. ramy, thank you for

joining us with that update on the oil markets. still to come we're going to look at the 2019 outlook for australian housing with hsbc's chief economist. shery: and more on the g20 trade compromises. this is bloomberg. ♪

paul: i'm paul allen in sydney. shery: you're watching daybreak australia. g20 leaders appear to have agreed to reform the wto in a statement that the white house quickly claimed as a win for president trump's protectionist agenda. joining us now is senior vice president michael. he is also former u.s. ambassador to vietnam. it is great to have you with us. how big of a win was this for president trump?

i think i would have to say it may be a little early to call it a win. i think it was pretty much as predicted with the chinese coming in and coming out with no additional tariffs raised with them. and the president coming in and getting at least some promises, at any rate, of action on the part of the chinese. the proof of the putting will be what happens going forward. shery: exactly. we still done have any basis for an agreement when it comes to reform, fundamental reforms for the chinese government. whether it is on intellectual property, or forced technology transfers. what could that basis be? how could they build on something going forward? think they have several ways they can begin to work on this. aere are several cases before chinese court which could be adjudicated more quickly. there is of course the merger with qualcomm that is still on the table. and there is the reform of the

wto, which was agreed to in the g20, but which also, not only the u.s., but some in the eu as well have been pushing for going forward. there are several different fronts upon which they could move. the first thing will have to be the quote, unquote be significant buys the chinese will have to do in order to try to help make a dent in the deficit. frankly i do not think we will see a big trade -- dent in the trade deficit. i think we have a case year of same bed, different dreams. in the white house statement you saw that china has agreed to do significant buys in terms of energy and in terms of other technologies in the united states. but when you have him talking to foreign leaders later on at the g20, he said china would be prepared to make buys according

to its needs and deal with legitimate trade disputes in the course of its reform. so, a little bit more of a chinese spin on what the white house thought they got at this meeting. i think both sides have put their spin on the thing and be will have to wait until they sit down and actually do the talks. three months is going to really be a short time in order to get anything out of here. one of the first things it would have to do is they will have to decide on which issues will be done quickly, which issues will take more time, and which issues they will have to admit are going to not be able to be resolved in three months. unfortunately i would put some of the structural reforms into that basket. paul: what can be achieved in three months? should we already be thinking about a possible extension to this 90 day moratorium? michael: gosh, i hope not.

that is the one thing i think this administration is not going to want. because if you think about it, we have seen this movie before. we started with the wto negotiations under clinton. i actually participated in some of those negotiations with china. then we had the structural reform dialogue. that we have the strategic and economic dialogue, under which all of these scenarios, it was high-level delegations from both sides getting together and trying to address some of these intractable problems. what exactly can be done in the short-term, as i said, i think there are some things that can be done in terms of tightening up some of the intellectual property laws, some of these things that can be done in terms of looking at the way in which we adjudicate forced technology transfer, and the way in which

american companies are expected to join into joint ventures. with chinese companies. some of those things can probably be don't with in the beginning. most importantly if you see some big buys, big long-term contracts and energy, in agriculture, that will go a long way towards diffusing some of the tensions. and if we have to come to an extension at the end of the three months, making some wins in those areas first will help to ease the way to getting an extension. paul: just looking at the g20 more broadly, the other 19 member nations get pushed around by the u.s., because there was no agreement out of apec for the first time ever. this time we have an omission of the word protectionism, this commitment to reform the wto. some comments from the russians sain just getting the communique was a success. was it all a bit watery? i think well, i guess,

you said it right there at the end. it is kind of telling that the bigs assessed for the g20 in this meeting was actually having an agreement. having said that, i think the climate change section of the agreement actually showed, again, it was one versus 20. in terms of multilateralism, while you did not get the normal dedication to preserving and pushing forward with a multilateral agenda, at least you got the fact that multilateralism has helped the economic development of all nations of the world going forward. on the other hand, china also got its pet fees taken care of in that no one talked about unfair trade practices in the key make a either. i think that on ballast, the argent -- in the communique, either. i think on balance, it was better than no agreement.

