>> good morning. i'm paul in sydney where australia markets have just opened for trade. >> good evening from bloomberg's global headquarters in new york. >> and i'm in hong kong. welcome to day break flverage asia. -- "daybreak: asia." >> our top stories this tuesday, u.s. markets maintain the trade truce rally. the s&p and the dow both rising. more than 1%. the dollar weakens again. the optimism extends to oil with crude surging the most in the five months and bouncing back from its worst monthly oss in a decade.

auto stocks are among the winners. exporters are looking at a big potential payday. >> let's get started with breaking news out of south korea. we are getting the final figures for third quarter g.d.p. coming in, a growth of .6% on quarter on quarter. on quarter. that was in line with estimates and also pretty flat from the second quarter where growth was also .6%. year on year there has been a slowdown to 2%. remember, this is the final figure. still a slowdown from second quarter growth of 2.8% that we saw a year on year. so a bit of a slowdown for g.d.p. growth for the third quarter. final numbers, growth of 2%. and we're also getting some s.p.i. numbers -- c.p.i. numbers. paul: yeah, the c.p.i. numbers

a little bit of a miss there. weaker by .7%. the expectation was for weakening but only by .6%. gives us a year on year figure of 2%. which does remain in line with the estimates. not a huge surprise, though. those easing oil prices we saw over that period, plus 15% reduction in fuel from the government were expected to drag on inflation. the monthly figure of .7% contraction a little more than expected. >> the b.o.k. still keeping its inflation projection for the whole of 2018 at 1.6%. of course the key will be what happens to not only inflation figures but also g.d.p. growth as we see those multiple headwinds for the south korean economy, including a very weak labor market. weak investments as well. not to mention some external demand challenges given that we're seeing some trade tensions between the u.s. and china. however, with some stalling there and a trade truce we could see upside for d.d.p. growth. in other economy -- g.d.p.

growth. in other economies, of course, the bank of korea, though, still expected to raise their policy rate by 25 basis points at the end of this month. let's get more on that rallying in u.s. stocks. the majors posting a second day of gains. oil surging. one part of the yield curve, the three-year treasury yield moving above the five-year for the first time since -- in a decade. let's bring in sue with more on this. we saw the treasury rally earlier in the session. although we don't keep a close eye on these spreads, still we have seen this huge movement. >> yeah. what it does is it tends to signal the fed, that the market believes we're coming to the end of the tightening cycle. that is significant. let's look at the snapshot the way the market closed. real important. you're going to see that big gain in oil. gold also caught a bit of a

big, although we're seeing it trend down. into some of the big movers. what we saw here was a major a e which is being bought, multibillion-dollar buyout. halliburton and many of the oil companies moving higher with the gains we saw. oil advanced, microdevices showing the huge jumps in the chip sector. pepsi could he and coke also were lower. for similar and related reasons. let's also take a look at the bloomberg. et's go into g-tv.

one of the biggest funds out there noting that it's cutting back about 125 people, this according to those close to the matter. that after they erased about $4 billion in assets between client withdrawals and losses. let's go take a look at oil real quick. because this is what we saw a lot of action in the market. showing there was a risk-off tone to the market. oil jumping the most since june. at one point closing with am -- with an almost 4% gain on the day. paul: thanks very much for that

update. let's see how things are haping up for asian markets. sophie: asian stocks at $325 billion in market value, we're setting up for a muted session this tuesday. you have stocks in sydney resuming declining, off by .2% after the best session since november 10. we are seeing gains for stocks in new ellington. cornell's university notes, once the after-glow of the trump-xi dinner meeting fades, fades, ill set reality will set in fairly quickly, especially as global growth concerns remain. we're seeing that with korea's latest read on g.d.p. we get more signals of weaker export performance. hyundai motor and kia motors noted a drop in sales. now on the agenda today, later this hour, we'll get the update on japanese monetary based. at 8:30 a.m. hong kong time,

australia expected to post a narrowing in the deficit that comes before the r.b.a.'s policy decision. the last one for 2018, no surprise expected there. ozzie bonds rising ahead of that -- aussie bonds rising head of that decision. a quick check now on the offshore unionan -- yuan which is holding onto its latest gains. we're we're seeing it trek toward 687. it rose over 1% overnight. the biggest gain in over three months. the volume almost doubled and volatility fell across the curve. commerce bank expecting yuan stability over this 90-day trade truce period. as depreciation may be interpreted as china attempting to derail negotiations with the u.s. shery: still to come, thank you so much for that, with the latest on the markets. let's go now to news with jessica. reporter: thanks. opec is losing qatar as a

member. that's as geopolitics finally ruptures a cartel that held together for decades, through war, sanctions and price swings. qatar has been a member of the group since 1961. it will leave next month to focus on gas. the decision comes about 18 months after the saudi-led diplomatic and economic isolation of the country. indicates doha believes it can stand on its own. iran is warning that oil could slump to $40 unless opec and its allies impose significant production curbs. tehran says output needs to be reduced by 1.4 million barrels a day to cut oversupply and it fears the cartel may not be able to reach agreement when it meets in vienna later this week. iran is a founding member of opec and will not participate cuts while under u.s. sanctions. japan's newspaper says tokyo prosecutors plan to re-arrest former nissan motor chairman, and representative director

greg kelly. the re-arrests will happen on december 10. meaning the former executives will remain in custody. ghosn is accused of understating his number by about $35 million over the last three years. global news 24 hours a day on ir and on twitter. this is bloomberg. shery: thank you. now we'll focus on the trade war and signs that the u.s. and china may be edging towards some kind of a deal. here's treasury secretary steven mnuchin. >> there is an immediate focus on reducing auto tar of is. as i've -- tariffs. as i mentioned there's a lot of a lot of done work to be done over the next 90 days but one of the specific issues we talked about was a significant increase in industrial proukts, including u.s. autos -- products, including u.s. autos. so big opportunity. shery: now to washington and our bloomberg congress editor joins us now.

despite all of the talk that we've heard from the trump administration, whether it's through tweets or white house statements or secretary mnuchin, we really haven't seen that much of a confirmation coming from the chinese side. should we be worried here? >> that's right. it's not for the first time that the president has left his aides scrambling to explain what he meant in a tweet. late sunday he said that the deal had been reached with china on auto tariffs. treasury secretary mnuchin and his top economic advisor have dialed back expectations somewhat. saying that, well, there's a framework but there are no specifics that they are able to offer. the chinese foreign ministry to comment on any deal ny on auto tariffs, which would have to apply across the board, not just with the u.s. under w.t.o. rules. so there's a lot of details to

be left to be negotiated here as the treasury secretary said. they don't have any specifics, they don't have any timeline. so it is going forward with somewhat ambiguous outcome. there is no joint statement after the u.s.-china meeting at the g-20. so there's no specific commitments on paper. we are yet to see what it is that -- what they'll -- if there are any deadlines associated with that or any levels of tariffs at all. shery: at least this meeting was a first face to face encounter between the leaders in more than a year. how optimistic should we be that at least the discussions are happening? >> the president puts great stock in his personal relationship and ability to negotiate with others. so this is progress in that they are taking -- talking and frankly both sides were probably -- will probably be eager for some sort of deal to unwind this.

