haidi: welcome to "daybreak: australia." i'm haidi stroud-watts in sydney. shery: i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. we are counting down to the open. ♪ haidi: zero the top stories we are covering. china taking more steps to ease trade tensions. let's talk about restarting purchases on american corn. nissan product or's plan to talk about ghosn.

australia's treasurer is set to deliver the best budget members in a decade, halfing the deficit ahead of the key election-year. let's get you started with a check of the markets to friday's session in the u.s., risk off across the board we have concerns over the outlook for growth weighing on the market. take a look at the dow which sank 500 points while the s&p 500 fell to the lowest level since april. the s&p 500 breached the 2600ological important level. the nasdaq fell for a second session.ve technology stocks lead the declines. keep an eye on the health care sector. rulingget a judge obamacare was unconstitutional. we could see more volatility in the monday session. we are just setting up for what will be the big news this week. the federal reserve deciding on policy expectations that it will raise rates for the fourth time

this year. let's see how we are setting up for the market open in asia. wel: we are and -- sophie: are entering a big week not only for the fed but the boe and boj and asian policymakers. we are counting down to decisions from thailand and indonesia. we are counting down to china's economic policy meeting at the end of the week which will likely see more easing measures particularly for the housing market. price gains flow further in november. with a backdrop, we are starting off with a mixed start for asian stocks. taking a look at futures, we may see gains for the nikkei at the start of cash trade but glosses for sydney's stocks when we kick off the trading session this monday. also, on the agenda, we get november fromfrom indonesia and singapore, plus australia is to release the midyear economic fiscal outlook report with the federal government expected to say it is on track to attain a budget

surplus next year. haidi: sophie kamaruddin, thank you for that. let's get you to first word news with test haslinda amin. -- with haslinda amin. haslinda: u.k. officials are pushing back at the idea of a second brexit referendum. on theey have held talks issue. speculation of a new vote has been rising since the prime minister abandon a vote on her deal with brussels. she attacked former leader tony blair for championing the so-called people votes. she faces questioning in the comments later on monday. north korea has told the united states that sanctions and pressure will not force it to alter its nuclear program. such measures do not work and washington should concentrate on improving relations. the agency added president trump should back up his frequent claims about wanting better ties with north korea.

pushingis said to be nissan to call an urgent shareholder meeting to discuss governance. affairdictment in the and relations between the two companies. rideau has written to nissan saying last week's indictment created significant risk to the civility of their rock -- of their long-running alliance. the nissan board is scheduled to meet later on monday. more than 40 people were taken to hospital after a parcel explosion in the northern japanese city. thes not known what caused blast at the two-story restaurant which left at least one person in critical condition. local mediatold that there was a smell of gas in the air after the explosion. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm haslinda amin. this is bloomberg. shery: thank you. president trump has intensified

the postelection shakeup of his administration. his -- he is appointed his asget chief mick mulvaney acting white house chief of staff and over the weekend, he said ryan zinke he would step down over violations. ros krasny joining us from washington. the latest changes come as the president insists the white house is a "happy place." that's right. the president said that last night as he was hosting a very fancy congressional ball. be said that every administration, every white house has turnover. and the midterm elections are a natural inflection point where you consider who should stay, who should go, and sometimes, people who have given their lives to the white house for a couple years want to get out. oning said that, zinke is the way out. and some of the reporting suggests wilbur ross is the commerce secretary and kiersten nielsen, the secretary of

homeland security, might be next. we have been getting pushback them.he white house on trump thinks he is doing a great job. with mick mulvaney taking over as chief of staff, you expect him to do more housecleaning and there could be other cabinet members and white house staff could be next on the chopping block. when it comes to the latest in the mueller investigation, it sounds like president trump will not be sitting down with the special counsel anytime soon. attorney today, rudy giuliani, said that would happen over his dead body. we will take him at his word. giuliani for months went back and forth, maybe he will, maybe he will not. at this point, we would not trump-muellermuch sit-down, especially after the conviction and sentencing of president trump's old lawyer and fixer. that has been a very key moment in the mueller investigation. -- angrye rather angry