doing the g20 agreement along with the truce that happened in the trade between china and the u.s., overall, i think the g20 can say, well, second-best is better than nothing. shery: just quickly, we have about 30 seconds, you are ambassador to vietnam, a country people have said could benefit from a trade war between china and the u.s. how will this likely play out for southeast asian countries? michael: we are already seeing countries -- we are chinese and americans and others coming into vietnam and trying to explore the possibility of setting up factories and shifting their supply chains to vietnam. yeah, the non-is already seeming to benefit a little from this whole thing. effect, igoes into think you'll see that opens up a lot more doors for supply chains that go into vietnam would not

only have access to the united -free, butt is tariffs also access to japan and other markets in southeast asia by virtue of the other fta's. has a lotat vietnam of the basic factors necessary and looks good going forward. shery: mr. ambassador, thank you so much. backxt, washington pushing a government funding deadline as lawmakers prepared to honor former president george h.w. bush. this is bloomberg. ♪ this is bloomberg. ♪

shery: welcome back. i'm shery ahn in new york. paul: i'm paul allen in sydney. let's get a quick check of the latest business flash headlines. china says it would consider improving -- approving qualcomm's bid if it is -- agreement of a wider

signed by president xi and tgrump -- trump. chinese regulators declined to clear the deal, although beijing later expressed regrets over the collapse. shery: they are said to be cutting jobs in key markets as part of a drive to reduce costs. as many as 100 positions could be involved in dubai alone, including some senior roles. the ceo launched a campaign to reignite growth at stanchart. trump says he is open to pushing back a u.s. government funding deadline to avert a partial shutdown as washington prepares to honor former president george h.w. bush. we are joined from rdc bureau it more.

i believe this deadline was december 7. can they actually delay this deadline? >> in washington we love extending deadlines on budgets and shutdowns and anything else. definitely between president donald trump and congress, an agreement can be struck to have an extension on the budget, as you say. some agencies would lose funding. not that many compared with a lot of other previous shutdowns, but the department of homeland security is one of them, the irs is another one. hs, thatase of chs, -- d is kind of a big deal. you might say, well, why do we need a two week extension based on one day of mourning for president bush? i think this is somewhat of a grace note by trump, maybe

throwing an olive branch to congress in terms of really wanted to do the right thing at a time of national mourning. former fbi director james comey is set to give closed-door testimony to congress on friday. what can we expect there? ros: it is very interesting. itey wanted to be in public, will be behind closed doors but a transcript will be released, hopefully within the day. a lot of focus will be on the fbi's treatment of hillary clinton and her emails in 2016. we love talking about that. and about the robert mueller fbi investigation into russia and trump's campaign and any connection between the two. so, it could be fireworks, at least behind closed doors. and sometime over next weekend we should find out what comey said. paul: all right.

ros from washington dc, thank you. still to come, we will be looking at what investors will be focused on through this trading week and how markets will react to the trade truce. this is bloomberg. ♪ ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

9:30 a.m. in sydney, markets opening in 30 minutes higher,tures a little .4% right now. i am paul allen in sydney. shery: i am shery ahn. you are watching daybreak australia. let's get to first word news with annabel. reporter: asian stocks are set to gain with the u.n. and the aussie dollar on the back of a pledge by the u.s. and china to tone down trade war rhetoric. andpresident trump president xi met at the g20. washington had been set to raise duties on $200 billion of imports through january 1 with the white house debating whether

to tax all goods from china. mr. trump: i look forward to the discussion from china, but the relationship is very special that i have with resident shane -- president xi, and it will be a primary reason why we will get this, get something that will be good for china and for the united states. russia and saudi arabia have yet to confirm new oil curbs after agreeing to extend the deal into next year. president putin announced the opec expansion -- the extension after meeting with the prince at the g20. the president said he is optimistic the alliance will reach an agreement on production cuts when they meet in vienna. the israeli prime minister benjamin netanyahu is facing corruption accusations with police recommending he stand trial for alleged bribery in a third case. investigators have more evidence he traded influence for favors, something he denies.