but at the same time trump is making a rather broad statements about whether or not he can keep those commitments with what eventually emerges remains to be seen. this has been one thing he's been consistent on is regarding trade with china. there are a lot of other issues besides auto tariffs. many of them subject to some detailed negotiations, if they're going to be resolved. paul: we've also been seeing this morning, washington preparing to lay to rest the body of president george h.w. bush. what is the schedule for the rest of this week? >> there is -- the president will lie in state at the capitol rotunda. through wednesday morning. the capitol's being kept open for members of the public to file in, through 7:00 a.m. wednesday, washington time. rom there, his remains will be taken to the washington

national cathedral for a funeral service that will include president trump, first lady melania trump, and the living former presidents, all in attendance. he'll be eulogized there. and then the casket will be flown back to texas where he'll be buried next to barbara bush, his wife who died, i believe it was back in april. and on the grounds of his presidential library. so there is a full ritual that is well practiced, well rehearsed and has been laid out thoroughly that will be taking place in washington and in texas for this ceremony. paul: all right. congress editor in washington. thanks for joining us. there are signals the federal reserve is backing on a more cautious interest rate path. we have a look at comments from

no less than five fed policymakers. let's start with vice chair. he spoke to bloomberg today. is he getting more dovish? >> that's a good question. we can let the we can let the listeners and viewers of bloomberg decide for themselves. he does make it clear that in the broad sense, the big picture, when he sat down with bloomberg tv and talked about really the way the risk for the economy, and with inflation, that he thinks that the fed and thers have to be wary of disinflation, deflation. he said that actually in recent decades the asymmetry in this has moved toward a disinflation side. think about technology holding down costs and sometimes wages, think of globalization. all kinds of reasons for this. he said that now central banks, including the federal reserve, are definitely focused on avoiding disinflation and he went on to say that he thinks that this is -- goes side by side with the fact when he was asked that he's not too worried

about inflation going above target. let's listen. >> we have an objective around 2%. 2% is not meant to be a ceiling. we've operated below 2%. we could operate somewhat above 2%. >> ok, so he's kind of opened the door to, i'm not going to get too nervous if it goes above 2% a while. other fed officials have said, st for the past two just for the past two months, but following the fed for so long. an expert really in terms of his research on monetary policy and exchange rates. but finally he also said that he thinks the baseline outlook for the economy is very solid. so i think it gets us back to that point, is he dovish? maybe. certainly not hawkish. but really saying, looking at the economy and waiting to see where it goes. shery: four other fed officials also spoke today. anything that stood out? >> let's start with randy. he spoke of council foreign relations and he sporklagely -- largely about financial risks and banking but he's the vice chair for supervision. that's what his job is, above

all. but he also votes on trade policy. asked about the neutral rate, he seemed to agree with others that said, look like we're going et -- looks like we're getting there. let's listen. >> we publish every our meeting our estimates, our projectses -- projections of what we think the neutral rates of interest is and there's a range of that currently. from 2.5% to 3.5%. which is a pretty big range. so we're coming up to the bottom of that range. >> of course that was former fed vice chair allen blinder questioning current board of governors randy quarles. he says incoming data will determine where the fed ends up. an interview with the financial times today, first of all, he declined to say whether or not he is supporting a rate hike. surprising because

everyone thinks surprising beca everyone thinks that's a done deal. he also said the economy by the second half of next year may be reflecting the impact of all these rate hikes. so he seems cautious. i don't know if that's dovish. john williams, president of the new york fed, the board of governors also speaking at a treasury conference in new york. they didn't say anything. one more quickly, though, it's j. powell we want to hear. his testimony on wednesday was canceled. so we're going to see what he thinks. he can provide a lot more clarity now. shery: sure. we'll be looking forward to that. global economics and policy editor, thank you so much for that. still ahead, oil prices jump to the highest in over five months with opec about to lose a member as it gets closer to another supply cut. find out what it means for qatar to leave the cartel. paul: plus, we ask trilogy global advisors how asian stocks are set to react to the positive trade news out of washington. this is bloomberg. ♪

aul: this is "daybreak: asia." shery: emerging market stocks were among those getting a lift from the apparent trade truce between the u.s. and china. the fate of that agreement, as well as fed policy, will be key factors for emerging markets heading into 2019. senior portfolio manager for trilogy global advisor, great you have to in the studio. if you have those two factors, trade tensions, as well as fed policy, which one is more important for emerging markets? stocks or assets going forward into next year? >> we think that trade tensions are going to be more important from this point on. because most of the rate hikes are behind us. that's our view. what's happened today is that exi and trump have initiated -- xi and trump have initiated that process. much like the nafta process, it will be bumpy. but the good news today is we an say that has begun. shery: we don't have a lot of

details about what that trade truce will involve. is that important at this point or is it more about the narrative and the understanding that there could be something that will actually fuel price momentum? >> we've had a lot of negativity being priced into emerging market stocks so we do expect this news to lift further up the stock market. in emerging markets. having said that, these are the two biggest economies in the world and it takes time to actually hammer out a trade agreement that touches intellectual property, tariff, many other things that are important between these two nations. we need to give them time. paul: not a lot of detail. there's also not a lot of clarity in some cases. for example, we have president trump tweeting that china's agreed to remove tariffs on autos, some confusion from president trump's staff and resounding silence from the chinese. do you have to be careful when you trade these tweets from 35,000 feet? >> it's always true and at

moments there's going to be moments of confusion. what the investors need to remember is that emerging markets are trading at 10 1/2 times next year's earnings. earnings growth are going to be 10% this year. we just finished the third quarter earnings season and it was a fantastic earnings season. last year earnings growths were 5%. 25%. nks -- 25%. next year we expect it to be between 15% and 20%. a market growing 15% to 20%, trading at 10 1/2 times earnings, that's compelling. so, yes, there's going to be a lot of conflicting commenting from xi and trump but i think markets from this point on will crawl a wall of worries and that's what our view is. paul: so you're optimistic. are there any particular markets that you're especially bullish about? >> definitely china and india. if you look at the two biggest consumer pools in the world, those are the ones that actually are increasing real wages, consuming being more optimistic. we think and expect a lot of continued earnings growth

fueled by the consumers in both those two markets. shery: showing how e.m. stocks have turned pocius positive and higher against the -- positive and higher. the correlation on the green in the second panel. some concern or actually some optimism that a weaker dollar could turbo charge the strength that we're seeing in emerging markets kwlampletse call for the dollar? markets. what markets. what do you expect for the dollar? >> we've a lot of weak innocence currencies in emerging markets in the last 2 1/2 years. having said that, we don't know if the market's going to be strong, the dollar's going to be stronger or weaker about. we just don't think that's going to be a headwind for emerging earnings. gnggoing back to the valuations, 10 1/2 times earnings, with 20% earnings growth, that's very compelling. you don't need to do -- to have the currencies do much. shery: we have seen the offshore yuan rally on that trade truce. at the same time you have potential more easing coming from china policy support.