tweets from president trump about that today. of course, there was this landmark ruling by a judge in texas that obamacare is unconstitutional. what is this about and can we see higher courts reversing this decision? ros: it was certainly a newsy weekend in the united states. this ruling and texas not entirely unexpected. it came from a judge who is president george w. bush appointee who is known to be supportive of republican issues. there is a likelihood that this particular ruling will be overturned on appeal and the appeal will be going ahead right away. we heard that from even conservative scholars over the weekend, we heard it from republican lawmakers like susan collins, the senator from maine. nothing happens with the obamacare markets at this time.

the ruling came just as this year's sign-up was ending. nothing happens with that now. expect severaly rounds more of litigation on this. and definitely and up at the supreme court. it does seem like there should be the votes to uphold obamacare in the supreme court but we are a long way from that we have two big new justices since obamacare was last considered at the top court. very, very interesting, and monumental, potentially, his is coming up in the next year or two. shery: of course, the media deadline will be next week when funding runs out. will we see a partial government shutdown? ros: well, there is every likelihood it seems that there could be a partial government shutdown. five days to go. it does not seem like there is much movement from the trump administration, from congressional republicans on the key issue here which is president trump's insistence on

$5 billion in funding for his border wall with mexico. the president himself last week said he would be proud to shut down the government over wall funding. one of his key deputies, stephan miller, said the same today on tv. democrats are prepared to let president trump really be the one who holds the back on this. very interesting, one million payers after work without if the government were to shut down. one wild-card i might mention is according to a blog out of florida, president trump is due to fly to west palm beach on friday to start his christmas vacation to would he do that if the government were going to shut down the following day? optics would not be great but anything is possible. all right, ros krasny in

washington. the deadline and when the partial government shutdown could begin is this friday to just before christmas. still ahead, australia's budget deficit looks set to be have to. he is warning against complacency to we will be discussing the midyear economic update do today later this hour. shery: theresa may and her team rejected talk of a second brexit referendum. as she prepares to face parliament again. we will have an analyst on that next. this is bloomberg. ♪ g. ♪

haidi: it is monday morning. we are counting down to trading in sydney. touchs looking to open a lower, 4/10 of 1%. we have futures relative to value, 6/10 of 1% lower at the moment. we have a big way, the final push for the end of the year but a massive week for the fed. have here ine, we

asia decisions out of taiwan, indonesia, and the bank of thailand as well as a look ahead to that. i'm haidi stroud-watts in sydney. shery: 10 shery ahn in new york and you're watching "bloomberg daybreak: australia." the latest on brexit. pushing back on reports that the government may be warming to a second referendum. the denial comes ahead of another potential and difficult week in parliament where prime minister theresa may is discussing the uncertainty. always great to have you with us. right now, we have no idea what could happen in these brexit proceedings. if we continue to see all of this uncertainty, we already have sterling taking a hit, guilt rallying. what is the outlook for markets? look, i think in terms of brexit, over the last 2.5 years, i don't think we have had an idea of what would happen. we have no better idea today. it is very likely the deadlines gets extended well into 2019.

for u.k. markets, we will see a lot of volatility as we move back and forth on whether the deal is going to happen, whether it will be a hard brexit or not. it is really hard to play that game. i think markets are looking or laterright now f in 2019 maybe we have a referendum, a change in government, another vote. no one knows at this point. i think markets are relatively at ease over brexit because you have other issues p have problems in the u.s., aside from the trade war, now we have risks of a government shutdown. there is a lot of geopolitical risk in markets today which may be part of the reason why we have seen a little bit of a risk off environment and a further rally in bond yields. shery: do we have any more clarity on what the boe could do? the expectation for this week's they will hold rates steady but