lies withon to indict the israeli attorney general who haven't ruled on other cases against him. spacex intends to go ahead with the 18th launch of the year monday, having postponed lift off for the weekend. it is not clear what forced the delay announced by tweet midnight saturday. satellites into orbit to scan the globe for pirates targeting shipping. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm annabel, this is bloomberg. shery: we have more positive developments on the trade front, on top of u.s. stocks gaining ground. we will see how this affects markets in asia. sophie kamaruddin in hong kong with another check on the markets. futures looking green at the moment. optimisme are seeing

potentially for asian stocks, but there might be muted enthusiasm with korea because we got korean export growth coming in slower than expected, rising 4.5% for the month of november. shipments to china fell 2.5% as companies grab more market share, just a little bit of .otential dent in enthusiasm overall seeing potential across the screen for asian stocks. companies to watch when it comes to reaction in share prices, chip players could move as president xi jinping says he this qualcomm deal as it is brought to him again. in sydney we are watching this company after it received a $1.8 billion takeover offer with an asset price of a 4% premium. as the december 13 deadline for regulators to decide on the vodafone merger is on the horizon.

arel media reporting they seeking $5 billion australian to finance, so watch for reaction to that development. ,aul: thank you for that sophie. let's see what we should be watching as trading gets underway in asia with our global markets editor, adam haigh. seeing pronounced moves, clearly on the back of this trade truce. is it sustainable? adam: there is short-term relief. if you are a traitor coming in to work, there is a deep sigh of relief in the fact we got through the g20 meeting and got some kind of framework we can work on. that is really what has been holding able back the last few weeks is people have try to assess global growth outlook for 2019, how much of an impact the war will have. but this morning some of the moves are pronounced, the aussie dollar has been up 1%. we have seen increasing gains

across the emerging-market fx spaces. south african rand, mexican peso falling well. looks like to feed into the asian fx spaces. interesting the yen is it coming off too much greeted you would have thought with a of haven demand it would have weekend -- been weakening, but it will be interesting to see how treasuries open when you get any pronounced move in bonds in that space. clearly this is a broadly positive move for risk assets. those people have been positioned for a favorable outcome, happy with what has happened over the weekend. longer-term it is a far more complicated picture. the other side is the -- is this dovish tilt. shery: taking into account those elements, the trade war tensions easing and the dovish fed, how will they impact the assessments going into 2019?

adam: one of the worries for next year, a few weeks ago was you would have this increasingly tight u.s. monetary policy and hawkish position from the fed that was going to go three times or so in 2019. that has changed in the markets, you have a pronounced move in havey markets and bonds led the move over the last few weeks with the 10 year yield back down to just under 3% and people talking about the potential for maybe 25 basis points of fed hiking. what has happened over the weekend in terms of how it pertains for the global growth outlook does support a broadly incrementally positive view on risk assets. people have dialed down 2019tations for returns in

may at the margin looking for them to be notched up. this is kind of kicking the can further down the road in terms of where the terrorists might be might be.iffs we haven't had an all-out removal of the trade war scenario in how returns will look. it certainly is helping sentiment on that side, and the more dovish tones we are getting from the fed. both of those working together could give more to the emerging markets rally we have seen of late. that is really what has captivated the moves, and that have a good run-up further into the last month of this year and set up a reasonably good position in 2019 with very discounted valuations you are finding in many emerging markets, not just equities but also bond markets looking like that might be a decent place to be. let the investors have

santa claus rallies. but -- adam haigh. you can find his charts on the gtv library on the bloomberg. let's continue discussing the u.s. markets because they are poised to react to the temporary halt on new tariffs which comes with the s&p 500 starting to rebound. it gained 5% last week and is near its 18 midpoint. will the trade truce spur greater gains? su keenan joining us with more of what to expect. we saw strategies downplaying the potential of a deal last week. some really looking forward to see what futures will do in half an hour. on we saw the market rebound expectations this would happen. this could be the second half of the reaction. let's go into the first chart. it was the biggest weekly advance since 2011. it was on a positive trade outlook that the can would be

kicked down the road. it has been. what we saw was tech rally. we saw oil futures down, energy was lower. it will be interesting because the full reaction will not really be seen until the opening bell. let's go into the sox most likely to move, most impacted by the trade truce. alcoa mentioned in its latest earnings it would see a terrific negative impact because of the tariffs. it started a rally friday. there will be more follow-through. we heard about emerging markets set to react or this is the etf that is popularly traded, down friday. kimberly-clark has exposure internationally. apple could be impacted by this. that will play out monday. we had more earnings to be reported, a number of companies set to report. here you have homebuilders,