will that send the yuan lower or could we see a bit of a rally before we see the weakening happen? >> it's very much it very much depends on how the trade negotiations go. having said, that the current stimulus the chinese are going to engage, tax cuts for the consumer are going to fuel the resumption in continued growth in consumption. and that should bolster the yuan. it depends on the negotiation. some days it's going to be weaker. some days stronger. we don't think the going to be a huge headwind. shery: thank you so much for your time. trilogy portfolio advisor. of course you can get a round-up of the stories you need to know to get your day going. it's available on mobile and you can customize your set sougs only get the news on industries and assets that you care about. this is bloomberg. ♪

latest latest ck of the business/headlines. a loan of almost $4 billion from state-run lender japan bank for international cooperation. wrapping up the refinancing of a bridge loan to buy london-listed scheyer. the loan will help reduce commitments in the $31 billion bridging facility that they enter into in may. the pursuit of scheyer is valued at $62 billion. shery: unilever has agreed to acquire the indian consumer business, including horlic for $3.8 billion. that will boost its presence in the emerging markets. that accounts for about 2/3 of overall revenue. it will use cash and shares of its indian subsidiary to take control of the operation. the two companies fell in london and amsterdam respectively. coming up next, quitting opec. what qatar's big decision says about the future of energy and

the world's largest oil cartel as we see prices now jumping the most since june. this is bloomberg. ♪

paul: it's 10:30 a.m. tuesday morning here in sydney. markets have been trading for about 30 minutes. seeing a bit of weakness right now, the main benchmark off about 2/3 of 1%. the heavyweight financial sector really weighing on things here. shery: yeah. we are seeing futures responding. .2%. a little bit of down side pressure after stocks climbed on that trade truce between the u.s. and china. of course we have seen the dollar weaker. oil gaining ground. not really being sustained right now after hours with s&p 500 futures falling at the moment. 6:30 p.m. here in new york. paul: and i'm paulalen in sydney. you're watching "daybreak" asia

-- "daybreak: asia." >> president trump's advisers have been left scrambling to explain a trade deal he claims he struck with china to lower tariffs on u.s. auto imports. the president announced the breakthrough in a tweet but the white house has offered no details and beijing has yet to comment on any potential tariff changes. the administration did say that china must show a commitment to change its trading practices. >> i will say this. they cannot slow-walk this, stall this, meander this. their words. immediate. so i expect to see confirming results. shery: meanwhile, the world trade drgs -- >> meanwhile the world trade organization has told bloomberg that criticism of its performance is justified and the system must be reformed. the director general says the views of critics such as the united states are fair and will be addressed when he meets members of congress and

treasury secretary mnuchin. he also says it would be a loss all-around if the u.s. were to quit the w.t.o. fed vice chairman richard says he's more concerned about falling short of the central bank's 2% inflation target than running above it. his remarks to bloomberg television add to signals that policymakers are not yet convinced inflation has returned to their long-run objective. however, he says the broader u.s. economy is strong and he welcomes the trade truce with china. >> in terms of the outlook for the u.s. economy, obviously trade's an important part. i don't think we're going there. obviously trade's a very important part of global economy. right now i think the u.s. economy is in good shape. we can talk about risky scenarios. but i think the outlook is very solid. >> meanwhile, australia's governing liberal party has changed its internal rules to avoid a repeat of the

leadership coup that have been seeing the country churn through five prime ministers in 11 years. a 2/3 vote of party lawmakers to trigger a leadership challenge. the opposition labor party adopted similar rules after its own series of leadership changes. and the delivery business. 64 small satellites launched into space. e falcon nine lifted off carrying a booster that's been used twice before. the pay load includes satellites from 34 organizations in 17 countries. the first stage was later successfully landed on a barge at sea. global news 24 hours a day, on air and attic tock on twitter, powered by more than 2,700 journalists and analysted in more than 120 countries -- analysts in more than 120 countries. paul: thank you very much.

let's check in on markets now with sophie in hong kong. sophie: we've had these shares trading so far this morning. the 200 off by .6%, resuming declines with discretionary and energy stocks the biggest lag ards. ahead of the decision at 11:30 a.m. hong kong time we seeing the aussie dollar holding steady while the 10-year note is getting some ground here. we futures also -- we're seeing the spread between the three and 10-year futures, also seeing a move ahead of that r.b.a. decision. so traders, they're going to be watching for a hawkish tone to help keep this aussie rebound checking -- chugging along in light of indicates that are the economy is on more solid footing. let's check in on some movers in sydney. i want to highlight the likes of met cash. falling lot -- metcash. falling to the lowest level in months. the company does see challenges ahead for its supermarket unit and its hardware business expected to face softer new

construction and d.i.y. activity for the rest of the fiscal year. and that broadly softer outlook for construction has been a drag on the wider industry. you have australia's largest cement group also under pressure this morning. sliding to the lowest level in 22 months. giving up all and more of monday's gain which was the best in advance of 2018. the company has confirmed that new c.e.o.'s first day on the job will be january 30. i also want to highlight, we have a stock now under pressure. we do have -- the company announced it is to acquire digital therapeutics company for $225 million. shery: thank you. checking the latest on the markets. now, qatar has rocked the oil world by deciding to quit opec. a six-decade member of the cartel, doha's decided to focus more fully on gas. the move comes as oil surged the most in five months on the extension of output curbs by saudi arabia and russia.

bloomberg's oil reporter is joining us now here with more on this. of course we can't forget the unprecedented supply cuts in canada as well. >> absolutely. so this today in oil trading hours in the u.s., we saw a flurry of headlines hit the terminal. oil traders had to digest a lot of information. they really need to see if opec is going to follow through on its path this week in vienna. a lot of questions still up in the air right now. but w.t.i. did valley on the fact that most do believe that saudi arabia and russia will come together and reach some ort of an agreement. paul: we can't ignore the elephant in the room, though, can we. this says a lot about the politics of the region, -- region, doesn't it? >> absolutely it does. so putin said over the weekend that saudi arabia and russia . ll come together.

but right now there are more questions than answers. sources tell us that they're not quite sure how much each will cut, if they'll cull to -- come to some sort of agreement. in the end, putin has to seal the deal. so russia is the big wild card right now. shery: of course we have big ews out of doha, leaving opec. opec go on bloomberg showing what kind of producer qatar is. really not a big producer in terms of output. they're now saying they want to focus more on natural gas. explain to us a little bit what this would mean for the block. >> absolutely. so they said they do want to focus on gas. but what this really is showing here is that this is the first middle east nation to leave opec. so it's sort of symbolic in that way and it's showing possibly a lack of unity within the cartel. but the rest of the cartel seems to be handling it well. like you pointed out, you know, qatar is a very small producer within opec. only produces less than 2% of

total output. so it's not really going to have that much of a market impact. it's just really more symbolic in the way that they are leaving the group, sort of signaling the ongoing sort of struggles and strife they've had with saudi arabia, causing some conflict and tensions over the last couple of years. shery: do we have any idea at this point what sort of agreement could come out of vienna this week? because we really, as you mentioned earlier, haven't seen a lot of details. >> no, we haven't. in fact, today the joint technical committee of opec, a non-- and nonopec members met, -- non-opec members met, and they didn't say anything on supply. rather tight-lipped. that was a surprise. analysts are telling me, 1.1 million, it may not be enough to really help push up prices. paul: all right. bloomberg oil reporter, jessica summers. thank you for joining us. economic growth in south korea matched expectations in the third quarter while inflation