inflation remains above the boe's target. an uncomfortable situation. when could they move? me that theyks to will look through the shorter term inflation prospects and look for the longer term. given the uncertainty and the volatility that markets are still experiencing, it is likely that they keep rates on hold. i think when you look at the rest of the world, with the exception of the u.s. which will probably hike this week, globally, central banks are on hold for a fairly long time. haidi: going back to your point about how 2019 still bowed so much political uncertainty, this is a good charge looking at the u.k. political risk. this is taking into account the last few weeks with theresa may's leadership. that has risen sharply. rest ofpiked above the g7. is that really the biggest political uncertainty, brexit,

going into the next year, or do you see this idea of political still being the more worrisome thing for investors over monetary policy risk? steve: i think a lot of the political risk turns into economic risk, whether we are talking about brexit or the trade war. or even the government shutdown. all of those things are fairly negative for longer-term growth. an inflation prospects. that is a big part of the reason why we are seeing now. haidi: two will talk more about what the fed does in the context of this we do start to see central banks including the fed having to now maneuver their way around what to do in the case of a full-blown trade war. in the case of a slowdown that is globally exacerbated by the disruption in supply chains. steve: right. i think there has been a reevaluation of growth and inflation prospects over 2019 with the trade war looking

extremely negative. probably undoing the benefits of the u.s. corporate tax cut. in early 2018. and now the fed in the markets reevaluated thealuated extent of fed rate hikes over 2019. where now they are almost priced out. haidi: stay with us to we will get more on the latest when it comes to the trade situation. tojing is taking more steps defuse this trade situation with the u.s. it is not confirmed it will remove retaliatory duties from america. beijing is also preparing to resume purchases of american corn. tom mackenzie joins us now from beijing with the latest. this comes on the back of last accor market where they restarted purchases of soybeans from the u.s. intensifying what came from that conversation between president xi and trump the couple weeks ago. from beijing, they respond

to this meeting two weeks ago. and the latest on probably the most significant is this agreement by policymakers to reduce the tariffs on u.s. autos from 40% back down to 15%. because around july, august of last year, they put in these additional 25% retaliatory tariffs on top of u.s. autos, that then shifts to china. this measure to cut them down 15% and put them on parity at four other autos will kick in from january 1. it also we are hearing they are considering the chinese purchasing 3 million metric tons of u.s. corn. adding to the are great story that you touched on. soybeane had the purchases. now they are looking at buying more u.s. corn. it builds of the measures we have had out of beijing in the last few weeks. aroundback of the g20 beefing up the intellectual property regime and reports that china is considering amending,

changing, or pushing back its main input -- made in china 2025 program. we expect more before march 1 when the end of the 90 days kicks in. the question from the u.s. is whether or not these will be verifiable actions and be enough to avert tariffs the u.s. says will kick in on march 2. to 25% on march 2 if there is not a consequential deal on the back of these 90 days of measures. shery: china holding a major economic meeting this weekend celebrating the fourth anniversary of reform and opening up. what should we expect? 10 we see measures that answer the u.s. criticism? possiblyssibly -- tom: to whether or not they go far enough is the key question. tomorrow, that is when they kick off the celebrations. we are expecting major speeches, there may be announcements, there are likely to be announcements around opening up further sections of the economy

in china. as you say from the 19th two the 21st, we have this major work conference policy decision-makers get together to play out the priorities and the targets for 2019. i had anteresting, exclusive sit-down interview with the leading economist here and founder of primavera capital of goldman sachs, he is pretty concerned about the outlook for the chinese economy and 2019. unless policymakers make major structural changes and reforms. take a listen. the risks are significant. they are not robust, policy responses. to a risks might lead further downward momentum. you risk consumer

confidence. that could be a vicious cycle. he also told me fiscal monetary policy measures will simply not be enough to support the economy, at least in the long term. saying there is a need for significant deregulation. "paying the service for the private sector is not enough, they need to release the straitjacket from the private sector." that would be the solution for ensuring that there is strong economic growth in china, not a small fiscal monetary policy measures that risk adding to the debt load. do we have any latest developments when it comes to the huawei cfo and the detention of these two canadians in china? tom: we know the canadian ambassador to china has met with both of these canadians. there is a view from former canadian ambassadors to china that the detention of these two for thein retaliation