apparel, hewlett-packard and more against amazon coming up with earnings. this could add to positive news to help lift the market. let's go into the bloomberg. we ended november on the right-hand side with a mark on the positive side. we ended the month up after october, the second worst drop in a decade. can the gains, if we see them monday, be sustainable? that will be the question by the end of tomorrow's trading. some of the individual spots like we to be in the spotlight, marriott hotels going to be one of them, now the center of a major hacking incident. dataalf a billion guests' was breached in this event. the company is saying it could go back to 2014. marriott, one of the largest chains in the world. we are told the data from their extensive,s fairly

phone numbers, credit cards. take a look at the history of the breaching events and what it shows, strategists are saying u.s. companies, major firms, still vulnerable to such attacks. how investors will react, unclear because it is something many investors have started to accept, that companies are being breached, but this is the second largest on record next to the major attack on yahoo! a couple of years ago that involved billions of customers' data. paul: thank you for that. just ahead on bloomberg daybreak panic growing over the aussie housing sector. we will get the outlook from hsbc chief economist paul blocks and. this is bloomberg. ♪ berg. ♪

shery: welcome back.

i'm shery ahn in new york. paul: i am paul allen in sydney. we are waiting for new numbers on the australian real estate market later monday morning. we will have october building approvals, and they are expected to show a contraction from the previous month. aussie property has been attracting bears likely -- lately. we have this man among those. he is warning about what used to be the hottest of hottest housing markets. thank you. to paraphrase, when you talked about the australian recession, the housing correction -- >> in some ways it is, and the timing is quite helpful because the rest of the economy is doing well. the unemployment rate is at a 6.5 year low. gdp at a high. a correction, now is really the time for that to happen. because the labor market is holding up well, people have jobs, interest rates are low,

you are seeing the correction happening in a fairly orderly fashion. it is not distressed sales driving the decline. it is not that interest rates have risen. there is a correction going on. and it is when the economy is doing well. paul: what is the risk of this becoming disorderly? you can still see a lot of cranes, apartments going up, a lot of supply still to come. what are the risks things could begin to spiral sharply? >> the risks are quite low. the fundamental thing that supports the housing market and people servicing debt is where they have jobs or not. we think there is a fair bit of momentum, not being driven by the housing story alone but a range of different factors including a ramp-up in infrastructure investment, driving the cranes. it is not just residential construction. the economy is getting support from a better commodity, iron ore and coal prices.

it is starting in china. while the growth story holds up, the direction can happen without having too much of a bigger effect on the broader economy, but it is a risk. you mentioned china. australia relies heavily on what happens in domestic demand from china. would your optimism translate to optimism over what is happening in the chinese economy? >> this is the fundamental point you raise. australia is tied into china's domestic demand story rather than being a big conservator to the manufactured export, supply chain. we are more dependent on domestic demand in china and australia is a big exporter of iron ore, coal, natural gas and base metals. those have held up well. they are up a long way since the early low point in 2016. increasingly australia is a big .mporter of services

education is our third-largest export behind coal and iron ore. we are very much therefore tied into rising middle incomes in china and demand for services. shery: how with -- how much will the trade tensions easing between the u.s. and china boost commodities? they are closely tied to the australian economy. >> what we have seen overnight is a helpful development from a global growth perspective and for australia. we are tied into the global ,rade economy, medium-sized dependent on the global scene. you have seen it reflected in the higher aussie dollar, the markets responding to the fact things look like they have stabilized for the moment. australia,ortant for something supporting the growth story. australia has already got growth , running at a six-year high. we have more gdp figures, we think that growth rate will continue into that time. we have --

paul: we have gdp later this week and the final rba's vision of the year. some say no rate increase until 2020. you used to sit on the board. >> i used to work at the rba. my view is in line with their stated view, that it is more likely the next move will be up than down. there is a hike coming at some point in time to we have it rather thanfor 2019 2020, but the bottom line is what we should be watching is what is happening in the labor market. the unemployment rate is sitting at 6.5 year low, 5% at the moment, starting to put upward pressure on wages growth. does that growth continue to gain momentum? does it lift through inflation? the target of inflation more than house prices, that is where the debate is, the housing market is cooling, can the rba consider lifting rates?