stayed on target for the second consecutive month. japan and korea economics team leader joins us now from tokyo. brett, so the numbers pretty much what were forecast, right? >> yes, they are pretty much what was forecast but there's stale a lot to think about in those -- still a lot to think about those numbers. economic growth is slowing in korea. it's growing but not in the pace we've seen in recent years. and there's nothing to indicate that that's going to accelerate again any time soon. when we look at those inflation numbers, it is at the central bank's target at 2%, it's been there for two months. but it certainly is very vulnerable to oil. falling oil prices could weigh on the inflation rate. that could complicate things a great deal for central bank. paul: yeah. so what does the central bank do? does it look at doing a one-off ike or wait for more data? >> it certainly will be looking for more data but it has to look at which way the fed is going to go. how many rate hikes do we see

out of the fed next year? that's the big question for the central bank in south korea. we see the gap winding a little bit between rates in the u.s. and korea. and that's always a concern for potential banks in asia. will it lead to capital outflows? so korea will be watching that very carefully and that will be a big question in terms of further rate hikes. and then the weakening economy, whether oil does bring down inflation, that could see rates going the other direction. so i think everything's open at the moment for of korea. but for the next couple of months at least, it's probably going to wait and see, see what happens with the fed and the local economy. shery: we had the weekend showing export growth disappointed in november. really rising much less than expected. so could that change a calculus for them, trade? >> it's certainly possible. trade really is the wild card for korea. exports have underpinned economic growth for a long time. it's one of the real drivers of the economy, with local demand

somewhat weak. it's the truce between china and the u.s. holds, that would be very good news for korea. that could see growth edge up into a little bit better. if it doesn't, then it is in a lot of trouble. china's korea's biggest trading partner. a lot of what korea sells to china then gets put into other products that are then sold to the rest of the world and the u.s.. so the trade war is something that's being watched in seoul with a great deal of interest and it really is the wild card for the economy going forward for next year, i would think. shery: korea and japan economics team leader brett miller. thank you so much for that. coming up next, we're back at the bloomberg global responsible investing forum with tech pioneer investor and philanthropist. this is bloomberg. ♪

paul: this is "daybreak: asia."

shery: let's get a quick check of the latest headlines. morgan stanley says the $11 billion restur structuring plan could cost $25 -- 25,000 staff their jobs, outweighing the cutbacks announced by general motors last week. ford is yet to detail the extent of any job cuts but analysts expects much of the company's turn-around plan to focus on europe and operation morgan stanley values at negative $7 billion. paul: disney is raising the stakes on the enormous potential payout. the board has firmed up the stock return goals the company must exceed for him to receive a block of shares. but also raised his possible jackpot. could he now receive $135 million of disney's stock return beats, at least three quarters of the company, and the s&p 500 over the four years end on december 31, 2021. shery: chicago management is

cutting at least 125 people as losses erased $4 billion. we're told the hedge fund firm eliminated 13 stock teams, about 40 people, and plans to lay off more before the year is out. they started 2018 with $11.3 billion in assets, but expects to enter next year with $7.3 billion. paul: bloomberg has kicked off new york's first ever sustainable finance week. 1,200 investors, business leaders and policymakers are looking for ways to realize good returns from ecofriendly practices. anchoring the week is the bloomberg global responsible investing forum. >> thanks. we've only gone through day one and with me i've got case foundation's c.e.o.. also chairwoman of the national geographic society, which is so near and dear to my heart, ever

since i was a child. you probably get that a lot. >> i do. and near and dear to my heart too. it's a joy to be with you today. >> great stuff. let's really hop into this. responsible investing is the theme for these two days. this whole entire week. when it comes to the case foundation, what's a project that is proof of concept, you say, hey, this works? >> we're really focused on impact investing. investments that provide both a social and financial return. we talk about that, people say, what do you mean? there's a company most of us know that's pretty hot these dafmentse not only are they a hot eye glass brand and a hip company -- >> i have a couple of their glasses. >> ok. but you probably know when you buy one of their glasses, something good happens. they train entrepreneurs in the developing world that make glasses available for low-cost or in some cases free to communities and they give them -- they've given away four million glasses as a result. great example of a company that's a hot brand, hot for investors to jump in if they can, and at the same time doing something really remarkable in

the world. >> good stuff happening here in evidence of all the visionaries, the leaders we've had here at bloomberg's global headquarters today. but there are challenges as well. through the lens of what you might have learned in terms of those challenges or maybe failures if you're able to admit, what is something that investors should know to say, hey, it's not all up and up. >> sure. we like to say it's early days in impact investing. there's tremendous traction and momentum. in fact, the amount of assets going into impact investing doubled in the last year to $228 billion. but probably what investors need to know is that the ecosystem is not complete yet. there's still parts of it that are filling out. when investors rely on for comfort and tools aren't necessarily there in impact investing but there is a growing climate and ecosystem of expertise around impact investing, all the major banks, world class investors have jumped in. so we're seeing very, very early momentum. reporter: how are you positioning your own portfolio

too? >> so of course we have a number of different portfolios in sort of our personal realm. but for me, i have one that i made a decision just a couple years ago to take to 100% impact across all asset classes. and it's been quite a learning process. but it's also been exciting. i've been able to see across asset classes, really great deal floes. i've been able to look at and in many cases jump in. so we're not sure how long it's going to take before i'm fully 100%, but certainly what i am today is values alined. that's the other thing i say to your investors. long before you jump into pure impact investing, know what's in your portfolio, make sure that it's in alignment with your values because that is nothing anyone has to compromise today. and we have to bust the myth that for things to provide social good, you would have to compromise on returns. we have lots of research out there in the markets that demonstrate that's not the case. reporter: right. you don't have to be concession air. that's a -- there's -- concessionary. there's a lot of proof of concept here. for investors watching and

saying this is a new topic for me, responsible investing, and how they align in terms of values, what are some of the value us see people are aligning themselves with right now? >> sure. they really range across the board as many different kinds of investors or values. so what we did at the case foundation is we put out what's called a short guide to impact investing and you can literally just google that and you'll find it or come to the case foundation site. but it's a great primer for someone who has heard about it, that maybe wants to go a little deeper. and figure out how they begin to frame what an impact investing strategy might look like for them. reporter: looking over the past year, year and a half, i know you were in seoul, south korea, last year for this pan asian conference on folks who wanted to get into responsible investing. fast forward to what you just mentioned. you were in paris last weekend? >> i was. reporter: the asia theme still pervades. >> definitely. we're very bullish on where asia is with impacter investing. we've seen a real growth in interest and passion around the topic. so people are starting to jump in. it's interesting, we had

entrepreneurs and investors from really the entire asian region with us in seoul last year. but then in paris what i was so delighted to see was a number of high net worth families and individuals who are just now getting pretty excited and getting ready to deploy their assets into impact investing. reporter: countries, individuals or companies, if you can speak on them, that stand out from asia? >> sure. hong kong, as you might imagine. we watched in japan, of course, their pension fund commit $1 trillion yen to sustainable investing. so many people in japan are watching that. but i'll give you an example. there was a vietnamese entrepreneur, founder of a gaming company, who was with us in asia. after he exited his company, he called and said, look, i really want to deploy this capital in the next stage, in a real meaningful and impactful way. he's looking at opportunities as a young entrepreneur. reporter: looking ahead to tomorrow. the theme is w.m.d.'s. but not weapons of mass destruction. women millennials and

diversity. the good kind of w.m.d.'s here. what is the theme that you think should be pushed ahead in terms of where money or responsible investment funds should be going here? >> sure. i think there's an economic imperative and what i would call an innovation imperative. to focus on these segments that have been left on the sidelines. we have great founders, great ideas out there among women, ople of color, people from different regions. we need to bring them on the field, bring their innovative ideas and companies forward and we need to back these folks. last year in the united states, 90% of venture capital went to men. only 10% to women. 75% went to just three places in the united states. when you expand different regions. that globally, it's even more dramatic. so it's really time to have all the players on the field and all of us championing these new great ideas. roimp that segues into my last question for you. your new book set to be pub accomplished -- published in january. be fearless. what's your favorite theme?