arrest and detention of the huawei cfo and vancouver. she is now on bail and bank over. these two canadians remain in detention somewhere likely in beijing. hueresting, i spoke to fred about this, because there is concern about what this means. he says he hopes it is an isolated case and hopes there will continue to be laws and regulations to protect the rights of foreigners operating in doing business in china. it is something the business community is watching closely. tom mackenzie there, coming to us there from beijing. coming up next, the fed is a is expected to hike rates on wednesday to will it be the last for some time? what are we expecting in terms of the signaling for the 2019 rate path? we will talk more about that next. this is bloomberg. ♪ ♪

a big final week of the

year for central banks. meeting, theeserve bank of japan, bank of england, as here in asia, indonesia, taiwan, and thailand with their final policy meetings. steve goldman is still with us in sydney. believe thisems to could maybe be the last hike we see form the fed for some time. maybe none next year. do you think we are getting ahead of ourselves in terms of what the data will look like? -- has nowfed is now come back to what they have said. it will be data dependent to what extent we will see rate hikes through 2019. it is fair to say that some of the more recent data still does not show material inflation gains. the market is pricing it very little inflation over the coming years. that will be part of the reason why expectations for fed rate hikes in 2018 have been tempered. 0-1 hike over 2000

19 p.m. more in line with what markets are coming to. weeks ine past few particular, the sessions we have seen in the u.s. have been characterized by the afternoon lull. there hasn't been a great deal of conviction. do we expect that going into next year, particularly as we have a fed shifting to every meeting being live? end, the real driver of inflation expectations in the u.s. is wage gains, the unemployment story. which is -- haidi: structural, though. globally, really. steve: i think the bargaining power of workers in the developed world is much less than it was in previous years. that means wage inflation is going to be well contained. but you do have an unemployment in the u.s. that is going in the low threes. there is some point where we are

going to start to see some wage inflation. can continuously maintain a level above 3%, that will be the question. i think if you consistently see range,ins in that 3.5% you will get inflation coming into the economy. but we do not see that. shery: shortly, we have a slowdown expectation impacting and dragging down the equity markets. these gtv charts on the bloomberg showing the four p four s&p 500 at the lowest level since 2016 what are your expectations for equities in 2019? i am a bond manager. i am more comfortable telling you on a default risk and interest rates. what i will say is maybe equity markets were priced for perfection. earlier in the year. where we were going to see continuing strong corporate profitability. that has been tempered a little bit more recently. i will still say corporate profitability looks fairly strong.

also think globally, banks will keep rates quite low. i think that is a good environment for equities. shery: we will have to leave it there. thank you so much. "daybreak: australia" is next.

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sydneyit is 9:30 in monday morning, markets open for a brand-new trading week, the last of 2018. we have futures looking like downside officer -- after it you close the lowest since april friday. big week of event risks with the bent ghosts japan -- the bank of thailand outsia, with their final decisions of the year. i am haidi stroud-watts. shery: i am shery ahn, 5:30 p.m. in new york. let's go to sophie kamaruddin in hong kong. heidi mentioned a lot to keep our eyes on. sophie: as we enter the final

stretch, quite a few rate decisions on tap. this monday you could see stocks kick off with a mixed start, futures higher, but in sydney we are seeing potential decline of .6% for the asx 200 after the benchmark lost 1.4%. the aussie dollar trading at six week lows. we are waiting for australia's economic and fiscal outlook. we are anticipating the federal government will see it is on track to see [indiscernible] stocks in sydney, we are checking in on players, keeping an eye on bhp after the company announced a special dividend of one dollars u.s., two cents a share. looking at australian pharma. they were downgraded to hold at morningstar. it popped up 8% after the company announced a takeover bid

for sigma health care. keeping an eye on investor office. we have closed the $3.4 billion australian takeover acquisition of the fund, and oxford will acquire a portfolio of 19 prime office real estate across australia's top five cities. group, someone questioning while the talks are being drawn out with kkr since the access. thank you. let's get to first word news now. -- ie: government shutdown must be avoided and it is up to president trump to resolve the issue, analysts say. down thesolved to shut government, saying he would be happy to bring the agency of the government to a halt if he doesn't get hits -- his way. but the president said -- the leading democrats that he will