it is about the outlook for the broader economy rather than the housing market itself. across the tasmanian see, new zealand seeing rises coming off as well partly due to the theory that american investors are no longer interested in ensuring themselves against the zombie apocalypse. this has to do with the crackdown on who can buy houses. >> there are a range of things going on. the aussie and new zealand market are calling up that the major cities are calling. it is not a local phenomenon. settingst is tighter in new zealand and the pullback in foreign demand. there are changes in the rules as form -- far as foreigners access to the market. the market overall isn't showing price decline. it is falling in a more steadfast fashion than australia. there,e will leave it thank you for joining us. hsb australia economist paul. thank you.

after presidents trump and i 's cease-fire,xi we will take a look at what it will mean. this is bloomberg. ♪ mean. this is bloomberg. ♪

shery: i am shery ahn in new york. paul: i am paul allen. let's get a quick check of the business flash headlines. graincorp is engaging with a takeover bid from long-term asset partners, valuing at $1.8 -- $1.8 billion u.s.. shares have been trading around the two-year lows. the australian government rejected a takeover offer from midland, being against the national interest. the deutsche bank boss doesn't expect to be personally targeted in a money laundering inquiry in germany.

raided several headquarter offices last week. the investigation touches the private wealth unit overseen by the man before he became ceo. but he said the bank conducted its own inquiry and considers the matter closed. vietnam airlines is pushing ahead with plans for an ipo in the new year. financial times says they plan to offer on the ho chi minh stock exchange in the first quarter, but the final decision will be made by the government in hanoi. they originally saw them aiming to counter the market in the middle of 2019. tory: takeda pharmaceutical hold a news conference in a final attempt to convince investors to abandon the $1 billion takeover of scheier. they say for my members and shareholders want to derail what

would be the biggest ever international takeover by a japanese company. investors will be asked to approve the deal wednesday. china have agreed to tone down trade rhetoric, but it is only temporary with a natural deal still a long way off. how might this affect policy decisions at the fed? our editor kathleen hays is here to connect the dots. how concern has the fed been about this of trade war? kathleen: the federal reserve has been watching and commented, but the longer it lasts and the more shares get thrown back and forth, the more concerned they have been. when i asked myself this question i thought, let's go back through the minutes and see what things came up. there was a dozen references in 10 pages of minutes of the things like trade policy boosting uncertainty.

in other words, the sense it is getting worse. trade tensions obviously weighing on global stock market , andment, in their minutes the slowdown of business investment, they have been scratching their head, they list tariffs as one of the reasons this is happening. these trade policies could lead to significant negatives. they said all of this could end up slowing growth more than expected. it is true any interview where a fed bank resident is asked about trade, they talk about maybe no damage yet, but the business as we speak to in our districts are not just talking about uncertainty but holding back on investments. there is very little sign of actual damage to the overall u.s. economy, even when you look at the monthly trade reports because the tariffs are relatively new. in terms of what it means for the fed, you have to say at least if this truce leads to a

deal, it means one potential negative for the fed is eliminated. it will not change the course of policy but in terms of what they are expecting to do, it could eliminate something on that path and force it to slow down and be dovish. last week we have a big moment for fed messaging and reaction as well area we have testimony this week from jay powell. what is at stake? kathleen: he is testifying to the joint economic committee of congress. both parties are represented, much smaller than when you see him or the fed chairs speaking at the humphrey hawkins testimony. this group is pretty knowledgeable and very much focused on the economy and fed policy. that is important. and this is going to follow jay powell's comment last week when he said the key rate is below neutral. it is something that will get a lot of play. let's listen to it again.

>> interest rates are still low by historical standards and remain just below the range of estimates of that level that would be neutral for the economy that is neither perceived -- neither speeding up or slowing down growth. kathleen: people wonder what this means, rocket the stock market, was it intentional? is he signaling more caution, or was he correcting a mistake that when he said the fed was far away from neutral? your economic reports in the making, manufacturing, jobs, all of this will set a lot of signals to the fed. but jay powell's testimony has to be one of the biggest events of the week. thank you for that. that is a must it for daybreak australia. we have trading in new zealand underway, showing a pop at the moment up .4%. we have the asx futures pointing higher, sherry.

shery: all of this on the back of u.s. markets, higher on easing trade tensions between china and the u.s., the aussie dollar up .8%. plenty more coming up. ♪

paul: good morning, i am paul allen in sydney where australian markets have opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. paul: our top stories, optimism in the air as we enter a new agreedhe u.s. and china to tone down the rhetoric and put new tariffs on hold. moscow and react will manage the oil market -- riyadh will manage to the oil markets, meeting