>> be bold. make a big bet. be out there and believe in the art of the possible and take something you passionately believe ined for. so for investors i would -- believe in forward. so for investors i would say, get that globally, engaged. learn. reporter: in the past 25 years, you and your husband have been doing that as well. jean case, thank you very much. shery: thank you so much for that. up next, we'll be talking about argentina's president, reflecting on the g-20 meeting and the ongoing trade disputes in a bloomberg television exclusive. don't miss it. this is bloomberg. ♪

paul: this is "daybreak: asia." i'm paul in sydney. shery: argentinean president macri says the peso is now at a competitive level, that's helping boost exports. he spoke exclusively to bloomberg after hosting what he

called a successful g-20 summit. >> it was a very good meeting. he found a different open attitude to work together. he is in favor of the whole world, no? but understanding that you can't accuse the united states of being a close country. it's the most open economy in the world. what he's asking for is a trade. i think we should keep finding to the die locker the consensus. -- dialogue, the consensus. that's what i tried to build during this g 206789 being an honest broker. to -- g-20. being an honest broker. i'm very glad and satisfied that we achieved an environment in which everybody was really comfortable. we created an environment and

especially saturday night, friday night, everybody was surprised of viewing what is argentina and our culture and -- [inaudible] >> things have improved for your country since we last saw each other in september. in new york. the peso has stabilized. inflation is coming down. it looks like the economy is going to start growing again. in the new year. we talked about the peso before. you know where it is right now. is it at the right level? >> yes. it's in a very competitive situation, no? the best moments of argentina. you can see the trade balance is really improving. our exports are growing. our imports are less. tourists brought -- has been reduced. especially those ones traveling to miami. i apologize, but we need them .o take their holidays here

help our economy. you didn't believe any in september when i told you we were going to balance our economy and so far we have been successful. it lab slocumback. slocumback. but -- a slow comeback. a slow comeback. but argentineans understand we have to work hard to solve all the problems. shery: let's get a check of the asian markets. we're seeing australian stocks under a little bit of pressure. down .3%, ahead of that rate decision from the r.b.a. they're expected to hold a cash rate steady at 1.5%. i can which stocks gaining ground for -- kiwi stocks gaining ground for six consecutive sessions although futures under a little bit of pressure with the nikkei down .4%. u.s. futures also under pressure. paul: all right, thanks. coming up next, our day break

australia, asia, i mean, we're going to speak to the c.e.o. of bank madari. that's up next. this is bloomberg. ♪ i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome.

>> good morning. i am paul allen in sydney. shery: good evening. i am shery ahn. sophie: and i am sophie kamaruddin and hong kong. welcome to "daybreak asia." paul: our top stories this tuesday -- asia-pacific markets look at a muted open. tweet leavesmp investors and advisors in the dark. no details from the white house and few comments from china. back from bouncing

its worst monthly loss in a decade as top producers pledged to manage the market. gains.stocks leading the they are the big winners in the u.s. trading session. we will see if this trend continues into asian markets after asian stocks saw the best day in more than a month. sophie kamaruddin with the latest. did seeon monday, we that rally at $325 billion in market value for asian docs. this tuesday, we are seeing the relief rally stall. we are seeing stocks in tokyo and seoul -- economic expansion adding to that wall of worry. keeping of korea's great study. -- rates steady. 200 is lower by .3%. the curve is flattening into that decision.

the spread between three-year and tenure futures. -- 10-year futures. far off fromo the low. a quick check on the offshore yuan, holding onto recent gains, 7 against the dollar. that is the biggest gain in more than three months while volume doubled in volatility fell across the curve. renewed bank has depreciation, which may be interpreted as an attempt to undermine negotiations with the united states. paul: sophie kamaruddin with the update of the markets. let's get more on what we should be watching as trading gets underway in asia with bloomberg's asia mliv team leader, garfield reynolds, with us. markets, stocks, treasuries. what are you watching this morning? garfield: it looks very much as a niceyesterday was

little party. the relief that there was not a bust up. there had been some thought that if you puton -- trump in a room with anybody, that could end badly. they got some progress. you understand there was a bit of relief. especially with what went on in the u.s., there is kind of a feeling that there were some oor economic data. we have had a lot of poor economic data coming out in general, so that relief rally was nice, but whatever happened between trump and xi, the damage from the trade wars are baked into the cake, and we do not have a resolution to that. there is a chart i was wanting to bring up. libraryd be in the gtv later on. looking at the global pmi,

relative to global stocks, and that shows that they both went up, up, up, up into the end of next year and the very beginning of this year, and then they came down. the pmi started coming down before any of the trade war stuff happened and when stocks were still rallying. as you can see on the chart, which is up on the screen now, down.i has kept trending stocks have been trending down but holding up a little bit better. if those two are going to be back to tracking each other the way they did for most of the bull market, that has a pretty grim outlook going forward. anl: we did see briefly inversion of these three and five year treasury yield curve. i know that's a little bit of skill. what is it, curiosity or harbinger of doom? garfield: it is potentially a harbinger that things are going to get better for a while in the u.s. and then they are going to get very bad. it's very much a late cycle

phenomenon. in fact, the twos and the five inverted briefly. once one part of the curve and words, the other parts of the curve do follow usually. while that inversion is taking place, you still usually get rallies in u.s. stocks. once the curve inverts and then starts to go back, starts therese the been, -- to re- steepen, that is the time. we're getting the lifecycle period. late cycle means we are coming and thethe recession, last recession was pretty painful, so there are some bad memories. shery: the markets are sending a message to the federal reserve. when it comes to emerging-market assets, we did see an outperformance there. , that makes a lot of sense. as i said, the trade use was at least positive, and there was --

we stepped back from the road to global trade wars go. and for emerging markets, it's hugely important -- important. the dollarlong with coming back overnight, the surge in king dollar has had some steam taken out of it. that gives them some space. when you look forward to 2019, you have got a general realization that growth is going to slow across the globe. in that environment, emerging markets are actually expected to not slow by as much as my and they are coming from a higher base, so the growth differential between developed markets and developing markets is likely to widen in developing markets favor, so that would argue for some potential for outperformance from emerging-market equities.