not get what he wants. >> president trump should understand there are not the votes for the wall in the house or senate. he is not going to get the wall in any form. haslinda: the global environmental movement bracing for a fight with populists after the latest international climate talks. the meeting and poland wrapped up with agreement about 200 countries moving to implement the 2015 paris accord. many businesses want governments to implement deeper carbon emissions cuts ahead of the u.n. leaders summit next year. a majority of people in japan agree with the government decision to ban chinese communications equipment from the public sector. respondents1% of support the move with 21% against. reports from japan say prime minister abe has called on businesses to avoid buying technology seen as a vulnerable

to leaks and shutdowns. 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. amin.aslinda this is bloomberg. haidi: breaking news crossing the bloomberg, the economic and fiscal outlook for australia is out, the largest surplus for 2020, the midyear budget, forecasting a deficit narrowed $20 billion australian. the treasury expects the larger surplus the following year according to the fiscal outlook released a short while ago. treasury had been predicting 2018-2019 for a budget of -- budget deficit of $14 million. tax was helped by a collection situation, the budget surplus of $4.1 million, australian, is predicted. -- in terms of the

other numbers, economic growth in 2018, at 2.75% 2019. that is being forecast, slightly lower than the 3% rejected in may and employment 5% versus 5.25%. andrcase of unemployment wage growth being forecast at 2.75%.evised down by we will get more analysis shortly, but let's get more on what we are watching in asia. itm haigh is here with us or very little scheduled now, lots of central bank decisions. what are we expecting given how the u.s. session ended friday? adam: we are trying to assess how investors are reappraising the outlook for next year. there is a lot of discussion in the narratives of global

economic growth and that is forecasted to slow, but how does that impact the possibility of -- what is key from an equity perspective? global markets are down, it has been a tough year. the question is how much is already in the price? if you look at indicators from the u.s. equity market, have a great chart here, it shows you the extent of the re-rating in the cyclical sectors, banks now off 15% or 20% on the year. the blue line is the transports on dow jones, but already a lot of this is in the price. in a week where we get the fed decision, expected to get a hike, all of the attention on on what 2019ents will look like, we see significant ratcheting back and the dots coming back for 2019.

degree pertain to some an effort to get some appetite back to risk assets. it is more about how much of that doom and gloom on the earnings front is already in the price. that is what we are hearing from comingam, prior to me on. a lot of this earnings pessimism is reflected in the price. even if you only get 4%, 5% year, growth eps next that is still a lot more than what the markets are now pricing for. you don't have to have a stellar year for earnings in 2019 to still get a reasonable positive return for equities. that is where the balance of the markets are now as we start off the week. shery: is the gloom and doom the reason people are jumping into bullion? adam: it is indicative of how investors are feeling and how

they are positioning being late assetand getting into allocation positions for the next year or two that clearly are expecting low returns. i think the chart shows it pretty well. people diving back into in this case hedge funds, coming back into speculative long positions in gold. it is another indicator of the way people are trying to play these markets at the moment, where they are dialing down overall expectations for returns going forward in an environment where things, the earnings outlooks are tricky. assets like gold continue to be some of the more favored parts of the market given how tough things are elsewhere. shery: thank you for that, adam haigh. don't forget to check the gtv

library for his charts. gtv on the bloomberg. directors of nissan meet later monday to discuss the future after harless ghosn. they will gather -- carlos ghosn. ramy inocencio has the story. the partnership between renault and nissan has been put under scrutiny. what can we expect? ramy: will they even get to name a successor to carlos ghosn? a lot of folks are wondering now he is out of the picture at least with nissan. the other aspect is whether renault will be pushing to see what it can get from this extraordinary shareholder meeting. first to the succession aspect. people familiar say the name we have been talking about for the ceo,few weeks or so, the he has been the driving force but to write -- behind carlos ghosn's downfall.