shery: garfield, thank you. bloomberg's asia mliv team leader. you can find garfield comments on the market live blog, on the bloomberg at mliv . there's commentary and analysis from bloomberg's expert editors so you can find what's happening to your investments right now. top white house officials have been left scrambling to explain president trump's claims of a deal with china to reduce tariffs on american cars. such an agreement does not exist on paper. and it has not been confirmed by beijing. tom mackenzie is watching this. tom, there was a lot of optimism, especially on the spiking after news of a potential deal coming out after president trump tweeted on auto tariffs potentially being reduced by china, and yet we have not much coming out of beijing itself. that's right, so we have

this tweet from trump suggesting the chinese will reduce or remove tariffs on autos. it that has impact on them -- that has impact on the markets, particularly for dharma and bmw. it have not had any official of beijing to confirm whether this is indeed the case. we have had reporting out of the chinese press saying this is being considered at the very least. what it really points to is the need to cut through some of this theatrics to -- the theatrics post deal to find out how much work needs to be done. you found the likes of larry kudlow being questioned on this issue on car tariffs. he says he sees this as a commitment from the chinese and that they will be implemented at some point. just a recap. on july 1, china reduced it tariffs on auto imports to 15%.

it added in august an additional 25% on imports from cars as retaliation. the total imports on u.s. guards being brought into the chinese market stands at 40%. that is significant. the biggest winners are going to be the german automakers. another question we have been trying to unpick is how many agricultural products or to what extent china will be stepping up its purchases. we heard mnuchin saying it was valued at $1.2 trillion. this is something that needs to be negotiated. that contrasts with the trump tweet. gap.ere is a there was the question of fentanyl. theywas something that have agreed on that they will start to restrict more closely, the fentanyl sales from china to the u.s. this is an opioid, of course. china has said the things about fentanyl in the past. there is skepticism.

she says if you do not have a joint date meant, there is risk that your going to get a misinterpretation of what was agreed around the table and you get that emerging opinions that makes it difficult to nail down the details of the final deal. paul: you hear tom detailing clarity. where overall do you think this please china's economy? the pmi numbers out yesterday, the november numbers, and bloomberg economics has been digging through those. their view is he will see a continued reduction in new exports. the new export order sell pretty sharply. they expect exports to continue to slow, even if you put the tariffs to one side. it is positive in the short-term, but longer-term, solidifying that deal will be difficult. the external demand picture is softening as well, they say, so that leads to this question of what additional measures we might see from chinese

policymakers and really focus on the fiscal stimulus measures. you may get a change in the budget deficit ratio, that that may be increased. there may be another cut as well. analysts think there might be a broad rate cut in 2019, but most think the most likely outcome or solution before that is another cut. you could get budget deficit ratio increase, another rrr cut, and maybe an increase in the quotas that could be spent on things like infrastructure spending. the focus is on fiscal stimulus. we may get some of those early 2019. tom mackenzie in beijing. thanks very much. let's get the first word news with jessica summers. qatar as alosing member as geopolitics finally -- held together for decades through war, sanctions. member of the a

groups and 1961 and will leave next month to focus on gas. the decision comes 18 months after the economic isolation of g -- and indicates g doha can stand on its own. they impose significant reduction cursed. tehran says output needs to be reduced by at least 1.4 million barrels per day to cut oversupply and fears the cartel may not be able to reach the agreement. iran is a founding member of opec and will not participate in cuts while under u.s. sanctions. told bloomberg that criticism of its performance is justified and the system must be reformed. the director general says the abusive critics -- the views of critics are fair. says it would be a loss

all around if the u.s. were to quit the wto. >> the u.s. leaving i think would be a loss for everyone. at the same time, including the u.s.. at the same time, i would rather focus on what is actually happening. what is actually happening is the united states is engaged in the wto, even in dispute settlement. the u.s. has difficulties. in the recent months, the u.s. was the country that brought more cases to the wto than anybody else. jessica: japan says tokyo theecutors plan to rearrest nissan chairman and brian kelly -- greg kelly. the former executives will remain in custody. accused of overestimating his income by around $35 million over the last three years. australia's governing liberal party has changed its internal

rules to avoid a repeat of the leadership coups that has seen the country move through five prime ministers in 11 years. the opposition labor party adopted similar rules after its own series of leadership changes. global news 24 hours a day, on , air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: thank you. still ahead, the ceo of indonesia's biggest lender by assets joins us in under half an hour. paul: first, why it is not the u.s. that will benefit most from president trump's car tariff deal with china. this is bloomberg.

paul: this is "daybreak asia."

i am paul allen in sydney. shery: i'm shery in new york. president trump had a surprise tweet to eliminate tariffs on chinaan made cars some to -- sent to china. there are no details of the so-called agreement from the white house. is watching this. and in fact, when china's foreign ministry spokesman was asked about this specifically, declining to comment on any changes. stephen: that's right. so this is -- came from a tweet yesterday from donald trump following the sidelined meeting in argentina with xi jinping, saying an agreement had been reached for china to at least, at the very minimum, remove the additional tariffs china placed on u.s. made imports of of autos to china, that they made after trump's initial salvo trade tariffs.

aging has not confirmed it. the only thing fairly new was this morning, is chinese paper -- a chinese paper citing unidentified auto industry , not the government, but an auto industry experts saying beijing is "discussing the possibility of lowering tariffs." the timing of such a move or the magnitude is not known. we heard from steven mnuchin. he echoed what donald trump said, that an agreement had possibly been made or at least an overture made by xi jinping on the chinese delegation. however, he said now is not the time to discuss specifics. that's what the market wants, specifics. interestingly enough, i did research and found that most of the u.s. -- most of the u.s.-made auto exports to china are actually german companies might bmw and mercedes-benz. 10y dominate six of the top

spots. keep in mind, most of the u.s. gm and ford are made through joint venture partnerships in china. through bmw, they are made mostly in south carolina. one of the biggest auto plants for exports in the world. and they are sent to china. it's very interesting. did this tweet or this move from trump and china benefit the germans? those stocks gained overnight in europe. paul: you have been following the carlos ghosn thought a closely. what is the latest? stephen: what we are hearing from the newspapers is what we were reporting yesterday in tokyo, and that is that it looks as though prosecutors might opt to rearrest carlos ghosn as well as a fellow detainee, director

of the nissan board, greg kelly. that would allow prosecutors to continue the detention without an indictment, so without officially being charged they can still continue to build their case. what we are hearing is carlos ghosn is refusing to sign any sort of concession to the allegations, if you will. they are not official yet, but allegations that he end kelly misrepresented income up to as much as 80 million u.s. dollars over the last few years. that is where the investigation centered.tors is we are hearing from another report that possibly, outside directors of these on could be meeting today to discuss options for replacing carlos ghosn as chairman of the nissan board. they have not named a week and a half ago or so. paul: stephen engle, thanks her much for that date -- that

update. qatar is quitting opec. what does that mean for the cartel and energy markets? we will explore the next. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i'm shery ahn in new york. to cater -- takeda pharmaceutical has secured a loan, wrapping up the refinancing of the loan to buy shire. it will help reduce commitments in the bridging facility that it and you're into and made. the pursuit of shire is valued at $62 billion. paul: unilever has agreed to indian consumer business for 3.8 billion

dollars. it will boost its presence in the emerging markets that account for about point two thirds -- that account for two thirds. the two companies fell in london and amsterdam respectively. shery: this company is said to be missing -- offering an iphone that can connect to the next generation of high-speed services. in the past, apple has been proven correct in saying new networks and the first versions of rival devices would ring problems such as only sporadic coverage and hesitant performance. qatar has rocked the oil world by deciding to quit opec. has decided to focus more fully on gas. bloomberg asian energy editor

aaron clark joins us now. is this a sign that the group's unit is crumbling? aaron: it's interesting. qatar said yesterday that they plan to leave opec. they cited technical reasons and said they want to focus on natural gas production rather than oil. to some extent, that is valid. their oil production is very small. i think they are opec's 11 th largest producer. they are the world's largest gas producer. i think the backdrop for this of betweens the dispute qatar and saudi arabia. saudi has led the blockade against the country and they have tried to isolate them politically in many ways. and the other way to understand this, i think, is saudi arabia's and russia's growing dominance

of oil markets. you know, this opec plus group, which is really led by vladimir putin and saudi arabia's crown prince, mohammad bin salman. they are running the show within opec and a lot seem to have a lot less influence on decisions. we just saw them greeting each other like a couple of old friends at the g20. they got a deal as well. what exactly did they agree to? aaron: well, there is very little details of far, but basically, prudent and been solman agreed to continue this agreement to manage global oil markets through this opec plus group of countries, which includes opec plus russia. this is the same group that agreed to cut their output from cutsry of 2017, and those

lasted 18 months, and we saw global markets respond. they essentially cleared a global oil glut in inventories. prices increased and they above $80 a barrel in october, the highest in four years, and those cut contributed to that, so clearly, they know how to manage the market and they have effectively done that very recently. shery: bloomberg intelligence senior energy analysts, thank you so much for that. let's get you some breaking news. we are hearing from kronos group, confirming talks on a potential investment by -- run us is a cannabis company and they are now confirming -- kronos is a cannabis company. we are seeing the stock jumping those9% or more after talks were confirmed, although there is noying

pact that has been reached on a transaction, although they have confirmed that the talks are ongoing. we will have plenty more coming up on "daybreak asia." this is bloomberg. ♪ ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

a.m. in hong kong, one hour away from the trading open. i am paul allen in sydney. shery: i am shery ahn in new york. news with jessica summers. president trump advisors have been left scrambling to explain a trade deal he claimed he struck with china to lower tariffs on u.s. auto imports. the president announced in the breakthrough in a tweet but the white house offered no details. in the first official response from beijing, the state run security daily said only the possibility of lowering u.s. auto tariffs is the center. >> they cannot stall this,

meander this. see confirming results. clarida says he is more concerned about falling short of the central banks 2% inflation target than running above it. his remarks to bloomberg television said policymakers are not convinced that they are near their long-term objective. he welcomes the trade with china. >> in terms of the outlook for the u.s., economy, trade is an important part. trade is a very important part of global economy. right now, i think the u.s. economy is in good shape and we can talk about risky scenarios, but the baseline outlook is solid. the argentinian

president said south america has second-biggest economy is on the right path to a strong rebound in 2019. a currency crisis dragged the country into recession this year and forced him to seek a record $56 billion imf credit line that of clouded his chances reelection next october. he told bloomberg that argentina is in a much stronger position. >> very competitive situation, no? the best moments of argentina. you can see in the trade balance, it's really improving. our exports are growing. and our imports are less. jessica: u.k. consumer spending growth slowed last month as concern about brexit prompted households to be more cautious with cash. spending rose 3.3%. cold weather kept shoppers out of stores in march. they remain confident with their finances.

and spacex has joined the delivery business, launching a rocket carrying 64 small satellites into space. it lifted off from vandenberg air force base, incorporating a booster that had been used twice before emissions in may and august. it included satellites from 34 organizations in 17 countries. it successfully landed on a barge at sea. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: thank you. thes get your check of markets in asia. trading right now, a little bit of pressure for most markets open right now. asian stocks saw the best day in a month. we are seeing japan's nikkei falling .2%.

it was trading at the highest in more than a month, as we see the japanese yen fluctuating, holding a little bit stronger against the u.s. dollar. 113 level. take a look at what the kospi is doing, down .4%. after seeing again in the last session, we had some data out of south korea. third quarter final gdp numbers decelerating to 2% growth from the second quarter on year. we have multiple headwinds for the economy there, including week investment. -- weak investment. paul: a mixed picture in australia. the asx weaker by .25%. 73.59.sie dollar, we just hit current account numbers. the deficit, $10.7 billion.

that bodes well for the gdp numbers themselves, which are due later this week. we have the -- the kiwi dollar continuing to be one of the better performers against the greenback. what 2019 may offer indonesia after it was caught up in this year's emerging market rout. sophie kamaruddin is there with a guest to can tell us more. indonesia has emerged as this quarter's turnaround story. policy measures bolstered confidence. the president's boosting spending ahead of next year's elections. for more on what 2019 may bring, we are joined by the president largest of indonesia's lender by assets. >> thank you. sophie: suffice to say, 2018

has been a trying year for indonesian policymakers. inc. indonesia has not been a -- bank indonesia has not been idle. the governor has pledged to maintain a preemptive policy stance into next year, even as rupiah has recovered from a low. do you think the central bank has been too aggressive in its hiking of rates? >> the government has made a good stance in the past couple of months. bitink the last hike was a unprecedented and not in line with the market. he has been giving guidance. to three ratetwo hikes next year. so far, he has been maintaining the policy stance or law and he well.ed quite the banking market has seen changes in that hike does

not reduce their ability. the credit increase so far has been quite good. in october, we have been growing the credit. that is unprecedented in the past two years. the challenge is twofold. first is how to maintain supply of credit. the bank has to be able to grow by double digits next year. as long as they maintain their liquidity, it is still possible. secondly is how to make sure the net interest market has been maintained at a reasonable level. good at has been very adjusting the credit rates. they have been able to manage the increasing cost of funds by doing it in a standard way. still there. if we can maintain the stability and the current position, their ability to have credit growth will still be maintained, hence

the growth next year can still be between halfway to 5.4%. it has been relatively flat. we expect it around to be 5.7%. a decrease from last year. adjust thestart to credit growth and also credit rates early next year. we probably grow slightly slower and pass on some of the credit cost to the end consumer. we hope the growth next year will be double-digit, so with the, and also maintaining funding and our balance sheet. we hope it will be slightly stable. there is a possibility of slightly increasing next year. shery: can you elaborate on that ? we have seen spending rates fall while the bank indonesia has increased the policy rate.

lenders and indonesia have not been passing that on. you say you may increase the pace to ensure that it can grow. what kind of peso we looking at? kartika: what we are looking at is how to balance between passing on the costs and maintaining the momentum. we are in good momentum. particularly for wholesale and is part of consumer business quite good, so we don't want to rush into increasing credit rates to hurt credit growth. so i think a modest 50 basis point increase next year, i think, is still possible, but we have to be mindful of the demand side, and i think there are differences here. for consumers, mortgage, probably more challenging, but for production and also specific items, i think it's possible to increase next year. for wholesale part, i think the forex alone is possible next year. market irease, the

think will grow at 10% plus next year. shery: given bank indonesia's year, we have seen them return to assets. pressure on the rupiah and bonds have been using as demonstrated by the chart on the terminal. does the rupiah remain undervalued? still 14,000 against the dollar. move,a: looking into the they have been able to start changing your view on indonesia -- their view on indonesia reserve your markets. inflation has been very immodest, close to 3%. the preemptive policy from central-bank and also a very fiscal policy from the ministry of finance has helped maintain stability. ish macron about look, there still the possibility and room