another confidant as well. analysts say the indictments we are talking about with nissan strain inmay put some being named chair of the company . the idea is there is an aspect of corporate evidence that if anything he had in relation to this allegation carlos ghosn and nissan understated or underreported $43 million his actual pay. what you are saying -- seeing on the screen is the extra question pushing ahead to what renault is asking of nissan. .et me put that up one is the connection with nissan and carlos ghosn's indictment. another is corporate governance. a third that could be in focus at the shareholder meeting or this board meeting is renault's appointees on nissan sport. board.an's

the renault deputy ceo wrote to nissan saying they are creating significant risk for renault and moving across, they want to figure this out as quickly as possible. we know the tensions are continuing to be strained as this saga continues. continuings also with tensions in the alliance, renault saying carlos ghosn's compensation was in compliance with french laws. ramy: you are getting something in japan that is different from what the french are saying. this could continue. according to renault, the preliminary finding for mr. 2018 to 2019 they didn't find anything amiss with his pay according to the early finding. that is why the board is keeping the interim top management into .ome -- interim

he is still ceo even though he is in jail in japan. off of the news, renault shares did rise a little. in the bloomberg terminal, we can see in the gtv library that over the course of the past year , for the most part and especially with what has happened recently, the shares of renault in white and nissan motors in yellow have been tanking. nissan is getting 18 month lows and renault is now a four-year low. we are looking ahead to the board meeting with nissan to see what if anything comes out of it. haidi: the drama continues. coming up ahead, australia's government is back on track to deliver the much vaunted budget 20 -- thet they outlook for growth will go through some -- this is bloomberg. ♪

shery: welcome back. i am shery ahn in new york. haidi: i am haidi stroud-watts. the australian government sees its cash deficit shrieking in the next fiscal year and larger larger in 2020 thanks to than expected tax collections but the growth forecast has been trimmed from -- to under 3%. a couple of years ago australia was at the risk of losing its aaa credit rating. we were talking about how much longer it can stretch this 26 year streak without a recession. they are looking ok if you don't look at which growth. >> it was only two years ago we were talking about losing -- at risk with the aaa rating. a lot of the turnaround comes down to the strong employment we

have had in companies boosting profits. they haven't been doing wage increases but the government has done well on that front. surprisingly i didn't think anyone could imagine they could turn this around so quickly but it has bounced back. almost looks like how the budget when itfore the crisis was upgrading forecasts instead of downgrading in the years after the crisis. selling point. how will the budget play into this? workingould really be in the government's favor. there has been terrible infighting in the last two or three years. i don't think the electorate is going to market as they might have. economic management is one of the central tenants of government. in australia the government marks economic performance by the budget.

it is doing everything right, thethe opinion polls show take mores, it will than a surplus. haidi: it will be interesting for sure with the election year coming up, i will economy here. -- economy reporter here. now a chief economist here are great to have you. i want to start with this chart. riding on the dragons back, looking at the correlation of australia -- lucky streak, solid growth link to trade with china. -- linked to trade with china. white line looking at iron ore exports to china. how much of the winning streak fortune into china? >> right place, right time.

the government -- global economy 2000truggling in the early . then came -- early 2000s then came china. for thatly meant decade australia outperformed every other dm economy by virtue of high commodity prices and the investment them that was so supportive for growth, jobs, income, the story we know so well. right place, right time but also both the rba and the government, managing that time in the sense of when your trader rises as much as it did, that brings with it other issues for policymakers to manage, not the least tight inflation. when we look back, it is remarkable we came through with very little disruption.