for appreciation over the rupiah towards year's end. there slightly helped by decreasing oil price because we are importing oil. one of our trade balance issues that. ,ith that kind of environment and oil price maintained at around $60, i think there is a lot of room for the appreciation of the rupiah towards year's end to 14,000. shery: let's talk about wealth management. he tied up with -- to get clients comenesia in singapore and indonesia. how successful have those efforts been so far? kartika: in the past, we are focusing mostly on wealth management. mostly focusing on local wealth. expanding our are self to cap the funds in indonesia. we believe that automatic

wealthyion, we have -- indonesians outside indonesia. we are offering funds similar to other banks. we are just starting in the past couple of months. we believe we are able to grow it faster next year once we set up more reasonable things in singapore as our base. shery: once the tech amnesty is over, do you see a return of indonesia's wealth going offshore? kartika: it depends on the product offerings. so far, it's been very minimal, so that is why we believe we can offerings onshore and offshore. we can provide for example emerging markets -- participation. werefore, we believe if offer a similar product, there is no reason for people to actually bring the money

offshore again, so that is the strategy in the medium-term. shery: turning to simtech and digital payments, we understand there is a strategy, a change afoot. you may be among the likes of wechat. kartika: there is a twist of the story. indonesia, wend are current -- in indonesia, we are starting a corporation to tie up payment and one platform. so basically, the banks will basically gather their capability and technological capability into one company. by buying up the banks, we have power which will enable us to capture more customer base and merchant base and to compete at a strong level in the technological ability as well. we are going to expand our digital capability, but we are focusing on products, for

example most lending and the money, which is part of the digital payment. we can have a strong footprint there. shery: are there any other companies in the strategy? kartika: possibly also with indonesian company -- embark in that, we will have larger access to the customer base in indonesia. shery: thank you for your time this morning. that was ceo kartika wirjoatmodjo here in hong kong. paul. paul: all right, thanks very much, sophie. the flattening yield curve produces a first inversion for more than a decade. we will ask whether it is a signal for the fed to start wrapping up its tightening cycle. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. the yield curve inverted for the first time in more than a decade. the spread between three-year and five-year yields fell below zero for the first time since 2007. andrew jackson, hermes investment management, head of fixed income, joins us now from hong kong. andrew, great to have you with us. this dtv chart on the bloomberg showing exactly what i said. ,he three-year to five-year gap the first one to turn negative since 2007. -- really nott the one spread you look at closely, but what could this signal for the markets? andrew: i think what we are seeing is a continuation of the trend we have been watching for

some time. is not the focus for most people. most people look at 2-10. -5 getting inverted is a sign that we are getting towards the end of cycle euro where people start to feel more cautious. but i think we have been and they have0's, been through certain resistance points a couple of times already. we are cautious about reading too much into this. we think the fed has done a good job of signaling what they are going to be doing. clearly, some of the comments from last week are having impacts on markets, but we think the market is reacting in a rational manner, and we do not think it is time to start panicking yet. shery: the fed has been good at signaling. where do we think we are in the fed tightening cycle? andrew: i think that one needs to be cautious about reading too much into the statements that were made last week.

if the fed's behavior over the last few years, the change in the head of the fed is put to the side for one second, we should expect to see the fed do something close to what the fed has signaled they will do. clearly, the expectation has moved down from what some people were expecting next week. they were telling us we were going to get for rate hikes in 2019. that is unlikely to occur now. andrew, i would like to get your thoughts on another chart from the dtv library. this one shows the tail risk at its lowest since 2016. you wrote in a recent report that you think tail risks are hugely underestimated based partly on trade uncertainty. the feeling that the major correction has yet to come. i wonder if your outlook had changed at all? andrew: i think that the outlook

is unchanged from what we signaled there. we think the credit markets have not moved in the kind of material fashion that one would expect on the major correction. equity markets have clearly done that. we have seen some rational behavior within credit markets. focused ony high-yield corporate's and a few european names that are suffering some distress. still maintain the view that tail risk is way higher than the market is expecting. i think the implied volatility is lower than it should we, and i think tail risk is there in a number of different areas. if you look around the world, whether it is trade wars, whether it is potential geopolitical risk, whether within europe it is on the on the streetss of paris, there is immediate amount of tail risk out there, and people maybe are underestimating the value of

having high-quality hedges within their portfolios at times like this. paul: is that the best way to protect yourself at the moment, by looking for the high-quality hedges, and if so, can you name a few? >> you just showed a graph of the vix. people talk a lot about the has arrivedhe vix at over the last three months. i think the vix is very low, but perspectives.cal i remember trading the vix when it was in the 40's, and it is nowhere near that level. creditity within markets, which is where we look, is still very cheap. leave people to with the impression that they should run away and start hedging their books, because i think there is still huge amounts of value in fixed income markets. i think as an insurance policy against a major correction, that maybe that curve is pointing us towards -- can be found in credit volatility.

deep outtright payers of the money options against the possibility of a cataclysmic event on the horizon. shery: how do you expect emerging markets fixed income to be? andrew: we think emerging markets fixed income has been hit reasonably badly, and it was had already earlier in the year. fixed emerging-market income particularly in the more global corporate's as fairly well valued, and we think that is an opportunity, but we recognize that emerging markets -- fixed income is not insulated from the tailwinds that might hit emerging-market equities and those two at -- asset classes -- we are not thinking about big upsides or downsides anywhere soon. we think that one of the issues that people face when they think is thaterging markets

emerging markets are very much what they have always been, which is distinct from developed market. we no longer see that distinction as being relevant. we think that there are -- i am here in hong kong today. there are hong kong corporate to service the world. the world is their client. trade wars will have an impact on emerging markets. largenk many of those emerging-market corporate's are now global players and should be viewed in that context rather than viewed as the merging. shery: really interesting. andrew jackson, thank you so much. her music management head of fixed income. you missed out on any of the charts, gtv is your function. you can save them for future reference. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: and i am paul allen in sydney. i believe we are getting a check of the latest business flash headlines. morgan stanley says forbes $11 billion restructuring plan could cost 25,000 staff their job. d has yet to delay job cuts.

they expect much of the turnaround plan to focus on an operation morgan stanley value that -$7 billion. they have firmed up the stock return goals. hiscompany must raise possible jackpot. eiger -- iger could receive --ey if the stock return over the four years, ending on december 31, 2021. assetchicago-based management is cutting at least 125 people as losses and client withdrawals erased $4 billion. the hedge fund eliminated 40 people and plans to lay off more back office staff before the year is out. 2018es say they started with 11 point $3 billion in

assets and expects to enter next year with $7.3 billion. shery: that's get a check on what's going up. yvonne, what are you watching? yvonne: autos in china. after that, the vague tweet we got on the president talking about how china has agreed to reduce tariffs on u.s. car imports, leaving advisors scrambling. outill ask the analysts there to talk about what all this means now for the sector. plenty more to come. also take a look at the bitcoin and cryptocurrencies with the ceo joining us from tokyo. plenty more to come. this is bloomberg. ♪

♪ 9:00 a.m. right here in hong kong and shanghai. welcome to "bloomberg markets: china open." yvonne: this morning, asia-pacific markets slide. the stock rally was short lived. features in a loss in hong kong. 's stock produces pledged to manage the market. rishaad: president trump's auto tariff to eat leaving advisors in the dark. no details, on the guarded comments from beijing. ♪