haidi: remarkable when you look at the pace of the chinese growth and demand story. most people don't expect that could be replicated again with other emerging markets with india. how well-placed is australia to withstand the slowing, the trade war and domestic slowing? some voices it will not be a soft landing. slow inink growth will australia because of those reasons. the slowing housing market, slowing credit growth, the backdrop, we haven't changed numbers at j.p. morgan, but we have been disappointed with europe with how growth has been there. looking at the global outlook as solid although there are significant downside risks. that probably worries the rba a little bit, and we saw in the december board meeting the growth knowledge that it was

softer. the other key factor we are starting to hear the bank talk about is the idea maybe the supply of credit is tightening up more than would be ideal in the current environment. we are watching in 2019. the bank still feels although need to cite the growth forecast, the magnitude of downgrades will not be large, and it will stick with this narrative that in the end everything will be ok, inflation will move, the labor market will do well. shery: growth has picked up significantly the first half of this year, more than 3%. what happened? >> growth was superstrong the first half of the year, 4% annualized for the first six months. third-quarter gdp accounts did a reality check on that in the sense that the primary source of weakness was the consumer.

we felt at j.p. morgan that if you could give a little bit and the australian economic story, we are watching more consumption. we didn't expect it to go so sharply, but it does feel like to us some of the constraints on the household balance sheet are starting to bond more tightly than had been the case in previous years. given how big a part of gdp consumption is, 60% of the economy, if that slows, overall gdp growth will slow in the forecast the rest of this year and into 2019. shery: could we expect fiscal easing to help consumers? >> it seems likely. the political context shows you that is on the cards. the government is behind in the polls, but they do have a chance to pay that play with cash on the fiscal side more than six months ago. we know the budget has been more

forward to early april. we will have an election in the first half of may. my sense is the budget will be budget,h a pre-election and both sides of politics will come up with spending initiatives being implemented that will have fiscal policy over the next year or two. haidi: if we emerge with a labour government, do we change your functions about economic policy? >> not really but it will be meaningful. voters will be faced with a distinct choice at the next election, the last decade has been a question of left and right and hasn't mattered too much. this time i think we get the sense the labour party is proposing a set of policies that will be distinct and different from those which the current government will run to the election with. i think there will be important differences. negative gearing, the credit

story, it investors wonder under maybe a labor government industrial relations come back on the agenda and that could compromise copper margins. you have an overriding sense that any industry that looks like it has concentrated market structure or impacts the cost of moving will be under scrutiny regardless of who wins. that is another issue corporate australia is wrestling with. thank you for coming on throughout the course of this year. we will have you in 2019 area j.p. morgan chief economist in sydney. shery: we will go live to wellington to find out why new wants as central bank big boost in capital buffers. this is bloomberg. ♪

welcome back. the new zealand reserve bank

wants double capital buffers to protect against the unforeseen economic shocks. let's bring in our wellington bureau chief. why does the rnc want to do this? rbnz want to do this? >> conditions are not die are at all, so it is a big question. new zealand banks owned by australia, and none of the banks coming fromant news the financial crisis. they are well capitalized, none of them failed. what the bank is saying is there have been think failures in the past and wants to make the banks more resilient to the really big shocks coming along once every 200 years. because of the cost to society when it does happen. the bank of new zealand doesn't want to be -- had to be bailed out in 1990.

thei: looking at implications, what are they? it could be an impact not just on kiwi lenders but big australian banks as well. big four here are australian owned banks, and we saw their stocks lower friday after the announcement was made. analysts are still crunching the numbers. those banks and their subsidiaries would need to come up with significant amounts of additional capital. certainly in the billions. the reserve bank has said it would expect of these two impact on bank profitability here and result in a small increase in borrowing costs for new zealanders. haidi: putting the estimate at $9 billion kiwi. thank you for that, are

wellington bureau chief there with the rbnz disaster plan. that is a must it retreating in new zealand is underway, a few minutes from the staggered open in australia. lots more next. this is bloomberg. ♪ is is bloomberg. ♪

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haidi: very good morning. i am haidi stroud-watts. shery: good evening from new york, i am shery ahn. inhie: iso be hammered in hong kong. welcome to daybreak asia -- i am sophie kamaruddin in hong kong. welcome to daybreak asia. china is taking more steps to ease trade tensions, lifting tariffs on u.s. cars and revaluing purchases on american corn. investigators prepared to